What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-13 compared with 2024-03-07 · 715 added, 666 removed, 1179 unchanged (54% 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, 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) 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.

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

While we believe we have a robust and efficient system of internal and disclosure controls and procedures, our management, including our Chief Executive Officer and Chief Financial Officer, recognize that it is impossible for our disclosure controls and procedures or our internal controls to prevent all errors and all fraud.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

We maintain disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), that are designed to ensure information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principle financial officer, to allow timely decisions regarding required disclosure.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are achieved.

Further, the design of a control system must be balanced against resource constraints, and therefore, the benefits of controls must be considered relative to their costs.

Given the inherent limitations in all systems of controls, no evaluation of controls can provide absolute assurance all control issues and instances of fraud, if any, within a company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of controls.

The design of any system of controls is also based in part upon certain assumptions about the

likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies and procedures may deteriorate.

Accordingly, given the inherent limitations in a cost-effective system of controls, financial statement misstatements due to error or fraud may occur and may not be detected.

Our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance of achieving their objectives.

We conduct periodic evaluations of our system of controls to enhance, where necessary, our control policies and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K.

Based upon this 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, 2024.

Remediation of Previously Identified Material Weakness

We previously reported a material weakness, identified in 2023, in our internal controls specifically related to the documentation of the assumptions supporting the valuation of the in-process research and development intangible assets acquired in connection with the Old Cartesian material business combination and the initial and on-going contingent value right obligation issued at that time to legacy Selecta stockholders.

This material weakness included a lack of sufficient documentation to provide evidence of the associated management review controls.

Although we have not entered into any business combination transactions since November 2023, the annual impairment testing required for our in-process research and development intangible assets necessitates similar valuation processes and controls.

For example, both could require the development of sophisticated long-range cash flow forecasts, by indication and market, appropriately adjusted for probability of success, which include but are not limited to:

(i) revenues from product sales and/or royalties;

(ii) expenses, including costs of goods sold, research and development, general and administrative and sales and marketing;

(iii) expectations of long-term effective tax rates;

(iv) consideration of capital expenditures which may be required in order to achieve revenue;

and (v) working capital requirements.

The resulting forecasts are then subjected to a discounted cash flow analysis in order to arrive at an estimate of fair value.

A similar cash flow forecasting process and discounted cash flow analysis is utilized at each reporting period to determine the estimated fair value of the contingent value right obligation.

For the Company’s required annual impairment testing (performed as of October 1, 2024) of its in-process research and development intangible assets, management documented and reviewed the significant inputs and assumptions used in the purchase accounting for the Old Cartesian material business combination.

As proscribed in “ASC 350 – Intangibles – Goodwill and Other,” management began with a qualitative assessment to determine whether it was necessary to perform the quantitative testing.

Management’s qualitative assessment resulted in a determination that it was not more likely than not that the Company’s in-process research and development assets were impaired.

Therefore, quantitative testing was not required to be performed.

At each reporting period during fiscal 2024, management documented and reviewed the significant inputs and assumptions used by the Company’s third-party valuation firm to determine the estimated fair value of the contingent value right obligation.

Cash flow forecasts were prepared by management, along with the necessary documentation and memoranda evidencing that the required controls were in place and operating effectively.

These cash flow forecasts were then subjected to discounted cash flow analysis to determine the estimated fair value of the contingent value right obligation.

Based upon management’s assessment, we have concluded that our disclosure controls and procedures were designed and operating effectively as of December 31, 2024 and, therefore, the previously identified material weakness was remediated.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f), to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Internal control over financial reporting includes our policies and procedures, such as our Code of Business Conduct and Ethics, which (i) require our employees, officers and directors to adhere to certain ethical standards;

(ii) require the maintenance of records, in reasonable detail, to help to ensure that our transactions, assets and liabilities are accurately and fairly recorded;

(iii) provide reasonable assurance that transactions are authorized by our management and directors and are recorded as necessary to allow for the accurate preparation of financial statements in accordance with U.S.

and (iv) provide reasonable assurance regarding the safeguarding of our assets and the prevention or timely detection of the unauthorized acquisition, use or disposition of our assets, which could have a material effect on the financial statements.

Internal control over financial reporting includes the controls themselves, management’s monitoring of those controls, actions taken to correct any deficiencies identified and oversight of our internal control environment by the Audit Committee of our Board of Directors.

Any system of internal control has inherent limitations and therefore may not prevent or detect misstatements.

Projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate over time because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of the end of our fiscal year 2024 and has reviewed the results of this assessment with the Audit Committee of our Board of Directors.

Management based its assessment on criteria established in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based upon this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2024.

Changes in 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.

Except as described above under “—Remediation of Previously Identified Material Weakness,” there have been no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the fiscal quarter ended December 31, 2024 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

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

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.”

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 .

On December 23, 2024 , Christopher Jewell , our Chief Scientific Officer , adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act.

Jewell’s plan provides for the exercise of vested stock options and the potential associated sale of up to 15,000 shares of our common stock until and including December 31, 2025.

The foregoing exercises or sales, if any, will be made in accordance with the prices and formulas set forth in the plan and such plan terminates on the earlier of the date all the shares under the plan are sold and December 31, 2025 .

During the fiscal quarter ended December 31, 2024, no other officer or director, as defined in Rule 16a-1(f) of the Exchange Act, 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

28 unchanged sentences

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

Certificate of Amendment to the Restated Certificate of Incorporation, as amended, of Cartesian Therapeutics, Inc., dated March 28, 2024.

8-K 001-37798 3.2 3/28/2024

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

1 unchanged sentence

Specimen Stock Certificate evidencing the shares of common stock

S-1 333-211555 4.2 5/24/2016

Form of Warrant to Purchase Shares of Series D Preferred Stock, dated August 9, 2013 or July 25, 2014, issued by the Registrant to Oxford Finance LLC and Square One Bank, together with a schedule of warrant holders

S-1 333-211555 4.5 5/24/2016

— — — Filed herewith

Form of Warrant to Purchase Shares of Series E Preferred Stock, dated December 31, 2015, issued by the Registrant to Oxford Finance LLC and Square One Bank, together with a schedule of warrant holders

S-1 333-211555 4.6 5/24/2016

Common Stock Purchase Warrant, dated June 27, 2017, by and between the Registrant and Timothy Springer, Ph.D.

8-K 001-37798 4.1 6/28/2017

Registration Rights Agreement, dated December 23, 2019, by and among the Registrant and the Investors named therein

8-K 001-37798 10.2 12/26/2019

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

2 unchanged sentences

10-Q 001-37798 4.2 11/5/2020

Form of Common Stock Purchase Warrant, dated December 23, 2019

8-K 001-37798 4.1 12/26/2019

Form of Amendment No.

1 to Common Stock Purchase Warrant by and between Selecta Biosciences, Inc.

and certain Directors, dated December 20, 2022

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.

10 unchanged sentences

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

Certificate of Amendment to the Certificate of Designation of Series A Non-Voting Convertible Preferred Stock, dated March 26, 2024.

8-K 001-37798 3.1 3/28/2024

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

8-K 001-37798 3.1 7/2/2024

Form of Registration Rights Agreement, dated as of July 2, 2024, by and among the Registrant and the Investors named therein.

8-K 001-37798 10.2 7/2/2024

Description of Securities

— — — Filed herewith

2016 Incentive Award Plan and form of award agreements thereunder

S-1/A 333-211555 10.2 6/8/2016

Amended and Restated 2016 Incentive Award Plan and form of award agreements thereunder

S-1 333-281204 10.1 8/2/2024

2016 Employee Stock Purchase Plan

2 unchanged sentences

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

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

2008 Stock Incentive Plan and form of award agreements thereunder

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

— — — Filed herewith

Cartesian Therapeutics, Inc.

17 unchanged sentences

dated May 11, 2018

— — — Filed herewith

10-K 001-37798 10.11(a) 3/7/2024

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

dated March 22, 2021

— — — Filed herewith

10-K 001-37798 10.11(b) 3/7/2024

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

dated Ma y 3 , 2021

— — — Filed herewith

dated May 3, 2021

10-K 001-37798 10.11(c) 3/7/2024

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

dated February 28, 2024

— — — Filed herewith

10-K 001-37798 10.12 3/7/2024

First Amendment to Lease Agreement by and between 7495 RP, LLC and the Registrant dated May 7, 2024

10-Q 001-37798 10.3(b) 5/8/2024

Second Amendment to Lease Agreement by and between 7495 RP, LLC and the Registrant dated August 30, 2024

10-Q 001-37798 10.1 11/7/2024

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

2 unchanged sentences

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

Employment Agreement, dates as of March 26, 2024, by and between the Registrant and Christopher Jewell, Ph.D.

8-K 001-37798 10.1 4/1/2024

Employment Agreement, dates as of March 28, 2024, by and between the Registrant and Metin K urtoglu, M.D., Ph.D.

8-K 001-37798 10.2 4/1/2024

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

2 unchanged sentences

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

10-K 001-37798 10.15(b) 3/7/2024

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-K 001-37798 10.16 3/7/2024

Stock Purchase Agreement, dated August 19, 2019, by and among the Registrant and the Investors named therein

8-K 001-37798 10.1 8/20/2019

Loan and Security Agreement, dated August 31, 2020, between Selecta Biosciences, Inc., Oxford Finance LLC, as Collateral Agent and as a lender, and Silicon Valley Bank, as a lender.

8-K 001-37798 10.1.1 9/3/2020

First Amendment to Loan and Security Agreement, dated September 7, 2021, by and among Selecta Biosciences, Inc., Oxford Finance LLC, and Silicon Valley Bank

10-Q 001-37798 10.3 11/9/2021

Second Amendment to Loan and Security Agreement, dated March 21, 2022, between Selecta Biosciences, Inc., Oxford Finance LLC, as Collateral Agent and as a lender, and Silicon Valley Bank, as a lender

Patent License Agreement by and between Biogen MA, Inc.

and Cartesian Therapeutics, Inc., dated September 8, 2023

10-K 001-37798 10.17 3/7/2024

Third Amendment to Loan and Security Agreement, dated September 20, 2022, between Selecta Biosciences, Inc., Oxford Finance LLC, as Collateral Agent and as a Lender, and Silicon Valley Bank, as a Lender

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

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

3 unchanged sentences

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

Sales Agreement, dated as of December 13, 2024, by and between the Registrant and Leerink Partners LLC

S-3 333-283803 1.2 12/13/2024

Cartesian Therapeutics, Inc.

Insider Trading Policy

— — — Filed herewith

Subsidiaries of Cartesian Therapeutics, Inc.

11 unchanged sentences

Compensation Clawback Policy

— — — Filed herewith

10-K 001-37798 97 3/7/2024

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

34 unchanged sentences

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

/s/ Kemal Malik MBBS Director March 13, 2025

Kemal Malik, MBBS

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

11 unchanged sentences

Consolidated Balance Sheets at December 31, 2024 and 2023

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

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023

Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) for the years ended December 31, 202 4 and 202 3

5 unchanged sentences

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.

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, 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 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.

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.

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.

We conducted our audits 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.

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.

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.

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

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.

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.

Critical Audit Matter

2 unchanged sentences

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.

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

Valuation of contingent value right

Description of the Matter

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.

As described in Note 3, the Company estimates the fair value of the Contingent Value Right (“CVR”) using a Monte Carlo simulation 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 the fair value of the liability are presented in the consolidated statements of operations and comprehensive loss.

The liability value is calculated based on significant inputs that are not observable in the market such as estimated cash flows, estimated probabilities of success, and expected volatilities of revenues, which represent a Level 3 measurement within the fair value hierarchy.

For the year ended December 31, 2024, the Company recorded the change in the fair value of the contingent value right liability of $(36.9 million).

