Cartesian Therapeutics reports $11.47 million net loss
- Form
- 10-Q
- Filed
- Importance
- Notable
- Accession
- 0001453687-26-000111
- Revenue: $0 for the three months ended Sep 30, 2026
- Net loss: $11.47 million for the three months ended Sep 30, 2026
- Cash and equivalents: $122.98 million at Sep 30, 2026
Written from the 10-Q on EDGAR. AI can make mistakes. Check the filing.
What changed
5 changes since the June 2026 10-Q
Compared with the 10-Q 0001453687-26-000101, filed Aug 6, 2026.
EPS down 183% from Jun 30
−$0.38, was $0.46.
From the filings
Before
$0.46Now
−$0.38Net income down 173% from Jun 30
−$11.5M, was $15.8M.
From the filings
Before
$15.8MNow
−$11.5MCash down 17% from Jun 30
$123M, was $148M.
From the filings
Before
$148MNow
$123MGain (loss) on change in fair value of CVR liability 10,700 (16,900) 27,600 (163) %
Adds "(loss)"; drops "(Loss)".
From the filings
Before
(Loss) gain on change in fair value of warrant liability (24) 2,472 (2,496) (101) %Now
Gain (loss) on change in fair value of CVR liability 10,700 (16,900) 27,600 (163) %Net loss for the three months ended September 30, 2026 was $11.5 million as compared to a net loss of $35.9…
Adds "loss"; drops "income".
From the filings
Before
Net income for three months ended June 30, 2026 was $15.8 million as compared to net income of $15.9 million for the three months ended June 30, 2025, an increase of $0.1 million. The increase in net income was primarily due to a higher gain on the change in the fair value of the CVR liability, partially offset by an increase in research and development expenses, the loss on change in fair value of embedded derivative, and an increase in general and administrative expenses for the three months ended June 30, 2026.Now
Net loss for the three months ended September 30, 2026 was $11.5 million as compared to a net loss of $35.9 million for the three months ended September 30, 2025, a decrease of $24.4 million. The decrease in net loss was primarily due to the gains on the change in the fair value of the CVR liability and derivative liability, partially offset by interest expense and increases in research and development expenses and general and administrative expenses for the three months ended September 30, 2026.
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Section by section. Added words and removed words against the earlier filing.
Cover page 2 changes
3 unchanged paragraphs
For the quarterly period ended June September 30, 2026
24 unchanged paragraphs
As of July October 31, 2026, the registrant had 30,255,352 30,503,005 shares of common stock, par value $0.0001 per share, outstanding.
1 unchanged paragraph
Forward-looking statements 1 change
7 unchanged paragraphs
• our dependence on third-parties, including contract research organizations in the conduct of our preclinical studies and clinical trials;
27 unchanged paragraphs
Financial Statements (unaudited) 123 changes
3 unchanged paragraphs
June September 30, December 31,
Cash and cash equivalents $ 147,606 122,975 $ 125,139
Accounts receivable 196 52 1,115
Prepaid expenses and other current assets 5,813 8,471 3,022
Total current assets 153,615 131,498 129,276
Property and equipment, net 11,311 10,731 12,185
Right-of-use assets, net 5,124 4,879 5,601
3 unchanged paragraphs
Total assets $ 318,628 $ 296,411
Long-term prepaid expenses and other assets 4,780 3,399 5,551
Total assets $ 294,305 $ 296,411
2 unchanged paragraphs
Accounts payable $ 1,046 $ 1,288
Warrant liability 165 —
Accounts payable $ 105 $ 1,288
Accrued expenses and other current liabilities 15,142 11,383 9,498
Lease liabilities 4,197 4,210 4,151
Total current liabilities 20,550 15,698 14,937
Lease liabilities, net of current portion 6,805 5,906 8,525
1 unchanged paragraph
Long-term debt, net 52,851 50,220 —
Contingent value rights liability 356,700 346,000 392,100
1 unchanged paragraph
Total liabilities 443,854 422,651
Total liabilities 424,772 422,651
2 unchanged paragraphs
Accumulated deficit ( 845,786 ) ( 822,373 )
Series A Preferred Stock, $ 0.0001 par value; 112,164.533 and 134,904.563 shares authorized as of June September 30, 2026 and December 31, 2025, respectively; 98,050.372 and 120,790.402 shares issued and outstanding as of June September 30, 2026 and December 31, 2025, respectively
Series B Preferred Stock, $ 0.0001 par value; 437,927 shares authorized as of June September 30, 2026 and December 31, 2025; 437,927 shares issued and outstanding as of June September 30, 2026 and December 31, 2025
Preferred stock, $ 0.0001 par value; 9,449,908.467 and 9,427,168.437 shares authorized as of June September 30, 2026 and December 31, 2025, respectively; no shares issued and outstanding as of June September 30, 2026 and December 31, 2025
Common stock, $ 0.0001 par value; 350,000,000 shares authorized as of June September 30, 2026 and December 31, 2025; 30,037,962 30,487,384 and 26,011,106 shares issued and outstanding as of June September 30, 2026 and December 31, 2025, respectively
Additional paid-in capital 725,165 731,409 700,706
Accumulated deficit ( 857,258 ) ( 822,373 )
Accumulated other comprehensive loss ( 4,608 4,621 ) ( 4,576 )
Total stockholders' deficit ( 125,226 130,467 ) ( 126,240 )
Total liabilities and stockholders' deficit $ 318,628 294,305 $ 296,411
2 unchanged paragraphs
Consolidated Statements of Operations and Comprehensive Income (Loss)
Three Months Ended June 30, Six Months Ended June 30,
Consolidated Statements of Operations and Comprehensive Loss (unaudited, amounts in thousands, except share and per share data)
Three Months Ended September 30, Nine Months Ended September 30,
1 unchanged paragraph
Total revenues — 298 78 1,398
Research and development 20,431 14,869 39,894 29,543
General and administrative 8,724 7,240 15,838 15,555
Total operating expenses 29,155 22,109 55,732 45,098
Operating loss ( 29,155 ) ( 21,811 ) ( 55,654 ) ( 43,700 )
Grant — 452 78 1,450
Total revenues — 452 78 1,850
Research and development 15,623 13,802 55,517 43,345
General and administrative 9,378 7,716 25,216 23,271
Total operating expenses 25,001 21,518 80,733 66,616
Operating loss ( 25,001 ) ( 21,066 ) ( 80,655 ) ( 64,766 )
1 unchanged paragraph
Interest income 1,103 1,748 2,129 3,763
Interest expense ( 852 ) — ( 852 ) —
Gain on change in fair value of contingent value rights liability 49,200 35,300 35,400 35,646
Total other income, net 44,924 37,697 32,241 41,876
Net income (loss) $ 15,769 $ 15,886 $ ( 23,413 ) $ ( 1,824 )
Interest income 1,202 1,548 3,331 5,311
Interest expense ( 1,991 ) — ( 2,843 ) —
(Loss) Gain on change in fair value of warrant liability ( 118 ) 654 ( 24 ) 2,472 164 516 140 2,988
Gain (loss) on change in fair value of embedded derivative ( 4,535 ) liability 3,340 — ( 4,535 1,195 ) —
Gain (loss) on change in fair value of CVR liability 10,700 ( 16,900 ) 46,100 18,746
Other income (expense), net 126 ( 5 114 — 123 237 ( 5 )
Total other income (expense), net 13,529 ( 14,836 ) 45,770 27,040
Net loss $ ( 11,472 ) $ ( 35,902 ) $ ( 34,885 ) $ ( 37,726 )
1 unchanged paragraph
Foreign currency translation adjustment ( 25 ) 12 ( 32 ) 44
Total comprehensive income (loss) $ 15,744 $ 15,898 $ ( 23,445 ) $ ( 1,780 )
Net income (loss) allocable to shares of common stock:
Less: Undistributed earnings allocable to participating securities ( 2,049 ) ( 2,628 ) — —
