Carisma Therapeutics had already laid off 95% of its team earlier this year. Now, a Hail Mary merger proposal with another biotech has fallen through.
The cell therapy macrophage biotech had just six employees left in April, consisting of staffers who were spared to help search for strategic alternatives as the company wound down operations.
Near the end of June, Carisma seemed to find a solution, agreeing to a proposed reverse merger with Ocugen’s OrthoCellix, a private regenerative cell therapy company.
However, OrthoCellix failed to secure commitments for shares of at least $25 million by Sept. 15, as required by the merger terms, prompting Carisma to ax the agreement, according to a Securities and Exchange Commission (SEC) document filed Sept. 18.
Now, OrthoCellix owes Carisma a $750,000 termination fee, according to the legal filing. The payment should be paid on or before today, the document reads.
OrthoCellix is also supposed to reimburse Carisma for “reasonable out-of-pocket expenses” tied to the merger proposal and termination.
The Ocugen subsidiary hasn’t confirmed with Carisma that it will pay either amount, according to the SEC filing. Carisma plans on “vigorously” working to enforce its right to payment.
In the meantime, the beleaguered Philadelphia biotech is receiving a $4 million payout from Moderna as the mRNA company cuts ties with its former partner.
In 2022, the two companies teamed up to develop in vivo cell therapies for cancer treatment, with Moderna doling out $45 million upfront and an investment worth $35 million. Carisma was also eligible for development, regulatory and commercial milestones, though the details were not publicly disclosed.
In 2024, the duo expanded the pact, bringing autoimmune disease targets into the fold.
Now, the former partners have amended the deal so Moderna pays $4 million to walk away from all other financial obligations, according to the SEC document.
More specifically, Moderna no longer has to pay Carisma any milestone or royalty fees for any products resulting from the deal, effective Sept. 16.
Meanwhile, Carisma said it will continue to try to “sell or otherwise dispose of or monetize its remaining assets,” while also exploring any other possible strategic transactions.
But it’s not looking good, with Carisma’s journey likely to end before the year is up.
The biotech said that “as a result of limited time and resources, it will be extremely challenging for the company to identify, evaluate and complete an alternative strategic transaction” before Oct. 7, when the Nasdaq hearings panel can no longer grant Carisma's listing due to continued noncompliance with listing standards.
Nasdaq could also delist Carisma before Oct. 7 since the merger proposal was key to the company’s plan to comply with the $1 share price minimum requirement.
If the biotech cannot quickly find and complete an alternative transaction, the company expects to revert to its pre-merger plan of “pursu[ing] an orderly wind down of its remaining operations,” according to the SEC document.
“It is unlikely that there will be a meaningful amount of cash available for distribution to stockholders in connection with a wind-down of the company's operations or a dissolution and liquidation of the company,” the cell therapy biotech’s legal document concludes.