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Item 9A. Controls and Procedures

2024-03-07 compared with 2023-03-02 · 882 added, 478 removed, 963 unchanged (59% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2022.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Annual Report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2023 because of the material weakness in internal control over financial reporting discussed below.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, our management concluded that, as of December 31, 2022, our internal control over financial reporting was effective.

Management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Old Cartesian, which is included in our consolidated financial statements as of and for the year ended December 31, 2023 and constituted 2% and 1% of total assets and total liabilities, respectively, as of December 31, 2023 and 0% and 1% of revenues and operating expenses, respectively, for the year then ended.

Based on this assessment, our management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective.

As a result of its review, management identified a material weakness.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

There are no material accounting errors or omissions within the consolidated financial statements as a result of this material weakness.

Management concluded that it did not design and implement effective internal controls specifically related to the documentation of the assumptions supporting the valuation of the in-process intangible assets in connection with the Old Cartesian material business combination and the initial and ongoing contingent value right obligation issued at the time to legacy Selecta stockholders.

This includes a lack of sufficient documentation to provide evidence of the associated management review controls.

Remediation Plans for Material Weakness in Internal Control over Financial Reporting

We are committed to maintaining a strong internal control environment.

In response to the identified material weakness above, we, with the oversight of the Audit Committee, intend to take comprehensive actions to remediate the material weakness in internal control over financial reporting.

We expect to re-evaluate the scope and level of precision for conducting and documenting the reviews over significant acquisitions and contingent value rights including the review of prospective financial information used in valuation reports produced by third-party specialists supporting the accounting for business combinations and contingent value rights.

The remediation efforts are intended both to address the identified material weakness and to enhance our overall financial control environment.

Inherent Limitations of Internal Controls

9 unchanged sentences

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except for our identification and assessment of the material weakness described above, there have been no changes in our internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the three months ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption established for “smaller reporting companies.”

Ernst & Young LLP has independently assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 and its report is included below.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Cartesian Therapeutics, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Cartesian Therapeutics, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Cartesian Therapeutics, Inc.

(and subsidiaries) (the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Cartesian Bio, LLC, formerly known as Cartesian Therapeutics, Inc.

(Old Cartesian), which is included in the 2023 consolidated financial statements of the Company and constituted 2% and 1% of total assets and total liabilities, respectively, as of December 31, 2023 and 0% and 1% of revenues and operating expenses, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Old Cartesian.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness in the design and operation of controls related to the valuation of the in-process intangible assets acquired as part of the Old Cartesian business combination and the Selecta Biosciences, Inc.

contingent value right obligation.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated March 7, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Boston, Massachusetts

March 7, 2024

Other Information

During the fiscal quarter ended December 31, 2023, none of our officers or directors, as defined in Rule 16a-1(f), informed us of the adoption , modification or termination of any "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as those terms are defined in Item 408 of Regulation S-K .

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Exhibit Filing

Agreement and Plan of Merger, dated November 13, 2023, by and among Selecta Biosciences, Inc., Sakura Merger Sub I, Inc., Sakura Merger Sub II, LLC, and Cartesian Therapeutics, Inc.

8-K 001-37798 2.1 11/13/2023

Restated Certificate of Incorporation of Selecta Biosciences, Inc.

2 unchanged sentences

8-K 001-37798 3.1 6/21/2022

Amended and Restated By-laws of Selecta Biosciences, Inc.

Certificate of Amendment to the Restated Certificate of Incorporation of Selecta Biosciences, Inc., dated November 13, 2023

8-K 001-37798 3.3 11/13/2023

Amended and Restated By-laws of Cartesian Therapeutics, Inc.

10-Q 001-37798 3.2 11/13/2023

Specimen Stock Certificate evidencing the shares of common stock

17 unchanged sentences

and certain Directors, dated December 20, 2022

— — — Filed herewith

10-K 001-37798 4.8(b) 3/2/2023

Form of Warrant to Purchase Stock, dated August 31, 2020, issued by Selecta Biosciences, Inc.

3 unchanged sentences

8-K 001-37798 4.1 4/6/2022

Form of Contingent Value Rights Agreement

8-K 001-37798 2.1 11/13/2023

Registration Rights Agreement, by and among Selecta Biosciences, Inc.

and certain purchasers party thereto

8-K 001-37798 10.2 11/13/2023

Certificate of Designation of Preferences, Rights and Limitations of Series A Non-Voting Convertible Preferred Stock

8-K 001-37798 3.4 11/13/2023

Description of Securities

4 unchanged sentences

S-1/A 333-211555 10.3 6/8/2016

2018 Employment Inducement Incentive Award Plan, amended and restated, and forms agreement thereunder

Amended and Restated Cartesian Therapeutics, Inc.

2018 Employment Inducement Incentive Award Plan, and forms of award agreements thereunder

S-8 333-276486 99.2 1/12/2024

1 unchanged sentence

S-1/A 333-211555 10.1 6/20/2016

Cartesian Therapeutics, Inc.

2016 Stock Incentive Plan, and forms of award agreements thereunder

S-8 333-276486 99.1 1/12/2024

Non-Employee Director Compensation Program

2 unchanged sentences

S-1 333-211555 10.5 5/24/2016

Exclusive Patent License Agreement, dated as of November 25, 2008, by and between the Registrant and the Massachusetts Institute of Technology

S-1 333-211555 10.7(a) 5/24/2016

First Amendment to Exclusive Patent License Agreement, dated as of January 12, 2010, by and between the Registrant and the Massachusetts Institute of Technology

S-1 333-211555 10.7(b) 5/24/2016

Letter Agreement, dated as of November 27, 2012, by and among the Registrant, Massachusetts Institute of Technology and Sanofi

S-1 333-211555 10.7(c) 5/24/2016

Letter Amendment, dated as of November 27, 2012, by and between the Registrant and the Massachusetts Institute of Technology

S-1 333-211555 10.7(d) 5/24/2016

Second Amendment to Exclusive Patent License Agreement, dated as of August 29, 2013, by and between the Registrant and the Massachusetts Institute of Technology

S-1 333-211555 10.7(e) 5/24/2016

Third Amendment to Exclusive Patent License Agreement, entered into on November 21, 2016 and effective as of November 18, 2016, by and between the Massachusetts Institute of Technology and the Registrant

8-K/A 001-37798 10.3(a) 12/14/2016

Letter Agreement, dated as of December 2, 2016, by and between the Massachusetts Institute of Technology and the Registrant

8-K/A 001-37798 10.3(b) 12/14/2016

Letter Agreement, dated as of December 2, 2016, by and among Spark Therapeutics, Inc., the Massachusetts Institute of Technology and the Registrant

8-K/A 001-37798 10.3(c) 12/14/2016

Fourth Amendment to Exclusive Patent License Agreement, entered into on December 13, 2019, by and between the Massachusetts Institute of Technology and the Registrant

10-K 001-37798 10.7(i) 3/12/2020

Fifth Amendment to Exclusive Patent License Agreement, dated as of May 15, 2020, by and between the Registrant and the Massachusetts Institute of Technology

10-Q 001-37798 10.1 8/6/2020

Amended and Restated License Agreement, dated as of May 31, 2017, by and between the Registrant and Shenyang Sunshine Pharmaceutical Co., Ltd.

8 unchanged sentences

10-Q 001-37798 10.1 11/3/2022

Lease Agreement by and between 704 Quince Orchard Owner, LLC and Cartesian Therapeutics, Inc.

dated May 11, 2018

— — — Filed herewith

First Amendment to Lease Agreement by and between 704 Quince Orchard Owner, LLC and Cartesian Therapeutics, Inc.

dated March 22, 2021

— — — Filed herewith

Second Amendment to Lease Agreement by and between 704 Quince Orchard Owner, LLC and Cartesian Therapeutics, Inc.

dated Ma y 3 , 2021

— — — Filed herewith

Lease Agreement by and between 7495 RP, LLC and Cartesian Therapeutics, Inc.

dated February 28, 2024

— — — Filed herewith

Employment Agreement, dated as of September 25, 2018, by and between the Registrant and Carsten Brunn, Ph.D.

8-K 001-37798 10.2 9/27/2018

Employment Agreement, dated as of June 6, 2016, by and between the Registrant and Takashi Kei Kishimoto

S-1/A 333-211555 10.18 6/8/2016

Employment Agreement, dated as of June 6, 2016, by and between the Registrant and Lloyd Johnston, Ph.D.

S-1/A 333-211555 10.21 6/8/2016

Employment Agreement, dated as of July 31, 2020, by and between the Registrant and Peter G.

10-Q 001-37798 10.1 11/5/2020

Employment Agreement, dated as of November 9, 2022, by and between the Registrant and Blaine Davis

— — — Filed herewith

Separation and Release Agreement, dated November 2 3 , 2022, by and between the Registrant and Kevin Tan

— — — Filed herewith

10-K 001-37798 10.15 3/2/2023

License and Development Agreement, dated as of June 11, 2020, by and between the Registrant and Swedish Orphan Biovitrum AB (Publ)

10-Q 001-37798 10.2 8/6/2020

Amendment No.

1 to License and Development Agreement, dated as of October 31, 2023, by and between the Registrant and Swedish Orphan Biovitrum AB (Publ)

— — — Filed herewith

Patent License Agreement, between Cartesian Therapeutics, Inc.

Department of Health and Human Services, as represented by the National Cancer Institute of the National Institutes of Health, dated September 16, 2019

— — — Filed herewith

Patent L icense A greement by and between Biogen MA, Inc.

and Cartesian Therapeutics, Inc.

, dated September 8, 2023

— — — Filed herewith

Securities Purchase Agreement, dated June 26, 2017, by and between the Registrant and Timothy Springer, Ph.D.

10 unchanged sentences

10-Q 001-37798 10.2 11/3/2022

Subsidiaries of Selecta Biosciences, Inc.

S-1 333-211555 21.1 5/24/2016

Fourth Amendment to Loan and Security Agreement, dated March 31, 2023, between Selecta Biosciences, Inc., Oxford Finance LLC, as Collateral Agent and as a lender, and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A.

(as successor to Silicon Valley Bank)), as a lender

10-Q 001-37798 10.1 5/4/2023

License and Development Agreement, dated January 8, 2023, by and between Selecta Biosciences, Inc.

and Audentes Therapeutics, Inc.

— — — Filed herewith

Form of Retention Bonus Letter

8-K 001-37798 10.3 11/13/2023

Securities Purchase Agreement, dated as of November 13, 2023, by and among Selecta Biosciences, Inc.

and each purchaser identified on Annex A thereto

8-K 001-37798 10.1 11/13/2023

Subsidiaries of Cartesian Therapeutics, Inc.

— — — Filed herewith

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

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— — — Furnished herewith

Cartesian Therapeutics, Inc.

Compensation Clawback Policy

— — — Filed herewith

101.INS Inline XBRL Instance Document - the Instance Document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL Document — — — Filed herewith

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# Indicates management contract or compensatory plan.

† Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24h-2 under the Securities Exchange Act of 1934.

* Certain annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.

† Certain confidential information contained in this exhibit, marked by brackets and asterisks, has been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because the information (i) is not material and (ii) is the type of information that the Company both customarily and actually treats as private and confidential.

Form 10-K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SELECTA BIOSCIENCES, INC.

CARTESIAN THERAPEUTICS, INC.

March 7, 2024

17 unchanged sentences

Nishan de Silva, M.D.

Myers Director March 2, 2023

/s/ Aymeric Sallin Director March 2, 2023

Aymeric Sallin

/s/ Murat Kalayoglu, M.D., Ph.D.

Director March 7, 2024

Murat Kalayoglu, M.D., Ph.D.

/s/ Michael Singer, M.D., Ph.D.

Director March 7, 2024

Michael Singer, M.D., Ph.D.

/s/ Timothy Springer, Ph.D.

3 unchanged sentences

Patrick Zenner

Selecta Biosciences, Inc.

Cartesian Therapeutics, Inc.

and Subsidiaries

3 unchanged sentences

Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Selecta Biosciences, Inc.

To the Stockholders and the Board of Directors of Cartesian Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Selecta Biosciences, Inc.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income (loss), changes in stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Cartesian Therapeutics, Inc.

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss), changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 7, 2024 expressed an adverse opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued and Prepaid Clinical Trial Expense

Valuation of in-process research and development acquired in a business combination

Description of the Matter

As discussed in Note 2 to the consolidated financial statements, the Company records research and development expenses, which include expenses related to clinical trials, as incurred.

The Company’s determination of clinical trial costs incurred, as well as the related accrued and prepaid expenses at each reporting period, incorporates judgment and utilizes various assumptions.

Such assumptions include progress of the studies, including the phase or completion of events, invoices received and contracted costs.

Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred.

Auditing the Company’s accrued and prepaid research and development expenses was especially challenging due to the significant judgment required to estimate the expenses incurred but not yet invoiced.

While the Company’s estimates of accrued and prepaid clinical trial expenses are primarily based on information received related to each study from its vendors, the Company makes an estimate for additional costs incurred based on management judgment.

Additionally, due to the long duration of clinical trials and the timing of invoicing received from third parties, the actual amounts incurred are not always known at the time the financial statements are issued.

As described in Note 3, on November 13, 2023, the Company acquired Cartesian Therapeutics, Inc.

in a stock for stock transfer, which was accounted for as a business combination using the acquisition method of accounting.

The acquired intangible assets consisted of in-process research and development which had estimated acquisition-date fair values of $150.6 million.

Auditing the acquisition date fair value of the in-process research and development was complex due to the significant judgment required in estimating the fair value.

In particular, the fair value estimate required the use of valuation methodologies that were sensitive to significant assumptions (e.g., projected revenue growth rates, including forecasted selling prices and unit volumes, and discount rates applied to the in-process research and development), which are affected by expected future market or economic conditions.

How We Addressed the Matter in Our Audit

To evaluate the accrued and prepaid clinical trial expenses, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used in the estimates and evaluating the significant assumptions that are used by management to estimate the recorded accruals and prepayments.

We obtained third party confirmations from the clinical research organization to further test the underlying data used in management’s estimate.

We corroborated the progress of research and development activities associated with clinical trials through discussion with the Company’s research and development personnel that oversee the research and development activities.

We inspected the Company’s third-party contracts, amendments, and any pending change orders to assess the impact on amounts recorded.

In addition, we performed analytics over fluctuations in accruals and prepaids by vendor throughout the period subject to audit and compared subsequent invoices received from third parties to amounts accrued.

To test the estimated fair value of the acquired in-process research and development intangible assets, our audit procedures included, among others, assessing the appropriateness of the valuation methodology and testing the significant assumptions discussed above and the completeness and accuracy of the underlying data used by the Company.

For example, we evaluated the reasonableness of assumptions used to determine the projected revenue growth rates by comparing the forecasted assumptions to projected industry growth rates, and other factors considered by management in developing the model.

We involved our valuation specialist to assist in evaluating the valuation methodologies and discount rates used to value in-process research and development intangible assets.

We also performed sensitivity analyses to evaluate the changes in the fair value of the acquired in-process research and development intangible assets that would result from changes in the significant assumptions.

/s/ Ernst & Young LLP

2 unchanged sentences

March 7, 2024

Selecta Biosciences, Inc.

Cartesian Therapeutics, Inc.

and Subsidiaries

12 unchanged sentences

Right-of-use asset, net 10,068 11,617

In-process research and development assets 150,600 —

Goodwill 48,163 —

Long-term restricted cash 1,377 1,311

2 unchanged sentences

Total assets $ 305,050 $ 165,886

Liabilities and stockholders’ equity

Liabilities, convertible preferred stock, and stockholders’ (deficit) equity

Current liabilities:

Accounts payable $ 3,150 $ 316

Accrued expenses 14,084 10,533

Accrued expenses and other current liabilities 15,572 14,084

Loan payable — 8,476

Lease liability 2,166 1,608

Income taxes payable — 601

Deferred revenue 2,311 593

Warrant liabilities 720 —

Contingent value right liability 15,983 —

Forward contract liabilities 28,307 —

Total current liabilities 68,209 25,077

2 unchanged sentences

Lease liability, net of current portion 8,789 10,055

Deferred revenue — 11,417

Warrant liabilities 19,140 25,423

Deferred revenue, net of current portion 3,538 —

Warrant liabilities, net of current portion 5,674 19,140

Contingent value right liability, net of current portion 342,617 —

Deferred tax liabilities, net 15,853 —

Total liabilities 444,680 72,058

Commitments and contingencies (Note 19)

Stockholders’ equity:

Series A Preferred Stock, $ 0.0001 par value;

548,375 and no shares authorized as of December 31, 2023 and December 31, 2022, respectively;

435,120.513 and no shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

Options for Series A Preferred Stock 3,703 —

Stockholders’ (deficit) equity:

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

9,451,625 and 10,000,000 shares authorized as of December 31, 2023 and December 31, 2022, respectively;

no shares issued and outstanding as of December 31, 2023 and December 31, 2022

Common stock, $ 0.0001 par value;

350,000,000 and 200,000,000 shares authorized as of December 31, 2022 and December 31, 2021, respectively;

350,000,000 shares authorized as of December 31, 2023 and December 31, 2022;

161,927,821 and 153,042,435 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

2 unchanged sentences

Accumulated other comprehensive loss ( 4,600 ) ( 4,558 )

Total stockholders’ equity 93,828 22,521

Total liabilities and stockholders’ equity $ 165,886 $ 159,883

Total stockholders’ (deficit) equity ( 440,184 ) 93,828

Total liabilities, convertible preferred stock, and stockholders’ (deficit) equity $ 305,050 $ 165,886

The accompanying notes are an integral part of these consolidated financial statements.

Selecta Biosciences, Inc.

Cartesian Therapeutics, Inc.

and Subsidiaries

8 unchanged sentences

Total operating expenses 112,420 96,239 89,674

Operating income (loss) 14,538 ( 4,597 ) ( 56,821 )

Operating (loss) income ( 86,416 ) 14,538 ( 4,597 )

Investment income 4,964 2,073 44

Loss on extinguishment of debt — — ( 461 )

Foreign currency transaction gain (loss), net 38 ( 22 ) —

1 unchanged sentence

Change in fair value of warrant liabilities 12,746 20,882 ( 2,339 )

Change in fair value of contingent value right liability ( 18,300 ) — —

Change in fair value of forward contract liabilities ( 149,600 ) — —

Other income, net 691 330 15

Income (loss) before income taxes 34,770 ( 9,721 ) ( 68,876 )

Income tax (expense) benefit 609 ( 15,966 ) —

Net income (loss) 35,379 ( 25,687 ) ( 68,876 )

Other comprehensive income (loss):

(Loss) income before income taxes ( 238,710 ) 34,770 ( 9,721 )

Income tax benefit (expense) 19,000 609 ( 15,966 )

Net (loss) income $ ( 219,710 ) $ 35,379 $ ( 25,687 )

Other comprehensive (loss) income:

Foreign currency translation adjustment ( 53 ) 18 ( 2 )

Unrealized loss on marketable securities ( 10 ) ( 1 ) —

Total comprehensive income (loss) $ 35,387 $ ( 25,690 ) $ ( 68,916 )

Net income (loss) per share:

Unrealized gain (loss) on marketable securities 11 ( 10 ) ( 1 )

Total comprehensive (loss) income $ ( 219,752 ) $ 35,387 $ ( 25,690 )

Net (loss) income per share:

Basic $ ( 1.66 ) $ 0.24 $ ( 0.22 )

4 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

Selecta Biosciences, Inc.