Net income (loss) allocable to shares of common stock - basic and diluted $ 13,720 $ 13,258 $ ( 23,413 ) $ ( 1,824 )
Basic $ 0.47 $ 0.51 $ ( 0.83 ) $ ( 0.07 )
Diluted $ 0.46 $ 0.50 $ ( 0.83 ) $ ( 0.07 )
Foreign currency translation adjustment ( 13 ) ( 10 ) ( 45 ) 34
Total comprehensive loss $ ( 11,485 ) $ ( 35,912 ) $ ( 34,930 ) $ ( 37,692 )
Net loss $ ( 11,472 ) $ ( 35,902 ) ( 34,885 ) ( 37,726 )
Net income loss per share allocable to common stockholders:
Basic and diluted $ ( 0.38 ) $ ( 1.38 ) $ ( 1.21 ) $ ( 1.45 )
1 unchanged paragraph
Basic 29,467,130 25,980,262 28,142,256 25,941,670
Diluted 29,860,880 26,447,251 28,142,256 25,941,670
Basic and diluted 30,309,295 26,002,892 28,894,967 25,962,302
3 unchanged paragraphs
(unaudited, amounts in thousands, except share data)
18 unchanged paragraphs
Issuance of common stock upon exercise of options — — — — 64,977 — 112 — — 112
Issuance of common stock upon vesting of restricted stock units
Issuance of common stock through at the market offering, net of commissions and expenses — — — — 382,467 — 3,471 — — 3,471
Stock-based compensation expense — — — — — — 2,661 — — 2,661
Currency translation adjustment — — — — — — — — ( 13 ) ( 13 )
3 unchanged paragraphs
16 unchanged paragraphs
3 unchanged paragraphs
1 unchanged paragraph
1 unchanged paragraph
1 unchanged paragraph
1 unchanged paragraph
2 unchanged paragraphs
1 unchanged paragraph
1 unchanged paragraph
1 unchanged paragraph
1 unchanged paragraph
2 unchanged paragraphs
and 43 more changes in the filing
Note 1: Description of the Business 3 changes
5 unchanged paragraphs
As of June September 30, 2026, the Company had an accumulated deficit of $ 845.8 857.3 million. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research and development of its product candidates and its administrative organization. The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain and sustain profitable operations. The successful development of product candidates requires substantial working capital, which may not be available to the Company on favorable terms or at all.
As of June September 30, 2026, the Company's cash, cash equivalents, and restricted cash were $ 149.3 124.7 million, of which $ 1.7 million was restricted cash related to lease commitments. The Company believes the cash, cash equivalents and restricted cash as of June September 30, 2026 will enable it to fund its current planned operations for at least the next 12 months from the filing of this Quarterly Report.
On May 22, 2026, the Company entered into the Loan Agreement (as defined below) with K2HV (as defined below), providing for Term Loan Facility (as defined below) with aggregate commitments of up to $ 150.0 million available in four tranches, subject to the satisfaction of certain conditions precedent. As of June September 30, 2026, the Company has borrowed $ 50.0 million under the Loan Agreement. See Note 9, "Debt" for more information.
2 unchanged paragraphs
Note 2: Summary of Significant Accounting Policies 3 changes
2 unchanged paragraphs
The accompanying unaudited consolidated financial statements for the three and six nine months ended June September 30, 2026 and 2025 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended December 31, 2025 included in the Company's Annual Report on Form 10-K that was filed with the SEC on March 9, 2026. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary for a fair statement of the Company's financial position as of June September 30, 2026, the consolidated results of operations for the three and six nine months ended June September 30, 2026, and cash flows for the six nine months ended June September 30, 2026. Such adjustments are of a normal and recurring nature. The results of operations for the three and six nine months ended June September 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.
1 unchanged paragraph
The Company disclosed its significant accounting policies in Note 2, "Summary of Significant Accounting Policies" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Other than described below, there have been no material changes to the Company's significant accounting policies during the six nine months ended June September 30, 2026.
7 unchanged paragraphs
To the extent that a valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The fair value of warrant, the embedded derivative and contingent value rights liabilities are determined using Level 3 inputs.
8 unchanged paragraphs
Note 3: Goodwill and Indefinite-Lived Intangible Assets 2 changes
As of June September 30, 2026, the Company has goodwill of approximately $ 48.2 million and an indefinite-lived intangible asset of $ 93.9 million related to Descartes-08 for MG.
There were no changes to the carrying value of the Company's goodwill or in-process research and development asset related to Descartes-08 for MG during the six nine months ended June September 30, 2026 and 2025.
Note 5: Fair Value Measurements 62 changes
The following tables present the Company's assets and liabilities that are measured and recorded at fair value on a recurring basis as of June September 30, 2026 and December 31, 2025 (in thousands):
1 unchanged paragraph
Total assets $ 146,630 $ 146,630 $ — $ —
Embedded derivative 11,940 — — 11,940
Total liabilities $ 368,805 $ — $ — $ 368,805
Money market funds (included in within "Cash and cash equivalents") $ 122,189 $ 122,189 $ — $ —
Total assets $ 122,189 $ 122,189 $ — $ —
Warrant liability (included within "Accrued expenses and other current liabilities") $ 1 $ — $ — $ 1
Derivative liability (included within "Long-term debt, net") 8,600 — — 8,600
Contingent value rights liability 356,700 346,000 — — 356,700 346,000
Total liabilities $ 354,601 $ — $ — $ 354,601
1 unchanged paragraph
Money market funds (included in within "Cash and cash equivalents") $ 122,724 $ 122,724 $ — $ —
3 unchanged paragraphs
There were no transfers within the fair value hierarchy during the six nine months ended June September 30, 2026 or the year ended December 31, 2025.
1 unchanged paragraph
Cash and cash equivalents $ 147,606 $ 160,324
As of June September 30, 2026 and December 31, 2025, money market funds were classified as cash and cash equivalents on the accompanying consolidated balance sheets as they mature within 90 days from the date of purchase.
As of June September 30, 2026, the Company had restricted cash balances relating to secured letters of credit in connection with its real estate leases. The Company's consolidated statements of cash flows include the following as of June September 30, 2026 and 2025 (in thousands):
Cash and cash equivalents $ 122,975 $ 143,384
1 unchanged paragraph
Total cash, cash equivalents, and restricted cash $ 149,341 124,710 $ 162,059 145,119
2 unchanged paragraphs
The Company recorded the fair value of the 2022 Warrants upon issuance using the Black-Scholes valuation model and is required to revalue the 2022 Warrants at each reporting date, with any changes in fair value recorded in the statements of operations and comprehensive income loss. The valuation of the 2022 Warrants is classified as Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that are both significant to the fair value measurement and unobservable, including the stock price volatility and the expected life of the 2022 Warrants. Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.
