UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2025


☐	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: 001-41859

CARGO Therapeutics, Inc.

(Exact name of Registrant as specified in its Charter)


Delaware	84-4080422
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
835 Industrial Road, Suite 400 San Carlos, California	94070
(Address of principal executive offices)	(Zip Code)

(650) 499-8950 (Registrant’s telephone number, including area code)

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

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common stock, par value $0.001 per share

     CRGX

     Nasdaq Global Select Market

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 ☒ No ☐

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 ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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. ☐

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

As of August 1, 2025, the registrant had 48,364,311 shares of common stock, $0.001 par value per share, outstanding.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward‑looking statements involve substantial risks, uncertainties and assumptions. All statements in this Quarterly Report on Form 10-Q, other than statements of historical fact, including, without limitation, statements regarding our strategy, future operations, future operating expenses, future financial position, future revenue, projected costs, prospects, plans, intentions, expectations, goals and objectives may be forward‑looking statements. The words “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should,” “would” or “will,” and similar expressions (including the negatives thereof) are intended to identify forward‑looking statements, although not all forward‑looking statements contain these identifying words. The forward-looking statements in this report include, but are not limited to, statements about:

•

our ability to successfully consummate the transaction contemplated pursuant to the Merger Agreement (as defined in the Note 1 to the condensed financial statements) or, if we are not successful in consummating such transaction, our ability to successfully identify and implement any other strategic alternative;

•

our ability to avoid or mitigate operational and/or financial risks associated with the successful completion of a strategic alternative;

•

the possibility that our board of directors may decide to pursue a dissolution and liquidation, if a strategic transaction is not consummated, and the amount of cash available for distribution to our stockholders in such event;

•

our ability to realize the level of the cost reductions that we expect from restructuring our operations, which may adversely impact our business and results of operations;

•

our ability to retain key remaining management personnel;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected terms of patent protection;

•

potential claims relating to our intellectual property and third-party intellectual property;

•

estimates of our expenses, future revenue, and capital requirements;

•

our future financial performance;

•

the pursuit of, potential for and execution of strategic options for our business;

•

our expectations regarding the time during which we will be an emerging growth company under the JOBS Act and a smaller reporting company as defined in Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the Exchange Act); and

•

other risks and uncertainties, including those listed under the caption “Risk Factors” in this Quarterly Report on Form 10-Q.

We have based these forward-looking statements largely on our current expectations, estimates, forecasts and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all

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potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website, Securities and Exchange Commission filings, webcasts, press releases and conference calls. We use these mediums, including our website, to communicate with the public about our company, our business and other issues. It is possible that the information that we make available may be deemed to be material information. We, therefore, encourage investors and others interested in our company to review the information that we make available on our website.

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		Page

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations and Comprehensive Loss	2
	Condensed Statements of Stockholders’ Equity	3
	Condensed Statements of Cash Flows	4
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
Signatures		43

iii

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

CARGO THERAPEUTICS, INC.

Condensed Balance Sheets

(in thousands, except share and per share data)


	June 30, 2025			December 31, 2024
	(Unaudited)			(Note 2)
Assets
Current assets:
Cash and cash equivalents	$	107,746		$	64,380
Short-term marketable securities		144,821			275,324
Assets held for sale		479			—
Restricted cash		567			—
Prepaid expenses and other current assets		4,992			5,308
Total current assets		258,605			345,012
Long-term marketable securities		—			28,388
Operating lease right-of-use assets		—			23,481
Restricted cash		—			567
Property and equipment, net		—			11,295
Other non-current assets		—			5,311
Total assets	$	258,605		$	414,054

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	8,668		$	2,441
Accrued clinical and research and development expenses		277			12,521
Accrued expenses and other current liabilities		739			9,437
Accrued restructuring costs		10,646			—
Operating lease liabilities, current		578			628
Total current liabilities		20,908			25,027
Operating lease liabilities, non-current		—			28,798
Total liabilities		20,908			53,825

Stockholders’ equity:
Common stock		46			46
Additional paid-in capital		684,743			672,540
Accumulated other comprehensive income		(9	)		291
Accumulated deficit		(447,083	)		(312,648	)
Total stockholders’ equity		237,697			360,229
Total liabilities and stockholders’ equity	$	258,605		$	414,054

The accompanying notes are an integral part of these unaudited condensed financial statements.

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CARGO THERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Loss

(unaudited, in thousands, except share and per share data)


	Three months ended June 30,						Six months ended June 30,
	2025			2024			2025			2024
Operating expenses:
Research and development	$	7,509		$	37,458		$	38,146		$	67,961
General and administrative		8,292			11,860			19,800			22,163
Restructuring, impairment, and costs of suspended programs		37,098			—			83,378			—
Total operating expenses		52,899			49,318			141,324			90,124
Loss from operations		(52,899	)		(49,318	)		(141,324	)		(90,124	)
Interest income		3,269			4,987			7,207			9,992
Other expense, net		(307	)		(17	)		(318	)		(27	)
Net loss	$	(49,937	)	$	(44,348	)	$	(134,435	)	$	(80,159	)
Other comprehensive loss:
Unrealized loss on marketable securities		(105	)		(44	)		(300	)		(323	)
Comprehensive loss	$	(50,042	)	$	(44,392	)	$	(134,735	)	$	(80,482	)
Net loss per share attributable to common stockholders, basic and diluted	$	(1.04	)	$	(1.02	)	$	(2.80	)	$	(1.90	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		48,133,609			43,344,345			47,993,622			42,170,123

The accompanying notes are an integral part of these unaudited condensed financial statements.

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CARGO THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity

(unaudited, in thousands, except share data)


							Accumulated
	Common Stock				Additional Paid-In		Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balances at December 31, 2024		46,042,504	$	46	$	672,540	$	291		$	(312,648	)	$	360,229
Exercise of stock options		12,447		—		38		—			—			38
Vesting of restricted stock awards		—		—		7		—			—			7
Stock-based compensation		—		—		6,876		—			—			6,876
Net loss		—		—		—		—			(84,498	)		(84,498	)
Other comprehensive loss		—		—		—		(195	)		—			(195	)
Balances at March 31, 2025		46,054,951		46		679,461		96			(397,146	)		282,457
Exercise of stock options		5,031		—		5		—			—			5
Vesting of restricted stock units		438,914		—		—		—			—			—
Vesting of restricted stock awards		—		—		19		—			—			19
Stock-based compensation		—		—		5,258		—			—			5,258
Net loss		—		—		—		—			(49,937	)		(49,937	)
Other comprehensive loss		—		—		—		(105	)		—			(105	)
Balances at June 30, 2025		46,498,896	$	46	$	684,743	$	(9	)	$	(447,083	)	$	237,697


										Accumulated
	Common Stock						Additional Paid-In			Other Comprehensive			Accumulated			Total Stockholders’
	Shares			Amount			Capital			Loss			Deficit			Equity (Deficit)
Balances at December 31, 2023		41,205,551		$	41		$	550,491		$	—		$	(145,146	)	$	405,386
Exchange of common stock for pre-funded warrants		(1,842,499	)		(2	)		(23	)		—			—			(25	)
Exercise of stock options		5,595			—			26			—			—			26
Vesting of restricted stock awards		—			—			11			—			—			11
Stock-based compensation		—			—			3,904			—			—			3,904
Net loss		—			—			—			—			(35,811	)		(35,811	)
Other comprehensive loss		—			—			—			(279	)		—			(279	)
Balances at March 31, 2024		39,368,647			39			554,409			(279	)		(180,957	)		373,212
Issuance of common stock in private placement, net of issuance costs of $7,119		6,471,000			7			102,881			—			—			102,888
Exercise of stock options		22,744			—			80			—			—			80
Vesting of restricted stock awards		—			—			11			—			—			11
Stock-based compensation		—			—			4,302			—			—			4,302
Net loss		—			—			—			—			(44,348	)		(44,348	)
Other comprehensive loss		—			—			—			(44	)		—			(44	)
Balances at June 30, 2024		45,862,391		$	46		$	661,683		$	(323	)	$	(225,305	)	$	436,101

The accompanying notes are an integral part of these unaudited condensed financial statements.

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CARGO THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(unaudited, in thousands)


	Six months ended June 30,
	2025			2024
OPERATING ACTIVITIES
Net loss	$	(134,435	)	$	(80,159	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		12,134			8,206
Amortization of operating lease right-of-use assets		1,080			2,762
Depreciation		712			1,165
Impairment of long-lived assets		10,197			—
Acquired in-process research and development		665			150
Accretion on investments in marketable securities		(1,478	)		(3,636	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		316			(973	)
Other non-current assets		5,311			13
Accounts payable		6,533			2,323
Accrued clinical and research and development expenses		(11,721	)		6,130
Accrued expenses and other current liabilities		(8,590	)		(1,132	)
Accrued restructuring costs		10,646			—
Operating lease liabilities		(6,447	)		(79	)
Net cash used in operating activities		(115,077	)		(65,230	)
INVESTING ACTIVITIES
Purchases of marketable securities		(81,687	)		(360,382	)
Proceeds from sales and maturities of marketable securities		241,756			73,799
Purchase of property and equipment		(481	)		(2,752	)
Purchase of in-process research and development		(1,188	)		(830	)
Net cash provided by (used in) investing activities		158,400			(290,165	)
FINANCING ACTIVITIES
Proceeds from issuance of common stock in private placement, net of issuance costs		—			103,269
Proceeds from exercise of stock options		43			106
Payment of deferred initial public offering costs		—			(105	)
Payment of transaction costs for exchange of common stock for warrants		—			(25	)
Net cash provided by financing activities		43			103,245
Net increase (decrease) in cash, cash equivalents and restricted cash		43,366			(252,150	)
Cash, cash equivalents, and restricted cash at beginning of period		64,947			406,299
Cash, cash equivalents, and restricted cash at end of period	$	108,313		$	154,149
COMPONENTS OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents	$	107,746		$	153,582
Restricted cash		567			567
Total cash, cash equivalents, and restricted cash	$	108,313		$	154,149

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CARGO THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(unaudited, in thousands)


	Six months ended June 30,
	2025		2024
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
Exchange of common stock for pre-funded warrants	$	—	$	37,600
Purchase of property and equipment in accounts payable and accrued expenses and other current liabilities	$	—	$	754
In-process research and development costs in accounts payable and accrued clinical and research and development expenses	$	—	$	493
Deferred issuance costs related to the private placement, included in accounts payable, accrued expenses and other current liabilities	$	—	$	381

The accompanying notes are an integral part of these unaudited condensed financial statements.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

1. Organization

Description of the business

CARGO Therapeutics, Inc. (the “Company”) was incorporated in the state of Delaware in December 2019 as Syncopation Life Sciences, Inc. and changed its name to CARGO Therapeutics, Inc. in September 2022. The Company is a biotechnology company historically focused on designing, engineering and developing next generation, potentially curative cell therapies for cancer patients.

Restructuring

On January 28, 2025, the Company’s board of directors (the “Board”) approved a reduction in the Company’s workforce by approximately 50% in connection with the Company’s election to discontinue the Phase 2 study of firicabtagene autoleucel (firi-cel). The Company had no plans for restructuring as of December 31, 2024. Therefore, no restructuring expense or related liability was recorded as of December 31, 2024.

