Caribou Biosciences, Inc.

Notes to Condensed Consolidated Financial Statements

1. Description of the Business, Organization, and Liquidity

Business and Organization

On October 6, 2026, Caribou Biosciences, Inc. (“Company” or “we”) announced that, on October 2, 2026, our Board of Directors (“Board”) approved a restructuring of our operations (“2026 Restructuring”) as we conduct a process to explore strategic alternatives to maximize stockholder value, including the planned discontinuation of clinical trials and further development activities for our two allogeneic chimeric antigen receptor (“CAR”)-T (“CAR-T”) cell therapy programs, vispacabtagene regedleucel (“vispa-cel”) and CB-011; a substantial reduction of our workforce; and other cost reduction measures. See Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) for additional information.

Prior to this announcement, we were a clinical-stage Clustered Regularly Interspaced Short Palindromic Repeats (“CRISPR”) genome-editing biopharmaceutical company dedicated to developing transformative therapies for patients with devastating diseases. Our genome-editing platform is based on our novel chRDNA (CRISPRh ybrid RNA-DNA, pronounced “chardonnay”) technology, which enables more precise genome editing of allogeneic cell therapies. Our allogeneic, or off-the-shelf, CAR-T cell therapy product candidates are manufactured in advance with cells from healthy donors. We incorporated in October 2011 as a Delaware corporation and are headquartered in Berkeley, California. We have four wholly owned subsidiaries that hold interests in our equity investments and do not have operating activities.

Liquidity

We have incurred operating losses and negative cash flows from operations since our inception and we had an accumulated deficit of $672.5 million as of September 30, 2026. During the nine months ended September 30, 2026, we incurred a net loss of $76.0 million and used $72.3 million of cash in operating activities.

Following our announced 2026 Restructuring, we expect to incur certain expenses related to one-time severance payments, continued healthcare coverage, costs to wind down the ANTLER phase 1 clinical trial and CaMMouflage phase 1 clinical trial, and costs associated with the anticipated sublease or termination of our facility leases.

Our management expects that existing cash, cash equivalents, and marketable securities of $94.8 million as of September 30, 2026, will be sufficient to fund our current operating plan for at least the next 12 months from the date this Form 10-Q is filed with the Securities and Exchange Commission (“SEC”).

2. Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in Note 2 to the annual consolidated financial statements for the year ended December 31, 2025, included in our Annual Report on Form 10-K (“Form 10-K”).

Basis of Presentation and Principles of Consolidation

Our unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include our accounts and the accounts of our wholly owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Certain prior period amounts in our consolidated financial statements have been reclassified to conform to current period presentation.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires our 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 our unaudited condensed consolidated financial statements; and the reported amounts of revenue, income, and expenses for the applicable reporting period. Significant estimates and assumptions made in the accompanying unaudited condensed consolidated financial statements include, but are not limited to, estimates related to revenue recognition, impairment of long-lived assets, impairment of equity investment, stock-based compensation expense, and accrued research and development expenses. Our management evaluates its estimates and assumptions on an ongoing basis using historical experience and various other assumptions that they believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates.

Concentrations of Credit Risk and Other Uncertainties

Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash and cash equivalents and investments in marketable securities. Substantially all our cash and cash equivalents are deposited in accounts at four financial institutions, and our account balances exceed federally insured limits. We mitigate the risks by investing only in high-grade instruments, limiting our exposure to any single issuer, and monitoring the ongoing creditworthiness of these financial institutions and issuers.

Third parties that represent 10% or more of our revenue were as follows:

*Less than 10%

We monitor economic conditions to identify facts or circumstances that may indicate if any of our accounts receivable are not collectible or if contract assets should be impaired. No allowance for credit losses or contract asset impairment was recorded as of September 30, 2026, or December 31, 2025.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in ASU 2024-03 require a public business entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. The objective of the disclosure requirements is to provide disaggregated information about a public business entity’s expenses to help investors (i) better understand the entity’s performance; (ii) better assess the entity’s prospects for future cash flows; and (iii) compare an entity’s performance over time and with that of other entities. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2024-03.