7 unchanged paragraphs
Expected volatility 92.40 % 87.36 %
June September 30, 2026 December 31, 2025
Risk-free interest rate 4.01 4.33 % 3.48 %
Dividend yield 0.00 % 0.00 %
Expected life (in years) 0.78 0.53 1.28
Expected volatility 79.81 % 87.36 %
The following table reflects a roll-forward of fair value for the Company's Level 3 warrant liabilities liability (see Note 10, "Equity" to these unaudited consolidated financial statements) for the six nine months ended June September 30, 2026 (in thousands):
2 unchanged paragraphs
Fair value as of June September 30, 2026
1 unchanged paragraph
The Company assessed the fair value of the Compound Derivative based on the probability, timing and magnitude of potential cash flows associated with each bifurcated feature. Based on the contingent nature of the triggering events, the absence of known triggering events as of the Closing Date (as defined below) and June September 30, 2026, and the Company's compliance with the terms of the Loan Agreement, the Company determined that the fair value of the Compound Derivative liability was primarily attributable to the Conversion Option. The fair value of the remaining bifurcated features was not material as of the Closing Date or June September 30, 2026.
Prior to September 30, 2026, the Company used a Black-Scholes model to estimate the fair value of the Compound Derivative. The fair value of the Compound Derivative as of September 30, 2026 was estimated using a binomial lattice model. Using a binomial lattice model, the Company estimated the fair value of the Compound Derivative using the "with" and
"without" approach, where the Term Loan Facility (as defined below) is valued both "with" and "without" the embedded features, and the estimated fair value of the Compound Derivative is the difference in value between the two scenarios.
The Company made this change because it believes the binomial lattice model produces a more accurate derivative value due to the ability to incorporate more instrument-specific assumptions. In addition, the binomial lattice model allows for changes in assumptions over the life of the Conversion Option compared to a closed-form model like Black-Scholes, which requires single-value assumptions at the time of issuance. The change of a valuation model is considered a change in accounting estimate in accordance with ASC 250. The change was applied prospectively from September 30, 2026. The Company evaluated the fair value of the Conversion Option under the binomial lattice model as of the Closing Date and June 30, 2026 and concluded the change in accounting estimate was not material to previously disclosed fair values.
The Company estimated the fair value of the Conversion Option valuation using a Black-Scholes model. the valuation binomial lattice model is classified as Level 3 in the fair value hierarchy because it uses significant unobservable inputs, including the Company's stock price, estimate of its expected term and stock volatility, which is a significant unobservable input. Variations in the inputs included below may result in materially different fair value measurements depending on the conditions or assumptions applied. Increases or decreases in the underlying stock price expected term and expected volatility generally result in corresponding changes in the estimated fair value.
The estimated fair value of the Conversion Option was determined using the following inputs to the Black-Scholes binomial lattice model:
2 unchanged paragraphs
• Expected volatility. The Company estimates stock price volatility based on the Company's historical volatility for a period of time commensurate with the remaining contractual term of the Conversion Option.
• Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield at the valuation date commensurate with the expected remaining life assumption. contractual term of the Conversion Option.
• Credit spread: The credit spread, expressed as an annualized rate with semiannual compounding, is estimated based on the Company's credit profile and observable market data for comparable issuers. The estimate is calibrated to the Closing Date spread and updated each reporting period for changes in relevant market conditions.
1 unchanged paragraph
• Expected life. The Company estimated an expected life of the Conversion Option which primarily considers the contractual remaining life of the Term Loan Facility, but also considers stock price trends and if the Conversion Option is in or out of the money.
• Expected Volatility. The Company estimates stock price volatility based on the Company's historical volatility for a period of time commensurate with the expected remaining life of the Conversion Option.
Stock price $ 10.42 $ 6.75
See Note 5, "Fair Value Measurements" to the consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 2026 for further discussion of the inputs to the Black-Scholes model.
The following table sets forth the inputs to the Black-Scholes models that were used to value the Conversion Option as of September 30, 2026 and the Closing Date: and June 30, 2026:
June September 30, 2026 May 22, 2026
Model utilized Binomial lattice Black-Scholes
Stock price $ 7.21 $ 6.75
1 unchanged paragraph
Expected life (in years) 2.5 3.69
Expected volatility 97.26 % 89.94 %
Expected volatility 98.00 % 89.94 %
Risk-free interest rate 4.14 5.00 % 4.21 %
Credit spread 20.10 % N/A
Time to maturity (in years) 3.67 N/A
Expected term (in years) N/A 3.69
Dividend yield 0.00 % 0.00 %
N/A - Not applicable. The input was not an explicit input into the model utilized
The Compound Derivative is not designated as a hedging instrument and is accounted for separately from the host debt instrument. The Compound Derivative is remeasured at each reporting date, with changes in fair value recognized in the consolidated statements of operations and comprehensive income loss. The fair value of the Compound Derivative is included within "Long-term debt" in the consolidated balance sheet as of June September 30, 2026.
1 unchanged paragraph
The following table reflects a roll-forward of fair value for the Company's Level 3 Compound Derivative for the six nine months ended June September 30, 2026 (in thousands):
2 unchanged paragraphs
Change in fair value 4,535 1,195
Fair value as of June September 30, 2026
2 unchanged paragraphs
The CVRs represent financial instruments that are accounted for under the fair value option election in ASC 825, Financial Instruments . Under the fair value option election, the CVRs are initially measured at the aggregate estimated fair value of the
The CVRs represent financial instruments that are accounted for under the fair value option election in ASC 825, Financial Instruments . Under the fair value option election, the CVRs are initially measured at the aggregate estimated fair value of the CVRs and will be subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The estimated fair value of the CVR liability was determined using a Monte Carlo simulation model to estimate future cash flows associated with the legacy assets, including the expected milestone and royalty payments under the Sobi License, net of deductions. Changes in fair value of the CVR liability are presented in the consolidated statements of operations and comprehensive income loss. The liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated probabilities of success, and expected volatility of future revenues, which represent a Level 3 measurement within the fair value hierarchy. The significant inputs used to estimate the fair value of the CVR liability, which represented a financial instrument being accounted for under the fair value option, were as follows:
June September 30, 2026 December 31, 2025
3 unchanged paragraphs
The following table reflects a roll-forward of fair value for the Company's Level 3 CVR liability for the six nine months ended June September 30, 2026 (in thousands):
2 unchanged paragraphs
Fair value as of June September 30, 2026
1 unchanged paragraph
The Company's Term Loan Facility (as defined below) is carried at amortized cost. The fair value of the Term Loan Facility, including the Compound Derivative, was estimated to be $ 54.2 49.4 million as of June September 30, 2026. The fair value was determined using a combination of a discounted cash flow analysis for the Term Loan Facility's' contractual payments, combined with the fair value of binomial lattice model described in the Compound "Embedded Derivative" section above. See Note 9 "Debt" to these unaudited consolidated financial statements for more information. The Company classifies the fair value of the Term Loan Facility within Level 3 of the fair value hierarchy because the fair value is derived using significant unobservable inputs.
Note 6: Property and Equipment 8 changes
1 unchanged paragraph
June September 30, 2026 December 31, 2025
Laboratory equipment $ 9,416 9,526 $ 8,419
Computer equipment and software 417 416 417
3 unchanged paragraphs
Construction in process 301 392 3,466
Total property and equipment 17,438 17,638 16,918
Less: Accumulated depreciation ( 6,127 6,907 ) ( 4,733 )
Property and equipment, net $ 11,311 10,731 $ 12,185
Depreciation expense was $ 0.8 million and $ 0.6 million for the three months ended June September 30, 2026 and 2025, respectively, and $ 1.4 2.2 million and $ 1.2 1.8 million for the six nine months ended June September 30, 2026 and 2025, respectively.
