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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 001-37798
Cartesian Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
Delaware
26-1622110
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer Identification No.)
7495 New Horizon Way, Frederick, MD
21703
(Address of principal executive offices)
(Zip Code)
(301) 348-8698
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareRNACThe Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Contingent Value Rights
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐Accelerated filer þ
Non-accelerated filer☐Smaller reporting companyþ
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
As of November 1, 2024, the registrant had 25,414,898 shares of common stock, par value $0.0001 per share, outstanding.
1

TABLE OF CONTENTS
Item 1. 
Item 2.
Item 3.
Item 4.
Item 1. 
Item 1A. 
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or the Quarterly Report, contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing and likelihood of success, the plans and objectives of management for future operations and future results of anticipated products, the impact of the resurgence of the COVID-19 pandemic or emergence of another pandemic on our business and operations and our future financial results, and the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described under the sections in this Quarterly Report titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as the following:
•any future payouts under the contingent value right, or CVR, issued to our holders of record as of the close of business on December 4, 2023;
•our ability to achieve the expected benefits or opportunities and related timing with respect to the Merger (as defined below) or to monetize any of our legacy assets;
•our future results of operations and financial position, business strategy, and the length of time that we believe our existing cash resources will fund our operations;
•our market size and our potential growth opportunities;
•our preclinical and clinical development activities;
•the efficacy and safety profile of our product candidates;
•the potential therapeutic benefits and economic value of our product candidates;
•the timing and results of preclinical studies and clinical trials;
•the expected impact of macroeconomic conditions, including inflation, increasing interest rates and volatile market conditions, current or potential bank failures;
•global events, including the ongoing conflicts between Russia and Ukraine and between Hamas and Israel and geopolitical tensions in China on our operations;
•the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates;
•potential litigation related to the Merger (as defined below) instituted against us or our directors;
•our ability to prevent or minimize the effects of litigation and other contingencies;
•our status as a preclinical and development-stage company and our expectation to incur losses in the future, and the possibility that we never achieve or maintain profitability;
•uncertainties with respect to our ability to access future capital;
•our ability to maximize the value of our pipeline of product candidates;
•our unproven approach to therapeutic intervention;
•our ability to enroll patients in clinical trials, timely and successfully complete those trials and receive necessary regulatory approvals;
•our ability to continue to grow our manufacturing capabilities and resources;
•our ability to manufacture our product candidates, which in some cases are manufactured on a patient-by-patient basis;
3

•our ability to access manufacturing facilities and to receive or manufacture sufficient quantities of our product candidates;
•our ability to maintain our existing or future collaborations or licenses and to seek new collaborations, licenses or partnerships;
•the impact of resurgence of the COVID-19 pandemic on our operations, the continuity of our business, including our preclinical studies and clinical trials, and general economic conditions;
•our ability to protect and enforce our intellectual property rights;
•federal, state, and foreign regulatory requirements, including U.S. Food and Drug Administration, or FDA, regulation of our product candidates;
•our ability to obtain and retain key executives and retain qualified personnel; and
•developments relating to our competitors and our industry, including the impact of government regulation.
Moreover, we operate in an evolving environment. New risks and uncertainties may emerge from time to time, and it is not possible for management to predict all risk and uncertainties.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Cartesian Therapeutics, Inc. and Subsidiaries
Consolidated Balance Sheets
(Amounts in thousands, except share data and par value)
 September 30,December 31,
 20242023
Assets  
Current assets:  
Cash and cash equivalents$219,198 $76,911 
Accounts receivable4,829 5,870 
Unbilled receivables980 2,981 
Prepaid expenses and other current assets4,129 4,967 
Total current assets229,136 90,729 
Non-current assets:
Property and equipment, net10,225 2,113 
Right-of-use asset, net13,523 10,068 
In-process research and development assets150,600 150,600 
Goodwill48,163 48,163 
Long-term restricted cash1,669 1,377 
Investments2,000 2,000 
Total assets$455,316 $305,050 
Liabilities, convertible preferred stock, and stockholders’ deficit  
Current liabilities:  
Accounts payable$517 $3,150 
Accrued expenses and other current liabilities9,452 15,572 
Lease liability2,770 2,166 
Deferred revenue— 2,311 
Warrant liabilities5 720 
Contingent value right liability8,661 15,983 
Forward contract liabilities— 28,307 
Total current liabilities21,405 68,209 
Non-current liabilities:
Lease liability, net of current portion11,881 8,789 
Deferred revenue, net of current portion— 3,538 
Warrant liabilities, net of current portion3,586 5,674 
Contingent value right liability, net of current portion401,839 342,617 
Deferred tax liabilities, net15,853 15,853 
Total liabilities454,564 444,680 
Commitments and contingencies (Note 18)
Series A Preferred Stock, $0.0001 par value; no and 548,375 shares authorized as of September 30, 2024 and December 31, 2023, respectively; no and 435,120.513 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
— 296,851 
Options for Series A Preferred Stock— 3,703 
Stockholders’ deficit:  
Series A Preferred Stock, $0.0001 par value; 180,455.753 and no shares authorized as of September 30, 2024 and December 31, 2023, respectively; 166,341.592 and no shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
— — 
Series B Preferred Stock, $0.0001 par value; 437,927 and no shares authorized as of September 30, 2024 and December 31, 2023, respectively; 437,927 and no shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
— — 
Preferred stock, $0.0001 par value; 9,381,617.247 and 9,451,625 shares authorized as of September 30, 2024 and December 31, 2023, respectively; no shares issued and outstanding as of September 30, 2024 and December 31, 2023
— — 
Common stock, $0.0001 par value; 350,000,000 shares authorized as of September 30, 2024 and December 31, 2023; 23,896,525 and 5,397,597 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
2 1 
Additional paid-in capital687,174 179,062 
Accumulated deficit(681,818)(614,647)
Accumulated other comprehensive loss(4,606)(4,600)
Total stockholders’ equity (deficit)752 (440,184)
Total liabilities, convertible preferred stock, and stockholders’ deficit$455,316 $305,050 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Cartesian Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Amounts in thousands, except share and per share data)