In September 2025, the FASB issued ASU No. 2025-06 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in ASU 2025-06 remove all references to prescriptive and sequential software development stages. This ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2025-06.

In December 2025, the FASB issued ASU 2025-11 - Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments in ASU 2025-11 provide clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual financial reporting period. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2025-11.

3. Fair Value Measurements and Fair Value of Financial Instruments

We classify fair value-based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices (unadjusted) in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and 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, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We 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. No such transfers occurred during the nine months ended September 30, 2026, and September 30, 2025.

Recurring Measurements

The following table sets forth our financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

The fair value and amortized cost of cash equivalents and available-for-sale marketable securities by major security type as of September 30, 2026, and December 31, 2025, are presented in the following tables (in thousands):

We reviewed each of our marketable securities as of September 30, 2026, and December 31, 2025, and concluded that any decline in fair value was not related to credit losses and was recoverable. Accordingly, no allowance for credit losses was recorded and the unrealized losses are reported as a component of accumulated other comprehensive (loss) income.

Nonrecurring Measurements

On May 15, 2020, we entered into an Exclusive License Agreement for Veterinary Therapeutics (as amended, “Edge chRDNA License Agreement”) with Edge Animal Health (“Edge”), a related party private company, under which we granted Edge an exclusive worldwide license to our Cas9 and Cas12a chRDNA intellectual property and know-how in a defined field of veterinary therapeutics. As consideration for the Edge chRDNA License Agreement, we received 7,500,000 shares of convertible preferred stock (“Edge Stock”) with an estimated fair value of$7.5 million, which was based on the price per share paid for similar shares by another investor, and which was an arm’s length transaction. In June 2024, we received 1,623,275 additional shares of convertible preferred stock pursuant to anti-dilution rights of the Edge chRDNA License Agreement with an estimated fair value of$1.6 million, based on management’s best estimate and judgment. We elected to apply the measurement alternative under Accounting Standards Codification (“ASC”) Topic 321, Investments - Equity Securities (“ASC 321”) for an equity security without a readily determinable fair value. Accordingly, this investment is carried at its cost minus impairment, if any, and is classified within Level 3 of the fair value hierarchy. If we identify observable price changes in orderly transactions for this investment or a similar investment, we will measure the investment at fair value as of the date that the observable transactions or events occurred.

As part of the preparation of our financial statements for the second quarter of 2025, we assessed potential indicators of impairment of our Edge Stock. As part of our assessment, we considered Edge’s planned operating cash flow requirements, available capital to fund those requirements, and ability to secure additional capital if needed as indicators of impairment. During the second quarter of 2025, we determined that impairment indicators existed, and the fair value of our Edge Stock was zero; as a result, as of June 30, 2025, our Edge Stock was fully impaired and no balance remained. We recorded an impairment expense of $9.2 million as “impairment of equity investment” in our unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2025.

4. Significant Agreements

Since December 31, 2025, there have been no material changes to the key terms of our ongoing significant agreements. See Note 4 to the consolidated financial statements included in our Form 10-K for additional information about our ongoing significant agreements.

Our ongoing significant agreements may include nonrefundable, upfront payments; annual license maintenance fees; sublicensing fees; obligations to reimburse for patent prosecution and maintenance fees; success payments; regulatory clinical and commercial milestones; and royalty payments. Our obligation to make such payments is contingent on milestones being achieved, licensed products being commercialized, and the agreements remaining in effect.

As of September 30, 2026, certain license and assignment agreements included potential future payments from us for development, regulatory, and sales milestones totaling approximately $48.9 million, related to our vispa-cel and CB-011 CAR-T cell therapy product candidates.

5. Revenue

Disaggregation of Revenue

We disaggregate revenue by geographical market based on the location of research and development activities of our licensees and other third parties. The following table is a summary of revenue by geographic location for the three and nine months ended September 30, 2026, and September 30, 2025 (in thousands):

For the three months ended September 30, 2026, we recognized $1.6 million of revenue related to performance obligations satisfied at a point in time, andno revenue related to performance obligations satisfied over time.

For the three months ended September 30, 2025, we recognized $1.6 million of revenue related to performance obligations satisfied at a point in time, and we recognized $0.6 million of revenue related to performance obligations satisfied over time.