Note 7: Accrued Expenses 11 changes
1 unchanged paragraph
Collaboration and licensing 1,044 320
Accrued expenses $ 15,142 $ 9,498
June September 30, 2026 December 31, 2025
Payroll and employee related expenses $ 2,641 3,232 $ 3,985
Collaboration and licensing 428 320
Accrued patent fees 147 253 205
Accrued research and development costs 7,955 4,652 2,521
Accrued professional and consulting services 2,528 2,277 2,059
Accrued interest 497 386 —
Accrued equity offering costs 32 3 30
Accrued expenses $ 11,383 $ 9,498
Note 8: Leases 22 changes
Three Months Ended June 30, Six Months Ended June 30,
Operating lease cost $ 569 $ 571 $ 1,153 $ 1,155
Variable lease cost 419 426 850 832
Short-term lease cost 90 8 94 19
Total lease cost $ 946 $ 1,005 $ 1,965 $ 2,006
2026 (remainder) $ 2,390
The Company maintains operating leases for manufacturing, laboratory and office space located in Maryland and Massachusetts. In Frederick, Maryland, the Company occupies over 35,000 total square feet of integrated space under a lease agreement, or the Frederick Lease Agreement, and subsequent amendments entered into between February 2024 and June 2025, or the Amended Frederick Lease Agreement. The Amended Fredrick Frederick Lease Agreement is set to expire in 2031, carries an aggregate annual base rent of approximately $ 1.4 million and is subject to annual increases in accordance with the terms of the Amended Frederick Lease Agreement. See Note 9, "Leases" to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 for further discussion of the Company's leases.
For the three and six nine months ended June September 30, 2026 and 2025, the components of lease costs were as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
Operating lease cost $ 559 $ 557 $ 1,712 $ 1,712
Variable lease cost 503 438 1,353 1,270
Short-term lease cost 132 131 226 150
Less: Sublease income ( 132 23 ) — ( 132 155 ) —
Total lease cost $ 1,171 $ 1,126 $ 3,136 $ 3,132
The maturity of the Company's operating lease liabilities as of June September 30, 2026 were as follows (in thousands):
2026 (remainder) $ 1,196
Total future minimum lease payments 13,634 12,440
Less: Imputed interest 2,632 2,324
Total operating lease liabilities $ 11,002 10,116
2 unchanged paragraphs
Weighted-average remaining lease term 3.5 3.4 years 4.2 4.0 years
Weighted-average discount rate 12.3 12.4 % 11.8 11.9 %
The changes in the Company's right-of-use assets and lease liabilities for the six nine months ended June September 30, 2026 and 2025 are reflected in the non-cash lease expense and accrued expenses and other liabilities, respectively, in the consolidated statements of cash flows.
Note 9: Debt 24 changes
7 unchanged paragraphs
The Company may, at its option, prepay all, but not less than all, of the outstanding principal balance together with accrued and unpaid interest and all amounts then due under the Loan Agreement, subject to a prepayment premium and an end of term fee. In addition, prior to repayment in full of the Term Loan Facility, the lenders may jointly elect to convert up to $ 15.0 million of the outstanding principal into shares of the Company's common stock, and/or certain other securities issued in a qualifying financing, or the Conversion Shares, subject to a $ 5.0 million conversion limit prior to the first anniversary of the Closing Date, at a conversion price equal to, at the lenders' election, either (i) if the relevant Conversion Shares are common stock, $ 8.2526 per share of common stock or (ii) if the relevant Conversion Shares are shares of common stock or other securities issued in a qualifying financing, the lowest effective price per share or other security in the Company's next qualified financing; provided, that to the extent such securities issued in a qualifying financing are convertible securities, the conversion price shall equal $ 1.00 for each $ 1.00 of notional principal represented by such convertible securities, or the Conversion Option. No prepayment premium applies to principal amounts converted into equity. The Loan Agreement also provides the lenders with certain registration rights, a right to participate in future qualified financings of the Company up to an aggregate of $ 5.0 million, and customary conversion mechanics and beneficial ownership limitations. As of June September 30, 2026, no portion of the outstanding principal had been converted into equity.
1 unchanged paragraph
The Company's obligations under the Loan Agreement are secured by a first priority security interest in substantially all of the Company's assets, excluding intellectual property, which is subject to a negative pledge. The Loan Agreement contains customary affirmative and negative covenants, including restrictions on additional indebtedness, liens, dividends, investments, asset sales, repurchase of equity, certain affiliate transactions, changes of control, mergers or acquisitions, as well as customary events of default. The Loan Agreement contemplates that the Company's existing and future material domestic subsidiaries will be required to become co-borrowers or guarantors and to grant a security interest in their assets to secure the obligations under the Loan Agreement. As of June September 30, 2026, the Company was in compliance with all covenants under the Loan Agreement.
In connection with the initial borrowing, the Company recognized a $ 7.4 million debt discount associated with the Compound Derivative, incurred approximately $ 2.8 million of debt issuance costs and an approximately $ 1.2 million original issue discount. The amortized cost of the Compound Derivative discount is included within "Long-term debt" in the consolidated balance sheet as of June September 30, 2026. The debt issuance costs and original issue discount were allocated among the funded and contingent borrowing tranches, of which approximately $ 1.4 million and $ 0.6 million were allocated to the First Tranche, respectively, and the amortized cost is included within "Long-term debt" in the consolidated balance sheet as of June September 30, 2026. The remaining $ 1.4 million and $ 0.6 million were allocated to Second Tranche and Third Tranche, respectively, and are deferred within "Long-term prepaid expenses and other assets" in the consolidated balance sheet as of June September 30, 2026, and until the related tranche is funded. Deferred debt issuance costs and original issue discount are amortized to interest expense over the term of the Loan Agreement using the straight-line method.
The Company is also required to pay a final payment fee equal to 6.95 % of funded principal, or approximately $ 3.5 million based on the amount funded as of June September 30, 2026, which is accreted to interest expense over the term of the Loan Agreement using the effective interest method.
2 unchanged paragraphs
Add: Compound Derivative measured at fair value 11,940 8,600
Add: accreted final payment fee 81 273
Less: unamortized Compound Derivative discount ( 7,232 6,824 )
Less: unamortized debt issuance costs ( 1,371 1,294 )
Less: unamortized original issue discount ( 567 535 )
Long-term debt, net $ 52,851 50,220
1 unchanged paragraph
Three and Six Months Ended June 30, 2026
Contractual interest $ 497
Total interest expense $ 852
Three Months Ended September 30, Nine Months Ended September 30,
Contractual interest $ 1,149 $ 1,646
Amortization of Compound Derivative discount 173 417 590
Amortization of debt issuance costs 33 77 110
Amortization of original issue discount 14 32 46
Accretion of final payment fee 81 192 273
Amortization of deferred debt issuance costs 38 88 126
Amortization of deferred original issue discount 16 36 52
Total interest expense $ 1,991 $ 2,843
For the six nine months ended June September 30, 2026, the effective interest rate for the Term Loan Facility was approximately 17.7 %.