 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Revenue:
Collaboration and license revenue$— $6,551 $39,111 $17,738 
Grant revenue387 — 561 — 
Total revenue387 6,551 39,672 17,738 
Operating expenses:
Research and development11,400 13,002 33,799 49,408 
General and administrative6,562 6,614 23,039 18,414 
Total operating expenses17,962 19,616 56,838 67,822 
Operating loss(17,575)(13,065)(17,166)(50,084)
Investment income2,573 1,299 4,932 4,024 
Foreign currency transaction, net— (3)— 39 
Interest expense— (1,273)— (2,833)
Change in fair value of warrant liabilities5,669 3,787 2,803 6,049 
Change in fair value of contingent value right liability(15,100)— (51,900)— 
Change in fair value of forward contract liabilities— — (6,890)— 
Other income, net250 253 1,050 753 
Net loss$(24,183)$(9,002)$(67,171)$(42,052)
Other comprehensive income (loss):
Foreign currency translation adjustment(15)(20)(6)(69)
Unrealized gain on marketable securities— — — 11 
Total comprehensive income (loss)$(24,198)$(9,022)$(67,177)$(42,110)
Net loss(24,183)(9,002)(67,171)(42,052)
Net loss per share:
Basic and diluted$(1.13)$(1.74)$(4.61)$(8.20)
Weighted-average common shares outstanding:
Basic and diluted21,471,408 5,160,150 14,561,613 5,129,030 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Cartesian Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(Amounts in thousands, except share data)

 Options for Series A    Accumulated
 Series APreferredSeries ASeries B  Additional other
 Preferred StockStockPreferred StockPreferred StockCommon stockpaid-inAccumulatedcomprehensiveStockholders’
 SharesAmountAmountSharesAmountSharesAmountSharesAmountcapitaldeficitlossequity (deficit)
Balance at December 31, 2023435,120.513 $296,851 $3,703 — $— — $— 5,397,597 $1 $179,062 $(614,647)$(4,600)$(440,184)
Issuance of Series A Preferred Stock in connection with private placement and settlement of related forward contract99,140.326 75,197 — — — — — — — — — — — 
Transfer of Series A Preferred Stock and options for Series A Preferred Stock to permanent equity(534,260.839)(372,048)(3,703)534,260.839 — — — — — 375,751 — — 375,751 
Issuance of common stock upon exercise of options— — — — — — — 52,558 — 154 — — 154 
Issuance of common stock upon exercise of warrants— — — — — — — 65,681 — 2,877 — — 2,877 
Stock-based compensation expense— — — — — — — — — 1,431 — — 1,431 
Currency translation adjustment— — — — — — — — — — — (5)(5)
Net loss— — — — — — — — — — (56,824)— (56,824)
Balance at March 31, 2024— $— $— 534,260.839 $— — $— 5,515,836 $1 $559,275 $(671,471)$(4,605)$(116,800)
Conversion of Series A Preferred Stock to common stock— — — (367,919.247)— — — 12,263,951 1 (1)— — — 
Issuance of common stock upon exercise of options— — — — — — — 36,451 — 120 — — 120 
Equity offering costs— — — — — — — — — (219)— — (219)
Stock-based compensation expense— — — — — — — — — 1,591 — — 1,591 
Currency translation adjustment— — — — — — — — — — — 14 14 
Net income— — — — — — — — — — 13,836 — 13,836 
Balance at June 30, 2024
— $— $— 166,341.592 $— — $— 17,816,238 $2 $560,766 $(657,635)$(4,591)$(101,458)
Issuance of Series B Preferred Stock and common stock in connection with private placement, net— — — — — 2,937,903 — 3,563,247 — 124,657 — — 124,657 
Conversion of Series B Preferred Stock to common stock— — — — — (2,499,976)— 2,499,976 — — — — — 
Issuance of common stock upon exercise of options— — — — — — — 17,064 — 56 — — 56 
Stock-based compensation expense— — — — — — — — — 1,695 — — 1,695 
Currency translation adjustment— — — — — — — — — — — (15)(15)
Net loss— — — — — — — — — — (24,183)— (24,183)
Balance at September 30, 2024
— $— $— 166,341.592 $— 437,927 $— 23,896,525 $2 $687,174 $(681,818)$(4,606)$752 

