Caribou Biosciences, Inc.

Notes to Condensed Consolidated Financial Statements

1. Description of the Business, Organization, and Liquidity

Business and Organization

Caribou Biosciences, Inc. (“Company” or “we”) is 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, including our novel chRDNA (CRISPRh ybrid RNA-DNA, or “chRDNA,” pronounced “chardonnay”) technology, enables more precise genome editing of allogeneic cell therapies. Our allogeneic, or off-the-shelf, chimeric antigen receptor (“CAR”)-T (“CAR-T”) cell therapy candidates are manufactured in advance with cells from healthy donors, with the goal of enabling broad patient access, rapid patient treatment, and increased manufacturing scale. We use our chRDNA technologies to armor our allogeneic CAR-T cell therapies through multiple genome-editing strategies, such as checkpoint disruption and immune cloaking, to enhance activity against devastating diseases. We are advancing two clinical-stage allogeneic CAR-T cell therapies for the treatment of patients with hematologic malignancies.

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 $488.4 million as of March 31, 2025. During the three months ended March 31, 2025, we incurred a net loss of $40.0 million and used $36.7 million of cash in operating activities. We expect to continue to incur substantial losses, and our ability to achieve and sustain profitability will depend on the successful development, regulatory approval, and commercialization of our product candidates and on our ability to generate sufficient revenue to support our cost structure. We may never achieve profitability and, unless and until we do, we will need to continue to raise additional capital. Our management expects that existing cash, cash equivalents, and marketable securities of $212.5 million as of March 31, 2025, will be sufficient to fund our current operating plan for at least the next 12 months from the date this Quarterly Report on Form 10-Q (“Form 10-Q”) is filed.

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, 2024, 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.

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 during the applicable reporting period. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, stock-based compensation expense, accrued research and development expenses, valuation of the Memorial Sloan Kettering Cancer Center (“MSKCC”) success payments liability under the Exclusive License Agreement, dated November 13, 2020, with MSKCC (as amended, “MSKCC Agreement”), and income taxes. Our management bases its estimates on 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 of cash and cash equivalents, accounts receivable, contract assets, other receivables, and investments in marketable securities and equity 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 in high-grade instruments, limiting our exposure to one issuer, and we monitor the ongoing creditworthiness of these financial institutions and issuers.

Licensees that represent 10% or more of our revenue and accounts receivable and contract assets 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 March 31, 2025, or December 31, 2024.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of the new guidance and do not expect that the adoption of ASU 2023-09 will have a material impact on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued 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.

3. Fair Value Measurements and Fair Value of Financial Instruments

Our financial instruments consist of Level 1, Level 2, and Level 3 financial instruments. We generally classify our marketable securities as Level 1 or Level 2. Instruments are classified as Level 2 when observable market prices for identical securities that are traded in less active markets are used. When observable market prices for identical securities are not available, such instruments are priced using benchmark curves, benchmarking of like securities, sector groupings, matrix pricing, and valuation models. These valuation models are proprietary to the pricing providers or brokers and incorporate a number of inputs including, in approximate order of priority: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. For certain security types, additional inputs may be used, or some of the standard inputs may not be applicable. Evaluators may prioritize inputs differently on any given day for any security based on market conditions, and not all inputs listed are available for use in the evaluation process for each security valuation on any given day. 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 three months ended March 31, 2025, and March 31, 2024. Level 1 financial instruments are comprised of money market fund investments and U.S. Treasury bills. Level 2 financial instruments are comprised of commercial paper, corporate debt securities, and U.S. government agency bonds. Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. Level 3 financial instruments consist of the MSKCC success payments liability.

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 March 31, 2025, and December 31, 2024, are presented in the following tables (in thousands):

We reviewed our impaired marketable securities as of March 31, 2025, and December 31, 2024, and concluded that the decline in fair value was not related to credit losses and is recoverable. Accordingly, no allowance for credit losses was recorded and instead the unrealized losses are reported as a component of accumulated other comprehensive income.

The following table presents the fair value of available-for-sale marketable securities by contractual maturities (in thousands):

The following table sets forth a summary of the changes in the fair value of our Level 3 financial liability (in thousands):

Our liability for the MSKCC success payments is carried at fair value and changes are recognized as expense or income as part of other income until the success payments liability is paid or expires. We recorded a $0.3 million change in the fair value of the MSKCC success payments liability as a gain in other income in our unaudited condensed consolidated statements of operations and comprehensive loss for each of the three-month periods ended March 31, 2025, and March 31, 2024.