Future principal payments, excluding contractual interest but including the final payment fee of approximately $ 3.5 million, in connection with the Loan Agreement as of June September 30, 2026 are as follows (in thousands):
2 unchanged paragraphs
Note 10: Equity 10 changes
2 unchanged paragraphs
During the six nine months ended June September 30, 2026, the Company sold 2,813,736 3,196,203 shares of its common stock pursuant to the Sales Agreement for net proceeds of approximately $ 19.3 22.8 million after commissions and expenses. As of June September 30, 2026, approximately $ 78.9 75.5 million remains available under the at the market program. There were no shares sold pursuant to the Sales Agreement during the six nine months ended June September 30, 2025.
During the six nine months ended June September 30, 2026, there were no warrants issued, exercised, or cancelled. The following is a summary of the Company's warrants as of June September 30, 2026:
1 unchanged paragraph
Outstanding at June September 30, 2026 6,560 685,712 692,272 $ 46.76
1 unchanged paragraph
As of June September 30, 2026, the Company had 98,050 shares of Series A Preferred Stock and 437,927 shares of Series B Preferred Stock issued and outstanding, respectively, which together are convertible into an aggregate of 3,706,272 shares of common stock.
1 unchanged paragraph
The Company has reserved shares of common stock for future issuance as of June September 30, 2026 as follows:
1 unchanged paragraph
Shares available for future stock incentive awards 4,457,032 4,225,966
Common stock options reserved for issuance 10,000 —
Unvested restricted stock units 648,078 637,225
Outstanding common stock options 3,362,644 3,547,608
3 unchanged paragraphs
Shares reserved for issuance under the at the market offering 36,600 12,057
Note 11: Stock Incentive Plans 46 changes
In June 2016, the Company's stockholders approved the 2016 Incentive Award Plan, or the 2016 Plan, which initially authorized 40,341 shares of common stock for future issuance under the 2016 Plan. Pursuant to the terms of the 2016 Plan, the Board of Directors is authorized to grant awards with respect to common stock, and may delegate to a committee of one or more members of the Board of Directors or executive officers of the Company the authority to grant options and restricted stock units. The Board of Directors established a Stock Option Committee which is authorized to grant awards to certain employees and consultants subject to conditions and limitations within the 2016 Plan. In January 2026, the number of shares of common stock that may be issued under the 2016 Plan was increased by 1,040,444 . As of June September 30, 2026, 3,410,201 3,552,044 shares remain available for future issuance under the 2016 Plan.
In September 2018, the Company's 2018 Employment Inducement Incentive Award Plan, or the 2018 Inducement Incentive Award Plan, was adopted by the Board of Directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules, which initially authorized 39,166 shares of its common stock for issuance. In June 2026, the Board of Directors approved an amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 750,000 shares of the Company's common stock for issuance thereunder. As of June September 30, 2026, there were 942,751 566,742 shares available for future grant under the 2018 Inducement Incentive Award Plan.
On November 2023, the Company assumed the 2016 Stock Incentive Plan, or the Old Cartesian Plan, of the then private company that merged with the Company in November 2023, or Old Cartesian. The Old Cartesian Plan permits the granting of options or restricted stock to employees, officers, directors, consultants and advisors to the Company. The unvested common stock options and Series A Preferred Stock options assumed by the Company generally vest over a four-year period. Additionally, the stock options granted have a contractual term of ten years and only full shares can be exercised as per the individual award agreements. As of June September 30, 2026, there were 58,285 61,385 shares available for future grant under the Old Cartesian Plan.
The outstanding stock options to purchase Old Cartesian common stock were converted into stock options to purchase 776,865 shares of common stock and 14,112.299 shares of Series A Preferred Stock of the Company. The replacement awards that were issued as a part of the assumption of the Old Cartesian Plan resulted in $ 2.6 million attributed to post-combination service to be recognized as stock-based compensation expense over the remaining terms of the replacement awards, of which less than $ 0.1 million and $ 0.2 million was recognized during each of the three months ended June September 30, 2026 and 2025, respectively, and $ 0.1 0.2 million and $ 0.4 0.5 million was recognized during the six nine months ended June September 30, 2026 and 2025, respectively, as research and development expense in the consolidated statements of operations and comprehensive income loss.
1 unchanged paragraph
Three Months Ended June 30, Six Months Ended June 30,
Research and development $ 614 $ 1,810 $ 1,563 $ 3,085
General and administrative 1,469 1,469 2,943 2,702
Total stock-based compensation expense $ 2,083 $ 3,279 $ 4,506 $ 5,787
Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive income loss, was as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
Research and development $ 916 $ 1,005 $ 2,479 $ 4,090
General and administrative 1,745 1,585 4,688 4,287
Total stock-based compensation expense $ 2,661 $ 2,590 $ 7,167 $ 8,377
1 unchanged paragraph
Three Months Ended June 30, Six Months Ended June 30,
Risk-free interest rate 4.18 % 4.05 % 3.94 % 4.42 %
Dividend yield — — — —
Expected volatility 89.10 % 95.12 % 92.55 % 97.21 %
Weighted-average fair value of common stock $ 6.33 $ 11.80 $ 6.79 $ 16.89
Three Months Ended September 30, Nine Months Ended September 30,
Risk-free interest rate 4.45 % 3.95 % 4.08 % 4.42 %
Dividend yield 0.00 % 0.00 % 0.00 % 0.00 %
Expected term (in years) 6.00 6.15 5.97 6.25 5.98 6.20
Expected volatility 88.40 % 93.79 % 91.09 % 97.19 %
Weighted-average fair value of common stock $ 9.42 $ 12.48 $ 7.22 $ 16.87
1 unchanged paragraph
The weighted-average grant date fair value of stock options granted during the three months ended June September 30, 2026 and 2025 was $ 4.80 7.12 and $ 9.32 9.82 , respectively, and $ 5.23 5.52 and $ 13.56 13.54 during the six nine months ended June September 30, 2026 and 2025, respectively.
As of June September 30, 2026, total unrecognized compensation expense related to unvested common stock options was approximately $ 12.6 14.3 million, which is expected to be recognized over a weighted average period of approximately 3.0 2.9 years.
6 unchanged paragraphs
Granted 1,680,200 $ 6.68
Reserved for issuance ( 10,000 ) $ 1.41
Exercised ( 278,341 ) $ 2.34
Forfeited ( 492,962 ) $ 14.42
Outstanding at June 30, 2026 3,362,644 $ 11.08 8.11 $ 8,604
Vested at June 30, 2026 974,036 $ 12.97 5.64 $ 2,601
Vested and expected to vest at June 30, 2026 3,013,426 $ 11.23 7.98 $ 7,674
Granted 2,093,850 $ 7.22
Exercised ( 343,318 ) $ 2.30
Forfeited ( 666,671 ) $ 15.18
Outstanding at September 30, 2026 3,547,608 $ 10.72 8.46 $ 2,109
Vested at September 30, 2026 810,404 $ 12.91 6.59 $ 1,165
Vested and expected to vest at September 30, 2026 3,182,104 $ 10.85 8.38 $ 1,987
1 unchanged paragraph
During the six nine months ended June September 30, 2026, the Company granted 420,650 restricted stock unit awards with a weighted-average fair value of $ 6.76 per share based on the closing price of the Company's common stock on the date of grant under the 2016 Plan, which generally vest over a four-year term. Forfeitures are estimated at the time of grant and are adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has estimated a forfeiture rate of 10 % for restricted stock unit awards based on historical experience.
