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What changed in Cartesian Therapeutics, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Cartesian Therapeutics, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+442 added−412 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-07)

Top changes in Cartesian Therapeutics, Inc.'s 2024 10-K

442 paragraphs added · 412 removed · 280 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

91 edited+93 added−46 removed140 unchanged
Biggest changeWe may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. • We expect to continue to grow our manufacturing capabilities and resources and we must incur significant costs to develop this expertise and/or rely on third parties to manufacture our products. • 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. • If we or our licensors are unable to adequately protect our proprietary technology, or obtain and maintain issued patents that are sufficient to protect our product candidates, others could compete against us more directly, which would negatively impact our business. • We have been in the past and may in the future be subject to stockholder litigation. • The failure to successfully integrate the businesses of Selecta and Old Cartesian in the expected timeframe would adversely affect the Company’s future results. • We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
Biggest changeWe may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates. • We expect to continue to grow our manufacturing capabilities and resources and we must incur significant costs to develop this expertise and/or rely on third-parties to manufacture our products. • We rely, and expect to continue to rely, on third-parties, including CROs, 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. • If we or our licensors are unable to adequately protect our proprietary technology, or obtain and maintain issued patents that are sufficient to protect our product candidates, others could compete against us more directly, which would negatively impact our business. • We have been in the past and may in the future be subject to stockholder litigation.
Biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act, or FD&C Act and the Public Health Service Act, or PHS Act, and other federal, state, local and foreign statutes and regulations.
Biological products are subject to regulation under the Federal Food, Drug, and Cosmetic Act, or the FD&C Act, and the Public Health Service Act, or the PHS Act, and other federal, state, local and foreign statutes and regulations.
There are two types of MAs. The EU MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EEA.
There are two types of MAs. The EU MA, which is issued by the European Commission through the Centralized Procedure, is based on the opinion of the Committee for Medicinal Products for Human Use, or CHMP, of the European Medicines Agency, or EMA, and is valid throughout the entire territory of the EEA.
To the Company’s knowledge, the definition of “biosimilar” with regard to an mRNA-modified cell therapy has not been expressly stated in statute, regulation, or guidance, and has not been reviewed by a court. The regulatory pathway for a biosimilar to one of our products thus remains somewhat uncertain.
To our knowledge, the definition of “biosimilar” with regard to an mRNA-modified cell therapy has not been expressly stated in statute, regulation, or guidance, and has not been reviewed by a court. The regulatory pathway for a biosimilar to one of our products thus remains somewhat uncertain.
Further, each clinical study must be reviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at which the clinical study will be conducted. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined: Phase 1.
Further, each clinical study must be reviewed and approved by an institutional review board, or IRB, at or servicing each institution at which the clinical study will be conducted. Human clinical trials are typically conducted in three sequential phases that may overlap or be combined: Phase 1.
For example, in Europe we are subject to Regulation (EU) 2016/679 (General Data Protection Regulation, or GDPR) in relation to our collection, control, processing and other use of personal data (i.e., data relating to an identifiable living individual).
For example, in Europe we are subject to Regulation (EU) 2016/679 (General Data Protection Regular, or GDPR) in relation to our collection, control, processing and other use of personal data (i.e., data relating to an identifiable living individual).
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 develop our mRNA-based product candidates by leveraging our proprietary technology and our manufacturing platform, RNA Armory®, which is an unproven approach to the treatment of autoimmune disease.
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 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.
The hyperlink to our website is included as an inactive textual reference only, and the information on our website is not incorporated by reference in this Annual Report on Form 10-K or in any other filings we make with the SEC. 22 Table of Contents RISK FACTORS SUMMARY Investing in our common stock involves various risks.
The hyperlink to our website is included as an inactive textual reference only, and the information on our website is not incorporated by reference in this Annual Report on Form 10-K or in any other filings we make with the SEC. 26 Table of Contents RISK FACTORS SUMMARY Investing in our common stock involves various risks.
The RMAT designation program is intended to facilitate an efficient development program for, and expedite review of, any product that meets the following criteria: (i) the product qualifies as an RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; (ii) the product is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (iii) preliminary clinical evidence indicates that the product has the potential to address 17 Table of Contents unmet medical needs for such a disease or condition.
The RMAT designation program is intended to facilitate an efficient development program for, and expedite review of, any product that meets the following criteria: (i) the product qualifies as an RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; (ii) the product is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and (iii) preliminary clinical evidence indicates that the product has the potential to address unmet medical needs for such a disease or condition.
The most common manifestations of SLE are cutaneous and musculoskeletal symptoms, although neurological, gastrointestinal, hematological, and renal symptoms are regularly observed as well. Patients with SLE are at a substantially increased risk of 10 Table of Contents infection and cardiovascular disease, contributing to estimated 10- and 15-year mortality rates of 9% and 15%, respectively.
The most common manifestations of SLE are cutaneous and musculoskeletal symptoms, although neurological, gastrointestinal, hematological, and renal symptoms are regularly observed as well. Patients with SLE are at a substantially increased risk of infection and cardiovascular disease, contributing to estimated 10- and 15-year mortality rates of 9% and 15%, respectively.
In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, the product is entitled to orphan exclusivity, which means the FDA may not approve any other application to market the "same drug" for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer with orphan exclusivity is unable to assure sufficient quantities of the approved orphan product.
In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, the product is entitled to orphan exclusivity, which means the FDA may not approve any other application to market the “same drug” for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer with orphan exclusivity is unable to assure sufficient quantities of the approved orphan product.
Orphan Designation Prior to the submission of a BLA, the FDA may grant orphan designation to drugs or biologics intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 16 Table of Contents individuals in the United States, there is no reasonable expectation that the cost of developing and marketing the product for this type of disease or condition will be recovered from sales in the United States.
Orphan Designation Prior to the submission of a BLA, the FDA may grant orphan designation to drugs or biologics intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and marketing the product for this type of disease or condition will be recovered from sales in the United States.
A discussion of risks relating to intellectual property is provided under the section titled “ Risk factors—Risks related to intellectual property.” We intend to continue developing intellectual property, and we intend to aggressively protect our position in key technologies.
A discussion of risks relating to intellectual property is provided under the section titled “Risk Factors—Risks Related to Our Intellectual Property.” We intend to continue developing intellectual property, and we intend to aggressively protect our position in key technologies.
During the biological product approval process, the FDA also will review proposed product labeling and will determine whether a Risk Evaluation and Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product candidate.
During the biological product approval process, the FDA also will review proposed product labeling and will determine whether a Risk Evaluation and Mitigate Strategy, or REMS, is necessary to assure the safe use of the biological product candidate.
We also must comply with the FDA’s advertising and promotion requirements, such as the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling, known as “off-label use”, and the requirement to balance information provided about a product’s benefits with important safety information.
We also must comply with the FDA’s advertising and promotion requirements, such as the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling, known as “off-label use,” and the requirement to balance information provided about a product’s benefits with important safety information.
Item 1. Business Our Corporate History and Background The Company (formerly known as Selecta Biosciences, Inc., or Selecta) was incorporated in Delaware on December 10, 2007, and is headquartered in Gaithersburg, Maryland.
Item 1. Business Our Corporate History and Background The Company (formerly known as Selecta Biosciences, Inc., or Selecta) was incorporated in Delaware on December 10, 2007, and is headquartered in Frederick, Maryland.
On January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, further reduced Medicare 21 Table of Contents payments to several providers, including hospitals and imaging centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
On January 2, 2013, the American Taxpayer Relief Act was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals and imaging centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Descartes-08 for the Treatment of Systemic Lupus Erythematosus Overview We are also developing Descartes-08 for the treatment of SLE, a chronic autoimmune disease that causes systemic inflammation which affects multiple organ systems. Background Information About Systemic Lupus Erythematosus SLE is a chronic, immune-mediated connective tissue disease that can impact nearly all major organ systems.
Descartes-08 for the Treatment of Systemic Lupus Erythematosus Overview We are also developing Descartes-08 for the treatment of SLE, a chronic autoimmune disease that causes systemic inflammation which affects multiple organ systems. 13 Table of Contents Background Information About Systemic Lupus Erythematosus SLE is a chronic, immune-mediated connective tissue disease that can impact nearly all major organ systems.
All three participants with detectable anti-acetylcholine receptor antibody levels before treatment had an average 42% reduction in antibody levels by month six. These reductions deepened to 68% by month nine and persisted at month 12. In summary, we observed continued clinical improvement and autoantibody reductions after BCMA-directed mRNA CAR-T treatment for MG that persisted through the one-year follow-up period.
All three participants with detectable anti-acetylcholine receptor antibody levels before treatment had an average 42% reduction in antibody levels by Month 6. These reductions deepened to 68% by Month 9 and persisted at Month 12. In summary, we observed continued clinical improvement and autoantibody reductions after BCMA directed mRNA CAR-T treatment for MG that persisted through the one-year follow-up period.
For more information regarding the risks related to our intellectual property, see the section titled “ Risk factors—Risks related to intellectual property .” Key Agreements Biogen License Agreement On September 8, 2023, we entered into a non-exclusive, sublicensable, worldwide, perpetual patent license agreement, or the Biogen Agreement, with Biogen MA, Inc, or Biogen, to research, develop, make, use, offer, sell and import products or processes containing or using an engineering T-cell modified with an mRNA comprising, or encoding a protein comprising, certain sequences licensed under the Biogen Agreement for the prevention, treatment, palliation and management of autoimmune diseases and disorders, excluding cancers, neoplastic disorders, and paraneoplastic disorders.
For more information regarding the risks related to our intellectual property, see the section titled “Risk factors—Risks Related to Our Intellectual Property.” 15 Table of Contents Key Agreements Biogen License Agreement On September 8, 2023, we entered into a non-exclusive, sublicensable, worldwide, perpetual license agreement, or the Biogen Agreement, with Biogen MA, Inc., or Biogen, to research, develop, make, use, offer, sell and import products or processes containing or using an engineering T-cell modified with an mRNA comprising, or encoding a protein comprising, certain sequences licensed under the Biogen Agreement for the prevention, treatment, palliation and management of autoimmune diseases and disorders, excluding cancers, neoplastic disorders, and paraneoplastic disorders.
The GDPR 19 Table of Contents imposes accountability and transparency obligations regarding personal data. We are also subject to EU rules with respect to cross-border transfers of personal data out of the EU and EEA. We are subject to the supervision of local data protection authorities in those EU jurisdictions where we are established or otherwise subject to the GDPR.
The GDPR imposes accountability and transparency obligations regarding personal data. We are also subject to EU rules with respect to cross-border transfers of personal data out of the EU and EEA. We are subject to the supervision of local data protection authorities in those EU jurisdictions where we are established or otherwise subject to the GDPR.
Violation of the federal Anti-Kickback Statute may also constitute a false or fraudulent claim for purposes of the federal civil False Claims Act. Actions under the civil False Claims Act may be brought by the Department of Justice or as a qui tam action by a private individual in the name of the government.
Violation of the federal Anti-Kickback Statute may also constitute a false or fraudulent claim for purposes of the federal civil False Claims Act. Actions under the civil False Claims Act may be brought by the Department of Justice or as a qui tam action 23 Table of Contents by a private individual in the name of the government.
The Biogen Agreement will otherwise expire when all claims of all issued patents within the patents and patent applications licensed 12 Table of Contents to us under the Biogen Agreement have expired or been finally rendered revoked, invalid or unenforceable by a decision of a court or government agency.
The Biogen Agreement will otherwise expire when all claims of all issued patents within the patents and patent applications licensed to us under the Biogen Agreement have expired or been finally rendered revoked, invalid or unenforceable by a decision of a court or government agency.
Sobi has also agreed to make milestone payments totaling up to $630.0 million to us upon the achievement of various development and regulatory milestones and, if commercialized, sales thresholds for annual net sales of SEL-212, and tiered royalty payments ranging from the low double digits on the lowest sales tier to the high teens on the highest sales tier.
Pursuant to the Sobi License, Sobi agreed to make milestone payments totaling up to $630.0 million to us upon the achievement of various development and regulatory milestones and, if commercialized, sales thresholds for annual net sales of SEL-212, and tiered royalty payments ranging from the low double digits on the lowest sales tier to the high teens on the highest sales tier.
In connection with the Merger and pursuant to the Merger Agreement, the Company (which was known as Selecta Biosciences, Inc. until immediately prior to the Merger) changed its corporate name to Cartesian Therapeutics, Inc. Overview We are a clinical-stage biotechnology company developing mRNA cell therapies for the treatment of autoimmune diseases.
In connection with the Merger and pursuant to the Merger Agreement, the Company (which was known as Selecta Biosciences, Inc. until immediately prior to the Merger) changed its corporate name to Cartesian Therapeutics, Inc. Overview We are a clinical-stage biotechnology company pioneering mRNA cell therapy for the treatment of autoimmune diseases.