On April 4, 2024, the Company effected a 1-for-30 reverse split of its issued and outstanding shares of common stock, or the Reverse Stock Split. As a result of the Reverse Stock Split, all figures in this Quarterly Report on Form 10-Q relating to shares of the Company’s common stock (such as share amounts, per share amounts, and conversion rates and prices), including but not limited to, the consolidated financial statements and footnotes included herein, have been adjusted to reflect the Reverse Stock Split for all periods presented.
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Cartesian Therapeutics, Inc. and Subsidiaries
Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(Amounts in thousands, except share data)
     Accumulated 
   Additional other
 Common stockpaid-inAccumulatedcomprehensiveStockholders’
 SharesAmountcapitaldeficitlossequity (deficit)
Balance at December 31, 20225,101,459 $1 $493,322 $(394,937)$(4,558)$93,828 
Issuance of common stock under Employee Stock Purchase Plan3,584 — 149 — — 149 
Issuance of vested restricted stock units9,226 — — — — — 
Stock-based compensation expense— — 2,276 — — 2,276 
Currency translation adjustment— — — — (22)(22)
Unrealized gain on marketable securities— — — — 11 11 
Net loss— — — (21,663)— (21,663)
Balance at March 31, 20235,114,269 $1 $495,747 $(416,600)$(4,569)$74,579 
Issuance of vested restricted stock units20 — — — — — 
Stock-based compensation expense— — 2,283 — — 2,283 
Currency translation adjustment— — — — (27)(27)
Net loss— — — (11,387)— (11,387)
Balance at June 30, 20235,114,289 $1 $498,030 $(427,987)$(4,596)$65,448 
Issuance of common stock under Employee Stock Purchase Plan2,587 — 82 — — 82 
Issuance of vested restricted stock units307 — — — — — 
Issuance of common stock, license agreement44,642 — 1,500 — — 1,500 
Stock-based compensation expense— — 2,321 — — 2,321 
Currency translation adjustment— — — — (20)(20)
Net loss— — — (9,002)— (9,002)
Balance at September 30, 20235,161,825 $1 $501,933 $(436,989)$(4,616)$60,329 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Cartesian Therapeutics, Inc. and Subsidiaries 
Consolidated Statements of Cash Flows
(Amounts in thousands)
 Nine Months Ended
September 30,
20242023
Cash flows from operating activities
Net loss$(67,171)$(42,052)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization665 571 
Amortization of premiums and discounts on marketable securities— (79)
Non-cash lease expense1,766 1,278 
Loss on disposal of property and equipment2 — 
Stock-based compensation expense4,717 8,380 
Non-cash interest expense— 455 
Warrant liabilities revaluation(2,803)(6,049)
Contingent value right liability revaluation51,900 — 
Forward contract liabilities revaluation6,890 — 
Loss on extinguishment of debt— 740 
Changes in operating assets and liabilities:
Accounts receivable1,041 1,698 
Unbilled receivable2,001 1,287 
Prepaid expenses, deposits and other assets763 (30)
Accounts payable(2,690)36 
Deferred revenue(5,849)7,528 
Accrued expenses and other liabilities(7,904)(1,638)
                    Net cash used in operating activities(16,672)(27,875)
Cash flows from investing activities
Proceeds from maturities of marketable securities— 28,254 
Purchases of property and equipment(8,388)(142)
                    Net cash (used in) provided by investing activities(8,388)28,112 
Cash flows from financing activities
Repayments of principal, final payment fee, and prepayment penalty on debt— (27,457)
Proceeds from exercise of common warrants2,877 — 
Proceeds from issuance of Series A Preferred Stock, gross in private placement40,000 — 
Net proceeds from issuance of common stock and Series B Preferred Stock in private placement124,438 — 
Proceeds from exercise of stock options330 — 
Proceeds from issuance of common stock under Employee Stock Purchase Plan— 231 
                    Net cash provided by (used in) financing activities167,645 (27,226)
Effect of exchange rate changes on cash(6)(69)
Net change in cash, cash equivalents, and restricted cash142,579 (27,058)
Cash, cash equivalents, and restricted cash at beginning of period78,288 108,038 
Cash, cash equivalents, and restricted cash at end of period$220,867 $80,980 
Supplemental cash flow information
Cash paid for interest$— $1,853 
Noncash investing and financing activities
Issuance of common stock, license agreement in stock-based compensation expense$— $1,500 
Purchase of property and equipment not yet paid$392 $65 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
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Cartesian Therapeutics, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