On March 18, 2025, in connection with the Company’s ongoing strategic assessment and evaluation of strategic options, the Company announced that the Board determined to suspend various development efforts and continue to pursue potential strategic alternatives such as a reverse merger, other business combination, dissolution and wind-down, or cash sale transaction. On March 13, 2025, the Board also approved a reduction in the Company’s current workforce of approximately 90% (collectively with the January 28, 2025 reduction in force, the “2025 Restructuring”).

In connection with the 2025 Restructuring, the Company recorded a restructuring charge of $37.1 million and $83.4 million during the three and six months ended June 30, 2025, respectively. The restructuring charge includes: (i) severance and termination benefit expense for employees terminated with separation dates between April 2025 and November 2025, (ii) a charge related to the impairment of property and equipment, including research and development equipment, leasehold improvements, furniture and fixtures, computer equipment and software, and (iii) contract termination and other costs. Refer to Note 10 for additional information on the 2025 Restructuring.

Since its founding through the 2025 Restructuring, the Company has devoted substantially all of its resources to organizing and staffing the Company, business planning, raising capital, establishing licensing arrangements, building its proprietary platform technologies, discovering its product candidates, establishing its intellectual property portfolio, conducting research, preclinical studies, and clinical trials, establishing arrangements with third parties for the manufacture of its product candidates and related raw materials, and providing general and administrative support for these operations.

The Agreement and Plan of Merger

On July 7, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Concentra Biosciences, LLC, a Delaware limited liability company (“Concentra”), and Concentra Merger Sub III, Inc., a Delaware corporation and a wholly owned subsidiary of Concentra (“Merger Sub”). The Merger Agreement provides for, among other things: (i) the acquisition of all of the Company’s outstanding shares of common stock by Concentra through a cash tender offer (the “Offer”) by Merger Sub, for a price per share of the common stock of (A) $4.379 in cash (the “Cash Amount”), subject to applicable tax withholding and without interest; plus (B) one contingent value right (“CVR”, and collectively with the Cash Amount, the “Offer Price”) and (ii) the merger of Merger Sub with and into the Company (the “Merger”) with the Company surviving the Merger.

Refer to Note 12—Subsequent Events for additional details.

Liquidity

Since inception, the Company has incurred significant operating losses and negative cash flows, and it expects that it will continue to incur costs and expenditures in connection with its streamlined operations. As of and for the

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

six months ended June 30, 2025, the Company had an accumulated deficit of $447.1 million, cash and cash equivalents and marketable securities of $252.6 million and negative cash flows from operations of $115.1 million. The Company believes its existing cash and cash equivalents and marketable securities will be sufficient to support operations for at least 12 months from the issuance of these unaudited condensed financial statements.

2. Summary of Significant Accounting Policies

Basis of presentation

The Company has prepared the accompanying condensed financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. The financial statements are presented in U.S. dollars.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.

Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the accrual of research and development expenses, impairment of long-lived assets, valuation of deferred tax assets, the fair value of equity instruments, equity-based instruments, stock-based compensation, and the determination of the incremental borrowing rate.

Unaudited interim condensed financial statements

The condensed balance sheet as of June 30, 2025 and the condensed statements of operations and comprehensive loss, and condensed statements of stockholders’ equity for the three and six months ended June 30, 2025, and 2024 and condensed statements of cash flows for the six months ended June 30, 2025, and 2024 are unaudited. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented. The condensed results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The condensed balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date. These condensed financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 12, 2025.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

Restructuring, Impairment and Costs of Suspended Programs

The Company recognizes restructuring charges related to the 2025 Restructuring when liabilities have been incurred. In connection with these activities, the Company records restructuring charges at fair value for:

•

severance and benefit expense in full for employees who had no requirements for future service when the 2025 Restructuring was approved,

•

severance and benefit expense ratably over the service period for employees who are required to render services to receive their severance and benefits,

•

impairment of long-lived assets classified as “held and used” when the carrying value of the asset group is not deemed to be recoverable, impairment of long-lived assets classified as “held for sale” when the carrying value of the asset group exceeds the fair value less cost to sell, and

•

contract termination costs when the contract is cancelled in accordance with its terms.

See Note 10 for additional information on the above restructuring charges.

Assets Held for Sale

An asset is considered to be held for sale when all the following criteria are met: (i) management commits to a plan to sell the asset; (ii) it is unlikely that the disposal plan will be significantly modified or discontinued; (iii) the asset is available for immediate sale in its present condition; (iv) actions required to complete the sale of the asset have been initiated; (v) sale of the asset is probable and the completed sale is expected to occur within one year; and (vi) the asset is actively being marketed for sale at a price that is reasonable given its current market value. The assets classified as held for sale are recorded at the lower of the carrying value and estimated fair value, less cost to sell.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker, the Company’s Interim Chief Executive Officer, in deciding how to allocate resources to an individual segment and in assessing performance. The Company has determined that it operates as one operating and reporting segment (See Note 11).

Marketable securities

The Company invests in marketable securities, primarily securities issued by the U.S. government and its agencies. All marketable securities have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its marketable debt securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company evaluates securities for impairment at the end of each reporting period. Factors considered in the evaluation include whether a decline in fair value below the amortized cost basis is due to credit-related factors or non-credit-related factors, the financial condition and near-term prospect of the issuer, and the Company’s intent and ability to hold the investment to allow for anticipated recovery in fair value. A credit-related impairment is recognized as an allowance on the balance sheet with a corresponding adjustment to earnings. Any impairment that is not credit-related is reported as a component of other comprehensive loss. Realized gains and losses are included in other expense, net. The cost of securities sold is based on the specific-identification method. Interest earned on marketable securities is included in interest income. Accrued interest on marketable securities is included in prepaid expenses and other current assets on the balance sheets.

Net loss per share attributable to common stockholders

Basic net loss per share attributable to common stockholders is computed using the weighted-average number of shares of common stock outstanding during the period excluding unvested restricted stock subject to repurchase. Basic net loss per share includes pre-funded warrants issued in January 2024 because the pre-funded warrants have a nominal exercise price of $0.001 per share and they were fully vested and exercisable upon their issuance. Diluted net

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

loss per share attributable to common stockholders is computed using the sum of the weighted-average number of shares of common stock outstanding during the period and the effect of dilutive securities.

As the Company was in a net loss position for the periods presented, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders because the effects of potentially dilutive securities are antidilutive.

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures, which improves segment disclosure requirements, primarily through enhanced disclosure requirements for significant segment expenses. The improved disclosure requirements apply to all public entities that are required to report segment information, including those with only one reportable segment. The Company adopted the guidance for interim periods in the fiscal period beginning January 1, 2025 and there was no impact on the Company’s reportable segments identified. Additional required disclosures have been added in Note 11.

Recently issued accounting pronouncements not yet adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes—Improvements to Income Tax Disclosures. ASU 2023-09 requires consistent categories and greater disaggregation of information in the rate reconciliation, income taxes paid disaggregated by jurisdiction and certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for the Company for annual periods beginning on January 1, 2025, with early adoption permitted. The Company is assessing the impact of the adoption of this standard on its financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items. The required information includes, but is not limited to, employee compensation and depreciation. The standard will be effective for the Company for annual periods beginning on January 1, 2027 and interim periods beginning on January 1, 2028, with early adoption permitted. The guidance is required to be applied on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating the effect that the adoption of this ASU may have on its financial statements.

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the accompanying financial statements and disclosures.

3. Fair Value Measurement

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. The Company recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2, and Level 3 in any periods presented.

Carrying amounts of certain of the Company’s financial instruments including, cash and cash equivalents, prepaid expenses and other current assets, accounts payable, accrued clinical and research and development expenses, and accrued expenses and other current liabilities approximate fair value due to the short-term nature of these instruments.

The following table presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of June 30, 2025:


	Valuation	Amortized		Unrealized		Unrealized			Fair
	Hierarchy	Cost		Gains		Losses			Value
		(in thousands)
Assets:
Cash equivalents:
Money market funds	Level 1	$	106,801	$	—	$	—		$	106,801
Total		$	106,801	$	—	$	—		$	106,801

Short-term marketable securities:
U.S. government and agencies securities	Level 2	$	6,499	$	—	$	(5	)	$	6,494
U.S. Treasury securities	Level 2		138,331		16		(20	)		138,327
Total		$	144,830	$	16	$	(25	)	$	144,821

Total assets		$	251,631	$	16	$	(25	)	$	251,622

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

The Company’s marketable securities as of June 30, 2025 mature within one year.

The following table presents the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2024:


	Valuation	Amortized		Unrealized		Unrealized			Fair
	Hierarchy	Cost		Gains		Losses			Value
		(in thousands)
Assets:
Cash equivalents:
Money market funds	Level 1	$	63,354	$	1	$	—		$	63,355
Total		$	63,354	$	1	$	—		$	63,355

Short-term marketable securities:
U.S. government and agencies securities	Level 2	$	102,094	$	138	$	(8	)	$	102,224
U.S. Treasury securities	Level 2		172,906		199		(5	)		173,100
Total		$	275,000	$	337	$	(13	)	$	275,324

Long-term marketable securities:
U.S. Treasury securities	Level 2	$	28,422	$	7	$	(41	)	$	28,388
Total		$	28,422	$	7	$	(41	)	$	28,388

Total assets		$	366,776	$	345	$	(54	)	$	367,067

The valuation techniques used to measure the fair values of the Company’s Level 2 financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices when available. If quoted market prices are not available, the fair value for the security is estimated under the market or income approach using pricing models with market observable inputs.

As of June 30, 2025, the Company does not hold any marketable securities that have been in a continuous unrealized loss position for over 12 months. For short-term marketable securities with an unrealized loss as of June 30, 2025, the unrealized losses were not due to credit-related factors, the Company does not intend to sell these short-term investments, and it is more likely than not that the Company will hold these short-term investments until maturity or a recovery of the cost basis. Therefore, the Company did not recognize an allowance for credit-related losses or an other-than-temporary impairment charge for any of its investments during the three and six months ended June 30, 2025, and 2024. Realized gains (losses) were not material during the three and six months ended June 30, 2025, and 2024.

4. Balance Sheet Components

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following:


	June 30, 2025		December 31, 2024
	(in thousands)
Prepaid research and development	$	1,335	$	1,079
Interest receivable		710		1,363
Other receivables		92		672
Other prepaid expenses		2,855		2,194
Total prepaid expenses and other current assets	$	4,992	$	5,308

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

Property and equipment, net

Property and equipment, net consisted of the following:


	December 31, 2024
	(in thousands)
Leasehold improvements	$	871
Computer equipment		680
Furniture and fixtures		120
Laboratory equipment		13,832
Construction in progress		86
Property and equipment at cost		15,589
Less: accumulated depreciation		(4,294	)
Property and equipment, net	$	11,295

Depreciation expense for the three months ended June 30, 2025, and 2024 was $40,000 and $0.6 million, respectively. Depreciation expense for the six months ended June 30, 2025, and 2024 was $0.7 million and $1.2 million, respectively.