The FDA may also audit the clinical investigation sites to determine that they have complied with good clinical practices. Notwithstanding the submission of relevant data and information, the FDA may ultimately deny approval or seek additional information from the applicant.
The FDA may also audit the clinical investigation sites to determine that they have complied with GCPs. Notwithstanding the submission of relevant data and information, the FDA may ultimately deny approval or seek additional information from the applicant.
The primary objective of the Phase 2a portion of the trial was to determine the optimal dosing schedule for patients with MG using the highest dose level tested in Phase 1b (52.5 x10 6 cells/kg).
The primary objective of the Phase 2a portion of the trial was to determine the optimal dosing schedule for patients with MG using the highest dose level tested in Phase 1b (52.5 x106 cells/kg).
NCI License Agreement Effective September 16, 2019, we entered into a nonexclusive, worldwide license agreement, or the NCI Agreement, with the U.S. Department of Health and Human Services, represented by the National Cancer Institute of the National Institutes of Health, or NCI.
NCI License Agreement Effective September 16, 2019, we entered into a non-exclusive, worldwide license agreement, or the NCI Agreement, with the U.S. Department of Health and Human Services, represented by the National Cancer Institute of the National Institutes of Health, or NCI.
In other words, a patient’s exposure to our cells is determined by the dose. The time, course and duration of that exposure are substantially determined by the nature of the mRNA we use.
In other words, a patient’s exposure to our cells is determined by the dose. The time, course and duration of that exposure are substantially determined by 9 Table of Contents the nature of the mRNA we use.
Additionally, we must use reasonable commercial efforts to initiate a Phase 3 clinical trial of a licensed product by the fourth quarter of 2024, submit a biologics license application, or BLA, with respect to a licensed product by the fourth quarter of 2026, and make a first commercial sale of a licensed product by the fourth quarter of 2028.
Additionally, we must use reasonable commercial efforts to initiate a Phase 3 clinical trial of a licensed product by the fourth quarter of 2024, submit a BLA with respect to a licensed product by the fourth quarter of 2026, and make a first commercial sale of a licensed product by the fourth quarter of 2028.
The EU also provides opportunities for market exclusivity. Upon receiving marketing authorization, “new active substances” generally receive eight years of data exclusivity, which prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic or biosimilar application, and an additional two years of market exclusivity, during which no generic or biosimilar product can be marketed.
Upon receiving MA, “new active substances” generally receive eight years of data exclusivity, which prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic or biosimilar application, and an additional two years of market exclusivity, during which no generic or biosimilar product can be marketed.
We believe our mRNA cell therapies have the potential to deliver deep, durable clinical benefit to a broad group of patients with autoimmune diseases because they can be administered over a short period of time, in an outpatient setting, and without pre-treatment chemotherapy.
We believe our mRNA cell therapies have the potential to deliver deep, durable clinical benefit to a broad group of patients with autoimmune diseases because they can be administered over a short period of time, in an outpatient setting, and without pre-treatment chemotherapy. We are leveraging our proprietary technology and manufacturing platform to develop mRNA cell therapies for autoimmune diseases.
SLE is the most common form of lupus, representing approximately 70% of lupus patients, and approximately three million adults worldwide are estimated to have SLE. Next Steps We expect to initiate a multi-center open-label single-arm Phase 2 trial, for which we have received FDA IND allowance, in the first half of 2024.
SLE is the most common form of lupus, representing approximately 70% of lupus patients, and approximately three million adults worldwide are estimated to have SLE. Next Steps We recently initiated a multi-center open-label single-arm Phase 2 trial, for which we have received FDA IND allowance.
We believe the mRNA cell therapies we are developing have the potential to deliver deep, durable clinical benefit to many patients with autoimmune diseases because they can be administered over a short period of time, in an outpatient setting, and without pre-treatment chemotherapy.
As the data in our clinical trials indicates, the mRNA cell therapies we are developing have the potential to deliver deep and durable clinical benefits to many patients with autoimmune diseases because they can be administered over a short period of time, in an outpatient setting, and without pre-treatment chemotherapy.
Our patents are focused on several key technologies, including the use of our mRNA CAR-T technology and other developments in our mRNA cell therapy pipeline. As of December 31, 2023, we had five issued patents worldwide, including two patents issued in the United States and three issued outside the United States.
Our patents are focused on several key technologies, including the use of our mRNA CAR-T technology and other developments in our mRNA cell therapy pipeline. As of December 31, 2024, we had seven issued patents worldwide, including three patents issued in the United States (U.S.
We make available on our website at www.cartesiantherapeutics.com, free of charge, copies of these reports as soon as reasonably practicable after filing or furnishing these reports with the SEC.
We make available on our website at www.cartesiantherapeutics.com, free of charge, copies of these reports as soon as reasonably practicable after filing or furnishing these reports with the SEC. Additionally, our Code of Business Conduct and Ethics is available on our website.
We manufacture Descartes-08 in-house and are typically able to process and release lots for infusion within approximately three weeks. Our autologous cell therapy product candidates, including Descartes-08, are manufactured on a patient-by-patient basis. We have optimized our manufacturing processes through over 200 cGMP runs. We also maintain FDA-reviewed human umbilical cord MSC cell collection and banking operations.
We manufacture Descartes-08 in-house and are typically able to process and release lots for infusion within approximately three weeks. Our autologous cell therapy product candidates, including Descartes-08, are manufactured on a patient-by-patient basis. We have optimized our manufacturing processes through over 200 cGMP runs.
Post-approval Requirements Rigorous and extensive FDA regulation of biological products continues after approval, particularly with respect to cGMP requirements. Manufacturers of our products are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation.
Descartes-08 has been granted RMAT designation for the treatment of MG. Post-approval Requirements Rigorous and extensive FDA regulation of biological products continues after approval, particularly with respect to cGMP requirements. Manufacturers of our products are required to comply with applicable requirements in the cGMP regulations, including quality control and quality assurance and maintenance of records and documentation.
Orphan medicinal products are eligible for certain financial and exclusivity incentives. For other countries outside of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country.
For other countries outside of the EU, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country.
In November 2023, the FDA announced that it is investigating the risk of T-cell malignancies in approved DNA CAR-T cell immunotherapies. The proliferation of DNA CAR-T cells has typically required pre-treatment chemotherapy, usually fludarabine and cyclophosphamide administered for several days before CAR-T cell treatment.
The resulting unconstrained proliferation frequently exceeds the toxicity threshold, leading to serious adverse events. In November 2023, the FDA announced that it is investigating the risk of T-cell malignancies in approved DNA CAR-T cell immunotherapies. The proliferation of DNA CAR-T cells has typically required pre-treatment chemotherapy, usually fludarabine and cyclophosphamide administered for several days before CAR-T cell treatment.
One of the performance goals agreed to by the FDA under PDUFA is to review 90% of standard BLAs in 10 months from the filing date and 90% of priority BLAs in six months from the filing date, whereupon a review decision is to be made. Two additional months are added to these timelines for new molecular entities.
One of the performance goals agreed to by the FDA under PDUFA is to review 90% of standard BLAs in 10 months from the filing date and 90% of priority BLAs in six months from the filing date, whereupon a review decision is to be made.
With respect to the legacy Selecta assets, as of December 31, 2023, we had (i) 233 issued patents worldwide, including 20 patents issued in the United States and 213 issued outside the United States, set to expire on various dates in 2032 through 2043, (ii) 476 patent applications pending worldwide, including 42 U.S. applications and 434 applications outside the United States and (iii) two registered marks.
With respect to the legacy Selecta assets, as of December 31, 2024, we had (i) 102 issued patents worldwide, including 11 patents issued in the United States and 91 issued outside the United States, set to expire on various dates in 2032 through 2043, (ii) 65 patent applications pending worldwide, including 12 U.S. applications and 53 applications outside the United States and (iii) two registered marks.
It is estimated to affect over 120,000 patients in the U.S. and Europe. MG patients develop antibodies that lead to an immunological attack on critical signaling proteins at the junction between nerve and muscle cells, thereby inhibiting the ability of nerves to communicate properly with muscles.
MG patients develop antibodies that lead to an immunological attack on critical signaling proteins at the junction between nerve and muscle cells, thereby inhibiting the ability of nerves to communicate properly with muscles.
Pursuant to the Sobi License, we agreed to grant Sobi an exclusive, worldwide (except as to Greater China) license to develop, manufacture and commercialize the SEL-212 drug candidate, which is currently in development for the treatment of chronic refractory gout. The SEL-212 drug candidate is a pharmaceutical composition containing a combination of SEL-037, or the Compound, and ImmTOR.
Pursuant to the Sobi License, we granted Sobi an exclusive, worldwide (except as to Greater China) license to develop, manufacture and commercialize a drug candidate known as SEL-212, which is currently in development for the treatment of chronic refractory gout.
Any proceeds received from milestone payments or royalties relating to the Sobi License would be required to be distributed to holders of CVRs, net of certain deductions.
Any proceeds received from milestone payments or royalties relating to the Sobi License would be required to be distributed to holders of CVRs, net of certain deductions. The transactions contemplated by the Sobi License were consummated on July 28, 2020.
However, as the disease progresses, symptom-free periods become less frequent and disease exacerbations can last for months. Disease symptoms reach their maximum levels within two to three years in approximately 80% of patients. Up to 20% of MG patients experience a respiratory crisis at least once in their lives. During the crisis phase, decline in respiratory function can become life-threatening.
Disease symptoms reach their maximum levels within two to three years in approximately 80% of patients. Up to 20% of MG patients experience a respiratory crisis at least once in their lives. During the crisis phase, decline in respiratory function can become life-threatening. Patients in crisis often require intubation and mechanical ventilation.
We have the unilateral right to terminate the agreement in any country or territory by giving NCI 60 days’ written notice. We agreed to indemnify NCI against any liability arising out of our, sublicensees’ or third parties’ use of the licensed patent rights and licensed products or licensed processes developed in connection with the licensed patent rights.
We agreed to indemnify NCI against any liability arising out of our, sublicensees’ or third-parties’ use of the licensed patent rights and licensed products or licensed processes developed in connection with the licensed patent rights.
Further, conventional cell therapies typically require pre-treatment with chemotherapy, which suppresses the immune system and increases the risk of infection, anemia, and neurotoxicity. As a result, conventional DNA cell therapies typically require close monitoring in an inpatient setting, increasing the total cost of care and generally limiting their reach to only the sickest patients.
As a result, conventional DNA cell therapies typically require close monitoring in an inpatient setting, increasing the total cost of care and generally limiting their reach to only the sickest patients.
Government Regulation Outside of the United States Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in countries outside the United States prior to the commencement of clinical studies or marketing of the product in those countries.
As a result, the ultimate impact, implementation and meaning of the BPCIA is subject to significant uncertainty. 21 Table of Contents Government Regulation Outside of the United States Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in countries outside the United States prior to the commencement of clinical studies or marketing of the product in those countries.
As of December 31, 2023, we had 38 employees, 26 of whom are primarily engaged in research and development activities and 12 in corporate functions. 37 of our employees are employed by us on a full-time basis. 73.6% of our employees have at least one of a Masters, PhD, or MD degree.
As of December 31, 2024, we had 66 full-time employees, 54 of whom are primarily engaged in research and development activities and 12 of whom are primarily engaged in corporate functions. 58% of our employees have at least one of a Masters, PhD, or MD degree.
We have not observed product-related cytokine release syndrome, neurotoxicity or infection of any grade. The most common product-related 8 Table of Contents adverse events observed—headache, nausea and fever—were self-limited and resolved within 72 hours of onset. One participant with MG with a history of allergic reaction to biologics developed hives after the third infusion and was hospitalized for monitoring.
The most common product-related adverse events observed, headache, nausea, and fever, were self-limited and resolved within 72 hours of onset. One participant with MG with a history of allergic reaction to biologics developed hives after the third infusion and was hospitalized for monitoring. The patient’s hives resolved completely after a brief course of steroids.
In all cases, again, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
The requirements and process governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country. In all cases, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.
Even when HIPAA does not apply, according to the Federal Trade Commission, or FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C § 45(a). 20 Table of Contents Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of any pharmaceutical or biological products for which we obtain regulatory approval.
Even when HIPAA does not apply, according to the Federal Trade Commission, or FTC, failing to take appropriate steps to keep consumers’ personal information secure constitutes unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act, 15 U.S.C § 45(a).
Patients in crisis often require intubation and mechanical ventilation. There are no known cures for MG and the current standard of care consists of chronic use of steroids and other immunosuppressants. These treatments must be administered continually and carry risks such as infection, osteoporosis, and metabolic diseases.
There are no known cures for MG and the current standard of care consists of chronic use of steroids and other immunosuppressants. These treatments must be administered continually and carry risks such as infection, osteoporosis, and metabolic diseases. Newer agents, such as those that block the complement pathway or inhibit FcRn, are typically administered continually.