For the nine months ended September 30, 2026, we recognized $4.3 million of revenue related to performance obligations satisfied at a point in time, and we recognized $1.2 million of revenue related to performance obligations satisfied over time.

For the nine months ended September 30, 2025, we recognized $5.3 million of revenue related to performance obligations satisfied at a point in time, and we recognized $1.9 million of revenue related to performance obligations satisfied over time.

Contract Balances

Accounts receivable relate to our right to consideration for performance obligations completed (or partially completed) for which we have an unconditional right to consideration. Our accounts receivable balances represent amounts we billed to our licensees with invoices outstanding as of the end of a reporting period.

Contract assets are rights to consideration in exchange for a license that we have granted to a licensee when the right is conditional on something other than the passage of time. Our contract asset balances represent royalties and milestone payments from our other license agreements that are unbilled as of the end of a reporting period.

Contract liabilities consist of deferred revenue and relate to amounts invoiced to, or advance consideration received from, licensees and other third parties that precede our satisfaction of the associated performance obligations. As of September 30, 2026, and December 31, 2025, our deferred revenue balance primarily relates to upfront payments received under licensing and other third-party revenue agreements that also include nonrefundable annual license fees, which are accounted for as material rights for license renewals and are recognized at the point in time when annual license fees are paid by the licensees and the renewal periods begin.

The following table presents changes in our contract assets and liabilities for the nine months ended September 30, 2026 (in thousands):

For the nine months ended September 30, 2026, and September 30, 2025, we recognized $1.9 million and $2.5 million of revenue, respectively, which was included in the opening contract liabilities balances at the beginning of the respective periods.

Transaction Prices Allocated to Remaining Performance Obligations

Remaining performance obligations represent in aggregate the amount of a transaction price that has been allocated to performance obligations not delivered as of the end of a reporting period. The value of transaction prices allocated to remaining unsatisfied performance obligations as of September 30, 2026, and December 31, 2025, was approximately $1.7 million and $3.6 million, respectively. We expect to recognize approximately $0.4 million of remaining performance obligations as revenue in the next 12 months from September 30, 2026, and to recognize the remainder thereafter.

Capitalized Contract Acquisition Costs and Fulfillment Costs

We did not incur any expenses to obtain our existing contracts, and costs to fulfill those contracts do not generate or enhance our resources. As such, no costs to obtain or fulfill a contract have been capitalized in any period.

6. Balance Sheet Items

Property and equipment, net, consisted of the following (in thousands):

Depreciation and amortization expenses related to property and equipment were $0.3 million and $0.6 million for the three months ended September 30, 2026, and September 30, 2025, respectively. Depreciation and amortization expenses related to property and equipment were $1.6 million and $2.9 million for the nine months ended September 30, 2026, and September 30, 2025, respectively.

Accrued expenses and other current liabilities consisted of the following (in thousands):

7. Related Party Transactions

Since December 31, 2025, there have been no related party transactions. See Note 7 to the consolidated financial statements included in our Form 10-K for additional information about our related parties.

Pfizer Investment

For the three and nine months ended September 30, 2025, we recognized $0.6 million and $1.9 million of revenue, respectively, from our Information Rights Agreement with Pfizer, dated June 29, 2023, which agreement expired on June 29, 2026, pursuant to which we had originally allocated $7.5 million as a contract with a customer under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Pfizer ceased to be a related party as of December 31, 2025.

Edge Animal Health

As of June 30, 2025, our investment in Edge was deemed fully impaired and no balance remained. See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for additional information.

8. Commitments and Contingencies

Research, Manufacturing, and License Agreements

We enter into various agreements in the ordinary course of business, such as those with contract manufacturing organizations (“CMOs”), suppliers, contract research organizations (“CROs”), clinical trial sites, licensors, assignors, and the like. These agreements provide for termination by either party in certain circumstances, generally with less than one-year notice and are, therefore, cancellable contracts and, if cancelled, are not anticipated to have a material effect on our unaudited condensed consolidated financial condition, results of operations, or cash flows. Some of these agreements include contingent payments that will become payable if and when certain development, regulatory, clinical, and/or commercial milestones are achieved by us. As of September 30, 2026, satisfaction and timing of such contingent payments are uncertain and thus cannot be reasonably estimated.

