Kalaris Therapeutics, Inc.
For the period ended Jun 30, 2025. Filed Aug 13, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 13, 2025
KLRS$2.42+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-14.
0000950170-25-071339
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-13.
0000950170-25-107979
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 153 previous paragraphs and 136 current paragraphs.
95 unchanged; 27 reworded; 6 added; 27 removed; 4 previous and 8 current paragraphs rearranged.
Tables are not compared: 3 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
The following table summarizes our research and development expenses (in thousands):
Current report
Other income, net
Current report
Comparison of the Six Months Ended June 30, 2025 and 2024
Current report
The following table summarizes our research and development expenses (in thousands):
Current report
Other income, net
Current report
There have been no material changes to our critical accounting estimates from those described in “Kalaris' Management’s Discussion and Analysis of Financial Conditions and Results of Operations” filed as Exhibit 99.4 to our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the "SEC") on March 18, 2025.
Removed paragraphs (27)
Previous report
General and Administrative Expenses
Previous report
Interest expense
Previous report
The following table summarizes our research and development expenses for the periods presented (in thousands):
Previous report
General and Administrative Expenses
Previous report
Interest expense
Previous report
Other income
Previous report
Although significant accounting policies are described in more detail in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report, we believe that the following accounting estimates are those most critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.
Previous report
Research and development expenses are charged to expense as incurred. Research and development expenses include certain payroll and personnel expenses, license fees, laboratory supplies, consulting costs, external contract research and development expenses and allocated overhead costs, including software and other miscellaneous expenses incurred in connection with our research and development programs.
Previous report
We estimate manufacturing and product development costs, preclinical study and clinical trial and other research and development expenses based on the services performed. We have entered into various agreements with outsourced vendors, contract development and manufacturing organizations and clinical research organizations. The financial terms of these contracts are subject to negotiation, which vary by contract and may result in payments that do not match the periods over which materials or services are provided. Generally, these agreements set forth the scope of work to be performed at a fixed fee, unit price or on a time and materials basis. We record the estimated costs of research and development activities based on the level of services performed, the progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development services provided, but not yet invoiced, are included in accrued expenses on the balance sheets. Advance payments for goods or services for future research and development activities are deferred as prepaid expenses and are expensed as the goods are delivered or the related services are performed. We make these estimates based on facts and circumstances known at that time. If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual accordingly. Amounts ultimately incurred in relation to amounts accrued for these services at a reporting date may be substantially higher or lower than our estimates. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred.
Previous report
Convertible Promissory Notes
Previous report
Tranche Liability
Previous report
The convertible promissory notes issued in the Convertible Note Financing in October and November 2024 contained subsequent tranches to require investors to provide additional financing upon a written notice. The investors’ right to receive additional convertible promissory notes in subsequent tranches of the Convertible Note Financing with a predetermined conversion price was concluded to be a freestanding financial instrument that is required to be accounted for separately as a liability at fair value. We estimated the fair value of the tranche liability at inception and remeasured it at the end of each reporting period until the tranche liability expired or was settled. The changes in the fair value were recorded as a change in fair value of the tranche liability in the condensed consolidated statements of operations and comprehensive loss. We estimated the fair value of the tranche liability using a probability weighted model, which considered as inputs the timing of issuing convertible notes and notes conversion, probabilities of conversion scenarios, the estimated fair value of shares into which the note was convertible and a discount rate. A significant change in probabilities of conversion scenarios and changes in the estimated conversion price would significantly change the estimated fair value of the tranche liability. We recognized $21.3 million as a tranche liability at the issuance dates in October and November 2024 and recognized a gain of $21.0 million as the change in fair value of the tranche liability for the three months ended December 31, 2024. In January 2025, as part of the first tranche of the Additional Permitted Bridge Financing, we issued additional convertible promissory notes for $3.75 million and one of three tranches was settled. In March 2025, we and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranche financings and the tranche liability expired unexercised.
Previous report
Derivative Liabilities
Previous report
The convertible promissory notes contained embedded features that provided the noteholder with multiple settlement alternatives. Certain of these settlement features provided the noteholder the right to receive cash or a variable number of shares upon a change in control or the completion of a capital raising transaction (the “redemption features”).