Descartes-15 is our next-generation autologous anti-BCMA mRNA CAR-T. In preclinical studies, we have observed Descartes-15 to be 10-fold more potent than Descartes-08. We intend to test the safety of Descartes-15 in an open label, single-arm Phase 1 trial in patients with relapsed/refractory multiple myeloma.
In preclinical studies, we have observed Descartes-15 to be 10-fold more potent than Descartes-08. We are testing the safety of Descartes-15 in an open label, single-arm Phase 1 trial in patients with relapsed/refractory multiple myeloma. This trial remains ongoing with three patients dosed to date.
Products receiving orphan designation in the EU can receive ten years of market exclusivity, during which time no marketing authorization application shall be accepted, and no marketing authorization shall be granted for a similar medicinal product for the same indication. An orphan product can also obtain an additional two years of market exclusivity in the EU for pediatric studies.
Orphan medicinal products are eligible for certain financial and exclusivity incentives. In particular, orphan medicinal products in the EU can receive ten years of market exclusivity, during which time no MA application shall be accepted, and no MA shall be granted for a similar medicinal product for the same indication.
Our lead product candidate, Descartes-08, is an autologous mRNA CAR-T directed against the B cell maturation antigen, or BCMA, that we are developing for the treatment of autoimmune diseases. Descartes-08 has been granted Orphan Drug Designation by the FDA for the treatment of MG.
The table below summarizes key information about our development pipeline. 6 Table of Contents Our lead product candidate, Descartes-08, is an autologous mRNA CAR-T directed against the B cell maturation antigen, or BCMA, that we are developing for the treatment of autoimmune diseases.
The primary objective of this trial is to evaluate the safety, tolerability, and manufacturing feasibility of Descartes-08 mRNA CAR-T cells administered as six once-weekly outpatient infusions of 52.5x10 6 cells/kg without pre-treatment chemotherapy in approximately 30 patients with SLE. Descartes-15 Descartes-15 is a next-generation, autologous anti-BCMA mRNA CAR-T.
The primary objective of this trial is to evaluate the safety, tolerability, and manufacturing feasibility of Descartes-08 mRNA CAR-T cells administered as six once-weekly outpatient infusions of 52.5x106 cells/kg without pre-treatment chemotherapy in approximately 30 patients with SLE. We also filed an amendment to the IND application with our Descartes-08 product candidate in pediatric autoimmune disease in December 2024.
We continue to enroll patients to the Phase 2b portion of the trial. The primary objective of the Phase 1b portion of the trial was to determine the maximum tolerated dose of Descartes-08 for patients with MG.
Clinical Development To date, we have completed the Phase 1/2 trial of Descartes-08 in MG, which consisted of a Phase 1b portion, a Phase 2a portion, and a Phase 2b portion. The primary objective of the Phase 1b portion of the trial was to determine the maximum tolerated dose of Descartes-08 for patients with MG.
This portion of the trial evaluated 11 patients with particularly advanced disease as assessed by both patient and clinician-reported outcomes. 79% of the 14 patients included in the Phase 1b and Phase 2a portions of the trial were classified at screening to have Class III or IV disease, as defined by the Myasthenia Gravis Foundation of America, indicating they have moderate-to-severe weakness affecting their muscles.
This portion of the trial evaluated 11 patients with particularly advanced disease as assessed by both patient and clinician-reported outcomes. 79% of the 14 patients included in the Phase 1b and Phase 2a portions of the trial were classified at screening to have Class III or IV disease, as defined by the Myasthenia Gravis Foundation of America, indicating they had moderate-to-severe weakness affecting their muscles. 10 Table of Contents The results of the Phase 2a portion of the trial, published in the Lancet Neurology in July 2023, indicated that after six weekly infusions of Descartes-08, the average improvement in all disease severity scores was three-to-five-fold greater than what is considered clinically meaningful by expert consensus.
We are currently enrolling in a Phase 2b randomized, double-blind, placebo-controlled trial in patients with MG, for which we expect to report topline results in mid-2024. We are also developing Descartes-08 for the treatment of other autoimmune diseases.
Descartes-08 for the Treatment of MG In July 2024, we reported topline results from a Phase 2b randomized, double-blind, placebo-controlled trial in patients with MG.
We expect to incur losses for the foreseeable future and may never achieve or maintain profitability. • We will need substantial additional funding in order to complete development of our product candidates and commercialize our products, if approved.
You should carefully read and consider the matters discussed in this Annual Report under the heading “Risk Factors,” which include the following risks: • We are a development-stage company, and we expect to incur losses for the foreseeable future and may never achieve or maintain profitability. • We will need substantial additional funding in order to complete development of our product candidates and commercialize our products, if approved.
This results in muscle weakness in tissues throughout the body, potentially manifesting in partial paralysis of eye movements, problems in chewing and swallowing, respiratory problems, speech difficulties and weakness in skeletal muscles. The symptoms of the disease can be transient and in the early stages of the disease can remit spontaneously.
This results in muscle weakness in tissues throughout the body, potentially manifesting in partial paralysis of eye movements, problems in chewing and swallowing, respiratory problems, speech difficulties and weakness in skeletal muscles. As the disease progresses, symptom-free periods become less frequent and disease exacerbations can last for months.
Federal, state and local governments in the U.S. have established and continue to consider policies to limit the growth of healthcare costs, including the cost of prescription drugs.
Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medical products. Federal, state and local governments in the U.S. have established and continue to consider policies to limit the growth of healthcare costs, including the cost of prescription drugs.
The trial, which is expected to have at least 30 completers, is designed to assess the primary endpoint of the proportion of patients achieving a five-point or greater reduction in their MGC score at day 85. Patients will receive six weekly infusions at the dose established in Phase 1b (52.5 x10 6 cells/kg).
Follow-on results of the Phase 2b portion of the trial were presented in December 2024. The trial reached its primary endpoint to assess the proportion of patients achieving a five-point or greater reduction in their MGC score at day 85. Patients received six weekly infusions at the dose established in Phase 1b (52.5 x106 cells/kg).
Conventional DNA-engineered CAR-T cells are in clinical development for several autoimmune diseases. DNA CAR-T cells are typically administered to patients in a subtherapeutic dose, which means that the cells must proliferate to reach therapeutic numbers in the body. However, this proliferation is not controlled in magnitude or duration, varies from patient to patient, and can be unpredictable.
The acute toxicities are from exponential amplification of the modified cell, and the pre-treatment chemotherapy administered to enable cell amplification. Conventional DNA-engineered CAR-T cells are in clinical development for several autoimmune diseases. DNA CAR-T cells are typically administered to patients in a subtherapeutic dose, which means that the cells must proliferate to reach therapeutic numbers in the body.
Descartes-08 for the Treatment of MG Overview Descartes-08 has been granted Orphan Drug Designation by the FDA for the treatment of MG. We chose MG as our lead indication because the pathogenesis for MG is common to many autoimmune diseases. Background Information About MG MG is a rare autoimmune disease that causes debilitating muscle weakness and fatigue.
We chose MG as our lead indication because the pathogenesis for MG is common to many autoimmune diseases. Background Information About MG MG is a rare autoimmune disease that causes debilitating muscle weakness and fatigue. It is estimated to affect over 120,000 patients in the U.S. and Europe.
For example, clinical trials for cell and gene therapy products are often structured as a hybrid Phase 1/2 study where a small group of participants with the disease are enrolled and both safety and efficacy tests are performed. 15 Table of Contents Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.
We have received FDA allowance for our investigational new drug application, or IND, for a Phase 2 trial of Descartes-08 for the treatment of patients with systemic lupus erythematosus, or SLE, a chronic autoimmune disease that causes systemic inflammation affecting multiple organ systems. We expect this Phase 2 trial to initiate in the first half of 2024.
In July 2024, the first patient was dosed in our Phase 2 trial of Descartes-08 for the treatment of systemic lupus erythematosus, or SLE, a chronic autoimmune disease that causes systemic inflammation affecting multiple organ systems. A data readout of this trial is expected in the second half of 2025.
The designation includes all of the features of Fast Track designation, as well as more intensive FDA interaction and guidance. Fast Track, priority review, accelerated approval, and breakthrough therapy designations do not change the standards for approval and may not necessarily expedite the development or approval process.
Fast Track, priority review, accelerated approval, and breakthrough therapy designations do not change the standards for approval and may not necessarily expedite the development or approval process. 20 Table of Contents In 2016, the 21st Century Cures Act established what the FDA describes as RMAT designation.
The trial also involves a crossover component, in which any patient originally assigned to placebo will be given the opportunity to receive Descartes-08 after completing trial treatment.
The trial also involved a crossover component, in which any patient originally assigned to placebo was given the opportunity to receive Descartes-08 after completing trial treatment. In the Phase 2b trial, we observed a deepening of responses after Month 3 in the primary efficacy data set.
This proliferation occurs because the CAR gene is irreversibly integrated into the T-cell’s genome, causing a cascade in which every daughter cell carries the same CAR as the parent cells. The resulting unconstrained proliferation frequently exceeds the toxicity threshold, leading to serious adverse events.
However, this proliferation is not controlled in magnitude or duration, varies from patient to patient, and can be unpredictable. This proliferation occurs because the CAR gene is irreversibly integrated into the T-cell’s genome, causing a cascade in which every daughter cell carries the same CAR as the parent cells.
The NCI Agreement terminates upon the expiration of the last to expire of the patent rights licensed thereunder, if not sooner terminated. NCI has the right to terminate this agreement, after giving written notice and providing a cure period in accordance with its terms, if we are in default of a material obligation.
NCI has the right to 16 Table of Contents terminate this agreement, after giving written notice and providing a cure period in accordance with its terms, if we are in default of a material obligation. We have the unilateral right to terminate the agreement in any country or territory by giving NCI 60 days’ written notice.
After each infusion, patients were observed for at least one week, and a higher dose level was administered if there were no significant adverse effects observed at the initial dose. We observed Descartes-08 to be well-tolerated by the three patients who participated in this portion of the trial with no cytokine release syndrome or other serious product-related adverse events.
We observed Descartes-08 to be well-tolerated by the three patients who participated in this portion of the trial with no CRS or other serious product-related adverse events.
If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. To obtain regulatory approval of medical product under EU regulatory systems, we must submit a marketing authorization application, which is similar to the U.S. BLA.
If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. EU law also provides opportunities for market exclusivity.
We are leveraging our proprietary technology and manufacturing platform, RNA Armory ® , to develop mRNA cell therapies for autoimmune diseases across three modalities. Our mRNA CAR-T modality is a personalized approach that collects a patient’s T-cells and uses mRNA to introduce a chimeric antigen receptor, or CAR, into the cell.
Our mRNA CAR-T modality is a personalized approach that collects a patient’s T-cells and uses mRNA to introduce a chimeric antigen receptor, or CAR, into the cell. The CAR redirects the T-cells to target and destroy pathogenic self-reactive cells.
The FDA does not always meet its PDUFA goal dates for standard and priority BLAs.
Two 19 Table of Contents additional months are added to these timelines for new molecular entities. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs.
In all cases, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki. 18 Table of Contents In the European Economic Area, or EEA, which is composed of the 27 member states of the European Union, or EU, plus Norway, Iceland and Liechtenstein, medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA.
In the European Economic Area, or EEA, which is composed of the 27 member states of the European Union, or EU, plus Norway, Iceland and Liechtenstein, medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA. To obtain an MA in the EEA, we must submit a marketing authorization application, which is similar to the U.S. BLA.
The graphs below contrast our mRNA cell therapy approach with that of conventional DNA cell therapy. As of the 2023 safety cutoff date, we have administered Descartes-08 to over 60 patients suffering from one of MG, multiple myeloma, and other diseases in open-label trials on an outpatient basis, many at community clinics.
As of December 31, 2024, we have administered Descartes-08 to over 100 patients suffering from one of MG, multiple myeloma, and other diseases in open-label trials on an outpatient basis, many at community clinics. We have not observed product-related CRS, neurotoxicity or infection of any grade.
We are developing Descartes-33 to deliver a combination of therapeutic proteins that target key drivers in the pathogenesis of autoimmunity. 11 Table of Contents Manufacturing We have established wholly owned internal manufacturing and research and development capabilities, which allow us to optimize processes rapidly and in an iterative manner.