Guarantees and Indemnifications

In the ordinary course of business, we enter into agreements that contain a variety of representations and warranties and provide for certain indemnifications by us. Our exposure under these agreements is unknown because claims may be made against us in the future. As of September 30, 2026, and December 31, 2025, we did not have any material indemnification claims that were probable or reasonably possible, and consequently, we have not recorded related liabilities.

Litigation

From time to time, we may become involved in litigation arising in the ordinary course of business. We record a liability for such litigation when it is probable that future losses will be incurred and if such losses can be reasonably estimated. Significant judgment by us is required to determine both probability and the estimated amount.

9. Common Stock

Shares of our common stock reserved for future issuances consisted of the following:

Shelf Registration Statement

On May 8, 2025, we filed a shelf registration statement on Form S-3 (“2025 Shelf Registration Statement”), which was declared effective by the SEC on May 14, 2025. Pursuant to the 2025 Shelf Registration Statement, we may, from time to time, sell up to $300.0 million of common stock, preferred stock, debt securities, warrants, rights, or units comprised of any combination thereof (including the $100.0 million of common stock reserved under the 2025 Shelf Registration Statement for our at-the-market equity offering program described below). As of September 30, 2026, we had $272.5 million available for sale under the 2025 Shelf Registration Statement.

At-the-Market Equity Offering Program

On August 9, 2022, we entered into an at-the-market Open Market Sale Agreement SM(“ATM Sales Agreement”) with Jefferies LLC (“Jefferies”) in connection with a prior shelf registration statement. With the effectiveness of the 2025 Shelf Registration Statement, we refreshed our at-the-market equity offering program under the ATM Sales Agreement. We may, from time to time, sell and issue shares of our common stock, through Jefferies as sales agent under the ATM Sales Agreement, having an aggregate offering price of up to $100.0 million in gross proceeds under the 2025 Shelf Registration Statement.

During the three months ended September 30, 2026, we sold 1,480,869 shares of our common stock at an average price of $1.84 per share, in accordance with the ATM Sales Agreement and the 2025 Shelf Registration Statement, for aggregate gross proceeds of $2.7 million ($2.7 million net of offering expenses).

During the nine months ended September 30, 2026, we sold 11,565,913 shares of our common stock at an average price of $2.01 per share, in accordance with the ATM Sales Agreement and the 2025 Shelf Registration Statement, for aggregate gross proceeds of $23.3 million ($22.8 million net of offering expenses).

We didnot sell any shares of our common stock under the ATM Sales Agreement during each of the three- and nine-month periods ended September 30, 2025.

As of September 30, 2026, $72.5 million remained available in our at-the-market equity offering program under the 2025 Shelf Registration Statement.

10. Stock-Based Compensation

Equity Incentive Plans

In July 2021, our Board adopted, and our stockholders approved, the 2021 Equity Incentive Plan (“2021 Plan”) that became effective on July 22, 2021. As of September 30, 2026, we had 10,838,278 shares available for future issuances under the 2021 Plan.

Stock Options

The following table summarizes stock option activity, including performance-based stock options (“PBSOs”), under our equity incentive plans during the nine months ended September 30, 2026:

(1)The aggregate intrinsic value is calculated as the difference between the stock option exercise price and the estimated fair value of the underlying common stock as of the end of each reporting period referenced above.

Grant Date Fair Value of Stock Options

During the three months ended September 30, 2026, and September 30, 2025, we granted 29,020 and 140,900 stock options, respectively, under the 2021 Plan to employees with a weighted average grant date fair value of $1.22 and $1.36, respectively.

During the nine months ended September 30, 2026, and September 30, 2025, we granted 3,501,947 and 3,506,188 stock options, respectively, under the 2021 Plan to employees with a weighted average grant date fair value of $1.36 and $1.08, respectively.

We estimated the fair value of each employee stock option award on the grant date using the Black-Scholes option-pricing model based on the following assumptions:

As of September 30, 2026, there was $8.4 million of unrecognized stock-based compensation expense related to employee stock options that is expected to be recognized over a weighted-average period of 2.5 years.