As of December 31, 2024, the Company recorded the contingent value right liability and the contingent value right liability, net of current portion of $7.8 million and $387.7 million, respectively.

Auditing the fair value of the CVR liability 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 including expected milestone and royalty payments and discount rate which are based on estimates of future market or economic conditions.

How We Addressed the Matter in Our Audit

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.

To test the fair value of the CVR liability, our audit procedures included, among others, assessing the appropriateness of the valuation methodology and testing the significant assumptions and the completeness and accuracy of the underlying data used by the Company.

We compared the assumptions for expected milestone and royalty payments to projected industry revenue 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 rate used to value the CVR liability.

We also performed sensitivity analyses to evaluate the changes in the fair value of the CVR liability that would result from changes in the significant assumptions.

/s/ Ernst & Young LLP

9 unchanged sentences

Cash and cash equivalents $ 212,610 $ 76,911

Marketable securities — 28,164

Accounts receivable 872 5,870

11 unchanged sentences

Total assets $ 435,023 $ 305,050

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

Liabilities, convertible preferred stock, and stockholders’ deficit

Current liabilities:

1 unchanged sentence

Accrued expenses and other current liabilities 12,076 15,572

Loan payable — 8,476

Lease liability 2,851 2,166

5 unchanged sentences

Non-current liabilities:

Loan payable, net of current portion — 17,786

Lease liability, net of current portion 11,133 8,789

6 unchanged sentences

Series A Preferred Stock, $ 0.0001 par value;

no and 548,375 shares authorized as of December 31, 2024 and December 31, 2023, respectively;

no and 435,120.513 shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Options for Series A Preferred Stock — 3,703

Stockholders’ deficit:

Series A Preferred Stock, $ 0.0001 par value;

134,904.563 and no shares authorized as of December 31, 2024 and December 31, 2023, respectively;

120,790.402 and no shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Options for Series A Preferred Stock 3,703 —

Stockholders’ (deficit) equity:

Series B Preferred Stock, $ 0.0001 par value;

437,927 and no shares authorized as of December 31, 2024 and December 31, 2023, respectively;

437,927 and no shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Preferred stock, $ 0.0001 par value;

7 unchanged sentences

Accumulated other comprehensive loss ( 4,621 ) ( 4,600 )

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

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

Total stockholders’ deficit ( 6,802 ) ( 440,184 )

Total liabilities, convertible preferred stock, and stockholders’ deficit $ 435,023 $ 305,050

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

1 unchanged sentence

and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Operations and Comprehensive Loss

(Amounts in thousands, except share and per share data)

Year Ended December 31,

2023 2022 2021

Collaboration and license revenue $ 38,275 $ 26,004

Grant revenue 638 —

Total revenue 38,913 26,004

Operating expenses:

1 unchanged sentence

General and administrative 30,126 40,450

Impairment of long-lived assets 7,579 710

Total operating expenses 82,810 112,420

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

Investment income 4,964 2,073 44

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

Operating loss ( 43,897 ) ( 86,416 )

Interest income 7,386 4,964

Foreign currency transaction, net — 38

Interest expense — ( 2,833 )

3 unchanged sentences

Other income, net 606 691

(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:

Loss before income taxes ( 77,137 ) ( 238,710 )

Income tax (expense) benefit ( 287 ) 19,000

Net loss $ ( 77,424 ) $ ( 219,710 )

Other comprehensive loss:

Foreign currency translation adjustment ( 21 ) ( 53 )

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

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

Net (loss) income per share:

Unrealized gain on marketable securities — 11

Total comprehensive loss $ ( 77,445 ) $ ( 219,752 )

Net loss per share allocable to common stockholders:

Basic $ ( 4.48 ) $ ( 49.76 )

9 unchanged sentences

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 )

Issuance of common stock under Employee Stock Purchase Plan — — — 58,794 — 161 — — 161

Issuance of common stock upon exercise of options — — — 447,492 — 778 — — 778

Issuance of vested restricted stock units — — — 201,250 — — — — —

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

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

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 )

Balance at December 31, 2021 — $ — $ — 123,622,965 $ 12 $ 457,391 $ ( 430,316 ) $ ( 4,566 ) $ 22,521

Issuance of common stock under Employee Stock Purchase Plan — — — 120,877 — 189 — — 189

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

Issuance of vested restricted stock units — — — 131,430 — — — — —

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, license agreement — — — 892,857 — 1,000 — — 1,000

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

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

Currency translation adjustment — — — — — — — 18 18

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

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

Series A Series A Series A Series B Additional other Stockholders’

Preferred Stock Preferred Stock Preferred Stock Preferred Stock Common stock paid-in Accumulated comprehensive equity

Shares Amount Amount Shares Amount Shares Amount Shares Amount capital deficit loss (deficit)

Balance at December 31, 2022

— $ — $ — — $ — — $ — 5,101,459 $ 1 $ 493,322 $ ( 394,937 ) $ ( 4,558 ) $ 93,828

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

15 unchanged sentences

435,120.513 $ 296,851 $ 3,703 — $ — — $ — 5,397,597 $ 1 $ 179,062 $ ( 614,647 ) $ ( 4,600 ) $ ( 440,184 )

Issuance of Series A Preferred Stock in connection with private placement and settlement of related forward contract 99,140.326 75,197 — — — — — — — — — — —

Transfer of Series A Preferred Stock and options for Series A Preferred Stock to permanent equity ( 534,260.839 ) ( 372,048 ) ( 3,703 ) 534,260.839 — — — — — 375,751 — — 375,751

Conversion of Series A Preferred Stock to common stock — — — ( 413,470.437 ) — — — 13,782,324 2 ( 2 ) — — —

Issuance of Series B Preferred Stock and common stock in connection with private placement, net of issuance costs of $ 5,585

— — — — — 2,937,903 — 3,563,247 — 124,438 — — 124,438

Conversion of Series B Preferred Stock to common stock — — — — — ( 2,499,976 ) — 2,499,976 — — — — —

Issuance of common stock upon exercise of options — — — — — — — 458,544 — 1,179 — — 1,179

Issuance of common stock upon exercise of warrants — — — — — — — 65,681 — 2,877 — — 2,877

Stock-based compensation expense — — — — — — — — — 6,582 — — 6,582

Currency translation adjustment — — — — — — — — — — — ( 21 ) ( 21 )

Net loss — — — — — — — — — — ( 77,424 ) — ( 77,424 )

Balance at December 31, 2024

— $ — $ — 120,790.402 $ — 437,927 $ — 25,767,369 $ 3 $ 689,887 $ ( 692,071 ) $ ( 4,621 ) $ ( 6,802 )

On April 4, 2024, the Company effected a 1-for-30 reverse split of its issued and outstanding shares of common stock, or the Reverse Stock Split.

As a result of the Reverse Stock Split, all figures in this Annual Report on Form 10-K relating to shares of the Company’s common stock (such as share amounts, per share amounts, and conversion rates and prices), including but not limited to, the consolidated financial statements and footnotes included herein, have been adjusted to reflect the Reverse Stock Split for all periods presented.

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

3 unchanged sentences

Year Ended December 31,

2023 2022 2021

Cash flows from operating activities (Amounts in thousands)

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

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

Net loss $ ( 77,424 ) $ ( 219,710 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 1,151 843

1 unchanged sentence

Non-cash lease expense 2,437 1,754

Impairment of Right of use asset 710 — —

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

Impairment of long-lived assets 7,579 710

Loss on disposal of property and equipment 273 477

Stock-based compensation expense 6,582 22,524

10 unchanged sentences

Accounts payable ( 2,927 ) 2,834

Income taxes payable — ( 601 ) 601

Deferred revenue ( 5,849 ) 5,256

4 unchanged sentences

Proceeds from maturities of marketable securities — 28,254

Payment made for investments — — ( 2,000 )

Purchases of marketable securities — ( 33,501 ) ( 30,455 )

Purchases of property and equipment ( 9,093 ) ( 206 )

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

Proceeds from the sale of property and equipment 351 —

Net cash (used in) provided by investing activities ( 8,742 ) 34,609

Cash flows from financing activities

1 unchanged sentence

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

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

Net proceeds from issuance of common stock- at-the-market offering — 2,121 51,958

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

Net proceeds from issuance of common stock and Series B Preferred Stock in private placement 124,438 —

Equity offering costs ( 66 ) —

Proceeds from exercise of common warrants 2,877 —

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

1 unchanged sentence

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

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

Net cash provided by (used in) financing activities 168,428 ( 13,145 )

Effect of exchange rate changes on cash ( 21 ) ( 53 )

6 unchanged sentences

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

Cashless warrant exercise $ — $ — $ 5,624

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

Purchase of property and equipment not yet paid $ 847 $ 128

Equity offering costs in accrued liabilities $ 451 $ —

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

3 unchanged sentences

Description of the Business

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.

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 Frederick, Maryland.

The Company is a clinical-stage biotechnology company pioneering mRNA cell therapy 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 4.

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 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 224,099 shares of the common stock, par value $ 0.0001 per share, of the Company, or the common stock, and 384,930.724 shares of the newly designated Series A Non-Voting Convertible Preferred Stock, par value $ 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.

2 unchanged sentences

For additional information, see Note 4.

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).

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

The 2023 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.

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 defined below) 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.

On March 27, 2024, the Company’s stockholders approved the Conversion Proposal (as defined below).

For additional information, see Note 11.

Additionally, on March 27, 2024, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation, as amended, or the Charter, to effect a reverse stock split of the Company’s issued and outstanding common stock, at a ratio in the range of 1-for-20 and 1-for-30, with such ratio to be determined at the discretion of the Company’s board of directors, or the Board of Directors.

The Board of Directors subsequently approved a final reverse stock split ratio of 1-for-30, and the Company effected the Reverse Stock Split on April 4, 2024.

As a result of the Reverse Stock Split, all figures in this Annual Report on Form 10-K relating to shares of the Company’s common stock (such as share amounts, per share amounts, and conversion rates and prices), have been adjusted to reflect the Reverse Stock Split for all periods presented, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital.

Shares of common stock underlying outstanding stock options, restricted stock units and warrants were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with their terms.

Additionally, the conversion ratio of the Company’s Series A Preferred Stock was proportionally adjusted.

Stockholders entitled to fractional shares as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares.

On July 2, 2024, the Company entered into a securities purchase agreement, or the 2024 Securities Purchase Agreement, for a private investment in public equity financing, or the 2024 Private Placement, which provided for the issuance of 3,563,247 shares of common stock and 2,937,903 shares of Series B Non-Voting Convertible Preferred Stock, par value $ 0.0001 per share, or the Series B Preferred Stock, each at a purchase price of $ 20.00 per share.

The 2024 Private Placement resulted in gross proceeds of approximately $ 130.0 million before deducting placement agent fees and other offering expenses.

On September 20, 2024, the Company’s stockholders approved the Series B Conversion Proposal (as defined below).

For additional information, see Note 11.

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.

1 unchanged sentence

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

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

The Company’s product candidates are in preclinical 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.

3 unchanged sentences

Liquidity and Management’s Plan

The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain and sustain profitable operations.

The Company is subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful development of its product candidates, raising additional capital with favorable terms, protection of proprietary technology and market acceptance of any approved future products.

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 a credit facility.

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

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.

If actual results are different from management’s estimates, the Company may need to seek additional strategic or financing opportunities sooner than would otherwise be expected.

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.

As of December 31, 2024, the Company had an accumulated deficit of $ 692.1 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.

As of December 31, 2024, the Company’s cash, cash equivalents, and restricted cash were $ 214.3 million, of which $ 1.7 million was restricted cash related to lease commitments.

The Company believes the cash, cash equivalents and restricted cash as of December 31, 2024 will enable it to fund its current planned operations for at least the next 12 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.