Previous report
The redemption features of the convertible promissory notes met the requirements for separate accounting and were accounted for as compound derivative instruments recorded as liability at fair value at inception and were subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recorded as a change in fair value of derivative liabilities in the condensed consolidated statements of operations and other comprehensive loss. Derivative liabilities were classified in the condensed consolidated balance sheets as current or non-current consistent with the classification of the respective convertible promissory notes they were related to. We estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis, which involves valuing the whole instrument on an as-is basis and then valuing the instrument without the embedded derivative. The difference between the entire instrument with the embedded derivatives compared to the instrument without the embedded derivatives is the fair value of the derivative liabilities. A significant increase in probabilities of qualified financing or redemption scenario, a change of control scenario and a decrease in a discount rate would significantly increase the estimated fair value of derivative liabilities. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.
Previous report
Royalty Obligation – Related Party
Previous report
In July 2024, we entered into the Royalty Agreement with Samsara. Under the Royalty Agreement, we redeemed 10,080 shares of our common stock, with a fair value of $32,000 from Samsara. In return, we are obligated to pay Samsara royalties on a product-by-product and country-by-country basis at low single-digit royalty rates on future net product sales. At the effective date of the agreement, we recognized an obligation to make future royalty payments to Samsara at estimated fair value as a liability on the condensed consolidated balance sheet and as a research and development expense in the condensed consolidated statement of operations and comprehensive loss. Once royalty payments to Samsara are deemed probable and estimable, and if such amounts exceed the royalty liability balance recognized at the effective date of the agreement, we will impute interest to accrete the royalty liability on a prospective basis based on such estimates. The fair value of the royalty obligation at the effective date of the Royalty Agreement was estimated using a risk-adjusted net present value model, based on the contractual royalty rates applied to the future net sales forecast, adjusted by the probability of success of product development and discounted to the effective date of the Royalty Agreement. Significant changes to any of the following assumptions would significantly impact the estimated liability amount: future timing and amounts of net product revenues, estimated probabilities of success based on a stage of product development and the discount rate.
Previous report
We measure stock-based awards made to employees and non-employees based on the estimated fair value of the awards as of the grant date using the Black-Scholes option-pricing model. The model requires management to make a number of assumptions including common stock fair value, expected volatility, expected term, risk-free interest rate and expected dividend yield.
Previous report
Fair Value of Common Stock- Prior to the closing of the Merger, the fair market value of our common stock was determined by our board of directors with assistance from management and external valuation experts. Our approach to estimating the fair market value of our common stock was consistent with the methods outlined in the American Institute of Certified Public Accountants’ Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Following the Merger, the fair market value of our common stock is based on its closing price on the Nasdaq Global Market as reported on the date of the stock option grant.
Previous report
Expected Volatility – Expected volatility is estimated by studying the volatility of the prices of shares of common stock of comparable public companies for similar terms. We will continue to apply this process until enough historical information regarding the volatility of our stock price becomes available.
Previous report
Expected Term – Expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method.
Previous report
Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury zero-coupon bonds issued in effect at the time of grant for periods corresponding with the expected term of the option.
Previous report
Expected Dividend – The Black-Scholes valuation model calls for a single expected dividend yield as an input. To date, we have not declared or paid any dividends and we do not expect to declare or pay any dividends in the future.
Previous report
Significant changes in the estimated fair value of common stock, expected volatility and expected term would significantly impact recognized stock-based compensation expense amounts. The intrinsic value of all outstanding stock options as of March 31, 2025 was approximately $44.7 million, based on the fair value of $8.03 per share of our common stock, of which approximately $14.1 million related to vested stock options, and approximately $30.6 million related to unvested stock options.
Previous report
Emerging Growth Company Status and Smaller Reporting Company
Previous report
We are an emerging growth company ("EGC"), as defined in the Jumpstart Our Business Startup Act (“JOBS Act”), and we may remain an EGC until the last day of the fiscal year following the fifth anniversary of the initial public offering of AlloVir’s common stock. For so long as we remain an EGC, we are permitted and intend to rely on certain exemptions from various public company disclosure and reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, we have provided only two years of audited financial statements and have not included all of the executive compensation-related information that would be required if we were not an EGC. Accordingly, the information contained herein may not be comparable with the information stockholders receive from other public companies in which they may hold stock. Under the JOBS Act, EGCs 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 certain or new or revised accounting standards until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of AlloVir’s initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period, or (iii) if we affirmatively and irrevocably opts out of the extended transition period provided by the JOBS Act.
