10-Q: Carisma Therapeutics Winds Down, Delists from Nasdaq

Carisma Therapeutics Inc. reported Q3 2025 results, confirming its strategic shift to an orderly wind-down of operations after a failed merger and Nasdaq delisting.

Summary

• Carisma Therapeutics Inc. has ceased all research and development activities and is pursuing an orderly wind-down of its operations.
• The planned merger with OrthoCellix, Inc. was terminated on September 16, 2025, due to OrthoCellix's failure to secure at least $25.0 million in concurrent financing.
• The company's common stock was delisted from The Nasdaq Stock Market LLC effective October 13, 2025, and now trades on the OTCID market tier under the symbol CARM.
• For the nine months ended September 30, 2025, the company reported a net income of $25.7 million, primarily driven by the recognition of deferred revenue and a one-time $4.0 million payment from an amendment to its collaboration agreement with Moderna.
• As of September 30, 2025, cash and cash equivalents stood at $2.8 million, with an accumulated deficit of $279.9 million.
• Management has expressed substantial doubt about the company's ability to continue as a going concern, as current cash is not expected to support operations for more than one year.
• The company expects to continue efforts to monetize its remaining assets, but it is unlikely that there will be a meaningful amount of cash available for distribution to stockholders in connection with a wind-down or liquidation.
• Key executives, including the CEO and CSO, are departing, and several board members have resigned.

Sentiment

Score: 1

Explanation: The company is in the process of an orderly wind-down, has ceased all research and development, failed a critical merger, been delisted from Nasdaq, and faces substantial doubt about its ability to continue as a going concern, with little to no expected return for shareholders.

Positives

• Reported a net income of $44.7 million for the three months ended September 30, 2025, and $25.7 million for the nine months ended September 30, 2025, a significant improvement from prior losses.
• Received a one-time cash payment of $4.0 million from Moderna as part of an amendment to their collaboration agreement, which also eliminated future payment obligations to Moderna.
• Generated $0.5 million from the sale of certain early-stage preclinical assets to Resolution Therapeutics Limited.
• Achieved substantial reductions in operating expenses, with research and development expenses decreasing from $11.3 million in Q3 2024 to $0.2 million in Q3 2025, and general and administrative expenses decreasing from $5.2 million to $1.2 million over the same period.

Negatives

• The merger agreement with OrthoCellix, Inc. was terminated due to OrthoCellix's failure to secure the required $25.0 million in concurrent financing.
• The company's common stock was delisted from Nasdaq on October 13, 2025, and now trades on the less liquid OTCID market tier, with no guarantee of continued broker market making or trading.
• Cash and cash equivalents of $2.8 million as of September 30, 2025, are insufficient to support operations for more than one year, raising substantial doubt about the company's ability to continue as a going concern.
• An accumulated deficit of $279.9 million as of September 30, 2025, indicates significant historical losses.
• The company has no intention of resuming its historical research and development activities, signaling an end to its core business model.
• It is unlikely that there will be a meaningful amount of cash available for distribution to stockholders in connection with a wind-down or dissolution.
• The company has not received the $0.8 million termination fee and $0.5 million expense reimbursement from OrthoCellix/Ocugen following the merger termination, and OrthoCellix has not confirmed its intention to pay.
• Incurred $4.2 million in one-time employee termination benefits during the nine months ended September 30, 2025, as part of workforce reductions.

Risks

• It is highly unlikely that there will be cash available for distribution to stockholders as part of the wind-down process, and there is no assurance as to the amount or timing of distributions, if any.
• Uncertainties regarding the ultimate amount of liabilities, operating costs, and amounts to be set aside for claims and obligations during the winding-up process make it impossible to predict the actual net cash amount, if any, available for stockholders.
• There is a risk of receiving no, or lower than expected, proceeds from efforts to monetize remaining assets.
• The company may be unable to collect the $1.3 million termination fee and expense reimbursement from OrthoCellix/Ocugen.
• Unanticipated costs relating to the defense, satisfaction, or settlement of any future lawsuits or other claims could reduce amounts available for distribution.
• Delays in the winding-up process could further deplete remaining assets.
• Stockholders could lose all or a significant portion of their investment in the company.
• The board of directors may elect to commence bankruptcy or liquidation and dissolution proceedings, which could be lengthy, increase costs, and further decrease any cash available for stockholders.
• The company is substantially dependent on its remaining consultants and advisors to facilitate asset monetization and the wind-down, and the loss of their services could be detrimental.
• The company may initiate steps to suspend its SEC reporting obligations, which would substantially reduce publicly available information about it.
• Delisting from Nasdaq and transition to the OTCID market tier may adversely affect the liquidity and market price of the common stock, and there is no guarantee a broker will continue to make a market.
• If funds are raised through strategic collaborations, the company may have to relinquish valuable rights to intellectual property, future revenue streams, or product candidates on unfavorable terms.

Future Outlook

The company has no intention of resuming its historical research and development activities. It expects to continue attempting to sell or otherwise dispose of or monetize its remaining assets and pursue an orderly wind-down of its remaining operations. It is unlikely that there will be a meaningful amount of cash available for distribution to stockholders. The company may file a Form 15 with the SEC to suspend its reporting obligations, and its board of directors may decide to commence bankruptcy or liquidation and dissolution proceedings.