However, there is no guarantee 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.

1 unchanged sentence

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.

Guarantees and Indemnifications

As permitted under Delaware law, the Company indemnifies its officers, directors, consultants and employees for certain events or occurrences that happen by reason of the relationship with, or position held at, the Company.

Through December 31, 2023, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding.

The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.

Summary of Significant Accounting Policies

Basis of Presentation

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.

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, Selecta Biosciences Security Corporation, a Massachusetts securities corporation which the Company dissolved in December 2024, 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:

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.

estimated fair value of the intangible assets acquired in connection with the Merger, estimated fair value of the CVRs, deferred income taxes, revenue recognition, estimated accrued research and development expenses, stock-based compensation expense, estimated fair value of the liability-classified warrants, and impairment of long-lived assets.

The Company assesses the above estimates on an ongoing basis;

1 unchanged sentence

Segment Information

Operating segments are defined as components of an enterprise for which separate and discrete information is available for evaluation by the chief operating decision maker, or the CODM, for the purposes of assessing performance and allocating resources.

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

The Company’s CODM function is fulfilled by its Chief Executive Officer.

The CODM function assesses performance for the segment and decides how to allocate resources based on consolidated net loss that is also reported on the consolidated statements of operations and comprehensive loss.

The CODM function uses net loss to monitor budget versus actual results to assess performance of the segment.

Segment assets are the same as total assets on the Company’s consolidated balance sheets.

All long-lived assets are located in the United States.

Long-lived assets consist of property and equipment, net, and operating lease right-of-use assets.

Summary of Significant Accounting Policies

Cash Equivalents, Marketable Securities and Investments

Cash equivalents include all highly liquid investments maturing within 90 days from the date of purchase.

2 unchanged sentences

Marketable securities with less than one year until maturity are classified as short term, while marketable securities with maturities greater than one year are classified as long term.

Unrealized gains or losses are included in accumulated other comprehensive income (loss).

Premiums or discounts from par value are amortized to investment income over the life of the underlying investment.

Unrealized gains or losses are included in accumulated other comprehensive loss.

Premiums or discounts from par value are amortized to interest income over the life of the underlying investment.

Although available to be sold to meet operating needs or otherwise, securities are generally held through maturity.

5 unchanged sentences

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.

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

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.

The Company also maintains cash in Russian bank accounts in denominations of both Russian rubles and U.S.

As of December 31, 2023, the Company maintained approximately $ 0.2 million in Russian bank accounts in denominations of both Russian rubles and U.S.

Fair Value of Financial Instruments

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.

The Company’s financial instruments consist mainly of cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and other current liabilities, investments, warrants to purchase common stock, forward contract liabilities, and contingent value rights.

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

Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

27 unchanged sentences

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.

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

The Company recognized an impairment charge on its right of use assets and related furniture and fixtures during the year ended December 31, 2024 and on a right-of-use asset during the year ended December 31, 2023.

Debt Issuance Costs

1 unchanged sentence

Debt issuance costs are amortized over the term of the related debt using the effective interest method and recorded as interest expense.

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in the equity of a business entity during a period from transactions and other events and circumstances from non-owner sources.

Accumulated Other Comprehensive Loss

Comprehensive loss is defined as the change in the equity of a business entity during a period from transactions and other events and circumstances from non-owner sources.

It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Comprehensive income (loss) consists of:

(i) all components of net income (loss) and (ii) all components of comprehensive income (loss) other than net income (loss), referred to as other comprehensive income (loss).

Other comprehensive income (loss) is comprised of unrealized gains and losses on debt securities and foreign currency translation adjustments.

Revenue Recognition

Comprehensive loss consists of:

(i) all components of net loss and (ii) all components of comprehensive loss other than net loss, referred to as other comprehensive loss.

Other comprehensive loss is comprised of unrealized gains and losses on debt securities and foreign currency translation adjustments.

Collaboration and License Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

5 unchanged sentences

(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 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:

29 unchanged sentences

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:

2 unchanged sentences

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied) in accordance with the royalty recognition constraint.

Grant Revenue

The Company has contracts with government-sponsored organizations for research and development related activities that provide for payments for reimbursable costs.

The Company recognizes grant revenue from these contracts as it performs services under these arrangements when the funding is committed.

Expenses associated with these contracts are recognized when incurred as research and development expense.

Grant revenue and related expenses are presented gross in the consolidated statements of operations and comprehensive loss as the Company has determined it is the primary obligor under the arrangements relative to the research and development services it performs as lead technical expert.

Amounts incurred that are subject to reimbursement from the sponsor are recorded as accounts receivable on the consolidated balance sheets.

Research and Development Costs

14 unchanged sentences

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, 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 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.

8 unchanged sentences

If warrants do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature.

If the warrants do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or other applicable GAAP.

After all relevant assessments are made, the Company concludes whether the warrants are classified as liability or equity.

Liability classified warrants are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss.

Liability classified warrants are required to be accounted for at fair value both on the date of

issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss.

Equity classified warrants are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

4 unchanged sentences

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

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.

Net Loss Per Share

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

The two-class method determines net income (loss) 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 income (loss) 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 income (loss) for the period had been distributed.

The Company’s Series A Preferred Stock, Series B 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.

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

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

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

For purposes 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, Series A Preferred Stock, and Series B Preferred Stock are considered potential dilutive common shares.

Contingent Liabilities

The Company accounts for its contingent liabilities in accordance with ASC No.

450, Contingencies .

The Company accounts for its contingent liabilities in accordance with ASC Topic 450, Contingencies (ASC 450) .

A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

5 unchanged sentences

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.

5 unchanged sentences

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.

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 one and five years .

9 unchanged sentences

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.

In accordance with ASC Topic 805, Business Combinations (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.

4 unchanged sentences

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.

For the years ended December 31, 2024 and 2023, the Company determined that there was no impairment to goodwill.

Indefinite-Lived Intangible Assets

4 unchanged sentences

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.

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.

3 unchanged sentences

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.

For the years ended December 31, 2024 and 2023, the Company determined that there was no impairment to the IPR&D assets.

Convertible Preferred Stock

The Company records its convertible 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.

The Company classifies its convertible preferred stock outside of stockholders’ deficit if the redemption of such shares is outside the Company’s control.

For shares classified outside of stockholders’ deficit, the Company does not adjust the carrying value of its convertible preferred stock to redemption value until it is probable of becoming redeemable.

As of December 31, 2024, there were no conditions that could have required cash redemption of the convertible preferred stock and therefore, all convertible preferred stock were classified within stockholders’ deficit.

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.

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’ deficit, if 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.

1 unchanged sentence

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.

4 unchanged sentences

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.

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

The estimated fair value of the CVR liability was determined using a discounted cash flow methodology as of December 31, 2023 and a Monte Carlo simulation method as of December 31, 2024 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 in the consolidated statements of operations and comprehensive loss.

The liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated probabilities of success, expected volatilities of revenues (Monte Carlo simulation) and risk-adjustment discount rate (discounted cash flow methodology), 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 Company accounts for contracts related to the future issuance of its convertible preferred stock as a liability if the underlying shares 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 shares are issued.

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

Subsequent measurement of the fair value of the Series A Preferred Stock forward contract liability was based on the market price of the Company’s common stock, which represented 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).

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 loss.

Recent Accounting Pronouncements

Recently Adopted

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

Subsequently, in November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses .

ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts.

ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses.

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

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.

This guidance is effective for the annual period beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

The Company adopted the new standard during the year ended December 31, 2024 and the amendments have be applied retrospectively to all prior periods presented in the consolidated financial statements.

See Note 21 for additional information.

Not Yet Adopted

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

1 unchanged sentence

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.

This guidance will be effective for the annual period 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.

The Company is currently in the process of evaluating the impact of the standard’s adoption on its consolidated financial statements and related disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting- Comprehensive Income- Expense Disaggregation Disclosures (ASU 2024-03), which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in notes to financial statements, including purchases of inventory, employee compensation, depreciation, amortization of intangible assets, and selling expenses.

This guidance will be effective for the annual period beginning the year ended December 31, 2027 and for interim periods beginning January 1, 2028, with early adoption permitted.

The Company is currently in the process of evaluating the impact of the standard’s adoption on its consolidated financial statements and related disclosures.

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.

11 unchanged sentences

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 .

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, or the Special 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 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 Special Meeting was held on March 27, 2024, during which the Company’s stockholders approved the Conversion Proposal, among other matters (see Note 11).

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

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.

1 unchanged sentence

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.

The Company has the obligation to absorb the 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

Therefore, the Company is the primary beneficiary.

27 unchanged sentences

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.

The fair value of the IPR&D assets were capitalized as of the Closing Date and are 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 each 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.

1 unchanged sentence

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):

The following summarizes the Company’s intangible assets acquired in the Merger (in thousands):

Acquisition Date

Fair Value Impairment Carrying Value at

December 31, 2023

Descartes-08 for MG $ 93,900

2 unchanged sentences

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 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 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.

2 unchanged sentences

Revenue $ 26,004

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.

Net loss $ ( 232,259 )

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 related to the Series A Preferred Stock was recorded as a liability as the underlying Series A Preferred Stock had a redemption feature that may have required 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

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

December 31, 2022

government agency securities and treasuries $ 13,566 $ — $ ( 9 ) $ 13,557

Corporate bonds $ 1,953 $ — $ ( 2 ) $ 1,951

Commercial paper 12,656 — — 12,656

Total $ 28,175 $ — $ ( 11 ) $ 28,164

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) 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 (loss) income per share (in thousands, except share and per-share data):

Net Loss Per Share Allocable to Common Stockholders

The Company reported a net loss for the years ended December 31, 2024 and 2023.

The Company used the treasury stock method to determine the number of dilutive shares for the year ended December 31, 2024.

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

Year Ended December 31,

2023 2022 2021

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

Net loss $ ( 77,424 ) $ ( 219,710 )

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 ) —

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

Net loss allocable to shares of common stock - basic ( 77,424 ) ( 257,260 )

Change in fair value of forward contract liability settled in February 2024

Net loss allocable to shares of common stock - diluted $ ( 77,870 ) $ ( 257,260 )

Weighted-average common shares outstanding - basic 17,276,822 5,170,319

Dilutive effect of employee equity incentive plans and outstanding warrants — 1,116,334 —

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

Net (loss) income per share:

Dilutive effect of forward contract liability settled in February 2024

Weighted-average common shares outstanding - diluted 17,357,943 5,170,319

Net loss per share:

Basic $ ( 4.48 ) $ ( 49.76 )

Diluted $ ( 4.49 ) $ ( 49.76 )

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:

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

Year Ended December 31,

2023 2022 2021

Common stock options and RSUs 2,150,273 776,865

Warrants to purchase common stock 692,523 1,040,813

Series A Preferred Stock 4,026,346 14,503,993

Series B Preferred Stock 437,927 —

Forward contract to issue Series A Preferred Stock — 3,304,677

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

Series A Preferred Stock options — 470,403

8 unchanged sentences

Contingent value right liability 395,500 — — 395,500

Forward contract liabilities 28,307 — 28,307 —

Total liabilities $ 399,336 $ — $ — $ 399,336

2 unchanged sentences

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

2 unchanged sentences

As of December 31, 2024 and 2023, 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.

As of December 31, 2024, the Company had restricted cash balances relating to secured letters of credit in connection with its real estate leases (see Note 9).

The Company’s consolidated statement of cash flows includes the following as of December 31, 2024 and 2023 (in thousands):

Year Ended December 31,

2023 2022 2021

Cash and cash equivalents $ 212,610 $ 76,911

Short-term restricted cash — 289 —

Long-term restricted cash 1,669 1,377

Total cash, cash equivalents, and restricted cash $ 214,279 $ 78,288

Marketable Securities

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.