Following the Phase 1 dose escalation trial, we expect to subsequently assess Descartes-15 in autoimmune indications. 14 Table of Contents Manufacturing We have established wholly-owned internal manufacturing and research and development capabilities, which allow us to optimize processes rapidly and in an iterative manner.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe 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: • clinical trials of our product candidates may produce unfavorable, incomplete or inconclusive results; • we may be unable to manufacture our product candidates, which in some cases such as mRNA CAR-T, are manufactured on a patient-by-patient basis; • regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or may place a clinical hold on existing clinical trials; • we may experience delays in reaching, or fail to reach, agreement on acceptable terms with contract research organizations, or CROs, or clinical trial sites; • we may be unable to recruit suitable patients to participate in a clinical trial, the number of patients required for clinical trials of our product candidates may be larger than we expect, enrollment in these clinical trials may be slower than we expect or participants may drop out of these clinical trials at a higher rate than we expect, or enrollment could be affected by the ongoing conflicts in Ukraine and the Middle East; • the number of clinical trial sites required for clinical trials of our product candidates may be larger than we expect; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; • investigators, regulators, data safety monitoring boards or institutional review boards may require that we or our investigators suspend or terminate clinical research, or we may decide to do so ourselves; • investigators may deviate from the trial protocol, fail to conduct the trial in accordance with regulatory requirements or misreport study data; • the cost of clinical trials of our product candidates may be greater than we expect or we may have insufficient resources to pursue or complete certain aspects of our clinical trial programs or to do so within the timeframe we planned; • the supply or quality of raw materials or manufactured product candidates (whether provided by us or third parties) or other materials necessary to conduct clinical trials of our product candidates may be insufficient, inadequate or not available at an acceptable cost, or in a timely manner, or we may experience interruptions in supply; • laboratories that we rely upon to perform certain quality control tests may become unavailable, or their services could be delayed; • regulators may revise the requirements for approving our product candidates, or such requirements may not be as we expect; • the FDA or comparable foreign regulatory authorities may disagree with our clinical trial design or our interpretation of data from preclinical studies and clinical trials, or may change the requirements for approval even after it has reviewed and commented on the design of our clinical trials; • regarding trials managed by our existing or any future collaborators, our collaborators may face any of the above issues, and may conduct clinical trials in ways they view as advantageous to them but potentially suboptimal for us; and • geopolitical events may affect international and overseas trial sites in ways beyond our control. 25 Table of Contents If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, or if we are forced to delay or abandon certain clinical trials or other testing in order to conserve capital resources, we may: • be delayed in obtaining marketing approval for our product candidates, if at all; • obtain marketing approval in some countries and not in others; • obtain approval for indications or patient populations that are not as broad as intended or desired; • obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; • be subject to additional post-marketing testing requirements; or • have a product removed from the market after obtaining marketing approval.
Biggest changeWe 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: • clinical trials of our product candidates may produce unfavorable, incomplete or inconclusive results; • we may be unable to manufacture our product candidates, which in some cases such as mRNA CAR-T, are manufactured on a patient-by-patient basis; • regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or may place a clinical hold on existing clinical trials; • we may experience delays in reaching, or fail to reach, agreement on acceptable terms with CROs or clinical trial sites; • we may be unable to recruit suitable patients to participate in a clinical trial, the number of patients required for clinical trials of our product candidates may be larger than we expect, enrollment in these clinical trials may be slower than we expect or participants may drop out of these clinical trials at a higher rate than we expect, or enrollment could be affected by unforeseen geopolitical conflict; • the number of clinical trial sites required for clinical trials of our product candidates may be larger than we expect; • our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we may have to suspend or terminate clinical trials of our product candidates for various reasons, including a finding that the participants are being exposed to unacceptable health risks; • investigators, regulators, data safety monitoring boards or institutional review boards may require that we or our investigators suspend or terminate clinical research, or we may decide to do so ourselves; • investigators may deviate from the trial protocol, fail to conduct the trial in accordance with regulatory requirements or misreport study data; • the cost of clinical trials of our product candidates may be greater than we expect or we may have insufficient resources to pursue or complete certain aspects of our clinical trial programs or to do so within the timeframe we planned; • the supply or quality of raw materials or manufactured product candidates (whether provided by us or third-parties) or other materials necessary to conduct clinical trials of our product candidates may be insufficient, inadequate or not available at an acceptable cost, or in a timely manner, or we may experience interruptions in supply; • laboratories that we rely upon to perform certain quality control tests may become unavailable, or their services could be delayed; • regulators may revise the requirements for approving our product candidates, or such requirements may not be as we expect; • the FDA or comparable foreign regulatory authorities may disagree with our clinical trial design or our interpretation of data from preclinical studies and clinical trials, or may change the requirements for approval even after it has reviewed and commented on the design of our clinical trials; • regarding trials managed by our existing or any future collaborators, our collaborators may face any of the above issues, and may conduct clinical trials in ways they view as advantageous to them but potentially suboptimal for us; and • geopolitical events may affect international and overseas trial sites in ways beyond our control.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • HIPAA, as amended by HITECH and their respective implementing regulations, which also impose obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Physician Payments Sunshine Act, or the Sunshine Act, which requires applicable manufacturers of certain products for which payment is available under a federal healthcare program to report annually to the government information related to certain payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by the physicians and their immediate family members; 33 Table of Contents • analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by third-party payors, including private insurers; and requirements to comply with federal and pharmaceutical industry compliance guidelines; • state data privacy and price transparency laws, many of which differ from each other in significant ways and often are broader than and not preempted by HIPAA or the Sunshine Act, thus complicating compliance efforts; by way of example, the California Consumer Privacy Act, or CCPA, which went into effect January 1, 2020, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • HIPAA, as amended by HITECH, and their respective implementing regulations, which also impose obligations, including mandatory contractual terms, on certain types of people and entities with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Physician Payments Sunshine Act, or the Sunshine Act, which requires applicable manufacturers of certain products for which payment is available under a federal healthcare program to report annually to the government information related to certain payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals beginning in 2022, and teaching hospitals, as well as ownership and investment interests held by the physicians and their immediate family members; 37 Table of Contents • analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by third-party payors, including private insurers; and requirements to comply with federal and pharmaceutical industry compliance guidelines; • state data privacy and price transparency laws, many of which differ from each other in significant ways and often are broader than and not preempted by HIPAA or the Sunshine Act, thus complicating compliance efforts; by way of example, the California Consumer Privacy Act, or CCPA, which went into effect January 1, 2020, among other things, creates new data privacy obligations for covered companies and provides new privacy rights to California residents, including the right to opt out of certain disclosures of their information.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on several factors, including: • the efficacy, safety and potential advantages compared to alternative treatments; • our ability to manufacture and distribute cell therapies in a timely and secure manner; • our ability to offer our products for sale at competitive prices; • the convenience and ease of administration compared to alternative treatments; • product labeling or product insert requirements of the FDA or foreign regulatory authorities, including any limitations or warnings contained in a product’s approved labeling, including any black box warning or REMS; • the willingness of the target patient population to try new treatments and of physicians to prescribe these treatments; • our ability to hire and retain a sales force; • the strength of marketing and distribution support; • the availability of third-party coverage and adequate reimbursement for our product candidates, once approved; • the prevalence and severity of any side effects; and • any restrictions on the use of our products together with other medications. 30 Table of Contents We currently have no sales organization.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on several factors, including: • the efficacy, safety and potential advantages compared to alternative treatments; • our ability to manufacture and distribute cell therapies in a timely and secure manner; • our ability to offer our products for sale at competitive prices; • the convenience and ease of administration compared to alternative treatments; • product labeling or product insert requirements of the FDA or foreign regulatory authorities, including any limitations or warnings contained in a product’s approved labeling, including any black box warning or REMS; • the willingness of the target patient population to try new treatments and of physicians to prescribe these treatments; • our ability to hire and retain a sales force; • the strength of marketing and distribution support; • the availability of third-party coverage and adequate reimbursement for our product candidates, once approved; • the prevalence and severity of any side effects; and • any restrictions on the use of our products together with other medications. 34 Table of Contents We currently have no sales organization.
The complaint seeks a temporary injunction against the stockholder vote on the Conversion Proposal, compensatory damages, pre-and post-judgment interest, and attorneys’ fees and costs. At a telephonic hearing on February 28, 2024, the Court denied the Plaintiff’s motion to expedite the proceedings, rejecting Plaintiff's argument that the lawsuit raised colorable disclosure claims warranting expedited treatment.
The complaint seeks a temporary injunction against the stockholder vote on the Series A Conversion Proposal, compensatory damages, pre-and post-judgment interest, and attorneys’ fees and costs. At a telephonic hearing on February 28, 2024, the Court denied the Plaintiff’s motion to expedite the proceedings, rejecting Plaintiff’s argument that the lawsuit raised colorable disclosure claims warranting expedited treatment.
Additional risks inherent in conducting international clinical trials include: • foreign regulatory requirements that could burden or limit our ability to conduct our clinical trials; 26 Table of Contents • increased costs and heightened supply constraints associated with the acquisition of standard of care drugs and/or combination or comparator agents for which we may bear responsibility in certain jurisdictions; • administrative burdens of conducting clinical trials under multiple foreign regulatory schema; • foreign exchange fluctuations; • more burdensome manufacturing, customs, shipment and storage requirements; • cultural differences in medical practice and clinical research; • lack of consistency in standard of care from country to country; • diminished protection of intellectual property in some countries; • changes in country or regional regulatory requirements; and • geopolitical instability or wars in regions outside of the United States where we conduct clinical trials may impact ongoing clinical trials.
Additional risks inherent in conducting international clinical trials include: • foreign regulatory requirements that could burden or limit our ability to conduct our clinical trials; • increased costs and heightened supply constraints associated with the acquisition of standard of care drugs and/or combination or comparator agents for which we may bear responsibility in certain jurisdictions; • administrative burdens of conducting clinical trials under multiple foreign regulatory schema; • foreign exchange fluctuations; • more burdensome manufacturing, customs, shipment and storage requirements; • cultural differences in medical practice and clinical research; • lack of consistency in standard of care from country to country; 30 Table of Contents • diminished protection of intellectual property in some countries; • changes in country or regional regulatory requirements; and • geopolitical instability or wars in regions outside of the United States where we conduct clinical trials may impact ongoing clinical trials.
The complaint alleges that the individual defendants breached their fiduciary duties and committed corporate waste when they authorized a private placement transaction, announced on December 19, 2019, at a price allegedly below fair value. The complaint further alleges that the four defendant directors who participated in the private placement were unjustly enriched in connection with the transaction.
The complaint alleged that the individual defendants breached their fiduciary duties and committed corporate waste when they authorized a private placement transaction, announced on December 19, 2019, at a price allegedly below fair value. The complaint further alleges that the four defendant directors who participated in the private placement were unjustly enriched in connection with the transaction.
Risks Related to our Operations Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. We are highly dependent on Carsten Brunn, Ph.D., our President and Chief Executive Officer, as well as the other principal members of our management, scientific and clinical teams.
Risks Related to our Operations Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel. We are highly dependent on Carsten Brunn, Ph.D., our President and Chief Executive Officer, as well as the other principal members of our management, scientific, clinical, and manufacturing teams.
Any of these transactions could be material to our financial condition and operating results and expose us to many risks, including: 46 Table of Contents • disruption in our relationships with future customers or with current or future distributors or suppliers as a result of such a transaction; • unexpected liabilities related to acquired companies; • difficulties integrating acquired personnel, technologies and operations into our existing business; • diversion of management time and focus from operating our business to acquisition integration challenges; • increases in our expenses and reductions in our cash available for operations and other uses; • possible write-offs or impairment charges relating to acquired businesses; and • inability to develop a sales force for any additional product candidates.
Any of these transactions could be material to our financial condition and operating results and expose us to many risks, including: • disruption in our relationships with future customers or with current or future distributors or suppliers as a result of such a transaction; • unexpected liabilities related to acquired companies; • difficulties integrating acquired personnel, technologies and operations into our existing business; • diversion of management time and focus from operating our business to acquisition integration challenges; • increases in our expenses and reductions in our cash available for operations and other uses; • possible write-offs or impairment charges relating to acquired businesses; and 50 Table of Contents • inability to develop a sales force for any additional product candidates.
Regardless of merit or eventual outcome, liability claims may result in: 32 Table of Contents • regulatory investigations, product recalls or withdrawals, or labeling, marketing or promotional restrictions; • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • loss of clinical trial participants or increased difficulty in enrolling future participants; • significant costs to defend the related litigation or to reach a settlement; • substantial payments to trial participants or patients; • loss of revenue; • reduced resources of our management to pursue our business strategy; • the inability to commercialize any products that we may develop; • distraction of management’s attention from our primary business; and • substantial monetary awards to patients or other claimants.
Regardless of merit or eventual outcome, liability claims may result in: 36 Table of Contents • regulatory investigations, product recalls or withdrawals, or labeling, marketing or promotional restrictions; • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • loss of clinical trial participants or increased difficulty in enrolling future participants; • significant costs to defend the related litigation or to reach a settlement; • substantial payments to trial participants or patients; • loss of revenue; • reduced resources of our management to pursue our business strategy; • the inability to commercialize any products that we may develop; • distraction of management’s attention from our primary business; and • substantial monetary awards to patients or other claimants.