The table below summarizes key assumptions used in the valuation of the MSKCC success payments liability:

(1)MSKCC is entitled to certain success payments if our common stock fair value increases, during a specified time period, by certain multiples of value based on a comparison of the fair value of our common stock to $5.1914 per share, adjusted for any future stock splits (“Initial Share Price”). For further information regarding our agreement with MSKCC, see Note 4 to the consolidated financial statements included in our Form 10-K.

As of March 31, 2025, we did not note any significant changes to the inputs used in the MSKCC success payments liability fair value calculation, other than a change in the fair value of our common stock to $0.91 per share. On April 24, 2025, we announced the discontinuation of the AMpLify phase 1 clinical trial for our CB-012 product candidate.

4. Significant Agreements

Since December 31, 2024, there have been no material changes to the key terms of our significant agreements. For further information regarding our significant agreements, see Note 4 to the consolidated financial statements included in our Form 10-K.

Our 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 upon milestones being achieved, licensed products being commercialized, and the agreements remaining in effect.

For the three months ended March 31, 2025, and March 31, 2024, we recorded $0.3 million and $1.3 million, respectively, as research and development expenses in our unaudited condensed consolidated statements of operations and comprehensive loss related to our license agreements. For the three months ended March 31, 2025, and March 31, 2024, we recorded $0.2 million and $0.2 million, respectively, as general and administrative expenses for patent prosecution and maintenance costs in our unaudited condensed consolidated statements of operations and comprehensive loss, which includes reimbursements of patent prosecution and maintenance costs of $0.2 million and $0.1 million, respectively.

As of March 31, 2025, certain license and assignment agreements included potential future payments from us for development, regulatory, and sales milestones totaling approximately $159.9 million.

5. Revenue

Disaggregation of Revenue

We disaggregate revenue by geographical market based on the location of research and development activities of our licensees and collaborators. The following table is a summary of revenue by geographic location for the three months ended March 31, 2025, and March 31, 2024 (in thousands):

During each of the three-month periods ended March 31, 2025, and March 31, 2024, we recognized $1.8 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.

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 that 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 that precede our satisfaction of the associated performance obligations. As of March 31, 2025, and December 31, 2024, our deferred revenue balance primarily resulted from the upfront payment received relating to our performance obligation to Pfizer Inc. (“Pfizer”). The remaining deferred revenue relates to upfront payments received under license 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 during the three months ended March 31, 2025 (in thousands):

During the three months ended March 31, 2025, and March 31, 2024, we recognized $1.0 million and $0.7 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 March 31, 2025, and March 31, 2024, were approximately $5.4 million and $8.3 million, respectively. We expect to recognize approximately $2.8 million of remaining performance obligations as revenue in the next 12 months 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

Prepaid expenses and other current assets consisted of the following (in thousands):

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

Depreciation and amortization expenses related to property and equipment were $1.2 million and $0.7 million for the three months ended March 31, 2025, and March 31, 2024, respectively.

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

7. Related Party Transactions

Since December 31, 2024, there have been no new related party transactions, except as set forth below. For further information regarding our related parties, see Note 7 to the consolidated financial statements included in our Form 10-K.

Pfizer Investment

During the three months ended March 31, 2025, we recognized $0.6 million of revenue from our Information Rights Agreement with Pfizer, dated June 29, 2023, pursuant to which we had originally allocated $7.5 million as a contract with a customer under Accounting Standards Codification (“ASC”) Topic 606. During the three months ended March 31, 2024, we recognized $0.6 million of revenue from Pfizer. As of March 31, 2025, there was approximately $3.1 million of related party deferred revenue ($2.5 million included in current liabilities and $0.6 million included in long-term liabilities) related to our performance obligation to Pfizer. As of December 31, 2024, there was approximately $3.7 million of related party deferred revenue ($2.5 million included in current liabilities and $1.2 million included in long-term liabilities) related to our performance obligation to Pfizer.

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, clinical 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 March 31, 2025, 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 March 31, 2025, and December 31, 2024, 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.

On April 11, 2023, a putative class action lawsuit was filed in the U.S. District Court for the Northern District of California against our company and certain of our officers and current and former members of our board of directors, Bergman v. Caribou Biosciences, Inc., et al., case number 3:23-cv-01742 (“Bergman Case”). The Bergman Case complaint challenged disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged durability of CB-010’s therapeutic effect and the product candidate’s clinical and commercial prospects, in alleged violation of Sections 11 and 15 of the Securities Act of 1933, as amended (“Securities Act”), and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). On September 18, 2023, plaintiffs filed an amended complaint adding the IPO underwriters as defendants and making substantially the same allegations as the original complaint. On November 14, 2023, we filed a motion to dismiss the amended complaint for failure to state a claim. Motion to dismiss briefing was completed on February 21, 2024. On April 22, 2024, we reached an agreement in principle with plaintiffs to settle the Bergman Case for $3.9 million in exchange for a full release of the putative class’s claims against us and all our current and former officers, current and former members of our board of directors, the IPO underwriters, and the other named defendant. On February 18, 2025, the court issued an order granting final approval of the settlement.

On December 24, 2024, a putative class action lawsuit was filed in the U.S. District Court for the Northern District of California against our company and certain of our current and former officers, Saylor v. Caribou Biosciences, Inc., et al., case number 3:24-cv-09413 (“Saylor Case”). The alleged class period is July 14, 2023, to July 16, 2024. The Saylor Case complaint challenges disclosures regarding our company’s business, operations, and prospects, specifically with respect to the alleged safety, efficacy, and durability of CB-010, CB-010’s clinical results and commercial prospects, and our financial statements, in alleged violation of Sections 10(b) and 20(a) of the Exchange Act. On April 15, 2025, the lead plaintiff filed a motion to voluntarily dismiss the lawsuit and, on April 27, 2025, the court granted the motion, dismissing the lawsuit without prejudice.

On March 3, 2025, a shareholder derivative complaint was filed in the U.S. District Court for the Northern District of California against our directors and certain of our current and former officers, Moisio, derivatively on behalf of Caribou Biosciences, Inc. v. Haurwitz, et al., case number 4:25-cv-02199 (“First Derivative Case”), alleging, among other things, that the named directors and officers breached their fiduciary duties by causing our company to make the disclosures being challenged in the Saylor Case and seeking unspecified monetary damages from our company as well as that we make certain changes to our corporate governance. On March 11, 2025, a second shareholder derivative complaint was filed in the U.S. District Court for the Northern District of California against the same defendants as in the First Derivative Case, Allen, derivatively on behalf of Caribou Biosciences, Inc. v. Braunstein, et al., case number 4:25-cv-02463 (“Second Derivative Case”), with the same allegations. On April 1, 2025, the First Derivative Case and the Second Derivative Case were deemed related and assigned to the same judge and, on April 7, 2025, the First Derivative Case and the Second Derivative Case were consolidated into a single action, In re Caribou Biosciences, Inc. Derivative Litigation, lead case number 4:25-cv-02199 (the “Consolidated Derivative Action”). The Consolidated Derivative Action is at the preliminary stage of the proceedings.

9. Common Stock

Common stock reserved for future issuances consisted of the following:

Shelf Registration Statement

On August 9, 2022, we filed a shelf registration statement on Form S-3 (“Shelf Registration Statement”) with the U.S. Securities and Exchange Commission (“SEC”). The Shelf Registration Statement allows us to sell from time to time up to $400.0 million of common stock, preferred stock, debt securities, warrants, rights, or units comprised of any combination of these securities, for our own account in one or more offerings (including the $100.0 million of common stock reserved for our at-the-market equity offering program). The SEC declared the Shelf Registration Statement effective on August 16, 2022, and it will expire after three years on August 16, 2025. The terms of any offering under the Shelf Registration Statement will be established at the time of such offering, as described in a prospectus supplement to the Shelf Registration Statement to be filed with the SEC prior to the completion of any such offering.

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”), pursuant to which, through Jefferies as sales agent, we may from time to time, sell shares of our common stock having an aggregate offering price of up to $100.0 million in gross proceeds under the Shelf Registration Statement.

During the three months ended March 31, 2025, we didnot issue any shares of our common stock under the ATM Sales Agreement.

During the three months ended March 31, 2024, we issued 1,594,171 shares of our common stock, in a series of sales, at an average price of $7.33 per share, in accordance with the ATM Sales Agreement for aggregate gross proceeds of $11.7 million ($11.3 million net of offering expenses).

10. Stock-Based Compensation

Equity Incentive Plans

In July 2021, our board of directors adopted, and our stockholders approved, the 2021 Equity Incentive Plan (“2021 Plan”) that became effective on July 22, 2021. As of March 31, 2025, we had 7,902,961 shares available for issuance under the 2021 Plan.

The following table summarizes stock option activity under our equity incentive plans during the three months ended March 31, 2025:

(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 at the end of each reporting period referenced above.

Grant Date Fair Value

During the three months ended March 31, 2025, we granted 3,335,888 stock options to employees with a weighted average grant date fair value of $1.07.

During the three months ended March 31, 2024, we granted 2,913,727 stock options to employees with a weighted average grant date fair value of $4.59.

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 March 31, 2025, there was $21.1 million of unrecognized stock-based compensation expense related to employee stock options that is expected to be recognized over a weighted-average period of 2.8 years.

Restricted Stock Units

During the three months ended March 31, 2025, we granted 1,148,685 restricted stock units (“RSUs”) to employees. A summary of the status of and change in unvested RSUs as of March 31, 2025, was as follows:

As of March 31, 2025, the total unrecognized stock-based compensation expense related to unvested RSUs was $6.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 3.2 years.

Employee Stock Purchase Plan (“ESPP”)

In July 2021, our board of directors adopted, and our stockholders approved, the ESPP, which became effective on July 22, 2021. We issued 877,027 shares of common stock under the ESPP as of March 31, 2025. We recorded $0.2 million in accrued liabilities related to contributions withheld as of March 31, 2025.

Stock-Based Compensation Expense

We recorded stock-based compensation expense related to employee equity-based awards grants in our unaudited condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

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

11. Income Taxes

No income tax expense was recorded during each of the three-month periods ended March 31, 2025, and March 31, 2024 due to our operating losses.

12. 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:

13. Segment Information

We operate and manage our business asone reportable segment andone operating segment, which 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 the consolidated statements of operations. The measure of segment assets is reported on the 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 spend 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 March 31, 2025, and March 31, 2024, exclude $1.7 million and $1.6 million of stock-based compensation expense, respectively, and $1.1 million and $0.6 million of depreciation and amortization expense, respectively.

(2)General and administrative expense for the three months ended March 31, 2025, and March 31, 2024, exclude $2.1 million and $2.4 million of stock-based compensation expense, respectively, and $0.1 million and $0.1 million of depreciation and amortization expense, respectively.

(3)Other segment items include stock-based compensation, change in fair value of the MSKCC success payments liability, and depreciation and amortization.

14. Subsequent Events

On April 24, 2025, we announced a strategic pipeline prioritization with workforce and cost reduction initiatives to focus resources on our CB-010 and CB-011 oncology programs. At that time, we disclosed that we had discontinued our GALLOP phase 1 trial of CB-010 for the treatment of lupus prior to dosing the first patient; our AMpLify phase 1 clinical trial of CB-012, an allogeneic anti-CLL-1 CAR-T cell therapy, for the treatment of relapsed or refractory acute myeloid leukemia, as additional data would be needed to advance this program; and our preclinical research. Additionally, we announced that our workforce was reduced by 47 employees, or approximately 32% of our company. In connection with the strategic pipeline prioritization and the workforce reduction, we currently estimate that expenses of approximately $2.5 million to $3.5 million in total will be incurred, consisting primarily of cash severance costs, benefits, and transition support services for impacted employees and costs to wind down our GALLOP phase 1 clinical trial and our AMpLify phase 1 clinical trial. Of these amounts, workforce reduction costs are estimated to be $1.8 million to $2.0 million, which we expect to incur in the second quarter of 2025, and clinical trial wind-down costs are estimated to be $0.7 million to $1.5 million, which we expect to incur through the third quarter of 2025. The charges that we expect to incur in connection with the foregoing are subject to a number of assumptions, and actual results may differ materially. We may also incur costs not currently contemplated due to events that may occur as a result of, or that are associated with, our strategic pipeline prioritization with workforce and cost reduction initiatives.

On May 7, 2025, we received a deficiency letter (the “Nasdaq Notice”) from the Staff of the Nasdaq Stock Market, LLC (“Nasdaq”) notifying us that, for the last 30 consecutive business days, the bid price for our shares of common stock had closed below $1.00 per share, which is the minimum bid price required to maintain continued listing on the Nasdaq Global Select Market. The Nasdaq Notice has no immediate effect on the listing of our common stock. We have an initial period of 180 calendar days (which expires on November 3, 2025) to regain compliance with Nasdaq minimum bid price requirement. To regain compliance, in general, the closing bid price of our common stock must be at least $1.00 per share for a minimum of 10 consecutive business days during this 180-calendar day period. Failure to cure this deficiency could result in our common stock being delisted from Nasdaq.