Previous report
We are also a “smaller reporting company” because the market value of our stock held by non-affiliates was less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to EGCs, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Reworded paragraphs (27)
Previous wording
Since our inception in September 2019, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, acquiring technology, establishing our intellectual property portfolio and performing research and development of our product candidate. We do not have any products approved for sale and have not generated any revenue from product sales or otherwise. We have incurred significant losses and negative cash flows from operations since our inception. Our net losses were $10.2 million and $3.4 million for the three months ended years ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of $126.8 million. To date, we have funded our operations primarily from sales of our redeemable convertible preferred stock, issuances of convertible promissory notes and a simple agreement for future equity (“SAFE”), and from cash and cash equivalents of AlloVir, Inc. ("AlloVir") received in the Merger (as defined below). From inception through March 31, 2025, we have received gross proceeds of $67.5 million from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and we received cash and cash equivalents of AlloVir of approximately $102.1 million in the Merger.
Current wording
Since our inception in September 2019, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, acquiring technology, establishing our intellectual property portfolio and performing research and development of our product candidate. We do not have any products approved for sale and have not generated any revenue from product sales or otherwise. We have incurred significant losses and negative cash flows from operations since our inception. Our net losses were $21.5 million and $9.1 million for the six months ended June 30, 2025 and 2024, respectively. Our negative cash flows from operations were $20.0 million and $8.5 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, we had an accumulated deficit of $138.1 million. To date, we have funded our operations primarily from sales of our redeemable convertible preferred stock, issuances of convertible promissory notes and a simple agreement for future equity (“SAFE”), and from cash and cash equivalents of AlloVir, Inc. (“AlloVir”) received in the Merger (as defined below). From inception through June 30, 2025, we have received gross proceeds of $67.5 million from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and we received cash and cash equivalents of AlloVir of approximately $102.1 million in the Merger.
Previous wording
As of March 31, 2025, we had $101.0 million in cash and cash equivalents. Based on our current operating plans, our management expects that our cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, management has based these estimates on assumptions that may prove to be wrong, and our operating plans may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.
Current wording
As of June 30, 2025, we had $88.4 million in cash and cash equivalents. Based on our current operating plans, our management expects that our cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, management has based these estimates on assumptions that may prove to be wrong, and our operating plans may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.
Previous wording
Additionally, the new U.S. administration has announced or imposed a series of tariffs on U.S. trading partners. In response, several countries have threatened or imposed retaliatory measures. While we have not experienced, and do not currently expect to experience, any direct impact from these tariffs and retaliatory measures, the full extent of the future impact of these and other threatened measures remains uncertain. We continue to monitor these tariffs and retaliatory measures and their possible effects on our business.
Current wording
Additionally, this past spring, the U.S. administration initiated a series of tariff-related actions against U.S. trading partners. In response, several countries have threatened or imposed retaliatory measures. The U.S. has reached agreements with certain of these countries, though the effective date for such agreements are not yet known. While we have not experienced, and do not currently expect to experience, any direct impact from these tariffs and retaliatory measures, the full extent of the future impact of these and other threatened measures remains uncertain. We continue to monitor these tariffs and retaliatory measures and their possible effects on our business.
Previous wording
We made a payment of $0.1 million in connection with our achievement of the first development milestone related to the dosing of the first patient in our Phase 1 clinical trial in August 2024, which was recorded as research and development expense in the statement of operations and comprehensive loss for the year ended December 31, 2024. No other milestones were achieved or probable as of March 31, 2025.
Current wording
We recognized an immaterial amount and $0.1 million in patent reimbursement costs for the three and six months ended June 30, 2025, respectively. We made a payment of $0.1 million in connection with our achievement of the first development milestone related to the dosing of the first patient in our Phase 1 clinical trial in August 2024, which was recorded as research and development expense in the consolidated statement of operations for the year ended December 31, 2024. No other milestones were achieved or probable through June 30, 2025. No milestone expense was recorded for each of the three and six months ended June 30, 2025 and 2024.