The success of our product candidates will depend on several factors, including the following: • design, initiation and completion of preclinical studies and clinical trials with positive results; • reliance on third parties, including but not limited to collaborators, licensees, clinical research organizations and contract manufacturing organizations; • receipt of marketing approvals from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates and not infringing or violating patents or other intellectual property of third parties; • manufacturability, manufacturing, logistics, and stability of our cell therapies, including autologous cell therapies; • growing our internal cGMP manufacturing capabilities to support commercial manufacturing or making arrangements with third-party manufacturers; • launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • acceptance of our products, if and when approved, by patients and the medical community; • effectively competing with other therapies; • obtaining and maintaining coverage and adequate reimbursement by third-party payors, including government payors, for our products, if approved; • maintaining an acceptable safety profile of our products following approval; and • maintaining and growing an organization of scientists and businesspeople who can develop and commercialize our product candidates and technology.
The success of our product candidates will depend on several factors, including the following: • design, initiation and completion of preclinical studies and clinical trials with positive results; • reliance on third-parties, including but not limited to collaborators, licensees, clinical research organizations and contract manufacturing organizations; 27 Table of Contents • receipt of marketing approvals from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates and not infringing or violating patents or other intellectual property of third-parties; • manufacturability, manufacturing, logistics, and stability of our cell therapies, including autologous cell therapies; • growing our internal cGMP manufacturing capabilities to support commercial manufacturing or making arrangements with third-party manufacturers; • launching commercial sales of our products, if and when approved, whether alone or in collaboration with others; • acceptance of our products, if and when approved, by patients and the medical community; • effectively competing with other therapies; • obtaining and maintaining coverage and adequate reimbursement by third-party payors, including government payors, for our products, if approved; • maintaining an acceptable safety profile of our products following approval; and • maintaining and growing an organization of scientists and businesspeople who can develop and commercialize our product candidates and technology.
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. For example, Descartes-08 has been granted orphan drug designation by the FDA for the treatment of MG.
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. For example, Descartes-08 has been granted Orphan Drug Designation and RMAT Designation by the FDA for the treatment of MG.
Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. 31 Table of Contents Even if we are able to commercialize any of our product candidates, the products may become subject to unfavorable pricing regulations or third-party coverage or reimbursement policies, any of which would have a material adverse effect on our business.
Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. 35 Table of Contents Even if we are able to commercialize any of our product candidates, the products may become subject to unfavorable pricing regulations or third-party coverage or reimbursement policies, any of which would have a material adverse effect on our business.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. 34 Table of Contents Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products. 38 Table of Contents Disruptions at the FDA and other government agencies caused by funding shortages or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.
The failure of any CMO to perform its obligations as expected, or, to the extent we manufacture all or a portion of our product candidates ourselves, our failure to execute on our manufacturing requirements, could adversely affect our business in a number of ways, including: • we or our current or future collaborators may not be able to initiate or continue clinical trials of product candidates that are under development; • we or our current or future collaborators may be delayed in submitting regulatory applications, or receiving regulatory approvals, for our product candidates; • we may lose the cooperation of our collaborators; • our facilities and those of our CMOs, and our products could be the subject of inspections by regulatory authorities that could have a negative outcome and result in delays in supply; • we may be required to cease distribution or recall some or all batches of our products or take action to recover clinical trial material from clinical trial sites; and • ultimately, we may not be able to meet the clinical and commercial demands for our products.
The failure of any CMO to perform its obligations as expected, or, to the extent we manufacture all or a portion of our product candidates ourselves, our failure to execute on our manufacturing requirements, could adversely affect our business in a number of ways, including: • we or our current or future collaborators may not be able to initiate or continue clinical trials of product candidates that are under development; • we or our current or future collaborators may be delayed in submitting regulatory applications, or receiving regulatory approvals, for our product candidates; • we may lose the cooperation of our collaborators; • our facilities and those of our CMOs, and our products could be the subject of inspections by regulatory authorities that could have a negative outcome and result in delays in supply; 33 Table of Contents • we may be required to cease distribution or recall some or all batches of our products or take action to recover clinical trial material from clinical trial sites; and • ultimately, we may not be able to meet the clinical and commercial demands for our products.
Doing business internationally involves a number of risks, including but not limited to: • multiple, conflicting and changing laws and regulations, such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us to obtain and maintain regulatory approvals for the use of our product candidates in various countries; • additional potentially relevant third-party patent rights; • complexities and difficulties in obtaining protection of and enforcing our intellectual property rights; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple-payor reimbursement regimes, government payors or patient self-pay systems; • limits on our ability to penetrate international markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our product candidates and exposure to foreign currency exchange rate fluctuations, which could result in increased operating expenses and reduced revenues; • natural disasters, political and economic instability, including wars, events of terrorism and political unrest, outbreak of disease, including the COVID-19 pandemic, boycotts, curtailment of trade and other business restrictions, economic sanctions, and economic weakness, including inflation; • changes in diplomatic and trade relationships; • challenges in enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • restriction on cross-border investment, including enhanced oversight by the Committee on Foreign Investment in the United States and substantial restrictions on investment from China; • certain expenses including, among others, expenses for travel, translation and insurance; 45 Table of Contents • legal risks, including use of the legal system by the government to benefit itself or affiliated entities at our expense, including expropriation of property; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the FCPA its books and records provisions, or its anti-bribery provisions; and • risks that we may suffer reputational harm as a result of our operations in Russia.
Doing business internationally involves a number of risks, including but not limited to: • multiple, conflicting and changing laws and regulations, such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us to obtain and maintain regulatory approvals for the use of our product candidates in various countries; • additional potentially relevant third-party patent rights; • complexities and difficulties in obtaining protection of and enforcing our intellectual property rights; • difficulties in staffing and managing foreign operations; • complexities associated with managing multiple-payor reimbursement regimes, government payors or patient self-pay systems; • limits on our ability to penetrate international markets; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our product candidates and exposure to foreign currency exchange rate fluctuations, which could result in increased operating expenses and reduced revenues; • natural disasters, political and economic instability, including wars, events of terrorism and political unrest, outbreak of disease, including pandemics, boycotts, curtailment of trade and other business restrictions, economic sanctions, and economic weakness, including inflation; • changes in diplomatic and trade relationships; • challenges in enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States; • restriction on cross-border investment, including enhanced oversight by the Committee on Foreign Investment in the United States and substantial restrictions on investment from China; • certain expenses including, among others, expenses for travel, translation and insurance; • legal risks, including use of the legal system by the government to benefit itself or affiliated entities at our expense, including expropriation of property; • regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the FCPA its books and records provisions, or its anti-bribery provisions; and • risks that we may suffer reputational harm as a result of our operations in Russia.
The complaint alleges that the defendants violated Sections 14(a) and 20(a) of the Exchange Act by failing to disclose purportedly material information to our stockholders in our Preliminary and Definitive Proxy Statements filed on January 31, 2024, and February 14, 2024, respectively, in connection with the solicitation of stockholder approval of a proposal to convert our Series A Preferred Stock into our common stock, subject to certain beneficial ownership limitations, or the Conversion Proposal.
The complaint alleged that the defendants violated Sections 14(a) and 20(a) of the Exchange Act by failing to disclose purportedly material information to our stockholders in our Preliminary and Definitive Proxy Statements filed on January 31, 2024, and February 14, 2024, respectively, in connection with the solicitation of stockholder approval of a proposal to convert our Series A Preferred Stock into our common stock, subject to certain beneficial ownership limitations, or the Series A Conversion Proposal.
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; and ◦ 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 General Data Protection Regulation, or 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.
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; and ◦ 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.
Even if we are successful in identifying new product candidates, they may not be suitable for 23 Table of Contents clinical development, including as a result of manufacturing difficulties, harmful side effects, limited efficacy or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance.
Even if we are successful in identifying new product candidates, they may not be suitable for clinical development, including as a result of manufacturing difficulties, harmful side effects, limited efficacy or other characteristics that indicate that they are unlikely to be products that will receive marketing approval and achieve market acceptance.
If any product candidate that we may choose to develop is associated with SAEs or other unexpected properties, we may need to abandon development or limit development of that product candidate to certain uses or subpopulations in which those undesirable characteristics would be expected to be less 24 Table of Contents prevalent, less severe or more tolerable from a risk-benefit perspective.
If any product candidate that we may choose to develop is associated with SAEs or other unexpected properties, we may need to abandon development or limit development of that product candidate to certain uses or subpopulations in which those undesirable characteristics would be expected to be less prevalent, less severe or more tolerable from a risk-benefit perspective.
Risks Related to the Development of our Product Candidates We develop our mRNA-based product candidates by leveraging our proprietary technology and our manufacturing platform, RNA Armory®, which is an unproven approach to the treatment of autoimmune disease.
Risks Related to the Development of our Product Candidates 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.
As a result, if these stockholders choose to act together, they would be able to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs.
As a result, if some or all of these stockholders choose to act together, they would be able to control or significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs.
Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the reference product was approved under a biologics license application, or BLA. The law is still being interpreted and implemented by the FDA, and as a result, its ultimate impact, implementation, and meaning are subject to uncertainty.
Under the BPCIA, an application for a biosimilar product cannot be approved by the FDA until 12 years after the reference product was approved under a BLA. The law is still being interpreted and implemented by the FDA, and as a result, its ultimate impact, implementation, and meaning are subject to uncertainty.
However, the Leahy-Smith Act and its implementation could increase the 40 Table of Contents uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. In addition, recent U.S.
However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. In addition, recent U.S.
Private individuals (e.g., whistleblowers) can bring these actions on behalf of the government; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
Private individuals (e.g., whistleblowers) can bring these actions on behalf of the government; in addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act; • HIPAA, which imposes criminal and civil liability for, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to institutional review boards, or IRBs, for reexamination, which may impact the costs, timing or successful completion of a clinical trial.
In addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial.
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 36 Table of Contents expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.
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.
Any information we determine not to disclose may ultimately be deemed significant by you or others with respect to future decisions, conclusions, views, activities or otherwise regarding a particular 27 Table of Contents product candidate or our business. As a result, preliminary and top-line data should not be relied upon in making an investment decision in our securities.
Any information we determine not to disclose may ultimately be deemed significant by you or others with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or our business. As a result, preliminary and top-line data should not be relied upon in making an investment decision in our securities.
Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting 39 Table of Contents and defending our intellectual property globally.
Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property globally.
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.
If the IRS, challenges our analysis that existing NOLs will not expire before 41 Table of Contents 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.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. We may be subject to a third-party preissuance submission of prior art to the U.S.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. We may be subject to a third-party pre-issuance submission of prior art to the U.S.
Any such action or other negative results caused by our inability to meet our reporting requirements or comply with legal and regulatory requirements or by disclosure of an accounting, reporting or control issue could adversely affect the trading price of our securities and our business.
Any such action or other negative results caused by our inability to meet our reporting requirements or comply with legal and regulatory requirements or by disclosure of an accounting, reporting or control 48 Table of Contents issue could adversely affect the trading price of our securities and our business.
It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in the future, such as, with respect to proper priority claims, inventorship, claim scope or patent term adjustments.
It is possible that defects of form in the 42 Table of Contents preparation or filing of our patents or patent applications may exist, or may arise in the future, such as, with respect to proper priority claims, inventorship, claim scope or patent term adjustments.
Consequently, for our existing patent rights outside the United States and any foreign patent rights we may decide to pursue in the future, we may not be able to obtain relevant claims and/or we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
Consequently, for our existing patent rights outside the United States and any foreign patent rights we may decide to pursue in the future, we may not be able to obtain relevant claims and/or we may not be able to prevent third-parties from practicing our inventions in all countries 47 Table of Contents outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.
For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with good clinical practices, or GCPs, and the FDA must be able to validate the data from the trial through an onsite inspection, if necessary.
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.
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.
Accordingly, we will need to obtain substantial additional funding to continue operations. If we are unable to raise capital when 40 Table of Contents 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.
In such an event, our competitors might be able to enter the market, which would have an adverse effect on our business. We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.
In such an event, our competitors might be able to enter the market, which would have an adverse effect on our business. 46 Table of Contents We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.
Similarly, we may be subject to claims that an employee, advisor or consultant performed work for us that conflicts with that person’s obligations to a third party, such as an employer, and thus, that the third party has an ownership interest in the intellectual property arising out of work performed for us.
Similarly, we may be subject to claims that an employee, advisor or consultant performed work for us that conflicts with that person’s obligations to a third-party, such as an employer, and thus, that the third-party has an ownership interest in the intellectual property arising out of work performed for us. Litigation may be necessary to defend against these claims.
However, the provision may have the effect of discouraging lawsuits against our directors, officers, employees and agents as it may limit any stockholder’s ability to bring a claim in a judicial forum that such stockholder finds favorable for disputes with us or our directors, officers, employees or agents.
However, the provision may have the effect of discouraging lawsuits against our directors, officers, employees and agents as it may limit any stockholder’s ability to bring a claim in a judicial forum that such stockholder finds favorable for disputes with us or our directors, officers, employees or agents and may result in increased litigation costs for our stockholders.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the DGCL, which prohibits stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us.
For example, the Patient Protection and Affordable Care Act of 2010, or the ACA, is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
For example, the ACA is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms.
