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Item 7. Management’s Discussion and Analysis

2026-03-09 compared with 2025-03-13 · 153 added, 167 removed, 250 unchanged (56% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K.

In addition to historical information, some of the information contained in the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

You should review the “Risk Factors” section of this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biotechnology company pioneering mRNA cell therapy for the treatment of autoimmune diseases.

We leverage our proprietary technology and manufacturing platform to introduce one or more mRNA molecules into cells to enhance their function.

We are a late clinical-stage biotechnology company pioneering cell therapy for the treatment of autoimmune diseases.

We leverage our proprietary technology and manufacturing platform to introduce mRNA into cells to provide a therapeutic effect to patients suffering from a variety of autoimmune conditions.

Unlike DNA, mRNA degrades naturally over time without integrating into the cell’s genetic material.

Therefore, our mRNA cell therapies are distinguished by their capacity to be dosed repeatedly like conventional drugs, administered in an outpatient setting, and given without pre-treatment chemotherapy required with many conventional cell therapies.

In a placebo-controlled Phase 2b clinical trial in patients with myasthenia gravis, or MG, a chronic autoimmune disease that causes disabling muscle weakness and fatigue, we observed that our lead product candidate, Descartes-08, generated a deep and durable clinical benefit where we observed an average MG-ADL reduction of 5.5 points at Month 4 with a third of patients achieving minimal symptom expression at Month 6 and 80% of participants reaching Month 12 maintained a clinically meaningful response.

Durability of response in MG is commonly measured over a period of 26 to 52 weeks, and maintenance of response over that period is considered durable.

Our cell therapies are designed to be dosed repeatedly like conventional drugs, administered in an outpatient setting, and given without pre-treatment chemotherapy, which is required with many conventional cell therapies.

On November 13, 2023, the Company (formerly known as Selecta) merged with the private Delaware corporation which, immediately prior to the Merger, was known as Cartesian Therapeutics, Inc., in accordance with the terms of the Merger Agreement, by and among Selecta, First Merger Sub, Second Merger Sub, and Old Cartesian.

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In connection with the Merger and pursuant to the Merger Agreement, the Company changed its corporate name to Cartesian Therapeutics, Inc.

See Note 4 of the accompanying notes to the consolidated financial statements appearing elsewhere in this Annual Report.

See Note 4, “Merger” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for more information regarding the Merger.

Financial Operations

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We do not have any products approved for sale and have not generated any product sales.

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.

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We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:

• advance Descartes-08 for MG into Phase 3 development;

• continue to advance Descartes-08 for MG through Phase 3 development;

• advance Descartes-08 for myositis into Phase 2 development;

• continue to develop our preclinical and clinical-stage product candidates;

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• incur additional costs associated with continuing to operate as a public company.

The following table presents our research and development expenses for the years ended December 31, 2024 and 2023 (in thousands):

Year Ended December 31,

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

Total research and development expenses $ 45,105 $ 71,260

Until we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, and license and collaboration agreements.

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We granted customary registration rights to investors in connection with the 2023 Private Placement.

On July 2, 2024, we 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 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.

We granted customary registration rights to investors in connection with the 2024 Private Placement.

We believe that our existing cash, cash equivalents, and restricted cash as of December 31, 2024 will enable us to fund our operating expenses and capital expenditure requirements into mid-2027.

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

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Our revenue consists primarily of collaboration and license revenue, which includes amounts recognized related to upfront and milestone payments for research and development funding under collaboration and license agreements.

We expect that any revenue we generate will fluctuate from quarter to quarter because of the timing and amounts of fees, research and development reimbursements and other payments from collaborators.

We expect that any revenue we generate will fluctuate from quarter to quarter

because of the timing and amounts of fees, research and development reimbursements and other payments from collaborators.

We do not expect to generate revenue from product sales for at least the next several years.

If we or our collaborators fail to complete the development of our product candidates in a timely manner or fail to obtain regulatory approval as needed, our ability to generate future revenue will be harmed, and will affect the results of our operations and financial position.

For further descriptions of the agreements underlying our collaboration and license revenue, see Notes 3 and 14 to our consolidated financial statements included elsewhere in this Annual Report.

For further descriptions of the agreements underlying our collaboration and license revenue, see Notes 2, “Summary of Significant Accounting Policies” and 15, “Collaboration and License Agreements” to our consolidated financial statements included elsewhere in this Annual Report.

Grant revenue

Additionally, we generate grant revenue which consists of funding received to perform specific research and development services under grant arrangements.

Research and development

We generate grant revenue, which consists of funding received to perform specific research and development services under grant arrangements.

Research and development expenses

Our research and development expenses consist of internal and external research and development costs, which primarily include fees paid to contract research organizations, internal manufacturing- and quality-related expenses, process development costs, internal research and development expenses, as well as fees paid to contract manufacturing organizations.

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For example, if the FDA or another regulatory authority were to require us to conduct clinical trials beyond those which we currently expect will be required for the completion of clinical development of a product candidate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time to complete any clinical development.

General and administrative

General and administrative expenses

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation, related to our executive, finance, business development and support functions.