Management Comments

• "We have no intention of resuming our historical research and development activities."
• "We expect to continue to attempt to sell or otherwise dispose of or monetize our remaining assets and pursue an orderly wind down of our remaining operations."
• "It is unlikely that there will be a meaningful amount of cash available for distribution to stockholders in connection with a wind down of our operations or a dissolution and liquidation of the company."
• "We intend to vigorously seek to enforce our right to receive such payments [the $1.3 million termination fee and expense reimbursement from OrthoCellix/Ocugen]."
• "We do not expect that our cash and cash equivalents will support our operations for more than one year following the date of this Quarterly Report on Form 10-Q."
• "Substantial doubt exists about our ability to continue as a going concern."

Industry Context

Carisma Therapeutics, a biotechnology company previously focused on macrophage engineering for liver fibrosis and cancer, is undergoing an orderly wind-down. This situation reflects the inherent high risks and capital intensity of drug development, where even innovative preclinical platforms may fail to secure sufficient funding or navigate competitive landscapes. The termination of the OrthoCellix merger due to a lack of financing underscores the challenging investment environment for early-stage biotech, particularly for companies with a history of strategic pivots and workforce reductions. The delisting from Nasdaq is a common outcome for firms unable to meet listing requirements or establish a viable path forward, signaling a significant loss of investor confidence and market access.

Comparison to Industry Standards

• The company's strategic shift from active research and development to an orderly wind-down is a stark deviation from the typical trajectory of biotechnology companies, which are usually focused on advancing product candidates through clinical trials and towards commercialization.
• The delisting from Nasdaq to the OTCID market tier represents a significant downgrade in market standing, indicating a failure to meet the financial and governance standards expected of companies on major stock exchanges, unlike many industry peers.
• With cash and cash equivalents of $2.8 million and an accumulated deficit of $279.9 million, coupled with a 'going concern' warning, the company's financial health is significantly weaker than that of stable or growing biotechnology firms.
• The failure to secure $25.0 million in concurrent financing for the OrthoCellix merger, despite a $5.0 million commitment from Ocugen, highlights a critical lack of investor confidence in the proposed combined entity, a hurdle that many successful biotech mergers overcome.
• The monetization of early-stage preclinical assets for $0.5 million and the amendment of the Moderna collaboration for a one-time $4.0 million payment, in lieu of potential future milestones and royalties, suggest a distressed asset sale strategy rather than a robust pipeline development typical of thriving biotech companies.

Management Changes

Corporate Governance

Legal Proceedings

• The company intends to vigorously seek to enforce its right to receive a $0.8 million termination fee and $0.5 million expense reimbursement (total $1.3 million) from OrthoCellix/Ocugen, which has not yet been paid.
• The company is in negotiations with a vendor to determine total costs owed for research and development services, with an estimated liability of $1.9 million recorded in accounts payable.
• The company may be subject to litigation or other claims related to a liquidation and dissolution of the company.

Related Party Transactions

• The company has a collaboration and license agreement with Moderna, a significant stockholder. This agreement was amended on September 16, 2025, for a one-time cash payment of $4.0 million, effectively terminating all future financial obligations from Moderna, including development target designation, development, regulatory, and commercial milestone payments, as well as royalties and research costs.

Stakeholder Impact

• Shareholders: Highly unlikely to receive meaningful cash distributions in a wind-down, facing potential loss of all or a significant portion of their investment. Delisting to OTCID will reduce liquidity and market price.
• Employees: Significant workforce reductions (84% in March 2025) and executive terminations have occurred, indicating job losses and uncertainty for remaining personnel.
• Creditors: Delaware law requires payment of outstanding obligations and reasonable provision for contingent and unknown obligations prior to any distributions to stockholders, potentially impacting the timing and amount of creditor settlements.
• Customers/Partners: All research and development activities have ceased, and product candidates have been terminated. The Moderna collaboration has been amended to a fully paid-up license, indicating no further active collaboration or future revenue streams from this partnership.

Next Steps

• Continue to attempt to sell or otherwise dispose of or monetize remaining assets.
• Pursue an orderly wind-down of remaining operations.
• Vigorously seek to enforce the right to receive the $1.3 million termination fee and expense reimbursement from OrthoCellix/Ocugen.
• May file a Form 15 with the SEC to suspend reporting obligations under Sections 13 and 15(d) of the Securities Exchange Act of 1934.
• The board of directors may decide to commence bankruptcy or liquidation and dissolution proceedings.
• Appoint a consultant to serve as the company's chief executive officer to manage remaining wind-down activities after Steven Kelly's departure.

Key Dates

Recommendation

The company is in an advanced stage of winding down its operations, has ceased all research and development, and has been delisted from Nasdaq. There is substantial doubt about its ability to continue as a going concern, and it is explicitly stated that it is "unlikely that there will be a meaningful amount of cash available for distribution to stockholders." The failed merger and executive departures further underscore the lack of a viable path forward. Investors face a high probability of losing all or a significant portion of their investment.

Keywords

Carisma Therapeutics, wind down, Nasdaq delisting, OrthoCellix merger termination, Moderna collaboration, asset monetization, going concern, biotechnology, Q3 2025 results, CAR-M, liquidation