UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~June 3130, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission File Number: 001-39409

KALARIS THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	83-1971007
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
628 Middlefield Rd. Palo Alto, California	94301
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 249-2727

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Common Stock, $0.0001 par value per share

     KLRS

     The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~May~~August 76, 2025, the registrant had 18,702,418 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
	Explanatory Note	2
	Cautionary Note Regarding Forward Looking Statements	2
	Cautionary Note Regarding Forward Looking Statements	3
	Risk Factors Summary	4
PART I.	FINANCIAL INFORMATION	5
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	7
	Condensed Consolidated Statements of Cash Flows	89
	Notes to Condensed Consolidated Financial Statements	910
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3128
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4440
Item 4.	Controls and Procedures	4440
PART II.	OTHER INFORMATION	4642
Item 1.	Legal Proceedings	4642
Item 1A.	Risk Factors	4642
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~102~~99
Item 3.	Defaults Upon Senior Securities	~~102~~99
Item 4.	Mine Safety Disclosures	~~102~~99
Item 5.	Other Information	~~102~~99
Item 6.	Exhibits	~~103~~100
~~Signatures~~	Signatures	~~105~~101

~~EXPLANATORY~~CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

On March 18, 2025, AlloVir, Inc., a Delaware corporation and our predecessor company (“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, and immediately following the Effective Time, AlloVir changed its name to “Kalaris Therapeutics, Inc.” At the Effective Time, our business became primarily the business conducted by Legacy Kalaris. We are now 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.

Unless the context otherwise requires, as used herein, references to “Kalaris,” “we,” “us,” “our,” and the “Company” refer to Kalaris Therapeutics, Inc. following the consummation of the Merger.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that involve substantial risk and uncertainties.

All statements, other than statements of historical fact, contained or incorporated by reference in this Quarterly Report, including statements regarding the strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements are based on current expectations and beliefs of our management, as well as assumptions made by, and information currently available to, our management, and are subject to risks and uncertainties. There can be no assurance that future developments affecting us will be those that we have anticipated. Forward-looking statements include, but are not limited to, statements concerning the following:

•

our future operations, including research and development activities;

•

our nature, strategy and focus;

•

the development and commercial potential and potential benefits of our product candidate, including expectations around intellectual property protection;

•

anticipated clinical drug development activities and related timelines, including the expected timing for announcement of data and other clinical results;

•

the uncertainties associated with our product candidate, as well as risks associated with the clinical development and regulatory approval of our product candidate, including potential delays in the completion of clinical trials;

•

expectations regarding the therapeutic benefits, clinical potential and clinical development of TH103;

•

risks related to our inability to obtain sufficient additional capital to continue to advance our product candidate;

•

uncertainties in obtaining successful clinical results for our product candidate and unexpected costs that may result therefrom;

•

risks related to the failure to realize any value from any product candidates being developed and anticipated to be developed in light of inherent risks and difficulties involved in successfully bringing product candidates to market;

•

the ability to obtain, maintain, and protect intellectual property rights related to our product candidate;

•

changes in regulatory requirements and government incentives;

•

our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or become available;

•

adverse reactions or changes to business relationships resulting from the completion of our merger (the “Merger”) with AlloVir, Inc. (“AlloVir”);

•

risks associated with the possible failure to realize, or that it may take longer to realize than expected, certain anticipated benefits of the Merger, including with respect to future financial and operating results; and

•

the risk of involvement in litigation, including securities class action litigation, that could divert the attention of our management, harm our business and for which we may not have sufficient insurance coverage to cover all costs and damages.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in this Quarterly Report under the heading “Risk Factors” in Item 1A. “Risk Factors” that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Moreover, we operate in a competitive and rapidly changing environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. You should read this Quarterly Report with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report are made as of the date of this Quarterly Report, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

In this Quarterly Report, unless otherwise stated or the context otherwise requires, references to the “Company,” “Kalaris,” “we,” “us,” and “our” refer to Kalaris Therapeutics, Inc. (formerly AlloVir, Inc.) and its consolidated subsidiaries.

References to “Legacy Kalaris” refer to Kalaris TX, Inc. (formerly Kalaris Therapeutics, Inc.) and references to “AlloVir” refer to AlloVir, Inc. prior to completion of the Merger.

RISK FACTORS SUMMARY

Our business is subject to a number or risks that, if realized, could materially affect our business, prospects, operating results and financial condition. These risks are discussed more fully in the “Risk Factors” section of this Quarterly Report. These risks include, but are not limited to, the following:

•

We have incurred significant losses since our inception. We expect to continue to incur significant expenses and operating losses for the foreseeable future and may never achieve or maintain profitability.

•

We have never generated revenue from product sales and may never achieve or maintain profitability.

•

We are heavily dependent on the success of our lead product candidate, TH103, which will require significant clinical testing before we can seek marketing approval and potentially generate commercial sales. If TH103 does not receive marketing approval or is not successfully commercialized, or if there is significant delay in doing so, our business will be harmed.

•

We will need substantial additional funding for our continuing operations. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

•

We have identified material weaknesses in our internal control over financial reporting and we may identify additional material weaknesses in the future or fail to maintain an effective system of internal control over financial reporting, which may result in material misstatements of our financial statements.

•

We are early in our development efforts. If we are unable to commercialize TH103 or any product candidate we may develop or experience significant delays in doing so, our business will be materially harmed.

•

Even if TH103 or any other product candidate we may develop receives marketing approval, we may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, and the market opportunity for any of our product candidates, if approved, may be smaller than we estimate.

•

We rely, and expect to continue to rely, on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, which may prevent or delay our ability to seek or obtain marketing approval for or commercialize our product candidates or otherwise harm our business. If we are not able to maintain these third-party relationships or if these arrangements are terminated, we may have to alter our development and commercialization plans and our business could be adversely affected.

•

If we are unable to obtain and maintain sufficient intellectual property protection for our technology, our product candidates, and product candidates we may develop, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors or other third parties could develop and commercialize products similar or identical to our, and our ability to successfully develop and, if approved, commercialize our product candidates may be adversely affected.

•

Even if we complete the necessary preclinical studies and clinical trials for our product candidates, the regulatory approval process is expensive, time-consuming and uncertain and we may not receive approvals for the commercialization of some or all of our product candidates in a timely manner, or at all.

•

The market price of our common stock has been and is expected to continue to be volatile.

•

We may be unable to integrate successfully the businesses of AlloVir and Legacy Kalaris and realize the anticipated benefits of the Merger.

•

We incur additional costs and increased demands upon management as a result of complying with the laws and regulations affecting public companies.

•

We do not know whether an active, liquid and orderly trading market will develop for our common stock or what the market price of our common stock will be and, as a result, it may be difficult for our stockholders to sell shares of our common stock.

•

Our executive officers, directors and principal stockholder, Samsara BioCapital, LP (“Samsara LP”), have the ability to control or significantly influence all matters submitted to our stockholders for approval.

•

Samsara LP, our principal stockholder, beneficially owns greater than 50% of our outstanding shares of capital stock, which has caused us to be deemed a “controlled company” under the rules of Nasdaq. As a result, we rely on exemptions from certain corporate governance requirements under Nasdaq listing standards afforded to a “controlled company”. Such reliance may result in our stockholders not having the same protections afforded to stockholders of companies that are subject to all of the corporate governance standards of Nasdaq.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Kalaris Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(inIn thousands, except share and per share data)

(~~unaudited~~Unaudited)

	March 31,			December 31,
	June 30,			December 31,
	2025			2024
Assets
Current assets
Current assets:
Cash and cash equivalents	$	~~100~~88,~~965~~426		$	1,639
Prepaid expenses and other current assets		13,~~217~~225			967
Total current assets		~~102~~91,~~182~~651			2,606
Deferred transaction costs		—			3,146
Restricted cash		500			—
Other non-current assets	~~410~~	691			410
Total assets	$	~~103~~92,~~092~~842		$	6,162
Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)
Current liabilities
Current liabilities:
Accounts payable	$	23,~~374~~680		$	1,560
Accrued research and development expenses		1,886			659
Accrued expenses and other current liabilities (including $37 and $85 due to a related party)		3,971			2,195
Accrued compensation		372			591
Convertible promissory notes, net of discount of $1,298 (including $0 and $18,670 due to a related party)		—			19,541
Accrued expenses and other current liabilities ($108 and $85 due to a related party)		2,510			945
Derivative liabilities (including $0 and $995 due to a related party)		—			1,042
Convertible promissory notes, net of discount of $1,298 (including $0 and $18,670 for a related party)		—			19,541
Tranche liability (including $0 and $331 due to a related party)		—			365
Derivative liabilities (including $0 and $995 for a related party)		—			1,042
Total current liabilities		7,651			24,703
Tranche liability (including $0 and $331 for a related party)		—			365
Total current liabilities		7,142			24,703
Royalty obligation – related party		32,076			32,076
Total liabilities		39,~~218~~727			56,779
Commitments and contingencies (Note 8)
Commitments and contingencies (Note 9)
Redeemable convertible preferred stock, no shares authorized, issued and outstanding as of March 31, 2025; $0.00001 par value, 75,151,340 shares authorized as of December 31, 2024; 43,151,340 shares issued and outstanding as of December 31, 2024; liquidation preference of $45,151 as of December 31, 2024		—			45,999
Redeemable convertible preferred stock, $0.00001 par value, no shares authorized, issued and outstanding as of June 30, 2025; 75,151,340 shares authorized as of December 31, 2024; 43,151,340 shares issued and outstanding as of December 31, 2024; liquidation preference of $0 as of June 30, 2025		—			45,999
Stockholders’ equity (deficit)
Stockholders’ equity (deficit):
Preferred stock, 10,000,000 shares authorized, $0.0001 par value, no shares issued and outstanding as of March 31, 2025; no shares authorized, issued, and outstanding as of December 31, 2024		—			—
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2025; no shares authorized, issued, and outstanding as of December 31, 2024		—			—
Common stock, $0.0001 and $0.00001 par value as of March 31, 2025 and December 31, 2024, respectively; 300,000,000 and 86,000,000 shares authorized as of March 31, 2025 and December 31, 2024, respectively; 18,702,418 and 1,356,431 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively		2			—
Common stock, $0.0001 and $0.00001 par value as of June 30, 2025 and December 31, 2024, respectively; 300,000,000 and 86,000,000 shares authorized as of June 30, 2025 and December 31, 2024, respectively; 18,702,418 and 1,356,431 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively		2			—
Additional paid-in capital		~~190~~191,~~629~~220			19,945
Accumulated deficit		(~~126~~138,~~757~~107	)		(116,561	)
Total stockholders’ equity (deficit)		6353,~~874~~115			(96,616	)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	~~103~~92,~~092~~842		$	6,162

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Kalaris Therapeutics, Inc.

Condensed Consolidated Statements of Operations ~~and~~

~~Comprehensive~~(In ~~Loss~~thousands, except share and per share data)

(~~in thousands, except share and per share data~~Unaudited)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Operating expenses:
Research and development (including $12, $13, $25 and $59 for a related party, respectively)	$	8,440		$	3,211		$	14,470		$	5,172
General and administrative (including $37, $48, $188 and $97 for a related party, respectively)		3,816			976			8,140			1,578
Total operating expenses		12,256			4,187			22,610			6,750
Loss from operations		(12,256	)		(4,187	)		(22,610	)		(6,750	)
Other income (expense), net:
Change in fair value of tranche liability (including $331 for a related party for the six months ended June 30, 2025)		—			—			365			—
Change in fair value of derivative liabilities (including $0, $311, $1,165 and $311 for a related party, respectively)		—			311			1,229			311
Interest expense (including $0, $499, $1,384 and $577 for a related party, respectively)		—			(499	)		(1,443	)		(577	)
Loss on extinguishment and on issuance of convertible promissory notes (including $0, $1,341, $169 and $2,134 for a related party respectively)		—			(1,341	)		(186	)		(2,134	)
Other income, net		906			66			1,099			93
Total other income (expense), net		906			(1,463	)		1,064			(2,307	)
Net loss	$	(11,350	)	$	(5,650	)	$	(21,546	)	$	(9,057	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.61	)	$	(4.26	)	$	(1.89	)	$	(6.87	)
Weighted-average shares outstanding, basic and diluted		18,701,286			1,325,706			11,417,677			1,319,129

	Three Months EndedMarch 31,
	2025			2024
Operating expenses
Research and development (including $13 and $46 for a related party)	$	6,030		$	1,961
General and administrative (including $151 and $49 for a related party)		4,324			602
Total operating expenses		10,354			2,563
Loss from operations		(10,354	)		(2,563	)
Change in fair value of tranche liability (including $331 and $0 for a related party)		365			—
Change in fair value of derivative liabilities (including $1,165 and $0 for a related party)		1,229			—
Interest expense (including $1,384 and $78 for a related party)		(1,443	)		(78	)
Loss on issuance of convertible promissory notes (including $169 and $793 for a related party)		(186	)		(793	)
Other income (expense), net		193			27
Total other income (expense), net		158			(844	)
Net loss and comprehensive loss	$	(10,196	)	$	(3,407	)
Net loss per share attributable to common stockholders, basic and diluted	$	(2.52	)	$	(2.60	)
Weighted-average shares outstanding, basic and diluted		4,053,140			1,312,552

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Kalaris Therapeutics, Inc.