Cartesian Therapeutics, Inc.

and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Amounts in thousands, except share data)

Additional other Stockholders’

Common stock paid-in Accumulated comprehensive Equity

Shares Amount capital deficit loss (Deficit)

Options for Accumulated

Series A Series A Additional other Stockholders’

Preferred stock Preferred Stock Common stock paid-in Accumulated comprehensive (Deficit)

Shares Amount Amount Shares Amount capital deficit loss Equity

Balance at December 31, 2020 — $ — $ — 108,071,249 $ 11 $ 391,175 $ ( 404,629 ) $ ( 4,563 ) $ ( 18,006 )

3 unchanged sentences

Issuance of common stock through at-the-market offering, net — — — 13,767,511 1 51,933 — — 51,934

Issuance of common stock through private placement 5,416,390 — 10,268 — — 10,268

Issuance of common stock upon exercise of pre-funded warrants 8,342,128 1 — — — 1

Issuance of common stock upon exercise of warrants — — — 1,076,669 — 5,624 — — 5,624

Other financing fees — — ( 370 ) — — ( 370 )

Issuance of common warrants with long-term debt, net — — 444 — — 444

Stock-based compensation expense — — — — — 7,720 — — 7,720

Currency translation adjustment — — — — — — — ( 2 ) ( 2 )

Unrealized loss on marketable securities — — — — — — — ( 1 ) ( 1 )

Net loss — — — — — — ( 25,687 ) — ( 25,687 )

4 unchanged sentences

Issuance of common stock through at-the-market offering, net — — — 774,544 — 2,121 — — 2,121

Issuance of common stock upon exercise of warrants 1,076,669 — 5,624 — — 5,624

Issuance of common stock and common warrants — — — 27,428,572 3 21,477 — — 21,480

Issuance of common stock, license agreement — — — 892,857 — 1,000 — — 1,000

Reclassification of warrant liabilities — — — — — 780 — — 780

Stock-based compensation expense — — — — — 10,194 — — 10,194

1 unchanged sentence

Unrealized loss on marketable securities — — — — — — — ( 10 ) ( 10 )

Net loss — — — ( 25,687 ) — ( 25,687 )

Net income — — — — — — 35,379 — 35,379

Balance at December 31, 2022 — $ — $ — 153,042,435 $ 15 $ 493,308 $ ( 394,937 ) $ ( 4,558 ) $ 93,828

Issuance of Series A Preferred Stock in private placement 619.627 250 — — — — — — —

Issuance of Series A Preferred Stock in connection with the Merger and settlement of related forward contract 384,930.724 261,753 — — — — — — —

Issuance of Series A Preferred Stock in connection with private placement and settlement of related forward contract 49,570.162 34,848 — — — — — — —

Issuance of common stock under Employee Stock Purchase Plan — — — 186,044 — 231 — — 231

Issuance of common stock upon exercise of options 71,190 — 156 — — 156

Issuance of vested restricted stock units — — — 636,418 — — — — —

Issuance of common stock through at-the-market offering, net 774,544 — 2,121 — — 2,121

Issuance of common stock and common warrants 27,428,572 3 21,477 — — 21,480

Issuance of common stock forward in connection with the Merger — — — — — 2,713 — — 2,713

Issuance of common stock in connection with the Merger and settlement of related forward contract — — — 6,723,639 1 ( 1 ) — — —

Issuance of replacement options in Merger — — 3,643 — — 6,801 — — 6,801

Issuance of common stock, license agreement — — — 1,339,285 — 1,500 — — 1,500

Reclassification of warrant liabilities — — 780 — — 780

Settlement of outstanding equity awards at Merger — — — — — ( 6,169 ) — — ( 6,169 )

Distribution of contingent value rights — — — — — ( 340,300 ) — — ( 340,300 )

Stock-based compensation expense — — 60 — — 20,964 — — 20,964

Currency translation adjustment — — — — — — — ( 53 ) ( 53 )

Unrealized loss on marketable securities — — — — ( 10 ) ( 10 )

Net income — — — 35,379 — 35,379

Unrealized gain on marketable securities — — — — — — — 11 11

Net loss — — — — — — ( 219,710 ) — ( 219,710 )

Balance at December 31, 2023

1 unchanged sentence

The accompanying notes are an integral part of these consolidated financial statements.

Selecta Biosciences, Inc.

Cartesian Therapeutics, Inc.

and Subsidiaries

3 unchanged sentences

Cash flows from operating activities (Amounts in thousands)

Net income (loss) $ 35,379 $ ( 25,687 ) $ ( 68,876 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Net (loss) income $ ( 219,710 ) $ 35,379 $ ( 25,687 )

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Depreciation and amortization 843 1,287 1,252

1 unchanged sentence

Non-cash lease expense 1,754 1,337 1,119

(Gain) on disposal of property and equipment ( 147 ) — ( 52 )

Impairment of Right of use asset 710 — —

Loss (gain) on disposal of property and equipment 477 ( 147 ) —

Stock-based compensation expense 22,524 11,194 7,720

1 unchanged sentence

Warrant liabilities revaluation ( 12,746 ) ( 20,882 ) 2,339

Contingent value right liability revaluation 18,300 — —

Forward contract liabilities revaluation 149,600 — —

Loss on extinguishment of debt 740 — —

Provision (benefit) for deferred taxes ( 19,000 ) — —

Changes in operating assets and liabilities:

6 unchanged sentences

Accrued expenses and other liabilities ( 2,761 ) 2,212 1,061

Net cash (used in) provided by operating activities ( 31,631 ) ( 60,382 ) 34,881

Net cash used in operating activities ( 51,161 ) ( 31,631 ) ( 60,382 )

Cash flows from investing activities

Cash assumed in acquisition of Old Cartesian 6,561 — —

Proceeds from maturities of marketable securities 28,254 19,700 16,400

2 unchanged sentences

Purchases of property and equipment ( 206 ) ( 1,201 ) ( 1,085 )

Proceeds from the sale of property and equipment — — 74

Net cash used in investing activities ( 15,002 ) ( 17,140 ) ( 741 )

Net cash provided by (used in) investing activities 34,609 ( 15,002 ) ( 17,140 )

Cash flows from financing activities

Proceeds from issuance of long-term debt, net of expenses — — 24,736

Repayments of principal on outstanding debt — — ( 19,313 )

Proceeds from issuance of Series A Preferred Stock, gross in private placement 20,250 — —

Repayments of principal, final payment fee, and prepayment penalty on debt ( 27,457 ) — —

Debt amendment fee included in debt discount — ( 110 ) —

1 unchanged sentence

Net proceeds from issuance of common stock and common warrants — 36,859 —

Net proceeds from issuance of common stock- private placement — — 10,268

Issuance costs paid for December 2019 financing — — ( 4,381 )

Other financing fees — — ( 343 )

Proceeds from exercise of pre-funded and common warrants — — 979

Settlement of outstanding equity awards at Merger ( 6,169 ) — —

Proceeds from exercise of stock options — 156 778

Proceeds from issuance of common stock under Employee Stock Purchase Plan 231 189 161

Net cash provided by financing activities 39,215 52,897 14,431

Net cash (used in) provided by financing activities ( 13,145 ) 39,215 52,897

Effect of exchange rate changes on cash ( 53 ) 20 ( 3 )

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Cash paid for interest $ 1,853 $ 2,248 $ 2,002

Noncash investing and financing activities

Non-cash investing and financing activities

Issuance of common stock, license agreement in stock-based compensation expense $ 1,500 $ 1,000 $ —

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Reclassification of warrant liability to equity $ — $ 780 $ —

Fair value of warrants issued in connection with issuance of long-term debt $ — $ — $ 444

Purchase of property and equipment not yet paid $ 128 $ 17 $ 224

The accompanying notes are an integral part of these consolidated financial statements .

Selecta Biosciences, Inc.

Cartesian Therapeutics, Inc.

and Subsidiaries

1 unchanged sentence

Description of the Business

Selecta Biosciences, Inc., or the Company, was incorporated in Delaware on December 10, 2007, and is based in Watertown, Massachusetts.

The Company is a clinical-stage biotechnology company leveraging the Company's ImmTOR® platform to develop toloreogenic therapies that selectively mitigate unwanted immune responses.

With a proven ability to induce tolerance to highly immunogenic proteins, the Company believes ImmTOR has the potential to amplify the efficacy of biologic therapies, including redosing of life-saving gene therapies, as well as restore the body's natural self-tolerance in autoimmune diseases.

The Company has several proprietary and partnered programs in its pipeline focused on enzyme therapies, gene therapies, and autoimmune diseases.

Since inception, the Company has devoted its efforts principally to research and development of its technology and product candidates, recruiting management and technical staff, acquiring operating assets, and raising capital.

Cartesian Therapeutics, Inc., or the Company, (formerly known as Selecta Biosciences, Inc., or Selecta) was incorporated in Delaware on December 10, 2007, and is headquartered in Gaithersburg, Maryland.

The Company is a clinical-stage biotechnology company developing mRNA cell therapies for the treatment of autoimmune diseases leveraging its proprietary technology and manufacturing platform to introduce one or more mRNA molecules into cells to enhance their function.

The Company believes its mRNA cell therapies have the potential to deliver deep, durable clinical benefit to a broad group of patients with autoimmune diseases because they can be administered over a short period of time, in an outpatient setting, and without pre-treatment chemotherapy.

On November 13, 2023, the Company acquired, in accordance with the terms of the Agreement and Plan of Merger, or the Merger Agreement, the assets of the Delaware corporation which, immediately prior to the Merger (as defined below), was known as Cartesian Therapeutics, Inc., or Old Cartesian, as disclosed in Note 3.

The transaction was structured as a stock-for-stock transaction pursuant to which all of Old Cartesian’s outstanding shares of capital stock were exchanged based on a fixed exchange ratio for consideration of 6,723,639 shares of the common stock, $ 0.0001 per share, of the Company and 384,930.724 shares of the newly designated Series A Non-Voting Convertible Preferred Stock, $ 0.0001 per share, or the Series A Preferred Stock.

The Series A Preferred Stock is intended to have economic rights similar to the common stock, but with only limited voting rights.

Additionally, the Company assumed all outstanding stock options of Old Cartesian.

The common stock and Series A Preferred Stock related to the Merger were issued on December 5, 2023.

For additional information, see Note 3.

In connection with the Merger, the Company entered into a definitive agreement, or the Securities Purchase Agreement, for a private investment in public equity transaction, or the November 2023 Private Placement, with the Investors (as defined below).

The Securities Purchase Agreement provides for the issuance to the Investors of an aggregate of 149,330.115 shares of Series A Preferred Stock for an aggregate purchase price of approximately $ 60.25 million.

For additional information, see Note 11.

In connection with the Merger, a contractual contingent value right, or CVR, was distributed to the holders of record of the Company's common stock and 2022 Warrants as of the close of business on December 4, 2023, but was not distributed to holders of shares of common stock or Series A Preferred Stock issued to stockholders of Old Cartesian or the Investors in the transactions.

Holders of the CVRs will be entitled to receive certain payments from proceeds received by the Company, if any, related to the disposition or monetization of the Company's legacy assets following the issuance of the CVRs.

For additional information, see Note 6.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing.

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These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities.

The Company’s product candidates are in development.

The Company’s product candidates are in pre-clinical and clinical development.

There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable.

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The successful development of product candidates requires substantial working capital, which may not be available to the Company on favorable terms or at all.

To date, the Company has financed its operations primarily through public offerings and private placements of its securities, funding received from research grants, collaboration and license arrangements and its credit facility.

The Company currently has no source of product revenue, and it does not expect to generate product revenue for the foreseeable future.

To date, the Company’s revenue has primarily been from collaboration agreements.

The Company has devoted substantially all of its financial resources and efforts to developing its ImmTOR platform, identifying potential product candidates and conducting preclinical studies and clinical trials.

The Company is in the early stages of development of its product candidates, and it has not completed development of any ImmTOR-enabled therapies.

As of December 31, 2022, the Company’s cash, cash equivalents, restricted cash and marketable securities were $ 136.2 million, of which $ 1.6 million was restricted cash related to lease commitments and $ 0.2 million was held by its Russian subsidiary designated solely for use in its operations.

The Company believes the cash, cash equivalents, restricted cash and marketable securities as of December 31, 2022 will enable it to fund its current planned operations for at least the next twelve months from the date of issuance of these financial statements, though it may realize additional cash resources upon the achievement of certain contingent collaboration milestones or it may pursue additional cash resources through public or private equity or debt financings or by establishing collaborations with other companies.

date, the Company’s revenue has primarily been from collaboration agreements.

The Company has devoted substantially all of its financial resources and efforts to developing its existing product candidates, identifying potential product candidates and conducting preclinical studies and clinical trials.

The Company is in the early stages of development of its product candidates, and it has not completed development of any product candidates.

As of December 31, 2023, the Company’s cash, cash equivalents, and restricted cash were $ 78.3 million, of which $ 1.4 million was restricted cash related to lease commitments and $ 0.2 million was held by its Russian subsidiary designated solely for use in its operations.

The Company believes the cash, cash equivalents and restricted cash as of December 31, 2023 combined with net proceeds of $ 40.0 million received subsequent to December 31, 2023 from the November 2023 Private Placement will enable it to fund its current planned operations for at least the next twelve months from the date of issuance of these financial statements, though it may pursue additional cash resources through public or private equity or debt financings or by establishing collaborations with other companies.

Management’s expectations with respect to its ability to fund current and long term planned operations are based on estimates that are subject to risks and uncertainties.

1 unchanged sentence

However, there is no guarantee that any collaboration milestones will be achieved or that any of these strategic or financing opportunities will be executed on favorable terms, and some could be dilutive to existing stockholders.

Further, the liability associated with the CVR Agreement (as defined below) will be settled solely through cash flow received under the Company's License and Development Agreement, or as so amended, the Sobi License, with Swedish Orphan Biovitrum AB (publ.), or Sobi, and any other Gross Proceeds (as defined in the CVR Agreement) net of certain agreed deductions.

Under the CVR Agreement, 100 % of all milestone payments, royalties and other amounts paid to the Company or controlled entities under the Sobi License, and any other Gross Proceeds will be distributed, net of specified deductions, to holders of the CVRs.

There is no obligation to the Company to fund any amount related to the CVR liability.

The Certificate of Designation of Preferences, Rights, and Limitations of the Series A Non-Voting Convertible Preferred Stock, or the Certificate of Designation, contains a provision granting each holder of the Series A Preferred Stock the option to require the Company to redeem any or all of such holder’s then-outstanding shares of Series A Preferred Stock beginning on the date that is 18 months following the date of the closing of the Merger, November 13, 2023, at a price per share equal to the ten-day trailing average closing trading price of the common stock at such time;

provided, however, that no holder will have the right to seek redemption of any shares of Series A Preferred Stock to the extent that such holder would otherwise be unable to convert such shares of Series A Preferred Stock due to the common stock beneficial ownership limitation applicable to such holder.

The Company could be required to use a significant amount of its cash resources on hand to satisfy this redemption obligation, particularly if its stockholders do not ever approve a proposal to convert the Company’s Series A Preferred Stock into common stock, or generally if holders of Series A Preferred Stock exercise their redemption right with respect to a significant number of shares of Series A Preferred Stock or at a time when the trading price of the Company’s common stock is elevated.

Further, in the event that the Company does not have sufficient cash on hand to satisfy its redemption obligations, the Company may need to raise additional capital to satisfy these potential obligations.

Any redemption payments could materially limit the amount of cash the Company has available to fund our operations and the potential need to redeem shares of Series A Preferred Stock may limit the flexibility with which the Company seeks to operate its business.

If the Company is unable to obtain additional funding on a timely basis, it may be forced to significantly curtail, delay, or discontinue one or more of its planned research or development programs or be unable to expand its operations or otherwise capitalize on its commercialization of its product candidates.

As of December 31, 2023, the Company had an accumulated deficit of $ 614.6 million.

The Company anticipates operating losses to continue for the

foreseeable future due to, among other things, costs related to research and development of its product candidates and its administrative organization.

At this time, any impact of COVID-19 on the Company’s business, revenues, results of operations and financial condition will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, the emergence of new virus variants, travel restrictions and social distancing in the United States and other countries, business closures, disruptions, mandated stay at home orders or lockdowns, supply chain disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research and development of its product candidates and its administrative organization.

Guarantees and Indemnifications

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Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Selecta (RUS), LLC, or Selecta (RUS), a Russian limited liability corporation, and Selecta Biosciences Security Corporation, a Massachusetts securities corporation, and Cartesian Bio, LLC, a Delaware limited liability company, which is a variable interest entity for which the Company is the primary beneficiary.

All significant intercompany accounts and transactions have been eliminated.

4 unchanged sentences

In preparing these consolidated financial statements, management used significant estimates in the following areas, among others:

revenue recognition and estimating accrued research and development expenses.

estimated fair value of the intangible assets acquired in connection with the Merger, estimated fair value of the CVRs, deferred income taxes, revenue recognition and estimating accrued research and development expenses.

The Company assesses the above estimates on an ongoing basis;

1 unchanged sentence

Segment Information

The Company views its operations and manages its business in one operating segment, the research and development of nanoparticle immunomodulatory drugs for the treatment and prevention of human diseases.

The Company views its operations and manages its business in one operating segment, which prior to the Merger related to the research and development of nanoparticle immunomodulatory drugs for the treatment and prevention of human diseases and subsequent to the Merger relates to the research and development of cell therapy product candidates.

Cash Equivalents, Restricted Cash, Marketable Securities and Investments

7 unchanged sentences

The cost of securities sold is determined based on the specific identification method for purposes of recording realized gains and losses.

We also invest in equity securities of companies whose securities are not publicly traded and where fair value is not readily available.

These investments are recorded using cost minus impairment adjusted for changes in observable prices, depending on our ownership percentage and other factors that suggest we have significant influence.

We monitor these investments to evaluate whether any increase or decline in their value has occurred, based on the implied value of recent company financings, public market prices of comparable companies and general market conditions.

These investments are included in investments in our consolidated balance sheets.

The Company has also in the past invested in equity securities of a company whose securities are not publicly traded and where fair value is not readily available.

This investment is recorded using cost minus impairment adjusted for changes in observable prices, depending on our ownership percentage and other factors that suggest we have significant influence.

The Company monitors this investment to evaluate whether any increase or decline in its value has occurred, based on the implied value of recent company financings, public market prices of comparable companies and general market conditions.

This investment is included in investments in the consolidated balance sheets.

Concentrations of Credit Risk and Off-Balance Sheet Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, short-term deposits and marketable securities, investments, and accounts receivable.

Cash and cash equivalents are

deposited with federally insured financial institutions in the United States and may, at times, exceed federally insured limits.

Cash and cash equivalents are deposited with federally insured financial institutions in the United States and may, at times, exceed federally insured limits.

Management believes that the financial institutions that hold the Company’s deposits are financially creditworthy and, accordingly, minimal risk exists with respect to those balances.

2 unchanged sentences

Fair Value of Financial Instruments

The Company’s financial instruments consist mainly of cash equivalents, restricted cash, accounts payable, loans payable, marketable securities, investments and common warrants.

The Company’s financial instruments consist mainly of cash equivalents, restricted cash, accounts payable, loans payable, marketable securities, investments, warrants to purchase common stock, forward contract liabilities, and contingent value rights.

The carrying amounts of cash equivalents, restricted cash, accounts receivable, and accounts payable approximate their estimated fair value due to their short-term maturities.

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The fair value of warrant liabilities is determined using Level 3 inputs.

The fair value of warrant liabilities and contingent value rights are determined using Level 3 inputs.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.

3 unchanged sentences

This condition could cause an instrument to be reclassified within levels in the fair value hierarchy.

The carrying amounts reflected in our consolidated balance sheet for investments approximate fair value and are assessed for impairment quarterly.

The carrying amounts reflected in the consolidated balance sheet for investments approximate fair value and are assessed for impairment quarterly.

Property and Equipment

6 unchanged sentences

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

In order to determine if assets have been impaired, assets are tested at the lowest level for which identifiable independent cash flows are available, which is at the entity level (“asset group”).

In order to determine if assets have been impaired, assets are tested at the lowest level for which identifiable independent cash flows are available.

An impairment loss is recognized when the sum of projected undiscounted cash flows is less than the carrying value of the asset group.

The measurement of the impairment loss to be recognized is based on the difference between the fair value and the carrying value of the asset group.

Based on management’s evaluation, the fair value of the asset group, measured as the market capitalization of the Company exceeds its carrying value.

The Company recognized a $ 0.7 million impairment charge on a right-of-use asset during the year ended December 31, 2023.

Debt Issuance Costs

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(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the Company satisfies each performance obligation.

and (v) recognize revenue when (or as) the

Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

2 unchanged sentences

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

For example, certain performance obligations associated with Swedish Orphan Biovitrum, or Sobi, Sarepta Therapeutics, Inc., or Sarepta, and Takeda Pharmaceuticals USA, Inc., or Takeda, (see Note 12) will be satisfied over time, and revenue will be recognized using the output method, based on the proportion of actual deliveries to the total expected deliveries over the initial term.

For example, certain performance obligations associated with the License and Development Agreement, or Astellas Agreement, entered into with Audentes Therapeutics, Inc., or Astellas, (see Note 14) will be satisfied over time, and revenue will be recognized using the input method.

Collaboration and License Revenue:

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(iii) royalties on net sales of licensed products;

(iv) reimbursements or cost-sharing of research and development (R&D) expenses;

(iv) reimbursements or cost-sharing of research and development expenses;

and (v) profit/loss sharing arising from co-promotion arrangements.

2 unchanged sentences

If not distinct, the license is combined with other promised goods and services in the contract.

For licenses that are combined with other promised goods and services, the Company assesses the nature of the combined performance

obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

For licenses that are combined with other promised goods and services, the Company assesses the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

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Any such adjustments to the transaction price are allocated to the performance obligations on the same basis as at contract inception.

Amounts allocated to a satisfied performance obligation shall be recognized as revenue, or as a reduction of revenue, in the period in which the transaction price changes.

Amounts allocated to a satisfied

performance obligation shall be recognized as revenue, or as a reduction of revenue, in the period in which the transaction price changes.

Manufacturing Supply Services:

12 unchanged sentences

These third party agreements are generally cancellable, and related costs are recorded as research and development expenses as incurred.

Non-refundable advance clinical payments for goods or services that will be used or rendered for future R&D activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed.

Non-refundable advance clinical payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed.

The Company also records accruals for estimated ongoing clinical research and development costs.

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The historical clinical accrual estimates made by the Company have not been materially different from the actual costs.

In June 2020, the Company and Sobi entered into a license and development agreement, or the Sobi License.

Pursuant to the Sobi License, clinical trial costs incurred to complete development of SEL-212, including but not limited to costs incurred while conducting and completing the Phase 3 DISSOLVE trials, will be reimbursed by Sobi.

In June 2020, the Company and Sobi entered into a License and Development Agreement, which was amended in October 2023.

Pursuant to the Sobi License, clinical trial costs incurred to complete development of the SEL-212 product candidate, including but not limited to costs incurred while conducting and completing the Phase 3 DISSOLVE trials, were reimbursed by Sobi.

These costs, when reimbursed, were recognized as revenue consistent with the revenue recognition methodology disclosed in Note 14.

The reimbursable costs exclude any costs of additional development activities required that are related to the ImmTOR platform and that are unrelated to SEL-212.

In January 2023, the Company and Astellas entered into the Astellas Agreement.