Unrecognized compensation expense related to the restricted stock units was approximately $ 5.2 4.6 million as of June September 30, 2026, which is expected to be recognized over a weighted-average period of approximately 2.8 2.6 years.
3 unchanged paragraphs
Vested ( 169,278 ) 18.59
Forfeited ( 125,792 ) 13.12
Vested ( 171,256 ) 18.66
Forfeited ( 134,667 ) 12.85
Unvested at June September 30, 2026
Note 12: Revenue Arrangements 2 changes
6 unchanged paragraphs
As of June September 30, 2026, the award period has ended, there is no outstanding receivable and there is no further amount subject to reimbursement by NINDS. As of December 31, 2025, the Company recorded a receivable of $ 0.9 million that is subject to reimbursement by NINDS. The Company recognized no grant revenue and grant revenue of $ 0.1 million during the three and six nine months ended June September 30, 2026, respectively. The Company recognized grant revenue of $ 0.2 0.5 million and $ 0.9 1.4 million during the three and six nine months ended June September 30, 2025, respectively.
1 unchanged paragraph
Remaining performance obligations represent the transaction price of contracts for which work has not been performed, or has been partially performed. As of June September 30, 2026 and December 31, 2025, there were no unsatisfied performance obligations from contracts with customers.
Note 13: Collaboration and License Agreements 2 changes
5 unchanged paragraphs
During the three and six nine months ended June September 30, 2026, the Company recognized $ 0.8 0.2 million and $ 1.0 million in research and development expense, respectively. No development, regulatory or sales-based milestones had been achieved and the Company has not recognized any royalty expense or sublicense revenue-sharing expense as of June September 30, 2026.
13 unchanged paragraphs
In May 2014, the Company entered into a license agreement, or the 3SBio License, with Shenyang Sunshine Pharmaceutical Co., Ltd., or 3SBio. The Company has paid to 3SBio an aggregate of $ 7.0 million in upfront and milestone-based payments under the 3SBio License as of June September 30, 2026. The Company is required to make future payments to 3SBio contingent upon the occurrence of events related to the achievement of clinical and regulatory approval milestones of up to an aggregate of $ 15.0 million for products containing the Company's ImmTOR platform.
Note 14: Income Taxes 1 change
As of June September 30, 2026, the Company has not recorded any U.S. federal or state income tax benefits for either the net losses the Company has incurred or its earned research and orphan drug credits, due to the uncertainty of realizing a benefit from those items in the future.
Note 15: Commitments and Contingencies 2 changes
As of June September 30, 2026, the Company was not a party to any litigation that could have a material adverse effect on the Company's business, financial position, results of operations or cash flows.
As permitted under Delaware law, the Company indemnifies its officers, directors, consultants and employees for certain events or occurrences that happen by reason of the relationship with, or position held at the Company. Through June September 30, 2026, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.
1 unchanged paragraph
Note 16: Segment Reporting 20 changes
Three Months Ended June 30, Six Months Ended June 30,
The following table presents selected financial information with respect to the Company's single operating segment for the three and six nine months ended June September 30, 2026 and 2025 (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
1 unchanged paragraph
Grant revenue — 298 78 998
Total revenue — 298 78 1,398
Descartes-08 for MG 12,465 5,035 24,600 12,071
Grant revenue — 452 78 1,450
Total revenue — 452 78 1,850
Descartes-08 for MG 6,515 5,431 31,115 17,502
1 unchanged paragraph
Early stage programs 971 1,715 1,326 2,705
Research and development employee expenses 4,027 4,254 7,855 7,956
General and administrative 8,724 7,240 15,838 15,555
Early stage programs 1,245 1,523 2,571 4,228
Research and development employee expenses 4,064 3,971 11,919 11,927
Research and development stock-based compensation expense 614 1,810 1,563 3,085 916 1,005 2,479 4,090
Research and development facilities and other expenses 2,118 2,055 4,087 3,726 2,259 1,872 6,346 5,598
General and administrative 9,378 7,716 25,216 23,271
1 unchanged paragraph
Net income (loss) $ 15,769 $ 15,886 $ ( 23,413 ) $ ( 1,824 )
Net loss $ ( 11,472 ) $ ( 35,902 ) $ ( 34,885 ) $ ( 37,726 )
(1) Includes interest income; interest expense; (loss) gain on change in fair value of warrant liability; gain (loss) on change in fair value of embedded derivative liability; gain (loss) on change in fair value of contingent value rights liability; and other income (expense), net.
MD&A 145 changes
4 unchanged paragraphs
We incurred net losses of $23.4 $34.9 million and $1.8 $37.7 million for the six nine months ended June September 30, 2026 and 2025, respectively. As of June September 30, 2026, we had an accumulated deficit of $845.8 $857.3 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:
1 unchanged paragraph
• advance Descartes-08 for myositis into through Phase 2 development;
6 unchanged paragraphs
We believe that our existing cash, cash equivalents, and restricted cash as of June September 30, 2026 will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
13 unchanged paragraphs
Gain (loss) on change in fair value of embedded derivative liability
6 unchanged paragraphs
Comparison of the Three Months Ended June September 30, 2026 and 2025
Three Months Ended June September 30, Increase (Decrease)
2 unchanged paragraphs
Grant revenue — 298 (298) (100) %
Total revenue — 298 (298) (100) %
Research and development 20,431 14,869 5,562 37 %
General and administrative 8,724 7,240 1,484 20 %
Total operating expenses 29,155 22,109 7,046 32 %
Operating loss (29,155) (21,811) (7,344) 34 %
Grant revenue — 452 (452) (100) %
Total revenue — 452 (452) (100) %
Research and development 15,623 13,802 1,821 13 %
General and administrative 9,378 7,716 1,662 22 %
Total operating expenses 25,001 21,518 3,483 16 %
Operating loss (25,001) (21,066) (3,935) 19 %
1 unchanged paragraph
Interest income 1,103 1,748 (645) (37) %
Interest expense (852) — (852) NM
Loss on change in fair value of embedded derivative (4,535) — (4,535) NM
Gain on change in fair value of contingent value rights liability 49,200 35,300 13,900 39 %
Other income (expense), net 126 (5) 131 NM
Total other income, net 44,924 37,697 7,227 19 %
Net income $ 15,769 $ 15,886 $ (117) (1) %
Interest income 1,202 1,548 (346) (22) %
Interest expense (1,991) — (1,991) NM
(Loss) Gain on change in fair value of warrant liabilities (118) 654 (772) (118) liability 164 516 (352) (68) %
Gain on change in fair value of derivative liability 3,340 — 3,340 NM
Gain (loss) on change in fair value of CVR liability 10,700 (16,900) 27,600 (163) %
Other income, net 114 — 114 NM
Total other income (expense), net 13,529 (14,836) 28,365 (191) %
Net loss $ (11,472) $ (35,902) $ 24,430 (68) %
During the three months ended June September 30, 2026, we recognized no did not recognize any grant revenue, compared to $0.3 $0.5 million for the three months ended June September 30, 2025, a decrease of $0.3 $0.5 million. Grant revenue recognized during the three months ended June September 30, 2025 was under the grant from the National Institute of Neurological Disorders and Stroke of the National Institutes of Health, or NINDS.