~~Unaudited~~ Condensed Consolidated Statements of Redeemable Convertible Preferred Stock

and Stockholders’ Equity (Deficit)

(inIn thousands, except share data)

(~~unaudited~~Unaudited)

	Redeemable ConvertiblePreferred Stock						Common Stock				AdditionalPaid-in			Accumulated			TotalStockholders’
	Shares			Amount			Shares (1)		Amount		Capital			Deficit			Equity (Deficit)
Balance at December 31, 2023		41,871,340		$	44,408			1,362,481	$	—	$	2,377		$	(47,394	)	$	(45,017	)
Issuance of Series B-2 redeemable convertible preferred stock, net of issuance costs of $9		1,280,000			1,591			—		—		—			—			—
Capital contributions – in-kind services – related party		—			—			—		—		60			—			60
Premium on issuance of convertible promissory notes		—			—			—		—		793			—			793
Stock-based compensation expense		—			—			—		—		31			—			31
Net loss		—			—			—		—		—			(3,407	)		(3,407	)
Balance at March 31, 2024		43,151,340		$	45,999			1,362,481	$	—	$	3,261		$	(50,801	)	$	(47,540	)
Balance at December 31, 2024		43,151,340		$	45,999			1,356,431	$	—	$	19,945		$	(116,561	)	$	(96,616	)
Premium on issuance of convertible promissory notes		—			—			—		—		1,341			—			1,341
Premium on issuance of convertible promissory notes		—			—			—		—		186			—			186
Stock-based compensation expense		—			—			—		—		322			—			322
Issuance of Series B-2 redeemable convertible preferred stock upon conversion of convertible promissory notes in connection with the Merger		794,499			3,695			—		—		—			—			—
Net loss		—			—			—		—		—			(5,650	)		(5,650	)
Conversion of convertible promissory notes into common stock in connection with the Merger		—			—			3,418,839		—		20,799			—			20,799
Balance at June 30, 2024		43,151,340		$	45,999			1,362,481	$	—	$	4,924		$	(56,451	)	$	(51,527	)
Conversion of redeemable convertible preferred stock into common stock in connection with the Merger		(43,945,839	)		(49,694	)		8,859,474		1		49,693			—			49,694
Recognition of AlloVir common stock outstanding at the closing of the Merger		—			—			5,067,674		1		104,989			—			104,990
Transaction costs related to the Merger		—			—			—		—		(5,357	)		—			(5,357	)
Stock-based compensation expense		—			—			—		—	374				—			374
Net loss		—			—			—		—		—			(10,196	)		(10,196	)
Balance at March 31, 2025		—		$	—			18,702,418	$	2	$	190,629		$	(126,757	)	$	63,874

The shares of common stock have been retroactively recast in connection with the Merger to reflect the exchange ratio of 0.2016 (Note 3).

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Kalaris Therapeutics, Inc.

~~Unaudited~~ Condensed Consolidated Statements of ~~Cash~~Redeemable ~~Flows~~Convertible Preferred Stock

~~(in~~and ~~thousands~~Stockholders’ Equity (Deficit)

(~~unaudited~~In thousands, except share data)

	Three Months EndedMarch 31,
	2025			2024
Cash flows from operating activities:
Net loss	$	(10,196	)	$	(3,407	)
Adjustments to reconcile net loss to net cash used in operations:
Stock-based compensation expense		374			31
Capital contributions – in-kind services – related party		—			60
Change in fair value of derivative liabilities (including $1,165 and $0 for a related party)		(1,229	)		—
Change in fair value of tranche liability (including $331 and $0 for a related party)		(365	)		—
Non-cash interest expense (including $1,384 and $78 for a related party)		1,443			78
Loss on issuance of convertible promissory notes (including $169 and $793 for a related party)		186			793
Changes in assets and liabilities:
Prepaid expense and other current assets		1,420			(395	)
Accounts payable		934			(1,235	)
Accrued compensation		(1,387	)		(278	)
Accrued research and development expenses		1,227			(242	)
Accrued expenses and other current liabilities		152			74
Net cash used in operating activities		(7,441	)		(4,521	)
Cash flows from financing activities:
Proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs		—			1,591
Proceeds from the issuance of convertible promissory notes (including $3,402 and $4,993 from a related party), net of issuance costs		7,500			4,993
Cash acquired in connection with the Merger		102,113			—
Payment of deferred transaction costs and issuance costs		(2,346	)		(5	)
Net cash provided by financing activities		107,267			6,579
Net increase in cash and cash equivalents and restricted cash		99,826			2,058
Cash and cash equivalents, at beginning of the period		1,639			3,169
Cash and cash equivalents and restricted cash, at end of the period	$	101,465		$	5,227
Reconciliation of cash, cash equivalents and restricted cash to statement of financial position
Cash and cash equivalents		100,965			5,227
Restricted cash		500			—
Cash and cash equivalents and restricted cash, at end of the period	$	101,465		$	5,227
Supplemental disclosure of cash flow information:
Capital contributions – in-kind services – related party	$	—		$	60
Premium on issuance of convertible promissory notes (including $169 and $793 for a related party)	$	186		$	793
Merger transaction costs recognized in additional paid-in capital	$	5,357		$	—
Unpaid deferred transaction costs included in accounts payable and other accrued expenses and current liabilities	$	629		$	—
Recognition of AlloVir common stock outstanding at the closing of the Merger	$	104,990		$	—
Issuance of redeemable convertible preferred stock upon conversion of convertible promissory notes	$	3,695		$	—
Conversion of redeemable convertible preferred stock into common stock in connection with the Merger	$	49,694		$	—
Conversion of convertible promissory notes and accrued interest in connection with the Merger	$	20,799		$	—

(Unaudited)


	Redeemable Convertible Preferred Stock						Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares			Amount			Shares (1)		Amount		Capital			Deficit			Equity (Deficit)
Balance at December 31, 2024		43,151,340		$	45,999			1,356,431	$	—	$	19,945		$	(116,561	)	$	(96,616	)
Premium on issuance of convertible promissory notes		—			—			—		—		186			—			186
Issuance of Series B-2 redeemable convertible preferred stock upon conversion of convertible promissory notes in connection with the Merger		794,499			3,695			—		—		—			—			—
Conversion of convertible promissory notes into common stock in connection with the Merger		—			—			3,418,839		—		20,799			—			20,799
Conversion of redeemable convertible preferred stock into common stock in connection with the Merger		(43,945,839	)		(49,694	)		8,859,474		1		49,693			—			49,694
Recognition of AlloVir common stock outstanding at the closing of the Merger		—			—			5,067,674		1		104,989			—			104,990
Transaction costs related to the Merger		—			—			—		—		(5,357	)		—			(5,357	)
Stock-based compensation expense		—			—			—		—	374				—			374
Net loss		—			—			—		—		—			(10,196	)		(10,196	)
Balance at March 31, 2025		—		$	—			18,702,418	$	2	$	190,629		$	(126,757	)	$	63,874
Stock-based compensation expense		—			—			—		—		591			—			591
Net loss		—			—			—		—		—			(11,350	)		(11,350	)
Balance at June 30, 2025		—		$	—			18,702,418	$	2	$	191,220		$	(138,107	)	$	53,115

The shares of common stock have been retroactively recast in connection with the Merger to reflect the exchange ratio of 0.2016 (Note 3).

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Kalaris Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2025			2024
Cash flows from operating activities:
Net loss	$	(21,546	)	$	(9,057	)
Adjustments to reconcile net loss to net cash used in operations:
Stock-based compensation expense		965			353
Capital contributions – in-kind services – related party		—			60
Change in fair value of derivative liabilities (including $1,165 and $311 for a related party)		(1,229	)		(311	)
Change in fair value of tranche liability (including $331 and $0 for a related party)		(365	)		—
Non-cash interest expense (including $1,384 and $577 for a related party)		1,443			577
Loss on extinguishment and on issuance of convertible promissory notes (including $169 and $2,134 for a related party)		186			2,134
Changes in assets and liabilities:
Prepaid expense and other current assets		(588	)		(403	)
Other non-current assets		(281	)		—
Accounts payable		2,240			(1,832	)
Accrued compensation		(1,073	)		(221	)
Accrued expenses and other current liabilities		268			208
Net cash used in operating activities		(19,980	)		(8,492	)
Cash flows from financing activities:
Proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs		—			1,591
Proceeds from the issuance of convertible promissory notes (including $3,402 and $9,993 from a related party), net of issuance costs		7,500			9,993
Cash acquired in connection with the Merger		102,113			—
Payment of deferred transaction costs and issuance costs		(2,346	)		(22	)
Net cash provided by financing activities		107,267			11,562
Net increase in cash and cash equivalents and restricted cash		87,287			3,070
Cash and cash equivalents and restricted cash, at beginning of the period		1,639			3,169
Cash and cash equivalents and restricted cash, at end of the period	$	88,926		$	6,239
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents		88,426			6,239
Restricted cash		500			—
Total cash, cash equivalents and restricted cash, at end of the period	$	88,926		$	6,239
Supplemental disclosure of cash flow information:
Capital contributions – in-kind services – related party	$	—		$	60
Premium on issuance of convertible promissory notes (including $169 and $2,134 for a related party)	$	186		$	2,134
Merger transaction costs recognized in additional paid-in capital	$	5,357		$	—
Recognition of AlloVir common stock outstanding at the closing of the Merger	$	104,990		$	—
Issuance of redeemable convertible preferred stock upon conversion of convertible promissory notes	$	3,695		$	—
Conversion of redeemable convertible preferred stock into common stock in connection with the Merger	$	49,694		$	—
Conversion of convertible promissory notes and accrued interest in connection with the Merger	$	20,799		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Kalaris Therapeutics, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

1. ~~Description~~Nature of the 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 (“VEGF”) 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~~the ~~18,~~Closing ~~2025~~Date, 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 1214, “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~~six months ended ~~March~~June 3130, 2025 and 2024, the Company incurred net losses of $1021.25 million and $39.41 million, respectively. During the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, the Company had negative cash flows from operations of $720.40 million and $48.5 million, respectively. As of ~~March~~June 3130, 2025 and December 31, 2024, the Company had an accumulated deficit of $~~126~~138.81 million and $116.6 million, respectively. 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.

AsSince ofits ~~March 31~~inception, ~~2025,~~ the Company ~~had~~has ~~cash~~funded ~~and~~its ~~cash~~operations ~~equivalents~~primarily ofwith ~~$101.0~~proceeds ~~million.~~from ~~The~~sales ~~Company’s~~of ~~management~~its ~~expects~~redeemable ~~that~~convertible ~~the~~preferred ~~existing~~stock, ~~cash~~issuances ~~and~~of ~~cash~~convertible ~~equivalents~~promissory ~~will~~notes beand ~~sufficient~~a tosimple ~~fund~~agreement ~~the Company’s operating plans~~ for atfuture ~~least~~equity ~~twelve~~(“SAFE”), ~~months~~and from ~~the~~cash ~~issuance~~and ~~date~~cash equivalents of ~~these~~AlloVir ~~condensed~~received ~~consolidated~~in ~~financial~~the ~~statements~~Merger.

As of June 30, 2025, the Company had cash and cash equivalents of $88.4 million. The Company expects that the existing cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements 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

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchanges Commission (“SEC”) regarding interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). AlloVir and its subsidiaries’ operating results are included in the Company’s

910

Commission (“SEC”) regarding interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). AlloVir and its subsidiaries’ operating results are included in the Company’s condensed consolidated financial statements from the Closing Date of the Merger. All other accompanying financial data as of December 31, 2024, and for the three and six months ended ~~March~~June 3130, 2024, include only the accounts and disclosures of Legacy Kalaris. All intercompany transactions and balances have been eliminated upon consolidation.

As all of the disclosures required by GAAP for complete financial statements are not included herein, these unaudited condensed consolidated financial statements and the notes accompanying them should be read in conjunction with Legacy Kalaris' audited financial statements as of and for the year ended December 31, 2024 filed as Exhibit 99.5 to the Company’s Current Report on Form 8-K filed with the SEC on March 18, 2025.

All historical common share data and per-share amounts prior to the Merger were retrospectively recast to reflect the effect of the exchange ratio of 0.2016 per one share, which was determined in accordance with the Merger Agreement. The number of authorized shares and par value per share were not recast. The conversion ratios for each series of redeemable convertible preferred stock, which were converted into shares of common stock in connection with the closing of the Merger, were proportionally recast.

Unaudited Condensed Financial Statements

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position as of ~~March~~June 3130, 2025 and its results of operations for the three and six months ended June 30, 2025 and 2024 and its cash flows for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024. The results of operations for the three and six months ended ~~March~~June 3130, 2025 and 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, or for any other future annual or interim period. The ~~condensed~~ consolidated balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted from these unaudited condensed consolidated financial statements.

Use of Estimates

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.

Concentrations of Credit Risk and Other Risks and Uncertainties

Cash balances are held at financial institutions and account balances may exceed federally insured limits. The Company also had investments in money market funds, which can be subject to certain credit risks. The Company mitigates the risks by investing in high-grade instruments, limiting its exposure to any one issuer and monitoring the ongoing creditworthiness of the financial institutions and issuers. To date, the Company has not experienced any losses on its cash and cash equivalents balances and periodically evaluates the creditworthiness of its financial institutions.

The Company is subject to risks common to companies in the development stage, including, but not limited to, development and regulatory approval of product candidates, development of markets and distribution channels, dependence on key personnel, and the ability to obtain additional capital as needed to fund its product plans and business operations. To achieve profitable operations, the Company must successfully develop and obtain requisite regulatory approvals for, manufacture, and market its product candidate. There can be no assurance that such product candidate can be developed and approved or manufactured at an acceptable cost and with appropriate performance characteristics, or that such product will be successfully marketed. These factors could have a material adverse effect on the Company’s future financial results.

The product candidate being developed by the Company requires approval from the U.S. Food and Drug Administration or other international regulatory agencies prior to commercial sales. There can be no assurance that the Company’s product candidate will receive the necessary regulatory approvals. If the Company is unable to complete clinical development, obtain regulatory approval for or commercialize its product candidate, or experiences significant delays in doing so, its business will be materially harmed.

Cash and Cash Equivalents

Cash and cash equivalents include cash in readily available checking accounts and money market funds. The Company considers all highly liquid investments purchased with an original maturity of three months or less as of the purchase date to be cash equivalents.