Pursuant to the Astellas Agreement, Astellas will reimburse the Company for 25 % of all budgeted costs incurred to complete the development of Xork for use in Pompe disease with an Astellas gene therapy investigational or authorized product.

These costs, when reimbursed, will be recognized as revenue consistent with the revenue recognition methodology disclosed in Note 14.

The reimbursable costs exclude any costs of additional development activities required that are related to ImmTOR and that are unrelated to SEL-212.

The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse.

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Stock-based compensation expense recognized in the consolidated financial statements is based on awards that ultimately vest.

Net Income (Loss) Per Share

The Company calculates basic net income (loss) per share by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period.

Diluted net income per share is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common equivalent shares outstanding for the period, including any dilutive effect from outstanding stock options, restricted stock units, warrants to purchase common stock, and employee stock purchase plan stock using the treasury stock method.

Net (Loss) Income Per Share

The Company applies the two-class method to compute basic and diluted net (loss) income per share attributable to common stockholders when it has issued shares that meet the definition of participating securities.

The two-class method determines net (loss) income per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.

The two-class method requires (loss) income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all (loss) income for the period had been distributed.

The Company's Series A Preferred Stock and 2022 Warrants participate in any dividends declared by the Company and are therefore considered to be participating securities.

The participating securities are not required to participate in the losses of the Company, and therefore during periods of loss there is no allocation required under the two-class method.

Basic net (loss) income per share attributable to common stockholders is computed by dividing the net (loss) income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period.

Diluted net (loss) income attributable to common stockholders is computed by adjusting net (loss) income per share attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities.

Diluted net (loss) income per share attributable to common stockholders is computed by dividing the diluted net (loss) income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares.

For purpose of this calculation, outstanding options to purchase common stock and Series A Preferred Stock, forward contracts to issue Series A Preferred Stock, restricted stock units, warrants to purchase common stock, employee stock purchase plan stock, contingently issuable shares, and Series A Preferred Stock are considered potential dilutive common shares.

Contingent Liabilities

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The Company elected not to recognize leases with an original term less than one year on its balance sheet.

Operating lease right-of-use (ROU) assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term.

Operating lease right-of-use assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term.

The interest rate implicit in lease contracts is typically not readily determinable.

As a result, the

Company utilizes its incremental borrowing rates, which are the rates incurred to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

As a result, the Company

utilizes its incremental borrowing rates, which are the rates incurred to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

In accordance with the guidance in ASC 842, the fixed and in-substance fixed contract consideration must be allocated to lease and non-lease components based on their relative fair values.

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Right-of-use assets and operating lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and the estimated incremental borrowing rate upon lease modification.

The Company enters into lease agreements with terms generally ranging from 2 - 8 years.

The Company enters into lease agreements with terms generally ranging from two to eight years .

Some of the Company’s lease agreements include Company options to either extend and/or early terminate the lease, the costs of which are included in its operating lease liabilities to the extent that such options are reasonably certain of being exercised.

Leases with renewal options allow the Company to extend the lease term typically between 1 and 5 years.

Leases with renewal options allow the Company to extend the lease term typically between one and five years .

When determining the lease term, renewal options reasonably certain of being exercised are included in the lease term.

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the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

If the screen is met, the transaction is accounted for as an asset acquisition.

If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the requirements of a business.

If determined to be a business combination, the Company accounts for the transaction under the acquisition method of accounting which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree and establishes the acquisition date as the fair value measurement point.

Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations based on the fair value estimates as of the date of acquisition.

In accordance with ASC 805, Business Combinations, or ASC 805, the Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

Goodwill represents the amount of consideration paid in excess of the fair value of the identified net assets acquired as a result of the Company’s business acquisitions accounted for using the acquisition method of accounting.

Goodwill is not amortized and is subject to impairment testing at a reporting unit level on an annual basis or when a triggering event occurs that may indicate the carrying value of the goodwill is impaired.

An entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary.

Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events.

Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

The Company evaluates goodwill for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable.

For the year ended December 31, 2023, the Company determined that there was no impairment to goodwill.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets consist of in-process research and development, or IPR&D.

The fair values of IPR&D assets acquired in business combinations are capitalized.

These assets are treated as indefinite-lived intangible assets until completion or abandonment of the projects, at which time the assets are amortized over the remaining useful life or written off, as appropriate.

Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually.

However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary.

Further testing is only required if the entity determines, based on the qualitative assessment, that it is more

likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount.

Otherwise, no further impairment testing is required.

The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount.

If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

The Company considers many factors in evaluating whether the value of its intangible assets with indefinite lives may not be recoverable, including, but not limited to, expected growth rates, the cost of equity and debt capital, general economic conditions, the Company’s outlook and market performance of the Company’s industry and recent and forecasted financial performance.

The Company evaluates indefinite-lived intangible assets for impairment at least annually on October 1 and whenever facts and circumstances indicate that their carrying amounts may not be recoverable.

For the year ended December 31, 2023, the Company determined that there was no impairment to the IPR&D assets.

Series A Preferred Stock

The Company records the Series A Preferred Stock upon issuance at its fair value.

The fair value includes the original issuance price, the settlement of any related forward contract, and is less issuance costs.

The Company classifies its Series A Preferred Stock outside of stockholders’ equity as the redemption of such shares is outside the Company’s control.

The Company does not adjust the carrying value of the Series A Preferred Stock to redemption value until it is probable of becoming redeemable, which the Company did not conclude was probable as of December 31, 2023.

Series A Preferred Stock Options

The Company classifies a portion of the fair value of the vested stock options for Series A Preferred Stock equal to the estimated redemption value on the measurement date outside of stockholders’ equity, as the redemption of the shares underlying the options are outside the Company’s control.

Any fair value in excess of the estimated redemption value is recognized as additional paid-in capital.

The estimated redemption value is based on the intrinsic value of the option.

The Company does not adjust the carrying value of the stock options for Series A Preferred Stock until the underlying Series A Preferred Stock is probable of becoming redeemable.

The Company concluded the redemption was not probable of occurring as of December 31, 2023.

The Company records the stock options for Series A Preferred Stock based on the intrinsic value of the vested options.

Variable Interest Entities

The Company evaluates its variable interests in variable interest entities, or VIEs, and consolidates VIEs when the Company is the primary beneficiary.

The Company determines whether it is the primary beneficiary of a VIE based on its assessment of whether the Company possesses both (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb losses that could be significant to the VIE or the right to receive benefits that could be significant to the VIE.

The Company reevaluates the accounting for its VIEs upon the occurrence of events that could change the primary beneficiary conclusion.

Contingent Value Right Liability

The CVRs distributed by the Company pursuant to the terms of the CVR Agreement represent financial instruments that are accounted for under the fair value option election in ASC 825, Financial Instruments , or ASC 825.

Under the fair value option election, the CVRs are initially measured at the aggregate estimated fair value of the CVRs and will be subsequently remeasured at estimated fair value on a recurring basis at each reporting period date.

The estimated fair value of the CVR liability was determined using the discounted cash flow method to estimate future cash flows associated with the legacy assets, including the expected milestone and royalty payments under the Sobi License, net of deductions.

Changes in fair value of the liability are presented within change in fair value of contingent value right liability in the consolidated statements of operations and comprehensive income (loss).

The liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated probabilities of success, and risk-adjustment discount rates, which represent a Level 3 measurement within the fair value hierarchy.

Forward Contract Liabilities

The Company accounts for contracts related to the future issuance of Series A Preferred Stock as a liability because the underlying shares of Series A Preferred Stock include a redemption feature that may require the Company to settle the instrument by transferring an asset.

The forward contract liability is carried at fair value through the date the underlying Series A Preferred Stock are issued.

The fair value of the forward contract liability was initially measured based on the fair value of the Series A Preferred Stock issued in the November 2023 Private Placement (see Note 11), less the purchase price, if any.

Subsequent measurement of the fair value of the forward contract liability is based on the market price of the Company’s common stock, which represents the redemption and conversion value of the Series A Preferred Stock, less the purchase price, if any, on an as-converted basis.

The remeasurement of the forward contract liability is based on Level 2 inputs within the fair value hierarchy as it’s based on observable market data.

Changes in fair value of the liability are presented within change in fair value of forward contract liabilities in the consolidated statements of operations and comprehensive income (loss).

Recent Accounting Pronouncements

Recently Adopted

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options .

ASU 2021-04 provides guidance as to how entities should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains equity-classified after modification or exchange as an exchange of the original instrument for a new instrument.

An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date.

The Company adopted the new standard effective January 1, 2022, and there was no impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) .

ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.

The Company has adopted ASU 2020-06 as of October 1, 2022, with an effective date of January 1, 2022, using the modified retrospective method.

The adoption of ASU 2020-06 had no impact on the Company's consolidated financial statements and disclosures.

Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments .

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This ASU is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, with early adoption permitted.

The adoption of ASU 2016-13 is not expected to have an impact on the Company’s financial position or results of operations upon adoption.

The Company adopted the new standard effective January 1, 2023, using a modified retrospective transition method, and there was no impact on its consolidated financial statements or results of operations upon adoption.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), which eliminates Step 2 from the goodwill impairment test.

Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.

Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1).

This ASU is effective for annual and interim impairment tests performed in periods beginning after December 15, 2022.

Early adoption of the standard is permitted.

The Company adopted the new standard effective January 1, 2023 and there was no impact on its consolidated financial statements or results of operations upon adoption.

Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis.

This guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025.

Early adoption is permitted.

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments to improve the effectiveness of income tax disclosures.

This guidance will be effective for the annual periods beginning the year ended December 31, 2025.

Early adoption is permitted.

Upon adoption, the guidance can be applied prospectively or retrospectively.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

On November 13, 2023, the Company merged with Old Cartesian in accordance with the terms of the Merger Agreement, by and among Selecta, Sakura Merger Sub I, Inc., a wholly owned subsidiary of Selecta, or First Merger Sub, Sakura Merger Sub II, LLC, a wholly owned subsidiary of Selecta, or Second Merger Sub, and Old Cartesian.

Pursuant to the Merger Agreement, First Merger Sub merged with and into Old Cartesian, pursuant to which Old Cartesian was the surviving corporation and became a wholly owned subsidiary of Selecta, or the First Merger.

Immediately following the First Merger, Old Cartesian merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity, or the Second Merger and, together with the First Merger, the Merger.

In connection with the Second Merger, Old Cartesian changed its name to Cartesian Bio, LLC.

The Merger was intended to qualify as a tax-free reorganization for U.S.

federal income tax purposes.

As a result of the Merger, Selecta changed its corporate name to Cartesian Therapeutics, Inc.

and its common stock began trading on the Nasdaq Global Market under the new trading symbol “RNAC” beginning on November 14, 2023.

The Merger Agreement was unanimously approved by the board of directors, or the Board of Directors, of Selecta and the board of directors of Old Cartesian.

The Merger was consummated substantially concurrently with the entry into the Merger Agreement and was not subject to approval of the Company's stockholders.

Under the terms of the Merger Agreement, following the consummation of the Merger on November 13, 2023, or the Closing Date, in exchange for 100 % of the outstanding shares of capital stock of Old Cartesian immediately prior to the effective time of the First Merger, the Company agreed to issue to the stockholders of Old Cartesian (i) 6,723,639 shares of the Company’s common stock and (ii) 384,930.724 shares of Series A Preferred Stock.

The issuance of the shares of common stock and Series A Preferred Stock occurred on December 5, 2023 which was after the December 4, 2023 record date for the distribution of the CVRs (see Note 6);

as such, the Old Cartesian stockholders did not have rights as holders of common stock or holders of Series A Preferred Stock until such issuance on December 5, 2023.

In addition, all outstanding stock options to

purchase Old Cartesian common stock were assumed by the Company and converted into stock options to purchase (i) shares of the Company’s common stock or (ii) shares of the Company’s Series A Preferred Stock on terms substantially identical to those in effect prior to Merger Agreement, except for adjustments to the underlying number of shares and the exercise price based on the Merger Agreement exchange ratio.

Pursuant to the Merger Agreement, the Company agreed to hold a stockholders’ meeting to submit the following proposals to a vote of its stockholders:

(i) the approval of the conversion of shares of Series A Preferred Stock into shares of common stock, or the Conversion Proposal, and (ii) either or both of (A) the approval of an amendment to the Company’s restated certificate of incorporation, as amended, or the Charter, to increase the number of shares of common stock authorized under the Charter and (B) the approval of an amendment to the Charter to effect a reverse stock split of all outstanding shares of common stock, in either case (A) or (B) by a number of authorized shares or at a stock split ratio, as the case may be, sufficient to allow the conversion of all shares of Series A Preferred Stock issued in the Merger.

The Company concluded the acquisition resulted in the Company obtaining a controlling financial interest in a VIE in accordance with ASC 810, Consolidation .

The Company determined that Old Cartesian was considered to be a VIE as it did not have sufficient equity to finance its activities without additional subordinated financial support.

Prior to the Closing Date, the primary source of funding for Old Cartesian had been preferred stock financings.

The Company acquired all of the outstanding shares of Old Cartesian and, therefore, is the sole equity holder and primary beneficiary.

The Company has the obligation to the absorb losses and right to receive the benefits of Old Cartesian, and the power to direct the activities that most significantly affect the economic performance of Old Cartesian which the Company considers to be its development activities.

Therefore, the Company is the primary beneficiary.

Further, the Company concluded the VIE qualified as a business and accounted for the transaction as the acquisition of a business in accordance with ASC 805.

As the primary beneficiary, the Company was the acquirer in the transaction.

The Company exchanged the right to receive shares of common stock and Series A Preferred Stock for all of the outstanding equity of Old Cartesian.

The Company determined the rights to receive shares exchanged in the Merger represent a forward contract.

The fair value of the forward contracts was determined based on the fair value of shares of common stock and Series A Preferred Stock underlying the forward contracts as of the acquisition date.

The total purchase price consists of the fair value of the forward contracts in addition to a portion of the fair value of options exchanged in the transaction related to prior service.

Under the acquisition method, the total purchase price of the acquisition was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the date of the acquisition.

The total fair value of the consideration of $ 168.5 million as of the Closing Date is summarized as follows (in thousands):

Forward contract to issue common stock $ 2,713

Forward contract to issue Series A Preferred Stock 155,308

Stock options allocated to consideration paid 10,444

Total consideration $ 168,465

The Company recorded the assets acquired and liabilities assumed as of the Closing Date based on the information available at that date.

The following table presents the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of the Closing Date (in thousands):

Assets acquired:

As of November 13, 2023

Cash and cash equivalents $ 6,561

Prepaid expenses and other current assets 309

Property and equipment, net 215

Right-of-use asset, net 915

In-process research and development assets 150,600

Goodwill 48,163

Liabilities assumed

Accrued expenses and other current liabilities $ 2,530

Lease liability $ 292

Lease liability, net of current portion $ 623

Deferred tax liability $ 34,853

Net assets acquired $ 168,465

The fair value of IPR&D assets were capitalized as of the Closing Date and will be accounted for as indefinite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts.

Upon successful completion of the development efforts, the carrying value of the respective IPR&D asset will be amortized over its estimated useful life.

Until that time, the IPR&D assets will be subject to impairment testing and will not be amortized.

The goodwill recorded related to the Merger is the excess of the fair value of the consideration transferred by the acquirer over the fair value of tangible assets, identifiable intangible assets and assumed liabilities as of the Closing Date and is not deductible for tax purposes.

The goodwill balance is primarily attributable to the value of the assembled workforce and deferred tax liabilities associated with the transaction.

The following summarizes the Company’s intangible assets acquired in the Merger and their carrying value as of December 31, 2023 (in thousands):

Acquisition Date

Fair Value Impairment Carrying Value at

December 31, 2023

Descartes-08 for MG $ 93,900 $ — $ 93,900

Descartes-08 for SLE 56,700 — 56,700

Total in-process research and development assets $ 150,600 $ — $ 150,600

The fair value of the intangible assets was estimated using the income approach in which the after-tax cash flows were discounted to present value.

The cash flows are based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital.

For the period from November 13, 2023 to December 31, 2023, Old Cartesian’s revenue and net loss within the consolidated statements of operations and comprehensive (loss) income were $ 0.0 million and $ 1.6 million, respectively.

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the Merger had taken place on January 1, 2022.

The unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date (in thousands):

Year Ended December 31,

Revenue $ 26,004 $ 112,226

Net (loss) income $ ( 232,259 ) $ 29,607

The Company’s transaction costs of $ 4.9 million were expensed as incurred and included in general and administrative expense in the consolidated statements of operations and comprehensive (loss) income.

The forward contract related to the common stock was recorded as additional paid-in capital as the instrument is indexed to the Company’s common stock.

The forward contract related to the Series A Preferred Stock was recorded as a liability as the underlying Series A Preferred Stock has a redemption feature that may require the Company to settle the instrument by transferring an asset.

The forward contract was measured at fair value through the date of settlement through the issuance of the shares of Series A Preferred Stock on December 5, 2023.

Marketable Securities and Investments

The following table summarizes the marketable securities held as of December 31, 2022 and 2021 (in thousands):

No marketable securities were held as of December 31, 2023.

The following table summarizes the marketable securities held as of December 31, 2022 (in thousands):

cost Unrealized gains Unrealized losses Fair

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Total $ 28,175 $ — $ ( 11 ) $ 28,164

December 31, 2021

Corporate bonds $ 2,007 $ — $ ( 1 ) $ 2,006

Commercial paper 11,992 — — 11,992

Total $ 13,999 $ — $ ( 1 ) $ 13,998

All marketable securities held at December 31, 2022 and 2021 had maturities of less than 12 months when purchased and are classified as short-term marketable securities on the accompanying consolidated balance sheet.

During the years ended December 31, 2022 and 2021, there were no marketable securities adjusted for other than temporary declines in fair value.

The Company does not intend to sell its investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity.

As of December 31, 2022 and 2021, the Company has a $ 2.0 million investment in Cyrus pursuant to the Cyrus Agreement.

The Company’s maximum exposure to loss related to this variable interest entity is limited to the carrying value of the investment.

As of December 31, 2023 and 2022, the Company has a $ 2.0 million investment in Cyrus Biotechnology, Inc., or Cyrus, pursuant to the Company's Collaboration and License Agreement with Cyrus, or the Cyrus Agreement.

The Company’s maximum exposure to loss related to this VIE is limited to the carrying value of the investment.

See Note 16 for details.

Net Loss Per Share

The Company has reported net income for the year ended December 31, 2022 and a net loss for the years ended December 31, 2021 and 2020.

Net (Loss) Income Per Share

The Company reported a net loss for the years ended December 31, 2023 and 2021, and net income for the year ended December 31, 2022.

The Company used the treasury stock method to determine the number of dilutive shares.

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except share and per-share data):

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except share and per-share data):

Year Ended December 31,

2023 2022 2021

Net income (loss) $ 35,379 $ ( 25,687 ) $ ( 68,876 )

Net (loss) income $ ( 219,710 ) $ 35,379 $ ( 25,687 )

CVR distribution to participating securities ( 37,550 ) — —

Net (loss) income allocable to shares of common stock - basic ( 257,260 ) 35,379 ( 25,687 )

Change in fair value of warrants — ( 20,882 ) —

Adjusted net income (loss) $ 14,497 $ ( 25,687 ) $ ( 68,876 )

Net (loss) income allocable to shares of common stock - diluted $ ( 257,260 ) $ 14,497 $ ( 25,687 )

Weighted-average common shares outstanding - basic 155,109,561 144,758,555 114,328,798

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Weighted-average common shares used in per share calculations - diluted 155,109,561 145,874,889 114,328,798

Net loss per share:

Net (loss) income per share:

Basic $ ( 1.66 ) $ 0.24 $ ( 0.22 )

Diluted $ ( 1.66 ) $ 0.10 $ ( 0.22 )

The following table represents the potential dilutive common shares excluded from the computation of the diluted net income (loss) per share for all periods presented, as the effect would have been anti-dilutive:

The following table represents the potential dilutive shares of common stock excluded from the computation of the diluted net (loss) income per share for all periods presented, as the effect would have been anti-dilutive:

Year Ended December 31,

2023 2022 2021

Options, RSUs and ESPP shares 17,800,034 11,492,002 7,909,583

Warrants to purchase common stock 31,224,703 213,339 10,735,980

Series A Preferred Stock 435,120,513 — —

Forward contract to issue Series A Preferred Stock 99,140,326 — —

Common stock options, RSUs and ESPP shares 23,306,661 17,800,034 11,492,002

Series A Preferred Stock options 14,112,299 — —

Total 602,904,502 18,013,373 22,227,982

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Money market funds (included in cash equivalents) $ 41,161 $ 41,161 $ — $ —

Marketable securities:

government agency securities and treasuries 13,557 — 13,557 —

Corporate bonds 1,951 — 1,951 —

Commercial paper 12,656 — 12,656 —

Total assets $ 41,161 $ 41,161 $ — $ —

Warrant liabilities $ 6,394 $ — $ — $ 6,394

Contingent value right liability 358,600 — — 358,600

Forward contract liabilities 28,307 — 28,307 —

Total liabilities $ 393,301 $ — $ 28,307 $ 364,994

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Marketable securities:

government agency securities and treasuries 13,557 — 13,557 —

Corporate bonds 1,951 — 1,951 —

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Cash, Cash Equivalents, and Restricted Cash

As of December 31, 2022 and 2021, the money market funds were classified as cash and cash equivalents on the accompanying consolidated balance sheets as they mature within 90 days from the date of purchase.