1. Description of the Business
Cartesian Therapeutics, Inc., or the Company (formerly known as Selecta Biosciences, Inc., or Selecta), was incorporated in Delaware on December 10, 2007, and is headquartered in Frederick, Maryland. The Company is a clinical-stage biotechnology company developing mRNA cell therapies for the treatment of autoimmune diseases leveraging its proprietary technology and manufacturing platform to introduce one or more mRNA molecules into cells to enhance their function. The Company believes its mRNA cell therapies have the potential to deliver deep, durable clinical benefit to a broad group of patients with autoimmune diseases because they can be administered over a short period of time, in an outpatient setting, and without pre-treatment chemotherapy.
On November 13, 2023, the Company acquired, in accordance with the terms of the Agreement and Plan of Merger, or the Merger Agreement, the assets of the Delaware corporation which, immediately prior to the Merger (as defined below), was known as Cartesian Therapeutics, Inc., or Old Cartesian, as disclosed in Note 3. The transaction was structured as a stock-for-stock transaction pursuant to which all of Old Cartesian’s outstanding shares of capital stock were exchanged based on a fixed exchange ratio for consideration of 224,099 shares of the common stock, par value $0.0001 per share, of the Company, or the common stock, and 384,930.724 shares of the newly designated Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share, or the Series A Preferred Stock. The Series A Preferred Stock is intended to have economic rights similar to the common stock, but with only limited voting rights. Additionally, the Company assumed all outstanding stock options of Old Cartesian. The common stock and Series A Preferred Stock related to the Merger were issued on December 5, 2023. For additional information, see Note 3.
In connection with the Merger, the Company entered into a definitive agreement, or the Securities Purchase Agreement, for a private investment in public equity transaction, or the November 2023 Private Placement, with the Investors (as defined below). The Securities Purchase Agreement provides for the issuance to the Investors of an aggregate of 149,330.115 shares of Series A Preferred Stock for an aggregate purchase price of approximately $60.25 million. For additional information, see Note 10.
In connection with the Merger, a contractual contingent value right, or CVR, was distributed to the holders of record of the Company's common stock and 2022 Warrants (as defined below) as of the close of business on December 4, 2023, but was not distributed to holders of shares of common stock or Series A Preferred Stock issued to stockholders of Old Cartesian or the Investors in the transactions. Holders of the CVRs will be entitled to receive certain payments from proceeds received by the Company, if any, related to the disposition or monetization of the Company's legacy assets following the issuance of the CVRs. For additional information, see Note 5.
On March 27, 2024, the Company’s stockholders approved the Conversion Proposal (as defined below). For additional information, see Note 10.
Additionally, on March 27, 2024, the Company’s stockholders approved an amendment to the Company’s restated certificate of incorporation, as amended, or the Charter, to effect a reverse stock split of the Company’s issued and outstanding common stock, at a ratio in the range of 1-for-20 and 1-for-30, with such ratio to be determined at the discretion of the Company’s board of directors, or the Board of Directors. The Board of Directors subsequently approved a final reverse stock split ratio of 1-for-30, and the Company effected the Reverse Stock Split on April 4, 2024. As a result of the Reverse Stock Split, all figures in this Quarterly Report on Form 10-Q relating to shares of the Company’s common stock (such as share amounts, per share amounts, and conversion rates and prices), have been adjusted to reflect the Reverse Stock Split for all periods presented, including reclassifying an amount equal to the reduction in par value of common stock to additional paid-in capital. Shares of common stock underlying outstanding stock options, restricted stock units and warrants were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with their terms. Additionally, the conversion ratio of the Company’s Series A Preferred Stock was proportionally adjusted. Stockholders entitled to fractional shares as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares.
On July 2, 2024, the Company entered into a securities purchase agreement, or the July 2024 Purchase Agreement, for a private investment in public equity financing, or the July 2024 Private Placement, which provides for the issuance of 3,563,247 shares of common stock and 2,937,903 shares of Series B Non-Voting Convertible Preferred Stock, par value $0.0001 per share, or the Series B Preferred Stock, each at a purchase price of $20.00 per share. The July 2024 Private Placement resulted in gross proceeds of approximately $130.0 million before deducting placement agent fees and other offering expenses. On September 20, 2024, the Company’s stockholders approved the Series B Conversion Proposal (as defined below). For additional information, see Note 10.
The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government
10
regulations and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities.
The Company’s product candidates are in pre-clinical and clinical development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants.
Unaudited Interim Financial Information
The accompanying unaudited consolidated financial statements for the three and nine months ended September 30, 2024 and 2023 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC, for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 7, 2024. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments that are necessary for a fair statement of the Company’s financial position as of September 30, 2024, the consolidated results of operations for the three and nine months ended September 30, 2024, and cash flows for the nine months ended September 30, 2024. Such adjustments are of a normal and recurring nature. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2024.
Liquidity and Management’s Plan
The future success of the Company is dependent on its ability to develop its product candidates and ultimately upon its ability to attain and sustain profitable operations. The Company is subject to a number of risks similar to other early-stage life science companies, including, but not limited to, successful development of its product candidates, raising additional capital with favorable terms, protection of proprietary technology and market acceptance of any approved future products. The successful development of product candidates requires substantial working capital, which may not be available to the Company on favorable terms or at all.
To date, the Company has financed its operations primarily through public offerings and private placements of its securities, funding received from research grants, collaboration and license arrangements and a credit facility. The Company currently has no source of product revenue, and it does not expect to generate product revenue for the foreseeable future. To date, the Company’s revenue has primarily been from collaboration agreements. The Company has devoted substantially all of its financial resources and efforts to developing its existing product candidates, identifying potential product candidates and conducting preclinical studies and clinical trials. The Company is in the early stages of development of its product candidates, and it has not completed development of any product candidates.
As of September 30, 2024, the Company’s cash, cash equivalents, and restricted cash were $220.9 million, of which $1.7 million was restricted cash related to lease commitments and $0.2 million was held by its Russian subsidiary designated solely for use in its operations. The Company believes the cash, cash equivalents and restricted cash as of September 30, 2024 will enable it to fund its current planned operations for at least the next twelve months from the date of issuance of these financial statements, though it may pursue additional cash resources through public or private equity or debt financings or by establishing collaborations with other companies. Management’s expectations with respect to its ability to fund current and long term planned operations are based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional strategic or financing opportunities sooner than would otherwise be expected. However, there is no guarantee that any collaboration milestones will be achieved or that any of these strategic or financing opportunities will be executed on favorable terms, and some could be dilutive to existing stockholders. Further, the liability associated with the CVR Agreement (as defined below) will be settled solely through cash flow received under the Company's License and Development Agreement, or as so amended, the Sobi License, with Swedish Orphan Biovitrum AB (publ.), or Sobi, and any other Gross Proceeds (as defined in the CVR Agreement) net of certain agreed deductions. Under the CVR Agreement, 100% of all milestone payments, royalties and other amounts paid to the Company or controlled entities under the Sobi License, and any other Gross Proceeds will be distributed, net of specified deductions, to holders of the CVRs. There is no obligation to the Company to fund any amount related to the CVR liability. See Note 5.