Restricted Cash

Restricted cash relates to the letter of credit secured in connection with the Company's operating lease (Note 8).

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements, as follows:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.

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.

Segment information

The Company operates and manages its business as one reportable and operating segment, which is the business of developing retinal therapies. The chief executive officer, who is the chief operating decision maker (the “CODM”), reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance.

Acquisitions

The Company evaluates acquisitions of assets and other similar transactions to assess whether the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen test is met, the transaction is accounted for as an asset acquisition. If the screen test is not met, further determination is required as to whether the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.

The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs. Goodwill is not recognized in an asset acquisition. In an asset acquisition, the cost allocated to the acquired in-process research and development assets with no alternative future use is charged to research and development expense at the acquisition date.

Deferred transaction costs

Deferred transaction costs relate to legal, consulting, and accounting fees incurred in connection with the Merger. The Company had $3.1 million of deferred transaction costs recorded as non-current assets as of December 31, 2024. All deferred transaction costs were recognized to additional paid-in capital upon the consummation of the Merger.

Patent Costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty of the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses in the statements of operations and comprehensive loss.

Tranche Liability

The convertible promissory notes issued in the convertible note financing in October and November 2024, contained subsequent tranches that required investors to provide additional financing upon a written notice of the Company. The investors’ right to receive additional convertible promissory notes in subsequent tranches of this convertible note financing with a predetermined conversion price was concluded to be a freestanding financial instrument that was required to be accounted for separately as a liability at fair value. The Company estimated fair value of the tranche liability at inception and remeasured it at the end of each reporting period until the tranche liability expired or was settled. The changes in the fair value were recorded as a change in fair value of tranche liability in the statements of operations and comprehensive loss. In connection with the closing of the Merger, the outstanding convertible promissory notes issued by the Company in October and November 2024 converted into shares of common stock and the tranche liability expired.

Convertible Promissory Notes Derivative Liabilities

The convertible promissory notes contained embedded features that provided the noteholder with multiple settlement alternatives. Certain of these settlement features provided the noteholder 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 (the “redemption features”). The redemption features of the convertible promissory notes met the requirements for separate accounting and were accounted for as compound derivative instruments recorded as a liability at fair value at inception and were subject to remeasurement to fair value at each reporting period when outstanding, with any changes in fair value recorded as a change in fair value of derivative liabilities in the statements of operations and other comprehensive loss (Note 4). Derivative liabilities were classified in the balance sheets as current consistent with the classification of the respective convertible promissory notes they were related to. The Company estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis, which involved valuing the whole instrument on an as-is basis and then valuing the instrument without the embedded derivative. The difference between the entire instrument with the embedded derivatives compared to the instrument without the embedded derivatives was the fair value of the derivative liabilities. A significant increase in probabilities of qualified financing or redemption scenario, a change of control scenario and a decrease in a discount rate would significantly increase the estimated fair value of derivative liabilities. In connection with the closing of the Merger, all outstanding convertible promissory notes, other than the AlloVir Note (as defined below), converted into shares of either redeemable preferred stock or common stock in accordance with the terms of the agreements and the derivatives expired.

Royalty Obligation – Related Party

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.

Redeemable Convertible Preferred Stock

The Company recorded redeemable convertible preferred stock at fair value on the date of issuance, net of issuance costs. The redeemable convertible preferred stock was recorded separately from stockholders’ equity (deficit) because the shares contained deemed liquidation features that were not solely within the Company’s control. The holders of the preferred stock controlled a majority of the votes of the board of directors of the Company. Accordingly, the preferred stock was classified as temporary equity in the Company’s condensed consolidated balance sheets. The Company did not adjust the carrying values of the redeemable convertible preferred stock to the liquidation preferences of such stock because it was uncertain whether or when a deemed liquidation event would occur that would obligate the Company to pay the liquidation preferences to holders of redeemable convertible preferred stock. Subsequent adjustments to the carrying values to the liquidation preferences would be made only when it became probable that such a deemed liquidation event would occur. In connection with the closing of the Merger, all outstanding shares of redeemable convertible preferred stock were converted into shares of common stock.

Research and Development Expenses

Research and development expenses are charged to expenses as incurred. Research and development expenses include payroll and personnel related expenses, license fees, laboratory supplies, consulting costs, external contract research and development

expenses and allocated overhead costs, including software and other miscellaneous expenses incurred in connection with its research and development programs.

The Company estimates manufacturing and product development costs, preclinical study and clinical trial and other research and development expenses based on the services performed. The Company has entered into various agreements with outsourced vendors, contract development and manufacturing organizations and clinical research organizations. The financial terms of these contracts are subject to negotiation, which vary by contract and may result in payments that do not match the periods over which materials or services are provided. Generally, these agreements set forth the scope of work to be performed at a fixed fee, unit price or on a time and materials basis. The Company records the estimated costs of research and development activities based on the level of services performed, the progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development services provided, but not yet invoiced, are included in accrued expenses on the condensed consolidated balance sheets. Advance payments for goods or services for future research and development activities are deferred as prepaid expenses and are expensed as the goods are delivered or the related services are performed. The Company makes these estimates based on facts and circumstances known at that time. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Amounts ultimately incurred in relation to amounts accrued for these services at a reporting date may be substantially higher or lower than the Company’s estimates. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred.

Stock-Based Compensation Expense

The Company provides stock-based awards in the form of stock options and restricted stock awards to its employees, directors and consultants. The Company accounts for stock-based compensation expense by measuring and recognizing compensation expense for all stock-based awards based on estimated grant-date fair values. For awards with service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service or vesting period. The vesting period generally approximates the expected service period of the awards. The Company accounts for forfeitures as they occur.

The Company estimates the fair value of stock options using the Black-Scholes option valuation model. The Black-Scholes model requires the input of subjective assumptions, including expected volatility, expected dividend yield, expected term, risk-free rate of return and the estimated fair value of the underlying common stock on the date of grant.

Foreign Currency Transactions

The functional currency for the Company and all of its subsidiaries is the U.S. Dollar. Transactions denominated in foreign currencies are initially measured in U.S. dollars using the exchange rate on the date of the transaction. Foreign currency denominated monetary assets and liabilities are subsequently remeasured at the end of each reporting period using the exchange rate at that date, with the corresponding foreign currency transaction gain or loss recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ deficit that result from transactions and economic events other than those with stockholders. The comprehensive loss for the Company equals its net loss for all periods presented.

Leases

The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842”). The Company determines whether an arrangement is or contains a lease at the inception of the arrangement and whether such a lease should be classified as a financing lease or operating lease at the commencement date of the lease. The Company does not have any leases classified as financing leases. Operating leases with a term greater than one year are recognized on the consolidated balance sheets as operating right-of-use asset (“ROU asset”) and operating lease liabilities. The Company elected not to recognize the ROU assets and lease liabilities for leases with lease terms of one year or less (short-term leases). Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the lease term. ROU assets are further adjusted for initial direct costs, prepaid rent, or incentives received, if any. The Company considers the lease term to be the noncancelable period that it has the right to use the underlying asset, together with any periods where it is reasonably certain it will exercise an option to extend (or not terminate) the lease. As the interest rate implicit in the Company’s lease contracts is not readily determinable, the Company utilizes its incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments.

Operating lease cost is recognized on a straight-line basis over the lease term. The Company has elected not to separate lease and non-lease components for its real estate leases and instead accounts for each separate lease component and the non-lease components associated with that lease component as a single lease component. Variable lease payments are not included in the measurement of ROU assets and lease liabilities, but rather are recognized as incurred.

13Capitalized Software Implementation Costs

AsThe ofCompany ~~March~~incurred 31costs to implement cloud computing arrangements hosted by third-party vendors. ASC 350-40, ~~2025~~Internal-Use Software, requires hosting arrangements that are service contracts to follow the guidance of internal-use software to determine which implementation costs can be capitalized. Implementation costs incurred during the application development stage are capitalized until the software is ready for its intended use. The costs are then amortized on a straight-line basis over the term of the associated hosting arrangement and ~~December~~are ~~31,~~recognized ~~2024~~as an operating expense with the condensed consolidated statement of operations. As of June 30, 2025 the Company ~~had~~capitalized no$0.1 ~~finance~~million ~~leases.~~software implementation costs within other non-current assets on the condensed consolidated balance sheets.

~~Net Loss Per Share Attributable to Common Stockholders~~11

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. The Company’s potentially dilutive securities include convertible promissory notes, redeemable convertible preferred stock, common stock subject to repurchase, unvested restricted stock awards, and stock options. These potentially dilutive securities have been excluded from the computation of diluted net loss per share as their inclusion would be antidilutive. Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock and common stock subject to repurchase are considered participating securities. The redeemable convertible preferred stock does not have a contractual obligation to share in the Company’s losses, and common stock subject to repurchase and unvested restricted stock awards are considered contingently issuable shares for accounting purposes. As such, the net loss is attributed entirely to common stockholders. Because the Company has reported a net loss for the reporting periods presented, the diluted net loss per common share is the same as basic net loss per common share for those periods.

Commitments and Contingencies

The Company recognizes a liability with regard to loss contingencies when it believes it is probable a liability has been incurred, and the amount can be reasonably estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, the Company accrues that amount. When no amount within the range is a better estimate than any other amount the Company accrues the minimum amount in the range.

Income Taxes

The Company accounts for income taxes using the asset and liability method; under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In evaluating the ability to recover its deferred income tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. In the event the Company determines that it would be able to realize its deferred income tax assets in the future in excess of their net recorded amount, it would make an adjustment to the valuation allowance that would reduce the provision for income taxes. Conversely, if all or part of the net deferred tax assets are determined not to be realizable in the future, an adjustment to the valuation allowance would be charged to the provision of income taxes in the period when such determination is made.

As of December 31, 2024, the Company maintained a valuation allowance against its deferred tax assets as the Company concluded it had not met the “more likely than not” to be realized threshold. Changes in the valuation allowance when they are recognized in the provision for income taxes may result in a change in the estimated annual effective tax rate.

Tax benefits related to uncertain tax positions are recognized when it is more likely than not that a tax position will be sustained during an audit. Tax positions that meet the more-likely-than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with the taxing authority. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax.

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

ASU 2023-09, Income Taxes (Topic 740)

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024 for all public entities. Early adoption is permitted and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact that the updated standard will have on its consolidated financial statement disclosures.

14ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)

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 vested or ~~not vested~~unvested, 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.~~

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:

AlloVir’s common stock outstanding			5,043,652
AlloVir’s restricted stock units accelerated and settled in common stock			24,022
Common stock issued to Legacy Kalaris' securityholders at the Effective Time			13,634,744
			18,702,418

15The 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 financial reporting purposes. This determination was primarily based on the fact that, immediately following the Merger: (1) Legacy Kalaris’ stockholders owned 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.

18,702,418

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~~six months ended ~~March~~June 3130, 2025.

4. Fair Value Measurements ~~and Fair Value of Financial Instruments~~

The Company’s fair value hierarchy for its financial instruments measured at fair value on a recurring basis as of ~~March~~June 3130, 2025 and December 31, 2024, were as follows (in thousands):

Fair Value Measurements

As of March 31, 2025

Total

Level 1

Level 2

Level 3

As of June 30, 2025

Total

Level 1

Level 2

Level 3

Assets:

Money market funds (included in cash equivalents)

7677,~~481~~042

—

Total fair value of assets

7677,~~481~~042

—

	Fair Value Measurements
As of December 31, 2024	Total		Level 1		Level 2		Level 3
Assets:
Money market funds (included in cash equivalents)	$	1,009	$	1,009	$	—	$	—
Total fair value of assets	$	1,009	$	1,009	$	—	$	—
Liabilities:
Derivative liabilities (including $995 for a related party)	$	1,042	$	—	$	—	$	1,042
Tranche liability (including $331 for a related party)		365	$	—	$	—		365
Total fair value of liabilities	$	1,407	$	—	$	—	$	1,407

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. 13

The Company classifies its money market funds as Level 1 assets under the fair value hierarchy as these assets have been valued using quoted market prices in active markets without any valuation adjustment. The Company classifies its derivative liabilities and tranche liability as Level 3 liabilities under the fair value hierarchy as these liabilities have been valued using pricing models with unobservable inputs supported by little or no market activity that are significant to the fair value of the liabilities. 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~~six months ended ~~March~~June 3130, 2025 and 2024.

16The following assumptions were used to determine the estimated fair value of the derivative liabilities related to the redemption features as of the issuance dates for the six months ended June 30, 2025:

The following assumptions were used to determine the estimated fair value of the derivative liabilities related to the redemption features as of the issuance dates for the three months ended March 31, 2025:


		At Issuance Date (January 10, 2025)
Expected term (in years)		0.2 – 0.3
Probability of achievement		0.0% – 80.0%
Discount rate		8.50%

The following assumptions were used to determine the estimated fair value of the derivative liabilities related to the redemption features as of the issuance date and as of December 31, 2024:

	Issuance Dates	December 31, 2024
Expected term (in years)	0.4 – 1.3	0.2 – 0.4
Probability of achievement	0.0% – 90.0%	0.0% – 80.0%
Discount rate	9.5% – 18.7%	9.000%

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:


		December 31, 2024
Expected term (in years)		0.2 - 0.4
Probability of achievement		0.0% - 80.0%
Discount rate		9.0%

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.