As of December 31, 2022, the Company had restricted cash balances relating to a secured letter of credit in connection with its lease for the Company’s headquarters (see Note 8 included elsewhere in this Annual Report).

As of December 31, 2023 and 2022, money market funds were classified as cash and cash equivalents on the accompanying consolidated balance sheets as they mature within 90 days from the date of purchase.

As of December 31, 2023, the Company had restricted cash balances relating to a secured letter of credit in connection with its lease for the Company’s prior headquarters (see Note 9 included elsewhere in this Annual Report).

Short-term restricted cash is included within prepaid expenses and other current assets in the consolidated balance sheets.

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Marketable Securities

As of December 31, 2022, marketable securities classified as Level 2 within the valuation hierarchy consist of U.S.

No marketable securities were held as of December 31, 2023.

Marketable securities held as of December 31, 2022 and classified as Level 2 within the valuation hierarchy consist of U.S.

government agency securities and treasuries, corporate bonds and commercial paper.

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The Company estimates the fair value of these marketable securities by taking into consideration valuations that include market pricing based on real-time trade data for the same or similar securities, and other observable inputs.

The amortized cost of available-for-sale debt

securities is adjusted for amortization of premiums and accretion of discounts to the earliest call date for premiums or to maturity for discounts.

Loans Payable

At December 31, 2022, in light of the recent issuance of the Term A Loan under the 2020 Term Loan, the Company believes the carrying value approximates the fair value of the loan.

Common Warrants

In December 2019, the Company issued common warrants in connection with a private placement of common shares, or the 2019 Warrants.

Pursuant to the terms of the 2019 Warrants, the Company could be required to settle the common warrants in cash in the event of certain acquisitions of the Company and, as a result, the common warrants are required to be measured at fair value and reported as a liability on the balance sheet.

Pursuant to the Stipulation and Agreement of Settlement discussed in Note 17, on December 20, 2022, the Company amended the terms of the outstanding 2019 Warrants held by certain members of the Company's board of directors to remove the cash settlement provision (the Amended 2019 Warrants).

The amortized cost of available-for-sale debt securities is adjusted for amortization of premiums and accretion of discounts to the earliest call date for premiums or to maturity for discounts.

Warrants to Purchase Common Stock

In December 2019, the Company issued warrants to purchase common stock in connection with a private placement, or the 2019 Warrants.

Pursuant to the terms of the 2019 Warrants, the Company could be required to settle the 2019 Warrants in cash in the event of certain acquisitions of the Company and, as a result, the common warrants are required to be measured at fair value and reported as a liability on the balance sheet.

On December 20, 2022, the Company amended the terms of the outstanding 2019 Warrants held by certain members of its Board of Directors, or the Amended 2019 Warrants, to remove the cash settlement provision.

As a result, the Amended 2019 Warrants were remeasured at fair value on December 20, 2022 and reclassified from a liability to equity on the balance sheet.

Refer to Note 12 for further discussion on the equity-classified Amended 2019 Warrants.

In April 2022, the Company issued warrants in connection with an underwritten offering of shares of common stock and warrants to purchase shares of common stock, or the 2022 Warrants.

In April 2022, the Company issued warrants in connection with an underwritten offering, or the 2022 Warrants.

Pursuant to the terms of the 2022 Warrants, the Company could be required to settle the 2022 Warrants in cash in the event of an acquisition of the Company under certain circumstances and, as a result, the 2022 Warrants are required to be measured at fair value and reported as a liability on the balance sheet.

The Company recorded the fair value of the 2019 Warrants and the 2022 Warrants upon issuance using the Black-Scholes valuation model and is required to revalue the 2019 Warrants and the 2022 Warrants at each reporting date, with any changes in fair value recorded in the statement of operations and comprehensive income (loss).

fair value recorded in the statement of operations and comprehensive income (loss).

The valuations of the 2019 Warrants and the 2022 Warrants are classified as Level 3 of the fair value hierarchy due to the need to use assumptions in the valuations that are both significant to the fair value measurement and unobservable, including the stock price volatility and the expected life of the 2019 Warrants and the 2022 Warrants.

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The changes in the fair values of the warrants are reflected in the statement of operations and comprehensive income (loss) for the years ended December 31, 2023, 2022 and 2021.

The estimated fair values of the 2019 Warrants, the Amended 2019 Warrants on the modification date, and the 2022 Warrants were determined using the following inputs to the Black-Scholes simulation valuation:

The estimated fair values of the 2019 Warrants and the 2022 Warrants were determined using the following inputs to the Black-Scholes simulation valuation:

Estimated fair value of the underlying stock .

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The expected life of the 2019 Warrants and the 2022 Warrants is assumed to be equivalent to their remaining contractual terms which expire on December 23, 2024 and April 11, 2027, respectively.

The Company estimates stock price volatility based on the Company’s historical volatility and the historical volatility of peer companies for a period of time commensurate with the expected remaining life of the warrants.

The Company estimates stock price volatility based on the Company’s historical volatility for a period of time commensurate with the expected remaining life of the warrants.

A summary of the Black-Scholes pricing model assumptions used to record the fair value of the 2019 Warrants liability is as follows:

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Expected volatility 83.67 % 79.92 %

A summary of the Black-Scholes pricing model assumptions used to record the fair value of the Amended 2019 Warrants liability on the modification date is as follows:

At Modification

Risk-free interest rate 4.64 %

Dividend yield —

Expected life (in years) 2.01

Expected volatility 79.77 %

A summary of the Black-Scholes valuation model assumptions used to record the fair value of the 2022 Warrants liability is as follows:

December 31, April 11,

Risk-free interest rate 4.01 % 4.22 %

2 unchanged sentences

Expected volatility 84.09 % 98.05 %

Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis

The following table reflects a roll-forward of fair value for the Company’s Level 3 warrant liabilities (see Note 12), for the year ended December 31, 2023 (in thousands):

1 unchanged sentence

Fair value as of December 31, 2022

Change in fair value ( 12,746 )

Fair value as of December 31, 2023

Contingent Value Right

On December 6, 2023, as contemplated by the Merger Agreement, the Company entered into the CVR Agreement, pursuant to which each holder of common stock as of December 4, 2023 or a 2022 Warrant was distributed a CVR, issued by the Company for each share of common stock held directly or underlying a 2022 Warrant held by such holder as of December 4, 2023.

Holders of warrants other than the 2022 Warrants will be entitled to receive, upon exercise of such warrants and in accordance with the terms of the warrants, one CVR per each share of common stock underlying such warrants.

Each CVR entitles its holder to distributions of the following, pro-rated on a per-CVR basis, during the period ending on the date on which the Royalty Term (as defined in the Sobi License) ends, or the Termination Date:

• 100 % of all milestone payments, royalties and other amounts paid to the Company or its controlled affiliates, or the Company Entities, under the Sobi License or, following certain terminations of the Sobi License, any agreement a Company Entity enters into that provides for the development and commercialization of SEL-212;

• 100 % of all cash consideration and the actual liquidation value of any and all non-cash consideration of any kind that is paid to or is actually received by any Company Entity prior to the Termination Date pursuant to an agreement relating to a sale, license, transfer or other disposition of any transferable asset of the Company existing as of immediately prior to the Merger, other than those exclusively licensed under the Sobi License or which the Company Entities are required to continue to own in order to comply with the Sobi License.

The distributions in respect of the CVRs will be made on a semi-annual basis, and will be subject to a number of deductions, subject to certain exceptions or limitations, including for (i) certain taxes payable on the proceeds subject to the CVR distribution, (ii) certain out of pocket costs incurred by the Company Entities, including audit and accounting fees incurred in connection with reporting obligations relating to the CVRs and other expenses incurred in the performance of their obligations and other actions under the CVR Agreement, (iii) a fixed semi-annual amount of $ 0.75 million for general and administrative overhead, (iv) payments made and remaining obligations on lease liabilities of Selecta immediately prior to the Merger and (v) amounts paid and remaining obligations with regard to the Xork product candidate.

Each of the deductions described in (iv) and (v) will be made only if certain milestone payments under the Sobi License are made and are also subject to certain adjustments as contemplated in the CVR Agreement.

The CVRs represent financial instruments that are accounted for under the fair value option election in ASC 825, Financial Instruments .

The liability was recorded at the date of approval, November 13, 2023, as a dividend.

Changes in fair value of the CVR liability are presented in the consolidated statements of operations and comprehensive income (loss).

The significant inputs used to estimate the fair value of the CVR liability, which represented a financial instrument being accounted for under the fair value option, were as follows:

December 31, 2023 At Issuance

November 13, 2023

Estimated cash flow dates 2024 - 2038 2024 - 2038

Estimated probability of success 95.0 % 95.0 %

Risk-adjusted discount rate 13.7 % 14.4 %

The following table reflects a roll-forward of fair value for the Company's Level 3 CVR liability for the year ended December 31, 2023 (in thousands):

CVR liability

Fair value as of December 31, 2022

Issuances 340,300

Reclassification of warrant liability to equity upon modification ( 780 )

Change in fair value 18,300

Fair value as of December 31, 2023

Forward Contract Liabilities

Merger Consideration

In connection with the Merger, the Company entered into a contract for the issuance of 384,930.724 shares of Series A Preferred Stock as part of the consideration transferred.

The fair value of the forward contract at the Closing Date (defined below) was $ 155.3 million.

The non-cash settlement of this liability occurred on December 5, 2023 with the issuance of the Series A Preferred Stock for $ 261.8 million.

November 2023 Private Placement

The Company entered into a contract for the issuance of 149,330.115 shares of Series A Preferred Stock as part of the November 2023 Private Placement which was settled in multiple tranches.

The Company determined the obligation to issue

148,710.488 shares of Series A Preferred Stock to Dr.

Springer, a member of the Company’s Board of Directors, and TAS Partners LLC, an affiliate of Dr.

Springer, represented a forward contract.

The fair value of the forward contract liability on November 13, 2023 was insignificant as the fair value of the underlying Series A Preferred Stock was equal to the purchase price of the Series A Preferred Stock as agreed upon in the November 2023 Private Placement.

The non-cash settlement of a portion of the liability occurred on December 13, 2023 with the issuance of the first tranche of the Series A Preferred Stock for $ 14.8 million.

The following table presents changes in the forward contract liabilities for the periods presented (in thousands):

Forward contract liabilities

Fair value as of December 31, 2022

Issuances 155,308

Settlements ( 276,601 )

Change in fair value 149,600

Fair value as of December 31, 2023

Property and Equipment

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65 Grove Street Lease

In July 2019, the Company entered into a lease for 25,078 square feet of laboratory and office space located at 65 Grove Street, Watertown, Massachusetts, or the Headquarters Lease.

As part of the Headquarters Lease, the Company incurred $ 0.8 million in non-reimbursable construction costs.

In July 2019, the Company entered into a lease with BRE-BMR Grove LLC for 25,078 square feet of laboratory and office space located at 65 Grove Street, Watertown, Massachusetts, or the Watertown Lease.

As part of the Watertown Lease, the Company incurred $ 0.8 million in non-reimbursable construction costs.

The lease began in March 2020, when the Company took control of the office space, and the lease term is 8 years.

The discount rate of 8.9 % was determined based on the Company’s incremental borrowing rate adjusted for the lease term, including any reasonably certain renewal periods.

In connection with the Headquarters Lease, the Company secured a letter of credit from Silicon Valley Bank, or SVB, for $ 1.4 million, recognized as long-term restricted cash, as of December 31, 2021.

On September 1, 2022, the Company entered into an amendment, or the Lease Agreement Amendment, to its lease agreement with BRE-BMR Grove LLC, originally entered into on July 23, 2019, or the Lease Agreement, to expand the Company’s corporate headquarters located at 65 Grove Street, Watertown, Massachusetts by approximately 7,216 square feet.

In connection with the Watertown Lease, the Company secured a letter of credit from Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon

Valley Bridge Bank, N.A.

(as successor to Silicon Valley Bank)), or SVB, for $ 1.6 million, of which $ 0.3 million is recognized as short-term restricted cash and $ 1.3 million is recognized as long-term restricted cash, as of December 31, 2022.

On September 1, 2022, the Company entered into an amendment, or the Lease Agreement Amendment, to its lease agreement with BRE-BMR Grove LLC, originally entered into on July 23, 2019, or the Lease Agreement, to expand the Company’s laboratory and office space located at 65 Grove Street, Watertown, Massachusetts by 7,216 square feet.

The lease term began on September 1, 2022, consistent with when the Company took control of the office space and the expected lease term is 5.7 years.

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Rent payments began in November 2022, and the base rent for the first year is $ 0.1 million per month.

In connection with the Lease Agreement Amendment, the Company entered into an amendment to its Loan and Security Agreement with Oxford, as Collateral Agent and a Lender, and SVB, as a Lender, on September 20, 2022, or the Third Amendment, to provide for an increase of $ 0.2 million in the letter of credit for a total of $ 1.6 million as of December 31, 2022, which renews automatically each year.

The Company recorded the right-of-use asset and operating lease liabilities of $ 3.2 million during the year ended December 31, 2022 as control of the premises was transferred to the Company.

On October 6, 2022, the Company entered into a sublease agreement with Nexo Therapeutics, Inc., or the Tenant, to sublease approximately 7,216 square feet of space currently rented by the Company at the corporate headquarters located at 65 Grove Street, Watertown, Massachusetts.

The sublease commenced on October 24, 2022, when the Company, the Tenant and BRE-BMR Grove LLC, executed the Consent to Sublease.

On October 6, 2022, the Company entered into a sublease agreement to sublease 7,216 square feet of space currently rented by the Company at 65 Grove Street, Watertown, Massachusetts.

The sublease commenced on October 24, 2022, when the Company, the sublessee and BRE-BMR Grove LLC, executed a Consent to Sublease.

The term of the sublease expires on March 31, 2024 with no option to extend the sublease term.

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The discount rate of 11.9 % was determined based on the Company’s incremental borrowing rate adjusted for the lease term including any reasonably certain renewal periods as of October 24, 2022, resulting in a decrease of less than $ 0.1 million to both the right-of-use asset and lease liabilities.

In May 2023, the Company received notice from BRE-BMR Grove LLC that the requirements to reduce the amount of the letter of credit for the Watertown Lease had been met.

In connection therewith, in June 2023, the Company secured a letter of credit from JPMorgan Chase Bank, N.A.

for $ 1.4 million, which is recognized as long-term restricted cash as of December 31, 2023, and renews automatically each year.

The $ 1.6 million letter of credit with SVB was released from restriction and returned to the Company on July 17, 2023, and therefore was reclassified into cash and cash equivalents in the consolidated balance sheets.

On October 31, 2023, in connection with entering into Amendment No.

1 to the License and Development Agreement with Sobi as described in Note 14, the Company entered into a sublease agreement with Sobi to sublease approximately 5,600 square feet of space currently rented by the Company at 65 Grove Street, Watertown, Massachusetts for which Sobi paid $ 1.0 million upfront rental payment.

The sublease commenced on November 6, 2023, when the Company, Sobi, and BRE-BMR Grove LLC, executed a Consent to Sublease.

The term of the sublease expires on November 5, 2024 with no option to extend the sublease term.

As of December 31, 2023, deferred rent of $ 0.8 million is included within accrued expenses and other current liabilities in the consolidated balance sheets.

During the year ended December 31, 2023, the Company determined that the right-of-use asset related to the operating lease for approximately 7,216 square feet at 65 Grove Street was partially impaired as of November 30, 2023.

As a result, the Company recognized a $ 0.7 million right-of-use asset impairment charge with $ 0.6 million and $ 0.1 million recognized in research and development and general and administrative operating expense categories, respectively, on its consolidated statements of operations and comprehensive income (loss) during the year ended December 31, 2023.

704 Quince Orchard Road Leases

In connection with the Merger, the Company acquired two operating leases for office and laboratory space in Gaithersburg, Maryland.

The leases expire in January 2027 and do not contain any renewal rights.

The discount rate of 11.5 % was determined based on the Company’s incremental borrowing rate adjusted for the lease term.

Moscow, Russia Lease

The Company has a month-to-month facility agreement for its Moscow, Russia office.

The Company has a month-to-month facility agreement for Selecta (RUS)'s Moscow, Russia office.

Rent expense is recognized as incurred.

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The maturity of the Company’s operating lease liabilities as of December 31, 2023 were as follows (in thousands):

Thereafter 946

Total future minimum lease payments 13,452

Less imputed interest 3,401

Imputed interest 2,497

Total operating lease liabilities $ 10,955

2 unchanged sentences

$ 2,696 $ 2,048

Other than the initial recording of the right-of-use asset and lease liability for the Headquarters Lease in 2020 and 2022, which were non-cash, the changes in the Company’s right-of-use asset and lease liability for the years ended December 31, 2022 and 2021 are reflected in the non-cash lease expense and accrued expenses and other liabilities, respectively, in the consolidated statements of cash flows.

Other than the initial recording and modification of the right-of-use asset and lease liability for the Watertown Lease during the year ended December 31, 2022 and the impairment on the right-of-use asset for the Watertown Lease and the assumption of the right-of-use assets and lease liabilities in connection with the Merger during the year ended December 31, 2023, which were non-cash, the changes in the Company’s right-of-use asset and lease liability for the years ended December 31, 2023 and 2022 are reflected in the non-cash lease expense and accrued expenses and other liabilities, respectively, in the consolidated statements of cash flows.

The following summarizes additional information related to operating leases:

2 unchanged sentences

2020 Term Loan

On August 31, 2020, the Company entered into a term loan of up to $ 35.0 million, or the 2020 Term Loan, consisting of term loans in an aggregate amount of $ 25.0 million, or the Term A Loan, and term loans in an aggregate amount of $ 10.0 million, or the Term B Loan, governed by a loan and security agreement, or the Loan Agreement, between the Company and Oxford Finance LLC, or Oxford, as Collateral Agent and a Lender, and SVB, as a Lender.

The Term A Loan was funded in full on August 31, 2020, or the Funding Date.

The second draw period expired on September 30, 2021 and the Term B Loan is no longer available to be drawn by the Company.

On March 21, 2022, the Company entered into a Second Amendment to its 2020 Term Loan.

The Second Amendment extended the date on which amortization payments in respect of the 2020 Term Loan will commence to April 1, 2023.

Thereafter, amortization payments will be paid monthly in equal installments of principal and interest to fully amortize the outstanding principal over the remaining term of the 2020 Term Loan, subject to recalculation upon a change in the prime rate.

The Second Amendment was determined to be a loan modification, and the $ 0.1 million fee was recorded as an addition to the debt discount on the effective date.

The 2020 Term Loan will mature on August 1, 2025.

Each advance under the Term Loan accrues interest at a floating per annum rate equal to the greater of (a) 7.90 %, and (b) the lesser of (x) the sum of (i) the prime rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue, and (ii) 4.65 % and (y) 10.00 %.

The Term Loan provides for interest-only payments on a monthly basis until April 1, 2023.

Thereafter, amortization payments will be payable monthly in equal installments of principal and interest to fully amortize the outstanding principal over the remaining term of the loan, subject to recalculation upon a change in the prime rate.

The Company may prepay the Term Loan in full but not in part provided that the Company (i) provides ten days’ prior written notice to Collateral Agent, (ii) pays on the date of such prepayment (A) all outstanding principal plus accrued and unpaid interest, and (B) a prepayment fee of between 3.0 % and 1.0 % of the aggregate original principal amount advanced by the lender depending on the timing of the prepayment.

Amounts outstanding during an event of default are payable upon SVB’s demand and shall accrue interest at an additional rate of 5.0 % per annum of the past due amount outstanding.

At the end of the loan term (whether at maturity, by prepayment in full or otherwise), the Company shall make a final payment to the lender in the amount of 9.0 % of the aggregate original principal amount advanced by the lender.

The final payment fee totaling $ 2.3 million is recorded as a loan discount.

The Term Loan is secured by a lien on substantially all of the assets of the Company, other than intellectual property, provided that such lien on substantially all assets includes any rights to payments and proceeds from the sale, licensing or disposition of intellectual property.

The Company has also granted the Collateral Agent a negative pledge with respect to its intellectual property.

The Loan Agreement contains customary covenants and representations, including but not limited to financial reporting obligations and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries.

The Loan Agreement also contains other customary provisions, such as expense reimbursement, non-disclosure obligations as well as indemnification rights for the benefit of the Collateral Agent.

The events of default under the Loan Agreement include, but are not limited to, the Company’s failure to make any payments of principal or interest under the Loan Agreement or other transaction documents, the Company’s breach or default in the performance of any covenant under the Loan Agreement or other transaction documents, the occurrence of a material adverse change, the Company making a false or misleading representation or warranty in any material respect under the Loan Agreement, the Company’s insolvency or bankruptcy, any attachment or judgment on the Company’s assets of at least $ 0.5 million, or the occurrence of any default under any agreement or obligation of the Company involving indebtedness in excess of $ 0.5 million.

If an event of default occurs, the Collateral Agent is entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement.

The Company assessed all terms and features of the 2020 Term Loan to identify any potential embedded features that would require bifurcation.

As part of this analysis, the Company assessed the economic characteristics and risks of the 2020 Term Loan, including any put, call, and contingent features.

The Company determined that the interest rate collar and prepayment call option did not require bifurcation;

whereas the contingent put option and default (contingent) interest rate feature met bifurcation criteria resulting in immaterial amounts.

On August 31, 2020, in connection with the 2020 Term A Loan, the Company issued warrants to the Lenders to purchase an aggregate of 196,850 shares of its common stock at an exercise price equal to $ 2.54 per share.