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If the Company is unable to obtain additional funding on a timely basis, it may be forced to significantly curtail, delay, or discontinue one or more of its planned research or development programs or be unable to expand its operations or otherwise capitalize on its commercialization of its product candidates. As of September 30, 2024, the Company had an accumulated deficit of $681.8 million. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to research and development of its product candidates and its administrative organization.
Guarantees and Indemnifications
As permitted under Delaware law, the Company indemnifies its officers, directors, consultants and employees for certain events or occurrences that happen by reason of the relationship with, or position held at the Company. Through September 30, 2024, the Company had not experienced any losses related to these indemnification obligations, and no claims were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related reserves were established.
2. Summary of Significant Accounting Policies
The Company disclosed its significant accounting policies in Note 2 – Summary of Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2024, except as noted below.
Grant Revenue
The Company has contracts with government-sponsored organizations for research and development related activities that provide for payments for reimbursable costs. The Company recognizes grant revenue from these contracts as it performs services under these arrangements when the funding is committed. Expenses associated with these contracts are recognized when incurred as research and development expense. Grant revenue and related expenses are presented gross in the consolidated statements of operations and comprehensive income (loss) as the Company has determined it is the primary obligor under the arrangements relative to the research and development services it performs as lead technical expert. Amounts incurred that are subject to reimbursement from the sponsor are recorded as accounts receivable on the consolidated balance sheets.
Recent Accounting Pronouncements
Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements or disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements or disclosures.
3. Merger
On November 13, 2023, the Company merged with Old Cartesian in accordance with the terms of the Merger Agreement, by and among Selecta, Sakura Merger Sub I, Inc., a wholly owned subsidiary of Selecta, or First Merger Sub, Sakura Merger Sub II, LLC, a wholly owned subsidiary of Selecta, or Second Merger Sub, and Old Cartesian. Pursuant to the Merger Agreement, First Merger Sub merged with and into Old Cartesian, pursuant to which Old Cartesian was the surviving corporation and became a wholly owned subsidiary of Selecta, or the First Merger. Immediately following the First Merger, Old Cartesian merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity, or the Second Merger and, together with the First Merger, the Merger. In connection with the Second Merger, Old Cartesian changed its name to Cartesian Bio, LLC.
The Merger was intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. As a result of the Merger, Selecta changed its corporate name to Cartesian Therapeutics, Inc. and its common stock began trading on the Nasdaq Global Market under the new trading symbol “RNAC” beginning on November 14, 2023.
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The Merger Agreement was unanimously approved by the board of directors of Selecta and the board of directors of Old Cartesian. The Merger was consummated substantially concurrently with the entry into the Merger Agreement and was not subject to approval of the Company's stockholders.
Under the terms of the Merger Agreement, following the consummation of the Merger on November 13, 2023, or the Closing Date, in exchange for 100% of the outstanding shares of capital stock of Old Cartesian immediately prior to the effective time of the First Merger, the Company agreed to issue to the stockholders of Old Cartesian (i) 224,099 shares of the Company’s common stock and (ii) 384,930.724 shares of Series A Preferred Stock. The issuance of the shares of common stock and Series A Preferred Stock occurred on December 5, 2023 which was after the December 4, 2023 record date for the distribution of the CVRs (see Note 5); as such, the Old Cartesian stockholders did not have rights as holders of common stock or holders of Series A Preferred Stock until such issuance on December 5, 2023. In addition, all outstanding stock options to purchase Old Cartesian common stock were assumed by the Company and converted into stock options to purchase (i) shares of the Company’s common stock or (ii) shares of the Company’s Series A Preferred Stock on terms substantially identical to those in effect prior to Merger Agreement, except for adjustments to the underlying number of shares and the exercise price based on the Merger Agreement exchange ratio.
Pursuant to the Merger Agreement, the Company agreed to hold a stockholders’ meeting, or the Special Meeting, to submit the following proposals to a vote of its stockholders: (i) the approval of the conversion of shares of Series A Preferred Stock into shares of common stock, or the Conversion Proposal, and (ii) either or both of (A) the approval of an amendment to the Company’s Charter to increase the number of shares of common stock authorized under the Charter and (B) the approval of an amendment to the Charter to effect a reverse stock split of all outstanding shares of common stock, in either case (A) or (B) by a number of authorized shares or at a stock split ratio, as the case may be, sufficient to allow the conversion of all shares of Series A Preferred Stock issued in the Merger. The Special Meeting was held on March 27, 2024 in which the Company’s stockholders approved the Conversion Proposal, among other matters (see Note 10).
The Company concluded the acquisition resulted in the Company obtaining a controlling financial interest in a variable interest entity, or VIE, in accordance with ASC 810, Consolidation, or ASC 810. The Company determined that Old Cartesian was considered to be a VIE as it did not have sufficient equity to finance its activities without additional subordinated financial support. Prior to the Closing Date, the primary source of funding for Old Cartesian had been preferred stock financings. The Company acquired all of the outstanding shares of Old Cartesian and, therefore, is the sole equity holder and primary beneficiary. The Company has the obligation to absorb the losses and right to receive the benefits of Old Cartesian, and the power to direct the activities that most significantly affect the economic performance of Old Cartesian which the Company considers to be its development activities. Therefore, the Company is the primary beneficiary. Further, the Company concluded the VIE qualified as a business and accounted for the transaction as the acquisition of a business in accordance with ASC 805, Business Combinations, or ASC 805. As the primary beneficiary, the Company was the acquirer in the transaction.
The Company exchanged the right to receive shares of common stock and Series A Preferred Stock for all of the outstanding equity of Old Cartesian. The Company determined the rights to receive shares exchanged in the Merger represent a forward contract. The fair value of the forward contracts was determined based on the fair value of shares of common stock and Series A Preferred Stock underlying the forward contracts as of the acquisition date. The total purchase price consists of the fair value of the forward contracts in addition to a portion of the fair value of options exchanged in the transaction related to prior service. Under the acquisition method, the total purchase price of the acquisition was allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the date of the acquisition.
The total fair value of the consideration of $168.5 million as of the Closing Date is summarized as follows (in thousands):
Forward contract to issue common stock$2,713 
Forward contract to issue Series A Preferred Stock155,308 
Stock options allocated to consideration paid10,444 
Total consideration$168,465 
The Company recorded the assets acquired and liabilities assumed as of the Closing Date based on the information available at that date. The following table presents the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of the Closing Date (in thousands):