Pursuant to the amendment to transfer of its lease in San Carlos to the tenant executed in June 2025 (see Note 5), the Company agreed to assign certain items of property and equipment located within the leased premises in San Carlos to the new tenant free of charge. As a result, the Company concluded its remaining property and equipment met the definition of “held for sale” as of June 30, 2025 and impaired the carrying amount of the assets to their fair value of zero except for $0.5 million of assets expected to be sold to a third party in the third quarter of 2025. The Company recorded an impairment charge of $2.2 million and $10.2 million in restructuring, impairment and costs of suspended programs in the condensed statement of operations during the three and six months ended June 30, 2025, respectively. No such impairment charge was recorded during the three and six months ended June 30, 2024.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:


	June 30, 2025		December 31, 2024
	(in thousands)
Accrued compensation and related expenses	$	25	$	7,894
Accrued purchases of property and equipment		—		82
Accrued deferred offering costs		—		82
Other		714		1,379
Total accrued expenses and other current liabilities	$	739	$	9,437

5. Leases

In December 2023, the Company entered into a 7-year lease for 99,557 square feet of lab and office space in San Carlos, California. The agreement provides for two options to renew for three years each, which the Company is not reasonably certain to exercise. The Company is required to maintain a letter of credit for $0.6 million which has been classified as restricted cash on the unaudited condensed balance sheets.

In July 2024, the Company entered into an agreement with a third party to sublease approximately 38,200 square feet of the Company’s lab and office space in San Carlos, California. The sublease term ends on June 30, 2026 with the third party having the option to extend the term for 12 months, unless sooner terminated or cancelled in accordance with the terms and conditions of the sublease or the Company intends to reoccupy the space. The sublease did not relieve the Company of its obligations under the primary lease, and therefore the Company did not adjust the right-of-use asset and the operating lease liability.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

In June 2025, the Company entered into an agreement with the landlord of the San Carlos leased premises (“Landlord”) and a third party (“Assignee”) to assign its lease in San Carlos and related sublease to the Assignee. Upon execution of the assignment, the Company paid a termination penalty of $35.8 million to the Landlord. Effective on the latest of the following dates: (1) the date the Landlord delivers a signed consent to assign the lease, (2) the date the leased premises are delivered to the Assignee, or (3) September 1, 2025, the Company will be relieved of its obligations under the lease, and the Assignee will assume all of the rights and obligations under the lease and related sublease. Additionally, the Company has agreed to assign certain items of property and equipment located within the leased premises in San Carlos to the Assignee free of charge. The Company accounted for this amendment as a lease modification and reduced the operating lease liability by $29.2 million, and reduced the carrying amount of the right-of-use asset by $22.4 million to zero. The Company recognized the excess reduction of the lease liability of $6.8 million as an offset to the termination-related expenses of $39.0 million, recognizing a net expense of $32.2 million related to the modification in restructuring, impairment and costs of suspended programs in the condensed statement of operations during the three and six months ended June 30, 2025. The termination-related expenses consisted of a $35.8 million of termination penalty, $2.6 million of broker fees and $0.6 million of non-reimbursable one-time payment represented by the security deposit paid to the Landlord on behalf of the Assignee.

The Company previously leased 31,117 square feet of lab and office space in San Mateo, California which expired in November 2024.

The future lease payments associated with the Company’s operating lease liabilities as of June 30, 2025 were as follows:


	Amount
	(in thousands)
Total undiscounted lease payments through September 1, 2025	$	584
Less: imputed interest		(6	)
Total operating lease liabilities	$	578

The future cash receipts associated with the Company’s sublease as of June 30, 2025 through the assignment date of September 1, 2025 are $0.4 million.

A summary of total lease costs and other information for the periods relating to the Company’s operating leases was as follows:


	Three months ended June 30,					Six months ended June 30,
	2025			2024		2025			2024
	(in thousands)
Operating lease cost	$	1,567		$	2,418	$	3,134		$	4,667
Variable lease cost		678			1,451		1,578			1,678
Termination-related costs, net		32,242			—		32,242			—
Sublease income		(568	)		—		(1,136	)		—
Total lease cost	$	33,919		$	3,869	$	35,818		$	6,345


	June 30, 2025	December 31, 2024
	(in thousands)
Other information:
Weighted-average remaining lease term (in years)	0.2	6.3
Weighted-average discount rate	12.7%	13.7%

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

Supplemental cash flow and non-cash information related to the Company’s operating leases were as follows:


	Six months ended June 30,
	2025		2024
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	1,753	$	1,985
Cash paid for lease modifications recognized in restructuring, impairment and costs of suspended programs	$	36,367	$	—
Decrease in lease liabilities from lease modifications	$	29,155	$	324

6. Common stock

Common stock issued and outstanding on the unaudited condensed balance sheets and statements of stockholders’ equity includes shares related to restricted stock that are subject to repurchase and therefore are excluded from the reserved common stock in the table below.

The Company’s reserved common stock, on an as-converted basis for issuance was as follows:


	June 30, 2025		December 31, 2024
Common stock options issued and outstanding under the Plan		3,766,330		6,029,631
Common stock issuable upon exercise of pre-funded warrants		1,842,499		1,842,499
Remaining shares available for issuance under the Plan		6,720,532		3,422,507
Remaining shares available for issuance under the employee stock purchase plan		798,780		798,780
Outstanding restricted stock units		285,475		14,000
Total reserved common stock		13,413,616		12,107,417

Pre-funded Warrants – Exchange Agreement

In January 2024, the Company entered into an exchange agreement (the “Exchange Agreement”), with certain stockholders (the “Exchanging Stockholders”), pursuant to which the Company exchanged an aggregate of 1,842,499 shares of the Company’s common stock owned by the Exchanging Stockholders for pre-funded warrants to purchase an aggregate of 1,842,499 common stock. The warrants have an exercise price of $0.001 per share and no expiration date. The pre-funded warrants are exercisable immediately and no additional consideration was rendered in the exchange. Holders of the pre-funded warrants (together with their affiliates and other attribution parties) may not exercise any portion of a pre-funded warrant if after giving effect to such exercise the holder, together with its affiliates, would beneficially own more than 9.99% (the “Exercise Limitation”) of the Company’s outstanding common stock immediately after exercise. At the holders’ election, the Exercise Limitation may be increased or decreased to any other percentage not in excess of 9.99% and will be effective 61 days after notice of such change to the Company.

The Company determined the fair value of the pre-funded warrants issued was $37.6 million which was equal to the fair value of the shares of the exchanged common stock on the date of transaction.

Private Placement

On May 30, 2024, the Company sold and issued 6,471,000 shares of its common stock to certain healthcare-focused institutional investors in a private placement (the “Private Placement”) at $17.00 per share for gross proceeds of approximately $110.0 million. In June 2024, the Company filed a Registration Statement on Form S-1 with the SEC to register the shares of common stock sold in the Private Placement. The Company raised net proceeds of $102.9 million, after deducting placement agent fees and offering expenses of $7.1 million.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

At-the-Market Equity Offering Program

In December 2024, the Company entered into a sales agreement, or the Sales Agreement, with TD Securities (USA) LLC (“TD Cowen”), to sell its shares of common stock having an aggregate offering price of up to $200.0 million from time to time through an “at-the-market” equity offering program under which TD Cowen acts as the Company’s agent. No shares of the Company’s common stock were issued and sold under the Sales Agreement through June 30, 2025. As of June 30, 2025, the Company had $200.0 million of capacity available to it under its “at-the-market” equity offering program. Additionally, pursuant to the Merger Agreement, the Company has agreed to certain customary restrictions on its ability to issue, grant, deliver, sell, authorize, pledge or otherwise encumber any shares of its capital stock or other securities, subject to certain exceptions set forth in the Merger Agreement which do not permit any sales pursuant to the Sales Agreement. As part of the wind-down of the Company’s operations, the Company terminated the Sales Agreement in August 2025.

7. Stock-Based Compensation

2023 Incentive Award Plan

In November 2023, the Board adopted the 2023 Incentive Award Plan (the “2023 Plan”). On January 1, 2025, the shares of common stock authorized for issuance under the 2023 Plan increased by 2,302,126 shares and as of June 30, 2025, a total of 6,720,532 shares of common stock were available for future issuance under the 2023 Plan.

Stock options

Stock option activity for the six months ended June 30, 2025 was as follows:


	Number of Options			Weighted-Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2024		6,029,631		$	14.58		8.83	$	22,452
Granted		175,000			4.35
Exercised		(17,478	)		2.49
Cancelled and forfeited		(2,420,823	)		16.06
Outstanding at June 30, 2025		3,766,330		$	13.21		4.57	$	135
Vested and expected to vest, June 30, 2025		3,766,330		$	13.21		4.57	$	135
Exercisable at June 30, 2025		2,653,982		$	13.09		2.83	$	98

Aggregate intrinsic value in the above table is calculated as the difference between the exercise price of the options and the estimated fair value of the Company’s common stock as of June 30, 2025 and December 31, 2024.

The estimated weighted-average grant-date fair value of options granted during the six months ended June 30, 2025, and 2024 was $3.25 and $18.73 per share, respectively. The aggregate intrinsic value of options exercised during the three months ended June 30, 2025, and 2024 was $17,000 and $0.4 million, respectively, and during the six months ended June 30, 2025, and 2024 was $0.1 million and $0.5 million, respectively.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

Restricted stock awards

The following table summarizes the Company’s restricted stock awards activity.


	Number of Awards			Weighted-Average Grant Date Fair Value
Unvested as of December 31, 2024		46,562		$	0.67
Vested		(26,260	)		0.67
Unvested as of June 30, 2025		20,302		$	0.67

The purchase price of the restricted stock awards is the fair value of common stock as determined by the Board.

The Company recorded less than $0.1 million as a share repurchase liability for restricted stock awards in accrued expenses and other current liabilities on the unaudited condensed balance sheets as of June 30, 2025 and December 31, 2024.

Restricted stock units

The following table summarizes the Company’s restricted stock units activity.


	Number of Awards			Weighted-Average Grant Date Fair Value
Unvested as of December 31, 2024		14,000		$	18.27
Granted		1,249,924			4.18
Vested		(438,914	)		4.11
Cancelled or forfeited		(539,535	)		4.21
Unvested as of June 30, 2025		285,475		$	4.90

Stock‑based compensation expense

Total stock-based compensation expense recorded in the unaudited condensed statements of operations and comprehensive loss was as follows:


	Three months ended June 30,				Six months ended June 30,
	2025		2024		2025		2024
	(in thousands)
General and administrative	$	3,559	$	2,601	$	8,290	$	4,841
Research and development		1,699		1,701		3,844		3,365
Total stock-based compensation expense	$	5,258	$	4,302	$	12,134	$	8,206

The estimated grant-date fair value of awards granted was calculated based on the following assumptions:


	Six months ended June 30,
	2025	2024
Expected term (in years)	5.5	5.5 - 6.1
Expected volatility	91.8%	85.7% - 104.1%
Expected dividend	—	—
Risk-free interest rate	4.0%	4.2% - 4.7%

There were no stock options granted during the three and six months ended June 30, 2025.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

As of June 30, 2025, the Company had $3.4 million of unrecognized stock-based compensation, which is net of any stock-based compensation for awards that will be forfeited as a result of the 2025 Restructuring. This unrecognized stock-based compensation is expected to be recognized through November 2025 or the closing of the Merger, if earlier.

Employee Stock Purchase Plan

On November 14, 2023, the Board adopted the 2023 Employee Stock Purchase Plan (the “ESPP”) which became effective immediately. As of June 30, 2025, there were 798,780 shares available for future issuance under the ESPP. There were no shares issued under the ESPP during the three and six months ended June 30, 2025, and 2024.