Other general and administrative expenses include facility-related costs not otherwise allocated to research and development expenses, travel expenses for our general and administrative personnel and professional fees for auditing, tax and corporate legal services, including intellectual property-related legal services.

Impairment of long-lived assets

Impairment of long-lived assets consists of impairment charges on our long-lived assets.

Impairment of indefinite-lived intangible and long-lived assets

Impairment of indefinite-lived intangible and long-lived assets consists of impairment charges on our intangible and long-lived assets.

Interest income

Interest income consists primarily of income earned on our cash, cash equivalents and marketable securities.

Interest expense

Interest expense consists of interest expense on amounts borrowed under our credit facilities and loss on extinguishment of debt.

Other income, net

Other income, net consists of non-operating income and non-operating expenses.

Change in fair value of warrant liabilities

Gain on change in fair value of warrant liabilities

Common warrants classified as liabilities are remeasured quarterly at fair value with the change in fair value recognized as a component of earnings.

Change in fair value of contingent value right liability

Loss on change in fair value of contingent value right liability

The contingent value right liability is remeasured quarterly at fair value with the change in fair value recognized as a component of earnings.

Change in fair value of forward contract liabilities

The forward contract liabilities associated with the delayed issuance of the Series A Preferred Stock related to the Merger and 2023 Private Placement are remeasured quarterly and upon settlement at fair value with the change in fair value recognized as a component of earnings.

Loss on change in fair value of forward contract liabilities

The forward contract liabilities associated with the delayed issuance of the Series A Preferred Stock related to the Merger and 2023 Private Placement were remeasured upon settlement at fair value with the change in fair value recognized as a

component of earnings.

The Series A Preferred Stock forward contract liability was settled during the year ended December 31, 2024

Other (expense) income, net

Other (expense) income, net consists of non-operating income and non-operating expenses, including impairment charge on investment.

We provide deferred tax assets and liabilities for the expected future tax consequences of temporary differences between our 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.

A valuation allowance is provided to reduce the deferred tax assets to the amount that will more-likely-than-not be realized.

We determine whether it is more likely than not that a tax position will be sustained upon examination.

If it is not more-likely-than-not that a position will be sustained, none of the benefit attributable to the position is recognized.

The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency.

We account for interest and penalties related to uncertain tax positions as part of its provision for income taxes.

To date,we have not incurred interest and penalties related to uncertain tax positions.

Results of Operations

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(in thousands, except percentages)

Collaboration and license revenue $ 38,275 $ 26,004 $ 12,271 47 %

Grant revenue 638 — 638 100 %

Total revenue 38,913 26,004 12,909 50 %

Collaboration and license $ 400 $ 38,275 $ (37,875) (99) %

Grant 2,397 638 1,759 NM

Total revenues

2,797 38,913 (36,116) (93) %

Operating expenses:

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General and administrative 31,468 30,126 1,342 4 %

Impairment of long-lived assets 7,579 710 6,869 967 %

Impairment of indefinite-lived intangible and long-lived assets

56,700 7,579 49,121 NM

Total operating expenses 146,202 82,810 63,392 77 %

Operating loss (43,897) (86,416) 42,519 (49) %

Operating loss (143,405) (43,897) (99,508) NM

Other income (expense):

Interest income 6,579 7,386 (807) (11) %

Foreign currency transaction, net — 38 (38) (100) %

Interest expense — (2,833) 2,833 (100) %

Change in fair value of warrant liabilities 2,558 12,746 (10,188) (80) %

Change in fair value of contingent value right liability (36,900) (18,300) (18,600) 102 %

Change in fair value of forward contract liabilities (6,890) (149,600) 142,710 (95) %

Other income, net 606 691 (85) (12) %

Gain on change in fair value of warrant liabilities

3,695 2,558 1,137 44 %

Loss on change in fair value of contingent value right liability

(4,354) (36,900) 32,546 (88) %

Loss on change in fair value of forward contract liabilities

— (6,890) 6,890 (100) %

Other (expense) income, net

(2,010) 606 (2,616) NM

Total other income (expense), net

3,910 (33,240) 37,150 (112) %

Loss before income taxes (139,495) (77,137) (62,358) 81 %

Income tax (expense) benefit (287) 19,000 (19,287) (102) %

Income tax benefit (expense)

9,193 (287) 9,480 NM

Net loss $ (130,302) $ (77,424) $ (52,878) 68 %

NM - Not meaningful

Collaboration and license revenue

During the year ended December 31, 2024, we recognized $38.3 million of collaboration and license revenue, compared to $26.0 million for the year ended December 31, 2023, an increase of $12.3 million.

The increase was primarily due to an increase in revenue recognized under the Sobi License resulting from the $30.0 million unconstrained development milestone recognized during the year ended December 31, 2024 and recognition of the remaining deferred revenue under the License and Development Agreement, or the Astellas Agreement, with Audentes Therapeutics, Inc., or Astellas, upon notice of termination during the year ended December 31, 2024.