In accordance with ASC 815-40, these warrants are classified as permanent equity in the accompanying consolidated balance sheets and will expire ten years from the date of issuance.

The initial grant date fair value of the warrants was $ 0.4 million as determined by the Black-Scholes valuation model and recorded to stockholders' equity, with the SVB portion allocated to the reacquisition price of the 2017 Term Loan and the Oxford fair value portion as a loan discount to the Term A Loan.

On the Funding Date, the Company entered into a payoff letter with SVB, pursuant to which the Company utilized $ 13.7 million of the 2020 Term Loan to pay off all outstanding obligations under the previous term loan, consisting of the principal payment, final prepayment and accrued interest.

During the year ended December 31, 2020, the Company recognized a loss on extinguishment of debt in the amount of $ 0.5 million determined as the difference between the reacquisition price and carrying value at August 31, 2020.

As of December 31, 2022 and 2021, the outstanding principal balance under the 2020 Term Loan was $ 25.0 million.

Total 2020 Term Loan and unamortized debt discount balances as of December 31, 2022 are as follows (in thousands):

Face value $ 25,000

Venture debt termination fee 2,250

Debt discount ( 988 )

Current portion of loan payable ( 8,476 )

Loan payable, net of current portion $ 17,786

Future minimum principal payments on the 2020 Term Loan as of December 31, 2022 are as follows (in thousands):

Total minimum principal payments $ 25,000

During the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 3.0 million, $ 2.8 million and $ 1.6 million respectively of interest expense related to the 2020 Term Loan and the previous term loan.

On August 31, 2020, the Company entered into a Loan and Security Agreement with Oxford Finance LLC, or Oxford, and Silicon Valley Bank, or the Loan and Security Agreement, and such facility, the 2020 Term Loan.

On March 10, 2023, Silicon Valley Bank was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation, or the FDIC, was appointed as receiver.

On March 13, 2023, the FDIC announced that all of Silicon Valley Bank’s deposits and substantially all of its assets had been transferred to a newly created, full-service, FDIC-operated bridge bank, Silicon Valley Bridge Bank, N.A., or SVBB.

SVBB assumed all loans that were previously held by Silicon Valley Bank.

On March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVBB’s customer deposits and certain other liabilities and acquired substantially all of SVBB’s loans and certain other assets from the FDIC, including the 2020 Term Loan.

On September 11, 2023, the Company entered into a payoff letter with Oxford and SVB, pursuant to which the Company paid all outstanding amounts under the 2020 Term Loan, together with accrued interest and a prepayment penalty, resulting in the full extinguishment of the 2020 Term Loan.

The total payoff amount was $ 22.3 million, consisting of the remaining

principal amount due of $ 19.8 million, the final payment fee of $ 2.3 million, the prepayment penalty of $ 0.2 million, and less than $ 0.1 million of accrued interest.

During the year ended December 31, 2023, the Company recorded a loss of $ 0.7 million on the extinguishment of the 2020 Term Loan, consisting of the prepayment penalty of $ 0.2 million and the write-off of $ 0.5 million of unamortized debt issuance costs and venture debt termination fee, which was included within interest expense in the consolidated statements of operations and comprehensive income (loss).

As of December 31, 2023, the Company had no outstanding borrowings, and as of December 31, 2022, the outstanding principal balance under the 2020 Term Loan was $ 25.0 million.

During the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 2.1 million, $ 3.0 million and $ 2.8 million respectively of interest expense related to the 2020 Term Loan.

Series A Preferred Stock

The Certificate of Designation was filed on November 13, 2023, which provided for the designation of shares of the Series A Preferred Stock and authorized the issuance of 548,375 shares of Series A Preferred Stock.

Additionally on November 13, 2023, the Company entered into the Securities Purchase Agreement with (i) Dr.

Springer, a member of the Company’s Board of Directors;

(ii) TAS Partners LLC, an affiliate of Dr.

Springer, and (iii) Seven One Eight Three Four Irrevocable Trust, a trust associated with Dr.

Murat Kalayoglu, a co-founder and the former chief executive officer of Old Cartesian, who joined the Company’s Board of Directors effective immediately after the effective time of the Merger, or the Investors.

Pursuant to the Securities Purchase Agreement, the Company agreed to issue and sell an aggregate of 149,330.115 shares of Series A Preferred Stock for an aggregate purchase price of $ 60.25 million in the November 2023 Private Placement.

In the November 2023 Private Placement Dr.

Springer agreed to settle his purchases in three tranches of shares of Series A Preferred Stock, the first for a purchase price of $ 10.0 million and each thereafter for a purchase price of approximately $ 20.0 million, with the three tranches settling 30 , 60 , and 90 days, respectively, following the Closing Date.

TAS Partners LLC agreed to settle its purchase for approximately $ 10.0 million within 30 days following the Closing Date.

The first, second and third tranches were settled on December 13, 2023, January 12, 2024 and February 11, 2024, respectively, under which (i) 24,785.081 shares of Series A Preferred Stock were issued to each of TAS Partners LLC and Dr.

Springer in the first tranche, (ii) 49,570.163 shares of Series A Preferred Stock were issued to Dr.

Springer in the second tranche, and (iii) 49,570.163 shares of Series A Preferred Stock were issued to Dr.

Springer in the third tranche.

On November 15, 2023, the Company issued 619.627 shares of Series A Preferred Stock to Seven One Eight Three Four Irrevocable Trust for $ 0.25 million.

The Company determined the obligation to issue 148,710.488 shares of Series A Preferred Stock to Dr.

Springer and TAS Partners LLC represented a forward contract and was accounted for as a liability with changes in fair value recorded in earnings.

A portion of the liability was settled with the initial issuance of 49,570.162 shares of Series A Preferred Stock on December 13, 2023 (see Note 6).

On December 5, 2023, the Company issued 384,930.724 shares of Series A Preferred Stock as part of its consideration transferred in connection with the Merger which settled the related forward contract liability (see Note 6).

As of December 31, 2023, the Company had 435,120.513 shares of Series A Preferred Stock issued and outstanding.

In accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity the Series A Preferred Stock is classified outside of stockholders’ equity because the shares of Series A Preferred Stock contain redemption features that are not solely within the control of the Company.

The Series A Preferred Stock is not currently redeemable, nor is it probable that the instrument will become redeemable, as it is only redeemable upon the occurrence of a contingent event.

Accordingly, no accretion has been recognized for the Series A Preferred Stock and it will not be accreted until it is probable that the shares of Series A Preferred Stock will become redeemable.

The Series A Preferred Stock had the following rights and preferences as of December 31, 2023:

Prior to the stockholder approval of the Conversion Proposal, the Series A Preferred Shares are not convertible.

Following the stockholder approval of the Conversion Proposal, each share of Series A Preferred Stock will automatically convert into 1,000 shares of common stock, subject to certain limitations, including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be established by the holder between 0 % and 19.9 %) of the total number of shares of common stock issued and outstanding immediately after giving effect to such

provided, however, that such beneficial ownership limitation does not apply to Dr.

Springer, TAS Partners LLC, or any of their respective affiliates.

Each share of Series A Preferred Stock outstanding that is not otherwise automatically converted into common stock as a result of the beneficial ownership limitation shall be convertible at any time at the option of the holder following stockholder approval of the Conversion Proposal, only to the extent the beneficial ownership limitation does not apply to the shares of Series A Preferred Stock to be converted.

Each share of Series A Preferred Stock will be redeemable at the option of the holder at any time following the date that is 18 months after the initial issuance date of the Series A Preferred Stock, other than any shares of Series A Preferred Stock that would not be convertible into shares of common stock as a result of the beneficial ownership limitation referred to above.

The amount payable upon redemption will be equal to the average closing sale price of the common stock listed over the ten consecutive trading days ending on, and including, the day immediately prior to the redemption date multiplied by the number of shares of common stock the Series A Preferred Stock would be convertible into.

Holders of Series A Preferred Stock are entitled to receive dividends on shares of Series A Preferred Stock on an as-converted basis equal to the dividends paid on shares of the common stock;

provided, however, that holders of Series A Preferred Stock (or any shares of common stock into which the Series A Preferred Stock are convertible) are not entitled to any CVRs or any amounts paid under the CVR Agreement.

Except as otherwise required by law, the Series A Preferred Stock does not have voting rights.

However, as long as any shares of Series A Preferred Stock are outstanding, the Company will not, without the affirmative vote of the holders of a majority of the then-outstanding shares of the Series A Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend the Certificate of Designation, (c) amend the Charter or other organizational documents in any manner that adversely affects any rights of the holders of Series A Preferred Stock, (d) issue further shares of Series A Preferred Stock (other than in connection with the exercise of the stock options to purchase Series A Preferred Stock) or increase or decrease (other than by conversion) the number of authorized shares of Series A Preferred Stock, (e) prior to the stockholder approval of the Conversion Proposal or at any time while at least 30 % of the originally issued Series A Preferred Stock remains issued and outstanding, consummate either (A) a Fundamental Transaction (as defined in the Certificate of Designation) or (B) any merger or consolidation of the Company or other business combination in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the capital stock of the Company immediately after such transaction, (f) amend or fail to comply with, in any manner that would be reasonably likely to prevent, impede or materially delay the conversion (or the stockholder approval thereof), or terminate, any of the stockholder support agreements entered into in connection with the Merger, or the Support Agreements, or agree to any transfer, sale or disposition of such shares subject to the Support Agreements (except for such transfers, sales or dispositions with respect to which the approval of the Company is not required pursuant to the applicable Support Agreement) or (g) enter into any agreement with respect to any of the foregoing.

The holders of Series A Preferred Stock shall rank on parity with the common stockholders as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntarily or involuntarily.

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary each holder of Series A Preferred Stock shall be entitled to receive out the assets of the Company equal to of the same amount that a holder of common stock would receive if the Series A Preferred Stock were fully converted, which shall be paid pari passu with holders of common stock, plus an amount equal to any dividends declared but unpaid.

If the assets available for distribution are not sufficient to pay the holders of the Series A Preferred Stock pursuant to the preceding sentence, the assets will be distributed ratably to the holders of the Series A Preferred Stock and common stock.

Reserved Shares

As of December 31, 2023, the Company has authorized shares of Series A Preferred Stock for future issuance as follows:

December 31, 2023

Shares reserved for issuance in November 2023 Private Placement

Outstanding Series A Preferred Stock options 14,112.299

Total 113,252.625

Equity Financings

On December 5, 2023, the Company issued 6,723,639 shares of common stock as part of its consideration transferred in connection with the Merger which settled the related equity-classified forward contract (see Note 3).

Underwritten Offering

On April 6, 2022, the Company entered into an underwriting agreement with SVB Securities LLC, as representative of the several underwriters named therein, relating to an underwritten offering of 27,428,572 shares, or the Shares, of the Company’s common stock and warrants to purchase up to 20,571,429 shares of common stock, or the 2022 Warrants.

The offering of the Shares and the 2022 Warrants is referred to as the 2022 Offering.

On April 6, 2022, the Company entered into an underwriting agreement with SVB Securities LLC (now known as Leerink Partners LLC), as representative of the several underwriters named therein, relating to an underwritten offering of 27,428,572 shares of the Company’s common stock and 2022 Warrants to purchase up to 20,571,429 shares of common stock.

The offering of such shares and the 2022 Warrants is referred to as the 2022 Offering.

Each share and accompanying 2022 Warrant to purchase 0.75 shares of common stock was sold at a combined offering price of $ 1.41 .

8 unchanged sentences

2020 Sales Agreement

On August 6, 2020, the Company filed a universal shelf registration statement on Form S-3 (File No.

333-241692) with the Securities and Exchange Commission, or the SEC, to sell an aggregate amount of up to $ 200.0 million of certain of its securities.

The shelf registration statement was declared effective by the SEC on August 14, 2020.

Concurrent with the filing of the shelf registration statement, the Company entered into a sales agreement, or the 2020 Sales Agreement with Jefferies LLC, as sales agent, pursuant to which the Company was permitted, from time to time, to issue and sell common stock with an aggregate value of up to $ 50.0 million in an “at the market offering.” On October 8, 2021, the Company delivered notice to Jefferies LLC that the Company was terminating the 2020 Sales Agreement, with effect as of October 19, 2021.

On August 6, 2020, the Company entered into a sales agreement, or the 2020 Sales Agreement with Jefferies LLC, as sales agent, pursuant to which the Company was permitted, from time to time, to issue and sell common stock with an aggregate value of up to $ 50.0 million in an “at the market offering.” On October 8, 2021, the Company delivered notice to Jefferies LLC that the Company was terminating the 2020 Sales Agreement, with effect as of October 19, 2021.

2021 Sales Agreement

On October 25, 2021, the Company entered into a Sales Agreement, or the 2021 Sales Agreement, with SVB Leerink LLC to sell shares of the Company’s common stock, from time to time, through an “at the market” equity offering program under which SVB Leerink will act as sales agent.

The shares of common stock sold pursuant to the 2021 Sales Agreement will be issued pursuant to such shelf registration statement on Form S-3 and related prospectus supplement, filed on October 25, 2021 with the SEC, for aggregate gross sales proceeds of up to $ 75.0 million.

On October 25, 2021, the Company entered into a Sales Agreement, or the 2021 Sales Agreement, with Leerink Partners LLC (then known as SVB Leerink LLC), or Leerink Partners, pursuant to which the Company may sell shares of the Company’s common stock, from time to time, through an “at the market” equity offering program under which Leerink Partners will act as sales agent.

The shares of common stock sold pursuant to the 2021 Sales Agreement, if any, would be issued and sold pursuant to a registration statement to be filed by the Company with the SEC, for aggregate remaining gross sales proceeds of up to $ 51.0 million.

During the year ended December 31, 2023, the Company sold no shares of its common stock pursuant to the 2021 Sales Agreement.

During the year ended December 31, 2022, the Company sold 774,544 shares of its common stock pursuant to the 2021 Sales Agreement for aggregate net proceeds of $ 2.1 million, after deducting commissions and other transaction costs.

the year ended December 31, 2021, the Company sold 13,767,511 shares of its common stock pursuant to the 2021 and 2020 Sales Agreements for aggregate net proceeds of $ 51.9 million, after deducting commissions and other transaction costs.

June 2020 Sobi Stock Purchase

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See Note 14 for details.

Also on June 11, 2020, the Company entered into a registration rights agreement (as amended by that certain letter agreement, dated as of November 4, 2020, the “Sobi Registration Rights Agreement”) with Sobi, pursuant to which the Company agreed to prepare and file a registration statement with respect to the resale of the shares of common stock acquired in the Sobi Private Placement.

The Company will be required to file this resale registration statement within 30 days following receipt by the Company of a written request from Sobi to file such resale registration statement, and to have the registration statement declared effective within ten (10) Business Days after the SEC informs the Company that no review of such resale registration statement will be made or that the SEC has no further comments on such resale registration statement.

Also on June 11, 2020, the Company entered into a registration rights agreement, as amended by that certain letter agreement, dated as of November 4, 2020, or the Sobi Registration Rights Agreement, with Sobi, pursuant to which the Company agreed to prepare and file a registration statement with respect to the resale of the shares of common stock acquired in the Sobi Private Placement.

statement declared effective within ten business days after the SEC informs the Company that no review of such resale registration statement will be made or that the SEC has no further comments on such resale registration statement.

December 2019 Financing

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The remaining 2019 Warrants liability and the 2022 Warrants liability were revalued as of December 31, 2023 at $ 6.4 million.

During the years ended December 31, 2022, 2021 and 2020, the Company recorded a decrease of $ 20.9 million and an increase of $ 2.3 million and $ 10.4 million, respectively, in the fair value of the warrants in the consolidated statements of operations and comprehensive income (loss).

During the years ended December 31, 2023, 2022 and 2021, the Company recorded a decrease of $ 12.7 million and $ 20.9 million and an increase of $ 2.3 million, respectively, in the fair value of the warrants in the consolidated statements of operations and comprehensive income (loss).

June 2017 Financing

In June 2017, the Company entered into a securities purchase agreement, or the Institutional Purchase Agreement, with a select group of institutional investors, or the Institutional Investors and a securities purchase agreement with Timothy A.

In June 2017, the Company entered into a securities purchase agreement, or the Institutional Purchase Agreement, with certain institutional investors and a securities purchase agreement with Timothy A.

Springer, Ph.D., a member of the Board of Directors, or the Springer Purchase Agreement, for a private placement of the Company’s securities, or the 2017 PIPE.

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Springer an aggregate of 338,791 shares of common stock at a purchase price equal to $ 17.71 per share, which was equal to the most recent consolidated closing bid price on the Nasdaq Stock Market on June 23, 2017, and warrants to purchase up to 79,130 shares of common stock, or the Warrant Shares, exercisable at $ 17.71 per Warrant Share, and with a term of five years .

The equity classified warrants expired in 2022.

The equity-classified warrants expired during the year ended December 31, 2022.

The following is a summary of warrant activity for the years ended December 31, 2023 and 2022:

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Outstanding at December 31, 2021 292,469 10,443,511 10,735,980 $ 1.62

Exercises — ( 1,642,036 ) ( 1,642,036 ) 1.46

Outstanding at December 31, 2021 292,469 10,443,511 10,735,980 $ 1.62

Issuance — 20,571,429 20,571,429 1.55

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Outstanding at December 31, 2022 2,236,326 28,991,953 31,228,279 $ 1.53

On June 17, 2022, at the 2022 Annual Meeting of Stockholders, the Company’s stockholders approved an amendment to the Company’s Restated Certificate of Incorporation, or the Charter, to increase the number of authorized shares of common stock, par value $ 0.0001 per share, from 200,000,000 to 350,000,000 shares.

On June 21, 2022, the Company filed a Certificate of Amendment to the Charter with the Secretary of State of the State of Delaware, which became effective upon filing.

Canceled ( 3,576 ) — ( 3,576 ) 16.77

Outstanding at December 31, 2023 2,232,750 28,991,953 31,224,703 $ 1.53

As of December 31, 2023, the Company had 350,000,000 shares of common stock authorized for issuance, $ 0.0001 par value per share, with 161,927,821 shares issued and outstanding.

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The common stock has the following characteristics:

The common stockholders are entitled to one vote for each share of common stock held with respect to all matters voted on by the stockholders of the Company.

The common stockholders are entitled to receive dividends, if and when declared by the Board of Directors.

Through December 31, 2022, no dividends have been declared or paid on common stock.

Upon liquidation of the Company, the common stockholders are entitled to receive all assets of the Company available for distribution to such stockholders.

Common stockholders are entitled to one vote for each share of common stock held with respect to all matters voted on by the stockholders of the Company.

Common stockholders are entitled to receive dividends, if and when declared by the Board of Directors.

Through December 31, 2023, no cash dividends have been declared or paid on common stock.

Upon liquidation of the Company, common stockholders are entitled to receive all assets of the Company available for distribution to such stockholders.

Reserved Shares

The Company has authorized shares of common stock for future issuance as follows:

December 31, 2022 December 31, 2021

December 31, 2023

Exercise of warrants 31,224,703

Shares available for future stock incentive awards 35,836,268

Unvested restricted stock units 1,705,558 394,450

Outstanding common stock options 23,306,661

Total 90,367,632

As described in Note 11, prior to the stockholder approval of the Conversion Proposal, the Series A Preferred Shares are not convertible.

Following the stockholder approval of the Conversion Proposal, each share of Series A Preferred Stock will automatically convert into 1,000 shares of common stock.

Stock Incentive Plans

The Company maintains the 2008 Stock Incentive Plan, or the 2008 Plan, for employees, consultants, advisors, and directors.

The Company maintained the 2008 Stock Incentive Plan, or the 2008 Plan, for employees, consultants, advisors, and directors.

The 2008 Plan provided for the granting of incentive and non-qualified stock option and restricted stock awards as determined by the Board.

In connection with the Merger, all outstanding awards issued under the 2008 Plan were cancelled, and the Board formally terminated the 2008 Plan.

In June 2016, the Company’s stockholders approved the 2016 Incentive Award Plan, or the 2016 Plan, which authorized 1,210,256 shares of common stock for future issuance under the 2016 Plan and the Company ceased granting awards under the 2008 Plan.

Upon the effective date of the 2016 Plan, awards issued under the 2008 Plan remain subject to the terms of the 2008

Awards granted under the 2008 Plan that expire, lapse or terminate become available under the 2016 Plan as shares available for future grants.

Upon the effective date of the 2016 Plan, awards issued under the 2008 Plan remained subject to the terms of the 2008 Plan.

Awards granted under the 2008 Plan that expired, lapsed or terminated became available under the 2016 Plan as shares available for future grants.

Additionally, pursuant to the terms of the 2016 Plan, the Board is authorized to grant awards with respect to common stock, and may delegate to a committee of one or more members of the Board or executive officers of the Company the authority to grant options and restricted stock units.

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In September 2018, the Company’s 2018 Employment Inducement Incentive Award Plan, or the 2018 Inducement Incentive Award Plan was adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules, which authorized 1,175,000 shares of its common stock for issuance.

In March 2019, the Board approved the amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 2,000,000 shares of the Company’s common stock for issuance thereunder.

In March 2019, the Board approved an amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 2,000,000 shares of the Company’s common stock for issuance thereunder.

In December 2023, the Board approved an amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 1,825,000 shares of the Company’s common stock for issuance thereunder.

As of December 31, 2023, there are 4,500,858 shares available for future grant under the 2018 Inducement Incentive Award Plan.

In accordance with the Merger Agreement, the Company assumed Old Cartesian’s 2016 Stock Incentive Plan, or the Old Cartesian Plan.