Grant Date Fair Value of PBSOs

On July 21, 2025, we granted a total of 1,092,165 PBSOs under the 2021 Plan to our officers with a weighted average grant date fair value of $1.00. We estimated the fair value of each PBSO on the grant date using the Black-Scholes option-pricing model based on a volatility of 88.7%, expected term of 1.9 years, risk-free interest rate of 3.9%, and expected dividend yield of 0.0%. Vesting of the PBSOs is conditioned on achievement of certain clinical development milestones during a two-year performance period ending June 30, 2027, and contingent on each executive officer’s continued employment on the vesting dates. As of September 30, 2026, there were 865,499 PBSOs outstanding with a weighted average grant date fair value of $1.00. As of September 30, 2026, we have concluded that it is not deemed probable, as required by ASC Topic 718 Compensation -Stock Compensation, that the clinical milestones will be achieved, and as such, no stock-based compensation expense has been recorded for PBSOs. As of September 30, 2026, there was $0.9 million of unrecognized stock-based compensation expense related to PBSOs, which will be recognized if the awards are deemed to be probable of vesting.

Restricted Stock Units (“RSUs”)

During the nine months ended September 30, 2026, we granted 1,239,859 RSUs under the 2021 Plan to employees. A summary of the status of and change in unvested RSUs as of September 30, 2026, was as follows:

As of September 30, 2026, the total unrecognized stock-based compensation expense related to unvested RSUs was $4.3 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.6 years.

Employee Stock Purchase Plan (“ESPP”)

In July 2021, our Board adopted, and our stockholders approved, the ESPP, which became effective on July 22, 2021. We issued 1,684,012 shares of common stock under the ESPP as of September 30, 2026. We recorded $0.1 million in accrued liabilities related to contributions withheld as of September 30, 2026.

Stock-Based Compensation Expense

We recorded stock-based compensation expense related to employee equity-based awards grants as follows (in thousands):

The above stock-based compensation expense related to the following equity-based awards (in thousands):

11. Net Loss Per Share

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):

Because we were in a net loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods, as the inclusion of all common stock equivalents outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

12. Segment Information

We operate and manage our business asone reportable segment andone operating segment, which, as of September 30, 2026, is the business of developing allogeneic CAR-T cell therapies. Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance; the CODM is our president and chief executive officer. Our CODM assesses performance for the segment and decides how to allocate resources based on consolidated net loss that is also reported on our consolidated statements of operations. The measure of segment assets is reported on our consolidated balance sheets as total consolidated assets. All our material long-lived assets are located in the United States. Our CODM uses consolidated net loss to evaluate our spending and monitor our budget versus actual results to assess performance of the segment and to allocate resources across our company. Factors used in determining the reportable segment include the nature of our operating activities, our company’s organizational and reporting structures, and the type of information reviewed by our CODM to allocate resources and evaluate financial performance.

The following table presents reportable segment profit and loss, including significant expense categories, attributable to our reportable segment for the periods indicated:

(1)Research and development internal costs for the three months ended September 30, 2026, and September 30, 2025, exclude $1.0 million and $1.2 million of stock-based compensation expense, respectively, and $0.3 million and $0.5 million of depreciation and amortization expenses, respectively. Research and development internal costs for the nine months ended September 30, 2026, and September 30, 2025, exclude $3.2 million and $4.3 million of stock-based compensation expense, respectively, and $1.5 million and $2.6 million of depreciation and amortization expenses, respectively.

(2)General and administrative expenses for the three months ended September 30, 2026, and September 30, 2025, excludes $1.2 million and $1.7 million of stock-based compensation expense, respectively, and less than $0.1 million and $0.1 million of depreciation and amortization expenses, respectively. General and administrative expenses for the nine months ended September 30, 2026, and September 30, 2025, excludes $3.7 million and $5.7 million of stock-based compensation expense, respectively, and $0.1 million and $0.3 million of depreciation and amortization expenses, respectively.

(3)Other segment items for the three and nine months ended September 30, 2026, include stock-based compensation and depreciation and amortization.