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Assets acquired:As of November 13, 2023
Cash and cash equivalents$6,561 
Prepaid expenses and other current assets309 
Property and equipment, net215 
Right-of-use asset, net 915 
In-process research and development assets150,600 
Goodwill48,163 
$206,763 
Liabilities assumed
Accrued expenses and other current liabilities$2,530 
Lease liability292 
Lease liability, net of current portion623 
Deferred tax liability34,853 
$38,298 
Net assets acquired$168,465 
The fair value of the in-process research and development, or IPR&D, assets were capitalized as of the Closing Date and will be accounted for as indefinite-lived intangible assets until completion or disposition of the assets or abandonment of the associated research and development efforts. Upon successful completion of the development efforts, the carrying value of each respective IPR&D asset will be amortized over its estimated useful life. Until that time, the IPR&D assets will be subject to impairment testing and will not be amortized. The goodwill recorded related to the Merger is the excess of the fair value of the consideration transferred by the acquirer over the fair value of tangible assets, identifiable intangible assets and assumed liabilities as of the Closing Date and is not deductible for tax purposes. The goodwill balance is primarily attributable to the value of the assembled workforce and deferred tax liabilities associated with the transaction.
The following summarizes the Company’s intangible assets acquired in the Merger (in thousands):

Acquisition Date
Fair Value
Descartes-08 for MG$93,900 
Descartes-08 for SLE56,700 
Total in-process research and development assets$150,600 
The fair value of the intangible assets was estimated using the income approach in which the after-tax cash flows were discounted to present value. The cash flows are based on estimates used to price the transaction, and the discount rates applied were benchmarked with reference to the implied rate of return from the transaction model as well as the weighted average cost of capital.
The forward contract related to the common stock was recorded as additional paid-in capital as the instrument is indexed to the Company’s common stock. The forward contract related to the Series A Preferred Stock was recorded as a liability as the underlying Series A Preferred Stock has a redemption feature that may require the Company to settle the instrument by transferring an asset. The forward contract was measured at fair value through the date of settlement through the issuance of the shares of Series A Preferred Stock on December 5, 2023.

4. Net Loss Per Share
The following table sets forth the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2024 and 2023 (in thousands, except share and per-share data):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Numerator:
     Net loss$(24,183)$(9,002)$(67,171)$(42,052)
Denominator:
     Weighted-average common shares outstanding - basic and diluted21,471,408 5,160,150 14,561,613 5,129,030 
Net loss per share:
     Basic and diluted$(1.13)$(1.74)$(4.61)$(8.20)

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The following table represents the potential dilutive shares of common stock excluded from the computation of the diluted net loss per share for all periods presented, as the effect would have been anti-dilutive:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Common stock options, restricted stock units and ESPP shares2,420,400 734,588 2,420,400 734,588 
Warrants to purchase common stock974,954 1,040,823 974,954 1,040,823 
Series A Preferred Stock5,544,719 — 5,544,719 — 
Series B Preferred Stock437,927 — 437,927 — 
Total9,378,000 1,775,411 9,378,000 1,775,411 

5. Fair Value Measurements
The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
TotalLevel 1Level 2Level 3
Assets:
     Money market funds (included in cash equivalents)$38,622 $38,622 $— $— 
Total assets$38,622 $38,622 $— $— 
Liabilities:
     Warrant liabilities$3,591 $— $— $3,591 
     Contingent value right liability$410,500 $— $— $410,500 
Total liabilities$414,091 $— $— $414,091 
 
December 31, 2023
TotalLevel 1Level 2Level 3
Assets:
     Money market funds (included in cash equivalents)$41,161 $41,161 $— $— 
Total assets$41,161 $41,161 $— $— 
Liabilities:
     Warrant liabilities$6,394 $— $— $6,394 
     Contingent value right liability$358,600 $— $— $358,600 
     Forward contract liabilities$28,307 $— $28,307 $— 
Total liabilities$393,301 $— $28,307 $364,994 