The following table provides a roll-forward of the aggregate fair values of the Company’s outstanding Level 3 financial instruments during the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024 (in thousands):

	Derivativeliabilities			Trancheliability
Balance as of January 1, 2024	$	—		$	—
Balance as of December 31, 2023	$	—		$	—
Initial fair value at issuance		12,~~117~~132			—
Change in fair value		—(311	)		—
Balance as of March 31, 2024	$	1,117		$	—
Balance as of June 30, 2024	$	1,821		$	—
Balance as of January 1, 2025	$	1,042		$	365
Balance as of December 31, 2024	$	1,042		$	365
Initial fair value at issuance		187			—
Change in fair value		(1,229	)		(365	)
Balance as of March 31, 2025	$	—		$	—
Balance as of June 30, 2025	$	—		$	—

5. Balance Sheet Components

Prepaid expenses and other current assets

Prepaid expenses and other current assets as of June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

	March 31,		December 31,
	June 30,		December 31,
	2025		2024
Prepaid research and development expenses	$	~~522~~2,072	$	388
Prepaid professional services		—		525
Prepaid insurance		593		54
Prepaid insurance and other current assets		695		54
Prepaid taxes		249		—
Total prepaid expenses and other current assets	$	1,217	$	967
Prepaid professional and legal services		83		525
Other prepaid expenses and other current assets		228		—
Total prepaid expenses and other current assets	$	3,225	$	967

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities as of June 30, 2025 and December 31, 2024 consisted of the following (in thousands):

	March 31,		December 31,
	June 30,		December 31,
	2025		2024
Accrued litigation expenses	$	1,000	$	—
Accrued research and development expenses	$	2,498	$	659
Accrued professional and legal services		722		308
Accrued compensation		686		591
Accrued transaction expenses		558		567
Accrued professional and legal services		645		308
Accrued transaction expenses		—		567
Accrued patent reimbursement costs		—		48
Other current liabilities		230		22
Other accrued expenses and other current liabilities		142		22
Total accrued expenses and other current liabilities	$	23,~~510~~971	$	~~945~~2,195

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.

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.

18The 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, that is not cured by the Company within 60 days after a written breach notice provided by UCSD.

The acquisition of the license under the UCSD Agreement, isincluding ~~effective~~patent ~~until~~rights and know-how, was accounted for as an asset acquisition. As the ~~expiration~~acquired ~~date~~technology ofdid not have an alternative use for accounting purposes, the ~~longest-lived~~Company recognized the $0.2 million initial cash consideration, $0.1 million patent ~~rights~~reimbursement orcosts ~~last~~incurred prior to bethe ~~abandoned~~effective ~~patent~~date, orand ~~future~~$0.2 ~~patent~~million related to the obligation to issue shares of the ~~licensed~~Company’s ~~products~~common stock as research and development expenses. The obligation to issue shares of common stock included two components, ~~whichever~~the isinitial ~~later~~shares obligation and the additional shares obligation. The ~~Company~~fair ~~can~~value ~~terminate~~of the ~~agreement~~initial ~~upon~~share 60obligation ~~days~~was ~~written~~estimated ~~notice~~as $0.1 ~~UCSD~~million ~~can~~based ~~terminate~~on the ~~agreement~~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 ~~event~~next round of anfinancing ~~uncured~~closed ~~material~~in ~~breach~~March 2022. The Company estimated the fair value of an additional 81,794 ~~such~~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 ~~failure~~derivative toliability ~~make~~and ~~payments~~should ~~due,~~be accounted for at fair value and re-measured until its settlement or toexpiration. ~~perform~~The ~~under~~Company recognized an immaterial amount and $0.1 million in patent reimbursement costs for the ~~UCSD~~three ~~Agreement~~and orsix amonths ~~violation~~ended ofJune ~~any~~30, ~~other~~2025, ~~material~~respectively. ~~term~~As of June 30, 2025 and December 31, 2024, the Company recognized an immaterial amount and $0.2 million related to the UCSD Agreement in accrued expenses and other current liabilities in the condensed consolidated balance sheets, isrespectively. ~~not~~Through ~~cured~~the six months ended June 30, 2025, development milestones totaling $0.1 million have been achieved by the Company ~~within~~and 60incurred ~~days~~as ~~after~~research aand ~~breach~~development ~~written~~expenses. ~~notice~~The ~~provided~~Company bydid ~~UCSD~~not achieve any development milestones and did not incur any related milestone expense during the three months ended June 30, 2025 and three and six months ended June 30, 2024. The assignment fee derivative liability fair value was estimated to be zero as of June 30, 2025 and December 31, 2024, as the probability of the Liquidity Event was estimated to be zero.

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.~~ 16

19deficit. 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 June 30, 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 $0.82 million loss on the issuance of convertible promissory notes –to a related party infor the ~~condensed~~six ~~consolidated~~months ~~statement~~ended ofJune ~~operations~~30, ~~and~~2025. ~~comprehensive~~The ~~loss~~Company ~~and~~recognized asa ~~additional~~$1.3 ~~paid-in-capital~~million inand ~~the~~a ~~condensed~~$2.1 ~~statement~~million ofloss ~~redeemable~~on issuance of convertible ~~preferred~~promissory ~~stock~~notes ~~and~~– ~~stockholders’~~related ~~deficit~~party for the three and six months ended ~~March~~June 3130, 2024, respectively. 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. 17

20condensed consolidated statements of operations. 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 ~~total~~Company ~~interest~~recognized ~~expense~~a ~~for~~change ~~the~~in ~~2024 Note was $0.8 million and $0.1 million for~~ the ~~three~~fair ~~months~~value ~~ended March 31, 2025 and 2024, respectively, consisting~~ of ~~$0.2~~derivative ~~million~~liability of ~~contractual interest expense and~~ $0.65 million in ~~amortization~~the ofcondensed ~~debt~~consolidated ~~discount~~statements ~~arising from the separation~~ of ~~the~~operations ~~derivative instrument~~ for the ~~three~~six months ended ~~March~~June 3130, 2025 ~~and less than $0~~.1 ~~million~~The ofchange ~~contractual interest expense and less than $0.1 million~~ in ~~amortization of debt discount arising from~~ the ~~separation~~fair value of ~~the~~ derivative ~~instrument~~liability was immaterial for the three and six months ended ~~March~~June 3130, 2024. InThe ~~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 was converted into ~~1,757,951~~ shares of ~~Legacy Kalaris~~ common stock, atand athe ~~conversion~~derivative ~~price~~liability ofexpired ~~$6.20~~in ~~per~~connection ~~share.~~with ~~The~~the ~~2024~~closing ~~Note~~of ~~was~~the noMerger ~~longer~~on ~~outstanding as of~~ March 3118, 2025.

There was no interest expense for the 2024 Note for the three months ended June 30, 2025. For the six months ended June 30, 2025, interest expense for the 2024 Note was $0.8 million, 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 and six months ended June 30, 2024, interest expense for the 2024 Note was $0.5 million and $0.6 million, respectively, including $0.2 million of contractual interest expense and $0.3 million and $0.4 million, respectively, 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 $0.9 million accrued interest of the 2024 Note were 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 June 30, 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).

$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 condensed consolidated 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 and $0.5 million for the three and six months ended ~~March~~June 3130, 2025, respectively. 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~~the ~~18,~~Closing ~~2025~~Date.

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~~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 condensed consolidated 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 and $0.2 million for the three and six months ended ~~March~~June 3130, 2025, respectively. 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~~the ~~18,~~Closing ~~2025~~Date.

The total interest expense for the 2024 Bridge Notes and 2025 Bridge Notes was $0 and $0.6 million for the three and six months ended ~~March~~June 3130, 2025, ~~consisting~~respectively. For the six months ended June 30, 2025, total interest expense consisted 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. There was no interest expense for the 2024 Bridge Notes and the 2025 Bridge Notes for the three and six months ended June 30, 2024.

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.19

In ~~March~~connection ~~2025~~with the closing of the Merger, the ~~Company~~$10.0 million aggregate outstanding principal amount and ~~other~~$0.3 ~~noteholders~~million ~~entered~~accrued interest of the 2024 Bridge Notes converted into an1,660,888 ~~acknowledgment~~shares of ~~conversion~~Legacy ~~and~~Kalaris ~~termination~~common ~~agreement~~stock toat ~~cancel~~a ~~all~~conversion ~~unfunded~~price ~~tranches~~of ~~included~~$6.20 inper share and the 2024 Bridge Notes were no longer outstanding as of June 30, 2025. ~~The~~In ~~Company~~connection ~~recognized~~with athe ~~gain~~closing of the Merger, the $3.75 million aggregate outstanding principal amount and $0.41 million inaccrued interest of the ~~change~~2025 inBridge ~~fair~~Notes ~~value~~converted into 794,499 shares of ~~tranche~~Series ~~liability~~B-2 Stock at a price of $4.7851 per share, which then converted on a one-for-one ~~the~~basis ~~three~~into ~~months~~shares ~~ended~~of ~~March~~Legacy 31Kalaris common stock, ~~2025~~and subsequently into 160,165 shares of AlloVir common stock.

22In 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 no gain and a gain of $0.4 million in the change in fair value of the tranche liability for the three and six months ended June 30, 2025, respectively.

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.

AtAs ~~the~~of ~~closing~~June of30, 2025, the ~~Merger~~Company ondoes ~~March~~not ~~18,~~have ~~2025,~~any ~~the~~outstanding ~~AlloVir~~convertible ~~Note~~promissory ~~was~~notes, ~~cancelled~~derivative inliabilities ~~accordance~~or ~~with~~the ~~its~~tranche ~~terms~~liability.

~~As of March 31, 2025, the Company does not have any outstanding convertible promissory notes, derivative liabilities or the tranche liability~~8. Leases

8In February 2025, the Company entered into a lease agreement for office space in Berkeley Heights, New Jersey. ~~Commitments~~In accordance with ASC 842, the Company has determined the lease commencement will occur upon substantial completion of lessor-owned improvements, which is expected in the third quarter of 2025. The lease is expected to terminate in November 2031. The Company can extend the lease term twice for an additional three years and ~~Contingencies~~can terminate the lease after four years and four months after the lease commencement date with a termination penalty of $0.3 million. The total undiscounted payments under this lease are approximately $2.1 million, excluding any extension or termination options. In addition to the base rent, the Company will pay its share of operating expenses and taxes. The lessor will provide a tenant improvement allowance of up to $0.4 million, which the Company intends to fully utilize. As of June 30, 2025, the Company has incurred $0.3 million of costs eligible for the tenant improvement allowance.

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 June 30, 2025.

9. Commitments and Contingencies

Leases

InThe ~~February 2025, the~~ Company's ~~entered~~commitments ~~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~~leases ~~and~~are ~~taxes.~~described ~~The~~in ~~Company~~Note ~~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~~8.~~3 million. The lessor will provide a tenant improvement allowance of up to $0.4 million, which the Company intends to utilize.~~

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~~Through ~~Company~~June ~~achieved~~30, 2025, the ~~first~~Company achieved development ~~milestone~~milestones intotaling ~~August 2024 and recognized an expense of~~ $0.1 million, which were recorded as research and development ~~expense in the condensed consolidated statement of operations and comprehensive loss for the year ended December 31, 2024~~expenses. No other milestones were achieved or probable as of ~~March~~June 3130, 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~~June 3130, 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~~June 3130, 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~~Related to ~~legacy~~Legacy ~~operations~~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 (the “Court”) 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 asserted 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 asserted 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 sought, among other things, damages, prejudgment and post-judgment interest, and attorneys’ fees, expert fees and other costs. 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. On July 30, 2025, the Court entered an order granting final approval of the settlement and dismissing the Securities Class Action with prejudice.

23On 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 alleged, 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 were based on substantially identical allegations as the complaint in the above-listed Securities Class Action. The lawsuit sought, 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. On August 1, 2025, the plaintiff filed a notice voluntarily dismissing the derivative lawsuit without prejudice.

~~Levin~~Litigation ~~and~~Related 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~~Merger 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~~June 3130, 2025 and December 31, 2024, the Company does not have any material indemnification claims that were probable or reasonably possible.

910. 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.

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

Redeemable convertible preferred stock as of December 31, 2024, consisted of the following (in thousands, except shares):


	December 31, 2024
	Shares Authorized		Shares Issued and Outstanding		Aggregate Liquidation Preference		Net Carrying Value
Series A		25,194,245		25,194,245	$	25,194	$	24,965
Series B-1		9,957,095		9,957,095		9,957		11,222
Series B-2		40,000,000		8,000,000		10,000		9,812
Total redeemable convertible preferred stock		75,151,340		43,151,340	$	45,151	$	45,999

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.

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.

1011. Common Stock

As of ~~March~~June 3130, 2025 and December 31, 2024, shares of common stock reserved for future issuance were as follows:

	March 31,		December 31,
	June 30,		December 31,
	2025		2024
Redeemable convertible preferred stock, as converted		—		8,699,309
Outstanding stock option awards		1,~~144~~988,~~859~~633		1,144,690
Shares available for future options grants under the Equity Plans		21,~~330~~487,~~988~~134		222,724
Shares available for grant under the 2020 ESPP		119,326		—
Total shares reserved for future issuance		3,595,~~173~~093		10,066,723

1112. Stock ~~Option Plan and Stock~~-Based Compensation

Equity Plans

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. 23

Asfuture ofissuance ~~March~~under ~~31,~~the ~~2025~~2020 Plan, which is subject to an annual increase on January 1 of each year from 2026 and thereafter,~~588,703~~ such that the number of shares of common stock ~~had~~reserved ~~been~~and ~~authorized~~available for issuance ~~and~~under ~~222,724~~the ~~shares~~2020 ~~were~~Plan ~~available~~is ~~for~~cumulatively ~~future~~increased ~~grants~~by ~~under~~5% of the ~~2019~~number ~~Plan~~of shares of common stock issued and 2outstanding on the immediately preceding December 31,~~269,474~~ or such lesser number of shares as approved by the plan administrator; to establish the maximum aggregate number of ~~common~~shares of stock ~~had~~that ~~been~~may ~~authorized~~be ~~for~~issued ~~issuance~~in ~~and~~the 2form of incentive stock options (“ISOs”) shall not exceed 15,~~108~~250,~~184~~000 ~~shares~~and ~~were~~to ~~available~~extend ~~for~~the ~~future~~term ~~grants~~of ~~under~~ the 2020 Plan to the tenth anniversary of the closing of the Merger.