Accelerated Vesting of Equity Awards held by Certain Executives

In the six months ended June 30, 2025, in connection with the planned terminations of certain executives in April 2025, May 2025, July 2025 and November 2025, and in accordance with the terms of their respective employment agreements and the original terms of the awards, the vesting of 384,591 options, 84,273 restricted stock units and 11,818 restricted stock awards was accelerated. The impact of the acceleration of vesting on the stock-based compensation expense for the three and six months ended June 30, 2025 was $1.5 million and $3.4 million, respectively. The Company expects to recognize the remaining $0.4 million of the stock-based compensation expense related to the accelerated vesting in the period from July 2025 through November 2025.

8. License and Research and Development Agreements

Stanford license agreement

In August 2022, the Company entered into a license agreement with the Board of Trustees of the Leland Stanford Junior University (“Stanford University”) relating to the Company’s platform technologies relating to CAR T-cell therapies (the “Stanford License”). Pursuant to the Stanford License, Stanford University granted the Company a worldwide, exclusive license under certain patent rights, and a worldwide non-exclusive license under certain technology, in each case, owned or controlled by Stanford University, to make, use and sell products, methods or services in the field of human therapeutic and diagnostic products. The licensed patent rights cover platform technology relating to the use of CD2/CD58 co-stimulatory signaling in cell therapy.

As consideration for the licenses granted under the Stanford License, the Company made an upfront payment of $50,000 and issued 67,605 shares of its common stock with a fair value of $0.1 million, of which 22,317 shares were issued to Stanford University, 27,100 shares were issued to two non-profit organizations that supported the research, and 18,188 shares were issued to various Stanford University inventors. The Company determined that the purchase of the licenses under the Stanford License represented an asset acquisition as it did not meet the definition of a business. As the acquired licenses represented in-process research and development (“IPR&D”) assets with no alternative future use, the Company recorded the upfront consideration of $0.2 million as research and development expense in August 2022, upon entering into the Stanford License.

No research and development expense pursuant to the Stanford License was recorded during both the three and six months ended June 30, 2025, and 2024.

In addition to annual license maintenance fees of up to $0.1 million per year, the Company may be required to pay up to $7.5 million upon achievement of sales milestones, up to $4.0 million upon achievement of development milestone events for each product covered by licensed patent rights, including upon initiation of specific clinical trials or receipt of regulatory approvals, up to $50,000 in a milestone payment upon achievement of a certain commercial milestone event, up to $0.5 million in a milestone payment upon achievement of certain additional development milestone events, and a double-digit percentage of milestone payments on the first two licensed non-patent products and, subject to certain royalty reductions, as applicable, low single-digit percentage royalties on net sales of products that are covered by the licensed patent rights or licensed technology. Subject to the terms of the Stanford License, the Company also agreed to pay Stanford University a certain percentage of non-royalty sublicense-related revenue that the Company receives from third-party sublicenses.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

Oxford license and supply agreement

In June 2022, the Company entered into a license and supply agreement (the “Oxford Agreement”), with Oxford Biomedica (UK) Limited (“Oxford”) for the manufacture and supply of lentiviral vectors for clinical and potentially commercial purposes by the Company.

In June 2025, the Company terminated the Oxford Agreement and was released of all obligations thereunder. The Company recorded research and development expense of $0.5 million related to the achievement of certain development milestones during the three and six months ended June 30, 2025. No research and development expense was recorded during the three and six months ended June 30, 2024.

The Company recorded certain manufacturing slot cancellation fees within restructuring, impairment, and costs of suspended programs in the Company’s condensed statement of operations and comprehensive loss (see Note 10).

National Cancer Institute

In March 2022, the Company entered into an exclusive license agreement (the “2022 NCI License”) with the U.S. Department of Health and Human Services, as represented by The National Cancer Institute (“NCI”), pursuant to which the Company obtained a worldwide, royalty-bearing, exclusive license under certain patent rights to make, use, sell, offer for sale, and import certain autologous products covered by such licensed patents in the field of CAR-T immunotherapies for the treatment of B-cell malignancies that express CD22, and a non-sublicensable exclusive license for evaluation purposes only to make, use, and import, but not sell, certain allogenic products and to practice processes in the field of certain CAR-T immunotherapies for the treatment of B-cell malignancies that express CD22 for evaluation purposes, with an exclusive option to negotiate a non-exclusive or exclusive commercialization license. In March 2024, the Company exercised its right to extend the exclusive option one time for an additional year and paid an extension royalty of $50,000. The Company allowed the exclusive option to lapse without exercise on March 16, 2025.

The Company recorded research and development expense related to the license of less than $0.1 million and $0.1 million during the six months ended June 30, 2025, and 2024, respectively. No research and development expense related to the license was recorded during the three months ended June 30, 2025, and 2024.

In June 2025, the Company and the NCI reached an agreement about the amounts payable under the 2022 NCI License, including $0.2 million to be paid in connection with the achievement of the change in control milestone. Upon NCI's receipt of the agreed upon amounts, the 2022 NCI License was terminated. The Company paid $0.2 million as of June 30, 2025 and has no future obligations under the 2022 NCI License.

In February 2023, the Company entered into an exclusive license agreement (the “2023 NCI License”) with the NCI, pursuant to which the Company obtained a worldwide, royalty-bearing, exclusive license under certain patent rights owned by the NCI to make, use, sell and import products and to practice processes in the field of certain CAR-T immunotherapies for the treatment of B-cell malignancies, wherein the T cells are engineered to express CD22 in combination with binders, CARs or other receptors targeting CD19, CD20, and/or CD79b; and at least one of the following: manufacturing the product with the STASH platform technology and/or a technology to activate CD2 signaling in the CAR T cell.

As consideration for the licenses granted under the 2023 NCI License, the Company agreed to pay the NCI a non-refundable license fee of $0.3 million in three installments whereby the first installment was payable within 60 days of the execution of the agreement and the remaining two payments are due on the first and second anniversaries of the effective date of the agreement. Additionally, the Company agreed to reimburse the NCI for $0.1 million in expenses incurred by the NCI prior to January 1, 2022, related to the preparation, filing, prosecution, and maintenance of all patent applications and patents included in the license under the 2023 NCI License. The Company determined that the purchase of the license under the 2023 NCI License represented an asset acquisition as it did not meet the definition of a business. As the acquired license represented IPR&D assets with no alternative future use, upon entering the 2023 NCI License in February 2023, the Company recorded the initial consideration of $0.4 million under the 2023 NCI License, consisting of the non-refundable upfront fees, as research and development expense. The Company accrued these amounts of which $0.1 million was recorded as accrued clinical and research and development expenses on the balance sheet as of December 31, 2024, and was paid in full as of June 30, 2025. The Company recorded research and development expense of less than $0.1 million during each of the six months ended June 30, 2025, and

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

2024. No research and development expense related to the license was recorded during the three months ended June 30, 2025, and 2024.

The Company agreed to pay up to $0.1 million in milestone payments upon achievement of certain regulatory milestone events, up to $1.7 million in milestone payments upon achievement of certain development milestone events including initiation of specific clinical trials or registration trials, and up to $16.0 million in milestone payments upon achievement of specific commercial milestone events. Subject to the terms of the 2023 NCI License, the Company also agreed to pay a low single-digit percentage on earned royalties on net sales of products covered by the licensed patent rights. The Company also agreed to make minimum annual royalty payments of $50,000 per year, which will be creditable against royalties due for sales in that year. In addition, the Company is obligated to pay the NCI a percentage of non-royalty revenue received by the Company from its right to sublicense at defined percentages. Additionally, if the Company is granted a PRV, the Company would be obligated to pay the NCI a minimum of $5.0 million upon the sale, transfer or lease of the PRV or $0.5 million upon submission of the PRV for use by the FDA. The Company is also obligated to pay the NCI a royalty based on a percentage of the fair market value of the consideration the Company receives for any assignment of the 2023 NCI License to a non-affiliate (upon the NCI’s prior written consent) or on an allocated portion of the fair value of consideration received in connection with a change in control (including an IPO). On the closing of the Company’s IPO in November 2023, the change in control milestone, as defined in the license agreement, was achieved.

Unless earlier terminated, the 2023 NCI License would expire upon the expiration of the last to expire of the licensed patent rights. The NCI may terminate or modify the 2023 NCI License in the event of an uncured material breach, including, but not limited to, if the Company does not meet certain milestones by certain dates, or upon certain insolvency events that remain uncured following the date that is 90 days following written notice of such breach or insolvency event. The Company may terminate the license, or any portion thereof, at its sole discretion at any time upon 60 days written notice to the NCI.

In June 2025, the Company and the NCI reached an agreement (“Settlement Agreement”) about the amounts payable under the 2023 NCI License including $0.1 million to be paid under in connection with the achievement of the change in control milestone. Under the terms of the Settlement Agreement, the 2023 NCI License will terminate on the earlier of: (1) July 31, 2025 (subsequently amended to September 15, 2025 – see Note 12); (2) the voluntary termination of the 2023 NCI License by the Company; or (3) the date of the license transfer to the third party (“License Assignment”), subject to approval by the NCI. As of June 30, 2025, the Company has no future obligations under the 2023 NCI License besides unbilled patent expenses related to the 2023 NCI License incurred by the NCI from January 2025 through the termination of the 2023 NCI License or the License Assignment, which are expected to be immaterial. If the License Assignment occurs, the Company will be required to pay an assignment royalty fee of $0.1 million to the NCI and will be relieved from unbilled patent expenses related to the 2023 NCI License incurred in 2025.

9. Net Loss Per Share

A reconciliation of net loss attributable to common stockholders and the number of shares in the calculation of basic and diluted loss per share was as follows:


	Three months ended June 30,						Six months ended June 30,
	2025			2024			2025			2024
	(in thousands, except share and per share amounts)
Numerator:
Net loss attributable to common stockholders	$	(49,937	)	$	(44,348	)	$	(134,435	)	$	(80,159	)
Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		48,133,609			43,344,345			47,993,622			42,170,123
Net loss per share attributable to common stockholders, basic and diluted	$	(1.04	)	$	(1.02	)	$	(2.80	)	$	(1.90	)

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

The following potentially dilutive shares were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented, because including them would have been anti-dilutive (on an as-converted basis):


	June 30,
	2025		2024
Outstanding stock options		3,766,330		5,973,422
Restricted stock awards subject to repurchase		20,302		128,698
Outstanding restricted stock units		285,475		—
Total		4,072,107		6,102,120

10. Restructuring, Impairment and Costs of Suspended Programs

In connection with the 2025 Restructuring, the Company reported the following costs in restructuring, impairment and costs of suspended programs:


	Three months ended June 30, 2025		Six months ended June 30, 2025
	(in thousands)
Severance and benefit expense	$	66	$	16,618
Impairment of long-lived assets		2,163		10,197
Contract termination and other restructuring costs		34,869		56,563
Total restructuring, impairment, and costs of suspended programs	$	37,098	$	83,378

Severance and Benefit Expense

Employees affected by the reduction in force under the 2025 Restructuring are entitled to receive severance payments and certain Company funded benefits. The restructuring charges are recorded at fair value.

With respect to the reduction in force announced in January 2025, the Company recognized severance and benefit expense in full for employees who had no requirements for future service when the reduction in force was approved by the Board. The Company recognized severance and benefit expense for employees who were required to render services to receive their severance and benefits ratably over the service period. The service period began on the communication date in January 2025 and was completed for most employees by April 1, 2025. The Company recognized $4.0 million in total severance and benefit expense during six months ended June 30, 2025, which was paid in April 2025. No severance and benefit expense for the reduction in force announced in January 2025 was recognized in the three months ended June 30, 2025.