During the year ended December 31, 2025, we recognized $0.4 million of collaboration and license revenue, compared to $38.3 million for the year ended December 31, 2024, a decrease of $37.9 million.

The decrease was primarily due to revenue recognized under the Sobi License in the prior year, resulting from the $30.0 million unconstrained development milestone, coupled with recognition of the remaining deferred revenue under the License and Development Agreement, or the Astellas Agreement, with Audentes Therapeutics, Inc., or Astellas, upon notice of termination during the year ended December 31, 2024.

Grant revenue

During the year ended December 31, 2024, we recognized $0.6 million of grant revenue.

We received funding approval from the National Institute of Neurological Disorders and Stroke of the National Institutes of Health, or NINDS, during the year ended December 31, 2024, and there was no grant revenue during the year ended December 31, 2023.

During the year ended December 31, 2025, we recognized $2.4 million of grant revenue, compared to $0.6 million for the year ended December 31, 2024, an increase of $1.8 million.

The increase was primarily due to increased expenses reimbursable under the grant from the National Institute of Neurological Disorders and Stroke of the National Institutes of Health incurred during the year ended December 31, 2025, for which we received funding approval during the year ended December 31, 2024.

Research and development expenses

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Descartes-08 for MG 22,893 12,142 10,751 89 %

Early stage programs 1,028 595 433 73 %

Early stage programs 5,795 1,028 4,767 NM

Research and development employee expenses 16,826 11,952 4,874 41 %

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Total research and development expenses $ 58,034 $ 45,105 $ 12,929 29 %

For the year ended December 31, 2024, our research and development expenses were $45.1 million, compared to $71.3 million for the year ended December 31, 2023, a decrease of $26.2 million.

The expenses associated with legacy Selecta programs decreased $25.7 million due to the wind down of the legacy Selecta programs as part of our strategic reprioritization.

The increase in expenses for Descartes-08 for MG was primarily related to the expenses for the ongoing Phase 2b trial and the preparations for the Phase 3 AURORA trial that were incurred following the Merger.

Our research and development employee expenses decreased $6.4 million due to a one-time cash charge to salaries and benefits as a result of our restructuring in 2023.

The decrease in our research and development stock-based compensation expense was primarily the result of the settlement of equity compensation awards in connection with the Merger.

The increase in our research and development facilities and other expenses was primarily the result of our lease of integrated manufacturing and office space in Frederick, Maryland that commenced May 2024.

NM - Not meaningful

For the year ended December 31, 2025, our research and development expenses were $58.0 million, compared to $45.1 million for the year ended December 31, 2024, an increase of $12.9 million.

The increase was primarily due to an increase in expenses for the development of Descartes-08 for MG, primarily related to the expenses for the ongoing Phase 3 AURORA trial, an increase in our research and development employee expenses and stock-based compensation expense due to headcount growth and manufacturing operations expenses.

These increases were partially offset by a decrease in expenses for legacy Selecta programs, primarily related to decreased expenses for Xork as a result of the termination of the Astellas Agreement in the year ended December 31, 2024 and a decrease in facilities and other expense, primarily driven by the move of costs associated with our leased office and laboratory space at 65 Grove Street, Watertown, Massachusetts moved to general and administrative expenses for the year ended December 31, 2025.

General and administrative expenses

For the year ended December 31, 2024, our general and administrative expenses were $30.1 million, compared to $40.5 million for the year ended December 31, 2023, a decrease of $10.4 million.

The decrease in costs was primarily the result of reductions in expenses incurred for stock compensation and professional fees in connection with the Merger.

Impairment of long-lived assets

During the year ended December 31, 2024, our impairment of long-lived assets was $7.6 million, compared to $0.7 million for the year ended December 31, 2023, an increase of $6.9 million.

During the year ended December 31, 2024, we recorded a full impairment charge of $7.6 million after evaluating the right-of-use assets and related furniture and fixtures upon our decision to cease use of our office and laboratory space at 65 Grove Street, Watertown, Massachusetts.

During the year ended December 31, 2023, we recorded an impairment charge of $0.7 million related to the partial impairment of a right-of-use asset at 65 Grove Street, Watertown, Massachusetts.

For the year ended December 31, 2025, our general and administrative expenses were $31.5 million, compared to $30.1 million for the year ended December 31, 2024, an increase of $1.4 million.

The increase was primarily due to an increase in facility and office costs, primarily as the result of the move of costs associated with our leased office and laboratory space at 65 Grove Street, Watertown, Massachusetts from research and development costs to general and administrative expenses, coupled with an increase in stock-based compensation, primarily driven by executive awards, and an increase in consulting expenses.

These increases were partially offset by a decrease in professional fees, driven primarily by lower legal and audit fees, coupled with decreases in patent costs due to a smaller body of intellectual property work, and a decrease in salaries and benefits, driven by the retention bonus expense in the prior year.

Impairment of indefinite-lived intangible and long-lived assets

During the year ended December 31, 2025, we recorded a non-cash impairment charge of $56.7 million related to our in-process research and development, or IPR&D, asset related to Descartes-08 for SLE.

See Note 3, “Goodwill and Indefinite-Lived Intangible Assets” for more information.