In those cases, a competitor could obtain a license to the same or similar technology from the licensor. We have at least one exclusive patent license that is restricted to a particular field of use. A competitor could obtain a license to a similar technology outside of that field of use.
Some of our patent licenses are non-exclusive. In those cases, a competitor could obtain a license to the same or similar technology from the licensor. We have at least one exclusive patent license that is restricted to a particular field of use. A competitor could obtain a license to a similar technology outside of that field of use.
The market price for our common stock may be influenced by many factors, including: • the success of competitive products or technologies; • results or progress, or changes in approach or timelines, of clinical trials of our product candidates or those of our competitors; • failure or discontinuation of any of our development programs; • commencement of, termination of, or any development related to any collaboration or licensing arrangement; • regulatory or legal developments in the United States and other countries; • development of new product candidates that may address our markets and make our product candidates less attractive; • changes in physician, hospital or healthcare provider practices that may make our product candidates less useful; • announcements by us, our collaborators or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; • announcement or market expectation of additional financing efforts; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our product candidates or clinical development programs; • failure to meet or exceed financial estimates, projections or development timelines of the investment community or that we provide to the public; • the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; • actual or expected changes in estimates as to financial results, development timelines or recommendations by securities analysts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; 47 Table of Contents • sale of common stock by us or our stockholders in the future as well as the overall trading volume of our common stock; • changes in the composition of our stockholder base; • activity in the options market for shares of our common stock; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, industry and market conditions; and • the other factors described in this “ Risk Factors” section.
The market price for our common stock may be influenced by many factors, including: • the success of competitive products or technologies; • results or progress, or changes in approach or timelines, of clinical trials of our product candidates or those of our competitors; • failure or discontinuation of any of our development programs; • commencement of, termination of, or any development related to any collaboration or licensing arrangement; • regulatory or legal developments in the United States and other countries; • development of new product candidates that may address our markets and make our product candidates less attractive; • changes in physician, hospital or healthcare provider practices that may make our product candidates less useful; • announcements by us, our collaborators or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; • announcement or market expectation of additional financing efforts; • developments or disputes concerning patent applications, issued patents or other proprietary rights; • the recruitment or departure of key personnel; • the level of expenses related to any of our product candidates or clinical development programs; • failure to meet or exceed financial estimates, projections or development timelines of the investment community or that we provide to the public; • the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; • actual or expected changes in estimates as to financial results, development timelines or recommendations by securities analysts; • variations in our financial results or those of companies that are perceived to be similar to us; • changes in the structure of healthcare payment systems; • sale of common stock by us or our stockholders in the future as well as the overall trading volume of our common stock; • changes in the composition of our stockholder base; • activity in the options market for shares of our common stock; • market conditions in the pharmaceutical and biotechnology sectors; • general economic, industry and market conditions; and • the other factors described in this “Risk Factors ” section. 51 Table of Contents Our executive officers, directors, and principal stockholders, if they choose to act together, will continue to have the ability to control or significantly influence all matters submitted to stockholders for approval.
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 ongoing Phase 1/2 clinical trial of Descartes-08. We also expect to rely on other third parties to store and distribute drug supplies for our clinical 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.
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. 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 Phase 2 clinical development.
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. Our mRNA approach to develop product candidates for the treatment of autoimmune diseases is an unproven approach.
In general, under Sections 382 and 383 of 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.
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.
The complaint alleges that the individual defendants breached their fiduciary duties by failing to disclose purportedly material information to our Company’s stockholders in our Preliminary Proxy Statement filed on January 31, 2024 in connection with the solicitation of stockholder approval of the Conversion Proposal.
The complaint alleged that the 52 Table of Contents individual defendants breached their fiduciary duties by failing to disclose purportedly material information to our Company’s stockholders in our Preliminary Proxy Statement filed on January 31, 2024 in connection with the solicitation of stockholder approval of the Series A Conversion Proposal.
There could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
There could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Any of these risks coming to fruition could have a material adverse impact on our business.
Our future capital requirements will depend on many factors, including: • the timing for stockholder approval of the conversion of our Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share, or Series A Preferred Stock, into shares of our common stock and any redemptions of Series A Preferred Stock for cash; • 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; and • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.
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; and • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.
Moreover, some of the patent applications in our portfolio will be subject to examination under the pre-Leahy-Smith Act law and regulations, while other patents applications in our portfolio will be subject to examination under the law and regulations, as amended by the Leahy-Smith Act. This introduces additional complexities into the prosecution and management of our portfolio.
Moreover, some of the patent applications in our portfolio will be subject to examination under the pre-Leahy-Smith Act law and regulations, while other patents applications in our portfolio will be subject to examination under the law and regulations, as amended by the Leahy-Smith Act.
Moreover, the terms of any financing may adversely affect the holdings or the 37 Table of Contents 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.
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.
On August 1, 2022, the Court entered an Order and Final Judgment which dismissed the action, and all claims contained therein, with prejudice. We could receive other demands or be subject to other litigation.
On August 1, 2022, the Court entered an Order and Final Judgment which dismissed the action, and all claims contained therein, with prejudice. We could receive other demands or be subject to other litigation. We intend to vigorously defend against any demands which we believe to be without merit.
In addition, the Leahy-Smith Act limits where a patentee may file a patent infringement suit and provides opportunities for third parties to challenge any issued patent in the USPTO. These provisions apply to all of our U.S. patents, even those issued before March 16, 2013.
This introduces additional complexities into the prosecution and management of our portfolio. 44 Table of Contents In addition, the Leahy-Smith Act limits where a patentee may file a patent infringement suit and provides opportunities for third-parties to challenge any issued patent in the USPTO. These provisions apply to all of our U.S. patents, even those issued before March 16, 2013.
Competitors may infringe our intellectual property, including our patents or the patents of our licensors. As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming.
As a result, we may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming.
We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.
Our business and operations, including our development programs, could be materially disrupted in the event of system failures, security breaches, violations of data protection laws or data loss or damage by us or third parties on which we rely, including our CROs or other contractors or consultants.
Any of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations. 49 Table of Contents Our business and operations, including our development programs, could be materially disrupted in the event of system failures, security breaches, violations of data protection laws or data loss or damage by us or third-parties on which we rely, including our CROs or other contractors or consultants.
In connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2023, we identified a material weakness in our internal control over financial reporting and concluded that our internal control over financial reporting was not effective as of December 31, 2023.
For example, in connection with the audit of our financial statements for the year ended December 31, 2023, we identified a material weakness in our internal control over financial reporting.
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 31 Table of Contents 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.
We also cannot guarantee that any of our patent searches or analyses, including but not limited to the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete and thorough, nor can we be certain that we have identified each and every patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction. 38 Table of Contents In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents covering technology that we license from third parties.
We also cannot guarantee that any of our patent searches or analyses, including but not limited to the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete and thorough, nor can we be certain that we have identified each and every patent and pending application in the United States and abroad that is relevant to or necessary for the commercialization of our product candidates in any jurisdiction.
The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an approved biologic.
The BPCIA was enacted as part of the ACA to establish an abbreviated pathway for the approval of biosimilar and interchangeable biological products. The regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an approved biologic.
The failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. 35 Table of Contents Risks Related to our Financial Position and Need for Additional Capital We are a development-stage company and have incurred significant losses since our inception.
The failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions. 39 Table of Contents 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.
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. Item 1B. Unresolved Staff Comments Not applicable. 50 Table of Contents
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.
Historically we devoted substantially all of our financial resources and efforts to developing our ImmTOR platform and following the closing of the Merger, or the Closing, 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 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.
In addition, we cannot be certain as to what type and how many clinical trials the FDA will require us to conduct before we may gain regulatory approval to market any of our product candidates in the United States or other countries, if any.
If we fail to produce positive results in clinical trials of our product candidates, the development timeline and regulatory approval and commercialization prospects for our product candidates, and, correspondingly, our business and financial prospects, would be negatively impacted. 28 Table of Contents In addition, we cannot be certain as to what type and how many clinical trials the FDA will require us to conduct before we may gain regulatory approval to market any of our product candidates in the United States or other countries, if any.
We expect to seek one or more of these designations for our other current and future product candidates. There can be no assurance that any of our other product candidates will qualify for any of these designations.
Descartes-08 also 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. There can be no assurance that any of our other product candidates will qualify for any of these designations.
Material weaknesses in our internal control over financial reporting could also reduce our ability to obtain financing or could increase the cost of any financing we obtain.
Material weaknesses in our internal control over financial reporting could also reduce our ability to obtain financing or could increase the cost of any financing we obtain. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.
Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.
The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also 42 Table of Contents pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive.
The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, financial resources and greater clinical development and commercialization capabilities.
These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third-parties from so competing.
Accordingly, rights under any existing patent or any patents we might obtain or license may not cover our product candidates, or may not provide us with sufficient protection for our product candidates to afford a commercial advantage against competitive products or processes, including those from branded and generic pharmaceutical companies.
Accordingly, rights under any existing patent or any patents we might obtain or license may not cover our product candidates, or may not provide us with sufficient protection for our product candidates to afford a commercial advantage against competitive products or processes, including those from branded and generic pharmaceutical companies. 43 Table of Contents In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how, information, or technology that is not covered by our patents.
Opening 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.
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.
Any of these risks coming to fruition could have a material adverse impact on our business. 41 Table of Contents We may become involved in lawsuits to protect or enforce our patents or other intellectual property, and our issued patents covering our product candidates could be found invalid or unenforceable or could be interpreted narrowly if challenged in court.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, and our issued patents covering our product candidates could be found invalid or unenforceable or could be interpreted narrowly if challenged in court. Competitors may infringe our intellectual property, including our patents or the patents of our licensors.
This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. 44 Table of Contents We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
As of December 31, 2024, this material weakness has been remediated, but we may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
Moreover, we have obligations under our licenses, and any failure to satisfy those obligations could give our licensor the right to terminate the license. Termination of a necessary license could have a material adverse impact on our business. Some of our patent licenses are non-exclusive.
Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. Moreover, we have obligations under our licenses, and any failure to satisfy those obligations could give our licensor the right to terminate the license. Termination of a necessary license could have a material adverse impact on our business.
Litigation may be necessary to defend against these claims. Although we have no knowledge of any such claims being alleged to date, if such claims were to arise, litigation may be necessary to defend against any such claims.
Although we have no knowledge of any such claims being alleged to date, if such claims were to arise, litigation may be necessary to defend against any such claims. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
Our executive officers, directors and stockholders who own more than 5% of our outstanding common stock and their respective affiliates, in the aggregate, hold shares representing approximately 60.1% of our outstanding voting stock as of December 31, 2023 , and assuming the conversion of all shares of Series A Preferred Stock into common stock and reflecting the completion of the November 2023 private placement, which occurred subsequent to December 31, 2023.
Our executive officers, directors and stockholders who own more than 5% of our outstanding common stock and their respective affiliates, in the aggregate, hold shares representing approximately 64.5% of our outstanding voting stock as of December 31, 2024 , assuming the conversion of all shares of all outstanding shares of Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share, or Series A Preferred Stock, and Series B Non-Voting Convertible Preferred Stock, par value $0.0001 per share, or Series B Preferred Stock, into common stock, or 68.4%, assuming no conversion of outstanding shares of Series A Preferred Stock and Series B Preferred Stock into common stock .
In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the Board of Directors, which is responsible for appointing the members of management. 48 Table of Contents Furthermore, our Charter specifies that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving claims brought against us by stockholders.
Furthermore, our Charter specifies that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving claims brought against us by stockholders.
We incurred a net loss of $219.7 million, had net income of $35.4 million, and incurred a net loss of $25.7 million for the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, we had an accumulated deficit of $614.6 million.
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 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.
We expect to continue to incur significant expenses and operating losses for the foreseeable future.
In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business.
In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent.
Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing. 43 Table of Contents If we do not obtain additional protection under the Hatch-Waxman Act and similar foreign legislation extending the terms of our patents for our product candidates, our business may be harmed.
If we do not obtain additional protection under the Hatch-Waxman Act and similar foreign legislation extending the terms of our patents for our product candidates, our business may be harmed.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe cybersecurity risk management program includes tools and activities to prevent, detect, and analyze current and emerging cybersecurity threats, and plans and strategies to address threats and incidents. As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with our internal IT function and management.
Biggest changeAs part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards. We continue to work with third-party cybersecurity vendors to assist us in best practices for implementing strengthened cybersecurity procedures.
Our Chief Financial Officer and Senior Director, Head of IT and Informatics provide periodic briefings to the Audit Committee regarding our Company’s cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third parties, and related matters. The Audit Committee provides regular updates to the full Board of Directors on such reports.
Our Chief Financial Officer and Senior Director, Head of IT provide periodic briefings to the Audit Committee regarding our Company’s cybersecurity risks and activities, including any recent cybersecurity incidents and related responses, cybersecurity systems testing, activities of third-parties, and related matters. The Audit Committee provides regular updates to the full Board of Directors on such reports.