With respect to the reduction in force announced in March 2025, the Company recognized $66,000 and $12.6 million in severance and benefit expense during the three and six months ended June 30, 2025, of which $4.9 million was accrued in accrued restructuring costs on the condensed balance sheet as of June 30, 2025. The Company recognizes severance and benefits ratably over the service period for remaining employees who are required to render services beyond the minimum retention period to receive their severance and benefits. For the remaining employees, the severance and benefit expense was recognized as of the communication date. The service period began on the communication date in March 2025 and is expected to be completed for all employees by November 2025. In the second half of 2025, the Company expects to recognize an additional $0.9 million for severance and benefit expense for the reduction in force announced in March 2025.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

Impairment of Long-Lived Assets

During the six months ended June 30, 2025, the Company’s decision in January 2025 to suspend the development of various programs was a triggering event that indicated the carrying value of long-lived assets, including its property and equipment, may not be recoverable. As part of its impairment analysis, the Company first assessed which long-lived assets have identifiable cash flows that are largely independent of the cash flows of other groups of assets and concluded that each class of long-lived assets represents an individual asset group, with the exception of leasehold improvements and furniture and fixtures which were determined to be in one asset group with the right-of-use asset for the Company's facility operating lease.

The Company concluded that all of its long-lived assets met the definition of “held for sale” as of June 30, 2025, and impaired the carrying amount to their fair value of zero, with the exception of $0.5 million of assets that it expects to sell in the third quarter (see Note 4). As a result of this analysis, the Company recorded an impairment charge for its remaining long-lived assets of $2.2 million and $10.2 million, in restructuring, impairment and costs of suspended programs in the condensed statement of operations for the three and six months ended June 30, 2025.

Contract Termination and Other Costs

Certain of the Company’s contracts primarily with contract development and manufacturing organizations include penalties for early termination of the contract. The Company also paid a penalty of $35.8 million in connection with the termination and assignment of the San Carlos lease (see Note 5). In connection with the 2025 Restructuring, the Company recorded $34.9 million and $56.6 million in contract termination and other restructuring costs during the three and six months ended June 30, 2025. Of these costs, $50.9 million was paid as of June 30, 2025, and $4.7 million was recorded as a liability as of June 30, 2025 in accrued restructuring costs on the condensed balance sheet. The Company will remeasure the liability to fair value as management’s estimates change until settlement.

As of the issuance date of these condensed financial statements, there is uncertainty regarding the timing of completion of all exit and disposal activities in connection with the 2025 Restructuring. The Company’s management targets to complete the activities by the end of 2025.

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

11. Segment Information

The Company has one reportable segment related to developing next-generation, potentially curative CAR T-cell therapies for cancer patients. The Company’s chief operating decision maker (“CODM”) is its Interim Chief Executive Officer. When evaluating the Company’s financial performance and making strategic decisions, the CODM focuses his review on the comparison of budget versus actual expenses incurred by function. The Company conducts operations solely within the United States and as such, all long-lived assets are located within the United States. The table below is a summary of the segment profit or loss, including significant segment expenses:


	Three months ended June 30,						Six months ended June 30,
	2025			2024			2025			2024
							(in thousands)
Research and Development
Manufacturing and technical operations	$	242		$	17,084		$	9,263		$	30,795
Clinical		683			5,854			7,180			9,980
Preclinical		210			256			1,140			526
Employee-related costs		3,429			7,635			11,513			14,366
Facilities and other operating costs		1,239			4,420			4,613			7,937

General and Administrative
Consultants and other outside services		1,877			3,751			4,519			7,348
Employee-related costs		880			3,669			4,044			6,903
Facilities and other operating costs		1,943			1,735			2,828			2,898

Restructuring, impairment, and costs of suspended programs		37,098			—			83,378			—
Stock-based compensation expense		5,258			4,302			12,134			8,206
Depreciation expense		40			612			712			1,165
Total operating expense		52,899			49,318			141,324			90,124
Loss from operations		(52,899	)		(49,318	)		(141,324	)		(90,124	)
Interest income		3,269			4,987			7,207			9,992
Other expense, net		(307	)		(17	)		(318	)		(27	)
Net loss	$	(49,937	)	$	(44,348	)	$	(134,435	)	$	(80,159	)

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CARGO THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

12. Subsequent Events

The Agreement and Plan of Merger

On July 7, 2025, the Company entered into the Merger Agreement with Concentra and Merger Sub. The Merger Agreement provides for, among other things: (i) the acquisition of all of the Company’s outstanding shares of common stock by Concentra through the Offer by Merger Sub, for the Offer Price and (ii) after the completion of the Offer, the satisfaction or waiver of certain conditions set forth in the Merger Agreement and in accordance with the Delaware General Corporation Law, the merger with the Company surviving the Merger, without a meeting or vote of the Company’s stockholders.

There can be no assurance that the Merger will be completed as the closing of the Offer is subject to certain conditions, including the tender of the Company’s common stock representing at least a majority of the total number of outstanding shares (including any shares held by Concentra). The Merger Agreement contains customary termination rights for both Concentra and Merger Sub, on the one hand, and the Company, on the other hand, including, among others, for failure to consummate the Offer on or before November 4, 2025. If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, including in connection with the Company’s entry into an agreement with respect to a Superior Company Proposal (as defined in the Merger Agreement), the Company will be required to pay Concentra a termination fee of $3.8 million. If Concentra terminates the Merger Agreement due to the Company having closing net cash of less than $217.5 million, the Company will be required to reimburse expenses incurred by Concentra up to a maximum amount of $0.5 million.

The Exercise of the Pre-Funded Warrants

In July 2025, the Company issued 1,842,499 shares of the Company’s common stock upon the exercise of pre-funded warrants held by the Exchanging Stockholders (see Note 6). The warrants were exercised at an exercise price of $0.001, and the Company received a nominal amount of proceeds upon exercise.

Updates to Income Taxes Legislation

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025, and others implemented through 2027. The Company is currently assessing its impact on its financial statements.

The Amendment to the Settlement Agreement with the NCI

In July 2025, the Company and the NCI executed an amendment to the Settlement Agreement. Under the amendment, all terms previously agreed upon per the Settlement Agreement remain in effect, except for the provision regarding the termination of the 2023 NCI License. As amended, the license will terminate on the earlier of: (1) September 15, 2025; (2) the voluntary termination of the 2023 NCI License by the Company; or (3) the date of the License Assignment, subject to approval by the NCI.

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Item 2. 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 together with the unaudited condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto for the year ended December 31, 2024, included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission, or the SEC, on March 12, 2025. This discussion and analysis contains forward-looking statements based upon current beliefs, plans, and expectations related to future events and our future performance that involves risks, uncertainties, and assumptions, such as statements regarding our intentions, plans, objectives, and expectations for our business. Our actual results and the timing of selected events could differ materially from those discussed in the forward-looking statements as a result of several factors including those set forth in the section titled “Risk Factors.” See also the section titled “Special Note Regarding Forward-Looking Statements”.

Overview

We are a biotechnology company historically focused on designing, engineering and developing next generation, potentially curative cell therapies for cancer patients. Our programs, platforms, and manufacturing strategy were designed to directly address the limitations of approved chimeric antigen receptor (CAR) T-cell therapies. A CAR is an engineered protein that is delivered into T cells, enabling recognition and destruction of cancer cells.

On January 28, 2025, we announced a reduction in force of approximately 50% in connection with our election to discontinue FIRCE-1, our Phase 2 study of firicabtagene autoleucel (firi-cel) (previously CRG-022) in patients with LBCL whose disease relapsed or was refractory (R/R) to CD19 CAR T-cell therapy. Firi-cel was our investigational autologous CAR T-cell product targeting the CD22 antigen and also our lead program.

On March 18, 2025, in connection with our ongoing evaluation of strategic options following discontinuation of the FIRCE-1 Phase 2 study of firi-cel, we announced an additional reduction in force of approximately 90% in connection with our determination to suspend pipeline development efforts (collectively, the 2025 Restructuring). In addition, we engaged TD Cowen as our exclusive strategic financial advisor in connection with our determination to explore potential strategic alternatives, including potential reverse mergers, other business combinations and cash sale transactions.

As a result of the reductions in our workforce and the suspension of various development efforts, we incurred $66,000 and $16.6 million of severance and benefit expense and $34.9 million and $56.6 million of contract termination and other costs and recorded an impairment charge of $2.2 million and $10.2 million on our long-lived assets in the three and six months ended June 30, 2025, respectively.

On July 7, 2025, we entered into a merger agreement (the Merger Agreement) with Concentra Biosciences, LLC and Concentra Merger Sub VII, Inc. (Merger Sub, and collectively with Concentra Biosciences, LLC, Concentra). The Merger Agreement provides for, among other things: (i) the acquisition of all of our outstanding shares of common stock by Concentra through a cash tender offer (the Offer) by Merger Sub, for a price per share of the common stock of (A) $4.379 in cash (the Cash Amount), subject to applicable tax withholding and without interest; plus (B) one contingent value right (CVR, and collectively with the Cash Amount, the Offer Price) and (ii) after the completion of the Offer, the satisfaction or waiver of certain conditions set forth in the Merger Agreement and in accordance with the Delaware General Corporation Law, the merger of Merger Sub with and into our company (the Merger) with us surviving the Merger, without a meeting or vote of our stockholders.

There can be no assurance that the Merger will be completed as the closing of the Offer is subject to certain conditions, including the tender of our common stock representing at least a majority of the total number of outstanding shares, including any shares held by Concentra. The Merger Agreement contains customary termination rights for both Concentra and Merger Sub, on the one hand, and us, on the other hand, including, among others, for failure to consummate the offer on or before November 4, 2025. If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, including in connection with our entry into an agreement with respect to a superior company proposal (as defined in the Merger Agreement), we will be required to pay Concentra a termination fee of $3.8 million. If Concentra terminates the Merger Agreement due to us having closing net cash of less than $217.5 million, we will be required to reimburse expenses incurred by Concentra up to a maximum amount of $0.5 million.

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We have incurred significant operating losses and negative cash flows since our inception. Since our founding, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, establishing licensing arrangements, building our proprietary platform technologies, discovering our product candidates, establishing our intellectual property portfolio, conducting research, preclinical studies, and clinical trials, establishing arrangements with third parties for the manufacture of our product candidates and related raw materials, and providing general and administrative support for these operations. We are currently managing streamlined operations during the pendency of the Merger.

Our net losses were $49.9 million and $44.3 million for the three months ended June 30, 2025, and 2024, and $134.4 million, respectively, and $80.2 million for the six months ended June 30, 2025, and 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $447.1 million and cash and cash equivalents and marketable securities of $252.6 million. If the Merger is not completed, management expects to incur additional losses in the future to fund our operations. Failure to manage discretionary spending or execute on a strategic alternative, may adversely impact our ability to achieve our intended business objectives. If we do not successfully consummate the Merger or other strategic transaction, our board of directors may decide to pursue a dissolution and liquidation.