Previous wording
Once royalty payments to Samsara are deemed probable and estimable, and if such amounts exceed the initially recorded royalty obligation balance, we will impute interest to accrete the liability on a prospective basis based on such estimates. If and when we make royalty payments under the Royalty Agreement, the royalty obligation balance will be reduced. As of March 31, 2025, royalty payments were not probable and estimable and, therefore, for the three months ended March 31, 2025, no interest expense was recognized for the royalty liability.
Current wording
Once royalty payments to Samsara are deemed probable and estimable, and if such amounts exceed the initially recorded royalty obligation balance, we will impute interest to accrete the liability on a prospective basis based on such estimates. If and when we make royalty payments under the Royalty Agreement, the royalty obligation balance will be reduced. As of June 30, 2025, royalty payments were not probable and estimable and, therefore, for the three and six months ended June 30, 2025, no interest expense was recognized for the royalty liability.
Previous wording
Change in fair value of derivative liabilities represents gains or losses from the remeasurement of the derivative liabilities embedded in the convertible promissory notes issued to Samsara and other investors at the end of each reporting period until settlement or extinguishment. The derivative liabilities expired in connection with the closing of the Merger.
Current wording
Change in fair value of derivative liabilities represents gains or losses from the remeasurement of the derivative liabilities embedded in the convertible promissory notes issued to Samsara and other investors at the end of each reporting period until settlement or extinguishment. The derivative liabilities expired in connection with the closing of the Merger on the Closing Date.
Previous wording
Interest expense represents non-cash interest expense accrued on issued and outstanding convertible promissory notes.
Current wording
Interest expense represents non-cash interest expense accrued on issued and previously outstanding convertible promissory notes and amortization of a debt discount on the advances under the convertible promissory note issued to Samsara in March 2024.
Previous wording
Loss on issuance of convertible promissory notes represents loss upon the issuance of convertible promissory notes to Samsara and other investors accounted at fair value. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into shares of redeemable convertible preferred stock or common stock of Legacy Kalaris immediately prior to the closing of the Merger.
Current wording
Loss on issuance of convertible promissory notes represents loss upon the issuance of convertible promissory notes to Samsara and other investors accounted at fair value. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into shares of redeemable convertible preferred stock or common stock of Legacy Kalaris immediately prior to the closing of the Merger on March 18, 2025.
Previous wording
Other income (expense), net includes primarily interest income received from money market investments and bank deposits, and foreign currency gains (losses).
Current wording
Other income (expense), net includes primarily interest income received from money market investments and bank deposits, and realized and unrealized foreign currency gains (losses).
Previous wording
The following table summarizes our results of operations for the periods presented (in thousands):
Current wording
The following table summarizes our results of operations (in thousands):
Previous wording
Research and development expenses increased by $4.1 million, from $2.0 million for the three months ended March 31, 2024, to $6.0 million for the three months ended March 31, 2025. CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs increased by $3.3 million, from $1.5 million for the three months ended March 31, 2024 to $4.8 million for the three months ended March 31, 2025, as we initiated our Phase 1 clinical trial in June 2024. CRO and other clinical expenses increased by $0.9 million, from $0.2 million for the three months ended March 31, 2024 to $1.1 million for the three months ended March 31, 2025, as we opened additional investigational sites and enrolled patients in our clinical trial. CDMO and other third-party preclinical studies and consulting costs increased by $2.5 million from $1.1 million for the three months ended March 31, 2024 to $3.6 million for the three months ended March 31, 2025, due to the additional manufacturing process development activities and manufacturing of our clinical supplies to support our clinical trial.
Current wording
Research and development expenses increased by $5.2 million, from $3.2 million for the three months ended June 30, 2024, to $8.4 million for the three months ended June 30, 2025. CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs increased by $4.6 million as we initiated our Phase 1 clinical trial of TH103 in June 2024. CRO and other clinical expenses increased by $0.2 million as we opened additional investigational sites and enrolled patients in our clinical trial. CDMO and other third-party preclinical studies and consulting costs increased by $4.4 million due to the additional manufacturing process development activities and manufacturing of our clinical supplies to support our clinical trial.