Primary responsibility for assessing, monitoring and managing our cybersecurity risks is delegated to our Senior Director, Head of IT and Informatics, who reports on IT operations, risk mitigation and assessment efforts, and other general cybersecurity matters to our Chief Financial Officer, to manage the risk assessment and mitigation process.
Primary responsibility for assessing, monitoring and managing our cybersecurity program is delegated to our Senior Director, Head of IT, who reports on IT operations, risk mitigation and assessment efforts, and other general cybersecurity matters to our Chief Financial Officer, to manage the risk assessment and mitigation process.
These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
This risk oversight includes identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks and address any identified gaps in existing safeguards.
We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes.
Our Senior Director, Head of IT has served as an Information Technology professional for over ten years and has held senior IT positions across several companies including a large pharmaceutical company. We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes.
We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats.
Additionally, we conduct periodic risk assessments to identify and monitor against potential cybersecurity threats and incidents, as well as assess for any changes in our business practices that may affect our cybersecurity position.
We require each third-party service provider to certify that it has the ability to implement and maintain appropriate security measures, consistent with all applicable laws, to implement and maintain reasonable security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may affect our Company.
All Company employees and third-party vendors are instructed to promptly report any suspected breach of its security measures that may affect our Company to the Senior Director, Head of IT.
Our Chief Financial Officer and our Senior Director, Head of IT and Informatics are the Company employees primarily responsible for assessing and managing material risks from cybersecurity threats with assistance from third-party service providers. Our Chief Financial Officer has served as a biotechnology executive for 15 years, whose responsibilities have included direct oversight of his companies' cybersecurity risks.
We partner with external cybersecurity vendors to enact a layered defense approach with controls deployed that seek to meet the requirements of the NIST Cybersecurity Framework. Our Chief Financial Officer has served as a biotechnology executive for 20 years, whose responsibilities have included direct oversight of his companies’ cybersecurity risks.
Removed
Our Senior Director, Head of IT and Informatics has served as an information technology professional for over ten years and has held senior IT positions at multiple biotechnology companies, where his primary responsibilities included maintaining direct oversight over his companies' cybersecurity risks.
Added
Our Chief Financial Officer and our Senior Director, Head of IT are the Company employees responsible for developing and implementing a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
Removed
We engage consultants or other third parties in connection with our risk assessment processes. These service providers assist us in designing and implementing our cybersecurity policies and procedures, and monitoring and testing our safeguards.
Added
Our Senior Director, Head of IT oversees the cybersecurity program through risk management, employee security training, and oversight and escalation of threat monitoring and incident response.
Added
In the event of a major security incident, we have established an escalation path for stakeholder notification and remediation efforts, and major incidents are immediately escalated to the Head of IT, Chief Financial Officer, and Chief Operations Officer.
Added
In 2024, we proactively conducted a thorough and robust cybersecurity assessment, performed by an external cybersecurity partner, to evaluate our risks and identify key areas to improve our cybersecurity posture.
Added
We have implemented processes when evaluating third-party service providers, for example by reviewing available audit reports including the System and 53 Table of Contents Organization Controls (SOC 2) reports and requesting disclosure of any previous cybersecurity events. We also perform quality audits of certain regulated vendors, which includes an assessment of the vendor’s information technology system and associated controls.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAdditionally, we lease approximately 32,294 total square feet of office and laboratory space in Watertown, Massachusetts under a lease that expires in May 2028. In February 2024, we entered into an agreement to lease 19,199 square feet consisting of integrated manufacturing and office space in Frederick, Maryland.
Biggest changeAdditionally, we lease approximately 7,909 total square feet of office, laboratory, and manufacturing space in Gaithersburg, Maryland under a lease that expires in January 2027 and 32,294 total square feet of office and laboratory space in Watertown, Massachusetts under a lease that expires in May 2028. Item 3. Legal Proceedings None. Item 4.
Item 2. Properties Our corporate headquarters are currently located at 704 Quince Orchard Road, Gaithersburg, Maryland and consists of 7,909 total square feet of leased office, laboratory, and manufacturing space under a lease that expires in January 2027.
Item 2. Properties Our corporate headquarters are currently located at 7495 New Horizon Way, Frederick, Maryland and consists of 29,050 total square feet of integrated manufacturing and office space under a lease that expires in June 2031.
Removed
The initial term is expected to commence no later than April 1, 2024 and terminate seven full lease years following, which is expected to be May 2031. 51 Table of Contents We also lease approximately 2,500 square feet of office and laboratory space in Moscow, Russia on a month-to-month basis.
Added
Mine Safety Disclosures Not applicable. 54 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is publicly traded on The Nasdaq Stock Market under the symbol “RNAC.” Holders As of March 1, 2024, there were approximately 161,948,618 shares of our common stock outstanding held by approximately 89 holders of record.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is publicly traded on The Nasdaq Stock Market under the symbol “RNAC.” Holders As of February 28, 2025, there were approximately 25,907,101 shares of our common stock outstanding held by approximately 107 holders of record.
Any future determination to pay dividends will be made at the discretion of our Board of Directors and will depend 53 Table of Contents on various factors, including applicable laws, our results of operations, financial condition, future prospects, then applicable contractual restrictions and any other factors deemed relevant by our Board of Directors.
Any future determination to pay dividends will be made at the discretion of our Board of Directors and will depend 55 Table of Contents on various factors, including applicable laws, our results of operations, financial condition, future prospects, then applicable contractual restrictions and any other factors deemed relevant by our Board of Directors.
This graph assumes the investment of $100 at the market close on December 31, 2018 in our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index and assumes the reinvestment of dividends, if any. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
This graph assumes the investment of $100 at the market close on December 31, 2019 in our common stock, the Nasdaq Composite Index and the Nasdaq Biotechnology Index and assumes the reinvestment of dividends, if any. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
Investors should not purchase our common stock with the expectation of receiving cash dividends. Purchases of Equity Securities by the Issuer or Affiliated Purchasers We did not repurchase any of our equity securities during the quarter ended December 31, 2023. Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities None. Item 6. [Reserved]
Investors should not purchase our common stock with the expectation of receiving cash dividends. Purchases of Equity Securities by the Issuer or Affiliated Purchasers We did not repurchase any of our equity securities during the quarter ended December 31, 2024. Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities Not applicable. Item 6. [Reserved]
Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2018 and December 31, 2023, with the cumulative total return of (a) the Nasdaq Composite Index and (b) the Nasdaq Biotechnology Index, over the same period.
Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, 2019 and December 31, 2024, with the cumulative total return of (a) the Nasdaq Composite Index and (b) the Nasdaq Biotechnology Index, over the same period.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur future capital requirements will depend on many factors, including: • the timing for stockholder approval of the conversion of our Series A Preferred Stock into shares of our common stock and any redemptions of Series A Preferred Stock for cash; • 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; and • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates. 61 Table of Contents Summary of Cash Flows Year Ended December 31, (In thousands) 2023 2022 2021 Cash (used in) and provided by: Operating activities $ (51,161) $ (31,631) $ (60,382) Investing activities 34,609 (15,002) (17,140) Financing activities (13,145) 39,215 52,897 Effect of exchange rate changes on cash (53) 20 (3) Net change in cash, cash equivalents, and restricted cash $ (29,750) $ (7,398) $ (24,628) Operating activities Net cash used in operating activities for the year ended December 31, 2023 was $51.2 million compared to $31.6 million in the same period in 2022.
Biggest changeOur 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; and • the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates.
Liability associated with the contingent value rights agreement, or CVR Agreement, entered into on December 6, 2023, will be settled solely through cash flow received under the Sobi License and any other Gross Proceeds (as such term is defined in the CVR Agreement) net of certain agreed deductions.
The liability associated with the contingent value rights agreement, or CVR Agreement, entered into on December 6, 2023, will be settled solely through cash flow received under the Sobi License and any other Gross Proceeds (as such term is defined in the CVR Agreement) net of certain agreed deductions.
In connection with entry into this agreement, we received a $10 million upfront payment and are eligible to receive $340.0 million for certain additional development and commercial milestones plus royalties on any potential commercial sales where Xork is used as a pre-treatment for AT845.
In connection with entry into this agreement, we received a $10.0 million upfront payment and are eligible to receive $340.0 million for certain additional development and commercial milestones plus royalties on any potential commercial sales where Xork is used as a pre-treatment for AT845.
On October 1, 2021, we entered into a License Agreement, or the Takeda Agreement, with Takeda Pharmaceuticals USA, Inc.
On October 1, 2021, we entered into a License Agreement, or the Takeda Agreement, with Takeda Pharmaceuticals USA, Inc, or Takeda.
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.
Financings 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.
We are eligible to receive $630 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.
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.
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 November 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.
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 November 2023 Private Placement.
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.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, we perform the following five steps: (i) identify the 62 Table of Contents contract(s) with a customer; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy each performance obligation.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy each performance obligation.
For further description of the NCI Agreement, see Note 16 to our consolidated financial statements included elsewhere in this Annual Report. 58 Table of Contents 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.
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.
We granted customary registration rights to investors in connection with the November 2023 Private Placement.
We granted customary registration rights to investors in connection with the 2023 Private Placement.
Warrant Liabilities In December 2019, we issued common warrants in connection with a securities purchase agreement between us and a group of institutional investors and certain members of our Board of Directors, or the 2019 Warrants.
Warrant Liabilities In December 2019, we issued the 2019 Warrants in connection with a securities purchase agreement between us and a group of institutional investors and certain members of our Board of Directors.
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.
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 66 Table of Contents they are issued at a discount, and therefore, represent material rights and should be accounted for as separate performance obligations.
At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the transaction price. Any such adjustments to the transaction price are allocated to the performance obligations on the same 63 Table of Contents basis as at contract inception.
At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraint, and if necessary, adjust our estimate of the transaction price. Any such adjustments to the transaction price are allocated to the performance obligations on the same basis as at contract inception.
All intercompany accounts and transactions have been eliminated. Collaboration and license revenue To date, we have not generated any revenue from product sales. 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.
All intercompany accounts and transactions have been eliminated. Components of our Results of Operations Collaboration and license revenue To date, we have not generated any revenue from product sales. 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.
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 pre-clinical milestones in June 2021.
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 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 62 Table of Contents dystrophies and a payment of $4.0 million for the achievement of certain non-clinical milestones.
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 remaining aggregate gross sales proceeds of up to $51.0 million.
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.
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 with any changes in fair value recorded on our statement of operations.
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 July 2023, we paid $1.0 million and issued 1,339,285 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.
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.
In June 2022, we paid $0.5 million and issued 892,857 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 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.
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.
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.
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. Effective September 2019, we entered into the NCI Agreement, a nonexclusive, worldwide license agreement with NCI.
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. Effective September 2019, we entered into the NCI Agreement with NCI.
Collaboration and License Agreements In-licenses In September 2023, we entered into the Biogen Agreement, a non-exclusive, sublicensable, worldwide, perpetual patent license agreement with Biogen, to research, develop, make, use, offer, sell and import products or processes containing or using an engineering T-cell modified with an mRNA comprising, or encoding a protein comprising, certain sequences licensed under the Biogen Agreement for the prevention, treatment, palliation and management of autoimmune diseases and disorders, excluding cancers, neoplastic disorders, and paraneoplastic disorders.
Collaboration and License Agreements In-licenses In September 2023, we entered into the Biogen Agreement with Biogen to research, develop, make, use, offer, sell and import products or processes containing or using an engineering T-cell modified with an mRNA comprising, or encoding a protein comprising, certain sequences licensed under the Biogen Agreement for the prevention, treatment, palliation and management of autoimmune diseases and disorders, excluding cancers, neoplastic disorders, and paraneoplastic disorders.
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.
Under the fair value option election, 65 Table of Contents 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 consolidated financial information presented below includes the accounts of Cartesian Therapeutics, Inc. and our wholly owned subsidiaries, Selecta (RUS) LLC, a Russian limited liability company, or Selecta (RUS), and Selecta Biosciences Security Corporation, a Massachusetts securities corporation, and Cartesian Bio, LLC, a Delaware limited liability company, which is a variable interest entity for which we are the primary beneficiary.
The consolidated financial information presented below includes the accounts of Cartesian Therapeutics, Inc. and our wholly owned subsidiaries, Selecta (RUS) LLC, a Russian limited liability company, or Selecta (RUS), Selecta Biosciences Security Corporation, a Massachusetts securities corporation which was dissolved in December 2024, and Cartesian Bio, LLC, a Delaware limited liability company, which is a variable interest entity for which we are the primary beneficiary.
In the November 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 subsequent to December 31, 2023 for gross proceeds of $40.0 million.
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.
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).
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 67 Table of Contents Amended 2019 Warrants).
Pursuant to the terms of the 2019 Warrants, we could be required to settle the common warrants in cash in the event of certain acquisitions of us and, as a result, the 2019 Warrants are required to be measured at fair value and reported as a liability on the balance sheet.