26Under the Equity Plans, the Company may grant ISOs, nonqualified stock options (“NSO”), restricted stock awards (“RSAs”), 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.

AAs ~~summary~~of June 30, 2025, 1,588,703 shares of ~~option~~common ~~activity~~stock had been authorized for issuance and 222,724 shares were available for future grants under the ~~Equity~~2019 ~~Plans~~Plan isand as2,269,474 ~~follows:~~shares of common stock had been authorized for issuance and 1,264,410 shares were available for future grants under the 2020 Plan.

	Outstanding Awards
	Number ofSharesUnderlyingOutstandingOptions		WeightedAverageExercisePrice PerShare		WeightedAverageRemainingContractualTerm (in years)		AggregateIntrinsicValue (inthousands)
Outstanding as of December 31, 2024		1,144,690	$	0.81		9.23	$	20,160
Options assumed in the Merger		169	$	35.42
Outstanding as of March 31, 2025		1,144,859	$	0.82		8.98	$	44,664
Exercisable as of March 31, 2025		361,037	$	0.76		8.65	$	14,106
Vested and expected to vest as of March 31, 2025		1,144,859	$	0.82		8.98	$	44,664

Stock Options

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.

A summary of restricted stock awards activity under the 2019 Plan is as follows:

	Restricted StockAwards			Weighted AverageGrant Date FairValue
Unvested as of December 31, 2024		1,839		$	1.71
Vested		(424	)	$	1.71
Unvested as of March 31, 2025		1,415		$	1.71

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. Six-month offering periods commence each January 1 and July 1 during the term of the plan, with the plan administrator having the right to establish different offering periods.

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:

•

Fair ~~value~~Value of Common Stock. Prior to the Merger, the fair market value of Legacy Kalaris' common stock was determined by the board of directors of Legacy Kalaris with assistance from management of Legacy Kalaris and external valuation experts. The approach to estimating the fair market value of common stock is consistent with the methods outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately- Held-Company Equity Securities Issued as Compensation (the “Practice Aid”). After the closing of the Merger, the fair value of common stock is the Company’s closing price per share on the Nasdaq Global Market aton the grant date.

•

Expected Term. The expected term of options granted represents the period of time that the options are expected to be outstanding. Due to the lack of historical exercise history, the expected term of the Company’s employee and non-employee stock options has been determined by calculating the midpoint of the contractual term of the options and the weighted-average vesting period.

•

Expected Volatility. The expected stock price volatility assumption was determined by examining the historical volatilities for comparable public companies, as the Company did not have any trading history for the common stock.

•

Risk-Free Interest Rate. The risk-free interest rate assumption is based on the U.S. Treasury zero-coupon issued in effect at the time of grant for periods corresponding with the expected term of the option.

•

Dividends. The Company has not paid any dividends on its common stock since inception and does not anticipate paying any dividends in the foreseeable future. Consequently, an expected dividend yield of zero was used.

~~There~~A ~~were~~summary noof ~~options~~option ~~granted~~activity ~~during~~under the ~~three~~Equity Plans for the six months ended ~~March~~June 3130, 2025 ~~and~~is ~~2024.~~as follows:

The following table presents the classification of stock-based compensation expense related to stock-based awards granted (in thousands):


	Outstanding Awards
	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2024		1,144,690	$	0.81		9.23	$	20,160
Options granted		843,943		7.31
Outstanding as of June 30, 2025		1,988,633	$	3.57		9.17	$	2,128
Vested and expected to vest as of June 30, 2025		1,988,633	$	3.57		9.17	$	2,128
Exercisable as of June 30, 2025		497,265	$	0.93		8.54	$	920

	Three Months Ended March 31,
	2025		2024
Research and development expenses	$	94	$	7
General and administrative expenses	280		24
Total stock-based compensation expense	$	374	$	31

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

	Three Months Ended March 31,
	2025		2024
Restricted stock awards and unvested founders’ shares	$	109	$	22
Stock options	265		9
Total stock-based compensation expense	$	374	$	31

In February 2022, the Company issued RSAs 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. If and when a RSA vests, the Company will issue one share of common stock for each whole RSA that has vested, subject to satisfaction of the employee's tax withholding obligations. The unvested RSAs 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 RSAs 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 RSAs 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.

~~12.~~A ~~Related~~summary ~~Parties~~of RSAs activity under the 2019 Plan for the six months ended June 30, 2025 is as follows:

Scientific Advisor – Board Member


	Restricted Stock Awards			Weighted Average Grant Date Fair Value
Unvested as of December 31, 2024		1,839		$	1.71
Vested		(848	)		1.71
Unvested as of June 30, 2025		991		$	1.71

In2020 ~~2021,~~Employee ~~the~~Stock ~~Company~~Purchase 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. Plan

28The 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 June 30, 2025, there was an aggregate of 119,326 shares reserved for future issuance under the 2020 ESPP.

The Company did not issue shares of common stock under the 2020 ESPP during the three and six months ended June 30, 2025.

Stock-Based Compensation Expense

Stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Research and development expenses	$	213	$	143	$	307	$	150
General and administrative expenses		378		179		658		203
Total stock-based compensation expense	$	591	$	322	$	965	$	353

13. Net Loss Per Share Attributable to Common Stockholders

Basic and diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2025 and 2024 was calculated as follows (in thousands, except share and per share data):


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Numerator:
Net loss attributable to common stockholders, basic and diluted	$	(11,350	)	$	(5,650	)	$	(21,546	)	$	(9,057	)
Denominator:
Weighted average common shares outstanding		18,702,418			1,362,481			11,419,020			1,362,481
Less: Weighted-average common shares subject to repurchase		(1,132	)		(36,775	)		(1,343	)		(43,352	)
Weighted-average shares outstanding, basic and diluted		18,701,286			1,325,706			11,417,677			1,319,129
Net loss per share attributable to common stockholders, basic and diluted	$	(0.61	)	$	(4.26	)	$	(1.89	)	$	(6.87	)

The potential shares of common stock were excluded from the computation of diluted net loss per share attributable to common stockholders as of June 30, 2025 and 2024 because including them would have had an anti-dilutive effect. The excluded shares were as follows:


	June 30,
	2025		2024
Redeemable convertible preferred stock, as converted		—		8,699,309
Outstanding options to purchase common stock		1,988,633		1,105,882
Unvested restricted stock awards		991		32,390
2024 Note1		—		1,644,393
Total		1,989,624		11,481,974

1 As of June 30, 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 June 30, 2024 into the Company’s preferred stock at the price of $6.20 per share.

14. Related Parties

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~~immaterial ~~million~~amounts ~~as general and administrative expenses~~ for the three months ended ~~March~~June 3130, 2025, ~~related~~and to2024 ~~the~~and ~~services provided by Samsara under the BSA. The Company recognized less than~~ $0.12 million ~~as general~~ and ~~administrative expenses and less than~~ $0.1 million ~~as research and development expenses~~ for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively, as general and administrative expenses, related to the services provided by Samsara under the BSA. ~~In-kind~~ ~~services~~The ofCompany ~~$0.1~~recognized ~~million~~immaterial ~~were~~amounts ~~estimated~~for atthe ~~fair~~three ~~value~~ and ~~recognized~~six asmonths ~~capital~~ended ~~contributions~~June to30, ~~additional~~2025 ~~paid-in-capital~~and ~~for~~2024 ~~the~~as ~~three~~research ~~months~~and ~~ended~~development ~~March 31~~expenses, ~~2024.~~related ~~Samsara~~to ~~stopped~~the ~~providing~~services ~~in-kind~~provided ~~services~~by inSamsara ~~July~~under ~~2024.~~the BSA.

AsIn-kind services of ~~March 31, 2025 and December 31, 2024, the Company recognized~~ $0.1 million inwere ~~accrued~~estimated ~~expenses~~at ~~and~~fair ~~other~~value ~~current~~and ~~liabilities~~recognized inas ~~the~~capital ~~condensed~~contributions ~~consolidated balance sheets, respectively, related~~ to ~~the~~additional ~~services~~paid-in ~~provided~~capital byfor ~~Samsara under~~ the ~~BSA.~~six ~~The~~months ~~Company~~ended ~~recognized~~June a30, ~~$32~~2024.1 ~~million~~There ~~royalty~~was ~~obligation~~no -capital ~~related~~contribution ~~party,~~recognized asfor ~~a long-term liability, under~~ the ~~Royalty~~three ~~Agreement~~months asended ofJune ~~March 31~~30, ~~2025~~2024. ~~and~~Samsara asstopped ofproviding ~~December~~in-kind ~~31,~~services in July 2024.

As of June 30, 2025 and December 31, 2024, the Company recognized immaterial amounts and $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. As of June 30, 2025 and December 31, 2024, the Company recognized immaterial amounts in accounts payable in the condensed consolidated balance sheets, 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 June 30, 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).

1315. ~~Net~~Defined ~~Loss~~Contribution ~~Per~~plan ~~Share Attributable to Common Stockholders~~

The ~~following~~Company ~~table~~sponsors ~~sets~~a ~~forth~~401(k) plan (the ~~computation~~“401(k) Plan”), which is designed to be qualified under Section 401(k) of ~~basic~~the ~~and~~Internal ~~diluted~~Revenue ~~net~~Code ~~loss~~of ~~per~~1986, ~~share~~as ~~attributable~~amended. Eligible employees can elect to ~~common~~contribute ~~stockholders~~to the 401(ink) ~~thousands~~Plan, ~~except~~subject ~~share~~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 each of the three and ~~per~~six ~~share~~months ~~data):~~ended June 30, 2025 and 2024 were immaterial.

	Three Months EndedMarch 31,
	2025			2024
Numerator:
Net loss	$	(10,196	)	$	(3,407	)
Denominator:
Weighted average common shares outstanding		4,054,696			1,362,481
Less: Weighted-average common shares subject to repurchase		(1,556	)		(49,929	)
Weighted-average shares outstanding, basic and diluted		4,053,140			1,312,552
Net loss per share attributable to common stockholders, basic and diluted:	$	(2.52	)	$	(2.60	)

16. Segment Reporting

The ~~potential~~Company ~~shares~~operates ofand ~~common~~manages ~~stock~~its ~~that~~business ~~were~~as ~~excluded~~one ~~from~~reportable ~~the~~and ~~computation~~operating ofsegment. ~~diluted~~The CODM reviews and evaluates net loss, ~~per~~as ~~share~~reported ~~attributable~~in tothe ~~common~~condensed ~~stockholders~~consolidated statements of operations, for ~~the~~purposes ~~periods~~of ~~presented~~assessing ~~because~~performance, ~~including~~making ~~them~~operating ~~would~~decisions, ~~have~~allocating ~~had~~resources, and planning and forecasting for future periods on an ~~antidilutive~~aggregate ~~effect~~basis. ~~were~~The CODM does not review assets at a different level or category than the amounts disclosed in the condensed consolidated balance sheets as ~~follows:~~total assets. All of the Company’s long-lived assets are located in the United States.

	March 31,
	2025		2024
Redeemable convertible preferred stock, as converted		—		8,699,309
Outstanding options to purchase common stock		1,144,859		113,810
Unvested restricted stock awards		1,415		45,544
2024 Note *		—		810,597
Total		1,146,274		9,669,260

The following is the Company’s summary of segment loss, including significant segment expenses for the three and six months ended June 30, 2025 and 2024 (in thousands):

* 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.


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
External research and development expenses:
CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs	$	6,915		$	2,359		$	11,727		$	3,874
License fees, milestone payments, and annual maintenance fees related to acquired technologies		—			—			—			50
Internal research and development personnel expenses		1,175			642			2,244			1,018
Other research and development costs		350			210			499			230
General and administrative personnel expenses		1,094			559			1,771			768
Other general and administrative expenses		2,722			417			6,369			810
Interest expense		—			499			1,443			577
Other segment items1		(906	)		964			(2,507	)		1,730
Net loss	$	(11,350	)	$	(5,650	)	$	(21,546	)	$	(9,057	)

291 Other segment items include change in fair value of tranche liability, change in fair value of derivative liabilities, loss on issuance of convertible promissory notes and other income, net.

1417. ~~Defined~~Subsequent ~~Contribution plan~~ Events

~~The~~On ~~Company~~July ~~sponsors~~4, a2025, ~~401(k)~~the ~~plan~~United (States enacted tax reform legislation through the ~~“401(k)~~One ~~Plan”),~~Big ~~which~~Beautiful ~~stipulates~~Bill ~~that~~Act. ~~eligible~~Included ~~employees~~in ~~can~~this ~~elect~~legislation toare ~~contribute~~provisions tothat allow for the ~~401(k)~~immediate ~~Plan~~expensing of domestic Unites States research and development expenses, ~~subject~~immediate toexpensing of certain ~~limitations~~capital onexpenditures, ~~eligible~~and ~~compensation~~other changes to the U.S. taxation of profits derived from foreign operations. The Company ~~may~~continues ~~match~~to ~~employee~~evaluate ~~contributions~~the inimpact ~~amounts~~the tonew belegislation ~~determined~~will athave on the ~~Company’s~~condensed ~~sole~~consolidated ~~discretion~~financial statements. ~~The~~However, as the assessment is ongoing, the Company’s ~~matching~~is ~~contributions~~not ~~during~~able to quantify the ~~three~~impact ~~months~~on ~~ended~~the ~~March~~condensed ~~31,~~consolidated ~~2025~~financial ~~and~~statements ~~2024~~at ~~were~~this ~~immaterial~~time.

~~15. Segment Reporting~~ 27

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.

