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Item 1A. Risk Factors

2026-03-09 compared with 2025-03-13 · 147 added, 141 removed, 671 unchanged (30% of the section changed)

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We develop our mRNA-based product candidates by leveraging our proprietary technology and our manufacturing platform, which is an unproven approach to the treatment of autoimmune disease.

We are early in most of our clinical development efforts and may not be successful in our efforts to build a pipeline of product candidates and develop marketable drugs.

We may not be successful in our efforts to build a pipeline of product candidates and develop marketable drugs.

Our mRNA approach to develop product candidates for the treatment of autoimmune diseases is an unproven approach.

Our most advanced product candidate, Descartes-08, is in the initial phase of Phase 3 clinical development.

We have not demonstrated the ability to successfully complete any Phase 3 or other pivotal clinical trials, obtain regulatory approvals, manufacture a commercial product, or arrange for a third-party to do so on our behalf, or conduct other sales and marketing activities necessary for successful product commercialization.

Our most advanced product candidate, Descartes-08, is in Phase 3 clinical development.

successful product commercialization.

We may have problems identifying new product candidates and applying our technologies to other areas.

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Moreover, we may not be able to complete, or may be required to deviate from the current clinical trial protocol for a variety of reasons.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achieving positive results in preclinical development or early-stage clinical trials, and we cannot be certain that we will not face similar setbacks.

face similar setbacks.

Serious adverse events, or SAEs, caused by, or other unexpected properties of, any product candidates that we may choose to develop could cause us, an institutional review board or regulatory authority to interrupt, delay or halt clinical trials of one or more of such product candidates and could result in a more restrictive label or the delay or denial of marketing approval by the FDA or comparable non-U.S.

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Prior to approving a new therapeutic product, the FDA generally requires that safety and efficacy be demonstrated in two adequate and well-controlled clinical trials.

Although the FDA may provide comments regarding our development plan as part of an SPA agreement or otherwise, final determination for marketing application approval are made after a complete review of a marketing application and are based on the entirety of the data in the IND or BLA.

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval for, or commercialize, our product candidates, including:

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Opening and conducting clinical trials at trial sites outside the United States may involve additional regulatory, administrative and financial burdens, including compliance with foreign and local requirements relating to regulatory submission and clinical trial practices.

Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of these data is subject to certain conditions imposed by the FDA.

Although the FDA may accept data from clinical trials conducted outside the United

States, acceptance of these data is subject to certain conditions imposed by the FDA.

For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with GCPs and the FDA must be able to validate the data from the trial through an onsite inspection, if necessary.

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We may not be able to qualify for or obtain various designations from regulators that would have the potential to expedite the review process of one or more of our product candidates and even if we do receive one or more such designations there is no guarantee that they will ultimately expedite the process, or aid in our obtaining marketing approval or provide market exclusivity.

There exist several designations that we can apply for from the FDA and other regulators that would provide us with various combinations of the potential for expedited regulatory review, certain financial incentives as well as the potential for post-approval exclusivity for a period of time.

These designations include but are not limited to orphan drug designation, breakthrough therapy designation, accelerated approval, fast track status and priority review for our product candidates.

There exist several designations that we can apply for from the FDA and other regulators that would provide us with various combinations of the potential for expedited regulatory review, certain financial incentives, aid in our obtaining marketing approval as well as the potential for post-approval exclusivity for a period of time.

These designations include but are not limited to orphan drug designation, breakthrough therapy designation, accelerated approval, CNPV, fast track status and priority review for our product candidates.

For example, Descartes-08 has been granted Orphan Drug Designation and RMAT Designation by the FDA for the treatment of MG.

Descartes-08 also received Rare Pediatric Disease Designation by the FDA for the treatment of JDM.

Descartes-08 received Rare Pediatric Disease Designation by the FDA for the treatment of JDM.

We expect to seek one or more of these designations for our other current and future product candidates.

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Were we to receive a designation that promised a period of market exclusivity, such as orphan drug exclusivity, such exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition.

In particular, the scope of exclusivity afforded for mRNA-modified cell therapy products may not be well defined.

