Full Press Release Details
TO CONSOLIDATED FINANCIAL STATEMENTS
| Page | |
| Consolidated Financial Statements | |
| Report of Independent Registered Public Accounting Firm (KPMG LLP, Philadelphia, PA, Auditor Firm ID: 185) | F-2 |
| Consolidated Balance Sheets, December 31, 2022 and 2021 | F-3 |
| Consolidated Statements of Operations and Comprehensive Loss, Years Ended December 31, 2022 and 2021 | F-4 |
| Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit, Years ended December 31, 2022 and 2021 | F-5 |
| Consolidated Statements of Cash Flows, Years ended December 31, 2022 and 2021 | F-6 |
| Notes to Consolidated Financial Statements | F-7 |
Report of Independent Registered Public Accounting
To the Stockholders and Board of Directors
Carisma Therapeutics Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Carisma
Therapeutics Inc. and subsidiary (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations
and comprehensive loss, convertible preferred stock and stockholders' deficit, and cash flows for the years then ended, and the
related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations
and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for
Critical Audit Matters
Critical audit matters are matters arising from the current period
audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:
(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
We have served as the Company's auditor since 2018.
Philadelphia, Pennsylvania
CARISMA THERAPEUTICS INC.
Consolidated Balance
(in thousands, except share and per share data)
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 24,194 | $ | 28,551 | ||||
| Marketable securities | 27,802 | - | ||||||
| Prepaid expenses and other assets | 2,596 | 1,235 | ||||||
| Total current assets | 54,592 | 29,786 | ||||||
| Property and equipment, net | 8,628 | 3,084 | ||||||
| Right of use assets - operating leases | 4,822 | 2,579 | ||||||
| Deferred financing costs | 4,111 | - | ||||||
| Total assets | $ | 72,153 | $ | 35,449 | ||||
| Liabilities, Convertible Preferred Stock and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,728 | $ | 2,322 | ||||
| Accrued expenses | 10,361 | 4,471 | ||||||
| Deferred revenue | 2,459 | - | ||||||
| Operating lease liabilities | 3,437 | 898 | ||||||
| Finance lease liabilities | 1,162 | - | ||||||
| Other current liabilities | 523 | - | ||||||
| Total current liabilities | 19,670 | 7,691 | ||||||
| Deferred revenues | 45,000 | - | ||||||
| Convertible promissory note | 33,717 | - | ||||||
| Derivative liability | 5,739 | - | ||||||
| Operating lease liabilities | 976 | 1,734 | ||||||
| Finance lease liabilities | 872 | - | ||||||
| Other long-term liabilities | 1,041 | - | ||||||
| Total liabilities | 107,015 | 9,425 | ||||||
| Commitments and contingencies (Note 7) | ||||||||
| Convertible preferred stock, $0.0001 par value: | ||||||||
| Series A convertible preferred stock $0.0001 par value, 6,138,518 shares authorized; 5,201,017 shares issued and outstanding at December 31, 2022 and 2021 (liquidation value of $54,091 at December 31, 2022) | 53,577 | 53,577 | ||||||
| Special voting preferred stock $0.0001 par value, 1 share authorized, issued and outstanding at December 31, 2022 and 2021 | - | - | ||||||
| Series B convertible preferred stock $0.0001 par value, 4,807,541 shares authorized, 3,499,866 shares issued and outstanding at December 31, 2022 and 2021 (liquidation value of $54,598 at December 31, 2022) | 54,231 | 54,231 | ||||||
| Series B special voting preferred stock $0.0001 par value, 1 share authorized, issued and outstanding at December 31, 2022 and 2021 | - | - | ||||||
| Total convertible preferred stock | 107,808 | 107,808 | ||||||
| Stockholders' deficit: | ||||||||
| Common stock $0.0001 par value, 14,910,158 shares authorized, 1,167,602 and 1,084,082 shares issued and outstanding at December 31, 2022 and 2021, respectively | - | - | ||||||
| Additional paid-in capital | 1,199 | 818 | ||||||
| Accumulated other comprehensive loss | (41 | ) | - | |||||
| Accumulated deficit | (158,223 | ) | (96,997 | ) | ||||
| Total Carisma Therapeutics Inc. stockholders' deficit | (157,065 | ) | (96,179 | ) | ||||
| Noncontrolling interests | 14,395 | 14,395 | ||||||
| Total stockholders' deficit | (142,670 | ) | (81,784 | ) | ||||
| Total liabilities, convertible preferred stock and stockholders' deficit | $ | 72,153 | $ | 35,449 |
See accompanying notes to consolidated financial
CARISMA THERAPEUTICS INC.