Previous wording
Personnel related costs increased by $0.7 million from $0.4 million for the three months ended March 31, 2024, to $1.1 million for the three months ended March 31, 2025, due to hiring in our research and development organization. This increase in compensation and personnel costs includes a $0.1 million increase in stock-based compensation expense.
Current wording
Personnel related costs increased by $0.5 million, due to hiring in our research and development organization. This increase in personnel related costs included a $0.1 million increase in stock-based compensation expense.
Previous wording
General and administrative expenses increased by $3.7 million from $0.6 million for the three months ended March 31, 2024 to $4.3 million for the three months ended March 31, 2025. The increase in general and administrative expenses was primarily attributable to an increase of $1.4 million in legal, accounting and other professional and outside services, an increase of $1.5 million related to AlloVir’s directors' and officers’ insurance recognized following the closing of the Merger, an increase of $0.5 million in personnel related expenses and an increase of $0.3 million in other expenses. Our general and administrative expenses increased as we invested in our corporate infrastructure and in connection with the closing of the Merger.
Current wording
General and administrative expenses increased by $2.8 million from $1.0 million for the three months ended June 30, 2024 to $3.8 million for the three months ended June 30, 2025. The increase in general and administrative expenses was primarily attributable to an increase of $1.7 million in legal, accounting and other professional and outside services, an increase of $0.2 million related to directors' and officers’ insurance recognized following the closing of the Merger, an increase of $0.5 million in personnel related expenses and an increase of $0.4 million in other expenses. General and administrative expenses increased as we invested in our corporate infrastructure and in connection with the closing of the Merger.
Previous wording
Other income of $0.2 million and less than $0.1 million for the three months ended March 31, 2025 and 2024, respectively, primarily consisted of interest income received from money market investments and foreign currency gains (losses).
Current wording
Other income, net of $0.9 million and $0.1 million for the three months ended June 30, 2025 and 2024, respectively, primarily consisted of interest income received from money market investments and foreign currency gains (losses).
Previous wording
We recognized a $0.4 million gain for the three months ended March 31, 2025, related to the changes in the fair value of tranche liability. We did not issue tranche liability for the three months ended March 31, 2024. The convertible promissory notes issued in the Convertible Note Financing in October and November 2024 and amended in November 2024 included three subsequent tranches for the issuance of convertible promissory notes at the predetermined conversion price that were concluded to be liabilities and are accounted for at fair value until the tranches’ expiration or settlement. The fair value of the tranche liability is estimated using a probability weighted scenario analysis discounted to the current period. Refer to Note 4, Fair Value Measurements and Fair Value of Financial Instruments, in the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. In January 2025, as part of the first tranche of the Additional Permitted Bridge Financing, we issued additional convertible promissory notes for $3.75 million and one of three tranches was settled. In March 2025, we and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranches and the tranche liability expired unexercised.
Current wording
We recognized a $0.4 million gain for the six months ended June 30, 2025, related to the changes in the fair value of tranche liability. We did not issue tranche liability for the six months ended June 30, 2024. The convertible promissory notes issued in the Convertible Note Financing in October and November 2024 and amended in November 2024 included three subsequent tranches for the issuance of convertible promissory notes at the predetermined conversion price that were concluded to be liabilities and are accounted for at fair value until the tranches’ expiration or settlement. The fair value of the tranche liability is estimated using a probability weighted scenario analysis discounted to the current period. Refer to Note 4, Fair Value Measurements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. In January 2025, as part of the first tranche of the Additional Permitted Bridge Financing, we issued additional convertible promissory notes for $3.75 million and one of three tranches was settled. In March 2025, we and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranches and the tranche liability expired unexercised.
Previous wording
We recognized $1.2 million and zero gain for the three months ended March 31, 2025 and 2024, respectively, related to the changes in the fair value of derivative liabilities embedded into convertible promissory notes issued to Samsara and other investors. We estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis. Refer to Note 4, Fair Value Measurements and Fair Value of Financial Instruments, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.