Marketable securities represent holdings of available-for-sale marketable debt securities in accordance with the Company’s investment policy.

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.

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.

The outstanding 2019 Warrants expired on December 23, 2024 in accordance with their terms.

Pursuant to the terms of the 2019 Warrants, the Company could have been required to settle the 2019 Warrants in cash in the event of certain acquisitions of the Company and, as a result, the 2019 Warrants were 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 the 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.

See 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, 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).

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.

Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.

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 changes in the fair values of the warrants are reflected in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023.

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

7 unchanged sentences

Expected life .

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 expected life of the 2019 Warrants was assumed to be equivalent to their remaining contractual term which expired on December 23, 2024.

The expected life of the 2022 Warrants is assumed to be equivalent to their remaining contractual term which expire on April 11, 2027.

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:

The 2019 Warrants expired on December 23, 2024 and therefore, there were no 2019 Warrants outstanding as of December 31, 2024.

A summary of the Black-Scholes pricing model assumptions used to record the fair value of the 2019 Warrants liability as of December 31, 2023 is as follows:

Risk-free interest rate 4.79 %

2 unchanged sentences

Expected volatility 83.67 %

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

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

Risk-free interest rate 4.25 % 4.01 %

8 unchanged sentences

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.

On December 6, 2023, as contemplated by the Merger Agreement, the Company entered into a contingent value rights agreement, or the CVR Agreement, pursuant to which each holder of common stock or a 2022 Warrant as of December 4, 2023 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, 30 CVRs 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:

3 unchanged sentences

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 .

Upon the achievement of a development milestone in June 2024, Sobi became obligated to make a $ 30.0 million payment to the Company and made such payment in July 2024.

The proceeds from this payment, net of deductions specified in the CVR Agreement, is expected to be included in the next scheduled distribution to the holders of the CVR in March 2025.

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

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 estimated fair value of the CVR liability was determined using a discounted cash flow methodology as of December 31, 2023 and a Monte Carlo simulation model as of December 31, 2024 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 CVR liability are presented in the consolidated statements of operations and comprehensive loss.

The liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated probabilities of success, expected volatility of future revenues (Monte Carlo simulation model) and risk-adjustment discount rate (discounted cash flow methodology), which represent a Level 3 measurement within the fair value hierarchy.

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 2025 - 2038

Estimated probability of success 95.0 % - 100.0 %

Expected volatility of future revenues 22.0 %

Estimated cash flow dates 2024 - 2038

Estimated probability of success 95.0 %

Risk-adjusted discount rate 13.7 %

2 unchanged sentences

Fair value as of December 31, 2023

Issuances 340,300

Change in fair value 36,900

3 unchanged sentences

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 fair value of the forward contract at the Closing Date 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.

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 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 initial 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 2023 Private Placement.

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

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 non-cash settlement of the remaining second and third tranches occurred on January 12, 2024 and February 11, 2024, respectively, for a total of $ 35.2 million.

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

1 unchanged sentence

Fair value as of December 31, 2023

Issuances 155,308

Settlements ( 35,197 )

12 unchanged sentences

Property and equipment, net $ 9,912 $ 2,113

Depreciation expense was $ 0.7 million, $ 0.7 million and $ 0.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

See Note 9 for details regarding the impairment loss the Company recognized for certain furniture and fixtures during the year ended December 31, 2024.

Depreciation expense was $ 1.2 million and $ 0.7 million for the years ended December 31, 2024 and 2023, respectively.

Accrued Expenses

4 unchanged sentences

Accrued professional and consulting services 3,674 4,331

Accrued interest — 222

Property and equipment 782 128

Other 286 516

Accrued expenses $ 12,076 $ 14,733

7495 New Horizon Way Leases

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 lease commenced on May 1, 2024 which was the date the Landlord delivered full possession of the premises to the Company.

The Frederick Lease Agreement will terminate approximately 7.2 years following the commencement date.

The Company will have one option to extend the term of the Frederick Lease Agreement for a period of five years at a cost of 100 % of the then-fair market value, not to exceed 103 % of the then-current base rent.

Base rent, which was due beginning on July 1, 2024, is $ 0.9 million annually and is subject to an annual upward adjustment of 3 % of the then-current rental rate.

In addition, the Company is obligated to pay its share of operating costs and taxes related to the property.

The Company paid the first month’s rent of $ 0.1 million upon execution of the Frederick Lease Agreement.

The Company assessed the classification of the lease at the commencement date and concluded it should be accounted for as an operating lease.

The Company recorded a lease liability and right-of-use asset of $ 3.6 million and $ 3.7 million, respectively, on the commencement date.

The Frederick Lease Agreement includes a tenant improvement allowance of up to $ 0.7 million which was recognized as a reduction in the right-of-use asset and lease liability at the commencement date as the Company was reasonably certain to incur reimbursable costs related to alterations equal to or exceeding the amount.

Additionally, the prepaid rent was included as an adjustment to the right-of-use asset.

The discount rate of 14 % was determined based on the Company’s incremental borrowing rate adjusted for the lease term, including any reasonably certain renewal periods.

Effective May 7, 2024, the Company and the Landlord entered into the first amendment to the Frederick Lease Agreement, or the First Frederick Lease Agreement Amendment, providing for the expansion of the premises leased pursuant to the Frederick Lease Agreement by approximately 7,842 square feet.

In connection with the expansion of the leased premises, the Company is obligated to pay $ 0.3 million in additional annual base rent for the first year of the term, which is subject to an annual upward adjustment of 3 % of the then-current rental rate, as well as its share of operating costs and taxes.

The lease commenced on May 7, 2024 which was the date the Landlord delivered full possession of the premises to the Company and will be coterminous with the Frederick Lease Agreement.

The rent commencement date was September 1, 2024.

The Company assessed the classification of the lease at the commencement date and concluded it should be accounted for as an operating lease.

The Company recorded a lease liability and right-of-use asset each of $ 1.2 million on the commencement date.

The First Frederick Lease Agreement Amendment includes a tenant improvement allowance of up to $ 0.1 million which was recognized as a reduction in the right-of-use asset and lease liability at the commencement date as the Company was reasonably certain to incur reimbursable costs related to alterations equal to or exceeding the amount.

The discount rate of 14 % was determined based on the Company’s incremental borrowing rate adjusted for the lease term.

Effective August 30, 2024, the Company and the Landlord entered into the second amendment to the Frederick Lease Agreement, or the Second Frederick Lease Agreement Amendment, providing for the expansion of the premises leased pursuant to the Frederick Lease Agreement and First Frederick Lease Agreement Amendment by approximately 2,009 square feet.

In connection with the expansion of the leased premises, the Company is obligated to pay $ 0.1 million in additional annual base rent for the first year of the term, which is subject to an annual upward adjustment of 3 % of the then-current rental rate, as well as its share of operating costs and taxes.

The lease commenced on September 1, 2024, which was the date the Landlord delivered full possession of the premises to the Company and will be coterminous with the Frederick Lease Agreement.

The rent commencement date was September 1, 2024.

The Company assessed the classification of the lease at the commencement date and concluded it should be accounted for as an operating lease.

The Company recorded a lease liability and right-of-use asset each of $ 0.3 million on the commencement date.

The discount rate of 14 % was determined based on the Company’s incremental borrowing rate adjusted for the lease term.

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 $ 0.3 million for the Frederick Lease Agreement, the First Frederick Lease Agreement Amendment and the Second Frederick Lease Agreement Amendment, which is recognized as long-term restricted cash as of December 31, 2024 and renews automatically each year.

65 Grove Street Lease

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.

As part of the Watertown Lease Agreement, 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 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.

In connection with the Watertown Lease Agreement, the Company secured a letter of credit from SVB for $ 1.6 million.

On September 1, 2022, the Company entered into an amendment, or the Watertown Lease Agreement Amendment, to its lease agreement with BRE-BMR Grove LLC, originally entered into on July 23, 2019 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.

4 unchanged sentences

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.

Sublease income is included within other income, net in the consolidated statements of operations and comprehensive income (loss).

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

Sublease income is included within other income, net in the consolidated statements of operations and comprehensive loss.

As a result of the sublease agreement and Consent to Sublease, rent payments to BRE-BMR Grove LLC for the lease of the office space increased.

1 unchanged sentence

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 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 Agreement 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.

for $ 1.4 million, which is recognized as long-term restricted cash as of December 31, 2024 and 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.

2 unchanged sentences

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.

The term of the sublease expired 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 sheet.

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.

As a result, the Company recognized a $ 0.7 million right-of-use asset impairment charge in impairment of long-lived assets on its consolidated statements of operations and comprehensive loss during the year ended December 31, 2023.

As a result of the expiration of the sublease to Sobi in November 2024 and the Company’s decision to cease use of its office and laboratory space at 65 Grove Street, Watertown, Massachusetts, the Company assessed the right-of-use assets and related furniture and fixtures associated with the Watertown Lease Agreement and Watertown Lease Agreement Amendment

for impairment.

The carrying value of each asset group was compared against the future net undiscounted cash flows projected to be generated over the remaining lease terms.

These projections included management's estimates of cash inflows from potential sublease income.

The carrying amount of the asset groups was found to be unrecoverable, thus the Company assessed the fair value of each asset group.

The fair value was determined using the income approach, whereby the Company discounted the estimated net cash flows using a rate commensurate with the Company’s estimated incremental borrowing rate.

As a result of this assessment, which included unrecoverable operating and maintenance costs, the Company determined that each asset group was fully impaired.

As such, an impairment charge of $ 7.6 million was recognized during the year ended December 31, 2024, $ 7.4 million of which related to the right-of-use assets and $ 0.2 million related to property and equipment.

704 Quince Orchard Road Leases

2 unchanged sentences

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 Selecta (RUS)'s Moscow, Russia office.

Rent expense is recognized as incurred.

Rent expense for the years ended December 31, 2023, 2022 and 2021 was $ 3.8 million, $ 3.2 million, and $ 2.9 million, respectively.

Rent expense for the years ended December 31, 2024 and 2023 was $ 5.5 million, $ 3.8 million, respectively.

For the years ended December 31, 2024 and 2023, the components of lease costs were as follows (in thousands):

2023 2022 2021

Operating lease cost $ 3,856 $ 2,828

4 unchanged sentences

The maturity of the Company’s operating lease liabilities as of December 31, 2024 were as follows (in thousands):

Thereafter 2,188

Total future minimum lease payments 18,439

4 unchanged sentences

$ 3,559 $ 2,696

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:

Other than the initial recording of the right-of-use assets and lease liabilities for the Frederick Lease Agreement, First Frederick Lease Agreement Amendment, and Second Frederick Lease Agreement Amendment during the year ended December 31, 2024, the impairments on the right-of-use assets for the Watertown Lease Agreement and Watertown Lease Agreement Amendment during the years ended December 31, 2024 and 2023, as applicable, 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 assets and lease liabilities for the years ended December 31, 2024 and 2023 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 the Company’s operating leases:

Weighted-average remaining lease term 4.5 years 4.3 years

7 unchanged sentences

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.

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.

As of December 31, 2024 and 2023, the Company had no outstanding borrowings.

During the year ended December 31, 2024, the Company recognized no interest expense.

During the year ended December 31, 2023, the Company recognized $ 2.1 million of interest expense related to the 2020 Term Loan.

Convertible Preferred Stock

Series B Preferred Stock

The Certificate of Designation of Preferences, Rights, and Limitations of the Series B Non-Voting Convertible Preferred Stock, or the Series B Certificate of Designation, was filed with the Secretary of State of the State of Delaware on July 2, 2024, and provided for the designation of shares of Series B Preferred Stock and authorized the issuance of 2,937,903 shares of Series B Preferred Stock.