During the year ended December 31, 2024, we recorded an impairment charge to our long-lived assets of $7.6 million after evaluating the right-of-use assets and related furniture and fixtures upon our decision to cease use of our office and laboratory space at 65 Grove Street, Watertown, Massachusetts.

Interest income

Interest income for the year ended December 31, 2024 was $7.4 million, compared to $5.0 million for the year ended December 31, 2023, an increase of $2.4 million.

The increase in interest income was due to increased investment balances.

Interest expense

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

Interest expense for the year ended December 31, 2023 comprised interest expense and amortization of the carrying costs of our credit facilities and loss on extinguishment of debt.

Change in fair value of warrant liabilities

For the year ended December 31, 2024, we recognized $2.6 million of income from the decrease in the fair value of warrant liabilities, compared to $12.7 million for the year ended December 31, 2023, a decrease of $10.1 million.

Interest income for the year ended December 31, 2025 was $6.6 million, compared to $7.4 million for the year ended December 31, 2024, a decrease of $0.8 million.

The decrease in interest income was due to lower investment balances and lower interest rates.

Gain on change in fair value of warrant liabilities

For the year ended December 31, 2025, we recognized $3.7 million gain on the change in the fair value of warrant liabilities, compared to $2.6 million gain for the year ended December 31, 2024, an increase of $1.1 million.

Fair value of warrant liabilities was determined utilizing the Black-Scholes valuation methodology.

The decrease in warrant value was primarily driven by a decrease in the per-share price of our common stock and the expiration of the warrants we issued in 2019, or the 2019 Warrants, during the year ended December 31, 2024.

Change in fair value of contingent value right liability

For the year ended December 31, 2024, we recognized $36.9 million of expense associated with the increase in the fair value of contingent value right liability, compared to $18.3 million of expense for the year ended December 31, 2023, an increase of $18.6 million.

The fair value of the contingent value right liability as of December 31, 2024 was determined

utilizing a Monte Carlo simulation model and as of December 31, 2023 was determined utilizing a discounted cash flow valuation methodology.

The increase in the fair value of CVR liability was primarily due to changes in the amount and timing of anticipated payments and the passage of time.

Change in fair value of forward contract liabilities

For the year ended December 31, 2024, we recognized $6.9 million of expense associated with the increase in the fair value of Series A Preferred Stock forward contract liabilities, compared to $149.6 million of expense for the year ended December 31, 2023, a decrease of $142.7 million.

The increase in the fair value of the Series A Preferred Stock forward contract liabilities during the year ended December 31, 2023 was primarily driven by an increase in the per-share price of our common stock since the date of the Merger and 2023 Private Placement.

A portion of the forward contract liability was settled during the year ended December 31, 2023 and there was no such forward contract liability prior to the Merger.

The increase in the fair value of the Series A Preferred Stock forward contract liabilities during the year ended December 31, 2024 was primarily driven by an increase in the per-share price of our common stock since December 31, 2023 through settlement.

The remaining Series A Preferred Stock forward contract liability was settled during the year ended December 31, 2024.

Other income, net

During the year ended December 31, 2024, we recognized other income, net of $0.6 million, compared to $0.7 million for the year ended December 31, 2023, a decrease of $0.1 million.

The decrease was primarily driven by a decrease in sublease income.

The decrease in warrant value was primarily driven by a decrease in the per-share price of our common stock and the passage of time.

Loss on change in fair value of contingent value right liability

For the year ended December 31, 2025, we recognized a $4.4 million loss on the change in the fair value of contingent value right liability, compared to a loss of $36.9 million for the year ended December 31, 2024, a decrease of $32.5 million.

The fair values of the contingent value right liability as of December 31, 2025 and 2024 were determined utilizing a Monte Carlo simulation model.

The increase in the fair value of the contingent value right liability was primarily due to the passage of time, partially offset by changes in the anticipated amount and timing of future payments.

Loss on change in fair value of forward contract liabilities

For the year ended December 31, 2024, we recognized $6.9 million loss on the change in fair value of Series A Preferred Stock forward contract liabilities.

The Series A Preferred Stock forward contract liability was settled during the year ended December 31, 2024.

Other (expense) income, net

During the year ended December 31, 2025, we recognized other expense, net of $2.0 million, compared to $0.6 million of other income, net for the year ended December 31, 2024, a change of $2.6 million.

The change was primarily driven by a loss on impairment of an investment during the year ended December 31, 2025, coupled with sublease income in the year ended December 31, 2024.

The terms of our subleases expired during the year ended December 31, 2024.

During the year ended December 31, 2025, we recognized a $9.2 million tax benefit primarily related to impairment of IPR&D during the year and corresponding deferred tax liability.

During the year ended December 31, 2024, we recognized a deferred tax expense of $0.3 million relating to a change in state tax rate applied to the indefinite deferred tax liability.

During the year ended December 31, 2023, we recognized a current tax benefit of $19.0 million relating to the benefit of legacy Selecta tax attributes that reduced deferred tax liabilities during the year.