1 unchanged paragraph
Descartes-08 for MG $ 12,465 $ 5,035 $ 7,430 148 %
Early stage programs 971 1,715 (744) (43) %
Total research and development expenses $ 20,431 $ 14,869 $ 5,562 37 %
The following is a comparison of research and development expenses for the three months ended June September 30, 2026 and 2025 (in thousands, except percentages):
Three Months Ended June September 30, Increase (Decrease)
Descartes-08 for MG $ 6,515 $ 5,431 $ 1,084 20 %
Descartes-08 for dermatomyositis 236 624 — 236 624 NM
Early stage programs 1,245 1,523 (278) (18) %
Research and development employee expenses 4,027 4,254 (227) (5) 4,064 3,971 93 2 %
Research and development stock-based compensation expense 614 1,810 (1,196) (66) 916 1,005 (89) (9) %
Research and development facilities and other expenses 2,118 2,055 63 3 2,259 1,872 387 21 %
Total research and development expenses $ 15,623 $ 13,802 $ 1,821 13 %
For the three months ended June September 30, 2026, our research and development expenses were $20.4 $15.6 million, compared to $14.9 $13.8 million for the three months ended June September 30, 2025, an increase of $5.5 $1.8 million. The increase was primarily due to an increase in expenses for Descartes-08 for MG, primarily related to the expenses for the ongoing Phase 3 AURORA trial, coupled with expenses for Descartes-08 in dermatomyositis, primarily related to the expense for the ongoing Phase 2 TRITON trial. This increase was partially offset by a decrease in stock-based compensation expense and expenses for early stage programs, primarily related to our decision to no longer pursue development of Descartes-08 in systemic lupus erythematosus. partially offset by new costs associated with the license agreement, or the WestGene Agreement, with WestGene Biopharma Co., Ltd., or WestGene.
1 unchanged paragraph
Other income (expense), net
For the three months ended June September 30, 2026, our general and administrative expenses were $8.7 $9.4 million, compared to $7.2 $7.7 million for the three months ended June September 30, 2025, an increase of $1.5 $1.7 million. The increase was primarily the result of higher professional and consulting fees and employee-related expenses.
Interest income for the three months ended June September 30, 2026 was $1.1 $1.2 million, compared to $1.7 $1.5 million for the three months ended June September 30, 2025, a decrease of $0.6 $0.3 million. The decrease in interest income was due to decreased cash and cash equivalents balance and lower interest rates.
Interest expense for the three months ended June September 30, 2026 was $0.9 $2.0 million. Interest expense is related to the Term Loan Facility (as defined below) with K2HV (as defined below) and consists of contractual interest expense as well as the amortization of debt issuance costs, debt discounts, deferred debt issuance costs, deferred debt discounts and the accretion of the final payment fee. There was no interest expense for the three months ended June September 30, 2025.
(Loss) Gain on change in fair value of warrant liability
For the three months ended June September 30, 2026, we recognized $0.1 $0.2 million of expense income from the increase decrease in the fair value of warrant liability, compared to $0.7 $0.5 million of income from the decrease in the fair value of warrant liability for the three months ended June September 30, 2025, a change of $0.8 $0.3 million. The increase decrease in fair value of the warrant liability in the current period was primarily driven by an increase a decrease in the per-share price of our common stock, partially offset by coupled with a decrease in the remaining expected life of the warrants.
Gain on change in fair value of contingent value rights derivative liability
For the three months ended June September 30, 2026, we recognized $4.5 $3.3 million of expense associated with income from the increase decrease in the fair value of the embedded derivative liability. The increase decrease in the fair value of the embedded derivative was primarily due to the change in our stock price between the Closing Date (as defined below) and June 30, 2026 and September 30, 2026. There was no change in fair value of embedded the derivative liability for the three months ended June September 30, 2025.
Gain (loss) on change in fair value of embedded derivative contingent value rights liability
For the three months ended June September 30, 2026, we recognized $49.2 $10.7 million of income from the decrease in the fair value of the contingent value rights, or CVR, liability, compared to $35.3 $16.9 million of income from expense associated with the decrease increase in the fair value of the CVR liability for the three months ended June September 30, 2025, a decrease change of $13.9 $27.6 million. The decrease in the fair value of the CVR liability in the current period was primarily due to changes in higher interest rates, partially offset by the timing passage of anticipated payments. time.
During the three months ended June September 30, 2026, we recognized $0.1 million of other income, net, compared to an immaterial amount of no other expense, income, net for the three months ended June September 30, 2025.
Net income loss for the three months ended June September 30, 2026 was $15.8 $11.5 million as compared to a net income loss of $15.9 $35.9 million for the three months ended June September 30, 2025, an increase a decrease of $0.1 $24.4 million. The increase decrease in net income loss was primarily due to a higher gain the gains on the change in the fair value of the CVR liability and derivative liability, partially offset by an increase interest expense and increases in research and development expenses the loss on change in fair value of embedded derivative, and an increase in general and administrative expenses for the three months ended June September 30, 2026.
Comparison of the Six Nine Months Ended June September 30, 2026 and 2025
Six Nine Months Ended June September 30, Increase (Decrease)
2 unchanged paragraphs
Grant revenue 78 998 (920) (92) %
Total revenue 78 1,398 (1,320) (94) %
Research and development 39,894 29,543 10,351 35 %
General and administrative 15,838 15,555 283 2 %
Total operating expenses 55,732 45,098 10,634 24 %
Operating loss (55,654) (43,700) (11,954) 27 %
Grant revenue 78 1,450 (1,372) (95) %
Total revenue 78 1,850 (1,772) (96) %
Research and development 55,517 43,345 12,172 28 %
General and administrative 25,216 23,271 1,945 8 %
Total operating expenses 80,733 66,616 14,117 21 %
Operating loss (80,655) (64,766) (15,889) 25 %
1 unchanged paragraph
Interest income 2,129 3,763 (1,634) (43) %
Interest expense (852) — (852) NM
Gain on change in fair value of contingent value rights liability 35,400 35,646 (246) (1) %
Other income (expense), net 123 (5) 128 NM
Total other income (expense), net 32,241 41,876 (9,635) (23) %
Net loss $ (23,413) $ (1,824) $ (21,589) NM
Interest income 3,331 5,311 (1,980) (37) %
1 unchanged paragraph
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and 65 more changes in the filing
Market risk 2 changes
A market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of June September 30, 2026, we have an outstanding principal amount related to our Term Loan Facility of $50.0 million. The Term Loan Facility bears interest at the greater of (i) 8.95% and (ii) the prime rate as quoted in The Wall Street Journal plus 2.20%. Refer to Note 9, "Debt" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
As of June September 30, 2026 and December 31, 2025, we had cash, cash equivalents, and restricted cash of $149.3 $124.7 million and $126.9 million, respectively, consisting of non-interest and interest-bearing money market accounts. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. Due to the short-term and the low risk profile of our money market accounts and marketable securities, and our current policy to hold marketable securities to maturity, a hypothetical change of one percentage point in interest rates would not have a material effect on the fair market value of our cash equivalents or short-term marketable securities. Refer to Note 5, "Fair Value Measurements" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.
1 unchanged paragraph
Controls and procedures 2 changes
1 unchanged paragraph
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June September 30, 2026.
3 unchanged paragraphs
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended June September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Other information 1 change
During the fiscal quarter ended June September 30, 2026, no officer or director, as defined in Rule 16a-1(f) of the Exchange Act, informed us of the adoption , modification or termination of any "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as those terms are defined in Item 408 of Regulation S-K .