We expect operating expenses to continue to decrease over the prior year due to the implementation of reductions in our workforce and suspension of various development efforts. In addition to general operating expenses and the costs associated with operating as a public company, we are incurring costs and expenditures related to the Merger. While we have entered into the Merger Agreement, there can be no assurance that the Merger will be completed within the expected timeframe or at all, as completion is subject to various closing conditions including the minimum tender condition and other requirements set forth in the merger agreement. There can be no assurance that we will be able to successfully consummate the Merger, or any other favorable transaction. Our general operations and efforts regarding the consummation of the Merger may be costly, time-consuming and complex, and we are incurring significant costs related to the Merger, such as legal, accounting and advisory fees and expenses and other related charges. A considerable portion of these costs will be incurred regardless of whether any the Merger is completed. Any such expenses will decrease the remaining cash available for use in our business or that could be used in future distributions to our stockholders in the event the Merger is not completed, and we pursue liquidation or dissolution. If the Merger is not completed, we may pursue alternative strategic transactions or dissolution and liquidation, which could have a variety of negative consequences and we may implement a course of action or consummate a transaction that yields unexpected results that adversely affect our business and decreases the remaining cash available for use in our business or the execution of our strategic plan. While we have entered into the Merger Agreement, there can be no assurances that the Merger will be completed, and if not completed, that any alternative transaction will be pursued, successfully consummated, lead to increased stockholder value or achieve the anticipated results. Any failure of such potential transaction to achieve the anticipated results could significantly impair our ability to enter into any future strategic transactions and may significantly diminish or delay any future distributions to our stockholders.

While less than historically incurred, we expect to continue to incur on-going operating expenses to:

•

fund our streamlined operations and operate as a public company;

•

maintain operational, financial and management information systems;

•

maintain and protect our intellectual property portfolio;

•

implement our restructuring such as third-party contract termination costs, severance and related benefit costs;

•

complete the Merger, or if the Merger is not completed, pursue alternative strategic transactions; and

•

make royalty, milestone or other payments under current license or collaboration agreements;

Our net losses may fluctuate significantly from period to period, depending upon the timing of our expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued research and development and other current liabilities.

To date, we have funded our operations primarily with the proceeds from the sale and issuance of our convertible preferred stock and convertible notes as well as the sale and issuance of our common stock. We do not have any products approved for sale and have not generated any revenue from product sales since our inception. See the

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subsection titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and capital resources” below.

Components of operating results

Operating expenses

Our operating expenses consist of research and development expenses and general and administrative expenses.

Research and development expenses

Our research and development expenses consist of direct costs, including manufacturing and technical operations, preclinical and clinical fees paid to CROs, supplies, health authority filings, technology licenses and in-process research and development (IPR&D) assets as well as indirect costs consisting of employee-related costs and allocated facilities and other operating costs.

We expense all research and development costs in the periods in which such costs are incurred. We track our direct costs by the stage of program, clinical or preclinical. Our indirect costs are not directly tied to any one program and are deployed across multiple programs, and as such, we do not track indirect costs on a specific program basis.

Due to the suspension of various development efforts related to our programs and the pendency of the Merger, we expect our research and development expenses to remain flat or decrease for the remainder of 2025.

General and administrative expenses

Our general and administrative expenses consist primarily of employee-related costs and expenses for outside services, including legal, human resources, audit, and accounting services, as well as facilities and other operating costs not included in research and development expenses. We expect that our general and administrative expenses will remain flat or decrease for the remainder of 2025 to support our operations pending the completion of the Merger, and will include costs expect to continue to incur additional costs associated with operating as a public company, including increased expenses related to legal, audit, accounting, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs, investor and public relations costs, and other administrative and professional services.

Restructuring, impairment and other costs of suspended programs

In connection with the reductions in our workforce and suspension of various development efforts, we incurred restructuring, impairment and costs of suspended programs, which include termination costs primarily related to arrangements with contract development and manufacturing organizations, severance and related benefit costs, and charges related to impairment of long-lived assets and write-offs for prepaid expenses and other current assets.

Interest income

Interest income includes interest income earned on our cash, cash equivalents, marketable securities, and restricted cash and non-cash interest income related to accretion of the discount on marketable securities.

Other expense, net

Other expense, net consists primarily of foreign currency gains and losses.

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Results of operations

Comparison of the three months ended June 30, 2025, and 2024

Our results of operations for each of the periods indicated are summarized in the table below:


	Three months ended June 30,
	2025			2024			Change
	(in thousands)
Operating expenses:
Research and development	$	7,509		$	37,458		$	(29,949	)
General and administrative		8,292			11,860			(3,568	)
Restructuring, impairment, and costs of suspended programs		37,098			—			37,098
Total operating expenses		52,899			49,318			3,581
Loss from operations		(52,899	)		(49,318	)		(3,581	)
Interest income		3,269			4,987			(1,718	)
Other expense, net		(307	)		(17	)		(290	)
Net loss	$	(49,937	)	$	(44,348	)	$	(5,589	)

Research and development expenses


	Three months ended June 30,
	2025		2024		Change
	(in thousands)
Direct costs:
Manufacturing and technical operations	$	242	$	17,084	$	(16,842	)
Preclinical and clinical		765		5,312		(4,547	)
Consultants and other outside services		128		798		(670	)
Indirect costs:
Employee-related costs		5,135		9,336		(4,201	)
Facilities and other operating costs		1,239		4,928		(3,689	)
Total research and development expenses	$	7,509	$	37,458	$	(29,949	)

Research and development expenses were $7.5 million and $37.5 million for the three months ended June 30, 2025, and 2024, respectively. The $29.9 million decrease in research and development expenses during this period was primarily due to:

•

$16.8 million decrease in manufacturing and technical operations costs, $4.5 million decrease in preclinical and clinical costs, $3.7 million decrease in facilities and other operating costs and $0.7 million decrease in consulting and other outside services costs primarily due to wind-down firi-cel in January 2025 and the suspension of various other programs in March 2025; and

•

$4.2 million decrease in employee-related costs primarily related to the reduction in our workforce that occurred in the first half of 2025.

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General and administrative expenses


	Three months ended June 30,
	2025		2024		Change
	(in thousands)
Employee-related costs	$	4,432	$	6,270	$	(1,838	)
Outside services		1,877		3,751		(1,874	)
Facilities and other operating costs		1,983		1,839		144
Total general and administrative expenses	$	8,292	$	11,860	$	(3,568	)

General and administrative expenses were $8.3 million and $11.9 million for the three months ended June 30, 2025, and 2024, respectively. The $3.6 million decrease in general and administrative expenses during this period was primarily due to:

•

$1.9 million decrease in outside services costs primarily related to marketing, accounting and audit costs, and

•

$1.8 million decrease in employee-related costs primarily related to the reduction in our workforce that occurred in the first half of 2025, net of a $1.0 million increase in stock-based compensation expense for general and administrative employees.

The above decreases in general and administrative expenses were partially offset by $0.1 million increase in facilities and other operating costs.

Restructuring, impairment, and costs of suspended programs

Restructuring, impairment, and costs of suspended programs were $37.1 million in the three months ended June 30, 2025 and consisted of:

•

$34.9 million in termination and other costs related to the termination of the San Carlos lease, legal fees and other costs incurred due to the restructuring;

•

$2.2 million in impairment of long-lived assets; and

•

$66,000 in severance and related benefit costs.

Interest income

Interest income was $3.3 million and $5.0 million in the three months ended June 30, 2025, and 2024, respectively. The $1.7 million decrease was primarily attributed due to lower average marketable securities balances during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Other expense, net

Other expense, net was $0.3 million and $17,000 in the three months ended June 30, 2025, and 2024, respectively. The increase of $0.3 million is primarily due to foreign currency losses.

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Comparison of the six months ended June 30, 2025, and 2024

Our results of operations for each of the periods indicated are summarized in the table below:


	Six months ended June 30,
	2025			2024			Change
	(in thousands)
Operating expenses:
Research and development	$	38,146		$	67,961		$	(29,815	)
General and administrative		19,800			22,163			(2,363	)
Restructuring, impairment, and costs of suspended programs		83,378			—			83,378
Total operating expenses		141,324			90,124			51,200
Loss from operations		(141,324	)		(90,124	)		(51,200	)
Interest income		7,207			9,992			(2,785	)
Other expense, net		(318	)		(27	)		(291	)
Net loss	$	(134,435	)	$	(80,159	)	$	(54,276	)

Research and development expenses


	Six months ended June 30,
	2025		2024		Change
	(in thousands)
Direct costs:
Manufacturing and technical operations	$	9,263	$	30,795	$	(21,532	)
Preclinical and clinical		6,970		8,335		(1,365	)
Consultants and other outside services		685		2,021		(1,336	)
License fees		665		150		515
Indirect costs:
Employee-related costs		15,364		17,731		(2,367	)
Facilities and other operating costs		5,199		8,929		(3,730	)
Total research and development expenses	$	38,146	$	67,961	$	(29,815	)

Research and development expenses were $38.1 million and $68.0 million for the six months ended June 30, 2025, and 2024, respectively. The $29.8 million decrease in research and development expenses during this period was primarily due to:

•

$21.5 million decrease in manufacturing and technical operations costs, $3.7 million decrease in facilities and other operating costs, $1.4 million decrease in preclinical and clinical costs and $1.3 million decrease in consulting and other outside services costs due to wind-down of firi-cel in January 2025 and the suspension of various other programs in March 2025; and

•

$2.4 million decrease in employee-related costs primarily related to the reduction in our workforce that occurred in the first half of 2025, net of a $0.5 million increase in stock-based compensation expense for research and development employees.

The above decreases in research and development expenses were partially offset by:

•

$0.5 million increase in license fees primarily related to certain milestone payments incurred in the six months ended June 20, 2025.

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General and administrative expenses


	Six months ended June 30,
	2025		2024		Change
	(in thousands)
Employee-related costs	$	12,327	$	11,744	$	583
Outside services		4,519		7,348		(2,829	)
Facilities and other operating costs		2,954		3,071		(117	)
Total general and administrative expenses	$	19,800	$	22,163	$	(2,363	)

General and administrative expenses were $19.8 million and $22.2 million for the six months ended June 30, 2025, and 2024, respectively. The $2.4 million decrease in general and administrative expenses during this period was primarily due to a $2.8 million decrease in outside services costs primarily related to reductions in services from third-party providers and a $0.1 million decrease in facilities and other operating costs due to wind-down of firi-cel in January 2025 and the suspension of various other programs in March 2025.

The above decreases in general and administrative expenses were partially offset by a $0.6 million increase in employee-related costs primarily related to a $3.4 million increase in stock-based compensation expense for general and administrative employees, net of $2.8 million decrease in employee-related costs other stock-based driven by the reduction in our workforce the occurred in the first half of 2025;

Restructuring, impairment, and costs of suspended programs

Restructuring, impairment, and costs of suspended programs were $83.4 million in the six months ended June 30, 2025 and consisted of:

•

$56.6 million in termination costs, including $32.2 million related to the San Carlos lease, arrangements with contract development and manufacturing organizations, legal fees and other costs incurred due to the restructuring;

•

$16.6 million in severance and related benefit costs; and

•

$10.2 million in impairment of long-lived assets;

Interest income

Interest income was $7.2 million and $10.0 million in the six months ended June 30, 2025, and 2024, respectively. The $2.8 million decrease was primarily attributed due to lower average marketable securities balances during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Other expense, net

Other expense, net was at $0.3 million and $27,000 in the six months ended June 30, 2025, and 2024, respectively. The increase of $0.3 million is primarily due to foreign currency losses.

Liquidity and capital resources

Since our inception, we have funded our operations primarily with the proceeds from the sale and issuance of common stock from our IPO in November 2023 and private placement in May 2024, as well as from the sale and issuances of our convertible preferred stock and convertible notes. On May 30, 2024, we sold and issued 6,471,000 shares of our common stock for net proceeds of approximately $102.9 million in a private placement, after deducting placement agent fees and offering expenses of $7.1 million.