Current wording
We recognized $1.2 million and $0.3 million gain for the six months ended June 30, 2025 and 2024, respectively, related to the changes in the fair value of derivative liabilities embedded into convertible promissory notes issued to Samsara and other investors. We estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis. Refer to Note 4, Fair Value Measurements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.
Previous wording
We recognized $1.4 million and $0.1 million for the three months ended March 31, 2025 and 2024, respectively, of interest expense, which included the accrued interest and amortization of debt discount related to issued and outstanding convertible promissory notes issued to Samsara and other investors. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details.
Current wording
We recognized $1.4 million and $0.6 million for the six months ended June 30, 2025 and 2024, respectively, of interest expense, which included the accrued interest and amortization of debt discount related to issued and outstanding convertible promissory notes issued to Samsara and other investors. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details.
Previous wording
We recognized $0.2 million and $0.8 million of loss on issuance of convertible promissory notes to Samsara and other investors for the three months ended March 31, 2025 and 2024, respectively. The decrease of $0.6 million in loss on issuance of convertible promissory notes was related to the lower amount of premium recognized at the issuance of the notes in January 2025 compared to the premium on the notes issued in March 2024. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for additional details.
Current wording
We recognized $0.2 million and $2.1 million of loss on issuance of convertible promissory notes to Samsara and other investors for the six months ended June 30, 2025 and 2024, respectively. The decrease of $1.9 million in loss on issuance of convertible promissory notes was related to the lower amount of premium recognized at the issuance of the notes in January 2025 compared to the premium on the notes issued in March 2024 and May 2024. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for additional details.
Previous wording
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. From inception, we have primarily funded our operations from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and from cash and cash equivalents of AlloVir received in the Merger. From inception through March 31, 2025, we have received gross proceeds of $67.5 million from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and we received cash and cash equivalents of AlloVir of approximately $102.1 million in the Merger. As of March 31, 2025, we had $101.0 million in cash and cash equivalents.
Current wording
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. From inception, we have primarily funded our operations from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and from cash and cash equivalents of AlloVir received in the Merger. From inception through June 30, 2025, we have received gross proceeds of $67.5 million from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and we received cash and cash equivalents of AlloVir of approximately $102.1 million in the Merger. As of June 30, 2025, we had $88.4 million in cash and cash equivalents.
Previous wording
We have incurred significant losses and negative cash flows from operations since our inception. As of March 31, 2025, we had an accumulated deficit of $126.8 million. Based on our current operating plans, we believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, we have based these estimates on assumptions that may prove to be wrong, and our operating plans may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.
Current wording
We have incurred significant losses and negative cash flows from operations since our inception. As of June 30, 2025, we had an accumulated deficit of $138.1 million. Based on our current operating plans, we believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, we have based these estimates on assumptions that may prove to be wrong, and our operating plans may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.
Previous wording
Net cash used in operating activities was $7.4 million and $4.5 million for the three months ended March 31, 2025 and 2024, respectively.
Current wording
Net cash used in operating activities was $20.0 million and $8.5 million for the six months ended June 30, 2025 and 2024, respectively.
Previous wording
Cash used in operating activities for the three months ended March 31, 2025, was primarily due to a net loss of $10.2 million, reduced by non-cash charges of $0.4 million and further reduced by net changes of $2.3 million in the net operating assets and liabilities. Non-cash changes primarily consist of a $0.4 million stock-based compensation expense, a gain of $1.2 million related to the change in fair value of derivative liabilities, a gain of $0.4 million related to the change in fair value of tranche liability, non-cash interest expense of $1.4 million and loss on issuance of convertible promissory notes of $0.2 million. The change in net operating assets and liabilities was primarily due to a decrease in prepaid expenses and other current assets of $1.4 million, an increase in accounts payable of $0.9 million, an increase in accrued research and development expenses of $1.2 million due to the timing of receipt of invoices from vendors, an increase in accrued expenses and other current liabilities of $0.2 million, partially offset by a decrease of $1.4 million in accrued compensation.