Liquidity and Capital Resources

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We are not obligated to pay Biogen any expenses, fees, or royalties.

For further description of the Biogen Agreement, see Note 16 to our consolidated financial statements included elsewhere in this Annual Report.

For further description of the Biogen Agreement, see Note 15, “Collaboration and License Agreements” to our consolidated financial statements included elsewhere in this Annual Report.

Effective September 2019, we entered into the NCI Agreement with NCI.

Under the NCI Agreement, we were granted a license under certain NCI patents and patent applications designated in the agreement, to make, use, sell, offer and import products and processes within the scope of the patents and applications licensed under the NCI Agreement when developing and manufacturing anti-BCMA CAR-T cell products for the treatment of MG, pemphigus vulgaris, and immune thrombocytopenic purpura according to methods designated in the NCI Agreement.

In connection with our entry into the NCI

Agreement, we paid to NCI a one-time $0.1 million license royalty payment.

thrombocytopenic purpura according to methods designated in the NCI Agreement.

In connection with our entry into the NCI Agreement, we paid to NCI a one-time $0.1 million license royalty payment.

Under the NCI Agreement, we are further required to pay NCI a low five-digit annual royalty.

We must also pay earned royalties on net sales in a low single-digit percentage and pay up to $0.8 million in benchmark royalties upon our achievement of designated benchmarks that are based on the commercial development plan agreed between the parties.

For further description of the NCI Agreement, see Note 16 to our consolidated financial statements included elsewhere in this Annual Report.

In October 2021, we and Ginkgo Bioworks Holdings, Inc., or Ginkgo, entered into a Collaboration and License Agreement, or the First Ginkgo Agreement, and paid Ginkgo a $0.5 million one-time upfront payment.

In June 2022, we paid $0.5 million and issued 29,761 shares of our common stock then-valued at $1.0 million to Ginkgo for the achievement of certain preclinical milestones under the First Ginkgo Agreement.

In January 2022, we entered into a Collaboration and License Agreement, or the Second Ginkgo Agreement, and paid Ginkgo a $1.5 million one-time upfront payment.

In July 2023, we paid $1.0 million and issued 44,642 shares of our common stock then-valued at $1.5 million to Ginkgo for the achievement of certain preclinical milestones under the Second Ginkgo Agreement.

For further description of the First Ginkgo Agreement and the Second Ginkgo Agreement, see Note 16 to our consolidated financial statements included elsewhere in this Annual Report.

Additionally, in October 2021, we entered into an Exclusive License Agreement with Genovis AB (publ.), or Genovis, or the Genovis Agreement, and paid Genovis a $4.0 million one-time upfront payment.

For further description of the NCI Agreement, see Note 15, “Collaboration and License Agreements” to our consolidated financial statements included elsewhere in this Annual Report.

In October 2021, we entered into an Exclusive License Agreement with Genovis AB (publ.), or Genovis, or the Genovis Agreement, and paid Genovis a $4.0 million one-time upfront payment.

In February 2023, as a result of the sublicense of Xork, a bacterial IgG protease, to Astellas, we made a $4.0 million payment to Genovis.

The Genovis Agreement was terminated effective September 13, 2024.

For further description of the Genovis Agreement, see Note 16 to our consolidated financial statements included elsewhere in this Annual Report.

On September 7, 2021, we entered into a Collaboration and License Agreement, or the Cyrus Agreement, with Cyrus Biotechnology, Inc., or Cyrus, and purchased 2,326,934 shares of Cyrus’ Series B Preferred Stock, par value $0.0001 per share, at a purchase price of $0.8595 per share for an aggregate purchase price of $2.0 million.

In October 2023, we notified Cyrus of our termination of the Cyrus Agreement, effective December 29, 2023.

For further description of the Cyrus Agreement, see Note 16 to our consolidated financial statements included elsewhere in this Annual Report.

For further description of the Genovis Agreement, see Note 15, “Collaboration and License Agreements” to our consolidated financial statements included elsewhere in this Annual Report.

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

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The Astellas Agreement was terminated effective June 6, 2024.

For further description of the Astellas Agreement, see Note 14 to our consolidated financial statements included elsewhere in this Annual Report.

Amounts paid and remaining obligations with regard to the Xork product candidate not reimbursed by Astellas through the Astellas Agreement were subject to potential reimbursement through deductions to CVR distributions as described in Note 6 to our consolidated financial statements included elsewhere in this Annual Report.

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

We received a $3.0 million upfront payment and were entitled to receive up to $1.124 billion in future additional payments over the course of the partnership that were contingent on the achievement of development or commercial milestones or Takeda’s election to continue its activities at specified development stages.

The Takeda Agreement was terminated effective July 25, 2023.

For further description of the Takeda Agreement, see Note 14 to our consolidated financial statements included elsewhere in this Annual Report.

For further description of the Astellas Agreement, see Note 13, “Revenue Arrangements” to our consolidated financial statements included elsewhere in this Annual Report.