The Old Cartesian Plan permits the granting of options or restricted stock to employees, officers, directors, consultants and advisors to the Company.

The unvested common stock options and Series A Preferred Stock options assumed by the Company in connection with the Merger generally vest over a four-year period.

Additionally, the stock options granted

have a contractual term of ten years and only full shares can be exercised as per the individual award agreements.

As of December 31, 2023, there are 3,848,809 shares available for future grant under the Old Cartesian Plan.

In connection with the Merger, the outstanding stock options to purchase Old Cartesian common stock were converted into stock options to purchase 23,306,661 shares of common stock and 14,112.299 shares of Series A Preferred Stock of the Company.

These replacement awards were revalued at their acquisition-date fair value and then attributed to pre and post-combination service.

This resulted in $ 2.6 million attributed to post-combination service to be recognized as stock-based compensation expense over the remaining terms of the replacement awards, of which $ 0.2 million was recognized as research and development expense in the consolidated statements of operations and comprehensive (loss) income during the year ended December 31, 2023.

Settlement of Equity Compensation Awards

Upon consummation of the First Merger, the equity compensation awards of the Company outstanding as of the date of the Merger were settled as follows:

(i) each unvested option to acquire shares of common stock and each unvested restricted stock unit award with respect to shares of common stock was accelerated and vested in full at the effective time of the First Merger;

(ii) each option to acquire shares of common stock was canceled and in exchange therefore, former holders became entitled to receive an amount in cash equal to the product of (A) the total number of shares of common stock subject to the unexercised portion the stock option (determined after giving effect to the accelerated vesting) multiplied by (B) the excess, if any, of $ 2.06 , or the Cash-out Amount, over the applicable exercise price per share of common stock under such stock option;

and (iii) each restricted stock unit award with respect to shares of common stock was cancelled and the former holder of such canceled restricted stock unit became entitled, in exchange therefor, to receive an amount in cash equal to the product of (A) the total number of shares of common stock deliverable under such restricted stock unit (determined after giving effect to the accelerated vesting) multiplied by (B) the Cash-out Amount.

Stock options with an exercise price in excess of the Cash-out Amount received no cash payment.

The modification to accelerate the vesting of all awards upon the Merger resulted in full recognition of unrecognized compensation of $ 13.1 million, of which $ 5.9 million and $ 7.2 million was classified as research and development expense and general and administrative expense, respectively, in the consolidated statements of operations and comprehensive (loss) income.

In addition, with the exception of any options with an exercise price greater than $ 2.06 per share, all awards were settled in cash for an amount equal to $ 2.06 less any exercise price associated with the awards.

The total cash payment made to the holders of stock options and restricted stock units was $ 9.4 million.

The fair value of the awards prior to the settlement was recorded to additional paid-in capital in an amount of $ 6.2 million and the amount in excess of fair value was recognized as additional stock-based compensation expense in an amount of $ 3.2 million, of which $ 1.5 million and $ 1.7 million was classified as research and development expense and general and administrative expense, respectively, in the consolidated statements of operations and comprehensive (loss) income.

Stock-Based Compensation Expense

Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive income (loss) was as follows (in thousands):

Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive income (loss), including $ 1.5 million recognized as stock-based compensation expense upon the achievement of a technical milestone by Ginkgo Bioworks Holdings, Inc., or Ginkgo, during the year ended December 31, 2023 and $ 1.0 million recognized as stock-based compensation expense upon the issuance of common stock to Ginkgo during the year ended December 31, 2022 as described in Note 16, was as follows (in thousands):

Year Ended December 31,

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Stock Options

The fair value of the stock options assumed in connection with the Merger was calculated using a Black-Scholes option pricing model based on the following weighted-average assumptions:

Common Stock Series A Preferred Stock

Risk-free interest rate 4.83 % 4.92 %

Dividend yield — —

Expected term 3.59 3.29

Expected volatility 83.77 % 83.87 %

Weighted-average fair value of common stock or Series A Preferred Stock, as applicable $ 0.40 $ 403.47

The estimated grant date fair values of employee stock option awards granted under the 2016 Plan and the 2018 Inducement Incentive Award Plan were calculated using the Black-Scholes option pricing model, based on the following weighted-average assumptions:

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The Company utilizes this method due to lack of historical exercise data and the plain nature of its stock-based awards.

Expected volatilities are based on the Company’s historical volatility.

The weighted average grant date fair value of stock options granted to employees during the years ended December 31, 2023, 2022 and 2021 was $ 0.90 , $ 1.99 , and $ 2.73 respectively.

As of December 31, 2022, total unrecognized compensation expense related to unvested employee stock options was $ 14.8 million, which is expected to be recognized over a weighted average period of 2.6 years.

The following table summarizes the stock option activity under the 2008 Plan, the 2016 Plan, and the 2018 Inducement Incentive Award Plan:

As of December 31, 2023, total unrecognized compensation expense related to unvested common stock options and Series A Preferred Stock options was $ 1.4 million and $ 1.0 million, respectively, which is expected to be recognized over a weighted average period of 2.4 years and 2.5 years, respectively.

The following table summarizes the stock option activity under the 2008 Plan, the 2016 Plan, the 2018 Inducement Incentive Award Plan, and Old Cartesian Plan for options for common stock:

Weighted-average

remaining Aggregate

Number of Weighted-average contractual term intrinsic value

Number of remaining Aggregate

Common Stock Weighted-average contractual term intrinsic value

options exercise price ($) (in years) (in thousands)

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Granted 5,477,200 $ 1.15

Assumed in connection with Merger 23,306,661 $ 0.10

Exercised — $ —

Forfeited ( 2,215,020 ) $ 2.68

Cancelled/settled in connection with the Merger ( 18,840,592 ) $ 2.86

Outstanding at December 31, 2023 23,306,661 $ 0.10 6.50 $ 13,760

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Forfeited — $ —

Cancelled/settled in connection with the Merger ( 266,239 ) $ 8.05

Outstanding at December 31, 2023 — $ — — $ —

The following table summarizes the stock option activity under the Old Cartesian Plan for options for Series A Preferred Stock:

Number of Weighted-average

Series A remaining Aggregate

Preferred Stock Weighted-average contractual term intrinsic value

options exercise price ($) (in years) (in thousands)

Outstanding at December 31, 2022 — $ — — $ —

Assumed in connection with Merger 14,112.299 $ 79.94

Outstanding at December 31, 2023 14,112.299 $ 79.94 5.91 $ 8,601

Vested at December 31, 2023 10,860.441 $ 71.67 5.15 $ 6,709

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Restricted Stock Units

During the year ended December 31, 2022, the Company granted 813,200 restricted stock awards with a weighted average fair value of $ 3.31 per share based on the closing price of the Company’s common stock on the date of grant to employees under the 2016 Plan, which will vest over a four year term and 699,500 restricted stock awards with a weighted average fair value of $ 1.70 per share based on the closing price of the Company’s common stock on the date of grant to employees under the 2016 Plan, which will vest over a two year term.

During the year ended December 31, 2023, the Company granted 1,054,600 restricted stock awards with a weighted average fair value of $ 1.13 per share based on the closing price of the Company’s common stock on the date of grant to employees under the 2016 Plan, which vested over a four-year term .

Forfeitures are estimated at the time of grant and are adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company has estimated a forfeiture rate of 10 % for restricted stock awards to employees based on historical experience.

Unrecognized compensation expense for all restricted stock units was $ 3.4 million as of December 31, 2022, which is expected to be recognized over a weighted average period of 2.4 years.

There was no unrecognized compensation expense and no outstanding restricted stock units as of December 31, 2023.

The following table summarizes the Company’s restricted stock units under the 2016 Plan and 2018 Inducement Incentive Award Plan:

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Forfeited ( 446,108 ) 1.91

Cancelled/settled in connection with the Merger ( 1,677,632 ) 1.96

Unvested at December 31, 2023

1,705,558 $ 2.62

Employee Stock Purchase Plan

In June 2016, the Company approved the 2016 Employee Stock Purchase Plan, or the ESPP, which authorized 173,076 shares of common stock for future issuance under the ESPP to participating employees.

In January 2022 and 2021, the number of shares of common stock authorized for issuance under the ESPP was increased by 1,236,229 shares and 1,080,711 shares,

respectively.

In January 2023 and 2022, the number of shares of common stock authorized for issuance under the ESPP was increased by 1,530,424 shares and 1,236,229 shares, respectively.

During the year ended December 31, 2023, the Company issued 186,044 shares of common stock under the ESPP.

As of December 31, 2023, 4,982,098 shares remain available for future issuance under the ESPP.

For each of the years ended December 31, 2022 and 2021, the Company recognized $ 0.1 million of stock-based compensation expense under the ESPP, respectively.

In connection with the Merger, the Board suspended the current ESPP offering period.

For each of the years ended December 31, 2023 and 2022, the Company recognized $ 0.1 million of stock-based compensation expense under the ESPP.

Revenue Arrangements

Astellas Gene Therapies

In January 2023, the Company entered into the Astellas Agreement, with Astellas.

Under the Astellas Agreement, the Company granted Astellas an exclusive license to the Company’s IdeXork technology arising from Xork, to develop and commercialize Xork for use in Pompe disease in combination with an Astellas gene therapy investigational or authorized product.

Xork, Genovis’ IgG Protease, is licensed pursuant to an Exclusive License Agreement with Genovis, or the Genovis Agreement, as described in Note 16 to these consolidated financial statements.

Astellas paid a $ 10.0 million upfront payment to the Company upon signing of the Astellas Agreement, and the Company is entitled to receive up to $ 340.0 million in future additional payments over the course of the partnership that are contingent on the achievement of various development and regulatory milestones and, if commercialized, sales thresholds for annual net sales where Xork is used as a pre-treatment for an Astellas investigational or authorized product.

The Company is also eligible for tiered royalty payments ranging from low to high single digits.

Any proceeds received from milestone payments or royalties relating to Xork would be required to be distributed to holders of CVRs, net of certain deductions.

Pursuant to the Astellas Agreement, the Company will have the exclusive right and responsibility to complete research and development of Xork products and to conduct all preclinical studies and clinical trials for Xork for use in Pompe disease with an Astellas gene therapy investigational or authorized product, or the Xork Development Services.

Astellas will reimburse the Company for 25 % of all budgeted costs incurred to complete the development of Xork for use in Pompe disease with an Astellas gene therapy investigational or authorized product.

The Company will have control and responsibility over regulatory filings, including any investigational drug applications, biologics license applications, and marketing authorization applications relating to the licensed product.

Astellas will have the exclusive right and responsibility to research, develop, and commercialize Astellas products used in combination with Xork and will have control and responsibility over all regulatory filings, including any investigational drug applications, biologics license applications, and marketing authorization applications, relating to Astellas products and Astellas products used in combination with Xork.

The Company determined the Astellas Agreement represents a service arrangement under the scope of ASC 606.

The Company determined that the sublicense of Xork to Astellas, the licensed know-how, and the Xork Development Services represent a single promise and performance obligation to be transferred to Astellas over time due to the nature of the promises in the contract.

As such, the Company will recognize the transaction price as revenue utilizing the input method to measure the progress of satisfying the single performance obligation to Astellas.

In determining the transaction price, the Company concluded the upfront payment of $ 10.0 million and development cost reimbursements of $ 5.5 million will be included in the initial transaction price.

All other development milestones will be fully constrained and will only be included in the transaction price when the applicable milestone is deemed probable of achievement.

Each of these variable consideration items were evaluated under the most likely amount method to determine whether such amounts were probable of occurrence, or whether such amounts should be constrained until they become probable.

As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt and timing of such development milestones is outside the control of the Company and probability of success criteria is estimated.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

In accordance with ASC 606, the Company will only recognize revenue associated with sales-based milestones and royalties when the subsequent sales thresholds are reached and underlying sales occur, respectively.

The Company determined that a significant financing component does not exist in its arrangement with Astellas.

The Company also determined the options to negotiate additional fields, enter into a clinical supply agreement, and enter into a commercial supply agreement do not represent material rights under the Astellas Agreement.

Astellas has the right to terminate the Astellas Agreement in its entirety or on a field-by-field basis, upon 90 days’ written notice to the Company.

As of December 31, 2023, the Company recorded $ 2.3 million as a short-term contract liability and $ 3.5 million as a long-term contract liability, representing deferred revenue associated with the Astellas Agreement.

As of December 31, 2023, the Company recorded a receivable of $ 0.3 million, representing billings for the Xork Development Services that are subject to

reimbursement by Astellas.

Revenue of $ 5.5 million related to the Astellas Agreement was recognized during the year ended December 31, 2023.

Takeda Pharmaceuticals USA, Inc.

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Under the Takeda Agreement, the Company granted Takeda an exclusive license to the Company’s ImmTOR technology initially for two specified disease indications within the field of lysosomal storage disorders.

Takeda paid a $ 3.0 million upfront payment to the Company upon signing of the Takeda Agreement, and the Company is entitled to receive up to $ 1.124 billion in future additional payments over the course of the partnership that are contingent on the achievement of development or commercial milestones or Takeda’s election to continue its activities at specified development stages.

The Company is also eligible for tiered royalties on future commercial sales of any licensed products.

Pursuant to the Takeda Agreement, the Company determined the Takeda Agreement represents a service arrangement under the scope of ASC 606, and given the reversion of the rights under the Takeda Agreement represents a penalty in substance for a termination by Takeda, the contract term would remain the stated term of the Takeda Agreement.

The Company determined that the research license, the licensed know-how, and the manufactured supply and delivery of materials represent a single promise and performance obligation to be transferred to Takeda over time due to the nature of the promises in the contract.

The delivery of the manufactured supply is the predominant promise within the arrangement, as it is essential to the utility of the licensed intellectual property.

The material to be supplied by the Company to Takeda is unique to the Company and cannot be obtained by other vendors.

As such, consideration in the initial transaction price will be allocated to the single performance obligation and the recognition period would not extend beyond the initial contractual period.

The Company will recognize the revenue associated with the upfront payment and combined single performance obligation utilizing the output method over the term that manufactured supply is delivered to Takeda.

In determining the transaction price, the Company concluded the payment associated with all the performance milestones will be fully constrained and only be included in the transaction price when the respective milestone is deemed probable of achievement.

Takeda paid a $ 3.0 million upfront payment to the Company upon signing of the Takeda Agreement, and the Company was entitled to receive up to $ 1.124 billion in future additional payments over the course of the partnership that were contingent on the achievement of development or commercial milestones or Takeda’s election to continue its activities at specified development stages.

The Company was also eligible for tiered royalties on future commercial sales of any licensed products.

Pursuant to the Takeda Agreement, the Company determined the Takeda Agreement represented a service arrangement under the scope of ASC 606, and given the reversion of the rights under the Takeda Agreement represented a penalty in substance for a termination by Takeda, the contract term would remain the stated term of the Takeda Agreement.

The Company determined that the research license, the licensed know-how, and the manufactured supply and delivery of materials represented a single promise and performance obligation to be transferred to Takeda over time due to the nature of the promises in the contract.

The delivery of the manufactured supply was the predominant promise within the arrangement, as it was essential to the utility of the licensed intellectual property.

The material supplied by the Company to Takeda was unique to the Company and cannot be obtained by other vendors.

As such, consideration in the initial transaction price was allocated to the single performance obligation and the recognition period would not extend beyond the initial contractual period.

The Company recognized the revenue associated with the upfront payment and combined single performance obligation utilizing the output method over the term that manufactured supply was delivered to Takeda.

In determining the transaction price, the Company concluded the payment associated with all the performance milestones was fully constrained and only included in the transaction price when the respective milestone was deemed probable of achievement.

As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt and timing of such study milestones is outside the control of the Company and probability of success criteria is estimated.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved, or as other changes in circumstances occur.

Takeda has the right to exercise covenant release rights on a field-by-field basis.

If Takeda exercises its covenant release rights, we could receive exercise payments per indication and would be entitled to significant development and commercial milestone payments and tiered royalties on commercial sales.

The Company determined that a significant financing component does not exist in its arrangement with Takeda.

The Company also determined the options to negotiate additional fields, pursue other products, enter into a supply agreement explore additional fields, and pursue additional development under the initial fields do not represent material rights under the agreement.

Takeda has the right to terminate the Takeda Agreement in its entirety or on a field-by-field basis, upon 90 days’ written notice to the Company.

The Company re-evaluated the transaction price in each reporting period, as uncertain events were resolved, or as other changes in circumstances occurred.

Takeda had the right to exercise covenant release rights on a field-by-field basis.

If Takeda exercised its covenant release rights, we could have received exercise payments per indication and would have been entitled to significant development and commercial milestone payments and tiered royalties on commercial sales.

The Company determined that a significant financing component did not exist in its arrangement with Takeda.

The Company also determined the options to negotiate additional fields, pursue other products, enter into a supply agreement explore additional fields, and pursue additional development under the initial fields did not represent material rights under the agreement.

Takeda had the right to terminate the Takeda Agreement in its entirety or on a field-by-field basis, upon 90 days’ written notice to the Company.

On March 9, 2023, the Company was notified by Takeda of the achievement of the milestone event related to the completion of a non-clinical milestone for one of the specified disease indications within the field of lysosomal storage disorders under the Takeda Agreement.

Accordingly, the Company received a milestone payment of $ 0.5 million during the year ended December 31, 2023.

The Takeda Agreement was terminated effective July 25, 2023, following Takeda’s decision to discontinue discovery and pre-clinical activities in adeno-associated virus, or AAV, gene therapy.

As of December 31, 2023, the Company recorded no contract liability.

As of December 31, 2022, the Company recorded $ 0.1 million as a short-term contract liability and no long-term contract liability representing deferred revenue associated with this agreement.

As of December 31, 2021, the Company recorded $ 1.0 million as a short-term contract liability and $ 1.0 million as a long-term contract liability, respectively, representing deferred revenue associated with this agreement.

Revenue of $ 0.6 million and $ 1.8 million related to the Takeda Agreement was recognized during the years ended December 31, 2023 and 2022, respectively.

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License and Development Agreement

On June 11, 2020, the Company and Sobi entered into the Sobi License.

Pursuant to the Sobi License, the Company has agreed to grant Sobi an exclusive, worldwide (except as to Greater China) license to develop, manufacture and commercialize the Company’s SEL-212 drug candidate, which is currently in development for the treatment of chronic refractory gout.

On June 11, 2020, the Company and Sobi entered into a License and Development Agreement.

Pursuant to the Sobi License, the Company agreed to grant Sobi an exclusive, worldwide (except as to Greater China) license to develop, manufacture and commercialize the SEL-212 drug candidate, which is currently in development for the treatment of chronic refractory gout.

The SEL-212 drug candidate is a pharmaceutical composition containing a combination of SEL-037, or the Compound, and ImmTOR.

Pursuant to the Sobi License, in consideration of the license, Sobi agreed to pay the Company a one-time, upfront payment of $ 75.0 million.

Sobi has also agreed to make milestone payments totaling up to $ 630.0 million to the Company upon the achievement of various development and regulatory milestones and, if commercialized, sales thresholds for annual net sales

of SEL-212, and tiered royalty payments ranging from the low double digits on the lowest sales tier to the high teens on the highest sales tier.

Pursuant to the Sobi License, the Company has agreed to supply (at cost) quantities of the Compound and ImmTOR as necessary for completion of the two Phase 3 clinical trials of SEL-212 (DISSOLVE I and DISSOLVE II) and a 6-month placebo extension.

The Company is required to supply quantities of the Compound until all rights to the Compound and any materials needed to manufacture the Compound are transferred to Sobi.

annual net sales of SEL-212, and tiered royalty payments ranging from the low double digits on the lowest sales tier to the high teens on the highest sales tier.

Any proceeds received from milestone payments or royalties relating to the Sobi License would be required to be distributed to holders of CVRs, net of certain deductions.

Pursuant to the Sobi License, the Company agreed to supply (at cost) quantities of the Compound and ImmTOR as necessary for completion of the two Phase 3 clinical trials of SEL-212 (DISSOLVE I and DISSOLVE II) and a six-month placebo extension.

The Company was required to supply quantities of the Compound until all rights to the Compound and any materials needed to manufacture the Compound were transferred to Sobi, which transfer occurred upon the execution of Amendment No.

1 to the License and Development Agreement on October 31, 2023.

Sobi has agreed to reimburse the Company for all budgeted costs incurred to complete development of SEL-212, including but not limited to costs incurred while conducting and completing the Phase 3 DISSOLVE trials, except for any costs of additional development activities required that are related to ImmTOR and that are unrelated to SEL-212.

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As the set-up of a second source supplier is optional for Sobi and the Company will be reimbursed at cost for its efforts in the subsequent set-up and technology transfer, the option for this future service was determined to be at a significant and incremental discount to its standalone selling price and treated as a material right in the arrangement, namely a distinct performance obligation.

In determining the transaction price, the Company concluded the upfront payment of $ 75.0 million and the $ 5.0 million development milestone associated with the dosing of the first patient in the Phase 3 DISSOLVE trials will be included in the transaction price.

All other development milestones will be fully constrained and only be included in the transaction price when the respective milestone is deemed probable of achievement.

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The Company estimated the standalone selling price of conducting the Phase 3 DISSOLVE trials by forecasting its anticipated costs and applying a margin reflective of the industry.

The Company must determine the standalone selling price of the second source supplier option by determining the discount given to Sobi multiplied by the likelihood that Sobi will exercise the option in the future.

Similar to the Phase 3 program estimate, the Company estimated the discount of the

option by forecasting the set-up costs and applying a margin that is reflective of the industry.