Current wording
Cash used in operating activities for the six months ended June 30, 2025, was primarily due to a net loss of $21.5 million, offset by non-cash charges of $1.0 million and further offset by net changes of $0.6 million in the net operating assets and liabilities. Non-cash changes primarily consist of a $1.0 million stock-based compensation expense, a gain of $1.2 million related to the change in fair value of derivative liabilities, a gain of $0.4 million related to the change in fair value of tranche liability, non-cash interest expense of $1.4 million and loss on issuance of convertible promissory notes of $0.2 million. The change in net operating assets and liabilities was primarily due to an increase in prepaid expenses and other current assets of $0.6 million, an increase in other non-current assets of $0.3 million, an increase in accounts payable of $2.2 million, a decrease in accrued expenses and other current liabilities of $0.3 million, and a decrease of $1.1 million in accrued compensation.
Previous wording
Cash used in operating activities for the three months ended March 31, 2024, was primarily due to a net loss of $3.4 million, reduced by non-cash charges of $1.0 million and increased by net changes of $2.1 million in the net operating assets and liabilities. Non-cash changes primarily consist of a loss on issuance of convertible promissory notes of $0.8 million, a non-cash interest expense of $0.1 million and a $0.1 million capital contribution by in-kind services provided by Samsara. The change in net operating assets and liabilities was primarily due to a decrease in accounts payable of $1.2 million, an increase in prepaid expenses and other current assets of $0.4 million, a decrease in accrued compensation of $0.3 million, and a decrease in accrued research and development expenses of $0.2 million due to the timing of payments and receipt of invoices from vendors, partially off-set by an increase in accrued expenses and other current liabilities of $0.1 million.
Current wording
Cash used in operating activities for the six months ended June 30, 2024, was primarily due to a net loss of $9.1 million, offset by non-cash charges of $2.8 million and increased by net changes of $2.2 million in the net operating assets and liabilities. Non-cash changes primarily consist of a loss on issuance of convertible promissory notes of $2.1 million, a non-cash interest expense of $0.6 million, stock-based compensation expense of $0.4 million, and offset by $0.3 million gain related to the change in fair value of derivative liabilities. The change in net operating assets and liabilities was primarily due to a decrease in accounts payable of $1.8 million, an increase in prepaid expenses and other current assets of $0.4 million, a decrease in accrued compensation of $0.2 million, and a decrease in accrued expenses and other current liabilities of $0.2 million.
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2025 was $107.3 million, which consisted of $102.1 million of cash and cash equivalents of AlloVir received in the Merger, proceeds from the issuance of a convertible promissory note of $7.5 million, partially offset by payments of transaction costs related to the Merger of $2.3 million.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2025 was $107.3 million, which consisted of $102.1 million of cash and cash equivalents of AlloVir received in connection with the Merger, proceeds from the issuance of a convertible promissory note of $7.5 million, partially offset by payments of deferred transaction costs and issuance costs related to the Merger of $2.3 million.
Previous wording
Cash provided by financing activities for the three months ended March 31, 2024 was $6.6 million, which consisted of $5.0 million net cash proceeds from the issuance of convertible promissory notes and $1.6 million from the issuance of redeemable convertible preferred stock to existing and new investors.
Current wording
Cash provided by financing activities for the six months ended June 30, 2024 was $11.6 million, which consisted of $10.0 million net cash proceeds from the issuance of convertible promissory notes and $1.6 million from the issuance of redeemable convertible preferred stock to existing and new investors.
Previous wording
We are required to pay certain milestone payments contingent upon the achievement of specific development and regulatory events in accordance with the UCSD Agreement. Refer to Note 6, Significant Agreements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. We achieved the first development milestone under the UCSD Agreement in August 2024. No other milestones were achieved or probable as of March 31, 2025 and December 31, 2024. We are required to pay royalties on sales of products developed under the UCSD Agreement. Our product candidate was in development as of March 31, 2025 and December 31, 2024 and no such royalties were due.
Current wording
We are required to pay certain milestone payments contingent upon the achievement of specific development and regulatory events in accordance with the UCSD Agreement. Refer to Note 6, Significant Agreements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. As of June 30, 2025 and December 31, 2024, we recognized an immaterial amount and $0.2 million related to the UCSD Agreement in accrued expenses and other current liabilities in the condensed consolidated balance sheets, respectively. Through the six months ended June 30, 2025, development milestones totaling $0.1 million have been achieved and incurred as research and development expenses. We did not achieve any development milestones and did not incur any related milestone expense during the three months ended June 30, 2025 and three and six months ended June 30, 2024. We are required to pay royalties on sales of products developed under the UCSD Agreement. Our product candidate was in development as of June 30, 2025 and December 31, 2024 and no such royalties were due.