Amounts paid and remaining obligations with regard to the Xork product candidate not reimbursed by Astellas through the Astellas Agreement were subject to potential reimbursement through deductions to CVR distributions as described in Note 6, “Fair Value Measurements” to our consolidated financial statements included elsewhere in this Annual Report.

In June 2020, we entered into the Sobi License.

Sobi paid us a one-time, upfront payment of $75.0 million, and upon the closing of a private placement of our common stock to Sobi at a price of $138.468 per share, we received an additional $25.0 million from Sobi.

We are eligible to receive $630.0 million in milestone payments upon the achievement of various development and regulatory milestones and 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.

Sobi has agreed to fund the Phase 3 clinical program of SEL-212, which commenced in September 2020.

We are eligible to receive $630.0 million in milestone payments upon the achievement of various development and regulatory milestones and sales thresholds for annual net sales of NASP, 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 agreed to fund the Phase 3 clinical program of NASP, which commenced in September 2020.

In July 2022, we received $10.0 million for the completion of the enrollment of the DISSOLVE II trial.

In July 2024, we received $30.0 million for the milestone associated with the initiation of a rolling biologics license application to the FDA for SEL-212 for the potential treatment of chronic refractory gout by Sobi.

Proceeds from milestone payments and royalties on sales of SEL-212, if any, are required to be distributed, net of certain agreed deductions, to holders of the CVRs.

For further description of the Sobi License, see Note 14 to our consolidated financial statements included elsewhere in this Annual Report.

Additionally, in June 2020, we and Sarepta Therapeutics, Inc., or Sarepta, entered into a Research License and Option Agreement, or the Sarepta Agreement.

Sarepta paid us a $2.0 million upfront payment upon closing and $3.0 million for the achievement of certain preclinical milestones in June 2021.

In August 2022, we received a payment of $2.0 million in exchange for a nine-month extension to Sarepta’s options to both Duchenne muscular dystrophy and certain limb-girdle muscular

dystrophies and a payment of $4.0 million for the achievement of certain non-clinical milestones.

In March 2023, we were notified by Sarepta that Sarepta would not be exercising its exclusive option under the Sarepta Agreement.

The Sarepta Agreement terminated upon the expiration of the option in March 2023.

For further description of the Sarepta Agreement, see Note 14 to our consolidated financial statements included elsewhere in this Annual Report.

On October 25, 2021, we entered into a Sales Agreement, or the 2021 Sales Agreement, with Leerink Partners LLC, or Leerink Partners (and then known as SVB Leerink LLC), to sell shares of our common stock, from time to time, through an “at the market” equity offering program under which Leerink Partners will act as sales agent.

The shares of common stock sold pursuant to the 2021 Sales Agreement, if any, would be issued and sold pursuant to a registration statement filed with the Securities and Exchange Commission, or SEC, for aggregate gross sales proceeds of up to $75.0 million.

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

On December 13, 2024, we and Leerink Partners entered into a Sales Agreement, or the 2024 Sales Agreement.

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

Under the 2024 Sales Agreement, we may issue and sell shares of our common stock, from time to time, through Leerink Partners for aggregate gross sales proceeds of up to $100.0 million.

On November 13, 2023, we entered into the 2023 Securities Purchase Agreement with (i) Dr.

Springer, a member of our Board of Directors;

In July 2024, we received $30.0 million for the milestone associated with the initiation of a rolling biologics license application to the FDA for NASP for the potential treatment of chronic refractory gout by Sobi.

Proceeds from milestone payments and royalties on sales of NASP, if any, are required to be distributed, net of certain agreed deductions, to holders of the CVRs.

For further description of the Sobi License, see Note 13, “Revenue Arrangements” to our consolidated financial statements included elsewhere in this Annual Report.

On November 13, 2023, we entered into the 2023 Securities Purchase Agreement with (i) Timothy A.

Springer, Ph.D., a member of our Board of Directors;

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

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

Murat Kalayoglu, a co-founder and the former chief executive officer of Old Cartesian, who joined our Board of Directors effective immediately after the effective time of the Merger, providing for the 2023 Private Placement.

Springer, and (iii) Seven One Eight Three Four Irrevocable Trust, a trust associated with Murat Kalayoglu, M.D., Ph.D., a co-founder and the former chief executive officer of Old Cartesian, who joined our Board of Directors effective immediately after the effective time of the Merger, providing for the 2023 Private Placement.

In the 2023 Private Placement, we issued and sold an aggregate of 149,330.115 shares of Series A Preferred Stock for an aggregate purchase price of $60.25 million, of which 50,189.789 shares of Series A Preferred Stock were issued and sold in the year ended December 31, 2023 for gross proceeds of $20.25 million, and 99,140.326 shares of Series A Preferred Stock were issued and sold during the year ended December 31, 2024 for gross proceeds of $40.0 million.

On July 2, 2024, we entered into the 2024 Securities Purchase Agreement for the 2024 Private Placement with certain institutional and accredited investors, or the Purchasers.

In the 2024 Private Placement, we issued and sold an aggregate of 3,563,247 shares of common stock and 2,937,903 shares of Series B Preferred Stock for which we generated gross proceeds of approximately $130.0 million.