The following table sets forth the Company’s summary of segment loss, including significant segment expenses for the three months ended March 31, 2025 and 2024 (in thousands):

		Three Months Ended March 31,
		2025			2024
External research and development expenses:
CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs		$	4,812		$	1,515
License fees, milestone payments, and annual maintenance fees related to acquired technologies			—			50
Internal research and development personnel expenses			1,069			376
Other research and development costs			149			20
General and administrative personnel expenses			677			209
Other general and administrative expenses			3,647			393
Interest expense			1,443			78
Other segment items	(1)		(1,601	)		766
Net loss		$	(10,196	)	$	(3,407	)

Other segment items include change in fair value of tranche liability, change in fair value of derivative liabilities, loss on issuance of convertible promissory notes and other income.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto appearing elsewhere in this Quarterly Report. This Quarterly Report contains forward-looking statements that involve risks and uncertainties, such as our plans, objectives, expectations, intentions, and beliefs. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those discussed in these forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part II, Item 1A of this Quarterly Report and those discussed in our other disclosures and filings. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make. All historical common share data and per-share amounts prior to the Merger (as defined below) have been retrospectively adjusted to reflect the exchange ratio of 0.2016 per one share, which was determined in accordance with the Merger Agreement (as defined below).

Overview

We are 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.

We are developing TH103, a novel, clinical stage anti-vascular endothelial growth factor (“VEGF”) drug, engineered to potentially provide longer lasting and increased anti-VEGF activity in patients with exudative and neovascular retinal diseases. TH103 is a fully humanized recombinant fusion protein, functioning as a “decoy receptor” (a VEGF trap), leveraging salient molecular properties of the human body’s native, highest affinity VEGF receptor 1. In head-to-head preclinical studies, TH103 showed more anti-VEGF activity and longer duration of activity compared to aflibercept, the current global market-leading anti-VEGF agent, which also functions as a decoy receptor VEGF trap but differs from TH103 in key molecular elements.

We are enrolling an open label Phase 1 clinical trial of TH103 in patients with neovascular Age-related Macular Degeneration (“nAMD”), a leading cause of blindness in the United States and Europe that affected an estimated 1.6 million adults in the United States in 2023, and we expect to report initial clinical data from Part 1 of the Phase 1 clinical trial in the fourth quarter of 2025. We also plan to expand the development of TH103 beyond nAMD into other prevalent VEGF-mediated retinal diseases, such as Diabetic Macular Edema (“DME”), diabetic retinopathy (“DR”), and Retinal Vein Occlusion (“RVO”).

Since our inception in September 2019, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, acquiring technology, establishing our intellectual property portfolio and performing research and development of our product candidate. We do not have any products approved for sale and have not generated any revenue from product sales or otherwise. We have incurred significant losses and negative cash flows from operations since our inception. Our net losses were $1021.25 million and $39.41 million for the ~~three~~six months ended ~~years~~June 30, 2025 and 2024, respectively. Our negative cash flows from operations were $20.0 million and $8.5 million for the six months ended ~~March~~June 3130, 2025 and 2024, respectively. As of ~~March~~June 3130, 2025, we had an accumulated deficit of $~~126~~138.81 million. To date, we have funded our operations primarily from sales of our redeemable convertible preferred stock, issuances of convertible promissory notes and a simple agreement for future equity (“SAFE”), and from cash and cash equivalents of AlloVir, Inc. ("“AlloVir"”) received in the Merger (as defined below). From inception through ~~March~~June 3130, 2025, we have received gross proceeds of $67.5 million from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and we received cash and cash equivalents of AlloVir of approximately $102.1 million in the Merger.

As of ~~March~~June 3130, 2025, we had $~~101~~88.04 million in cash and cash equivalents. Based on our current operating plans, our management expects that our cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, management has based these estimates on assumptions that may prove to be wrong, and our operating plans may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.

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We expect to continue to incur substantial losses for the foreseeable future, including costs associated with operating as a public company. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for our product candidate. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of our product candidate, which may never occur. We may never achieve or maintain profitability. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations.

We anticipate that our expenses will increase substantially if and as we:

•

conduct our ongoing Phase 1 clinical trial of TH103 in patients with nAMD;

•

continue to progress the development of TH103 in future preclinical studies and clinical trials;

•

advance any future product candidate that we may develop into preclinical and clinical development;

•

maintain, expand, enforce and protect our intellectual property portfolio;

•

seek regulatory and marketing approvals for TH103 and any other product candidate that successfully completes clinical trials;

•

seek to identify and maintain additional collaborations and license agreements, and the success of those collaborations and license agreements;

•

make any payments under our existing or future strategic collaboration agreements, licensing agreements or sponsored research agreements, including with the University of California, San Diego (“UCSD”);

•

ultimately establish a sales, marketing and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval;

•

generate revenue from commercial sales of product candidates that we may receive marketing approval;

•

hire additional clinical, regulatory, manufacturing, quality control, development and scientific personnel;

•

in-license or acquire additional technologies or product candidates;

•

establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates we may develop for which we obtain regulatory approval; and

•

add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts and our operations as a public company.

We do not currently own or operate any drug development or manufacturing facilities. We rely on Contract Development and Manufacturing Organizations (“CDMOs”) to help develop and produce TH103 in accordance with the U.S. Food and Drug Administration’s (“FDA”) current Good Manufacturing Practices regulations for use in our clinical trials. We use external contract research organizations (“CROs”) to conduct our preclinical studies and clinical trials.

Given our stage of development, we do not yet have a marketing or sales organization or commercial infrastructure. Accordingly, if we obtain regulatory approval for our product candidate, we also expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

Because of the numerous risks and uncertainties associated with product development, our management is unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability, if at all. Even if we are able to generate revenue from the sale of our product candidate, we may not achieve or maintain profitability. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and may be forced to reduce our operations.

Macroeconomic Trends

The disruption and volatility in the global and domestic capital markets resulting from heightened inflation, current and potential tariffs and other trade restrictions, interest rate and currency rate fluctuations, disruptions at government agencies under the new U.S. administration (such as workforce reductions or funding cuts), any potential economic slowdown or recession, including trade wars or civil or political unrest (such as the ongoing war between Ukraine and Russia, conflict in the Middle East, and tension between China and Taiwan) may increase the cost of capital and limit our ability to access capital. These and similar adverse market conditions may negatively impact our business, financial position and results of operations.

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Additionally, ~~the~~this ~~new~~past spring, the U.S. administration ~~has~~initiated ~~announced or imposed~~ a series of ~~tariffs~~tariff-related onactions against U.S. trading partners. In response, several countries have threatened or imposed retaliatory measures. The U.S. has reached agreements with certain of these countries, though the effective date for such agreements are not yet known. While we have not experienced, and do not currently expect to experience, any direct impact from these tariffs and retaliatory measures, the full extent of the future impact of these and other threatened measures remains uncertain. We continue to monitor these tariffs and retaliatory measures and their possible effects on our business.

Recent Financing

In October 2024, Kalaris Tx, Inc. (formerly, Kalaris Therapeutics, Inc), a Delaware corporation ("“Legacy Kalaris"”) entered into a convertible note purchase agreement with Samsara BioCapital L.P. (“Samsara”) to issue to Samsara and other investors who subsequently joined the agreement up to $25.0 million of convertible promissory notes with a maturity date of May 31, 2025 (the “Convertible Note Financing”). In October and November 2024, Legacy Kalaris received $10.0 million from the initial closings of the Convertible Note Financing. Under the Merger Agreement (as defined below), Legacy Kalaris was permitted to issue additional convertible promissory notes pursuant to the Convertible Note Financing or otherwise to fund its operations prior to the closing of the Merger (as defined below) 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 existing Legacy Kalaris stockholders (the “Additional Permitted Bridge Financing”). In January 2025, as part of the first tranche of the Additional Permitted Bridge Financing, 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, and Legacy Kalaris issued convertible promissory notes in an aggregate principal amount of $3.75 million to existing Legacy Kalaris stockholders. No additional tranches of the convertible notes financing closed prior to the closing of the Merger. Immediately prior to the closing of the Merger, Legacy Kalaris’ outstanding convertible promissory notes held by its existing stockholders were converted into shares of Legacy Kalaris’ common stock or shares of Legacy Kalaris’ Series B-2 redeemable convertible preferred stock (“Series B-2 Preferred Stock"”) that were then converted into shares of Legacy Kalaris’ common stock, which, at the effective time of the Merger, were converted into the right to receive shares of AlloVir’s common stock calculated in accordance with the Exchange Ratio (as defined below). Immediately prior to the closing of the Merger, Legacy Kalaris’ outstanding convertible promissory note issued to AlloVir was cancelled.

Merger with AlloVir

On March 18, 2025 (the “Closing Date”), 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 Legacy Kalaris.

In connection with the Merger, 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, and immediately following the Effective Time, AlloVir changed its name to “Kalaris Therapeutics, Inc.” At the Effective Time, our business became primarily the business conducted by Legacy Kalaris.

Subject to the terms and conditions of the Merger Agreement, at the Effective Time, all issued and outstanding shares of Legacy Kalaris’ common stock (including common stock issued upon conversion of Legacy Kalaris’ preferred stock and outstanding convertible promissory notes) 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 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 Legacy Kalaris’ 2019 Equity Incentive 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 following the Merger, stockholders of Legacy Kalaris owned approximately 74.47% of the outstanding common stock of the combined company on a fully diluted basis. The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States (“GAAP”). Under this method of accounting, Legacy Kalaris was deemed to be the accounting acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Legacy Kalaris issuing stock to acquire the net assets of AlloVir. As a result of the Merger, the net assets of AlloVir were recorded at their carrying value and our financial statements are consolidated after the Effective Time.

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License Agreement with the University of California, San Diego

In April 2021, we entered into a license agreement with UCSD (as amended, the “UCSD Agreement”) pursuant to which we 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, we agreed to pay UCSD $0.2 million and were obligated to issue shares of our common stock to UCSD equal to 5% of our fully diluted issued and outstanding securities until such time as an aggregate of $5.0 million in gross proceeds from the sale of equity securities had been raised by us. In June 2022, after the closing of the Series A financing, we issued 137,234 shares of our common stock to UCSD. We were also obligated to pay $0.1 million of patent costs incurred prior to the effective date and are required to reimburse future patent expenses incurred by UCSD during the term of the UCSD Agreement. Under the UCSD Agreement, we are 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. We are 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 we enter into a sublicensing agreement, we are 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 our voting stock or the sale by us of all or substantially all of our assets (collectively referred to as “Liquidity Event”), we are 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 our 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. We 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 or a violation of any other material term of the UCSD Agreement, is not cured by us within 60 days after a breach written notice provided by UCSD.

We recognized an immaterial amount and $0.1 million in patent reimbursement costs for the three and six months ended June 30, 2025, respectively. We made a payment of $0.1 million in connection with our achievement of the first development milestone related to the dosing of the first patient in our Phase 1 clinical trial in August 2024, which was recorded as research and development expense in the consolidated statement of operations ~~and comprehensive loss~~ for the year ended December 31, 2024. No other milestones were achieved or probable asthrough June 30, 2025. No milestone expense was recorded for each of ~~March~~the 31three and six months ended June 30, 2025 and 2024.

Royalty Agreement with Samsara – Related Party

In July 2024, we entered into a royalty agreement (the “Royalty Agreement’”) with Samsara. Under the Royalty Agreement, we redeemed 10,080 shares of our common stock issued to Samsara under a founder’s restricted stock purchase agreement in exchange for our agreement to pay Samsara a low single digit percentage tiered royalty on net sales, if any, of our 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 our patents for such product in such country.

We 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 consolidated balance sheet and the consolidated statement of redeemable convertible preferred stock and shareholders’ deficit. We recorded $32.1 million as a long-term liability related to the obligation to make royalty payments to Samsara. The fair

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paid-in-capital in the consolidated balance sheet and the consolidated statement of redeemable convertible preferred stock and shareholders’ deficit. We 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. The excess of the royalty liability over the fair value of the redeemed shares of $32.0 million was recorded as a research and development expense.

Once royalty payments to Samsara are deemed probable and estimable, and if such amounts exceed the initially recorded royalty obligation balance, we will impute interest to accrete the liability on a prospective basis based on such estimates. If and when we make royalty payments under the Royalty Agreement, the royalty obligation balance will be reduced. As of ~~March~~June 3130, 2025, royalty payments were not probable and estimable and, therefore, for the three and six months ended ~~March~~June 3130, 2025, no interest expense was recognized for the royalty liability.

Financial Operations Overview

Operating Expenses

Our operating expenses consist of research and development expenses and general and administrative expenses.

Research and Development Expenses

The largest component of our total operating expenses since inception has been research and development activities, including preclinical development of our product candidate. Research and development costs are expensed as incurred.

External research and development costs include:

•

costs associated with acquiring technology and intellectual property licenses that have no alternative future uses, milestone payments and annual license maintenance fees under its licensing agreements;

•

costs incurred under agreements with third-party CDMOs, CROs and other third parties that conduct preclinical and clinical activities on our behalf and manufacture our product candidate;

•

consulting fees associated with our research and development activities;

•

costs related to compliance with regulatory requirements; and

•

other costs associated with our research and development programs.

Internal research and development costs include:

•

employee-related costs, including salaries, benefits, travel and meals expenses, and stock-based compensation expense for our research and development personnel; and

•

allocated overhead costs, including software and other miscellaneous expenses incurred in connection with our research and development programs.

Costs for certain development activities are recognized based on our management’s evaluation of the progress to completion of specific tasks using information and data provided by our vendors and third-party service providers. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense when the goods have been delivered or the services have been performed, or when it is no longer expected that the goods will be delivered or the services rendered. Upfront payments under license agreements are expensed upon receipt of the license, and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable. Research and development expenses incurred from inception relate to the development of our lead product candidate, TH103.