(4)Other segment items for the three and nine months ended September 30, 2025, include impairment charges, impairment of equity investment, stock-based compensation, and depreciation and amortization.

13. 2025 Restructuring Charge

Severance and Wind-Down Costs

On April 24, 2025, we announced the discontinuation of our preclinical research and two clinical programs. Additionally, we announced that we reduced our workforce by 47 employees, or approximately 32% of our workforce. As a result, we recorded cash severance costs, benefits, and transition support services expenses of $1.8 million for the nine months ended September 30, 2025, which we recorded as research and development expenses or general and administrative expenses in our unaudited condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2025, we recorded wind-down costs of $0.4 million, as research and development expenses in our unaudited condensed consolidated statements of operations and comprehensive loss related to the discontinuation of our preclinical research and two clinical programs.

As part of the preparation of the financial statements for each reporting period, we review our long-lived assets for impairment indicators. As a result of the previously announced strategic pipeline prioritization during the second quarter of 2025, we identified certain triggering events, such as significant changes in our current and expected use of leased office and lab space and lab equipment. We determined the asset groups based on the lowest level of identifiable cash flows under our strategic pipeline prioritization and assessed the impairment for each of the asset groups. We reduced the usage of our leased office and lab space, and were considering subleasing the unused space under one or both of our leases. The leasehold improvements, right of use assets, and lab equipment related to the leased office and lab spaces were assessed as a single asset group and determined to not be recoverable. Accordingly, for the second quarter of 2025, we concluded that this asset group is impaired. For asset groups where impairment was triggered, we used discounted cash flow models (an income approach) with Level 3 inputs to estimate the fair values of the asset groups. The significant assumptions used in the discounted cash flow models included projected sublease income over the remaining lease terms, expected downtime prior to the commencement of executed or future subleases, and discount rates that reflected a market participant's assumptions in valuing the asset groups. As a result, we recognized impairment charges totaling $10.0 million for the second quarter of 2025, of which $7.4 million and $2.6 million, respectively, were related to the tenant improvements and right of use asset associated with the underlying leased properties.

At that time, we also identified certain laboratory equipment that we no longer plan to use. This asset group, consisting of laboratory equipment that would no longer be used going forward, was also determined to not be recoverable. As a result, this asset group was deemed impaired, resulting in a $2.2 million impairment charge for the second quarter of 2025. The fair value of the lab equipment was classified as Level 3 in the fair value hierarchy due to the use of unobservable inputs utilized, such as estimates provided by third-party vendors.

The following table summarizes the restructuring and impairment costs recognized in our unaudited condensed consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2025:

Our strategic pipeline prioritization was substantially completed in the second quarter of 2025, and we currently do not expect to record additional material charges related to our restructuring in 2025.

14. Subsequent Events

On October 6, 2026, we announced that, on October 2, 2026, our Board approved a restructuring of our operations as we conduct a process to explore strategic alternatives to maximize stockholder value, including the planned discontinuation of clinical trials and further development activities for vispa-cel and CB-011, a substantial reduction of our workforce, and other cost reduction measures. The reduction in workforce is anticipated to occur in phases with the majority of affected employees expected to depart in the fourth quarter of 2026, with a limited number of employees expected to remain through completion of our process of exploring strategic alternatives to support transaction execution and business wind-down activities. Our Board took these actions in view of the current financing environment for allogeneic CAR-T cell therapies, which has made it increasingly challenging to secure the capital necessary to responsibly advance our vispa-cel and CB-011 CAR-T cell therapy programs.

We currently estimate that approximately $15.0 million to $19.0 million in total will be incurred related to our 2026 Restructuring, a substantial portion of which is expected to be recognized during the fourth quarter of 2026. The anticipated expenses primarily include one-time severance payments, continued healthcare coverage, and related costs of approximately $10.0 million to $11.0 million and future costs to discontinue our ANTLER phase 1 clinical trial for vispa-cel and our CaMMouflage phase 1 clinical trial for CB-011 of $5.0 million to $8.0 million. We also intend to terminate applicable contracts, resolve various intellectual property licensing agreements, and seek ways to sublease our facilities or terminate our facility leases. As a result, we may incur additional costs as part of the 2026 Restructuring.