We previously maintained a term loan of up to $35.0 million, of which $25.0 million was funded in August 2020.

In September 2023, we entered into a payoff letter with Oxford Finance LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for SVBB (as successor to Silicon Valley Bank)), the lenders under the term loan, pursuant to which we paid all outstanding amounts under such term loan, together with accrued interest and a prepayment penalty, resulting in the full extinguishment of such 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.

If in the future we seek debt financing, the terms of such debt could restrict our operating and financial flexibility by imposing liens on our assets and covenants on the operation of our business.

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

We granted customary registration rights to investors in connection with the 2024 Private Placement.

On December 13, 2024, we and Leerink Partners entered into a Sales Agreement, or the Sales Agreement.

Under the Sales Agreement, we may issue and sell shares of our common stock, from time to time, through Leerink Partners for aggregate gross sales proceeds of up to $100.0 million.

During the years ended December 31, 2025 and 2024, we sold no shares of our common stock pursuant to the Sales Agreement.

Future funding requirements

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To the extent that we raise additional capital through the sale of equity instruments, the ownership interest of our existing stockholders will be diluted, and other preferences may be necessary that adversely affect the rights of existing stockholders.

We believe that our existing cash, cash equivalents, and restricted cash as of December 31, 2024 will enable us to fund our operating expenses and capital expenditure requirements into mid-2027.

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.

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Remaining lease payments from December 31, 2025 through the end of the lease term total approximately $6.8 million.

Payments made and remaining obligations on this lease liability are subject to potential reimbursement through deductions to CVR distributions as described in Note 6 to our consolidated financial statements included elsewhere in this Annual Report.

Payments made and remaining obligations on this lease liability were subject to potential reimbursement through deductions to CVR distributions as described in Note 6 “Fair Value Measurements” to our consolidated financial statements included elsewhere in this Annual Report and were reimbursed in the March 2025 CVR distribution.

In November 2023, in connection with the Merger, we acquired two leases for office and laboratory space in Gaithersburg, Maryland, which expire in January 2027.

Annualized rent is approximately $0.3 million and remaining lease payments from December 31, 2025 through the end of the lease term total approximately $0.4 million.

In February 2024, we entered into an agreement to lease approximately 19,199 square feet of integrated manufacturing and office space in Fredericksburg, Maryland.

In February 2024, we entered into an agreement to lease approximately 19,199 square feet of integrated manufacturing and office space in Frederick, Maryland.

In May 2024, we entered into an amendment to lease an additional approximately 7,842 square feet at the same site.

In August 2024, we entered into a second amendment to lease an additional approximately 2,009 square feet at the same site.

The lease, as amended, expires in June 2031.

In March 2025, we entered into a third amendment to lease an additional approximately 6,439 square feet at the same site.

The leases expire coterminously in June 2031.

Annualized base rent under the leases is approximately $1.4 million and is subject to annual increases in accordance with the terms of the lease agreement.

The leases provide for a tenant improvement allowance of $0.8 million.

Remaining lease payments from December 31, 2025 through the end of the lease term total approximately $8.8 million.

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We may be obligated to make certain future payments which are contingent upon future events such as our achievement of specified regulatory and commercial milestones, or royalties on net product sales under these agreements.

As of December 31, 2024, we were unable to estimate the timing or likelihood of achieving these milestones or

generating future product sales.

Payments made and remaining obligations on the license agreement with 3SBio are subject to potential reimbursement through deductions to CVR distributions as described in Note 6 to our consolidated financial statements included elsewhere in this Annual Report.

As of December 31, 2025, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales.

Payments made and remaining obligations on the license agreement with 3SBio are subject to potential reimbursement through deductions to CVR distributions as described in Note 6, “Fair Value Measurements” to our consolidated financial statements included elsewhere in this Annual Report.

Summary of Cash Flows

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(In thousands) 2025 2024

Cash provided by and (used in):

Cash (used in) provided by:

Operating activities $ (73,941) $ (23,674)

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Operating activities

Net cash used in operating activities for the year ended December 31, 2024 was $23.7 million compared to $51.2 million in the same period in 2023.

The decrease in net cash used in operating activities of $27.5 million was primarily due to $17.9 million of net loss, adjusted for non-cash items, and $5.8 million of cash used in changes in operating assets and liabilities, in each case during the year ended December 31, 2024 compared to $56.1 million of net loss, adjusted for non-cash items, and $4.9 million of cash provided by changes in operating assets and liabilities during the year ended December 31, 2023.

Net cash used in operating activities for the year ended December 31, 2025 was $73.9 million compared to $23.7 million for the year ended December 31, 2024.

The increase in net cash used in operating activities of $50.2 million was primarily due to $65.9 million of net loss, adjusted for non-cash items, and $8.0 million of cash used in changes in operating assets and liabilities during the year ended December 31, 2025 compared to $17.9 million of net loss, adjusted for non-cash items, and $5.8 million of cash provided by changes in operating assets and liabilities during the year ended December 31, 2024.