Consolidated Statements
of Operations and Comprehensive Loss
(in thousands, except share and per share data)
| Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Collaboration revenues | $ | 9,834 | $ | - | ||||
| Operating expenses: | ||||||||
| Research and development | 56,618 | 34,387 | ||||||
| General and administrative | 9,378 | 6,407 | ||||||
| Total operating expenses | 65,996 | 40,794 | ||||||
| Operating loss | (56,162 | ) | (40,794 | ) | ||||
| Change in fair value of derivative liability | (1,919 | ) | - | |||||
| Interest (expense) income, net | (3,145 | ) | 10 | |||||
| Net loss | $ | (61,226 | ) | $ | (40,784 | ) | ||
| Share information: | ||||||||
| Net loss per share of common stock, basic and diluted | $ | (54.65 | ) | $ | (37.62 | ) | ||
| Weighted-average shares of common stock outstanding, basic and diluted | 1,120,390 | 1,084,082 | ||||||
| Comprehensive loss | ||||||||
| Net loss | $ | (61,226 | ) | $ | (40,784 | ) | ||
| Unrealized loss on marketable securities | (41 | ) | - | |||||
| Comprehensive loss | $ | (61,267 | ) | $ | (40,784 | ) |
See accompanying notes to consolidated financial
CARISMA THERAPEUTICS INC.
Consolidated Statements
of Convertible Preferred Stock and Stockholders' Deficit
(in thousands, except share and per share data)
| Convertible preferred stock | Stockholders' deficit | ||||||||||||||||||||||||||||||||||||||||||||||
| Series A convertible preferred stock | Special voting preferred stock | Series B convertible preferred stock | Series B special voting preferred stock | Common stock | Additional | Accumulated other | |||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | paid-in capital | comprehensive loss | Accumulated deficit | Noncontrolling interests | Total | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 | 5,201,017 | $ | 53,577 | 1 | $ | - | 2,453,170 | $ | 38,054 | 1 | $ | - | 1,084,082 | $ | - | $ | 339 | $ | - | $ | (56,213 | ) | $ | 14,395 | $ | (41,479 | ) | ||||||||||||||||||||
| Issuance of Series B convertible preferred stock at $15.60 per share, net of issuance costs of $151 | - | - | - | - | 1,046,696 | 16,177 | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | 479 | - | - | - | 479 | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | (40,784 | ) | - | (40,784 | ) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | 5,201,017 | 53,577 | 1 | - | 3,499,866 | 54,231 | 1 | - | 1,084,082 | - | 818 | - | (96,997 | ) | 14,395 | (81,784 | ) | ||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | - | - | 83,520 | - | 106 | - | - | - | 106 | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | - | 275 | - | - | - | 275 | ||||||||||||||||||||||||||||||||
| Unrealized loss on marketable securities | - | - | - | - | - | - | - | - | - | - | - | (41 | ) | - | - | (41 | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | - | - | (61,226 | ) | - | (61,226 | ) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 5,201,017 | $ | 53,577 | 1 | $ | - | 3,499,866 | $ | 54,231 | 1 | $ | - | 1,167,602 | $ | - | $ | 1,199 | $ | (41 | ) | $ | (158,223 | ) | $ | 14,395 | $ | (142,670 | ) |
See accompanying notes to consolidated financial
CARISMA THERAPEUTICS INC.
Consolidated Statement
| Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (61,226 | ) | $ | (40,784 | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | 1,893 | 682 | ||||||
| Stock-based compensation expense | 275 | 479 | ||||||
| Reduction in the operating right of use assets | 4,197 | 834 | ||||||
| Amortization of debt discount | 2,537 | - | ||||||
| Change in fair value of derivative liability | 1,919 | - | ||||||
| Non-cash interest expense | 93 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | (1,361 | ) | 253 | |||||
| Accounts payable | (473 | ) | (974 | ) | ||||
| Accrued expenses | 4,230 | 2,995 | ||||||
| Deferred revenues | 47,459 | - | ||||||
| Operating lease liabilities | (4,659 | ) | (813 | ) | ||||
| Net cash used in operating activities | (5,116 | ) | (37,328 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of marketable securities | (90,900 | ) | - | |||||
| Proceeds from the sale of marketable securities | 63,000 | - | ||||||
| Purchases of property and equipment | (4,660 | ) | (1,871 | ) | ||||
| Net cash used in investing activities | (32,560 | ) | (1,871 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the exercise of stock options | 106 | - | ||||||
| Payment of principal related to the finance lease liabilities | (865 | ) | - | |||||
| Proceeds from failed sale-leaseback arrangement | 1,626 | - | ||||||
| Payment of finance liability from failed sale-leaseback arrangement | (98 | ) | - | |||||
| Payment of deferred financing costs | (2,450 | ) | - | |||||
| Proceeds from the sale of Series B convertible preferred stock | - | 16,328 | ||||||
| Payment of Series B issuance costs | - | (366 | ) | |||||
| Proceeds from issuance of convertible promissory note | 35,000 | - | ||||||
| Net cash provided by financing activities | 33,319 | 15,962 | ||||||
| Net decrease in cash and cash equivalents | (4,357 | ) | (23,237 | ) | ||||
| Cash and cash equivalents at beginning of the year | 28,551 | 51,788 | ||||||
| Cash and cash equivalents at end of the year | $ | 24,194 | $ | 28,551 | ||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid for interest | $ | 98 | $ | - | ||||
| Supplemental disclosures of non-cash financing and investing activities | ||||||||
| Property and equipment in accounts payable | $ | - | $ | 121 | ||||
| Unrealized loss on marketable securities | $ | (41 | ) | $ | - | |||
| Deferred financing costs in accrued expenses | $ | 1,661 | $ | - | ||||
| Allocation of debt proceeds to derivative liability | $ | 3,820 | $ | - | ||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 6,440 | $ | - | ||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | $ | 2,898 | $ | - |
See accompanying notes to the consolidated financial statements
CARISMA THERAPEUTICS INC.