Additionally, on July 2, 2024, the Company entered into the 2024 Securities Purchase Agreement with certain institutional and accredited investors, or the Purchasers.

The Purchasers included (i) Dr.

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

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

Springer, and (iii) Dr.

Chafen Lu, Dr.

Springer’s wife.

Pursuant to the 2024 Securities Purchase Agreement, the Company agreed to issue and sell an aggregate of 3,563,247 shares of common stock and 2,937,903 shares of Series B Preferred Stock for an aggregate purchase price of $ 130.0 million in the 2024 Private Placement.

Each share of Series B Preferred Stock is convertible into one share of the Company’s common stock subject to stockholder approval of a proposal to issue such shares of common stock upon conversion of such shares of Series B Preferred Stock in accordance with the Listing Rules of the Nasdaq Stock Market LLC, or the Series B Conversion Proposal.

Under the 2024 Securities Purchase Agreement, the Company issued 3,563,247 shares of common stock and 578,403 shares of Series B Preferred Stock for an aggregate purchase price of $ 82.8 million to the Purchasers other than Dr.

Springer, TAS Partners LLC, and Dr.

The Company also issued (i) 1,636,832 shares of Series B Preferred Stock to Dr.

Springer, (ii) 721,361 shares of Series B Preferred Stock to TAS Partners LLC, and (iii) 1,307 shares of Series B Preferred Stock to Dr.

Lu for an aggregate purchase price of $ 47.2 million.

Pursuant to the 2024 Securities Purchase Agreement, the Company agreed to submit to its stockholders the approval of the Series B Conversion Proposal, at a special meeting of stockholders, which was held on September 20, 2024.

On September 20, 2024, at such special meeting, the Company’s stockholders approved the Series B Conversion Proposal, among other matters.

On September 25, 2024, pursuant to the terms of the Series B Certificate of Designation, 2,499,976 shares of Series B Preferred Stock automatically converted into 2,499,976 shares of common stock;

437,927 shares of Series B Preferred Stock did not automatically convert at such time due to beneficial ownership limitations.

The Series B Preferred Stock were classified in permanent equity as there were no conditions that could have required cash redemption of the shares.

The Series B Preferred Stock has the following rights and preferences:

Prior to the stockholder approval of the Series B Conversion Proposal the Series B Preferred Stock were not convertible into shares of common stock.

Following the stockholder approval of the Series B Conversion Proposal, each share of Series B Preferred Stock automatically converted into one share of common stock, subject to certain limitations, including that a holder of Series B Preferred Stock is prohibited from converting shares of Series B 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 0.0 % and 19.9 %) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion;

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

The Series B Preferred Stock is not redeemable.

Holders of Series B Preferred Stock are entitled to receive dividends on shares of Series B Preferred Stock on an as-converted basis (without regard to the beneficial ownership limitation) equal to the dividends paid on shares of the common stock.

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

However, as long as any shares of Series B 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 B Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series B Preferred Stock, (b) alter or amend the Series B Certificate of Designation, or (c) amend the Charter or other organizational documents in any manner that alters or changes the preferences, rights, privileges, or powers of, or restrictions provided for the benefit of the holders of Series B Preferred Stock.

The holders of Series B Preferred Stock shall rank on parity with the holders of common stock and the holders of Series A Preferred Stock 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 B Preferred Stock shall be entitled to receive out of the assets of the Company, whether capital or surplus, the same amount that a holder of common stock would receive if the Series B Preferred Stock were fully converted, which shall be paid pari passu with holders of common stock and holders of Series A Preferred 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 B Preferred Stock pursuant to the preceding sentence, all remaining assets will be distributed ratably to the holders of the Series A Preferred Stock, Series B Preferred Stock and common stock.

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.

The Certificate of Designation of Preferences, Rights, and Limitations of the Series A Non-Voting Convertible Preferred Stock, or the Series A 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 2023 Securities Purchase Agreement with (i) Dr.

2 unchanged sentences

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.

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 2023 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 2023 Private Placement.

In the 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.

7 unchanged sentences

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).

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.

The remaining portion of the forward contract liability was settled upon the issuance of 49,570.163 shares of Series A Preferred Stock each on January 12, 2024 and February 11, 2024, respectively (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

On March 26, 2024, the Company, with the consent of the requisite holders of Series A Preferred Stock, amended the Series A Certificate of Designation such that the automatic conversion of the Series A Preferred Stock into common stock, or the Automatic Conversion, would occur eight business days following stockholder approval of the Conversion Proposal.

On March 27, 2024, the Company’s stockholders approved the Conversion Proposal, among other matters, at the Special Meeting.

On April 8, 2024, pursuant to the terms of the Series A Certificate of Designation, as amended, 367,919.247 shares of Series A Preferred Stock automatically converted into 12,263,951 shares of common stock, including the non-cash reclassification of an amount equal to the increase in par value of common stock from additional paid-in capital;

166,341.592 shares of Series A Preferred Stock did not automatically convert at such time due to beneficial ownership limitations.

On October 11, 2024, pursuant to a Notice of Optional Conversion delivered to the Company by a holder of Series A Preferred Stock pursuant to the Series A Certificate of Designation, 45,551.190 shares of Series A Preferred Stock held by such holder were converted into 1,518,373 newly issued shares of common stock.

In accordance with the guidance in ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480) the Series A Preferred Stock was classified outside of stockholders’ deficit upon issuance and as of December 31, 2023 because the shares of Series A Preferred Stock contained redemption features that were not solely within the control of the Company.

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

Accordingly, no accretion was recognized for the Series A Preferred Stock.

As a result of the approval of the Conversion Proposal, all conditions that could have required cash redemption of the Series A Preferred Stock were removed.

Since the Series A Preferred Stock was no longer redeemable, the associated balances of the Series A Preferred Stock were reclassified to permanent equity during the first quarter of 2024.

The Series A Preferred Stock has the following rights and preferences:

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

Following the stockholder approval of the Conversion Proposal, each share of Series A Preferred Stock automatically converted into 33.333 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 conversion;

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.

Each share of Series A Preferred Stock outstanding that was 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.

Prior to the stockholder approval of the Conversion Proposal, each share of Series A Preferred Stock was redeemable at the option of the holder at any time following the date that was 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 have been convertible into shares of common stock as a result of the beneficial ownership limitation referred to above.

The amount payable upon redemption would have been 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 have been convertible into.

Following the Conversion Proposal, the Series A Preferred Stock is not redeemable.

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;

1 unchanged sentence

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

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 Series A 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 Series A 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 and the holders of Series B Preferred Stock 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 and holders of Series B Preferred Stock, plus an amount equal to any dividends declared but unpaid.

As of December 31, 2024, the Company had 120,790.402 shares of Series A Preferred Stock and 437,927 shares of Series B Preferred Stock issued and outstanding, respectively, which are convertible into a total of 4,464,273 shares of common stock.

Equity Financings

2024 Private Placement

On July 2, 2024, the Company and the Purchasers entered into the 2024 Securities Purchase Agreement for the 2024 Private Placement.

Pursuant to the 2024 Securities Purchase Agreement, the Purchasers agreed to purchase an aggregate of 3,563,247 shares of common stock and 2,937,903 shares of Series B Preferred Stock, inclusive of 2,359,500 shares of Series B Preferred Stock purchased by directors and executive officers of the Company, and related parties thereto, each at a price per share of $ 20.00 .

The 2024 Private Placement resulted in gross proceeds of approximately $ 130.0 million before deducting placement agent fees and other offering expenses.

On December 5, 2023, the Company issued 224,099 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 4).

Underwritten 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.

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 914,285 shares of the Company’s common stock and 2022 Warrants to purchase up to 685,712 shares of common stock, or 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 $ 42.30 .

8 unchanged sentences

2024 Sales Agreement

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.

On December 13, 2024, the Company entered into a Sales Agreement, or the 2024 Sales Agreement, with Leerink Partners to 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 2024 Sales Agreement will be issued pursuant to the Company’s shelf registration statement on Form S-3 (File No.

333-283803), filed on December 13, 2024 with the SEC and related prospectus supplement, filed on January 8, 2025 with the SEC, for aggregate gross sales proceeds of up to $ 100.0 million.

2021 Sales Agreement

1 unchanged sentence

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.

During the years ended December 31, 2024 and 2023, the Company sold no shares of its common stock pursuant to the 2021 Sales Agreement.

The 2024 Sales Agreement supersedes the 2021 Sales Agreement, which is no longer in effect.

June 2020 Sobi Stock Purchase

6 unchanged sentences

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.

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 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

On December 18, 2019, the Company entered into a securities purchase agreement, or the 2019 Purchase Agreement, with a group of institutional investors and certain members of the Board of Directors.

Pursuant to the 2019 Purchase Agreement, the Company sold an aggregate of 37,634,883 shares of its common stock at a purchase price of $ 1.46 per share, warrants to purchase an aggregate of 22,988,501 shares of common stock at a purchase price of $ 0.125 per share underlying each common warrant, and pre-funded warrants to purchase an aggregate of 8,342,128 shares of common stock at a purchase price of $ 1.46 per share, all with five year terms, or the 2019 PIPE.

The closing of the 2019 PIPE occurred on December 23, 2019.

On December 18, 2019, the Company entered into a securities purchase agreement, or the 2019 Securities Purchase Agreement, with a group of institutional investors and certain members of the Board of Directors.

Pursuant to the 2019 Securities Purchase Agreement, the Company sold an aggregate of 1,254,496 shares of its common stock at a purchase price of $ 43.80 per share, warrants to purchase an aggregate of 766,275 shares of common stock at a purchase price of $ 3.75 per share underlying each common warrant, and pre-funded warrants to purchase an aggregate of 278,070 shares of common stock at a purchase price of $ 43.80 per share, all with five year terms, or the 2019 Private Placement.

The closing of the 2019 Private Placement occurred on December 23, 2019.

The exercise price of the pre-funded warrants is $ 0.003 per share and the exercise price for the common warrants is $ 43.80 per share.

6 unchanged sentences

As discussed in Note 6, the Company remeasured the Amended 2019 Warrants at the fair value of $ 0.8 million on December 20, 2022 and reclassified this amount to additional paid-in capital.

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, 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 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.

Pursuant to the Institutional Purchase Agreement, the Company sold an aggregate of 2,750,000 shares of its common stock at a purchase price equal to $ 16.00 per share.

Pursuant to the Springer Purchase Agreement, the Company sold to Dr.

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 during the year ended December 31, 2022.

The outstanding 2019 Warrants expired on December 23, 2024 in accordance with their terms.

The remaining 2022 Warrants liability was revalued as of December 31, 2024 at $ 3.8 million.

During the years ended December 31, 2024 and 2023, the Company recorded a decrease of $ 2.6 million and $ 12.7 million, respectively, in the fair value of the warrants in the consolidated statements of operations and comprehensive loss.

The following is a summary of warrant activity for the years ended December 31, 2024 and 2023:

3 unchanged sentences

Outstanding at December 31, 2022 74,539 966,393 1,040,932 $ 46.03

Issuance — 20,571,429 20,571,429 1.55

Canceled ( 79,130 ) — ( 79,130 ) $ 17.71

Reclassification of warrant liability to equity on modification 2,022,987 ( 2,022,987 ) — $ 1.46

Expired ( 119 ) — ( 119 ) $ 503.10

Outstanding at December 31, 2023 74,420 966,393 1,040,813 $ 45.98

Canceled ( 3,576 ) — ( 3,576 ) 16.77

Exercises ( 65,681 ) — ( 65,681 ) 43.80

Expired ( 1,928 ) ( 280,681 ) ( 282,609 ) 44.09

Outstanding at December 31, 2024 6,811 685,712 692,523 $ 46.96

11 unchanged sentences

Shares available for future stock incentive awards 4,205,199

Unvested restricted stock units 444,238

Outstanding common stock options 1,706,035

Series A Preferred Stock 4,026,346

Series B Preferred Stock 437,927

Total 11,512,268

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 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.