Investing activities

Net cash used in investing activities for the year ended December 31, 2024 was $8.7 million compared to net cash provided by investing activities of $34.6 million in the same period in 2023, a decrease of $43.3 million.

The net cash used in investing activities for the year ended December 31, 2024 consisted primarily of purchases of property and equipment.

The net cash provided by investing activities for the year ended December 31, 2023 was primarily proceeds from the maturities of marketable securities and cash assumed in the Merger offset by purchases of property and equipment.

Net cash used in investing activities for the year ended December 31, 2025 was $5.5 million compared to net cash used in investing activities of $8.7 million for the year ended December 31, 2024, a decrease of $3.2 million.

The net cash used in investing activities for the years ended December 31, 2025 and 2024 consisted primarily of purchases of property and equipment.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2024 was $168.4 million compared to net cash used in financing activities of $13.1 million in the same period in 2023, an increase of $181.5 million.

Net cash used in financing activities for the year ended December 31, 2025 was $8.1 million compared to net cash provided by financing activities of $168.4 million for the year ended December 31, 2024, a change of $176.5 million.

The net cash used in financing activities for the year ended December 31, 2025 was primarily due to payment on the contingent value

right liability.

The net cash provided by financing activities for the year ended December 31, 2024 was primarily the result of proceeds of the 2024 Private Placement and the 2023 Private Placement.

The net cash used in financing activities for the year ended December 31, 2023 was primarily the result of repayments of principal on outstanding debt and settlement of equity awards in the Merger partially offset by proceeds from the 2023 Private Placement.

Recent Accounting Pronouncements

For a discussion of recently adopted or issued accounting pronouncements refer to Note 3 to our consolidated financial statements included elsewhere in this Annual Report.

For a discussion of recently adopted or issued accounting pronouncements refer to Note 2, “Summary of Significant Accounting Policies” to our consolidated financial statements included elsewhere in this Annual Report.

Off-Balance Sheet Arrangements

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Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S.

The preparation of these consolidated financial statements requires us to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in our consolidated financial statements.

The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities in our consolidated financial statements.

Actual results may differ from these estimates under different assumptions or conditions and could have a material impact on our reported results.

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The CVRs distributed pursuant to the terms of the CVR Agreement 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 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.

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 a Monte Carlo simulation model as of December 31, 2025 and 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 rates (discounted cash flow methodology), which represent a Level 3 measurement within the fair value hierarchy.

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, which represent a Level 3 measurement within the fair value hierarchy.

Collaboration and License Revenue Recognition

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Collaboration and license agreements with customers are generally accounted for in accordance with ASC 606.

We analyze collaboration arrangements by first assessing whether they are within the scope of ASC Topic 808, Collaborative Arrangements (ASC 808 ), and evaluate whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards that are dependent on the commercial success of such activities.

We analyze collaboration arrangements by first assessing whether they are within the scope of ASC Topic 808, Collaborative Arrangements (ASC 808), and evaluate whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and

rewards that are dependent on the commercial success of such activities.

Collaboration agreements with customers that are not within the scope of ASC 808 are accounted for in accordance with ASC 606.

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We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Optional licenses are evaluated to determine if

they are issued at a discount, and therefore, represent material rights and should be accounted for as separate performance obligations.

Optional licenses are evaluated to determine if they are issued at a discount, and therefore, represent material rights and should be accounted for as separate performance obligations.

Milestone Payments:

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Clinical trial expenses are a significant component of research and development expenses, and we outsource a significant portion of these costs to third-parties.

Third-party clinical trial expenses include patient costs, clinical research organization costs and costs for data management.

Third-party clinical trial expenses include patient costs, clinical research organization

costs and costs for data management.

The accrual for site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations, and other pass-through costs.

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

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

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

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

Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, certain assumptions that form the basis of forecasted results (e.g., revenue, discount rates and probability of clinical success) and other relevant events.

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

We evaluate goodwill for impairment at least annually on October 1, or the Assessment Date, and whenever facts and circumstances indicate that their carrying amounts may not be recoverable.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets consist of IPR&D.

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

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

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

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

Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount.

Otherwise, no further impairment testing is required.

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

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

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

We evaluate indefinite-lived intangible assets for impairment at least annually on the Assessment Date, and whenever facts and circumstances indicate that their carrying amounts may not be recoverable.

Warrant Liabilities

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Pursuant to the terms of the 2022 Warrants, we could be required to settle the 2022 Warrants in cash in the event we are acquired 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.

We recorded the fair value of the 2019 Warrants and 2022 Warrants upon issuance using the Black-Scholes valuation model, and are required to revalue the common warrants at each reporting date and upon exercise or expiration with any changes in fair value recorded on our statement of operations.

In December 2022, we amended the terms of the outstanding 2019 Warrants held by certain members of our Board of Directors to remove the cash settlement provision (as so amended, the

Amended 2019 Warrants).

changes in fair value recorded on our statement of operations.

In December 2022, we amended the terms of the outstanding 2019 Warrants held by certain members of our Board of Directors to remove the cash settlement provision (as so amended, the Amended 2019 Warrants).

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.

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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 7. Management’s Discussion and Analysis