Notes to the Consolidated Financial
Therapeutics Inc., a Delaware Corporation (the Company), is a clinical-stage biopharmaceutical company focused on utilizing the Company's
proprietary macrophage and monocyte cell engineering platform to develop transformative therapies to treat cancer and other serious disorders.
Cell therapy enables the utilization of reprogrammed living cells to perform complex functions such as clearance of tumor cells or resolution
of inflammation. The Company's initial focus is its proprietary Chimeric Antigen Receptor Macrophage (CAR-M) platform, which redirects
macrophages against specific tumor associate antigens and enables targeted anti-tumor immunity by utilizing genetically modifying myeloid
cells (macrophages and monocytes) to express chimeric antigen receptors, or CARs, enabling the innate immune cells to recognize specific
tumor associated antigens on the surface of tumor cells. The Company's clinical lead product candidate CT-0508 is an ex vivo
gene-modified autologous CAR-M cell therapy product intended to treat solid tumors that overexpress HER2.
Company has completed enrollment of the first group of patients in a Phase 1 clinical trial of CT-0508, with nine patients having
been successfully dosed. In November 2022, the Company presented preliminary clinical results from the first group of patients.
CT-0508 was successfully manufactured using macrophages obtained from heavily pre-treated, advanced solid tumor patients and has
shown high CAR expression, viability, and purity. In addition, CT-0508 has been generally well-tolerated after infusion with no
dose-limiting toxicities reported to date from the nine patients enrolled in the first group. While the results from this early
clinical trial data are both preliminary and limited, we believe the results indicate that CT-0508 can be detected within the tumor
microenvironment, or TME, lead to remodeling and activation of the TME, and potentially induce anti-tumor adaptive immunity. In the
combination setting, the Company has observed the synergistic potential of CT-0508 with a PD1 blocking T-cell checkpoint inhibitor
in pre-clinical models, enabling a combination trial with pembrolizumab. The Company submitted a clinical protocol amendment to the
Food and Drug Administration (FDA) in September 2022 to allow it to treat patients with the co-administration of CT-0508 and
pembrolizumab. The FDA has granted "Fast Track" status to CT-0508 for the treatment of patients with HER2 overexpressing
solid tumors and we plan to prioritize development for this indication.
CT-0508, the Company has a broad pipeline of cell therapy assets in various stages of pre-clinical development. In addition to the development
of ex vivo CAR-M cell therapies, the Company is also developing in vivo CAR-M gene therapies, wherein immune cells are
directly engineered with the patient's body. To advance the Company's in vivo CAR-M therapeutics, the Company established
a strategic collaboration with ModernaTX Inc. (Moderna) (Note 12).
March 2023, the Company completed an Agreement and Plan of Merger and Reorganization, as amended, (the Merger Agreement) with Seahawk
Merger Sub, Inc. (Merger Sub), a Delaware corporation and wholly-owned subsidiary of Sesen Bio, Inc. (Sesen Bio), a publicly
traded life science company. The Merger Agreement provided for the merger of the Company with Merger Sub, with the Company as the surviving
entity and the Company continuing as a wholly-owned subsidiary of Sesen Bio (the Merger). At the closing of the Merger, (a) each
then outstanding share of the Company's common stock and convertible preferred stock (collectively, the Company's capital
stock) (including shares of the Company's common stock issued in connection with the pre-closing financing transaction described
below) were converted into shares of Sesen Bio common stock, and (b) each then outstanding stock option to purchase the Company's
common stock was assumed by Sesen Bio.
with the closing of the Merger Agreement, certain parties purchased 1,964,101 shares of the Company's common stock at $15.60
per share for an aggregate purchase price of $30.6 million (Pre-Closing Financing), which converted into shares of Sesen Bio common
stock following the Merger. Upon completion of the Merger, the outstanding principal and unpaid interest associated with the $35.0
million convertible promissory note (Note 6) were automatically converted into shares of Sesen Bio common stock.
Notes to the Consolidated
Financial Statements
the Merger, the shareholders of the Company held 71.7% of the combined company, and the shareholders of Sesen Bio held 28.3% of the combined
Merger will be accounted for as a reverse capitalization because the primary assets of Sesen Bio were cash, cash equivalents and
marketable securities, which will be recorded at fair value in the consolidated financial statements of the Company, and the reported
operating results prior to the Merger will be those of the Company. The combined company was renamed Carisma Therapeutics
incurred losses since inception and has an accumulated deficit of $158.2 million as of December 31, 2022. The Company anticipates
incurring additional losses until such time, if ever, that it can generate significant sales from its product candidates currently in
development. Management believes that cash, cash equivalents and marketable securities of $52.0 million as of December 31, 2022 and
net proceeds of $105.3 million from the completion of the Merger and Pre-Closing Financing are sufficient to sustain planned operations