To date, we have incurred significant losses and negative cash flows from operations. As of June 30, 2025, we had available cash and cash equivalents and marketable securities of $252.6 million, which were available to fund operations, and an accumulated deficit of $447.1 million.

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In December 2024, we entered into a sales agreement, or the Sales Agreement, with TD Securities (USA) LLC (TD Cowen), to sell our shares of common stock having an aggregate offering price of up to $200.0 million from time to time through an “at-the-market” equity offering program under which TD Cowen acts as our agent. No shares of our common stock were issued and sold under the Sales Agreement during the six months ended June 30, 2025. As of June 30, 2025, we had $200.0 million of capacity available to us under our “at-the-market” equity offering program.

On July 7, 2025, we entered into the Merger Agreement with Concentra and Merger Sub, providing for the acquisition of our company by Concentra. Under the terms of the Merger Agreement, we have agreed to various covenants and agreements, including, among others, agreements to conduct our business in the ordinary course of business between the execution of the Merger Agreement and the closing of the Merger. Outside of certain limited exceptions, including the sale of certain of our legacy assets, we may not take certain actions without Concentra’s consent, including (i) acquiring businesses and disposing of significant assets, (ii) incurring expenditures above specified thresholds, (iii) incurring debt, (iv) issuing additional securities or (v) repurchasing shares of our common stock. We do not believe these restrictions will prevent us from meeting our ongoing costs of operations, working capital needs or capital expenditure requirements. Under the terms of the Merger Agreement, we may be required to pay Concentra a termination fee of $3.8 million if the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement. Moreover, we have incurred, and will continue to incur, significant costs and expenses in connection with the pending transaction. We must pay a material portion of these costs and expenses whether or not the transaction is completed. Payment of any such fees, costs or expenses may require us to use available cash that would have otherwise been available for general corporate purposes or other uses.

We expect to continue to incur significant costs and expenditures in connection with our streamlined operations, operations as a public company. Currently, our primary use of cash is headcount cost and lease and overhead expenses, pending the completion of the Merger. There can be no assurance, that we will be able to successfully consummate the Merger. If the Merger is not completed, management expects to incur additional losses in the future to fund its operations. Failure to manage discretionary spending or execute on a strategic alternative, may adversely impact our ability to achieve our intended business objectives. If we do not successfully consummate the Merger or other strategic transaction, our board of directors may decide to pursue a dissolution and liquidation.

Future funding requirements

Because of the numerous risks and uncertainties associated with the status of our company, we are unable to estimate the exact amount of our capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

•

the extent of funding required to finance our streamlined operations and to operate as a public company before the Merger completion;

•

the timing of Merger completion; and

•

our regular course operations, including protection of intellectual property and other operational matters.

Based upon our current operating plans, including our previously announced reductions in force and suspension of various development efforts, we believe that our existing cash and cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements through at least the next 12 months following the issuance of our condensed financial statements. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We anticipate that our operating expenses will decrease as we suspended various development efforts and commenced our reductions in force.

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Cash flows

Our cash flows for each of the periods indicated are summarized in the table below:


	Six months ended June 30,
	2025			2024
	(in thousands)
Cash used in operating activities	$	(115,077	)	$	(65,230	)
Cash provided by (used in) investing activities		158,400			(290,165	)
Cash provided by financing activities		43			103,245
Net increase (decrease) in cash, cash equivalents and restricted cash	$	43,366		$	(252,150	)

Operating activities

Cash used in operating activities of $115.1 million for the six months ended June 30, 2025 was primarily attributable to our net loss of $134.4 million, and a $4.0 million increase in our working capital, partially offset by $23.3 million in non-cash adjustments. Non-cash adjustments consisted primarily of $12.1 million in stock-based compensation, $10.2 million in impairment of long-lived assets, $1.1 million in amortization of right-of-use assets, $0.7 million in depreciation, and $0.7 million in acquisition of in-process research and development, partially offset by $1.5 million in accretion on marketable securities. The $4.0 million increase in working capital is primarily due to a $11.7 million decrease in accrued clinical, research and development expense mainly related to manufacturing and technical operations, preclinical and clinical expenses, a $8.6 million decrease in accrued expenses and other current liabilities, a $6.4 million decrease in operating lease liabilities, partially offset by a $10.6 million increase in accrued restructuring costs related to the 2025 Restructuring, a $6.5 million increase in accounts payable driven by the timing of payments, a $5.3 million decrease in other assets, and a $0.3 million decrease in prepaid expenses and other current assets.

Cash used in operating activities of $65.2 million for the six months ended June 30, 2024 was primarily attributable to our net loss of $80.2 million, partially offset by $8.6 million in non-cash adjustments and a $6.2 million decrease in our working capital. Non-cash adjustments consisted primarily of $8.2 million in stock-based compensation, $2.8 million in amortization of right-of-use assets and $1.2 million in depreciation, partially offset by $3.6 million in net accretion on marketable securities. The $6.2 million decrease in working capital is primarily due to a $6.1 million increase in accrued clinical, research and development expense, and a $2.3 million increase in accounts payable driven by increased research and development expenses mainly related to manufacturing and technical operations, preclinical and clinical outside services and employee-related expenses, partially offset by a $1.1 million decrease in accrued expenses and other current liabilities primarily due to payment of the accrued annual bonus and a $1.0 million increase in prepaid expenses and other current assets.

Investing activities

Cash provided by investing activities of $158.4 million for the six months ended June 30, 2025 primarily consisted of $241.8 million of proceeds from sales and maturities of marketable securities, partially offset by $81.7 million in purchases of marketable securities, $1.2 million in purchases of in-process research and development comprised of fees paid related to our license agreements, and $0.5 million in payments for equipment purchased prior to the suspension of various other programs in March 2025.

Cash used in investing activities of $290.2 million for the six months ended June 30, 2024 consisted of $360.4 million in purchases of marketable securities, $2.8 million in purchases of equipment for our research and development activities, as well as, leasehold improvements and purchase of furniture for our new offices, and $0.8 million in purchases of in-process research and development comprised of fees paid related to our license agreements, partially offset by $73.8 million of proceeds from sales and maturities of marketable securities.

Financing activities

Cash provided by financing activities of less than $0.1 million for the six months ended June 30, 2025 consisted of proceeds from exercise of stock options.

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Cash provided by financing activities of $103.2 million for the six months ended June 30, 2024 consisted of $103.3 million in net proceeds from issuance of common stock in the private placement and $0.1 million in proceeds from exercise of stock options, partially offset by $0.1 million in payments of deferred initial public offering costs and transaction costs for exchange of common stock for warrants.

Off-balance sheet arrangements

We currently do not have, and did not have during the periods presented, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Contractual obligations and commitments

Leases

We have entered into lease arrangements for facilities, which consist of office and laboratory space, amended to be early terminated effective September 1, 2025. As of June 30, 2025, our total fixed lease payment obligations outstanding are $0.6 million payable by September 1, 2025.

License agreements

Our contractual obligations are expected to affect our liquidity and cash flows in future periods. Under our license agreements with our research institution partners, we are required to make payments upon successful completion and achievement of certain milestones as well as royalty payments upon sales of products covered by such licenses. The payment obligations under the license fees are recorded in accrued liabilities as such payments are not contingent on future events. The remaining payment obligations under the license agreements are contingent upon future events such as our achievement of specified development, clinical, regulatory, and commercial milestones. To the extent that the timing of these future milestone payments is not known, we have not included these fees in our condensed balance sheet as of June 30, 2025. For a more detailed description of these agreements, see Note 8 to our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

During the three and six months ended June 30, 2025, we incurred certain manufacturing slot cancellation fees and recorded them within restructuring, impairment, and costs of suspended programs in our condensed statement of operations and comprehensive loss. For more details on the restructuring activities, see Note 10 to our condensed financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

Critical accounting policies and significant judgments and estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

There have been no material changes to our critical accounting estimates from those described under our “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2024, other than as noted below.

Impairment of long-lived assets

During the three and six months ended June 30, 2025, we recorded an impairment charge of $2.2 million and $10.2 million, respectively, related to all of our property and equipment in connection with the 2025 Restructuring. No such impairment charge was recorded during the three and six months ended June 30, 2024. For more details on

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the impairment of our property and equipment and our restructuring activities, see Notes 4 and 10 to our condensed financial statements included in Item 1 in this Quarterly Report on Form 10-Q.

Emerging growth company and smaller reporting company status

We are an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Recent accounting pronouncements

See Note 2 to our condensed financial statements included in Item 1 of this Quarterly Report on Form 10-Q for more information.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company, as defined by Rule 12b-2 under the Securities and Exchange Act of 1934, as amended (the Exchange Act) and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of June 30, 2025, management, with the participation and supervision of the person serving as our Interim Chief Executive Officer and Chief Financial Officer, have evaluated our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on that evaluation, our Interim Chief Executive Officer and Chief Financial Officer has concluded that, as of June 30, 2025, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Interim Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There are no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently a party to any material legal proceedings. From time to time, we may, however, in the ordinary course of business become involved in legal proceedings. Regardless of outcome, litigation could have a material adverse effect on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained.

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Item 1A. Risk Factors.

For a discussion of our potential risks and uncertainties, see the information in Part I, “Part I, Item 1A.
Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. The risk factors set
forth below supplement the risk factors disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2024. The risks described in our Annual Report would apply to us if the Merger is not completed and we choose to resume research and development activities. However, at this time, we do not believe it is likely that we would choose to resume such efforts if the Merger is not completed, and instead we would either pursue an alternative strategic transaction, if available, or a dissolution and liquidation of our company.

Risks related to the pending transaction with Concentra

We may not complete the pending transaction with Concentra within the time frame we anticipate, or at all, which could have an adverse effect on our business, financial results and/or operations.

On July 7, 2025, we entered into the Merger Agreement with Concentra and Merger Sub. The Merger Agreement provides for, among other things: (i) the acquisition of all of our outstanding shares of common stock by Concentra through the Offer by Merger Sub, for a price per share of the common stock consisting of (A) the Cash Amount, subject to applicable tax withholding and without interest; plus (B) one CVR and (ii) the Merger of Merger Sub with and into our company with us surviving the Merger.

Concentra's obligation to accept shares of common stock tendered in the Offer is subject to conditions, including: (i) that the number of shares of voting common stock validly tendered (and not properly withdrawn) prior to the expiration of the Offer (excluding shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” by the “depository,” as such terms are defined by Section 251(h) of the DGCL) that, when considered together with all other shares of the voting common stock (if any) owned by Concentra and its “affiliates” (as defined in Section 251(h)(6)(a) of the DGCL), equals at least one share more than 50% of all shares of voting common stock then issued and outstanding as of the expiration of the Offer; (ii) the absence of any Legal Restraint (as defined in the Merger Agreement) in effect preventing or prohibiting the consummation of the Offer, the Merger or any of the other transactions contemplated by the Merger Agreement or the CVR Agreement; (iii) the accuracy of the representations and warranties made by the Company in the Merger Agreement, subject to specified materiality qualifications and exceptions; (iv) compliance by the Company with its covenants under the Merger Agreement in all material respects; and (v) the Closing Net Cash (as defined in the Merger Agreement) shall be no less than $217.5 million. The obligations of Concentra and Merger Sub to consummate the Offer and the Merger under the Merger Agreement are not subject to a financing condition.