In particular, the scope of exclusivity afforded for mRNA-modified cell therapy products may not be well defined and may change.

Further with respect to orphan drug status, even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is clinically superior if it is shown to be safer, more effective or makes a major contribution to patient care.

Interim, top-line and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish interim, top-line or preliminary data from our clinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a full analyses of all data related to the particular trial.

We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data.

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Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects.

In such an event, our

trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications.

In such an event, our trials could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications.

In November 2023, the FDA issued a statement that it is investigating serious risk of T-cell malignancy following BCMA-directed or CD19-directed autologous CAR-T cell immunotherapies.

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However, because all currently approved CAR T-cell immunotherapies are in oncology indications, there can be no assurance that FDA will reach the same risk-benefit analysis in other indications.

While we believe our mRNA-based CAR-T product candidates may have a differentiated toxicity profile than currently approved DNA-based CAR-T therapies, there can be no assurance that the FDA would not treat Descartes-08 or any of our other product candidates similar to approved DNA-based CAR-T therapies.

In June 2025, the FDA eliminated the REMS for currently approved BCMA- and CD19-directed autologous chimeric antigen receptor CAR T cell immunotherapies, but maintained the boxed warning and stated that the products would continue to be subject to safety monitoring through AE reporting and any post-marketing commitments or requirements.

The FDA’s investigation may impact the FDA’s review of product candidates that we are developing, or that we may seek to develop in the future, which may, among other things, result in additional regulatory scrutiny of our product candidates, delay the timing for receiving any regulatory approvals or impose additional post-approval requirements on any of our product candidates that receive regulatory approval.

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Additionally, over the last several years, the U.S.

government has shut down multiple times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA and other government employees

and stop critical activities.

government has shut down multiple times and certain regulatory agencies, such as the FDA, have had to furlough or reduce the number of critical FDA and other government employees and stop critical activities.

If funding for the FDA is reduced, FDA priorities change or a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions which could have a material adverse effect on our business.

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Although we do not consider any of these grants material to our business, a prolonged impact on the availability of grant funding from government agencies could adversely impact our business.

Risks Related to our Financial Position and Need for Additional Capital

We are a development-stage company, and we expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

Except for the year ended December 31, 2022, we have incurred significant operating losses since our inception.

We incurred a net loss of $130.3 million and $77.4 million for the years ended December 31, 2025, and 2024, respectively.

As of December 31, 2025, we had an accumulated deficit of $822.4 million.

To date, we have financed our operations primarily through public offerings and private placements of our securities, funding received from collaboration and license arrangements and a credit facility.

We currently have no source of product revenue, and we do not expect to generate product revenue for the foreseeable future.

We expect to devote substantially all of our financial resources and efforts to developing our mRNA-based therapies for the treatment of autoimmune diseases, identifying potential product candidates and conducting preclinical studies and our clinical trials.

We are in the early stages of clinical development of most of our product candidates.

continue to incur significant expenses and operating losses for the foreseeable future.

We expect that our expenses will increase substantially as we:

• continue the research and development of our product candidates;

• increase and develop our manufacturing and distribution capacities;

• discover and develop additional product candidates;

• seek to maintain and enter into collaboration, licensing and other agreements, including, but not limited to research and development, and/or commercialization agreements;

• seek regulatory approvals for any product candidates that successfully complete clinical trials;

• potentially establish a sales, marketing and distribution infrastructure and scale up internal manufacturing capabilities to commercialize any products for which we may obtain regulatory approval;

• maintain, expand and protect our intellectual property portfolio, including through licensing arrangements;

• add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts;

• experience any delays or encounter any issues with any of the above, including, but not limited to, failed studies, complex results, safety issues or other regulatory, manufacturing or scale-up challenges;

• are exposed to broad macroeconomic conditions including inflation and supply chain tightness which could result in us paying more, or being unable, to access goods and services.

To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue.

This will require us to be successful in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates, discovering additional product candidates, obtaining regulatory approval and securing reimbursement for these product candidates, manufacturing, marketing and selling any products for which we may obtain regulatory approval, and establishing and managing our collaborations at various stages of a product candidate’s development.