There were no transfers within the fair value hierarchy during the nine months ended September 30, 2024 or year ended December 31, 2023.
Cash, Cash Equivalents, and Restricted Cash
As of September 30, 2024 and December 31, 2023, money market funds were classified as cash and cash equivalents on the accompanying consolidated balance sheets as they mature within 90 days from the date of purchase.
As of September 30, 2024, the Company had restricted cash balances relating to secured letters of credit in connection with its real estate leases. The Company’s consolidated statements of cash flows include the following as of September 30, 2024 and 2023 (in thousands):
September 30,
20242023
Cash and cash equivalents$219,198 $79,603 
Long-term restricted cash1,669 1,377 
Total cash, cash equivalents, and restricted cash$220,867 $80,980 
Warrants to Purchase Common Stock
15
In December 2019, the Company issued warrants to purchase common stock in connection with a private placement, or the 2019 Warrants. Pursuant to the terms of the 2019 Warrants, the Company could be required to settle the 2019 Warrants in cash in the event of certain acquisitions of the Company and, as a result, the 2019 Warrants are required to be measured at fair value and reported as a liability on the balance sheet. On December 20, 2022, the Company amended the terms of the outstanding 2019 Warrants held by certain members of the Board of Directors, or the Amended 2019 Warrants, to remove the cash settlement provision. As a result, the Amended 2019 Warrants were remeasured at fair value on December 20, 2022 and reclassified from a liability to equity on the balance sheet. See Note 12 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for further discussion on the equity-classified Amended 2019 Warrants.
In April 2022, the Company issued warrants in connection with an underwritten offering, or the 2022 Warrants. Pursuant to the terms of the 2022 Warrants, the Company could be required to settle the 2022 Warrants in cash in the event of an acquisition of the Company under certain circumstances and, as a result, the 2022 Warrants are required to be measured at fair value and reported as a liability on the balance sheet.
The Company recorded the fair value of the 2019 Warrants and the 2022 Warrants upon issuance using the Black-Scholes valuation model and is required to revalue the 2019 Warrants and the 2022 Warrants at each reporting date, with any changes in fair value recorded in the statement of operations and comprehensive income (loss). The valuations of the 2019 Warrants and the 2022 Warrants are classified as Level 3 of the fair value hierarchy due to the need to use assumptions in the valuations that are both significant to the fair value measurement and unobservable, including the stock price volatility and the expected life of the 2019 Warrants and the 2022 Warrants. Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement.
The estimated fair values of the 2019 Warrants and the 2022 Warrants were determined using the following inputs to the Black-Scholes simulation valuation:
Estimated fair value of the underlying stock. The Company estimates the fair value of the common stock based on the closing stock price at the end of each reporting period.
Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury at the valuation date commensurate with the expected remaining life assumption.
Dividend rate. The dividend rate is based on the historical rate, which the Company anticipates will remain at zero.
Expected life. The expected life of the 2019 Warrants and the 2022 Warrants is assumed to be equivalent to their remaining contractual terms which expire on December 23, 2024 and April 11, 2027, respectively.
Volatility. The Company estimates stock price volatility based on the Company’s historical volatility for a period of time commensurate with the expected remaining life of the warrants.
A summary of the Black-Scholes pricing model assumptions used to record the fair value of the 2019 Warrants liability is as follows:
September 30,December 31,
 20242023
Risk-free interest rate4.73 %4.79 %
Dividend yield— — 
Expected life (in years)0.230.98
Expected volatility81.13 %83.67 %
A summary of the Black-Scholes pricing model assumptions used to record the fair value of the 2022 Warrants liability is as follows:
September 30,December 31,
 20242023
Risk-free interest rate3.58 %4.01 %
Dividend yield— — 
Expected life (in years)2.533.28
Expected volatility93.95 %84.09 %
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The following table reflects a roll-forward of fair value for the Company’s Level 3 warrant liabilities (see Note 11 to these unaudited consolidated financial statements) for the nine months ended September 30, 2024 (in thousands):
Warrant liabilities
Fair value as of December 31, 2023
$6,394 
     Change in fair value(2,803)
Fair value as of September 30, 2024
$3,591 