If the transaction is not completed within the expected time frame or at all, we may be subject to a number of material risks. The price of our common stock may decline to the extent that current market price reflects a market assumption that the transaction will be completed. We could be required to pay Concentra a termination fee of $3.8 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. The failure to complete the transaction also may result in negative publicity and negatively affect our relationship with our stockholders, employees, vendors, suppliers, regulators and other business partners. We may also be required to devote significant time and resources to litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement.

There can be no assurance that the Merger will be completed. If the Merger is not completed, our board of directors may decide to pursue a dissolution and liquidation of our company. In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of cash available for distribution continues to decrease as we fund our operations while pursuing the Merger. In addition, if our board of directors were to approve and recommend, and our stockholders were to approve, a dissolution and liquidation of the company, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to stockholders. Our commitments and contingent liabilities may include obligations under our employment and related agreements or policies with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control of the company, litigation against us, and other various claims and legal actions arising in the ordinary course of business, and other unexpected and/or contingent liabilities. As a result of this requirement, a portion of our assets would need to be reserved pending the resolution of such obligations.

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In addition, we may be subject to litigation or other claims related to a dissolution and liquidation of our company. If a dissolution and liquidation were to be pursued, our board of directors, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up of our company. A liquidation would be a lengthy and uncertain process with no assurance of any value ever being returned to our stockholders.

The Merger Agreement contains provisions that could discourage a potential competing acquirer.

The Merger Agreement provides that, upon the terms and subject to the conditions thereof, we and our representatives cannot directly or indirectly solicit, initiate or knowingly encourage or knowingly facilitate discussions with third parties regarding other proposals to acquire or combine with us and we are subject to restrictions on our ability to respond to any such proposal. In the event that we receive an acquisition proposal from a third party, we must notify Concentra of such proposal and negotiate in good faith with Concentra prior to terminating the Merger Agreement or effecting a change in the recommendation of our board of directors and the Transaction Committee to our stockholders with respect to the Offer and the Merger. The Merger Agreement also contains certain termination rights for Concentra and us and further provides that, upon termination of the Merger Agreement under specified circumstances, including certain terminations in connection with an alternative business combination transaction as permitted by the terms of the Merger Agreement, we will be required to pay Concentra a termination fee of $3.8 million. These provisions could discourage a potential third-party acquirer that might have an interest in acquiring all or a significant portion of us from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the transaction. These provisions also might result in a potential third-party acquirer proposing to pay a lower price to our stockholders than it might otherwise have proposed to pay due to the added expense of the termination fee that may become payable in certain circumstances. If the Merger Agreement is terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Offer and the Merger.

The announcement and pendency of the transaction with Concentra could adversely affect our business, financial results and/or operations.

Employee retention may be particularly challenging while the transaction is pending because employees may experience uncertainty about their roles following the transaction. A substantial amount of our management’s and employees’ attention is being directed toward the completion of the transaction and thus is being diverted from our day-to-day operations. The adverse effects of the pendency of the transaction could be exacerbated by any delays in completion of the transaction or termination of the Merger Agreement. In addition, our executive officer and directors may have interests in the Merger that are different from, or are in addition to, those of our stockholders generally, including the acceleration of equity awards in connection with the Merger, severance payments and retention bonuses. Such interests of our directors and executive officer are set forth in further detail in the Schedule 14D-9 we filed with the SEC on July 23, 2025.

We are substantially dependent on our remaining employees to facilitate the consummation of the Merger.

Our ability to consummate a strategic transaction depends upon our ability to retain our remaining employees required to consummate such a transaction, the loss of whose services may adversely impact the ability to consummate such transaction. In 2025, we implemented two corporate restructuring plans designed to optimize our resource allocation and contain costs. In connection with the most recent restructuring plan, in March 2025, we announced a reduction of our workforce by approximately 90%. In addition, as part of these restructuring efforts, we eliminated all of our executive officers except our Chief Financial Officer and Chief Operating Officer, who we appointed to also serve as interim Chief Executive Officer. As of June 30, 2025, we had only 16 full-time employees. Our ability to successfully complete the Merger depends in large part on our ability to retain these remaining personnel. Despite our efforts to retain these employees, one or more may terminate their employment with us on short notice. Our cash conservation activities may yield other unintended consequences, such as reduced employee morale, which may cause remaining employees to seek alternative employment. The loss of the services of certain employees could potentially harm our ability to consummate the Merger, to run our day-to-day business operations, as well as to fulfill our reporting obligations as a public company.

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While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Merger Agreement is in effect, we are subject to restrictions on our business activities, generally requiring us to conduct our business in the ordinary course, consistent with past practice, and subjecting us to a variety of specified limitations absent Concentra’s prior consent, subject to certain exceptions including the sale of our certain legacy assets. These limitations include, among other things, restrictions on our ability to acquire other businesses and assets, dispose of our assets, make investments, enter into certain contracts, repurchase or issue securities, pay dividends, make capital expenditures, take certain actions relating to intellectual property, amend our organizational documents and incur indebtedness. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, and may as a result materially and adversely affect our business, results of operations and financial condition.

In certain instances, the Merger Agreement requires us to pay a termination fee to Concentra, which could require us to use available cash that would have otherwise been available for general corporate purposes.

We may be required to pay Concentra a termination fee of $3.8 million if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. If Concentra terminates the Merger Agreement due to us having Closing Net Cash of less than $217.5 million, we will be required to pay to Concentra an expense reimbursement fee up to a maximum amount of $0.5 million. If the Merger Agreement is terminated under such circumstances, the termination fee we will be required to pay will require us to use available cash that would have otherwise been available for general corporate purposes and other uses, including a distribution to our stockholders in the event we consummate an alternative strategic transaction or otherwise elect to wind down and dissolve our company.

We have incurred, and will continue to incur, direct and indirect costs as a result of the pending transaction with Concentra.

We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the pending transaction. We must pay a material portion of these costs and expenses whether or not the transaction is completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses, any of which could materially and adversely affect our business, prospects, financial condition and results of operations.

Lawsuits may be filed against us and the members of our board of directors arising out of the proposed Merger, which may delay or prevent the proposed Merger.

Complaints may in the future be filed against us, our board of directors, Concentra, any of Concentra’s boards of directors and/or others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, including the amount of costs associated with defending these claims or any other liabilities that may be incurred in connection with the litigation of these claims, and we may not be successful in defending against any such future claims. Lawsuits that may be filed against us, our board of directors, Concentra, or any of Concentra’s boards of directors could delay or prevent the consummation of the Merger, result in significant costs, and divert the attention of our management and employees from our day-to-day business which could affect our operations and otherwise adversely affect us financially.

We may become involved in securities class action litigation that could divert management’s attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages.

In the past, securities class action litigation has often followed certain significant business transactions not involving us, such as the sale of a company or announcement of any other strategic transaction, or the announcement of negative events, such as negative results from clinical trials. These events may also result in investigations by the SEC. We may be subject to such litigation or investigation even if no wrongdoing has occurred. Litigation and investigations are usually expensive and divert management’s attention and resources, which could adversely affect our business and cash resources and our ability to consummate the Offer and the Merger within the expected time

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frames or at all, or to consummate any alternative strategic transaction, and could adversely impact the ultimate value our stockholders receive in any such transaction.

Our stockholders may not receive any payment on the CVR and the CVR may expire valueless.

If the Merger is completed, the holders of our common stock, In-the-Money Options (as defined in the Merger Agreement), Company Restricted Stock Units (as defined in the Merger Agreement) and Company Pre-Funded warrants (as defined in the Merger Agreement) will be entitled to receive CVRs on a one-for-one basis with respect to each underlying share, subject to the terms and conditions of a Contingent Value Rights Agreement (the “CVR Agreement”). Each CVR will represent the right to receive contingent payments from (i) 80% of proceeds if Concentra sells our product assets within two years, and (ii) any Closing Net Cash (as defined in the Merger Agreement) exceeding $217.5 million, as described more fully in our Current Report on Form 8-K (the “Form 8-K”), filed with the SEC on July 8, 2025. There can be no assurance any payments will be made with respect to the CVRs. The CVRs will not be transferable, except in the limited circumstances specified in the CVR Agreement, will not have any voting or dividend rights, and will not represent any equity or ownership interest in Concentra or any constituent party to the Merger Agreement. Accordingly, the right of any of our stockholders to receive any future payment on or derive any value from the CVRs will be contingent solely upon Concentra’s sale of our assets within two years and any excess cash above the $217.5 million threshold, and if Concentra does not sell our assets within the specified period or if Closing Net Cash does not exceed $217.5 million, as outlined more fully in the Form 8-K and in the CVR Agreement, no payments will be made under the CVRs, and the CVRs will expire valueless.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

Recent Sales of Unregistered Securities

None.

(b)

Use of Proceeds

None.

(c)

Issuer Repurchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

No director or officer adopted or terminated a trading arrangement for the purchase of Company securities for the quarterly period ended June 30, 2025 that is either (1) a contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), or a “Rule 10b5-1 trading arrangement”, or (2) a “non-Rule” 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

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Item 6. Exhibits.


		Incorporated by Reference			Filed
Exhibit Number	Description	Form	Date	Number	Herewith
2.1*	Agreement and Plan of Merger, dated as of July 7, 2025, by and among CARGO Therapeutics, Inc., Concentra Biosciences, LLC, and Concentra Merger Sub VII, Inc.	8-K	7/8/2025	2.1
3.1	Amended and Restated Certificate of Incorporation, as amended, currently in effect.	8-K	11/14/2023	3.1
3.2	Bylaws, as amended, currently in effect.	8-K	11/14/2023	3.2
4.2	Form of Common Stock Certificate.	S-1/A	11/6/2023	4.2
4.3	Amended and Restated Investors’ Rights Agreement, dated February 9, 2023, by and among the Registrant and the investors listed therein.	S-1/A	11/6/2023	4.3
4.4	Form of Securities Purchase Agreement, dated May 28, 2024, by and among the Company and the Purchasers	8-K	5/28/2024	10.1
10.1	Form of Contingent Value Rights Agreement by and between Concentra Biosciences, LLC, Concentra Merger Sub VII, Inc., and a wholly owned Subsidiary of Concentra Biosciences, LLC.	8-K	7/8/2025	10.1
10.2†	Assignment and Assumption of Lease, dated June 27, 2025, by and between CARGO Therapeutics, Inc. and Dren Bio Management, Inc.	8-K	7/2/2025	10.1
10.3#	Retention Bonus Letter Agreement, dated March 28, 2025, by and between the Company and Anup Radhakrishnan.	14D-9	7/23/2025	(e)(15)
10.4#	Separation Agreement, dated April 9, 2025, by and between the Company and Anup Radhakrishnan.	14D-9	7/23/2025	(e)(16)
31.1+	Certification Pursuant to Rule 13a-14(a)/15(d)-14(a), As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32.1+	Certification Pursuant to Rule 13a-14(B) of the Securities Exchange Act of 1934, As Amended and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. Section 1350), As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents				X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)				X

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+ This certification accompanies the Quarterly Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

# Indicates management contract or compensatory plan.

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† Certain portions of this document constitute confidential information have been redacted in accordance with Regulation S-K, Item 601(b)(10).

* Certain annexes and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted annexes and schedules upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any annexes or schedules so furnished.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	CARGO Therapeutics, Inc.

Date: August 6, 2025	By:	/s/ Anup Radhakrishnan
		Anup Radhakrishnan
		Interim Chief Executive Officer, Chief Financial Officer and Chief Operating Officer (Principal Financial Officer)