The Company must determine the standalone

selling price of the second source supplier option by determining the discount given to Sobi multiplied by the likelihood that Sobi will exercise the option in the future.

Similar to the Phase 3 program estimate, the Company estimated the discount of the option by forecasting the set-up costs and applying a margin that is reflective of the industry.

As the Company will be providing the set-up and technology transfer services and the future supply at cost, the discount of the option is equal to the margin amount.

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This amount was added to the overall transaction price and payment was received during the year ended December 31, 2022.

As of December 31, 2022, the Company recorded no short-term or long-term contract liability.

As of December 31, 2021, the Company recorded $ 37.5 million, as a short-term contract liability and $ 5.1 million, as a long-term contract liability, representing deferred revenue associated with this agreement.

In addition, as of December 31, 2022 the Company has recorded $ 0.1 million of contract assets related to incremental costs that would not have been incurred if the Sobi License had not been obtained, of which $ 0.1 million is presented in prepaid expenses and other current assets and less than $ 0.1 million is presented in other assets in the accompanying consolidated balance sheets.

Amortization of contract assets was $ 0.6 million for the year ended December 31, 2022.

On October 31, 2023, the Company and Sobi entered into Amendment No.

1 to the License and Development Agreement, pursuant to which the Company granted Sobi an exclusive license to manufacture ImmTOR solely in connection with Sobi’s development of SEL-212 under the License and Development Agreement and transferred certain contracts and manufacturing equipment to Sobi.

Additionally, in connection with entry into the amendment, Sobi agreed to make employment offers to certain of the Company’s employees engaged in ImmTOR manufacturing activities on or prior to a specified date, and the Company agreed not to terminate the employment of such employees prior to such specified date.

The Company maintains no responsibilities to Sobi to manufacture, or supply Sobi with, ImmTOR under the Sobi License.

As of December 31, 2023 and 2022, the Company recorded a total outstanding receivable of $ 4.6 million and $ 5.0 million, respectively, representing billings for the Phase 3 DISSOLVE program that are subject to reimbursement by Sobi.

As of December 31, 2022, the Company recorded a total unbilled receivable of $ 3.2 million, representing revenue earned but not yet billed for the Phase 3 DISSOLVE program.

Additionally, as of December 31, 2023 and 2022, the Company recorded a total unbilled receivable of $ 3.0 million and $ 3.2 million, respectively, representing revenue earned but not yet billed for the Phase 3 DISSOLVE program.

Revenue of $ 19.4 million and $ 82.6 million related to the Sobi License was recognized during the years ended December 31, 2023 and 2022, respectively, inclusive of $ 1.1 million of revenue recognized from performance obligations related to prior periods as a result of the change in transaction price during the year ended December 31, 2023.

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Research License and Option Agreement

In June 2020, the Company and Sarepta entered into a Research License and Option Agreement, or the Sarepta Agreement.

In June 2020, the Company and Sarepta Therapeutics, Inc., or Sarepta, entered into a Research License and Option Agreement, or the Sarepta Agreement.

Pursuant to the Sarepta Agreement, the Company agreed to grant Sarepta a license under the Company’s intellectual property rights covering the Company’s antigen-specific biodegradable nanoparticle encapsulating ImmTOR to research and evaluate ImmTOR in combination with Sarepta’s adeno-associated virus gene therapy technology, or gene editing technology, using viral or non-viral delivery, to treat Duchenne Muscular Dystrophy and certain Limb-Girdle Muscular Dystrophy subtypes, or the Indications.

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The Company determined that the Sarepta Agreement and supply obligation including the delivery of the research license, the licensed know-how, the manufactured supply and delivery of materials represent a single promise and performance obligation to be transferred to Sarepta over time due to the nature of the promises in the contract.

The delivery of the

manufactured supply is the predominant promise within the arrangement, as it is essential to the utility of the licensed intellectual property.

The delivery of the manufactured supply is the predominant promise within the arrangement, as it is essential to the utility of the licensed intellectual property.

As such, consideration in the initial transaction price will be allocated to the single performance obligation based on the contractual price.

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The Sarepta Agreement contains other customary terms and conditions, including representations and warranties, covenants, termination, and indemnification obligations in favor of each party.

During the year ended December 31, 2020, the Company and Sarepta entered into two amendments relating to an additional feasibility study.

During the year ended December 31, 2021, the Company and Sarepta entered into a third amendment relating to the additional feasibility study.

During the year ended December 31, 2022, the Company and Sarepta entered into two amendments relating to the additional feasibility study.

On April 13, 2021, the Company was notified by Sarepta of the achievement of the milestone event related to the completion of a non-clinical study for Duchenne muscular dystrophy and certain limb-girdle muscular dystrophies under the Sarepta Agreement.

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On June 10, 2022, the Company was notified by Sarepta that Sarepta would be extending their options under the Sarepta Agreement.

In exchange for a nine -month extension to Sarepta’s options to both Duchenne muscular dystrophy and certain limb-girdle muscular dystrophies, the Company received a milestone payment of $ 2.0 million during the three months ended September 30, 2022.

In exchange for a nine-month extension to Sarepta’s options to both Duchenne muscular dystrophy and certain limb-girdle muscular dystrophies, the Company received a milestone payment of $ 2.0 million during the year ended December 31, 2022.

On June 15, 2022, the Company was notified by Sarepta of the achievement of a milestone event related to certain preclinical study milestones under the Sarepta Agreement.

Accordingly, the Company received a milestone payment of $ 4.0 million during the three months ended September 30, 2022.

As of December 31, 2022, one milestone remained constrained.

The Company will re-evaluate the transaction price in each reporting period, as uncertain events are resolved.

The Company is recognizing the revenue associated with the transaction price and combined single performance obligation utilizing the output method, over the 33-month term as the manufactured supply is delivered to Sarepta.

As of December 31, 2022 and 2021, the Company recorded $ 0.5 million and $ 4.6 million, respectively, as a short-term contract liability representing deferred revenue associated with this agreement.

Revenue of $ 10.2 million and $ 0.4 million related to the Sarepta Agreement was recognized during the years ended December 31, 2022 and 2021, respectively, inclusive of $ 0.9 million of revenue recognized from performance obligations related to prior periods as a result of the change in transaction price during the year ended December 31, 2022.

Accordingly, the Company received a milestone payment of $ 4.0 million during the year ended December 31, 2022.

On March 13, 2023, the Company was notified by Sarepta that Sarepta would not be exercising its exclusive option under the Sarepta Agreement.

The Sarepta Agreement terminated upon the expiration of the option in March 2023.

As of December 31, 2023, the Company recorded no contract liability.

As of December 31, 2022, the Company recorded $ 0.5 million as a short-term contract liability representing deferred revenue associated with this agreement.

Revenue of $ 0.5 million and $ 10.2 million related to the Sarepta Agreement was recognized during the years ended December 31, 2023 and 2022, respectively.

Asklepios Biopharmaceutical, Inc.

License Agreement for Pompe Disease

In December 2019, the Company and AskBio entered into a license agreement, or the AskBio License Agreement.

In December 2019, the Company and Asklepios Biopharmaceutical, Inc., or AskBio, entered into a license agreement, or the AskBio License Agreement.

Pursuant to the AskBio License Agreement, AskBio exercised its option to exclusively license the Company’s intellectual property rights covering the Company’s ImmTOR platform to research, develop, and commercialize certain AAV gene therapy products utilizing ImmTOR, and targeting the GAA gene, or derivatives thereof, to treat Pompe Disease.

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Spark Therapeutics, Inc.

In December 2016, the Company entered into a license and option agreement, or the Spark License Agreement, with Spark pursuant to which the Company and Spark agreed to collaborate on the development of gene therapies for certain targets utilizing the ImmTOR platform.

In December 2016, the Company entered into a license and option agreement, or the Spark License Agreement, with Spark Therapeutics, Inc., or Spark, pursuant to which the Company and Spark agreed to collaborate on the development of gene therapies for certain targets utilizing the ImmTOR platform.

The Spark License Agreement provided Spark with certain exclusive, worldwide, royalty bearing licenses to the Company’s intellectual property, allowing Spark to develop and commercialize gene therapies in combination with ImmTOR for Factor VIII, an essential blood clotting protein relevant to the treatment of hemophilia A, the initial target.

Additionally, in connection with the Spark License Agreement, the Company entered into a Stock Purchase Agreement with Spark, or the Spark Purchase Agreement.

Pursuant to the Spark Purchase Agreement, Spark purchased a total of $ 15.0 million of the Company’s common stock including 197,238 shares for an aggregate purchase price of $ 5.0 million at the initial closing, 324,362 shares of common stock for an aggregate purchase price of $ 5.0 million on June 8, 2017, and 205,254 shares of common stock from the Company for an aggregate purchase price of $ 5.0 million on October 31, 2017.

On January 18, 2022, both parties agreed to mutually terminate the Spark License Agreement.

Therefore, the remaining contract liability of $ 9.2 million was recognized as revenue during the year ended December 31, 2022.

Skolkovo Foundation

During the year ended December 31, 2021, revenue of $ 0.1 million related to the remaining contract liability of the Russia-based Development Fund of New Technologies Development and Commercialization Center, or Skolkovo, grant funding was recognized at the expiration of the three-year audit period.

Transaction Price Allocated to Future Performance Obligations

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As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 5.8 million.

Contract Balances from Contracts with Customers ( Takeda, Sobi, Sarepta, AskBio, and Spark )

Contract Balances from Contracts with Customers ( Astellas, Takeda, Sobi, Sarepta, AskBio, and Spark )

The following table presents changes in the Company’s contract liabilities during the year ended December 31, 2023 (in thousands):

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Related-Party Transactions

November 2023 Securities Purchase Agreement

On November 13, 2023, the Company entered into the Securities Purchase Agreement with (i) Dr.

Springer, (ii) TAS Partners LLC, an affiliate of Dr.

Springer, and (iii) Seven One Eight Three Four Irrevocable Trust, a trust associated with Dr.

Murat Kalayoglu, in which the Company agreed to issue and sell an aggregate of 149,330.115 shares of Series A Preferred Stock for an aggregate purchase price of $ 60.25 million (see Note 11).

The November 2023 Private Placement includes a delayed settlement mechanism, and as a result, the below issuances and sales to related parties of the Company were made during the year ended December 31, 2023.

Name Shares of Series A Preferred Stock purchased Total aggregate purchase price

Springer, Ph.D.

24,785.081 $ 10,000,000

TAS Partners LLC (affiliate of Timothy A.

Springer, Ph.D.) 24,785.081 $ 10,000,000

Seven One Eight Three Four Irrevocable Trust (affiliate of Murat Kalayoglu, MD, Ph.D.) 619.627 $ 250,000

April 2022 Offering

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Warrant liability reclassification

During the year ended December 31, 2022, the Company amended the terms of certain of the outstanding 2019 Warrants held by members of the Company's board of directors and remeasured the Amended 2019 Warrants as described in Notes 5 and 10.

During the year ended December 31, 2022, the Company amended the terms of certain of the outstanding 2019 Warrants held by members of the Company's Board of Directors and remeasured the Amended 2019 Warrants as described in Note 6.

Consulting Services

The Company entered into consulting agreements with its founders to serve on its Scientific Advisory Board, effective January 1, 2020 to December 31, 2021, under which they were paid quarterly for their services.

The Company incurred expenses for consulting services provided by its founders totaling $ 0.1 million during each of the years ended December 31, 2021 and 2020.

No expenses were incurred for the year ended December 31, 2022.

The Company incurred expenses for consulting services provided by its founders totaling $ 0.1 million during the year ended December 31, 2021.

No expenses were incurred for the years ended December 31, 2023 and 2022.

Collaboration and License Agreements

Biogen MA, Inc.

On September 8, 2023, the Company entered into a non-exclusive, sublicensable, worldwide, perpetual patent license agreement, or the Biogen Agreement with Biogen MA, Inc., or Biogen to research, develop, make, use, offer, sell and import products or processes containing or using an engineering T-cell modified with an mRNA comprising, or encoding a protein comprising, certain sequences licensed under the Biogen Agreement for the prevention, treatment, palliation and management

of autoimmune diseases and disorders, excluding cancers, neoplastic disorders, and paraneoplastic disorders.

The Company is not obligated to pay Biogen any expenses, fees, or royalties.

The Company may terminate the Biogen Agreement for any reason or no reason, and Biogen may terminate the agreement after a notice-and-cure period of 30 days if the Company fails to pay a fee owed to Biogen or for any other material breach of the agreement.

The Biogen Agreement will otherwise expire when all claims of all issued patents within the patents and patent applications licensed to the Company under the Biogen Agreement have expired or been finally rendered revoked, invalid or unenforceable by a decision of a court or government agency.

National Cancer Institute of the National Institutes of Health

Effective September 16, 2019, the Company entered into a nonexclusive, worldwide license agreement, or the NCI Agreement with the U.S.

Department of Health and Human Services, represented by the National Cancer Institute of the National Institutes of Health, or NCI.

Under the NCI Agreement, the Company was granted a license under certain NCI patents and patent applications designated in the agreement, to make, use, sell, offer and import products and processes within the scope of the patents and applications licensed under the NCI Agreement when developing and manufacturing anti-BCMA CAR-T cell products for the treatment of myasthenia gravis, pemphigus vulgaris, and immune thrombocytopenic purpura according to methods designated in the NCI Agreement.

In connection with the Company's entry into the NCI Agreement, Old Cartesian paid to NCI a one-time $ 0.1 million license royalty payment.

Under the NCI Agreement, the Company is further required to pay NCI a low five-digit annual royalty.

The Company must also pay earned royalties on net sales in a low single-digit percentage and pay up to $ 0.8 million in benchmark royalties upon the Company's achievement of designated benchmarks that are based on the commercial development plan agreed between the parties.

Under the NCI Agreement, the Company must use reasonable commercial efforts to bring licensed products and licensed processes to the point of Practical Application (as defined in the NCI Agreement).

Upon the Company's first commercial sale, the Company must use reasonable commercial efforts to make licensed products and licensed processes reasonably accessible to the United States public.

After the Company's first commercial sale, the Company must make reasonable quantities of licensed products or materials produced via licensed processes available to patient assistance programs and develop educational materials detailing the licensed products.

Unless the Company obtains a waiver from NCI, the Company must have licensed products and licensed processes manufactured substantially in the United States.

Prior to the first commercial sale, upon NCI’s request, the Company is obligated to provide NCI with commercially reasonable quantities of licensed products made through licensed processes to be used for in vitro research.

Additionally, the Company must use reasonable commercial efforts to initiate a Phase 3 clinical trial of a licensed product by the fourth quarter of 2024, submit a BLA with respect to a licensed product by the fourth quarter of 2026, and make a first commercial sale of a licensed product by the fourth quarter of 2028.

The NCI Agreement terminates upon the expiration of the last to expire of the patent rights licensed thereunder, if not sooner terminated.

NCI has the right to terminate this agreement, after giving written notice and providing a cure period in accordance with its terms, if the Company is in default of a material obligation.

The Company has the unilateral right to terminate the agreement in any country or territory by giving NCI 60 days’ written notice.

The Company agreed to indemnify NCI against any liability arising out of the Company's, sublicensees’ or third parties’ use of the licensed patent rights and licensed products or licensed processes developed in connection with the licensed patent rights.

Ginkgo Bioworks Holdings, Inc.

Collaboration and License Agreements

On October 25, 2021, the Company entered into a Collaboration and License Agreement, or the First Ginkgo Agreement, with Ginkgo Bioworks Holdings, Inc., or Ginkgo.

On October 25, 2021, the Company entered into a Collaboration and License Agreement, or the First Ginkgo Agreement, with Ginkgo.

Under the First Ginkgo Agreement, Ginkgo will design next generation IgA proteases with potentially transformative therapeutic potential.

In return, Ginkgo is eligible to earn both upfront research and

development fees and milestone payments, including certain milestone payments for fixed fair values in the form of Selecta common stock, clinical and commercial milestone payments of up to $ 85.0 million in cash.

The Ginkgo Agreement was assessed for collaboration components and was determined not to be within the scope of ASC 808 as the risk and rewards are not shared by both parties.

The Company will expense costs related to the Ginkgo Agreement as incurred until regulatory approval is received in accordance with ASC 730.

In return, Ginkgo is eligible to earn both upfront research and development fees and milestone payments, including certain milestone payments for fixed fair values in the form of the Company's common stock, clinical and commercial milestone payments of up to $ 85.0 million in cash.

The First Ginkgo Agreement was assessed for collaboration components and was determined not to be within the scope of ASC 808 as the risk and rewards are not shared by both parties.

The Company will expense costs related to the First Ginkgo Agreement as incurred until regulatory approval is received in accordance with ASC 730.

The Company is accounting for the contingently issuable shares to be issued in exchange for the license obtained from Ginkgo as a liability classified stock-based compensation arrangement with a non-employee which will be recognized when achievement of the milestones is probable.

The Company will assess the capitalization of costs incurred after the receipt of regulatory approval and, if applicable, will amortize these payments based on the expected useful life of each asset, typically based on the expected commercial exclusivity period.

The Company is also obligated to pay Ginkgo tiered royalties ranging from low-single digit to high-single digit percentages of annual net sales of collaboration products which will be expensed as the commercial sales occur.

The Company is also obligated to pay Ginkgo

tiered royalties ranging from low-single digit to high-single digit percentages of annual net sales of collaboration products which will be expensed as the commercial sales occur.

On January 3, 2022, the Company entered into a Collaboration and License Agreement, or the Second Ginkgo Agreement, with Ginkgo.

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This milestone resulted in the payment of $ 0.5 million and issuance of 892,857 shares of the Company’s common stock then-valued at $ 1.0 million to Ginkgo during the year ended December 31, 2022.

On July 19, 2023, the Company and Ginkgo mutually agreed that the completion of the technical development plan’s midpoint task under the Second Ginkgo Agreement had been achieved as of June 30, 2023.

This milestone resulted in the payment of $ 1.0 million and issuance of 1,339,285 shares of the Company’s common stock then-valued at $ 1.5 million to Ginkgo during the year ended December 31, 2023.

Genovis AB (publ.)

License Agreement

On October 21, 2021, the Company entered into an Exclusive License Agreement, or the Genovis Agreement, with Genovis.

Under the Genovis Agreement, the Company paid to Genovis an upfront payment in exchange for an exclusive license to Genovis’ IgG Protease, or Xork, enzyme technology across all therapeutic uses in humans, excluding research, preclinical, diagnostic and other potential non-therapeutic applications of the enzyme.

On October 21, 2021, the Company entered into the Genovis Agreement with Genovis.

Under the Genovis Agreement, the Company paid to Genovis an upfront payment in exchange for an exclusive license to Genovis’ IgG Protease, Xork, enzyme technology across all therapeutic uses in humans, excluding research, preclinical, diagnostic and other potential non-therapeutic applications of the enzyme.

Genovis is eligible to earn from the Company development and sales-based milestones and sublicensing fees.

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The Company is also obligated to pay Genovis tiered royalties of low double digit percentages of worldwide annual net sales of collaboration products which will be expensed as the commercial sales occur.

In February 2023, the Company made a $ 4.0 million payment to Genovis as a result of the sublicense of Xork to Astellas.

See Note 14 to these consolidated financial statements for further discussion on the Astellas Agreement.

Cyrus Biotechnology, Inc.

Collaboration and License Agreement

On September 7, 2021, the Company and Cyrus Biotechnology, Inc., or Cyrus, entered into a collaboration and license agreement, or the Cyrus Agreement.

On September 7, 2021, the Company and Cyrus entered into the Cyrus Agreement.

Pursuant to the Cyrus Agreement, Cyrus agreed to grant the Company an exclusive, worldwide license to certain intellectual property to form a protein engineering collaboration combining the Company’s ImmTOR platform with Cyrus’ ability to redesign protein therapeutics.

The lead program is a proprietary interleukin-2, or IL-2, protein agonist designed to selectively promote expansion of regulatory T cells for treatment of patients with autoimmune diseases and other deleterious immune conditions.

In return for the licensed intellectual property, the Company made an upfront payment and is obligated to pay certain discovery, development, and sales-based milestones which could potentially total up to approximately $ 1.5 billion across multiple programs.

The lead program was a proprietary interleukin-2, or IL-2, protein agonist designed to selectively promote expansion of regulatory T cells for treatment of patients with autoimmune diseases and other deleterious immune conditions.

In return for the licensed intellectual property, the Company made an upfront payment and was obligated to pay certain discovery, development, and sales-based milestones which could have potentially totaled up to approximately $ 1.5 billion across multiple programs.

The Cyrus Agreement was assessed for collaboration components and was determined not to be within the scope of ASC 808 as the risk and rewards are not shared by both parties.

The Company will expense costs related to the Cyrus Agreement as incurred until regulatory approval is received in accordance with ASC 730.

The Company is also obligated to pay Cyrus tiered royalties ranging from mid-single digit to low-double digit percentages of annual net sales of collaboration products which will be expensed as the commercial sales occur.

The Company expensed costs related to the Cyrus Agreement as incurred until regulatory approval is received in accordance with ASC 730.

The Company assessed the capitalization of costs incurred after the receipt of regulatory approval and, if applicable, would have amortized these payments based on the expected useful life of each asset, typically based on the expected commercial exclusivity period.

The Company was also obligated to pay Cyrus tiered

royalties ranging from mid-single digit to low-double digit percentages of annual net sales of collaboration products which would have been expensed as commercial sales occur.

