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Background

9 Months Ended

Sep. 30, 2025

(1)	Background

Carisma Therapeutics Inc., a Delaware corporation (collectively with its subsidiaries, the Company), is a biotechnology company that was previously focused on applying its industry leading expertise in macrophage engineering to develop transformative therapies to treat serious diseases including liver fibrosis and cancer.

2024 Revised Operating Plans

In March and December 2024, the Company’s board of directors approved revised operating plans to reduce monthly operating expenses, conserve cash, and refocus the Company’s efforts on strategic priorities. As part of these plans, in March 2024, the Company elected to cease further development of its first lead product candidate, CT-0508. In December 2024 as part of the plan, the Company elected to cease further development of its then lead product candidate, CT-0525, following an assessment of the competitive landscape in anti-HER2 treatments and the impact of recently approved therapies on HER2 antigen loss/downregulation, and the effects on the future development strategy of any anti-HER2 product.

2025 Cash Preservation Plan

As part of a further revised plan approved by the Company’s board of directors on March 25, 2025 to preserve the Company’s existing cash resources following its reduction in workforce, as further discussed below (the cash preservation plan), the Company reduced its operations to those necessary to identify and explore a range of strategic alternatives to maximize value and prepare to wind down its business. The Company has no intention of resuming its historical research and development activities.

As part of the cash preservation plan, the Company’s board of directors determined to terminate all of its employees not deemed necessary to pursue strategic alternatives and execute an orderly wind down of its operations. Affected employees were informed of the reduction in workforce on March 25, 2025, which became effective on March 31, 2025. The reduction in workforce included 37 of the Company’s full-time employees representing approximately 84% of the Company’s total workforce, including certain employees engaged in research and development, manufacturing and corporate activities. The Company incurred approximately $4.2 million in connection with the reduction in workforce during the nine months ended September 30, 2025, which primarily represents one-time employee termination benefits directly associated with the workforce reduction. The Company expects to pay the majority of related reduction in workforce amounts by the end of 2025.

Termination of Merger with OrthoCellix

After a comprehensive review of strategic alternatives, on June 22, 2025, the Company entered into an Agreement and Plan of Merger (the Merger Agreement), by and among the Company, Azalea Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (Merger Sub), Ocugen, Inc. (Ocugen), a Delaware corporation, and OrthoCellix, Inc. (OrthoCellix), a Delaware corporation and wholly-owned subsidiary of Ocugen, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub would merge with and into OrthoCellix (the OrthoCellix Merger), with OrthoCellix continuing as a wholly owned subsidiary of the Company and the surviving company of the OrthoCellix Merger. Pursuant to the Merger Agreement, the Company was entitled to terminate the Merger Agreement if OrthoCellix failed to secure aggregate commitments for shares of the Company’s common stock from one or more investors equal to or in excess of the concurrent investment amount (inclusive of a $5.0 million commitment from Ocugen) of $25.0 million by or before September 15, 2025. As previously disclosed, on August 29, 2025, Ocugen entered into a subscription agreement with the Company (Ocugen Subscription Agreement), pursuant to which Ocugen committed to purchase $5.0 million of shares of the Company’s common stock, which investment was intended to be consummated as part of a concurrent financing at or immediately following the closing of the Merger.

On September 16, 2025, pursuant to Section 9.1(k) of the Merger Agreement, the Company delivered written notice to OrthoCellix of termination of the Merger Agreement, effective immediately, as a result of OrthoCellix’s failure to secure the concurrent financing amount of at least $25.0 million as of September 15, 2025.

Pursuant to Section 9.3(e) of the Merger Agreement, on or prior to September 18, 2025, OrthoCellix was required to pay a termination fee to the Company in an amount equal to $0.8 million (Termination Fee), as a result of the termination of the Merger Agreement pursuant to Section 9.1(k). In addition, pursuant to Section 9.3(f) of the Merger Agreement, on or prior to September 18, 2025, OrthoCellix was required to reimburse the Company for reasonable out-of-pocket expenses incurred by the Company in connection with the Merger Agreement and the transactions contemplated thereby, in an amount equal to $0.5 million (Expense Reimbursement), as a result of the termination of the Merger Agreement pursuant to Section 9.1(k). To date, the Company has not received from Ocugen the Termination Fee or the Expense Reimbursement. OrthoCellix has not confirmed its intention to pay the Termination Fee or Expense Reimbursement. The Company intends to vigorously seek to enforce its right to receive payment. The Company recorded a receivable of $1.3 million for the Termination Fee and Expense Reimbursement which is included in prepaid expenses and other assets on the Company’s unaudited interim consolidated balance sheet and recorded a corresponding reduction to general and administrative expenses on the Company’s unaudited consolidated statements of operations and comprehensive loss as of and for the nine months ended September 30, 2025.

The Ocugen Subscription Agreement automatically terminated upon the termination of the Merger Agreement. The Support Agreements, dated June 22, 2025, by and among the Company, OrthoCellix, Ocugen and the other parties named therein automatically terminated upon the termination of the Merger Agreement.

Delisting

On October 9, 2025, the Company received a delisting determination letter (the Determination Letter) from The Nasdaq Stock Market LLC (Nasdaq). As a result of the Company’s previously disclosed noncompliance with the Nasdaq Listing Rules, the Company’s common stock was suspended from trading on Nasdaq effective at the open of business on October 13, 2025. The Determination Letter also indicated that, after applicable appeal periods have lapsed, Nasdaq intends to file a Form 25 with the Securities and Exchange Commission (SEC) to complete the delisting of the Company’s common stock from Nasdaq. The Company does not plan to appeal Nasdaq’s determination.

The Company’s common stock commenced trading on the OTCID market tier operated by the OTC Markets Group at the open of business on October 13, 2025 under the Company’s current trading symbol “CARM.” There is no guarantee, however, that a broker will continue to make a market in the Company’s common stock or that trading of the common stock will continue on the OTCID market tier or otherwise or that the Company will continue to provide information sufficient to enable brokers to provide quotes for its common stock.

Pursuit of Additional Asset Monetizations and Wind Down

The Company expects to continue to attempt to sell or otherwise dispose of or monetize its remaining assets and pursue an orderly wind down of its remaining operations. There can be no assurance that the Company will be able to identify and complete additional asset monetization transactions. It is unlikely that there will be a meaningful amount of cash available for distribution to stockholders in connection with a wind down of the Company’s operations or a dissolution and liquidation of the Company. The Company also may determine, following effectiveness of the Form 25 delisting the Company’s common stock from Nasdaq, to file a Form 15 with the SEC to suspend the Company’s reporting obligations under Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended. The Company does not expect to be able to continue to file reports with SEC, including but not limited to the Annual Report on Form 10-K for the fiscal year ending December 31, 2025.