We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidate through clinical trials, pursue regulatory approval of our product candidate and expand the indications for our product candidate. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidate may be affected by a variety of factors, including the timing and progress of clinical development activities, our ability to successfully complete clinical trials with safety, potency and purity profiles that are satisfactory to the FDA or any comparable foreign regulatory authority, our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize, our product candidate; our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidate is

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regulatory approval for, and then successfully commercialize, our product candidate; our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our product candidate is approved; the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; our ability to obtain and maintain patent, trade secret and other intellectual property protection and our ability to commercialize products, if and when approved, whether alone or in collaboration with others. We may never receive regulatory approval for our product candidate. As a result of the uncertainties discussed above, our management is unable to determine the duration and completion costs of our research and development activities or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidate, if approved.

General and Administrative Expenses

General and administrative expenses consist primarily of payroll and personnel-related expenses, including salaries, employee benefit costs and stock-based compensation expense. General and administrative expenses also include professional fees for legal, consulting, accounting and tax services, as well as allocated overheads, including information technology costs, and other general operating expenses not otherwise classified as research and development expenses.

We anticipate that our general and administrative expenses will increase as a result of increased personnel costs, including salaries, benefits and stock-based compensation expense. Additionally, we expect to incur significant additional expenses associated with being a public company, including expanded infrastructure and higher consulting, legal and accounting services, investor relations costs and director and officer insurance premiums.

Change in fair value of tranche liability

Change in fair value of tranche liability represents gains or losses from the remeasurement of tranche liability related to the investors’ rights to receive additional convertible promissory notes in subsequent tranches of the Convertible Note Financing with a predetermined conversion price. The tranche liability was remeasured at fair value at the end of each reporting period until the tranche liability is exercised or expires. The tranche liability was cancelled in March 2025.

Change in fair value of derivative liabilities

Change in fair value of derivative liabilities represents gains or losses from the remeasurement of the derivative liabilities embedded in the convertible promissory notes issued to Samsara and other investors at the end of each reporting period until settlement or extinguishment. The derivative liabilities expired in connection with the closing of the Merger on the Closing Date.

Interest expense

Interest expense represents non-cash interest expense accrued on issued and previously outstanding convertible promissory notes and amortization of a debt discount on the advances under the convertible promissory note issued to Samsara in March 2024.

Loss on issuance of convertible promissory notes

Loss on issuance of convertible promissory notes represents loss upon the issuance of convertible promissory notes to Samsara and other investors accounted at fair value. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into shares of redeemable convertible preferred stock or common stock of Legacy Kalaris immediately prior to the closing of the Merger on March 18, 2025.

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Other income (expense), net

Other income (expense), net includes primarily interest income received from money market investments and bank deposits, and realized and unrealized foreign currency gains (losses).

Results of Operations

Comparison of the Three Months Ended ~~March~~June 3130, 2025 and 2024

The following table summarizes our results of operations ~~for the periods presented~~ (in thousands):

	Three Months EndedMarch 31,						Change
	Three Months EndedJune 30,
	2025			2024			$Change
Operating expenses
Operating expenses:
Research and development	$	68,~~030~~440		$	13,~~961~~211		$	45,~~069~~229
General and administrative		43,~~324~~816			~~602~~976			32,~~722~~840
Total operating expenses		1012,~~354~~256			24,~~563~~187			78,~~791~~069
Loss from operations		(1012,~~354~~256	)		(24,~~563~~187	)		(78,~~791~~069	)
Other income (expense)
Other income (expense), net:
Change in fair value of tranche liability	365				—			365
Change in fair value of derivative liabilities		—			311			(311	)
Change in fair value of derivative liabilities		1,229			—			1,229
Interest expense		—			(499	)		499
Interest expense		(1,443	)		(78	)		(1,365	)
Loss on issuance of convertible promissory notes		—			(1,341	)		1,341
Loss on issuance of convertible promissory notes		(186	)		(793	)		607
Other income, net		906			66			840
Other income, net		193			27			166
Total other income (expense), net		906			(1,463	)		2,369
Total other income (expense), net		158			(844	)		1,002
Net loss	$	(11,350	)	$	(5,650	)	$	(5,700	)
Net loss and comprehensive loss	$	(10,196	)	$	(3,407	)	$	(6,789	)

Research and Development Expenses

The following table summarizes our research and development expenses ~~for the periods presented~~ (in thousands):

	Three Months EndedMarch 31,				Change
	Three Months EndedJune 30,
	2025		2024		$Change
External costs
External costs:
CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs	$	46,~~812~~915	$	12,~~515~~359	$	34,~~297~~556
License fees, milestone payments and annual maintenance fees related to acquired technologies		—		50		(50	)
Internal costs:
Internal costs
Personnel related costs (including stock-based compensation)		1,175		642		533
Personnel related costs		1,069		376		693
Other expense		350		210		140
Other expense		149		20		129
Total research and development expenses	$	8,440	$	3,211	$	5,229
Total research and development expenses	$	6,030	$	1,961	$	4,069

Research and development expenses increased by $45.12 million, from $23.02 million for the three months ended ~~March~~June 3130, 2024, to $68.04 million for the three months ended ~~March~~June 3130, 2025. CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs increased by $~~3.3 million, from $1.5 million for the three months ended March 31, 2024 to $~~4.86 million ~~for the three months ended March 31, 2025,~~ as we initiated our Phase 1 clinical trial of TH103 in June 2024. CRO and other clinical expenses increased by $0.~~9 million, from $0.~~2 million ~~for the three months ended March 31, 2024 to $1.1 million for the three months ended March 31, 2025,~~ as we opened additional investigational sites and enrolled patients in our clinical trial. CDMO and other third-party preclinical studies and consulting costs increased by $24.54 million ~~from $1.1 million for the three months ended March 31, 2024 to $3.6 million for the three months ended March 31, 2025,~~ due to the additional manufacturing process development activities and manufacturing of our clinical supplies to support our clinical trial.

Personnel related costs increased by $0.75 million ~~from $0.4 million for the three months ended March 31~~, ~~2024, to $1.1 million for the three months ended March 31, 2025,~~ due to hiring in our research and development organization. This increase in ~~compensation and~~ personnel related costs ~~includes~~included a $0.1 million increase in stock-based compensation expense.

General and Administrative Expenses

General and administrative expenses increased by $32.78 million from $01.60 million for the three months ended ~~March~~June 3130, 2024 to $4.3.8 million for the three months ended ~~March~~June 3130, 2025. The increase in general and administrative expenses was primarily attributable to an increase of $1.47 million in legal, accounting and other professional and outside services, an increase of $10.52 million related to ~~AlloVir’s~~ directors' and officers’ insurance recognized following the closing of the Merger, an increase of $0.5 million in personnel related expenses and an increase of $0.3 million in other expenses. Our general and administrative expenses increased as we invested in our corporate infrastructure and in connection with the closing of the Merger.

expenses and an increase of $0.4 million in other expenses. General and administrative expenses increased as we invested in our corporate infrastructure and in connection with the closing of the Merger.

Change in fair value of derivative liabilities

We did not recognize any change in the fair value of derivative liabilities for the three months ended June 30, 2025. We recognized a $0.3 million gain for the three months ended June 30, 2024, related to the changes in the fair value of derivative liabilities embedded into convertible promissory notes issued to Samsara and other investors. We estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis. Refer to Note 4, Fair Value Measurements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.

Interest expense

We recognized no interest expense for the three months ended June 30, 2025. We recognized $0.5 million of interest expense for the three months ended June 30, 2024, which included the accrued interest and amortization of debt discount related to issued and outstanding convertible promissory notes issued to Samsara and other investors. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details.

Loss on issuance of convertible promissory notes

We recognized no loss on issuance of convertible promissory notes for the three months ended June 30, 2025 as no additional notes were issued. We recognized $1.3 million of loss on issuance of convertible promissory notes to Samsara and other investors for the three months ended June 30, 2024. The loss on issuance of convertible promissory notes was related to the premium recognized at the issuance of the notes in May 2024. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for additional details.

Other income, net

Other income, net of $0.9 million and $0.1 million for the three months ended June 30, 2025 and 2024, respectively, primarily consisted of interest income received from money market investments and foreign currency gains (losses).

Comparison of the Six Months Ended June 30, 2025 and 2024

The following table summarizes our results of operations (in thousands):


	Six Months Ended June 30,
	2025			2024			Change
Operating expenses:
Research and development	$	14,470		$	5,172		$	9,298
General and administrative		8,140			1,578			6,562
Total operating expenses		22,610			6,750			15,860
Loss from operations		(22,610	)		(6,750	)		(15,860	)
Other income (expense), net:
Change in fair value of tranche liability		365			—			365
Change in fair value of derivative liabilities		1,229			311			918
Interest expense		(1,443	)		(577	)		(866	)
Loss on issuance of convertible promissory notes		(186	)		(2,134	)		1,948
Other income, net		1,099			93			1,006
Total other income (expense), net		1,064			(2,307	)		3,371
Net loss	$	(21,546	)	$	(9,057	)	$	(12,489	)

Research and Development Expenses

The following table summarizes our research and development expenses (in thousands):


	Six Months Ended June 30,
	2025		2024		Change
External costs:
CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs	$	11,727	$	3,874	$	7,853
License fees, milestone payments and annual maintenance fees related to acquired technologies		—		50		(50	)
Internal costs:
Personnel related costs (including stock-based compensation)		2,244		1,018		1,226
Other expense		499		230		269
Total research and development expenses	$	14,470	$	5,172	$	9,298

Research and development expenses increased by $9.3 million, from $5.2 million for the six months ended June 30, 2024, to $14.5 million for the six months ended June 30, 2025. CDMO, CRO and other third-party preclinical studies, clinical trials and consulting costs increased by $7.9 million as we initiated our Phase 1 clinical trial in TH103 in June 2024. CRO and other clinical expenses increased by $1.2 million as we opened additional investigational sites and enrolled patients in our clinical trial. CDMO and other third-party preclinical studies and consulting costs increased by $6.7 million due to the additional manufacturing process development activities and manufacturing of our clinical supplies to support our clinical trial.

Personnel related costs increased by $1.2 million due to hiring in our research and development organization. This increase in personnel related costs included a $0.1 million increase in stock-based compensation expense.

General and Administrative Expenses

General and administrative expenses increased by $6.5 million, from $1.6 million for the six months ended June 30, 2024 to $8.1 million for the six months ended June 30, 2025. The increase in general and administrative expenses was primarily attributable to an increase of $3.1 million in legal, accounting and other professional and outside services, an increase of $1.7 million related to directors' and officers’ insurance recognized following the closing of the Merger, an increase of $1.0 million in personnel related expenses and an increase of $0.7 million in other expenses. General and administrative expenses increased as we invested in our corporate infrastructure and in connection with the closing of the Merger.

Change in fair value of tranche liability

We recognized a $0.4 million gain for the ~~three~~six months ended ~~March~~June 3130, 2025, related to the changes in the fair value of tranche liability. We did not issue tranche liability for the ~~three~~six months ended ~~March~~June 3130, 2024. The convertible promissory notes issued in the Convertible Note Financing in October and November 2024 and amended in November 2024 included three subsequent tranches for the issuance of convertible promissory notes at the predetermined conversion price that were concluded to be liabilities and are accounted for at fair value until the tranches’ expiration or settlement. The fair value of the tranche liability is estimated using a probability weighted scenario analysis discounted to the current period. Refer to Note 4, Fair Value Measurements ~~and Fair Value of Financial Instruments~~, in ~~the~~our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. In January 2025, as part of the first tranche of the Additional Permitted Bridge Financing, we issued additional convertible promissory notes for $3.75 million and one of three tranches was settled. In March 2025, we and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranches and the tranche liability expired unexercised.

Change in fair value of derivative liabilities

We recognized $1.2 million and ~~zero~~$0.3 million gain for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively, related to the changes in the fair value of derivative liabilities embedded into convertible promissory notes issued to Samsara and other investors. We estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis. Refer to Note 4, Fair Value Measurements ~~and Fair Value of Financial Instruments~~, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. All outstanding convertible promissory notes, other than the AlloVir Note, were ~~converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.~~

converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.

Interest expense

We recognized $1.4 million and $0.16 million for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively, of interest expense, which included the accrued interest and amortization of debt discount related to issued and outstanding convertible promissory notes issued to Samsara and other investors. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details.

Loss on issuance of convertible promissory notes

We recognized $0.2 million and $02.81 million of loss on issuance of convertible promissory notes to Samsara and other investors for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively. The decrease of $01.69 million in loss on issuance of convertible promissory notes was related to the lower amount of premium recognized at the issuance of the notes in January 2025 compared to the premium on the notes issued in March 2024 and May 2024. Refer to Note 7, Convertible Promissory Notes, in our condensed consolidated financial statements included elsewhere in this Quarterly Report, for additional details.

Other income, net

Other income, net of $01.21 million and ~~less than~~ $0.1 million for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively, primarily consisted of interest income received from money market investments and foreign currency gains (losses).

Liquidity and Capital Resources

Sources of Liquidity

Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. From inception, we have primarily funded our operations from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and from cash and cash equivalents of AlloVir received in the Merger. From inception through June 30, 2025, we have received gross proceeds of $67.5 million from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and we received cash and cash equivalents of AlloVir of approximately $102.1 million in the Merger. As of June 30, 2025, we had $88.4 million in cash and cash equivalents.

received in the Merger. From inception through March 31, 2025, we have received gross proceeds of $67.5 million from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and we received cash and cash equivalents of AlloVir of approximately $102.1 million in the Merger. As of March 31, 2025, we had $101.0 million in cash and cash equivalents.

Funding Requirements

Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to the development of our lead product candidate, TH103, and, to a lesser extent, general and administrative expenditures. We expect to continue to incur significant and increasing expenses for the foreseeable future as we continue to advance TH103, expand our corporate infrastructure, further our research and development initiatives and incur costs associated with the potential commercialization activities. Conducting preclinical testing and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, TH103, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of a product that we do not expect to be commercially available for several years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

We have incurred significant losses and negative cash flows from operations since our inception. As of ~~March~~June 3130, 2025, we had an accumulated deficit of $~~126~~138.81 million. Based on our current operating plans, we believe that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, we have based these estimates on assumptions that may prove to be wrong, and our operating plans may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect.