Previous wording
In February 2025, we entered into a lease agreement for office space in Berkeley Heights, New Jersey. The lease is expected to commence in the second quarter of 2025 and terminate in November 2031. Total undiscounted payments under this lease are approximately $2.1 million. In addition to the base rent, we will pay our share of operating expenses and taxes. The lessor will provide a tenant improvement allowance of up to $0.4 million, which we intend to utilize.
Current wording
In February 2025, we entered into a lease agreement for office space in Berkeley Heights, New Jersey. The lease is expected to commence in the third quarter of 2025 and to terminate in November 2031. We can extend the lease term twice for an additional three years and can terminate the lease after four years and four months after the lease commencement date with a termination penalty of $0.3 million. Total undiscounted payments under this lease are approximately $2.1 million. In addition to the base rent, we will pay our share of operating expenses and taxes. The lessor will provide a tenant improvement allowance of up to $0.4 million, which we intend to utilize.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
We did not recognize any change in the fair value of derivative liabilities for the three months ended June 30, 2025. We recognized a $0.3 million gain for the three months ended June 30, 2024, related to the changes in the fair value of derivative liabilities embedded into convertible promissory notes issued to Samsara and other investors. We estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis. Refer to Note 4, Fair Value Measurements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.
Current report — wording carried from elsewhere
We recognized no interest expense for the three months ended June 30, 2025. We recognized $0.5 million of interest expense for the three months ended June 30, 2024, which included the accrued interest and amortization of debt discount related to issued and outstanding convertible promissory notes issued to Samsara and other investors. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details.
Current report — wording carried from elsewhere
We recognized no loss on issuance of convertible promissory notes for the three months ended June 30, 2025 as no additional notes were issued. We recognized $1.3 million of loss on issuance of convertible promissory notes to Samsara and other investors for the three months ended June 30, 2024. The loss on issuance of convertible promissory notes was related to the premium recognized at the issuance of the notes in May 2024. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for additional details.
Current report — wording carried from elsewhere
The following table summarizes our results of operations (in thousands):
Current report — wording carried from elsewhere
Research and development expenses increased by $9.3 million, from $5.2 million for the six months ended June 30, 2024, to $14.5 million for the six months ended June 30, 2025. CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs increased by $7.9 million as we initiated our Phase 1 clinical trial in TH103 in June 2024. CRO and other clinical expenses increased by $1.2 million as we opened additional investigational sites and enrolled patients in our clinical trial. CDMO and other third-party preclinical studies and consulting costs increased by $6.7 million due to the additional manufacturing process development activities and manufacturing of our clinical supplies to support our clinical trial.
Current report — wording carried from elsewhere
Personnel related costs increased by $1.2 million due to hiring in our research and development organization. This increase in personnel related costs included a $0.1 million increase in stock-based compensation expense.
Current report — wording carried from elsewhere
General and administrative expenses increased by $6.5 million, from $1.6 million for the six months ended June 30, 2024 to $8.1 million for the six months ended June 30, 2025. The increase in general and administrative expenses was primarily attributable to an increase of $3.1 million in legal, accounting and other professional and outside services, an increase of $1.7 million related to directors' and officers’ insurance recognized following the closing of the Merger, an increase of $1.0 million in personnel related expenses and an increase of $0.7 million in other expenses. General and administrative expenses increased as we invested in our corporate infrastructure and in connection with the closing of the Merger.
Current report — wording carried from elsewhere
Other income, net of $1.1 million and $0.1 million for the six months ended June 30, 2025 and 2024, respectively, primarily consisted of interest income received from money market investments and foreign currency gains (losses).
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Change in fair value of derivative liabilities
Previous report — wording carried elsewhere
Loss on issuance of convertible promissory notes
Previous report — wording carried elsewhere
Change in fair value of derivative liabilities
Previous report — wording carried elsewhere
Loss on issuance of convertible promissory notes