We are only in the preliminary stages of most of these activities.

We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.

Because of the numerous risks and uncertainties associated with pharmaceutical and biological product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability.

If we are required by the FDA or other regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of any of our product candidates, our expenses could increase and product revenue could be further delayed.

We may not be able to sustain or increase profitability on a quarterly or annual basis.

Our failure to remain profitable would depress our value and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product offerings or continue our operations.

We will need substantial additional funding in order to complete development of our product candidates and commercialize our products, if approved.

If we are unable to raise capital when needed and on terms favorable to us, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue research and development for other product candidates.

Additionally, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

Accordingly, we will need to obtain substantial additional funding to continue operations.

If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our clinical trials, our other research and development programs or any future commercialization efforts.

We believe that our existing cash, cash equivalents and restricted cash as of December 31, 2025, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.

We may pursue additional cash resources through public or private equity or debt financings, by establishing collaborations with other companies or through the monetization of potential royalty and/or milestone payments pursuant to our existing collaboration and license arrangements.

Management’s expectations with respect to our 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, we may need to seek additional strategic or financing opportunities sooner than would otherwise be expected.

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.

If we are unable to obtain additional funding on a timely basis, we may be forced to significantly curtail, delay, or discontinue one or more of our planned research or development programs or be unable to expand our operations, meet long-term obligations or otherwise capitalize on our commercialization of our product candidates.

We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

Our future capital requirements will depend on many factors, including:

• the scope, progress, results and costs of our clinical trials, preclinical development, manufacturing, laboratory testing and logistics;

• the number of product candidates that we pursue and the speed with which we pursue development;

• our headcount growth and associated costs;

• the costs, timing and outcome of regulatory review of our product candidates;

• the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval;

• the revenue, if any, from commercial sales of our product candidates for which we receive marketing approval;

• the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;

• the effect of competing technological and market developments;

• the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.

In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all.

Market volatility resulting from the ongoing conflicts in Ukraine and the Middle East and current global macroeconomic conditions or other factors could also adversely impact our ability to access capital as and when needed.

Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders, and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline.

The sale of additional equity or convertible securities would dilute all of our stockholders.

The incurrence of indebtedness could result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

We could also be required to seek funds through arrangements with collaborators or others at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs, including our clinical trial programs, or the commercialization of any product candidates, or be unable to sustain or expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

Our ability to use our net operating loss and research and development tax credit carryforwards to offset future taxable income may be subject to certain limitations.

We have net operating loss carryforwards, or NOLs, for federal and state income tax purposes that may be available to offset our future taxable income, if any.

In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to use its pre-change NOLs to offset future taxable income.

If the IRS, challenges our analysis that existing NOLs will not expire before utilization due to previous ownership changes, or if we undergo an ownership change, our ability to use our NOLs could be limited by Section 382 of the Code.

Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code.

Furthermore, our ability to use NOLs of companies that we may acquire in the future may be subject to limitations.

As a result, we may not be able to use a material portion of the NOLs reflected on our balance sheet, even if we attain profitability.

Under current law, NOLs that arose before January 1, 2018 may be carried forward up to 20 years.

NOLs that arose after 2017 may be used to offset at most 80% of our taxable income to the extent not offset by pre-2018 NOLs and such NOLs can be carried forward indefinitely.

As a result, we may become required to pay federal income taxes in future years despite having generated losses for federal income tax purposes in prior years.

We have recorded a material amount of goodwill and indefinite-lived intangible assets in connection with the Merger.

We have, and may in the future, record impairment charges, which would adversely impact our financial position and results of operations.

We have recorded a material amount of goodwill and indefinite-lived intangible assets on our balance sheet in connection with the Merger.

We review our goodwill and intangible assets for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable, in accordance with Accounting Standards Codification Topic 350, Intangibles - Goodwill and Other.

One potential indicator of goodwill impairment is whether the fair value of our equity, as measured by our market capitalization, is below the net book value of our equity.