On June 13, 2022, the Company and Cyrus mutually agreed that the preclinical key in-vitro success milestone had been achieved.

In October 2023, the Company notified Cyrus of its termination of the Cyrus Agreement, effective December 29, 2023.

Stock Purchase Agreement

Additionally, on September 7, 2021, the Company entered into a stock purchase agreement, or the Series B Preferred Stock Purchase Agreement, in connection with the Cyrus Agreement.

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The Company has recognized the $ 2.0 million investment of Cyrus’ Series B Preferred Stock at cost on the purchase date.

On June 13, 2022, the Company and Cyrus mutually agreed that the preclinical key in-vitro success milestone had been achieved.

As of December 31, 2023, no impairment indicators are present and therefore the carrying value of the investment in Cyrus is $ 2.0 million on the accompanying consolidated balance sheet.

The Company’s maximum exposure to loss related to this variable interest entity is limited to the carrying value of the investment.

The Company’s maximum exposure to loss related to this VIE is limited to the carrying value of the investment.

The Company has not provided financing to Cyrus other than the amount contractually required by the Series B Preferred Stock Purchase Agreement.

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Pursuant to the AskBio Collaboration Agreement, the Company and AskBio agreed to license intellectual property rights to each other as part of a collaboration to research, develop, and commercialize certain AAV gene therapy products utilizing the Company’s ImmTOR platform to enable re-dosing of such AAV gene therapy products to treat serious rare and orphan genetic diseases for which there is a significant unmet medical need.

Pursuant to the AskBio Collaboration Agreement, the Company and AskBio agreed to conduct proof of concept studies to potentially validate the use of ImmTOR in conjunction with AskBio’s AAV gene therapy, or SEL-302, (previously disclosed as MMA-101, in combination with ImmTOR) for the treatment of MMA, to mitigate the formation of neutralizing anti-AAV capsid antibodies, or the POC Studies.

Pursuant to the AskBio Collaboration Agreement, the Company and AskBio agreed to conduct proof of concept studies to potentially validate the use of ImmTOR in conjunction with AskBio’s AAV gene therapy, or SEL-302, (previously disclosed as MMA-101, in combination with ImmTOR) for the treatment of methylmalonic acidemia, or MMA, to mitigate the formation of neutralizing anti-AAV capsid antibodies.

On April 29, 2021, the Company was notified by AskBio that it intended to opt-out of development of the MMA indication.

The feasibility study and license agreement with AskBio, or AskBio Collaboration Agreement, otherwise remains in effect.

Consequently, the Company has assumed all rights to the MMA program and intends to continue to progress the SEL-302 program through clinical development.

The Company filed an IND to conduct a Phase 1/2 clinical trial of its SEL-302 product candidate in pediatric patients with methylmalonic acidemia in the third quarter of 2021.

In December 2022, we initiated ReiMMAgine, the Phase 1/2 clinical trial of SEL-302.

The ReiMMAgine trial is now enrolling patients and aims to evaluate the safety, tolerability and efficacy of SEL-302.

The SEL-399 program combined an empty AAV capsid (EMC-101), which is an AAV capsid containing no transgene, with ImmTOR and is being conducted in partnership with AskBio.

Building on the preclinical data the Company has generated showing ImmTOR’s effect on mitigating or reducing the formation of neutralizing antibodies to AAV gene therapies, the Company completed a clinical trial of SEL-399 in healthy adult volunteers in Belgium.

The goal of the SEL-399 clinical trial was to demonstrate the appropriate dose of ImmTOR in humans to mitigate the formation of antibodies to AAV capsids used in gene therapies.

This promising study in healthy volunteers provides support for the potential use of ImmTOR for the inhibition of neutralizing antibodies to AAV8 in gene therapy clinical trials.

The Company and AskBio will share responsibility for the research, development and commercialization of products developed under the SEL-399 program collaboration.

The parties will also share research, development, and commercialization costs equally for all collaboration products, but with a right of either party to opt out of certain products, and thereby no longer be required to share costs for such products.

Each party will receive a percentage of net profits under the collaboration equal to the percentage of shared costs borne by such party in the development of such product.

Pursuant to the AskBio Collaboration Agreement, AskBio is responsible for manufacturing the AAV capsids and AAV vectors and the Company is responsible for manufacturing ImmTOR.

The AskBio Collaboration Agreement is considered to be within the scope of ASC 808, as both parties are active participants and exposed to the risks and rewards of the collaborative activity.

The Company evaluated the terms of the AskBio Collaboration Agreement and have identified the following promises in the arrangement (1) conducting research and development activities to develop and commercialize products under the collaboration, or the R&D Services, (2) granting a non-exclusive, non-transferable, royalty-free, fully paid up, worldwide license to certain intellectual property of the Company, or the IP Rights, for the purpose of performing the POC Studies, or the Research License, (3) granting an exclusive,

nontransferable, worldwide license to the IP Rights for use in certain indications, or the Collaboration License, (4) providing manufactured supply of preclinical and clinical ImmTOR, or the Manufactured Supply, (5) participation on identified steering committees responsible for the oversight of the collaboration, or the JSC Participation, and (6) granting an exclusive option to obtain a license under the IP Rights to research, develop and commercialize Licensed Products.

The Company determined that the R&D Services, Research License, Collaboration License, Manufactured Supply, and JSC Participation were not capable of being distinct, and therefore must be combined into a single performance obligation.

Therefore, promises (1) through (5) identified above were combined into a single performance obligation.

Furthermore, the Company evaluated the Option Agreement and determined that it does not provide AskBio with a material right under ASC 606 as the option was not priced at a discount (see discussion of the option exercise in Note 12).

The Company noted that AskBio did not meet the definition of a customer within the scope of ASC 606 for any distinct performance obligations as the Company concluded that such items were not an output of the Company’s ordinary activities.

As such, the Company determined that the entire arrangement would be accounted for within the scope of ASC 808.

In accordance with ASC 808, collaboration expenses are recognized within R&D expense and selling, general and administrative expense on the Company’s condensed consolidated statements of operations.

Under certain collaborative arrangements, the Company is entitled to reimbursement of certain R&D expense.

Activities under collaborative arrangements for which the Company is entitled to reimbursement are considered to be collaborative activities under the scope of ASC 808.

For these units of account, the Company does not analogize to ASC 606 or recognize revenue.

Rather, the Company analogizes to the guidance in ASC 730, which requires that reimbursements from counterparties be recognized as an offset to the related costs.

In accordance with ASC 730, the Company records reimbursement payments received from collaborators as reductions to R&D expense.

The Company and AskBio shared responsibility for the research, development and commercialization of products developed under the SEL-399 program collaboration.

The parties also shared research, development, and commercialization costs equally for all collaboration products, but with a right of either party to opt out of certain products, and thereby not be required to share costs for such products.

Each party would have received a percentage of net profits under the collaboration equal to the percentage of shared costs borne by such party in the development of such product.

Pursuant to the AskBio Collaboration Agreement, AskBio was responsible for manufacturing the AAV capsids and AAV vectors and the Company was responsible for manufacturing ImmTOR.

The Company and AskBio mutually agreed to the termination of the AskBio Collaboration Agreement, effective December 13, 2023.

For the years ended December 31, 2023 and 2022, the Company recognized $ 0.1 million and $ 0.9 million, respectively, of collaboration expense under the AskBio Collaboration Agreement in which actual costs incurred by both parties approximate a 50 % cost share.

Massachusetts Institute of Technology

In November 2008, the Company entered into an exclusive patent license agreement, or the MIT License, with the Massachusetts Institute of Technology, or MIT, under which the Company received an exclusive royalty-bearing license to utilize patents held by MIT in exchange for upfront consideration and annual license maintenance fees.

Such fees are expensed as incurred and have not been material to any period presented.

In June 2020, the Company entered into a Fifth Amendment, or the MIT Amendment, to the MIT License, which is effective as of May 15, 2020.

Pursuant to the MIT Amendment, certain of the Company’s diligence obligations were extended.

The extension included the obligation to commence a Phase 3 trial for a licensed product by the second quarter of 2021 or to file an IND (or equivalent) with the FDA or comparable European regulatory agency for a licensed product by the second quarter of 2023.

Additionally, certain of the Company’s development and regulatory milestones and payments upon achievement of such milestones were adjusted.

As of December 31, 2022, and in connection with the execution of the Spark License Agreement, the Company has made contractual payments pursuant to the MIT License totaling $ 2.2 million.

In connection with the Spark Purchase Agreement and the calculated premium paid by Spark for the equity investments made as described in Note 12, the Company has made additional contractual payments pursuant to the MIT license totaling $ 0.4 million as of December 31, 2022.

The Company made no additional payments during the year ended December 31, 2022.

Shenyang Sunshine Pharmaceutical Co., Ltd

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Under ASC 740, the Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse.

On June 11, 2020, the Company entered into the Sobi License (see note 12).

In September 2020, Sobi paid the Company a one-time upfront payment of $ 75.0 million.

Sobi has also agreed to make milestone payments totaling up to $ 630.0 million to the Company upon achievement of various development and regulatory milestones and sales thresholds for annual net sales of

SEL-212, and tiered royalty payments ranging from low double digits on the lowest sales tier to high teens on the highest sales tier.

For income tax purposes, the transfer of trademark and product rights is treated as a sale and the net proceeds from the sale are taxed under the default installment method as cash is received by the Company.

During the year ending December 31, 2021, the Company completed an analysis of future tax obligations under the default installment sale method versus making a timely filed election on its 2020 tax return due October 15, 2021 to elect out of the installment sale method for income tax purposes.

As a result, the Company elected out of the default installment sale treatment with the filing of its 2020 tax return.

In the elect out method, the Company was initially taxed based upon the estimated fair value of all present and future proceeds from the sale and the Company utilized all of its available net operating losses and income tax credits, which served to reduce the federal and state tax liability.

As the Company recognizes future cash proceeds under the Sobi license, the Company will exclude such amounts from taxable income up to the originally estimated fair value that was previously taxed.

On November 13, 2023, the Company acquired, in accordance with the terms of the Merger Agreement, the assets of Old Cartesian.

In accordance with ASC 805-740-25-3, recognition of deferred tax assets and liabilities is required for substantially all temporary differences and acquired tax carryforwards and credits.

The Company has computed estimated temporary differences and acquired tax carryforwards and credits as of the transaction date.

The Company will not have tax basis in IPR&D booked as part of the purchase accounting.

For accounting purposes, the IPR&D will not be amortized and only subject to impairment review and testing.

Though the tax effects may be delayed indefinitely, ASC 740-10-55-63 states that “deferred tax liabilities may not be eliminated or reduced because a reporting entity may be able to delay the settlement of those liabilities by delaying the events that would cause taxable temporary differences to reverse.” As such, the Company can potentially only utilize indefinite-lived assets as it relates to this indefinite lived intangible deferred tax liability reversal.

As such, the Company has booked a deferred tax liability for the portion of the liability that cannot be reduced based on scheduling.

Additionally, a portion of this target deferred tax liability is offset with the Company's pre-Merger deferred tax assets on a combined basis, and as such the portion of deferred tax liability reduced by the Company's pre-Merger deferred tax assets has been charged to income rather than to goodwill.

For the year ended December 31, 2023, the Company recognized a current tax benefit, of $ 19.0 million.

For the year ended December 31, 2022, the Company recognized a current tax benefit for penalty abatements received of $ 0.6 million.

For the year ended December 31, 2021, the Company recognized tax expense of $ 16.0 million, inclusive of penalties and interest of $ 1.3 million assessed as of December 31, 2021.

For the year ended December 31, 2020, the Company did not record a current or deferred income tax expense or benefit.

For the year ended December 31, 2021, the Company had recorded a tax expense of $ 16.0 million, inclusive of penalties and interest of $ 1.3 million assessed as of December 31, 2021.

The following table reconciles the federal statutory income tax rate to the Company’s effective income tax rate:

Year Ended December 31,

2022 2021 2020

Statutory U.S.

federal rate 21.0 % 21.0 % 21.0 %

21.0 % 21.0 % 21.0 %

State income taxes - net of federal benefit

2.3 % 1.6 % ( 166.0 ) %

Permanent items

( 1.6 ) % ( 18.6 ) % 8.3 %

Research tax credits

0.6 % ( 3.2 ) % 55.0 %

Deferred revenue

Other — % ( 3.7 %) — %

— % — % 156.5 %

— % — % ( 3.7 ) %

Change in fair value of forward contract liabilities

( 13.2 ) % — % — %

Valuation allowance, net

2.8 % ( 4.4 ) % ( 230.1 ) %

Stock-based compensation

( 3.9 ) % 1.8 % ( 5.2 ) %

Effective income tax rate

8.0 % ( 1.8 ) % ( 164.2 ) %

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets are as follows (in thousands):

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Net operating loss carryforwards

$ 29,841 $ 17,015

Research and development credits

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Deferred revenue

84,626 83,417

Operating lease liabilities

R&E Capitalization

Patent costs 7,472 6,843

Patent and license costs

Gross deferred tax assets

152,465 131,073

Deferred Tax Liabilities

Depreciation $ ( 81 ) $ ( 90 )

Intangible assets

$ ( 41,144 ) $ —

( 128 ) ( 81 )

Operating lease right-of-use assets

( 2,751 ) ( 3,174 )

Gross deferred tax liabilities

( 44,023 ) ( 3,255 )

Net deferred tax assets before valuation allowance

108,442 127,818

Valuation allowance

Net deferred tax assets $ — $ —

The Company has provided a full valuation allowance against its net deferred tax assets, as the Company believes that it is more likely than not that the deferred tax assets will not be realized.

Realization of future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and concluded that it is more likely than not that the Company will not realize the

benefit of its deferred tax assets.

( 124,295 ) ( 127,818 )

Net deferred tax assets/(liabilities)

$ ( 15,853 ) $ —

The Company has provided a full valuation allowance against its net deferred tax assets, outside of the indefinite tax liability booked as part of the Merger.

The Company believes that it is more likely than not that the net deferred tax assets will not be realized.

Realization of future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income.

The valuation allowance decreased by $ 3.5 million for the year ended December 31, 2023, primarily as a result of tax benefit booked as part of the Merger.

The valuation allowance decreased by $ 1.5 million for the year ended December 31, 2022, primarily as a result of pre-tax income and credits.

The valuation allowance increased by $ 22.4 million for the year ended December 31, 2021, primarily as a result of an increase in deferred revenue.

As of December 31, 2022, the Company is in the process of closing down operations in Russia and does not expect any tax liability.

At December 31, 2022, the Company has federal net operating loss carryforward of $ 62.4 million, which can be carried forward indefinitely but will be subject to an 80% limitation and state net operating loss carryforward of $ 61.8 million, which will expire at various times through 2042.

As of December 31, 2023, the Company is in the process of winding down operations in Russia and does not expect any tax liability relating to such operations.

At December 31, 2023, the Company has federal net operating loss carryforward of $ 108.7 million, which can be carried forward indefinitely, subject to an 80% limitation and state net operating loss carryforward of $ 110.3 million, which will expire at various times through 2043.

The Company has $ 4.9 million and $ 0.9 million, respectively, of federal and state research and development tax credit carryforwards, which will expire at various times through 2043.

Utilization of the NOL carryforwards and research and orphan drug credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended (the Code), and similar state law due to ownership changes that could occur in the future.

Utilization of the NOL carryforwards and research and orphan drug credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and similar state law due to ownership changes that could occur in the future.

These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

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Based on this analysis, the Company does not believe that any of its tax attributes through December 31, 2023 will expire unutilized due to Section 382 limitations.

To the extent the Company enters into future equity transactions, there could be a limitation on the Company’s tax attributes.

The Company applies ASC 740, Income Taxes to uncertain tax positions.

1 unchanged sentence

During 2023, the Company completed a detailed study of its research and development and orphan drug credits through December 31, 2022 .

The Company generated research credits for the years ended December 31, 2022 and 2021, but has not conducted a formal study to document its qualified activities.

This study may result in an adjustment to the Company’s research and development credit carryforwards;

however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position.

A full valuation allowance has been provided against our research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and development credit carryforwards and the valuation allowance.

The Tax Cuts and Jobs Act of 2017 requires taxpayers to capitalize and amortize, rather than deduct, research and experimental, or R&E, expenditures under section 174 for tax years beginning after December 31, 2021.

This rule became effective for the Company during the year and resulted in the capitalization of R&E costs of $ 38.1 million.

The Company will amortize these costs for tax purposes over 5 years if the R&E was performed in the U.S.

As a result, the Company adjusted its deferred tax asset balances and the impacts are included in the research tax credits and state income taxes - net of federal benefit lines in the effective rate reconciliation above.

The Tax Cuts and Jobs Act requires taxpayers to capitalize and amortize, rather than deduct, research and experimental, or R&E, expenditures under section 174 for tax years beginning after December 31, 2021.

These rules became effective for the

Company during the year ended December 31, 2022.

As a result, the Company has capitalized R&E costs of $ 44.7 million and $ 29.3 million for the years ended December 31, 2023 and December 31, 2022, respectively.

The Company will amortize these costs for tax purposes over five years if the R&E was performed in the U.S.

and over 15 years if the R&E was performed outside the U.S.

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As of December 31, 2023, the Company was not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

On August 3, 2020, a stockholder of Selecta filed a stockholder derivative action, purportedly on behalf of Selecta and against certain current and former members of the Company’s Board of Directors, as well as one affiliated company owned by a current board member, in the Court of Chancery of the State of Delaware, namely Franchi v.

Barabe, et al.

The complaint alleges that the individual defendants breached their fiduciary duties and committed corporate waste when they authorized a private placement transaction, announced on December 19, 2019, at a price allegedly below fair value.

The complaint further alleges that the four defendant directors who participated in the private placement were unjustly enriched in connection with the transaction.

On September 25, 2020, the defendants filed a motion to dismiss the lawsuit.

On November 6, 2020, the plaintiff filed an amended complaint, and the defendants filed a second motion to dismiss on January 8, 2021.

On December 31, 2020, we received a litigation demand letter from two other putative stockholders relating to the same private placement transaction.

On April 12, 2021, the Court of Chancery in the State of Delaware granted a motion to stay the litigation pending a review by a Special Committee appointed by the Company’s Board of Directors.

While the litigation was stayed, the parties reached an agreement in principle to settle the matter, and on March 18, 2022, they submitted a Stipulation and Agreement of Settlement and other documentation to the Court for its approval of the settlement.

On July 21, 2022, the Court held a settlement hearing, at which the settlement was approved.

On August 1, 2022, the Court entered an Order and Final Judgment which dismissed the action, and all claims contained therein, with prejudice.

As permitted under Delaware law, the Company indemnifies its directors for certain events or occurrences while the director is, or was, serving at the Company’s request in such capacity.

8 unchanged sentences

The Company does not believe that the resolution of these matters will have a material adverse effect the Company’s business, financial position, results of operations or cash flows.

Restructuring

In April 2023, in light of current market conditions, the Board of Directors, took steps to extend the Company's cash runway by pausing further development of SEL-302 for the treatment of MMA, and conducting a targeted headcount reduction.

On August 17, 2023, the Company announced additional steps to extend cash runway and maximize value for stockholders by continuing to prioritize development of SEL-212 and support of its collaboration with Astellas for Xork, and pausing further development of all of the Company’s other clinical and preclinical product candidates that it was no longer actively advancing.

As a result of these measures, the Company implemented a restructuring plan resulting in an approximate 79 % reduction of the Company's existing headcount by December 31, 2023.

The Company recognized restructuring expenses consisting of one-time cash severance payments and other employee-related costs of $ 6.4 million during the year ended December 31, 2023.

Cash payments for employee related restructuring charges of $ 2.5 million were paid as of December 31, 2023.

The Company recorded $ 5.6 million and $ 0.8 million based on each employee's role to research and development and general and administrative operating expense categories, respectively, on its consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2023.

The following table summarizes the change in the Company's accrued restructuring balance (in thousands):

Beginning Balance Ending Balance

December 31, 2022 Charges Payments December 31, 2023

Severance liability $ — $ 6,431 $ 2,535 $ 3,896

Subsequent Events

Collaboration and License Agreements

On January 8, 2023, the Company entered into a License and Development Agreement with Astellas Therapeutics, Inc., or the Astellas Agreement.

Under the Astellas Agreement obtained the sole and exclusive right to commercialize Xork for use in Pompe disease with an Astellas gene therapy investigational or authorized product, with a current focus on AT845.

The Company received a $ 10 million upfront payment in February 2023 and is eligible to receive $ 340.0 million for certain additional development and commercial milestones plus royalties on any potential commercial sales where Xork is used as a pre-treatment for AT845.

As a result of the sublicense of Xork to Astellas, the Company made a $ 4.0 million payment to Genovis in February 2023.

On February 28, 2024, the Company entered into a lease agreement with 7495 RP, LLC, or the Landlord, pursuant to which it agreed to lease from the Landlord the manufacturing space located at 7495 New Horizon Way, Frederick, Maryland, or the Frederick Lease Agreement.

The space consists of 19,199 leasable square feet of integrated manufacturing and office space.

The initial term of the Frederick Lease Agreement is expected to commence no later than April 1, 2024, once the Landlord has obtained legal possession of the premises free of the existing tenant and delivered full possession of the premises to the Company, or the Commencement Date.

The Frederick Lease Agreement will terminate seven full lease years following the Commencement Date which, assuming a Commencement Date of April 1, 2024, will be May 31, 2031.

The Company will have one option to extend the term of the Frederick Lease Agreement for a period of five years .

The base rent for the initial term is $ 0.1 million per month .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures