1. Description of Business, Organization and Liquidity

Description of the Business

Kalaris Therapeutics, Inc. (“Kalaris” or “the Company”) is a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapeutics aimed at becoming the standard of care for prevalent retinal diseases for which there is a major unmet medical need. The Company is developing TH103, a novel, clinical stage anti-vascular endothelial growth factor drug, engineered to potentially provide longer lasting and increased anti-vascular endothelial growth factor (“VEGF”) activity in patients with exudative and neovascular retinal diseases.

On March 18, 2025 (the “Closing Date”), AlloVir, Inc., a Delaware corporation (“AlloVir”), consummated the previously announced merger (the “Merger”) pursuant to the terms of the Agreement and Plan of Merger, dated as of November 7, 2024 (the “Merger Agreement”), by and among AlloVir, Aurora Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of AlloVir (“Merger Sub”) and Kalaris Tx, Inc. (formerly Kalaris Therapeutics, Inc.), a Delaware corporation (“Legacy Kalaris”). At the effective time of the Merger (the “Effective Time”), Merger Sub merged with and into Legacy Kalaris, with Legacy Kalaris continuing as a wholly-owned subsidiary of AlloVir and the surviving corporation of the Merger and, after giving effect to the Merger, Legacy Kalaris became a wholly-owned subsidiary of AlloVir. Immediately following the Effective Time, AlloVir changed its name to “Kalaris Therapeutics, Inc.” At the Effective Time, the Company’s business became primarily the business conducted by Legacy Kalaris. The Company's common stock, which was previously listed on The Nasdaq Capital Market and traded under the ticker symbol “ALVR” through the close of business on March 18, 2025, commenced trading on The Nasdaq Global Market under the ticker symbol “KLRS” on March 19, 2025. Refer to Note 3, “Merger with AlloVir”, for further details of the Merger.

Samsara BioCapital L.P. and its affiliates (collectively, “Samsara”), the Company's majority stockholder and a related party, have provided Legacy Kalaris with significant equity and debt financing since its inception, and management and operational support services to the Company. Refer to Note 12, “Related Parties,” for further details of the related party transactions with Samsara.

Liquidity

The Company has incurred significant losses and negative cash flows from operations since its inception. During the three months ended March 31, 2025 and 2024, the Company incurred net losses of $10.2 million and $3.4 million, respectively. During the three months ended March 31, 2025 and 2024, the Company had negative cash flows from operations of $7.4 million and $4.5 million, respectively. As of March 31, 2025, the Company had an accumulated deficit of $126.8 million. The Company expects to continue to incur substantial losses for the foreseeable future, and its ability to achieve and sustain profitability will depend on the successful development, approval, and commercialization of product candidates and on the achievement of sufficient revenues to support the Company’s operations.

As of March 31, 2025, the Company had cash and cash equivalents of $101.0 million. The Company’s management expects that the existing cash and cash equivalents will be sufficient to fund the Company’s operating plans for at least twelve months from the issuance date of these condensed consolidated financial statements.

The Company will need to raise additional financing to continue its product's development for the foreseeable future until it becomes profitable. The Company plans to monitor expenses and raise additional capital through a combination of equity and debt financings, strategic alliances, and licensing arrangements. The Company’s ability to access capital when needed is not assured and, if capital is not available to the Company when, and in the amounts needed, the Company may be required to significantly curtail, delay or discontinue one or more of its research or development programs or the commercialization of any product candidate, or be unable to expand its operations or otherwise capitalize on the Company’s business opportunities, as desired, which could materially harm the Company’s business, financial condition and results of operations.

2. Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in conformity with GAAP requires 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 the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the accrual of research and development expenses, the fair value of convertible promissory notes, the fair value of derivative liabilities, the fair value of royalty obligation, the fair value of common stock and redeemable convertible preferred stock, stock-based compensation expense, and valuation of deferred tax assets.

In July 2024, the Company entered into a royalty agreement with Samsara (Note 6). In exchange for the shares of common stock the Company redeemed from Samsara, the Company is obligated to pay royalties on a product-by-product and country-by-country basis at low single-digit royalty rates on future net product sales. Given the significant related party relationships with Samsara, the Company concluded that the royalty agreement is a funded research and development agreement under ASC 730-20, Research and Development Arrangements. The Company recognized the royalty obligation at its estimated fair value at the effective date of the agreement. Once royalty payments are deemed probable and estimable, and if such amounts exceed the royalty obligation balance, the Company will impute interest to accrete the royalty obligation on a prospective basis based on such estimates. If and when the Company makes royalty payments under the royalty agreement, the royalty obligation balance will be reduced.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements; however, the amendments affect where such information appears in the notes to the financial statements because entities are required to include certain current disclosures in the same tabular format as the other disaggregation requirements in the amendments. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact that the updated standard will have on its consolidated financial statement disclosures and financial reporting processes.

3. Merger with AlloVir

On March 18, 2025, the Merger closed, and, pursuant to the Merger Agreement, Merger Sub merged with and into Legacy Kalaris with Legacy Kalaris continuing as a wholly owned subsidiary of AlloVir and the surviving corporation of the Merger. Upon completion of the Merger, AlloVir changed its name to "Kalaris Therapeutics, Inc." and Legacy Kalaris was renamed to "Kalaris Tx, Inc."

Subject to the terms and conditions of the Merger Agreement, at the Effective Time, all issued and outstanding shares of the Legacy Kalaris’ common stock (including common stock issued upon conversion of Legacy Kalaris’ redeemable convertible preferred stock and outstanding convertible promissory notes, (other than the AlloVir Note (as defined below)) converted into the right to receive 0.2016 shares of AlloVir’s common stock calculated in accordance with an exchange ratio equal to 1:0.2016 (the “Exchange Ratio”). Each award of restricted shares of Legacy Kalaris’ common stock that was unvested and outstanding was converted into and was exchanged for the right to receive a number of restricted shares of AlloVir common stock based on the Exchange Ratio. Each outstanding option to purchase shares of Legacy Kalaris’ common stock under the Legacy Kalaris’ 2019 Equity Incentive Plan (the "2019 Plan"), whether or not vested, was converted into an option to acquire a number of shares of AlloVir’s common stock based on the Exchange Ratio. Exercise prices of assumed options were determined as the product of the exercise price immediately prior to the Effective Time multiplied by the reciprocal of the Exchange Ratio, and rounding up to the nearest whole cent. There were no changes to any other terms of such options or restricted share awards.

Immediately prior to the Effective Time, (i) the outstanding principal and accrued but unpaid interest on convertible promissory notes issued by Legacy Kalaris in January 2025 (other than the AlloVir Note) converted into 794,499 shares of Series B-2 redeemable convertible preferred stock (the "Series B-2 Stock") at a price of $4.7851 per share, which then converted on a one-for-one basis into shares of Legacy Kalaris common stock, and (ii) the outstanding principal and accrued but unpaid interest on convertible notes issued by Legacy Kalaris in 2024 converted into shares of Legacy Kalaris’ common stock at a price of $6.20 per share.

In January 2025, Legacy Kalaris issued a convertible promissory note in an aggregate principal amount of up to $7.5 million to AlloVir (the “AlloVir Note”) under which AlloVir funded a principal amount of $3.75 million in January 2025. The AlloVir Note accrued interest on the initial advance commencing on the date of such advance, at an interest rate of 8.0% per annum. At the Effective Time, the AlloVir Note was cancelled.

Immediately prior to the Effective Time, each option to purchase shares of AlloVir’s common stock (each, an “AlloVir Option”) that was outstanding immediately prior to the Effective Time, whether vested or unvested, survived the Closing and remains outstanding in accordance with its terms, provided that (i) each unexercised and outstanding AlloVir Option with an exercise price per share equal to or greater than $92.00 was cancelled for no consideration, and (ii) each AlloVir Option that had an exercise price per share less than $92.00, was unvested and unexercised as of the Effective Time, was accelerated in full. Additionally, immediately prior to the Effective Time, each outstanding and unvested AlloVir restricted stock unit was accelerated in full and settled in shares of AlloVir’s common stock.

The aggregate number of shares that AlloVir issued to Legacy Kalaris’ securityholders (including all holders of outstanding convertible notes) at the closing of the Merger was 13,634,744 shares of AlloVir's common stock. Immediately following the Merger, Legacy Kalaris securityholders owned approximately 74.47% of the outstanding shares of the Company’ common stock on a fully-diluted basis and pre-closing AlloVir securityholders owned approximately 25.53% of the outstanding shares of the Company’s common stock on a fully-diluted basis. The number of shares of the Company's common stock issued and outstanding immediately following the closing of the Merger was as follows:

The Merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Legacy Kalaris was deemed to be the accounting acquirer for financing reporting purposes. This determination was primarily based on the fact that, immediately following the Merger: (1) Legacy Kalaris’ stockholders own a substantial majority of the voting rights of the Company, inclusive of Samsara; (2) Legacy Kalaris designated a majority of the initial members of the board of directors of the Company; and (3) other than with respect to the Company’s chief financial officer, for which the Company has commenced a search for a qualified candidate, the Company's senior management (which are determined by the board of directors of the Company) hold all key positions in senior management of the Company. For accounting purposes, the Merger is treated as the equivalent of Legacy Kalaris issuing stock to acquire the net assets of AlloVir. The reported operating results prior to the Merger are those of Legacy Kalaris. The net assets of AlloVir were recorded at their carrying value in the condensed consolidated financial statements of the Company. Historical common stock share, restricted share awards, common stock options and exercise prices data of Legacy Kalaris have been retroactively recast based on the Exchange Ratio.

AlloVir’s net assets acquired included the following: $102.1 million of cash and cash equivalents, $1.7 million of prepaid expenses and other current assets, and $2.6 million of accounts payable and accrued expenses.

The Company recognized approximately $1.5 million related to AlloVir’s directors’ and officers’ insurance and $0.1 million of share-based compensation expense related to the acceleration of vesting of stock options and restricted stock units as general and administrative expenses at the Effective Time. The Company also incurred transaction costs related to the Merger of approximately $5.4 million, which were recorded as a reduction to additional paid-in capital in the condensed consolidated statement of redeemable convertible preferred stock and stockholders’ equity (deficit) for the three months ended March 31, 2025.

4. Fair Value Measurements and Fair Value of Financial Instruments

The carrying amounts of prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities approximate their fair value due to their short-term maturities. During the periods presented, the Company has not changed the manner in which it values liabilities that are measured at estimated fair value using Level 3 inputs. There were no transfers within the hierarchy for any period presented.

The Company issued the following financial instruments to be accounted for at fair value on a recurring basis: derivative liabilities embedded in convertible promissory notes, and the tranche liability related to the convertible note financing (Note 7).

The Company estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis. The Company estimated that the embedded change of control feature fair values were minimal based on the low probability of the change of control events during the three months ended March 31, 2025 and 2024.

As all outstanding convertible promissory notes, other than the AlloVir Note, were converted on March 18, 2025, in connection with the closing of the Merger, the derivative liabilities expired and their fair values were minimal at the time of conversion.

The fair value of the tranche liability related to the convertible promissory notes issued in October and November 2024 was estimated using the probability weighted model with the following Level 3 input assumptions: the timing of issuing convertible notes and notes conversion, probabilities of conversion scenarios, the estimated fair value of the Company’s shares into which the note was convertible and a discount rate. The significant assumptions were as follows as of December 31, 2024:

In March 2025, the Company and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranches and the tranche liability expired unexercised.

5. Balance Sheet Components

Prepaid expenses and other current assets

Accrued expenses and other current liabilities

6. Significant Agreements

License Agreement with the University of California, San Diego

In April 2021, the Company entered into a license agreement with UCSD (as amended, the “UCSD Agreement”) pursuant to which the Company obtained (i) an exclusive license under the patent rights to make, use, sell, offer for sale, and import licensed products and (ii) a non-exclusive license to use the technology with a right to sublicense, each (i) and (ii) related to new anti-VEGF agents and novel long-acting VEGF inhibitors for intraocular neovascularization for the treatment of patients with retinal pathologies. As partial consideration for the license, the Company agreed to pay UCSD $0.2 million and was obligated to issue shares of its common stock to UCSD equal to 5% of the fully diluted issued and outstanding securities of the Company until such time as an aggregate of $5.0 million in gross proceeds from the sale of equity securities had been raised by the Company. In June 2022, after the closing of the Series A financing, the Company issued 137,234 shares of its common stock to UCSD. The Company was also obligated to pay $0.1 million of patent costs incurred prior to the effective date and is required to reimburse future patent expenses incurred by UCSD during the term of the UCSD Agreement. Under the UCSD Agreement, the Company is required to make annual license maintenance payments of $10,000 during the first four anniversaries and $15,000 on the fifth and every subsequent anniversary of the effective date. The Company is obligated to pay an aggregate of up to $4.6 million upon the achievement of various development and regulatory milestones and low single-digit royalties on net sales of licensed products. The royalty is payable, on a licensed product-by-licensed product and country-by country basis, until expiration of the last-to-expire issued patent of the applicable licensed product in the country of sale or the manufacture. If the Company enters into a sublicensing agreement, it is required to pay UCSD a sublicense fee as a percentage of the fair market value of any sublicense fee received that is not earned royalties for each sublicense granted. The sublicense fee percentage ranges from 50% if the applicable sublicense agreement is entered into within one year from the UCSD Agreement effective date and decreases to 10% if the applicable sublicense agreement is entered into after the first dosing of a patient for a phase 2 clinical trial.

In case of a closing of a merger, or sale of at least 50% of the voting stock of the Company or the sale by the Company of all or substantially all of its assets (collectively referred to as “Liquidity Event”), the Company is obligated to make a one-time cash milestone payment to UCSD ranging from $0.1 million to $1.0 million based on the valuation of the Company’s outstanding shares at the Liquidity Event closing date. The Merger did not meet the definition of the Liquidity Event.

The UCSD Agreement is effective until the expiration date of the longest-lived patent rights or last to be abandoned patent or future patent of the licensed products, whichever is later. The Company can terminate the agreement upon 60 days written notice. UCSD can terminate the agreement in the event of an uncured material breach, such as a failure to make payments due, or to perform under the UCSD Agreement or a violation of any other material term of the UCSD Agreement, is not cured by the Company within 60 days after a breach written notice provided by UCSD.

The acquisition of the license under the UCSD Agreement, including patent rights and know-how, was accounted for as an asset acquisition. As the acquired technology did not have an alternative use for accounting purposes, the Company recognized the $0.2 million initial cash consideration, $0.1 million patent reimbursement costs incurred prior to the effective date, and $0.2 million related to the obligation to issue shares of the Company’s common stock as research and development expenses. The obligation to issue shares of common stock included two components, the initial shares obligation and the additional shares obligation. The fair value of the initial share obligation was estimated as $0.1 million based on the fair value of 55,440 shares of common stock, which represented 5% of the outstanding fully diluted equity at the effective date. As the initial share obligation was indexed to the Company’s own stock, it was recorded as additional paid-in capital. The additional shares obligation was recognized when the next round of financing closed in March 2022. The Company estimated the fair value of an additional 81,794 shares of common stock as $0.2 million and recognized it as research and development expenses and additional paid-in capital in March 2022. The Company concluded that the contingent payment upon the closing of the Liquidity Event is a derivative liability and should be accounted for at fair value and re-measured until its settlement or expiration. As of March 31, 2025 and as of December 31, 2024, the Company recognized less than $0.1 million and $0.2 million in accrued expenses and other current liabilities in the condensed consolidated balance sheets, respectively. The Company achieved the first development milestone in August 2024 and incurred an expense of $0.1 million recorded as research and development expense in the consolidated statement of operations for the year ended December 31, 2024. The assignment fee derivative liability fair value was estimated to be zero as of March 31, 2025 and December 31, 2024, as the probability of the Liquidity Event was estimated to be zero.

Royalty Agreement with Samsara – Related Party

In July 2024, the Company entered into a royalty agreement (the “Royalty Agreement’) with Samsara, the majority stockholder of the Company and a related party. Under the Royalty Agreement, the Company redeemed 10,080 shares of its common stock issued to Samsara under a restricted stock purchase agreement in exchange for the Company’s agreement to pay Samsara a low single digit percentage tiered royalty on net sales, if any, of the Company’s products developed using the technology licensed under the UCSD Agreement. Such royalties are payable on a product-by-product and country-by-country basis until the later of (i) ten years after the first commercial sale of such product in such country and (ii) the expiration of the last-to-expire issued claim of the Company’s patents for such product in such country.

The Company identified two elements in the Royalty Agreement: repurchased shares, and future royalty payments to Samsara. The repurchase of shares was accounted at an estimated fair value of $32,000 as a reduction of common stock and additional paid-in-capital in the condensed consolidated balance sheet and the statement of redeemable convertible preferred stock and shareholders’ deficit. The Company recorded $32.1 million as a long-term liability related to the obligation to make royalty payments to Samsara. The fair value of the royalty obligation was estimated using a risk-adjusted net present value model, based on the contractual royalty rates applied to the future net sales forecast, adjusted by the probability of success of product development and discounted to the effective date of the Royalty Agreement using a 25.0% discount rate. The excess of the royalty liability over the fair value of the repurchased shares of $32.0 million was recorded as a research and development expense in July 2024. Once royalty payments to Samsara are deemed probable and estimable, and if such amounts exceed the initially recorded royalty obligation balance, the Company will impute interest to accrete the liability on a prospective basis based on such estimates. If and when the Company makes royalty payments under the Royalty Agreement, the royalty obligation balance will be reduced.

From July 2024 through March 31, 2025, royalty payments were not probable and estimable and, therefore, no interest expense was recognized for the royalty liability.

7. Convertible Promissory Notes

2024 Convertible Promissory Note

In March 2024, the Company issued a convertible promissory note to Samsara (the “2024 Note”) for total proceeds of up to $10.0 million. The 2024 Note was payable in two advances at Samsara’s discretion, carried an annual interest rate of 10%, and had an original maturity date of March 2025. In March and May 2024, Samsara advanced to the Company $5.0 million for an aggregate advance of $10.0 million under the 2024 Note. All unpaid interest and principal were due and payable upon request of Samsara on or after maturity, or in the event of default. The Company could not prepay the principal amount and accrued interest at any time before maturity without the consent of Samsara.

In the event that the Company issued and sold shares of its redeemable convertible preferred stock to investors following the issuance date of the 2024 Note in a single transaction or a series of related transactions that resulted in either (i) gross proceeds of at least $10.0 million (excluding conversion of the (a) 2024 Note and any other convertible notes or convertible securities issued by the Company and then outstanding and (b) aggregate gross proceeds to the Company yielded by any cash investment by Samsara, or (ii) designated as a qualified financing by Samsara (a “2024 Note Qualified Financing”)), then the outstanding principal amount of the 2024 Note and any unpaid accrued interest would automatically convert into shares of redeemable convertible preferred stock issued in the 2024 Note Qualified Financing at a conversion price equal to 80% of the per share price paid by investors for the redeemable convertible preferred stock in the 2024 Note Qualified Financing.

Upon a change in control, the 2024 Note, at the election of Samsara, would either (i) become due and payable in cash upon the closing of such change in control, in an amount equal to twice the outstanding principal amount plus any unpaid accrued interest, or (ii) convert into shares of the Company’s Series B-2 Stock. The conversion would have been based on a price equal to 100% of the total aggregate consideration paid for each share of the Company’s capital stock on an as-converted to common stock basis (including any earn-out amounts).

Unless earlier converted or repaid in connection with the 2024 Note Qualified Financing or a change in control on or prior to the maturity date, or at any time at Samsara’s option, Samsara could have elected to convert the 2024 Note and any unpaid accrued interest into the Company’s common stock at a conversion price equal to the Series B-2 Stock conversion price then in effect.

The 2024 Note contained customary representations and warranties and event of default provisions. Upon any event of default, Samsara could declare the principal and unpaid accrued interest under the 2024 Note immediately due and payable.

The 2024 Note was issued to Samsara at the estimated fair value of $12.1 million at the issuance date. Since the convertible promissory notes were issued to a related party and considered not at arm’s length, the total premium of $2.1 million, which was the difference between the fair value at the issuance date and the principal amount of the note, was recognized as a loss on issuance of convertible promissory notes – related party in the condensed consolidated statement of operations and comprehensive loss and as additional paid-in-capital in the condensed statement of redeemable convertible preferred stock and stockholders’ deficit in March and May 2024 when amounts were advanced under the 2024 Note. The Company recognized a $0.8 million loss on issuance of convertible promissory notes – related party in the condensed consolidated statement of operations and comprehensive loss and as additional paid-in-capital in the condensed statement of redeemable convertible preferred stock and stockholders’ deficit for the three months ended March 31, 2024. The fair value of convertible promissory notes at issuance was estimated using the probability weighted settlements scenarios model discounted to present value with the following range of assumptions: expected term of 0.4 – 1.3 years, probabilities of scenario achievement of 0.0% – 90.0% and discount rates of 12.3% – 18.7%.

The 2024 Note contained embedded features that provided Samsara the right to receive cash or a variable number of shares upon a change in control or the completion of a capital raising transaction by the Company. These embedded features were required to be bifurcated and accounted for separately as a compound derivative instrument. The embedded features were initially and subsequently measured at fair value with changes in the fair value recorded as a change in fair value of derivative liabilities – related party in the statements of operations and comprehensive loss. The total fair value at issuance of the derivative instrument issued with the 2024 Note was $2.1 million, including $1.1 million for the convertible promissory note issued in March 2024. The derivative liability created a discount on the advances under the 2024 Note that was amortized using the effective interest rate method over the term of the respective advance and recorded as a non-cash interest expense.

The Company recognized a change in the fair value of derivative liability of $0.5 million in the condensed consolidated statements of operations for the three months ended March 31, 2025. The change in the fair value of derivative liability was minimal for the three months ended March 31, 2024. The 2024 Note was converted into shares of common stock, and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.

The total interest expense for the 2024 Note was $0.8 million and $0.1 million for the three months ended March 31, 2025 and 2024, respectively, consisting of $0.2 million of contractual interest expense and $0.6 million in amortization of debt discount arising from the separation of the derivative instrument for the three months ended March 31, 2025 and less than $0.1 million of contractual interest expense and less than $0.1 million in amortization of debt discount arising from the separation of the derivative instrument for the three months ended March 31, 2024. In connection with the closing of the Merger, the $10.0 million aggregate outstanding principal amount and $0.9 million accrued interest of the 2024 Note converted into 1,757,951 shares of Legacy Kalaris common stock at a conversion price of $6.20 per share. The 2024 Note was no longer outstanding as of March 31, 2025.

2024 and 2025 Bridge Notes

In October 2024, the Company entered into a convertible note purchase agreement with Samsara to sell and issue convertible promissory notes for an aggregate principal amount of up to $25.0 million. In November 2024, the Company amended the agreement and other existing preferred stockholders of the Company joined the agreement. In October 2024, the Company issued to Samsara a convertible promissory note with an aggregate principal amount of approximately $9.0 million (the “October 2024 Note”). In November 2024, the Company issued additional notes with an aggregate principal amount of approximately $1.0 million to Samsara and other investors (the “November 2024 Notes”, and together with the October 2024 Note, the “2024 Bridge Notes”). The October and November 2024 issuance of convertible notes is referred to as the “First Tranche Closing”. The Company had the right to draw up to an additional $15.0 million in three subsequent tranche closings of up to a maximum aggregate principal amount of $5.0 million in each such closing (each, the “Subsequent Tranche Closing”). The 2024 Bridge Notes carried an annual interest rate of 8%, and had an original maturity date of May 2025.

In the event that the Company issued and sold shares of its redeemable convertible preferred stock to investors following the respective issuance date of the 2024 Bridge Notes in a single transaction or a series of related transactions that results in either (i) gross proceeds of at least $10.0 million (excluding conversion of the (a) 2024 Bridge Notes and any other convertible notes or convertible securities issued by the Company and then outstanding and (b) aggregate gross proceeds to the Company yielded by any cash investment by Samsara), or (ii) designated as a qualified financing by Samsara (a “2024 Bridge Notes Qualified Financing”), then the outstanding principal amount of the 2024 Bridge Notes and any unpaid accrued interest would automatically convert into shares of redeemable convertible preferred stock issued in the 2024 Bridge Notes Qualified Financing at a conversion price equal to 80% of the per share price paid by investors for the redeemable convertible preferred stock in the 2024 Bridge Notes Qualified Financing.

Upon a change in control, the 2024 Bridge Notes, at the election of Samsara, would either (i) become due and payable in cash upon the closing of such change in control, in an amount equal to twice the outstanding principal amount plus any unpaid accrued interest, or (ii) convert into shares of the Company’s Series B-2 Stock at a price equal to 100% of the total aggregate consideration to be paid for each share of the Company’s capital stock on an as-converted to common stock basis (including any earn-out amounts) as determined by the board of directors of the Company in its sole discretion, provided that if the conversion occurred due to the closing of the Merger, only clause (ii) would apply to such conversion.

Unless earlier converted or repaid in connection with the 2024 Bridge Notes Qualified Financing or a change in control on or prior to the maturity date, or at any time at Samsara’s option, Samsara could have elected to convert the 2024 Bridge Notes and any unpaid accrued interest into the Company’s common stock at a conversion price equal to the Series B-2 Stock conversion price then in effect (the “2024 Bridge Notes Optional Conversion”).

The 2024 Bridge Notes contained customary representations and warranties and event of default provisions. Upon any event of default, Samsara could declare the principal and unpaid accrued interest under the 2024 Bridge Notes immediately due and payable.

The Company determined that the investors’ right to receive additional convertible promissory notes at a predetermined conversion price under each of the Subsequent Tranche Closing represented freestanding instruments that should be accounted for separately as liabilities, initially recorded and subsequently remeasured at fair value until their exercise or expiration (the “Tranche Liability”). The Tranche Liability was initially recorded at $21.4 million. The change in the fair value of the Tranche Liability was $21.0 million for the year ended December 31, 2024. As of December 31, 2024, the Tranche Liability fair value was $0.4 million. The decrease in fair value was a result of modification of tranche amounts and parties agreeing to convert each of the subsequent Tranche Closings at a price per share equal to the Company Value Per Share, as defined in the Merger Agreement. The fair value of the Tranche Liability was estimated using the probability weighted scenario analysis discounted to the current period (Note 4).

The 2024 Bridge Notes were issued to Samsara and other existing preferred stockholders of the Company at the estimated fair value of $24.5 million at the issuance dates. The premium of $14.5 million, which was the difference between the fair value at the issuance date and the principal amount of the notes, was recognized as additional paid-in-capital in the consolidated statement of redeemable convertible preferred stock and stockholders’ deficit at the issuance date. The fair value of the notes at issuance was estimated using the probability weighted settlements scenarios model discounted to present value with the following range of assumptions: expected term of 0.4 - 0.6 years, probabilities of scenario achievement of 0% - 60% and a discount rate of 9.5%. The aggregate estimated fair value of the 2024 Bridge Notes and the Tranche Liability was $45.9 million as of the issuance date.

The Company recognized the excess of the aggregated fair value over net cash proceeds received as non-pro rata distribution to the stockholders, resulting in a loss of $35.9 million at the issuance date, which was recorded as a loss on issuance of convertible promissory notes in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024.

The 2024 Bridge Notes contained embedded features that provided Samsara and other stockholders the right to receive cash or a variable number of shares upon a change in control or the completion of a capital raising transaction by the Company. These embedded features were required to be bifurcated and accounted for separately as a compound derivative instrument. The embedded features were initially and subsequently measured at fair value with changes in the fair value recorded as a change in fair value of derivative liabilities in the statements of operations and comprehensive loss. The fair value at issuance of the derivative instrument issued with the 2024 Bridge Notes was $1.0 million. The derivative liabilities created a discount on the advances under the 2024 Bridge Notes that were amortized using the effective interest rate method over the term of the respective advance and recorded as a non-cash interest expense. The change in the fair value of derivative liabilities related to the 2024 Bridge Notes was $0.5 million for the three months ended March 31, 2025. The 2024 Bridge Notes were converted into shares of common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.

Pursuant to the Merger Agreement, the Company was permitted to enter into a series of financings to fund its operations prior to the closing of the Merger in an amount not to exceed $15.0 million in the aggregate on a to be converted post-money basis, with up to $7.5 million to be provided by AlloVir and up to $7.5 million to be provided by Legacy Kalaris’ stockholders.

In January 2025, the Company amended its 2024 Bridge Notes agreement and changed the amounts of Subsequent Tranche Closings from $5.0 million for each tranche to $3.75 million for the first two tranches and $7.5 million for the third tranche. No other changes were made to the terms of the 2024 Bridge Notes. In January 2025, Samsara and other investors funded an aggregate principal amount of $3.75 million in convertible promissory notes (the “2025 Bridge Notes”). The 2025 Bridge Notes’ terms were similar to the 2024 Note's Terms. Samsara and other investors agreed that the 2025 Bridge Notes would convert into shares of Series B-2 Stock at a price per share equal to the Company Value Per Share, as defined in the Merger Agreement, at the closing of the Merger.

The 2025 Bridge Notes were issued to Samsara and other existing preferred stockholders of the Company at the estimated fair value of $3.9 million at the issuance dates. The premium of $0.2 million, which was the difference between the fair value at the issuance date and the principal amount of the notes, was recognized as additional paid-in-capital in the condensed consolidated statement of redeemable convertible preferred stock and stockholders’ equity (deficit) at the issuance date. The fair value of the notes at issuance was estimated using the probability weighted settlements scenarios model discounted to present value with the following range of assumptions: expected term of 0.2 - 0.3 years, probabilities of scenario achievement of 20% - 80% and a discount rate of 8.5%. The 2025 Bridge Notes contained embedded features that provided Samsara and other stockholders the right to receive cash or a variable number of shares upon a change in control or the completion of a capital raising transaction by the Company. These embedded features were required to be bifurcated and accounted for separately as a compound derivative instrument. The embedded features were initially and subsequently measured at fair value with changes in the fair value recorded as a change in fair value of derivative liabilities in the statements of operations and comprehensive loss. The fair value at issuance of the derivative instrument issued with the 2025 Bridge Notes was $0.2 million. The derivative liabilities created a discount on the advances under the 2025 Bridge Notes that were amortized using the effective interest rate method over the term of the respective advance and recorded as a non-cash interest expense. The change in the fair value of derivative liabilities related to the 2025 Bridge Notes was $0.2 million for the three months ended March 31, 2025. The 2025 Bridge Notes were converted into shares of Series B-2 Stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.

The total interest expense for the 2024 Bridge Notes and 2025 Bridge Notes was $0.6 million for the three months ended March 31, 2025, consisting of $0.2 million of contractual interest expense and $0.4 million in amortization of debt discount arising from the separation of the derivative instrument.

In connection with the closing of the Merger, the $10.0 million aggregate outstanding principal amount and $0.3 million accrued interest of the 2024 Bridge Notes converted into 1,660,888 shares of Legacy Kalaris common stock at a conversion price of $6.20 per share and the 2024 Bridge Notes were no longer outstanding as of March 31, 2025. In connection with the closing of the Merger, the $3.75 million aggregate outstanding principal amount and $0.1 million accrued interest of the 2025 Bridge Notes converted into 794,499 shares of Series B-2 Stock at a price of $4.7851 per share, which then converted on a one-for-one basis into shares of Legacy Kalaris common stock, and subsequently into 160,165 shares of AlloVir common stock.

In March 2025, the Company and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranches included in the 2024 Bridge Notes. The Company recognized a gain of $0.4 million in the change in fair value of tranche liability for the three months ended March 31, 2025.

January 2025 AlloVir Convertible Promissory Note

In January 2025, the Company issued the AlloVir Note under which AlloVir funded a principal amount of $3.75 million.

At the closing of the Merger on March 18, 2025, the AlloVir Note was cancelled in accordance with its terms.

As of March 31, 2025, the Company does not have any outstanding convertible promissory notes, derivative liabilities or the tranche liability.

8. Commitments and Contingencies

Leases

In February 2025, the Company entered into a lease agreement for office space in Berkeley Heights, New Jersey. The lease is expected to commence in the second quarter of 2025 and terminate in November 2031. Total undiscounted payments under this lease are approximately $2.1 million. In addition to the base rent, the Company will pay its share of operating expenses and taxes. The Company can extend the lease term twice for an additional three years and can terminate the lease after four years and four months after the lease commencement date with a termination penalty of $0.3 million. The lessor will provide a tenant improvement allowance of up to $0.4 million, which the Company intends to utilize.

In connection with the signing of the lease, the Company secured a letter of credit in favor of the lessor in the amount of $0.5 million, which will be reduced to $0.2 million over five years. The letter of credit is recorded as restricted cash in the condensed consolidated balance sheet as of December 31, 2025.

Research and Development Agreements

The Company enters into various agreements in the ordinary course of business, such as those with suppliers, contract development and manufacturing organizations, clinical research organizations, and other research and development vendors. These agreements provide for termination at the request of either party, generally with less than one year’s notice. Therefore, they are cancellable contracts and, if canceled, are not expected to have a material effect on the Company’s financial condition, results of operations, or cash flows.

License and Royalty Agreements

The Company is required to pay certain milestone payments contingent upon the achievement of specific development and regulatory events in accordance with the UCSD Agreement (Note 6). The Company achieved the first development milestone in August 2024 and recognized an expense of $0.1 million as research and development expense in the condensed consolidated statement of operations and comprehensive loss for the year ended December 31, 2024. No other milestones were achieved or probable as of March 31, 2025 and December 31, 2024. The Company is required to pay royalties on commercial sales of products developed under the UCSD Agreement. The Company’s product candidate was in clinical development as of March 31, 2025, and no such royalties were due.

The Company is obligated to pay royalties to Samsara under the Royalty Agreement (Note 6). The Company recognized an initial royalty obligation liability in the amount of $32.1 million, which was based on its estimated fair value at the effective date of the Royalty Agreement. Once royalty payments to Samsara are deemed probable and estimable, and if such amounts exceed the royalty liability balance, the Company will impute interest to accrete the royalty obligation on a prospective basis based on such estimates. As of March 31, 2025, these royalties were not probable and estimable.

Legal Contingencies

The Company, from time to time, may be a party to litigation arising in the ordinary course of business. If the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount is reasonably estimable, the Company will accrue a liability for the estimated loss.

Litigation related to legacy operations of AlloVir

On January 19, 2024, a purported stockholder of AlloVir filed a lawsuit, captioned Zerbato v. AlloVir, Inc. et al., No. 1:24-cv-10152 (D. Mass.) (the “Securities Class Action”), in the U.S. District Court for the District of Massachusetts against AlloVir and two of its officers purportedly on behalf of a putative class of stockholders. On April 16, 2024, the Court appointed stockholders Harry Levin and Julio Maurice Bueno as lead plaintiffs and their counsel as lead counsel in the action.

On June 17, 2024, lead plaintiffs filed their amended complaint. In the amended complaint, lead plaintiffs assert claims purportedly on behalf of a putative class of stockholders consisting of persons who purchased or otherwise acquired AlloVir securities between January 11, 2023 and December 21, 2023, inclusive. The amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and the related regulations, alleging that the defendants made false and misleading statements and omissions to investors relating to AlloVir’s three Phase 3 studies of posoleucel. The complaint seeks, among other things, damages, prejudgment and post-judgment interest, and attorneys’ fees, expert fees and other costs. Defendants filed their motion to dismiss the amended complaint on August 16, 2024 and oral argument on the motion to dismiss was held on February 19, 2025. On April 14, 2025, the parties executed a definitive stipulation and agreement of settlement resolving the claims in the Securities Class Action for $1.0 million, subject to Court approval. On April 23, 2025, the Court entered an order granting preliminary approval of the settlement and authorized providing notice of the settlement to class members. A final approval hearing is scheduled to take place on July 30, 2025.

On October 21, 2024, a purported AlloVir stockholder filed a derivative lawsuit, captioned Lister v. Brainard et al., No. 1:24-cv-12658 (D. Mass.), in the U.S. District Court for the District of Massachusetts against certain of AlloVir’s officers and directors and naming AlloVir as a nominal defendant. The derivative complaint alleges, purportedly on behalf of AlloVir, violations of Section 14(a) of the Securities Exchange Act of 1934, breach of fiduciary duties, unjust enrichment, waste of corporate assets, gross mismanagement, and abuse of control against the individual defendants and contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934 against Dr. Brainard and Mr. Sinha. These claims are based on substantially identical allegations as the complaint in the above-listed Securities Class Action. The lawsuit seeks, among other things, an award of damages and restitution in favor of AlloVir, certain changes to AlloVir’s corporate governance, and attorneys’ fees and costs. Defendants moved to dismiss the case on May 6, 2025. Under the current schedule, the motion to dismiss is due to become fully briefed on August 21, 2025.

Litigation related to the Merger

Two complaints have been filed by purported AlloVir stockholders as individual actions against AlloVir and the members of its board of directors in the Supreme Court of the State of New York, New York County, captioned Keller v. AlloVir, Inc. et al., No. 650989/2025 (N.Y. Sup. Ct. Feb. 20, 2025), and Morgan v. AlloVir, Inc. et al., No. 650965/2025 (N.Y. Sup. Ct. Feb. 19, 2025) (the “Complaints”). The Complaints allege that the proxy statement/prospectus describing the transaction between Legacy Kalaris and AlloVir misrepresented and/or omitted certain purportedly material information, and assert claims for negligent misrepresentation and concealment and negligence under New York common law. The Complaints seek various remedies including, among other things, an order enjoining the consummation of the merger, requiring the defendants to file an amended proxy statement/prospectus, rescinding the merger or granting rescissory damages, and awarding costs, including plaintiff’s attorneys’ fees and experts’ fees, and other relief the court may deem just and proper. AlloVir and Legacy Kalaris deny the allegations in the Complaints and deny that any further disclosure beyond that already contained in the proxy statement/prospectus was required under applicable law.

Guarantees and Indemnifications

In the normal course of business, the Company enters into agreements that contain a variety of representations and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. As of March 31, 2025 and December 31, 2024, the Company does not have any material indemnification claims that were probable or reasonably possible.

9. Redeemable Convertible Preferred Stock

In January 2024, the Company issued 1,280,000 shares of Series B-2 Stock at a price of $1.25 per share for gross cash proceeds of $1.6 million.

As of March 31, 2025, the Company did not have authorized and outstanding shares of redeemable convertible preferred stock. All shares were converted into shares of common stock at the closing of the Merger on March 18, 2025.

The holders of the Company’s redeemable convertible preferred stock had various rights and preferences, including the following:

Liquidation Preference

In the event of any liquidation, dissolution, or winding up of the Company, or a deemed liquidation event, including a merger or consolidation, or a sale or other disposition of all or substantially all of the Company’s assets, the holders of shares of Series A redeemable convertible preferred stock (the “Series A Stock”), Series B-1 redeemable convertible preferred stock (the "Series B-1 Stock") and Series B-2 Stock were entitled to receive, before any payments are made to the holders of common stock, an amount per share equal to the Series A Stock, Series B-1 Stock and Series B-2 Stock original issuance price of $1.00, $1.00 and $1.25 per share, respectively, plus any dividends declared but unpaid. If the Company’s legally available assets were insufficient to satisfy the Series A Stock, Series B-1 Stock and Series B-2 Stock liquidation preference, then proceeds would be distributed with equal priority and pro rata among the holders of the Series A Stock, Series B-1 Stock and Series B-2 Stock in proportion to the preferential amount each holder was otherwise entitled to receive.

After the payment of the full liquidation preference of the redeemable convertible preferred stock, the Company’s remaining assets legally available for distribution, if any, would be distributed ratably to the holders of common stock and redeemable preferred stock on an as-if-converted basis.

Conversion

Shares of redeemable convertible preferred stock were convertible into common stock at the option of the holder at a conversion ratio that equaled the original issue price for such series, adjusted for any anti-dilution adjustments, divided by the conversion price for such series, in effect on the date of the conversion. The initial conversion price per share for convertible preferred stock was the original issuance price. The conversion ratios were one-for-4.9603 for each series of redeemable convertible preferred stock as of March 18, 2025 and December 31, 2024, as adjusted for the Exchange Ratio.

Each share of redeemable convertible preferred stock was automatically convertible into shares of common stock at the then-effective conversion ratio immediately upon (i) the vote or written consent of the holders of at least the majority of the outstanding shares of redeemable convertible preferred stock, (ii) the closing of a firm-commitment underwritten public offering with gross proceeds to the Company of at least $75.0 million and a public offering price which is at least $3.75 per share, adjusted for any anti-dilution adjustments, or (iii) closing of a special purpose acquisition company (a “SPAC”) transaction. A SPAC transaction is any business combination pursuant to which the Company was merged into, or otherwise combined with a SPAC listed on a national securities exchange, or a subsidiary of such SPAC, and the shares of capital stock of the Company outstanding immediately prior to such transaction continued to represent, immediately following such combination, a majority, by voting power, of the capital stock of the surviving or resulting corporation.

Dividends

The Company could not pay any dividends on common stock of the Company unless the holders of redeemable convertible preferred stock then outstanding first or simultaneously received dividends at the same rate as dividends paid with respect to common stock or any class or series that was not convertible into common stock, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to redeemable convertible preferred stock. If the Company declared, paid or set aside, a dividend on shares of more than one class or series of capital stock of the Company, the dividend payable to the holders of each series of redeemable convertible preferred stock was calculated based upon the dividend on the class or series of capital stock that would have resulted in the highest dividend for such series of preferred stock. Through March 18, 2025, no dividends had been declared or paid.

Voting Rights

Each holder of redeemable convertible preferred stock was entitled to the number of votes equal to the number of shares of common stock into which such shares of preferred stock held by such holder could then be converted. The holders of redeemable convertible preferred stock voted together with the holders of common stock as a single class and on an as-converted to common stock basis.

The holders of shares of the Series A Stock, voting as a separate class, were entitled to elect three members of the board of directors. The holders of the shares of common stock, voting as a separate class, were entitled to elect one director of the Company. The holders of common stock and redeemable convertible preferred stock, voting together as a single class on an as-converted basis, were entitled to elect all remaining members of the board of directors, if any.

Redemption

The Company’s redeemable convertible preferred stock was classified as temporary equity in the accompanying condensed consolidated balance sheets in accordance with authoritative guidance for the classification and measurement of potentially redeemable securities whose redemption was based upon deemed liquidation events not solely within the Company’s control, including a merger or consolidation, or, a sale or other disposition of all or substantially all of the Company’s assets. The Company determined not to adjust the carrying values of the redeemable convertible preferred stock to the liquidation preferences of such shares because of the uncertainty of whether or when such events would occur.

10. Common Stock

11. Stock Option Plan and Stock-Based Compensation

At the closing of the Merger, the Company assumed the 2019 Plan.

In connection with the Merger, AlloVir’s stockholders approved an amendment to AlloVir's 2020 Stock Option and Grant Plan (as amended, the "2020 Plan" and together with the 2019 Plan, the "Equity Plans") to increase the number of shares reserved for future issuance under the 2020 Plan, which is subject to an annual increase on January 1 of each year from 2026 and thereafter, such that the number of shares of common stock reserved and available for issuance under the 2020 Plan is cumulatively increased by 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or such lesser number of shares as approved by the plan administrator; to establish the maximum aggregate number of shares of stock that may be issued in the form of incentive stock options ("ISOs") shall not exceed 15,250,000 and to extend the term of the 2020 Plan to the tenth anniversary of the closing of the Merger.

Under the Equity Plans, the Company may grant ISOs, nonqualified stock options (“NSO”), restricted stock awards, restricted stock unit awards and other stock awards to the Company’s employees, officers, non-employee directors, consultants, and advisors. Options to purchase common stock may be granted at a price not less than the fair market value as established by the board of directors in the case of both NSOs and ISOs. Stock option grants under the Equity Plans generally vest over four years. All options expire no later than ten years from the date of grant. The exercise price of ISOs granted to an employee who owns more than 10% of the voting power of all classes of stock of the Company shall be no less than 110% of the estimated fair market value of the underlying common stock on the grant date, and the contractual term is no longer than five years.

As of March 31, 2025, 1,588,703 shares of common stock had been authorized for issuance and 222,724 shares were available for future grants under the 2019 Plan and 2,269,474 shares of common stock had been authorized for issuance and 2,108,184 shares were available for future grants under the 2020 Plan.

Aggregate intrinsic value represents the difference between the fair value of the underlying common stock and the exercise price as of March 31, 2025 and December 31, 2024. The total fair value of options that vested during the three months ended March 31, 2025 and 2024 was $0.5 million and less than $0.1 million, respectively. No options were granted during the three months ended March 31, 2025 and 2024. As of March 31, 2025, the total unrecognized stock-based compensation expense was $2.1 million, which is expected to be recognized over a weighted- average period of 2.8 years.

Restricted Stock Awards

In February 2022, the Company issued restricted stock awards to its former president for 203,670 shares and a consultant for 13,577 shares, in each case, at a purchase price of $0.005 per share under the 2019 Plan. The shares related to the former president’s award vest monthly over four years starting from January 2021, while the shares related to the consultant’s award vest monthly over six years starting from January 2020. The unvested restricted stock awards are subject to the Company’s right of repurchase upon termination of services at a repurchase price equal to their original purchase price. Shares purchased pursuant to these awards participate in dividends and voting, are legally outstanding, and are presented as outstanding shares; however, for accounting purposes, shares purchased by employees pursuant to restricted stock awards are not considered issued until they vest according to their respective vesting schedules. Unvested awards are excluded from the calculation of net loss attributable to common stockholders as these are considered contingently issuable shares and require services to be performed as these shares continue to vest. Proceeds received from the issuance of restricted stock awards are recorded as a share repurchase liability within accrued expenses and other current liabilities on the condensed consolidated balance sheet and reclassified to additional paid-in capital as such awards vest.

As of March 31, 2025, there was less than $0.1 million of unrecognized stock-based compensation related to restricted stock awards, which is expected to be recognized over a weighted-average period of 0.8 years. No restricted stock awards were repurchased or cancelled during the three months ended March 31, 2025 and 2024.

2020 Employee Stock Purchase Plan

The Company can issue common stock shares to its employees under the 2020 Employee Stock Purchase Plan (the “2020 ESPP”). The number of shares of common stock reserved and available for issuance under the 2020 ESPP is cumulatively increased on each January 1 by the lesser of (i) 53,161 shares of common stock, (ii) 1% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, and (iii) such number of shares of common stock as determined by the plan administrator. On March 31, 2025, there was an aggregate of 119,326 shares reserved for future issuance under the 2020 ESPP.

The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages up to $25,000 annually to be applied toward the purchase of shares of the Company's common stock on the last trading day of the offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the Nasdaq Global Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. The Company utilizes the Black Scholes option pricing model to compute the fair market value of the shares and compensation expense is recognized over the offering period.

The Company did not issue shares of common stock under the 2020 ESPP during the three months ended March 31, 2025.

Stock-Based Compensation Expense

The Black-Scholes option pricing model, used to estimate the fair value of stock-based awards, requires the use of the following assumptions:

There were no options granted during the three months ended March 31, 2025 and 2024.

12. Related Parties

Scientific Advisor – Board Member

In 2021, the Company entered into an advisory agreement with one of its founders and a director. For each of the three months ended March 31, 2025 and 2024, the Company paid the scientific advisor a consulting fee in the amount of $12,500 for advisory services. There were no amounts due to or from this related party as of March 31, 2025 and December 31, 2024.

Samsara BioCapital L.P. and Affiliates

Since the Company’s inception, Samsara has provided in-kind research and development and general and administrative services to the Company. From April 2022, Samsara also began to provide general and administrative services for cash consideration related to (i) accounting and controllership, (ii) human resources, and (iii) executive assistance. In July 2023, the Company and Samsara entered into a Business Services Agreement (the “BSA”) that governs the provision of such services. The BSA has a term of five years and may be terminated upon 15 days written notice by either party.

The Company recognized $0.2 million as general and administrative expenses for the three months ended March 31, 2025, related to the services provided by Samsara under the BSA. The Company recognized less than $0.1 million as general and administrative expenses and less than $0.1 million as research and development expenses for the three months ended March 31, 2024, related to the services provided by Samsara under the BSA. In-kind services of $0.1 million were estimated at fair value and recognized as capital contributions to additional paid-in-capital for the three months ended March 31, 2024. Samsara stopped providing in-kind services in July 2024.

As of March 31, 2025 and December 31, 2024, the Company recognized $0.1 million in accrued expenses and other current liabilities in the condensed consolidated balance sheets, respectively, related to the services provided by Samsara under the BSA. The Company recognized a $32.1 million royalty obligation - related party, as a long-term liability, under the Royalty Agreement as of March 31, 2025 and as of December 31, 2024.

The Company issued Samsara convertible promissory notes (Note 7), redeemable convertible preferred stock and common stock. In July 2024, the Company entered into a Royalty Agreement with Samsara (Note 6).

13. Net Loss Per Share Attributable to Common Stockholders

* As of March 31, 2024, the conversion of the 2024 Note into common stock or redeemable convertible preferred stock was dependent on the price of shares that may be issued in connection with the 2024 Note Qualified Financing. The number of shares herein is calculated based on the conversion of the 2024 Note’s outstanding principal and accrued and unpaid interest as of March 31, 2024 into the Company’s preferred stock at the price of $6.20 per share.

14. Defined Contribution plan

The Company sponsors a 401(k) plan (the “401(k) Plan”), which stipulates that eligible employees can elect to contribute to the 401(k) Plan, subject to certain limitations on eligible compensation. The Company may match employee contributions in amounts to be determined at the Company’s sole discretion. The Company’s matching contributions during the three months ended March 31, 2025 and 2024 were immaterial.

15. Segment Reporting

The Company operates and manages its business as one reportable and operating segment. The CODM reviews and evaluates net loss, as reported in the statements of operations and comprehensive loss, for purposes of assessing performance, making operating decisions, allocating resources, and planning and forecasting for future periods on an aggregate basis. The CODM does not review assets at a different level or category than the amounts disclosed in the condensed consolidated balance sheets. All of the Company’s long-lived assets are located in the United States.