carm-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 10-Q

____________________________________________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________to _________________

Commission File Number: 001-36296

Carisma Therapeutics Inc.

(Exact Name of Registrant as Specified in its Charter)

____________________________________________________________


Delaware			26-2025616
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

3675 Market Street, Suite 200 Philadelphia, PA			19104
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (267) 491-6422

(Former Name or Former Address, if Changed Since Last Report)

____________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of exchange
on which registered

Common Stock, $0.001 par value per share

CARM

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 9, 2023, the registrant had 40,284,845 shares of common stock, $0.001 par value per share, outstanding.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties, and other 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 these forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q may include, but are not limited to, statements about:

•the timing and conduct of our ongoing Phase 1 clinical trial of CT-0508 and our sub-study of our ongoing Phase 1 clinical trial utilizing CT-0508 in combination with pembrolizumab;

•the timing and conduct of our pre-clinical studies and planned clinical trial of CT-0525 for solid tumors that overexpress HER2;

•the timing and conduct of our planned clinical trial of CT-1119 for advanced mesothelin-positive solid tumors;

•the timing and conduct of our planned clinical trial of CT-0729 for prostate-specific membrane antigen positive castrate resistant prostate cancer;

•our ability to replicate in later clinical trials positive results found in pre-clinical studies and early- stage clinical trials of our product candidates;

•our plans to conduct discovery and pre-clinical testing of the development of in vivo CAR-M therapeutics for up to twelve oncology targets, as well as multiple other targets and indications;

•our ability to successfully enroll patients in and complete clinical trials;

•our plans to conduct discovery and pre-clinical testing of other product candidates;

•our ability to realize the anticipated benefits of our research and development programs, strategic partnerships, research and licensing programs and academic and other collaborations;

•the timing of applying for and receiving, and our ability to maintain, marketing approvals from applicable regulatory authorities for our product candidates;

•our ability to obtain and maintain intellectual property protection and regulatory exclusivity for CT-0508, CT-0525, CT-1119 and any other product candidates we are developing or may develop in the future;

•acceptance of CT-0508, CT-0525 and any other product candidates, if and when approved, by patients, the medical community and third-party payors;

•our expectations regarding our ability to fund our operating expenses and capital expenditure requirements with our cash, cash equivalents and short-term investments;

•the potential advantages of our product candidates;

•our estimates regarding the potential market opportunity for our product candidates;

•our commercialization and manufacturing capabilities and strategy;

•the impact of health epidemics, pandemics or other contagious outbreaks (including any resurgence of the COVID-19 pandemic) on our business and operations;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our competitive position;

•the impact of government laws and regulations;

•our ability to recognize the benefits of our merger, or the Merger, with Sesen Bio, Inc., or Sesen Bio, and the effect the completion of the Merger will have on our business relationships, operating results and business generally;

•the receipt of any payments under the contingent value rights issued to our stockholders in connection with the completion of the Merger, the realization of value for Sesen Bio legacy assets and the amount and timing of distributions to be made to our stockholders, if any; and

•political and economic developments.

In some cases, forward-looking statements can be identified by terminology such as “ “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “goals,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. If one or more of these risks or uncertainties occur, or if our underlying

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assumptions prove to be incorrect, actual events or results may vary significantly from those expressed or implied by the forward-looking statements. No forward-looking statement is a promise or a guarantee of future performance.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires, references to the “Company,” “Carisma,” “we,” “us,” and “our” refer to Carisma Therapeutics Inc. (formerly Sesen Bio, Inc.) and its consolidated subsidiaries.

References to “Legacy Carisma” refer to CTx Operations, Inc. (formerly CARISMA Therapeutics Inc.) and references to “Sesen Bio” refer to Sesen Bio, Inc. prior to completion of the Merger.

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CARISMA THERAPEUTICS INC.

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		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited).	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations and Comprehensive Loss	2
	Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Consolidated Statements of Cash Flows	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	30
Item 4.	Controls and Procedures.	30

PART II.	OTHER INFORMATION	31
Item 1.	Legal Proceedings.	31
Item 1A.	Risk Factors.	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	84
Item 5.	Other Information.	84
Item 6.	Exhibits.	86

SIGNATURES		87

iii

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

CARISMA THERAPEUTICS INC.

Unaudited Consolidated Balance Sheets

(in thousands, except share and per share data)


	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	76,353	$	24,194
Marketable securities	40,725		27,802
Prepaid expenses and other assets	5,122		2,596
Total current assets	122,200		54,592
Property and equipment, net	7,590		8,628
Right of use assets – operating leases	3,047		4,822
Restricted cash	30		—
Deferred financing costs	146		4,111
Total assets	$	133,013	$	72,153

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	2,487	$	1,728
Accrued expenses	9,614		10,361
Deferred revenue	1,416		2,459
Operating lease liabilities	2,486		3,437
Finance lease liabilities	1,215		1,162
Other current liabilities	755		523
Total current liabilities	17,973		19,670
Deferred revenue	45,000		45,000
Convertible promissory note	—		33,717
Derivative liability	—		5,739
Operating lease liabilities	920		976
Finance lease liabilities	606		872
Other long-term liabilities	1,809		1,041
Total liabilities	66,308		107,015
Commitments and contingencies (Note 5)
Convertible preferred stock	—		107,808
Stockholders’ equity (deficit):
Common stock $0.001 par value, 350,000,000 shares authorized, 40,269,576 and 2,217,737 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	40		2
Additional paid-in capital	269,141		1,197
Accumulated other comprehensive income (loss)	265		(41)
Accumulated deficit	(202,741)		(158,223)
Total Carisma Therapeutics Inc. stockholders’ equity (deficit)	66,705		(157,065)
Noncontrolling interests	—		14,395
Total stockholders’ equity (deficit)	66,705		(142,670)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	133,013	$	72,153

See accompanying notes to unaudited interim consolidated financial statements.

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CARISMA THERAPEUTICS INC.

Unaudited Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Collaboration revenues	$	3,560	$	2,703	$	6,803	$	3,525
Operating expenses:
Research and development	18,518		14,212		35,159		22,979
General and administrative	6,007		2,424		15,581		4,635
Total operating expenses	24,525		16,636		50,740		27,614
Operating loss	(20,965)		(13,933)		(43,937)		(24,089)
Change in fair value of derivative liability	—		(144)		(84)		(701)
Interest income (expense), net	1,177		(771)		(300)		(1,370)
Pre-tax loss	(19,788)		(14,848)		(44,321)		(26,160)
Income tax expense	(88)		—		(197)		—
Net loss	$	(19,876)	$	(14,848)	$	(44,518)	$	(26,160)

Share information:
Net loss per share of common stock, basic and diluted	$	(0.49)	$	(7.20)	$	(1.67)	$	(12.69)
Weighted-average shares of common stock outstanding, basic and diluted	40,258,107		2,061,643		26,596,712		2,060,819
Comprehensive loss
Net loss	$	(19,876)	$	(14,848)	$	(44,518)	$	(26,160)
Unrealized gain (loss) on marketable securities	129		(39)		306		(197)
Comprehensive loss	$	(19,747)	$	(14,887)	$	(44,212)	$	(26,357)

See accompanying notes to unaudited interim consolidated financial statements.

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CARISMA THERAPEUTICS INC.

Unaudited Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share and per share data)


	Convertible preferred stock			Stockholders’ Equity (Deficit)
	Shares	Amount		Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit	Noncontrolling interests	Total
				Shares	Amount
Balance, December 31, 2022	8,700,885	$	107,808	2,217,737	$	2	$	1,197	$	(41)	$

SEC Form 10-Q filed by Sesen Bio Inc.