The 2008 Plan provided for the granting of incentive and non-qualified stock option and restricted stock awards as determined by the Board of Directors.

In connection with the Merger, all outstanding awards issued under the 2008 Plan were cancelled, and the Board of Directors formally terminated the 2008 Plan.

In June 2016, the Company’s stockholders approved the 2016 Incentive Award Plan, or the 2016 Plan, which authorized 40,341 shares of common stock for future issuance under the 2016 Plan and the Company ceased granting awards under the 2008 Plan.

1 unchanged sentence

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.

On December 9, 2020, the Board established a Stock Option Committee authorized to grant awards to certain employees and consultants subject to conditions and limitations within the 2016 Plan.

Additionally, pursuant to the terms of the 2016 Plan, the Board of Directors is authorized to grant awards with respect to common stock, and may delegate to a committee of one or more members of the Board of Directors or executive officers of the Company the authority to grant options and restricted stock units.

On December 9, 2020, the Board of Directors established a Stock Option Committee authorized to grant awards to certain employees and consultants subject to conditions and limitations within the 2016 Plan.

In January 2024 and 2023, the number of shares of common stock that may be issued under the 2016 Plan was increased by 215,903 and 204,056 shares, respectively.

In June 2024, the Company’s stockholders approved an amendment and restatement of the 2016 Plan to reserve an additional 3,466,544 shares of the Company’s common stock for issuance.

As of December 31, 2024, 3,520,174 shares remain available for future issuance under the 2016 Plan.

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 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.

In September 2018, the Company’s 2018 Employment Inducement Incentive Award Plan, or the 2018 Inducement Incentive Award Plan was adopted by the Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules, which authorized 39,166 shares of its common stock for issuance.

In March 2019, the Board of Directors approved an amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 66,667 shares of the Company’s common stock for issuance thereunder.

In December 2023, the Board of Directors approved an amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 60,833 shares of the Company’s common stock for issuance thereunder.

In June and December 2024, the Board of Directors approved amendments and restatements of the 2018 Inducement Incentive Award Plan to reserve an additional 360,000 and 450,000 shares, respectively, of the Company’s common stock for issuance thereunder.

As of December 31, 2024, there are 611,960 shares available for future grant under the 2018 Inducement Incentive Award Plan.

2 unchanged sentences

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.

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, 2024, there are 27,270 shares available for future grant under the Old Cartesian Plan.

1 unchanged sentence

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.

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 $ 1.3 million and $ 0.2 million was recognized as research and development expense in the consolidated statements of operations and comprehensive loss during the years ended December 31, 2024 and 2023, respectively.

Following the Automatic Conversion, the options exercisable for shares of Series A Preferred Stock became exercisable for shares of common stock.

Settlement of Equity Compensation Awards

4 unchanged sentences

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 $ 61.80 per share, all awards were settled in cash for an amount equal to $ 61.80 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), 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):

Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive 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 as described in Note 16, was as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Research and development $ 3,217 $ 12,985

9 unchanged sentences

Weighted-average fair value of common stock or Series A Preferred Stock, as applicable $ 12.00 $ 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:

The estimated grant date fair values of 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:

Year Ended December 31,

2023 2022 2021

Risk-free interest rate 4.02 % 3.95 %

3 unchanged sentences

Weighted-average fair value of common stock $ 19.63 $ 34.54

The expected term of the Company's stock options granted to employees has been determined utilizing the "simplified" method for awards that qualify as "plain-vanilla" options.

The expected term of the Company’s stock options granted has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

Under the simplified method, the expected term is presumed to be the midpoint between the vesting date and the end of the contractual term.

1 unchanged sentence

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, 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:

The weighted average grant date fair value of stock options granted during the years ended December 31, 2024 and 2023 was $ 15.63 and $ 26.90 , respectively.

The total intrinsic value of stock options exercised during the year ended December 31, 2024 was $ 7.0 million.

No stock options were exercised during the year ended December 31, 2023.

As of December 31, 2024, total unrecognized compensation expense related to unvested common stock options was $ 10.3 million, which is expected to be recognized over a weighted average period of 2.9 years.

The following table summarizes the stock option activity under the 2016 Plan, the 2018 Inducement Incentive Award Plan, and the Old Cartesian Plan for options for common stock:

Weighted-average

4 unchanged sentences

Granted 1,000,092 $ 19.63

Assumed in connection with Merger 23,306,661 $ 0.10

Converted from options for Series A Preferred Stock 470,403 $ 2.40

Exercised ( 458,544 ) $ 2.57

Forfeited ( 82,781 ) $ 17.28

Cancelled/settled in connection with the Merger ( 18,840,592 ) $ 2.86

Outstanding at December 31, 2024 1,706,035 $ 11.99 7.59 $ 12,025

1 unchanged sentence

Vested and expected to vest at December 31, 2024 1,564,044 $ 11.31 7.44 $ 11,961

Non-employee consultants

Outstanding at December 31, 2022 266,239 $ 8.05 5.08 $ —

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:

4 unchanged sentences

Outstanding at December 31, 2023 14,112.299 $ 79.94 5.91 $ 8,601

Assumed in connection with Merger 14,112.299 $ 79.94

Converted to options for common stock ( 14,112.299 ) $ 79.94

Outstanding at December 31, 2024 — $ —

Vested at December 31, 2023 10,860.441 $ 71.67 5.15 $ 6,709

Vested and expected to vest at December 31, 2023 14,112.299 $ 79.94 5.91 $ 8,601

As a result of the approval of the Conversion Proposal on March 27, 2024, all conditions that could have required cash redemption of the Series A Preferred Stock underlying the stock options were removed.

Since the Series A Preferred Stock was no longer redeemable, the associated balances of the stock options to purchase Series A Preferred Stock were reclassified to additional paid-in capital during the first quarter of 2024.

Following the Automatic Conversion, all options to purchase Series A Preferred Stock were converted into options to purchase common stock with adjustments to the underlying number of shares of common stock determined by multiplying the number of shares of Series A Preferred Stock by 33.333 and rounding down to the nearest whole number of shares and the per-share exercise price by dividing the per-share exercise price of Series A Preferred Stock by 33.333 and rounding the resulting exercise price up to the nearest whole cent.

Restricted Stock Units

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 .

During the year ended December 31, 2024, the Company granted 477,037 restricted stock unit awards with a weighted average fair value of $ 19.86 per share based on the closing price of the Company’s common stock on the date of grant under the 2016 Plan and the Old Cartesian Plan, which generally vest 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.

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:

The Company has estimated a forfeiture rate of 10 % for restricted stock unit awards based on historical experience.

No restricted stock unit awards vested during the year ended December 31, 2024.

The aggregate fair value of restricted stock unit awards that vested during the year ended December 31, 2023 was $ 0.7 million.

Unrecognized compensation expense related to the restricted stock unit awards was $ 5.4 million as of December 31, 2024, which is expected to be recognized over a weighted-average period of 2.9 years.

The following table summarizes the Company’s restricted stock units under the 2016 Plan and the Old Cartesian Plan:

Number of shares Weighted average

1 unchanged sentence

Unvested at December 31, 2023

1,705,558 $ 2.62

Granted 477,037 19.86

Vested ( 636,418 ) 2.40

Forfeited ( 32,799 ) 19.80

Cancelled/settled in connection with the Merger ( 1,677,632 ) 1.96

Unvested at December 31, 2024

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 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.

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.

444,238 $ 19.86

Revenue Arrangements

Collaboration and license revenue

Astellas Gene Therapies

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

In January 2023, the Company entered into the License and Development Agreement, or the Astellas Agreement, with Audentes Therapeutics, Inc., or 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.

Xork, Genovis’ IgG Protease, was licensed pursuant to an Exclusive License Agreement, or the Genovis Agreement, with Genovis AB (publ.), or Genovis, 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 was entitled to receive up to $ 340.0 million in future additional payments over the course of the partnership that were 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 was 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 have been required to be distributed to holders of CVRs, net of certain deductions.

Pursuant to the Astellas Agreement, the Company would have had 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 reimbursed 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 would have had control and responsibility over regulatory filings, including any investigational drug applications, biologics license applications, and marketing authorization applications relating to the licensed product.

Astellas would have had the exclusive right and responsibility to research, develop, and commercialize Astellas products used in combination with Xork and would have had 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 represented 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 represented 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 recognized 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 would be included in the initial transaction price.

All other development milestones would be fully constrained and would only have been included in the transaction price when the applicable milestone was deemed probable of achievement.

they became probable.

As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt and timing of such development milestones was outside the control of the Company and probability of success criteria was estimated.

The Company re-evaluated the transaction price in each reporting period, as uncertain events were resolved, or as other changes in circumstances occurred.

In accordance with ASC 606, the Company would have only recognized revenue associated with sales-based milestones and royalties when the subsequent sales thresholds were reached and underlying sales occurred, respectively.

The Company determined that a significant financing component did 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 did not represent material rights under the Astellas Agreement.

Astellas had 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.

In March 2024, the Company was notified by Astellas of its intention to terminate the Astellas Agreement, which occurred effective June 6, 2024.

As of December 31, 2024, there were no unsatisfied performance obligations related to the Astellas Agreement.

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.

As of December 31, 2024 and 2023, the Company recorded a receivable of $ 0.1 million and $ 0.3 million, respectively, representing billings for the Xork Development Services that were subject to reimbursement by Astellas.

Revenue of $ 6.3 million related to the Astellas Agreement was recognized during the year ended December 31, 2024, inclusive of $ 3.2 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, 2024.

Revenue of $ 5.5 million related to the Astellas Agreement was recognized during the year ended December 31, 2023.

1 unchanged sentence

License and Development Agreement

On October 1, 2021, the Company entered into a License Agreement, or the Takeda Agreement, with Takeda.

On October 1, 2021, the Company entered into a License Agreement, or the Takeda Agreement, with Takeda Pharmaceuticals USA, Inc., or Takeda.

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.

12 unchanged sentences

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.

If Takeda exercised its covenant release rights, the Company 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.

1 unchanged sentence

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.

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.

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.

Swedish Orphan Biovitrum

The Takeda Agreement was terminated effective July 25, 2023, following Takeda’s decision to discontinue discovery and preclinical activities in adeno-associated virus, or AAV, gene therapy.

As of December 31, 2024 and 2023, there were no unsatisfied performance obligations related to the Takeda Agreement.

No revenue and revenue of $ 0.6 million related to the Takeda Agreement was recognized during the years ended December 31, 2024 and 2023, respectively.

Swedish Orphan Biovitrum AB (publ.)

License and Development Agreement

3 unchanged sentences

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.

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.

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.

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.

15 unchanged sentences

Given the reversion of the rights under the Sobi License represents a penalty in substance for a termination by Sobi, the contract term would remain the stated term of the Sobi License.

The Company determined that the Sobi License contains three distinct performance obligations due to the nature of the promises in the contract, which includes conducting the Phase 3 DISSOLVE trials, Sobi’s option to set-up a second source supplier, and a combined obligation comprised of the delivery of the license to SEL-212, transfer of the know-how and the manufacturing and delivery of SEL-212 supply for development, or the Combined License Obligation.

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 were included in the transaction price.

The Company determined that the Sobi License contained three distinct performance obligations due to the nature of the promises in the contract, which includes conducting the Phase 3 DISSOLVE trials, Sobi’s option to set-up a second source supplier, and a combined obligation comprised of the delivery of the license to SEL-212, transfer of the know-how and the manufacturing and delivery of SEL-212 supply for development, or the Combined License Obligation.

As the set-up of a second source supplier was optional for Sobi and the Company was to 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.