Pursuant to the terms of the 2019 Warrants, we could have been required to settle the common warrants in cash in the event of certain acquisitions of us and, as a result, the 2019 Warrants were required to be measured at fair value and reported as a liability on the balance sheet.
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.
In connection with our entry into the NCI 61 Table of Contents 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.
A portion of the Series A Preferred Stock forward contract liability was settled during the year ended December 31, 2023 and there was no such forward contract liability prior to the Merger.
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.
Additionally, in October 2021, we entered into an Exclusive License Agreement with 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 to Astellas, we made a $4.0 million payment to Genovis.
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. 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.
Sobi paid us a one-time, upfront payment of $75 million, and upon the closing of a private placement of our common stock to Sobi at a price of $4.6156 per share, we received an additional $25 million from Sobi.
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.
Recent Accounting Pronouncements For a discussion of recently adopted or issued accounting pronouncements please see Note 2 to our consolidated financial statements included elsewhere in this Annual Report. Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.
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. Off-Balance Sheet Arrangements As of December 31, 2024, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.
As a result of the sublicense of Xork to Astellas, we made a $4.0 million payment to Genovis in February 2023. For further description of the Astellas Agreement, see Note 14 to our consolidated financial statements included elsewhere in this Annual Report.
As a result of the sublicense of Xork to Astellas, we made a $4.0 million payment to Genovis in February 2023. 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.
Except for the year ended December 31, 2022, we have incurred significant operating losses since our inception. We incurred a net loss of $219.7 million and had net income of $35.4 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $614.6 million.
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.
Change in fair value of warrant liabilities Common warrants classified as liabilities are remeasured quarterly at fair value, utilizing a Black-Scholes valuation methodology, with the change in fair value recognized as a component of earnings.
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 Series A Preferred Stock forward contract liabilities For the year ended December 31, 2023 we recognized $149.6 million of expense associated with the increase in the fair value of Series A Preferred Stock forward contract liabilities.
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.
Critical Accounting Policies and Use of Estimates 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 U.S. GAAP.
Critical Accounting Policies and Use of Estimates 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. GAAP.
For further description of the Genovis Agreement, see Note 16 to our consolidated financial statements included elsewhere in this Annual Report.
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.
Change in fair value of warrant liabilities For the year ended December 31, 2023, we recognized $12.7 million of income from the decrease in the fair value of warrant liabilities, compared to $20.9 million for the year ended December 31, 2022, a decrease of $8.2 million or 39.2%. Fair value of warrant liabilities was determined utilizing the Black-Scholes valuation methodology.
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. Fair value of warrant liabilities was determined utilizing the Black-Scholes valuation methodology.
We expect to continue to incur significant expenses and operating losses for the foreseeable future as we: 54 Table of Contents • advance Descartes-08 for MG into Phase 3 development; • continue to develop our preclinical and clinical-stage product candidates; • seek regulatory approvals for any product candidates that successfully complete clinical trials; and • maintain, expand and protect our intellectual property portfolio, including through licensing arrangements.
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; 56 Table of Contents • continue to develop our preclinical and clinical-stage product candidates; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • maintain, expand and protect our intellectual property portfolio, including through licensing arrangements; • hire additional staff, including clinical, scientific and management personnel; and • incur additional costs associated with continuing to operate as a public company.
We are subject to risks in the development of our products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We expect that we will need substantial additional funding to support our continuing operations.
We are subject to risks in the development of our products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We expect that we will need substantial additional funding to support our continuing operations. As of December 31, 2024, we had an accumulated deficit of $692.1 million.
Item 7. 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 appearing elsewhere in this Annual Report.
Item 7. 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.
Changes in fair value of the liability are presented within change in fair value of CVRs in the consolidated statements of operations and comprehensive income (loss).
Changes in fair value of the CVR liability are presented in the consolidated statements of operations and comprehensive loss.
Change in fair value of contingent value right liability The CVR liability is remeasured quarterly at fair value, utilizing a discounted cash flow valuation methodology, with the change in fair value recognized as a component of earnings.
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.
The estimated fair value of the CVR liability was determined using the discounted cash flow method to estimate future cash flows associated with the legacy assets, including the expected milestone and royalty payments under the Sobi License, net of deductions.
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.
We will need to generate significant revenues to achieve profitability, and we may never do so. Concurrently with the closing of the Merger, we entered into a securities purchase agreement in which we agreed to issue 149,330.115 shares of Series A Preferred Stock, in exchange for aggregate gross proceeds of $60.25 million, or the November 2023 Private Placement.
Concurrently with the closing of the Merger, we entered into a securities purchase agreement, or the 2023 Securities Purchase Agreement, pursuant to which we agreed to issue 149,330.115 shares of Series A Preferred Stock, in exchange for aggregate gross proceeds of $60.25 million, or the 2023 Private Placement.
The increase in Series A Preferred Stock value was primarily driven by an increase in the per-share price of our common stock since the date of the Merger and November 2023 Private Placement.
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.
The increase in net cash used in operating activities of $19.6 million was primarily due to $56.2 million of net loss, adjusted for non-cash items, and $5.0 million of cash provided by changes in operating assets and liabilities, in each case during the year ended December 31, 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.
In connection with the Merger and pursuant to the Merger Agreement, the Company changed its corporate name to Cartesian Therapeutics, Inc., with Old Cartesian surviving as a wholly owned subsidiary of the Company, as summarized in Note 3 of the accompanying notes to the consolidated financial statements appearing elsewhere in this Annual Report.
In connection with the Second Merger, Old Cartesian changed its name to Cartesian Bio, LLC. 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.
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. Investment income Investment income consists primarily of interest income earned on our cash, cash equivalents and marketable securities.
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.
We leverage our proprietary technology and manufacturing platform to introduce one or more mRNA molecules into cells to enhance their function. Unlike DNA, mRNA degrades naturally over time without integrating into the cell’s genetic material.
Overview 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. Unlike DNA, mRNA degrades naturally over time without integrating into the cell’s genetic material.
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 primarily of sublease income.
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.
On November 13, 2023, we entered into a securities purchase agreement with (i) Dr. Timothy A. Springer, 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.
Springer, 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.
In April 2022, we issued warrants in connection with an underwritten offering of shares of common stock and warrants to purchase shares of common stock, or the 2022 Warrants.
The outstanding 2019 Warrants expired on December 23, 2024 in accordance with their terms. In April 2022, we issued warrants in connection with an underwritten offering of shares of common stock and warrants to purchase shares of common stock, or the 2022 Warrants.
The estimates used to determine the fair value of these common warrants represent our best estimates, but may prove to be wrong. Therefore, the change in fair value of warrant liabilities could be materially different in the future.
The estimates used to determine the fair value of these common warrants represent our best estimates, but may prove to be wrong. Therefore, the change in fair value of warrant liabilities could be materially different in the future. Stock-Based Compensation We account for all stock-based compensation granted to employees and non-employees using a fair value method.
We regularly evaluate various potential sources of additional funding such as strategic collaborations, license agreements, debt issuance, potential royalty and/or milestone monetization transactions and the issuance of equity instruments to fund our operations.
We will require substantial additional financing to fund our operations and to continue to execute our strategy, and we will pursue a range of options to secure additional capital. 63 Table of Contents We regularly evaluate various potential sources of additional funding such as strategic collaborations, license agreements, debt issuance, potential royalty and/or milestone monetization transactions and the issuance of equity instruments to fund our operations.
Investing activities Net cash provided by investing activities for the year ended December 31, 2023 was $34.6 million compared to net cash used in investing activities of $15.0 million in the same period in 2022, an increase of $49.6 million.
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.
Financing activities Net cash used in financing activities for the year ended December 31, 2023 was $13.1 million compared to net cash provided by financing activities of $39.2 million in the same period in 2022, a decrease of $52.3 million.
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.
We believe that our existing cash, cash equivalents, and restricted cash as of December 31, 2023, combined with net proceeds from the November 2023 Private Placement received subsequent to December 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into mid-2026.
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.
Product candidates in clinical development generally have higher development costs than those in earlier stages of development, primarily due to the size, duration and cost of clinical trials. The successful development of our clinical and preclinical product candidates is highly uncertain. Clinical development timelines, the probability of success and development costs can differ materially from our expectations.
The successful development of our clinical and preclinical product candidates is highly uncertain. Clinical development timelines, the probability of success and development costs can differ materially from our expectations.
The liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated 64 Table of Contents probabilities of success, and risk-adjustment discount rates, which represent a Level 3 measurement within the fair value hierarchy. Stock-Based Compensation We account for all stock-based compensation granted to employees and non-employees using a fair value method.
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.
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. We may be unable to raise capital when needed or on reasonable terms, if at all, which would force us to delay, limit, reduce or terminate our product development or future commercialization efforts.
We may be unable to raise capital when needed or on reasonable terms, if at all, which would force us to delay, limit, reduce or terminate our product development or future commercialization efforts. We will need to generate significant revenues to achieve profitability, and we may never do so.
The increase in costs was primarily the result of expenses incurred for stock compensation, personnel expenses, and professional fees incurred in connection with the Merger. Investment income Investment income for the year ended December 31, 2023 was $5.0 million, compared to $2.1 million for the year ended December 31, 2022, an increase of $2.9 million, or 138%.
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.
The increase was primarily driven by sublease income. Income taxes 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. For the year ended December 31, 2022, we recognized a $0.6 million benefit for penalty abatements received.
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 Except for net income for the year ended December 31, 2022, we have incurred recurring net losses since our inception.
The decrease in warrant value was primarily driven by a decrease in the per-share price of our common stock. Change in fair value of contingent value right liability For the year ended December 31, 2023 we recognized $18.3 million of expense associated with the increase in the fair value of CVR liability.
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.
For further description of the agreements underlying our collaboration and license revenue, see Notes 2 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 3 and 14 to our consolidated financial statements included elsewhere in this Annual Report. 57 Table of Contents Grant revenue Additionally, we generate grant revenue which consists of funding received to perform specific research and development services under grant arrangements.
Collaboration and license agreements with customers are generally accounted for in accordance with ASC 606.
Collaboration and License Revenue: We currently generate revenue through collaboration and license agreements with strategic collaborators for the development and commercialization of product candidates. Collaboration and license agreements with customers are generally accounted for in accordance with ASC 606.
Interest expense Interest expense for the year ended December 31, 2023 was $2.8 million compared to $3.0 million for the year ended December 31, 2022, a decrease of $0.2 million, or 7%. 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.
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.
General and administrative expenses During the year ended December 31, 2023, our general and administrative expenses were $40.6 million, compared to $23.9 million for the year ended December 31, 2022, an increase of $16.7 million, or 70%.
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.
In addition to our existing cash equivalents, we from time to time have received and may receive in the future research and development funding pursuant to our collaboration and license agreements. Currently, funding from payments under our collaboration agreements represent our only source of committed external funds.
Our cash, cash equivalents, and restricted cash were $214.3 million as of December 31, 2024, of which $1.7 million was restricted cash related to lease commitments. In addition to our existing cash equivalents, we from time to time have received and may receive in the future research and development funding pursuant to our collaboration and license agreements.
While our significant accounting policies are more fully described in the notes to our consolidated financial statements included elsewhere in this Annual Report, we believe the following accounting policies to be the most critical in understanding the judgments and estimates we use in preparing our consolidated financial statements: Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
Collaboration and License Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.
In an open-label Phase 2 clinical trial in patients with 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.
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.
The net cash provided by financing activities for the year ended December 31, 2022 was primarily the result of net proceeds from issuance of common stock and warrants to purchase common stock and the issuance of common stock in the "at-the-market" offering contemplated by the 2021 Sales Agreement.
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.
Contingent Value Right Liability 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 825, Financial Instruments, or ASC 825.
While our significant accounting policies are more fully described in the notes to our consolidated financial statements included elsewhere in this Annual Report, we believe the following accounting policies to be the most critical in understanding the judgments and estimates we use in preparing our consolidated financial statements: Contingent Value Right Liability 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) .
Research and development Our research and development expenses consist of external research and development costs, which we track on a program-by-program basis and primarily include contract manufacturing organization related costs and fees paid to contract research organizations, and internal research and development costs, which are primarily compensation expenses for our research and development employees, lab supplies, analytical testing, allocated overhead costs and other related expenses.
Research and development 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.
These costs, when reimbursed, will be recognized as revenue consistent with the revenue recognition methodology disclosed in Note 14 to our consolidated financial statements included elsewhere in this Annual Report. General and administrative 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.
General and administrative 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.
Indebtedness We previously maintained a term loan of up to $35.0 million, of which $25.0 million was funded in August 2020.
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. Indebtedness We previously maintained a term loan of up to $35.0 million, of which $25.0 million was funded in August 2020.
Net (loss) income Net loss for the year ended December 31, 2023 was $219.7 million as compared to net income of $35.4 million for the year ended December 31, 2022, a decrease of $255.1 million, or 721%.
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 terms of our subleases expired during the year ended December 31, 2024.

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