Exhibits 7 changes
11 unchanged paragraphs
10.1*# Loan and Security Agreement, dated as of May 22, 2026, among Cartesian Therapeutics, Inc. and Cartesian Bio, LLC, as borrowers, the lenders party thereto, K2 HealthVentures LLC, as administrative agent, and Ankura Trust Company, LLC, as collateral trustee.
10.2# Amended and Restated Cartesian Therapeutics, Inc. 2018 Employment Inducement Incentive Award Plan
- - - Filed herewith
17 unchanged paragraphs
Date: August 6, 2026
Date: November 5, 2026
3 unchanged paragraphs
Date: August 6, 2026
Date: November 5, 2026
3 unchanged paragraphs
Unchanged: Notes to the financial statements, Note 17: Subsequent Events, Legal proceedings, Risk factors, Unregistered sales of stock, Defaults on senior securities, Mine Safety Disclosures
Only in this filing: Note 4: Net Loss Per Share Allocable to Common Stockholders
Only in the earlier filing: Note 4: Net Income (Loss) Per Share Allocable to Common Stockholders
Compared by code from the two filings' text and XBRL. Not advice.
The reading, claim by claim
- • our ability to monetize any of our legacy assets.
- The accompanying notes are an integral part of these unaudited consolidated financial statements.
- Net income -$11.5 million.
3 of 4 claims matched the filing text.
Not found in the filing text
- The accompanying notes are an integral part of these unaudited consolidated financial statements.
From the filing's financial data, not stated in its text
From this 10-Q's financial data (XBRL) for the quarter ended September 30, 2026
- For the quarter ended September 30, 2026, Cartesian Therapeutics, Inc. reported: Revenue $0.
From the filing
Item 6.
Item 6.
Exhibits
45
Signatures
2
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or the Quarterly Report, contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing and likelihood of success, the plans and objectives of management for future operations and future results of anticipated products, the impact of future pandemics or similar events on our business and operations and our future financial results, and the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "plan," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential", or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described under the sections in this Quarterly Report titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as the following:
• our future results of operations and financial position, business strategy, and the length of time that we believe our existing cash resources will fund our operations;
• the availability and use of funds under our Loan Agreement (as defined herein) with K2 HealthVentures LLC, or K2HV;
• our compliance with certain covenants under our Loan Agreement with K2HV that could adversely affect our operations and, in the case of an event of default, could result in us being obligated to repay any outstanding indebtedness sooner than planned and possibly at a time when we do not have sufficient capital to meet this obligation;
• our market size and our potential growth opportunities;
• our preclinical and clinical development activities;
• our dependence on third-parties, including contract research organizations in the conduct of our preclinical studies and clinical trials;
• the efficacy and safety profile of our product candidates;
• the potential therapeutic benefits and economic value of our product candidates;
• the timing and results of preclinical studies and clinical trials;
• the potential impairment of our goodwill and indefinite lived intangible assets;
• the expected impact of macroeconomic conditions, including inflation, increasing interest rates, volatile market conditions and current or potential bank failures;
• the impact of global events, including the ongoing conflicts between Russia and Ukraine, the ongoing conflict in the Middle East and geopolitical tensions with China;
• the impact of political uncertainty on our product development;
• the receipt and timing of potential regulatory designations, approvals and commercialization of our product candidates;
• our ability to prevent or minimize the effects of litigation and other contingencies;
• our status as a development-stage company and our expectation to incur losses in the future, and the possibility that we never achieve or maintain profitability;
3
• uncertainties with respect to our ability to access future capital;
• our ability to maximize the value of our pipeline of product candidates;
• our unproven approach to therapeutic intervention;
• our ability to enroll patients in clinical trials, timely and successfully complete those trials and receive necessary regulatory approvals;
• our ability to continue to grow our manufacturing capabilities and resources;
• our ability to manufacture our product candidates, which in some cases are manufactured on a patient-by-patient basis;
• our ability to receive or manufacture sufficient quantities of our product candidates;
• our ability to maintain our existing or future collaborations or licenses and to seek new collaborations, licenses or partnerships;
• our ability to protect and enforce our intellectual property rights;
• federal, state, and foreign regulatory requirements, including U.S. Food and Drug Administration, or FDA, regulation of our product candidates;
• our ability to obtain and retain key executives and retain qualified personnel;
• developments relating to our competitors and our industry;
• any future payouts under the contingent value rights, or CVR, issued to our holders of record as of the close of business on December 4, 2023; and
• our ability to monetize any of our legacy assets.1
Moreover, we operate in an evolving environment. New risks and uncertainties may emerge from time to time, and it is not possible for management to predict all risk and uncertaintie
Item 1. Financial Statements (unaudited)
Item 1. Financial Statements (unaudited)
Cartesian Therapeutics, Inc. and Subsidiaries
Consolidated Balance Sheets (amounts in thousands, except share data and par value)
(unaudited)
Assets
Current assets:
Prepaid expenses and other current assets 8,471 3,022
Right-of-use assets, net 4,879 5,601
In-process research and development asset
Long-term prepaid expenses and other assets 3,399 5,551
Total assets $ 294,305 $ 296,411
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable $ 105 $ 1,288
Accrued expenses and other current liabilities 11,383 9,498
Lease liabilities, net of current portion 5,906 8,525
Warrant liability, net of current portion — 141
Long-term debt, net 50,220 —
Commitments and contingencies (Note 15)
Stockholders' deficit:
Series A Preferred Stock, $ 0.0001 par value; 112,164.533 and 134,904.563 shares authorized as of September 30, 2026 and December 31, 2025, respectively; 98,050.372 and 120,790.402 shares issued and outstanding as of September 30, 2026 and December 31, 2025, respectively
— —
Series B Preferred Stock, $ 0.0001 par value; 437,927 shares authorized as of September 30, 2026 and December 31, 2025; 437,927 shares issued and outstanding as of September 30, 2026 and December 31, 2025
— —
Preferred stock, $ 0.0001 par value; 9,449,908.467 and 9,427,168.437 shares authorized as of September 30, 2026 and December 31, 2025, respectively; no shares issued and outstanding as of September 30, 2026 and December 31, 2025
— —
Total liabilities and stockholders' deficit $ 294,305 $ 296,411
The accompanying notes are an integral part of these unaudited consolidated financial statements.2
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Table of Contents
Cartesian Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss (unaudited, amounts in thousands, except share and per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Revenues:
Collaboration and license $ — $ — $ — $ 400
Gain (loss) on change in fair value of derivative liability 3,340 — ( 1,195 ) —
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Table of Contents
Cartesian Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Deficit (unaudited, amounts in thousands, except share data)
Series A Series B Additional paid-in capital Accumulated deficit Accumulated other comprehensive loss Stockholders' deficit
Preferred Stock Preferred Stock Common stock
Shares Amount Shares Amount Shares Amount
Issuance of common stock upon vesting of restricted stock units
— — — — 169,278 — — — — —
Issuance of common stock through at the market offering, net of commissions and expenses
Conversion of Series A Preferred Stock to common stock ( 22,740.030 ) — — — 758,001 — — — — —
Issuance of common stock upon exercise of options — — — — 192,209 — 373 — — 373
Issuance of common stock through at the market offering, net of commissions and expenses
Issuance of common sto
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