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.

9 unchanged sentences

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.

The Company determined the standalone selling price of the second source supplier option by determining the discount given to Sobi multiplied by the likelihood that Sobi would have exercised 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.

As the Company was to provide the set-up and technology transfer services and the future supply at cost, the discount of the option was equal to the margin amount.

The Company considered discussions with Sobi as well as probability of regulatory success of SEL-212 in determining the likelihood of exercise.

The Company estimated the standalone selling price of the Combined License Obligation by utilizing a discounted cash flow model.

The Company determined that the delivery of the supply to Sobi best represents the pattern of delivery of the Combined License Obligation as the supply is essential to the utility of the license and know-how.

The Company will recognize the revenue allocated to the Combined License Obligation by utilizing the output method.

The Company estimated the total supply of the Compound and ImmTOR to be required during the clinical trial period and will recognize revenue as this supply is shipped for use in the clinical trials.

The Company will recognize the revenue allocated to the conducting of the Phase 3 DISSOLVE trials obligation by utilizing the input method.

The Company estimated the total budgeted costs to be incurred over the Phase 3 DISSOLVE trials and will recognize revenue as these costs are incurred.

The Company’s costs best represent the pattern of transfer as these will capture all performance of the trials completed to date and can be readily measured.

The Company will recognize the revenue allocated to the second source supplier option when the future services and goods are transferred.

The Company determined that the delivery of the supply to Sobi best represented the pattern of delivery of the Combined License Obligation as the supply was essential to the utility of the license and know-how.

The Company recognized the revenue allocated to the Combined License Obligation by utilizing the output method.

The Company estimated the total supply of the Compound and ImmTOR required during the clinical trial period and recognized revenue as this supply was shipped for use in the clinical trials.

The Company recognized the revenue allocated to the conducting of the Phase 3 DISSOLVE trials obligation by utilizing the input method.

The Company estimated the total budgeted costs to be incurred over the Phase 3 DISSOLVE trials and recognized revenue as these costs were incurred.

The Company’s costs best represented the pattern of transfer as these captured all performance of the trials completed to date and were readily able to be measured.

The Company was to recognize the revenue allocated to the second source supplier option when the future services and goods were transferred.

On June 29, 2022, the Company completed enrollment of the DISSOLVE II trial.

3 unchanged sentences

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.

Additionally, Sobi’s option to set-up a second source supplier was removed as a result of the amendment.

Further, 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.

On June 28, 2024, Sobi initiated a rolling biologics license application to the FDA for SEL-212 for the potential treatment of chronic refractory gout which resulted in the achievement of a development milestone and a $ 30.0 million payment obligation from Sobi to the Company.

As a result, the development milestone was no longer constrained and $ 30.0 million was recognized as revenue during the year ended December 31, 2024 as there were no remaining performance obligations under the Sobi License.

The proceeds from the achievement of the development milestone were received from Sobi in July 2024 and are expected to be included, net of deductions as specified in the CVR Agreement, in the next scheduled distribution to holders of the CVRs in March 2025.

As of December 31, 2024 and 2023, the Company recorded a total outstanding receivable of $ 0.1 million and $ 4.6 million, respectively, representing billings for the Phase 3 DISSOLVE program that are subject to reimbursement by Sobi.

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.

Additionally, as of December 31, 2023, the Company recorded a total unbilled receivable of $ 3.0 million representing revenue earned but not yet billed for the Phase 3 DISSOLVE program.

As of December 31, 2024, there was no unbilled receivable outstanding.

Revenue of $ 31.9 million, inclusive of the $ 30.0 million development milestone, related to the Sobi License was

recognized during the year ended December 31, 2024, and $ 1.9 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, 2024.

Revenue of $ 19.4 million related to the Sobi License was recognized during the year ended December 31, 2023, 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.

Sarepta Therapeutics, Inc.

3 unchanged sentences

Sarepta initially had an option term of 24 months during which it could opt-in to obtain an exclusive license to further develop and commercialize the product to treat at least one Indication, with a potential to extend the option term for an additional fee.

The Company will supply ImmTOR to Sarepta for clinical supply on a cost-plus basis.

Sarepta paid a $ 2.0 million upfront payment to the Company upon signing of the Sarepta Agreement, and the Company is eligible to receive additional preclinical payments during the option term.

If Sarepta opts-in to an exclusive license agreement, the Company could receive option exercise payments per Indication upon execution of the exclusive license, and the Company would be entitled to significant development and commercial milestone payments and tiered royalties ranging from the mid-to-high single digits based on net sales.

Pursuant to the Sarepta Agreement, the Company determined the Sarepta Agreement represents a service arrangement under the scope of ASC 606, with a 24 -month contract duration.

The Company agreed to supply ImmTOR to Sarepta for clinical supply on a cost-plus basis under the Sarepta Agreement.

Sarepta paid a $ 2.0 million upfront payment to the Company upon signing of the Sarepta Agreement, and the Company was eligible to receive additional preclinical payments during the option term.

If Sarepta opted in to an exclusive license agreement, the Company could have received option exercise payments per Indication upon execution of the exclusive license, and the Company would have been entitled to significant development and commercial milestone payments and tiered royalties ranging from the mid-to-high single digits based on net sales.

Pursuant to the Sarepta Agreement, the Company determined the Sarepta Agreement represented a service arrangement under the scope of ASC 606, with a 24 -month contract duration.

Given the reversion of the rights under the Sarepta Agreement represents a penalty in substance for a termination by Sarepta, the contract term would remain the stated term of the Sarepta Agreement.

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.

As such, consideration in the initial transaction price will be allocated to the single performance obligation based on the contractual price.

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.

Each of these variable consideration items was 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 of such study milestones is outside the control of the Company and probability of success criteria is estimated.

The Company also determined the option to enter into a future commercial license agreement and extend the term of the option does not represent a material right since it was not priced at an incremental discount.

Sarepta may terminate the Sarepta Agreement for any reason upon 30 days’ written notice to the Company.

The Sarepta Agreement contains other customary terms and conditions, including representations and warranties, covenants, termination, and indemnification obligations in favor of each party.

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 represented 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 was the predominant promise within the arrangement, as it was essential to the utility of the licensed intellectual property.

As such, consideration in the initial transaction price was allocated to the single performance obligation based on the contractual price.

In determining the transaction price, the Company concluded the payment associated with all the performance milestones was fully constrained and would only be 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 of such study milestones was outside the control of the Company and probability of success criteria was estimated.

The Company also determined the option to enter into a future commercial license agreement and extend the term of the option did not represent a material right since it was not priced at an incremental discount.

Sarepta had the right to terminate the Sarepta Agreement for any reason upon 30 days’ written notice to the Company.

The Sarepta Agreement contained other customary terms and conditions, including representations and warranties, covenants, termination, and indemnification obligations in favor of each party.

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.

6 unchanged sentences

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 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.

On November 18, 2022, both parties agreed to mutually terminate the AskBio License Agreement.

Therefore, the remaining contract liability of $ 7.0 million was recognized as revenue during the period ended December 31, 2022.

Spark Therapeutics, Inc.

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.

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.

As of December 31, 2024 and 2023, there were no unsatisfied performance obligations related to the Sarepta Agreement.

No revenue and revenue of $ 0.5 million related to the Sarepta Agreement was recognized during the years ended December 31, 2024 and 2023, respectively.

Transaction Price Allocated to Future Performance Obligations

Remaining performance obligations represent the transaction price of contracts for which work has not been performed, or has been partially performed.

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 ( Astellas, Takeda, Sobi, Sarepta, AskBio, and Spark )

As of December 31, 2024, there were no unsatisfied performance obligations from contracts with customers.

Contract Balances from Contracts with Customers

The following table presents changes in the Company’s contract liabilities during the year ended December 31, 2024 (in thousands):

4 unchanged sentences

Total contract liabilities $ 5,849 $ — $ ( 5,849 ) $ —

Grant revenue

National Institute of Neurological Disorders and Stroke of the National Institutes of Health

In June 2024, the Company received funding approval from the National Institute of Neurological Disorders and Stroke of the National Institutes of Health, or NINDS, for an award of $ 1.5 million granted for the budget period, which runs from June 2024 through May 2025.

Subject to the availability of funds and satisfactory progress of the project, an additional $ 1.5 million has been recommended by NINDS to be awarded for the budget period June 2025 through May 2026.

The initial $ 1.5 million funding was provided by NINDS to further the Company’s use of RNA-based CAR-T cells to combat autoantibody-associated autoimmune disorders.

Grant funding is to be used solely for manufacturing of RNA-based CAR-T cells and analysis of samples to inform mechanism of action.

The award period runs through May 31, 2026.

The Company will recognize grant revenue when expenses reimbursable under the grant have been incurred.

As of December 31, 2024, the Company recorded a receivable of $ 0.6 million that is subject to reimbursement by NINDS.

Accordingly, the Company recognized grant revenue of $ 0.6 million during the year ended December 31, 2024.

Related-Party Transactions

November 2023 Securities Purchase Agreement

2024 Securities Purchase Agreement

On July 2, 2024, the Company entered into the 2024 Securities Purchase Agreement with the Purchasers.

The Purchasers included (i) Dr.

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

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

Springer, and (iii) Dr.

Chafen Lu, Dr.

Springer’s wife (see Note 11).

The below issuances and sales to related parties of the Company were made during the year ended December 31, 2024.

Name Shares of Series B Preferred Stock purchased Total aggregate purchase price

(in thousands)

Springer, Ph.D.

1,636,832 $ 32,737

TAS Partners LLC, affiliate of Timothy A.

Springer, Ph.D.

721,361 $ 14,427

Chafen Lu, Ph.D., wife of Timothy A.

Springer, Ph.D.

2023 Securities Purchase Agreement

On November 13, 2023, the Company entered into the 2023 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.

Springer, (ii) TAS Partners LLC, 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.

The 2023 Private Placement included 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, 2024.

Name Shares of Series A Preferred Stock purchased Total aggregate purchase price

(in thousands)

Springer, Ph.D.

99,140.326 $ 40,000

TAS Partners LLC (affiliate of Timothy A.

The below issuances and sales to related parties of the Company were made subject to the 2023 Private Placement during the year ended December 31, 2023.

Name Shares of Series A Preferred Stock purchased Total aggregate purchase price

(in thousands)

Springer, Ph.D.

Seven One Eight Three Four Irrevocable Trust (affiliate of Murat Kalayoglu, MD, Ph.D.) 619.627 $ 250,000

April 2022 Offering

During the year ended December 31, 2022, the Company completed the 2022 Offering as described in Note 12.

The following table sets forth the number of shares of Common Stock and 2022 Warrants purchased in the 2022 Offering by directors and executive officers, as of the time of the Offering, and related parties thereto:

Name Shares of Common Stock purchased 2022 Warrants purchased Total aggregate purchase price

24,785.081 $ 10,000

TAS Partners LLC (affiliate of Timothy A.

Springer, Ph.D.) 24,785.081 $ 10,000

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 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 the year ended December 31, 2021.

No expenses were incurred for the years ended December 31, 2023 and 2022.

Seven One Eight Three Four Irrevocable Trust (affiliate of Murat Kalayoglu, MD, Ph.D.) 619.627 $ 250

Exercise of Amended 2019 Warrants

On March 26, 2024, TAS Partners LLC exercised 65,681 Amended 2019 Warrants, paid the per-share exercise price of $ 43.80 in cash for an aggregate exercise price of $ 2.9 million, and received 65,681 shares of common stock and 1,970,443 CVRs.

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.

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.

1 unchanged sentence

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.

The Biogen Agreement encompasses patents and patent applications in the PCT/US2010/026825 patent family, which was filed March 10, 2010.