Whether our market capitalization triggers an impairment charge in any future period will depend on the underlying reasons for the decline in stock price, the significance of the decline and the length of time the stock price has been trading at such prices.

In addition, the determination as to whether our indefinite-lived intangible assets related to Descartes-08 are impaired is heavily dependent on the results of our ongoing clinical trials, as well as other factors, such as the potential market for Descartes-08, if approved.

For example, during the year ended December 31, 2025, we recorded a $56.7 million impairment charge related to Descartes-08 in SLE, due to our announced pause in further development of Descartes-08 in SLE, following which we made a further decision that we would no longer pursue the development of Descartes-08 in SLE.

See Note 3, “Goodwill and Indefinite-Lived Intangible Assets” to our consolidated financial statements included elsewhere in this Annual Report for more information.

In the event that we determine in a future period that impairment exists for any reason, we would record an impairment charge, which could be material and which would reduce the underlying asset’s value in the period such determination is made, which would adversely impact our financial position and results of operations.

We have incurred substantial expenses related to the integration of Old Cartesian.

We have incurred substantial expenses in connection with the Merger and the subsequent integration of Old Cartesian with Selecta.

There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, billing, payroll, research and development, marketing and benefits.

Both we and Old Cartesian have incurred significant transaction expenses in connection with the drafting and negotiation of the Merger Agreement and significant severance expenses as a result of the Merger.

While we and Old Cartesian have assumed that a certain level of expenses will be incurred, there are many factors beyond our control that could affect the total amount or the timing of the integration expenses.

Moreover, many of the expenses that have been and will be incurred are, by their nature, difficult to estimate accurately.

These integration expenses have resulted in our taking significant charges against earnings following the completion of the Merger, and the amount and timing of such charges are uncertain at present.

Risks Related to Manufacturing and our Dependence on Third-Parties

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We rely, and expect to continue to rely, on third-parties to conduct our clinical trials, and those third-parties may not perform satisfactorily, including by failing to meet deadlines for the completion of such trials.

We rely, and expect to continue to rely, on third-parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators, to conduct and manage our clinical trials, including our planned Phase 3 clinical trials of Descartes-08.

We also expect to rely on other third-parties to store and distribute drug supplies for our clinical trials.

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We are aware that pharmaceutical and biotechnology companies, offer or are pursuing the development of pharmaceutical products or technologies that may address one or more indications that our product candidates target, as well as smaller, early-stage companies, that offer or are pursuing the development of pharmaceutical products or technologies that may address one or more indications that our product candidates target.

We face competition with respect to our current product candidates and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.

We face competition with respect to our current product candidates and will face competition with respect to

any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide.

Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources, established presence in the market and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and reimbursement for product candidates and in marketing approved products than we do.

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Our existing insurance coverage may not fully cover potential liabilities that we may incur.

We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates.

We may need to increase our insurance coverage as we expand our clinical

trials or if we commence commercialization of our product candidates.

Insurance coverage is increasingly expensive.

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Although the law includes limited exceptions, including for “protected health information” maintained by a covered entity or business associate, it may regulate or impact our processing of personal information depending on the context;

◦ similar healthcare laws and regulations in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as the GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the EU (including health data);

• similar healthcare laws and regulations in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as the GDPR, which imposes obligations and restrictions on the collection and use of

personal data relating to individuals located in the EU (including health data);

in addition, the United Kingdom leaving the EU could also lead to further legislative and regulatory changes.

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The failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Risks Related to our Financial Position and Need for Additional Capital

We are a development-stage company, and we expect to incur losses for the foreseeable future and may never achieve or maintain profitability.

Except for the year ended December 31, 2022, we have incurred significant operating losses since our inception.

We incurred a net loss of $77.4 million and $219.7 million for the years ended December 31, 2024, and 2023, respectively.

As of December 31, 2024, we had an accumulated deficit of $692.1 million.

We currently have no source of product revenue, and we do not expect to generate product revenue for the foreseeable future.

We are in the early stages of clinical development of most of our product candidates.

We expect to continue to incur significant expenses and operating losses for the foreseeable future.