Contingent Value Right
On December 6, 2023, as contemplated by the Merger Agreement, the Company entered into a contingent value rights agreement, or the CVR Agreement, pursuant to which each holder of common stock or a 2022 Warrant as of December 4, 2023 was distributed a CVR, issued by the Company for each share of common stock held directly or underlying a 2022 Warrant held by such holder as of December 4, 2023. Holders of warrants other than the 2022 Warrants will be entitled to receive, upon exercise of such warrants and in accordance with the terms of the warrants, 30 CVRs per each share of common stock underlying such warrants.
Each CVR entitles its holder to distributions of the following, pro-rated on a per-CVR basis, during the period ending on the date on which the Royalty Term (as defined in the Sobi License) ends, or the Termination Date:
•100% of all milestone payments, royalties and other amounts paid to the Company or its controlled affiliates, or the Company Entities, under the Sobi License or, following certain terminations of the Sobi License, any agreement a Company Entity enters into that provides for the development and commercialization of SEL-212; and
•100% of all cash consideration and the actual liquidation value of any and all non-cash consideration of any kind that is paid to or is actually received by any Company Entity prior to the Termination Date pursuant to an agreement relating to a sale, license, transfer or other disposition of any transferable asset of the Company existing as of immediately prior to the Merger, other than those exclusively licensed under the Sobi License or which the Company Entities are required to continue to own in order to comply with the Sobi License.
The distributions in respect of the CVRs will be made on a semi-annual basis, and will be subject to a number of deductions, subject to certain exceptions or limitations, including for (i) certain taxes payable on the proceeds subject to the CVR distribution, (ii) certain out of pocket costs incurred by the Company Entities, including audit and accounting fees incurred in connection with reporting obligations relating to the CVRs and other expenses incurred in the performance of their obligations and other actions under the CVR Agreement, (iii) a fixed semi-annual amount of $0.75 million for general and administrative overhead, (iv) payments made and remaining obligations on lease liabilities of Selecta immediately prior to the Merger and (v) amounts paid and remaining obligations with regard to the Xork product candidate. Each of the deductions described in (iv) and (v) will be made only if certain milestone payments under the Sobi License are made and are also subject to certain adjustments as contemplated in the CVR Agreement. Upon the achievement of a development milestone in June 2024, Sobi became obligated to make a $30.0 million payment to the Company and made such payment in July 2024. The proceeds from this payment, net of deductions specified in the CVR Agreement, is expected to be included in the next scheduled distribution to the holders of the CVR in March 2025.
The CVRs represent financial instruments that are accounted for under the fair value option election in ASC 825, Financial Instruments, or ASC 825. Under the fair value option election, the CVRs are initially measured at the aggregate estimated fair value of the CVRs and will be subsequently remeasured at estimated fair value on a recurring basis at each reporting period date. The liability was recorded at the date of approval, November 13, 2023, as a dividend. The estimated fair value of the CVR liability was determined using a discounted cash flow methodology as of December 31, 2023 and a Monte Carlo simulation model as of September 30, 2024 to estimate future cash flows associated with the legacy assets, including the expected milestone and royalty payments under the Sobi License, net of deductions. Changes in fair value of the CVR liability are presented in the consolidated statements of operations and comprehensive income (loss). The liability value is based on significant inputs not observable in the market such as estimated cash flows, estimated probabilities of success, expected volatility of future revenues (Monte Carlo simulation model) and risk-adjustment discount rates (discounted cash flow methodology), which represent a Level 3 measurement within the fair value hierarchy. The significant inputs used to estimate the fair value of the CVR liability, which represented a financial instrument being accounted for under the fair value option, were as follows:
17
September 30,
2024
Estimated cash flow dates2024-2038
Estimated probability of success
95.0% - 100.0%
Expected volatility of future revenues22.0 %

December 31,
2023
Estimated cash flow dates2024 - 2038
Estimated probability of success95.0 %
Risk-adjusted discount rate13.7 %
The following table reflects a roll-forward of fair value for the Company's Level 3 CVR liability for the nine months ended September 30, 2024 (in thousands):
CVR liability
Fair value as of December 31, 2023
$358,600 
     Change in fair value51,900 
Fair value as of September 30, 2024
$410,500 
Forward Contract Liabilities
Merger Consideration
In connection with the Merger, the Company entered into a contract for the issuance of 384,930.724 shares of Series A Preferred Stock as part of the consideration transferred. The fair value of the forward contract at the Closing Date was $155.3 million. The non-cash settlement of this liability occurred on December 5, 2023 with the issuance of the Series A Preferred Stock for $261.8 million.
November 2023 Private Placement
The Company entered into a contract for the issuance of 149,330.115 shares of Series A Preferred Stock as part of the November 2023 Private Placement which was settled in multiple tranches. The Company determined the obligation to issue 148,710.488 shares of Series A Preferred Stock to Dr. Timothy A. Springer, a member of the Company’s Board of Directors, and TAS Partners LLC, an affiliate of Dr. Springer, represented a forward contract. See Note 10. The initial fair value of the forward contract liability on November 13, 2023 was insignificant as the fair value of the underlying Series A Preferred Stock was equal to the purchase price of the Series A Preferred Stock as agreed upon in the November 2023 Private Placement. Subsequent measurement of the fair value of the forward contract liability was based on the market price of the Company’s common stock, which represented the redemption and conversion value of the Series A Preferred Stock, less the purchase price, on an as-converted basis. The non-cash settlement of a portion of the liability occurred on December 13, 2023 with the issuance of the first tranche of the Series A Preferred Stock for $14.8 million. The non-cash settlement of the remaining second and third tranches occurred on January 12, 2024 and February 11, 2024, respectively, for a total of $35.2 million.
The following table presents changes in the forward contract liabilities for the periods presented (in thousands):
Forward contract liabilities
Fair value as of December 31, 2023
$28,307 
     Settlements(35,197)
     Change in fair value6,890 
Fair value as of September 30, 2024
$— 
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6. Property and Equipment
Property and equipment consists of the following (in thousands):
 September 30,December 31,
 20242023
Laboratory equipment$11,233 $6,280 
Computer equipment and software620 702 
Leasehold improvements758 61 
Furniture and fixtures462 452 
Office equipment196 196 
Construction in process3,269 150 
Total property and equipment16,538 7,841 
Less: Accumulated depreciation(6,313)(5,728)
Property and equipment, net$10,225 $2,113 

Depreciation expense was $0.3 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $0.7 million and $0.5 million for the nine months ended September 30, 2024 and 2023, respectively.
7. Accrued Expenses
Accrued expenses consist of the following (in thousands):
 September 30,December 31,
 20242023
Payroll and employee related expenses$1,778 $4,390 
Accrued patent fees729 472 
Accrued external research and development costs3,943 4,896 
Accrued professional and consulting services2,284 4,331 
Property and equipment339 128 
Other290 516 
Accrued expenses