In general, all patents that issue in this family have an expected expiration date of March 10, 2030, subject to potential patent term adjustments and/or extensions.

patents and applications in this family, U.S.

Patent 9,034,324 was awarded 677 days of patent term adjustment, which would extend the expiration date of this patent to January 16, 2032, absent any challenges to the patent term.

The other issued patent in this family was not awarded any patent term adjustment, so its expected expiration date is March 10, 2030.

National Cancer Institute of the National Institutes of Health

6 unchanged sentences

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.

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.

3 unchanged sentences

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 NCI Agreement encompasses patents and patent applications in the PCT/US2013/032029 patent family, which was filed March 15, 2013.

In general, all patents that issue in this family have an expected expiration of March 15, 2033, subject to potential patent term adjustments and/or extensions.

patents and applications in this family, only two patents were awarded patent term adjustments.

Patent 9,765,342 was awarded 297 days of patent term adjustment, which would extend the expiration date of this patent to January 6, 2034, absent any challenges to the patent term.

The other patent, U.S.

Patent 10,876,123, was awarded three days of patent term adjustment, but this patent is subject to terminal disclaimers filed against other family members, so this patent will not extend beyond the March 15, 2033 date.

The other issued patents in this family were not awarded any patent term adjustment, so the expected expiration date for these patents also remains March 15, 2033.

There is also a pending patent application which, if issued, will expire on March 15, 2033, but could also be subject to patent term adjustment and to any potential future terminal disclaimers.

NCI has the right to terminate the NCI 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.

9 unchanged sentences

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.

13 unchanged sentences

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.

Under the Genovis Agreement, the Company paid to Genovis an upfront payment in exchange for an exclusive license to the Xork enzyme technology across all therapeutic uses in humans, excluding research, preclinical, diagnostic and other potential non-therapeutic applications of the enzyme.

Genovis was eligible to earn from the Company development and sales-based milestones and sublicensing fees.

The Genovis 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 Genovis Agreement as incurred until regulatory approval is received in accordance with ASC 730.

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.

The Company was to expense costs related to the Genovis Agreement as incurred until regulatory approval was received in accordance with ASC 730.

The Company would have 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 Genovis tiered royalties of low double digit percentages of worldwide annual net sales of collaboration products which would have been expensed as the commercial sales occurred.

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.

In March 2024, the Company notified Genovis of its intention to terminate the Genovis Agreement, which occurred effective September 13, 2024.

Cyrus Biotechnology, Inc.

Collaboration and License Agreement

On September 7, 2021, the Company and Cyrus entered into the Cyrus Agreement.

On September 7, 2021, the Company and Cyrus Biotechnology, Inc., or Cyrus, entered into a collaboration and license agreement, or 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.

4 unchanged sentences

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.

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.

7 unchanged sentences

The Company has recognized the $ 2.0 million investment of Cyrus’ Series B Preferred Stock at cost on the purchase date.

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.

As of December 31, 2024, no impairment indicators are present and there were no observable price changes.

Therefore, the carrying value of the investment in Cyrus is $ 2.0 million on the accompanying consolidated balance sheets.

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

2 unchanged sentences

Feasibility Study and License Agreement

In August 2019, the Company entered into a feasibility study and license agreement with AskBio, or the AskBio Collaboration Agreement.

In August 2019, the Company entered into a feasibility study and license agreement, or the AskBio Collaboration Agreement, with Asklepios Biopharmaceutical, Inc., or AskBio.

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.

6 unchanged sentences

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.

For the years ended December 31, 2024 and 2023, the Company recognized no and $ 0.1 million, respectively, of collaboration expense under the AskBio Collaboration Agreement in which actual costs incurred by both parties approximate a 50 % cost share.

Shenyang Sunshine Pharmaceutical Co., Ltd

9 unchanged sentences

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.

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.” 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, 2024, the Company recognized a current tax expense of $ 0.3 million.

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 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:

3 unchanged sentences

State income taxes - net of federal benefit

2.3 % 1.6 % ( 166.0 ) %

Permanent items

1 unchanged sentence

Research tax credits

0.6 % ( 3.2 ) % 55.0 %

Deferred revenue

— % — % 156.5 %

— % — % ( 3.7 ) %

Change in fair value of contingent value right liability

Change in fair value of forward contract liabilities

10 unchanged sentences

Net operating loss carryforwards $ 44,062 $ 29,841

$ 29,841 $ 17,015

Research and development credits 6,024 5,649

2 unchanged sentences

Deferred revenue 75,567 84,626

84,626 83,417

Operating lease liabilities 3,848 2,718

Contingent value right liability 108,832 —

R&E Capitalization 26,863 19,778

1 unchanged sentence

Gross deferred tax assets 274,806 152,465

152,465 131,073

Deferred Tax Liabilities

Intangible assets $ ( 41,441 ) $ ( 41,144 )

$ ( 41,144 ) $ —

( 128 ) ( 81 )

Depreciation ( 115 ) ( 128 )

Operating lease right-of-use assets ( 1,523 ) ( 2,751 )

( 2,751 ) ( 3,174 )

Gross deferred tax liabilities ( 43,079 ) ( 44,023 )

( 44,023 ) ( 3,255 )

Net deferred tax assets before valuation allowance 231,727 108,442

108,442 127,818

Valuation allowance ( 247,867 ) ( 124,295 )

( 124,295 ) ( 127,818 )

Net deferred tax assets/(liabilities) $ ( 16,140 ) $ ( 15,853 )

$ ( 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.

2 unchanged sentences

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 net deferred tax assets.

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 $ 123.6 million for the year ended December 31, 2024, primarily as a result of tax loss in the current year and the recognition of a $ 108.8 million tax benefit related to the Company’s CVR liability.

The valuation allowance decreased by $ 3.5 million for the year ended December 31, 2023, primarily as a result of a tax benefit booked as part of the Merger.

As of December 31, 2024, 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.

At December 31, 2024, the Company has federal net operating loss carryforward of $ 152.6 million, which can be carried forward indefinitely, subject to an 80% limitation and state net operating loss carryforward of $ 187.8 million, of which $ 74.4 million has an unlimited carryforward and the remaining $ 113.4 million will expire at various times through 2044.

The Company has $ 5.2 million and $ 1.0 million, respectively, of federal and state research and development tax credit carryforwards, which will expire at various times through 2044.

8 unchanged sentences

As of the adoption date on January 1, 2010 and through December 31, 2024, the Company had no unrecognized tax benefits or related interest and penalties accrued.

During 2023, the Company completed a detailed study of its research and development and orphan drug credits through December 31, 2022 .

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.

As of December 31, 2024, the Company has not completed a detailed study of its research and development and orphan drug credits for the tax years ending December 31, 2023 and December 31, 2024 .

As a result, the Company will adjust its deferred tax asset balances and include the impacts in the research tax credits and state income taxes – net of federal benefit lines in the effective rate reconciliation next year, once the updated study has been completed.

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.

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 $ 45.1 million and $ 43.9 million for the years ended December 31, 2024 and December 31, 2023, 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.

The Company will amortize these costs for tax purposes over five years if the R&E was performed in the United States and over 15 years if the R&E was performed outside the United States.

Interest and penalty charges, if any, related to unrecognized tax benefits would be classified as income tax expense in the accompanying statement of operations.

As of December 31, 2024, the Company had no accrued interest related to uncertain tax positions.

The statute of limitations for assessment by the Internal Revenue Service and Massachusetts tax authorities is open for tax years since inception as the Company claimed research tax credits on its 2020 tax return which remains open for examination for the 2020 year as well as for any year in which a credit has been claimed for.

The Company files income tax returns in the United States and Massachusetts.

The statute of limitations for assessment by the Internal Revenue Service and state tax authorities is open for tax years 2020 to the present.

To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, or state tax authorities to the extent utilized in a future period.

The Company files income tax returns in the United States, Massachusetts, and Maryland.

There are currently no federal, state or foreign audits in progress.

Employee Benefit Plans

Defined Contribution Plan

2 unchanged sentences

The 401(k) Plan provides for matching contributions on a portion of participant contributions pursuant to the 401(k) Plan’s matching formula.

As of January 2022, all matching contributions vest ratably over two years and participant contributions vest immediately.

Contributions by the Company totaled $ 0.3 million, $ 0.3 million, and $ 0.2 million during each of the years ended December 31, 2023, 2022 and 2021, respectively.

All matching contributions vest ratably over two years and participant contributions vest immediately.

Contributions by the Company totaled $ 0.2 million and $ 0.3 million during the years ended December 31, 2024 and 2023, respectively.

Employee Stock Purchase Plan

In June 2016, the Company approved the 2016 Employee Stock Purchase Plan, or the ESPP, which initially authorized 5,769 shares of common stock for future issuance under the ESPP to participating employees.

As of December 31, 2024, 45,795 shares remain available for future issuance under the ESPP.

In connection with the Merger, the Board of Directors suspended offerings under the ESPP.

The Company recognized no stock-based compensation expense under the ESPP for the year ended December 31, 2024 and $ 0.1 million of stock-based compensation expense under the ESPP for the year ended December 31, 2023.

Commitments and Contingencies

As of December 31, 2024, 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.

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.

Through December 31, 2024, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding.

Additionally, 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.

The term of the indemnification is for the director’s lifetime.

8 unchanged sentences

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

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 the Company’s product candidate, SEL-302, for the treatment of methylmalonic acidemia 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 the Company’s product candidate, 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 that resulted in an approximate 90 % reduction of the Company’s existing headcount as of December 31, 2024.

The following table summarizes the change in the Company’s accrued restructuring balance included in accrued expenses and other current liabilities on its consolidated balance sheets (in thousands):

December 31, 2022 Charges Cash Payments December 31, 2023

Severance liability $ — $ 6,431 $ ( 2,535 ) $ 3,896

December 31, 2023 Charges Cash Payments December 31, 2024

Severance liability $ 3,896 $ 798 $ ( 4,614 ) $ 80

The Company recognized restructuring expenses consisting of one-time cash severance payments and other employee-related costs.

The Company recorded these restructuring charges based on each employee’s role to the respective research and development and general and administrative operating expense categories on its consolidated statements of operations and comprehensive loss.

For the years ended December 31, 2024 and 2023, the Company recognized $ 0.2 million and $ 5.6 million in research and development expenses, respectively, and $ 0.6 million and $ 0.8 million in general and administrative expenses, respectively.

Payments for the restructuring plan were substantially complete by June 30, 2024.

Segment Reporting

Factors used in determining the reportable segment include the nature of the Company’s operating activities, the organizational and reporting structure and the type of information reviewed by the CODM to allocate resources and evaluate financial performance.

The accounting policies of the segment are the same as those described in Note 3.

The following table presents selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2024 and 2023 (in thousands):

Year Ended December 31,

Collaboration and license revenue $ 38,275 $ 26,004

Grant revenue 638 —

Total revenue 38,913 26,004

Operating expenses:

Legacy Selecta programs 6,150 31,826

Descartes-08 for MG 12,142 343

Early stage programs 1,028 595

Research and development employee expenses 11,952 18,363

Research and development stock-based compensation expense 3,217 12,985

Research and development facilities and other expenses 10,616 7,148

General and administrative 30,126 40,450

Impairment of long-lived assets 7,579 710

Other expense, net (1) 33,527 133,294

Net loss $ ( 77,424 ) $ ( 219,710 )

(1) Includes impairment of long-lived assets, interest income, foreign currency transaction, net, interest expense, change in fair value of warrant liabilities, change in fair value of contingent value right liability, change in fair value of forward contract liabilities, other income, net, and income tax (expense) benefit.

Subsequent Events

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 .

The Company has evaluated subsequent events through the date on which the consolidated financial statements were issued.

The Company has concluded that no subsequent events have occurred that require disclosure, except as disclosed within these consolidated financial statements.

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