This forecast of cash resources and planned operations involves risks and uncertainties, and the actual amount of expenses could vary materially as a result of a number of factors. Because of the numerous risks and uncertainties associated with product development, and because the extent to which we may enter into collaborations with third parties for the development of TH103 is unknown, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of TH103. Our future funding requirements will depend on many factors, including, but not limited to, the following:

unknown, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of TH103. Our future funding requirements will depend on many factors, including, but not limited to, the following:

•

the timing, scope, progress and results of our preclinical studies and clinical trials for our current and future product candidates;

•

the number, scope and duration of clinical trials required for regulatory approval of our current and future product candidates;

•

the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities for our product candidates, including any requirement to conduct more studies or generate additional data;

•

the cost of manufacturing clinical and commercial supplies, as well as scale-up of our current and future product candidates;

•

the potential increase in the number of our employees and the acquisition and expansion of physical facilities to support growth initiatives;

•

our ability to maintain existing, and establish new, strategic collaborations, licensing or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty or other payments due under any such agreement;

•

the cost of filing and prosecuting our patent applications, and maintaining and enforcing our patents and other intellectual property rights;

•

the extent to which we acquire or in-license other product candidates and technologies;

•

the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against our product candidates;

•

the effect of competing technological and market developments;

•

the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our ’ product candidates for which we receive marketing approval;

•

the amount of revenue, if any, received from commercial sales of TH103 or any future product candidates, should any product candidates receive marketing approval;

•

our implementation of various computerized informational systems and efforts to enhance operational systems;

•

the costs associated with being a public company; and

•

the impact of inflation, tariffs and other trade restrictions, as well as other factors, including economic uncertainty and geopolitical tensions, which may exacerbate the magnitude of the factors discussed above.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings or debt financings, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaboration or licensing arrangements with third parties or other strategic transactions, we may have to relinquish rights to our intellectual property, future revenue streams, research programs, or product candidates, or we may have to grant licenses on terms that may not be favorable to us. If we are unable to raise capital as and when needed or on attractive terms, or ~~at all, we may have to significantly delay, reduce or discontinue the development or future commercialization of TH103 or any future product candidate.~~

at all, we may have to significantly delay, reduce or discontinue the development or future commercialization of TH103 or any future product candidate.

Cash Flows

The following table summarizes primary sources and uses of cash for the periods presented (in thousands):

	Three Months EndedMarch 31,
	Six Months EndedJune 30,
	2025			2024
Net cash used in operating activities	$	(719,~~441~~980	)	$	(48,~~521~~492	)
Net cash provided by financing activities		107,267			611,~~579~~562
Net increase in cash, cash equivalents and restricted cash	$	9987,~~826~~287		$	23,~~058~~070

Operating Activities

Net cash used in operating activities was $720.40 million and $48.5 million for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively.

Cash used in operating activities for the ~~three~~six months ended ~~March~~June 3130, 2025, was primarily due to a net loss of $1021.25 million, ~~reduced~~offset by non-cash charges of $01.40 million and further ~~reduced~~offset by net changes of $20.36 million in the net operating assets and liabilities. Non-cash changes primarily consist of a $01.40 million stock-based compensation expense, a gain of $1.2 million related to the change in fair value of derivative liabilities, a gain of $0.4 million related to the change in fair value of tranche liability, non-cash interest expense of $1.4 million and loss on issuance of convertible promissory notes of $0.2 million. The change in net operating assets and liabilities was primarily due to aan ~~decrease~~increase in prepaid expenses and other current assets of $10.46 million, an increase in ~~accounts~~other ~~payable~~non-current assets of $0.93 million, an increase in ~~accrued~~accounts ~~research~~payable ~~and development expenses~~ of $12.2 million ~~due to the timing of receipt of invoices from vendors~~, ana ~~increase~~decrease in accrued expenses and other current liabilities of $0.23 million, ~~partially~~and ~~offset by~~ a decrease of $1.41 million in accrued compensation.

Cash used in operating activities for the ~~three~~six months ended ~~March~~June 3130, 2024, was primarily due to a net loss of $39.41 million, ~~reduced~~offset by non-cash charges of $12.08 million and increased by net changes of $2.12 million in the net operating assets and liabilities. Non-cash changes primarily consist of a loss on issuance of convertible promissory notes of $02.81 million, a non-cash interest expense of $0.16 million, ~~and~~stock-based acompensation expense of $0.14 million, ~~capital~~and ~~contribution~~offset by $0.3 million gain related to the change in~~-kind~~ ~~services~~fair ~~provided~~value byof ~~Samsara~~derivative liabilities. The change in net operating assets and liabilities was primarily due to a decrease in accounts payable of $1.28 million, an increase in prepaid expenses and other current assets of $0.4 million, a decrease in accrued compensation of $0.32 million, and a decrease in accrued ~~research~~expenses and ~~development~~other current liabilities of $0.2 million.

expenses of $0.2 million due to the timing of payments and receipt of invoices from vendors, partially off-set by an increase in accrued expenses and other current liabilities of $0.1 million.

Financing Activities

Net cash provided by financing activities for the ~~three~~six months ended ~~March~~June 3130, 2025 was $107.3 million, which consisted of $102.1 million of cash and cash equivalents of AlloVir received in connection with the Merger, proceeds from the issuance of a convertible promissory note of $7.5 million, partially offset by payments of deferred transaction costs and issuance costs related to the Merger of $2.3 million.

Cash provided by financing activities for the ~~three~~six months ended ~~March~~June 3130, 2024 was $611.6 million, which consisted of $510.0 million net cash proceeds from the issuance of convertible promissory notes and $1.6 million from the issuance of redeemable convertible preferred stock to existing and new investors.

Contractual and Other Obligations

We enter into contracts in the normal course of business with CDMOs for clinical supply manufacturing, with CROs for clinical trials and with other vendors for preclinical studies, supplies and other products and services for operating purposes. These agreements generally provide for termination at the request of either party generally with less than one-year notice and, therefore, our management believes that non-cancellable obligations under these agreements are not material. We do not currently expect any of these agreements to be terminated and did not have any non-cancellable obligations under these agreements as of ~~March~~June 3130, 2025 and December 31, 2024.

We are required to pay certain milestone payments contingent upon the achievement of specific development and regulatory events in accordance with the UCSD Agreement. Refer to Note 6, Significant Agreements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. We achieved the first development milestone under the UCSD Agreement in August 2024. No other milestones were achieved or probable as of March 31, 2025 and December 31, 2024. We are required to pay royalties on sales of products developed under the UCSD Agreement. Our product candidate was in development as of March 31, 2025 and December 31, 2024 and no such royalties were due.

We are obligated to pay royalties to Samsara under the Royalty Agreement. Refer to Note 6, Significant Agreements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. We recognized an initial royalty 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, we will impute interest to accrete the royalty liability on a prospective basis based on such estimates. As of March 31, 2025, these royalties were not probable and estimable.39

Instatements ~~February~~included ~~2025,~~elsewhere wein ~~entered~~this ~~into~~Quarterly aReport ~~lease~~for ~~agreement~~additional ~~for~~details. ~~office~~As ~~space~~of inJune ~~Berkeley~~30, ~~Heights~~2025 and December 31, ~~New~~2024, ~~Jersey.~~we ~~The~~recognized ~~lease~~an isimmaterial ~~expected~~amount toand ~~commence~~$0.2 inmillion related to the ~~second~~UCSD ~~quarter~~Agreement ofin ~~2025~~accrued expenses and ~~terminate~~other current liabilities in ~~November~~the ~~2031~~condensed consolidated balance sheets, respectively. ~~Total~~Through ~~undiscounted~~the ~~payments~~six ~~under~~months ~~this~~ended ~~lease~~June ~~are~~30, ~~approximately~~2025, development milestones totaling $20.1 million have been achieved and incurred as research and development expenses. InWe ~~addition~~did tonot achieve any development milestones and did not incur any related milestone expense during the ~~base~~three ~~rent~~months ended June 30, we2025 ~~will~~and ~~pay~~three ~~our~~and ~~share~~six ofmonths ~~operating~~ended ~~expenses~~June ~~and~~30, ~~taxes~~2024. ~~The~~We ~~lessor~~are ~~will~~required ~~provide~~to apay ~~tenant~~royalties ~~improvement~~on ~~allowance~~sales of upproducts todeveloped $0under the UCSD Agreement.4 ~~million~~Our product candidate was in development as of June 30, ~~which~~2025 weand ~~intend~~December to31, ~~utilize~~2024 and no such royalties were due.

We are obligated to pay royalties to Samsara under the Royalty Agreement. Refer to Note 6, Significant Agreements, in our condensed consolidated financial statements included elsewhere in this Quarterly Report for additional details. We recognized an initial royalty 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, we will impute interest to accrete the royalty liability on a prospective basis based on such estimates. As of June 30, 2025 these royalties were not probable and estimable.

In February 2025, we entered into a lease agreement for office space in Berkeley Heights, New Jersey. The lease is expected to commence in the third quarter of 2025 and to terminate in November 2031. We 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. Total undiscounted payments under this lease are approximately $2.1 million. In addition to the base rent, we will pay our share of operating expenses and taxes. The lessor will provide a tenant improvement allowance of up to $0.4 million, which we intend to utilize.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact the financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

Critical Accounting Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. On an ongoing basis, management evaluates these estimates and judgments, including, but not limited to, those related to the accrual of research and development expenses, the fair value of royalty obligation, the fair value of convertible promissory notes, the fair value of tranche liability, the fair value of derivative liabilities, the fair value of common stock and preferred stock, and stock-based compensation. These estimates and assumptions are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates and assumptions could occur in the future. Our management's estimates are based on our historical experience and on various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.

41There have been no material changes to our critical accounting estimates from those described in “Kalaris' Management’s Discussion and Analysis of Financial Conditions and Results of Operations” filed as Exhibit 99.4 to our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the "SEC") on March 18, 2025.

the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.

Although significant accounting policies are described in more detail in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report, we believe that the following accounting estimates are those most critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.

Research and Development Expenses

Research and development expenses are charged to expense as incurred. Research and development expenses include certain payroll and personnel expenses, license fees, laboratory supplies, consulting costs, external contract research and development expenses and allocated overhead costs, including software and other miscellaneous expenses incurred in connection with our research and development programs.

We estimate manufacturing and product development costs, preclinical study and clinical trial and other research and development expenses based on the services performed. We have entered into various agreements with outsourced vendors, contract development and manufacturing organizations and clinical research organizations. The financial terms of these contracts are subject to negotiation, which vary by contract and may result in payments that do not match the periods over which materials or services are provided. Generally, these agreements set forth the scope of work to be performed at a fixed fee, unit price or on a time and materials basis. We record the estimated costs of research and development activities based on the level of services performed, the progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development services provided, but not yet invoiced, are included in accrued expenses on the balance sheets. Advance payments for goods or services for future research and development activities are deferred as prepaid expenses and are expensed as the goods are delivered or the related services are performed. We make these estimates based on facts and circumstances known at that time. If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual accordingly. Amounts ultimately incurred in relation to amounts accrued for these services at a reporting date may be substantially higher or lower than our estimates. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred.

Convertible Promissory Notes

Tranche Liability

The convertible promissory notes issued in the Convertible Note Financing in October and November 2024 contained subsequent tranches to require investors to provide additional financing upon a written notice. The investors’ right to receive additional convertible promissory notes in subsequent tranches of the Convertible Note Financing with a predetermined conversion price was concluded to be a freestanding financial instrument that is required to be accounted for separately as a liability at fair value. We estimated the fair value of the tranche liability at inception and remeasured it at the end of each reporting period until the tranche liability expired or was settled. The changes in the fair value were recorded as a change in fair value of the tranche liability in the condensed consolidated statements of operations and comprehensive loss. We estimated the fair value of the tranche liability using a probability weighted model, which considered as inputs the timing of issuing convertible notes and notes conversion, probabilities of conversion scenarios, the estimated fair value of shares into which the note was convertible and a discount rate. A significant change in probabilities of conversion scenarios and changes in the estimated conversion price would significantly change the estimated fair value of the tranche liability. We recognized $21.3 million as a tranche liability at the issuance dates in October and November 2024 and recognized a gain of $21.0 million as the change in fair value of the tranche liability for the three months ended December 31, 2024. In January 2025, as part of the first tranche of the Additional Permitted Bridge Financing, we issued additional convertible promissory notes for $3.75 million and one of three tranches was settled. In March 2025, we and other noteholders entered into an acknowledgment of conversion and termination agreement to cancel all unfunded tranche financings and the tranche liability expired unexercised.

Derivative Liabilities

The redemption features of the convertible promissory notes met the requirements for separate accounting and were accounted for as compound derivative instruments recorded as liability at fair value at inception and were subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recorded as a change in fair value of derivative liabilities in the condensed

consolidated statements of operations and other comprehensive loss. Derivative liabilities were classified in the condensed consolidated balance sheets as current or non-current consistent with the classification of the respective convertible promissory notes they were related to. We estimated the fair value of the derivative liabilities embedded in the convertible promissory notes using a with-and-without scenario analysis, which involves valuing the whole instrument on an as-is basis and then valuing the instrument without the embedded derivative. The difference between the entire instrument with the embedded derivatives compared to the instrument without the embedded derivatives is the fair value of the derivative liabilities. A significant increase in probabilities of qualified financing or redemption scenario, a change of control scenario and a decrease in a discount rate would significantly increase the estimated fair value of derivative liabilities. All outstanding convertible promissory notes, other than the AlloVir Note, were converted into either shares of redeemable convertible preferred stock or common stock and the derivative liability expired in connection with the closing of the Merger on March 18, 2025.

Royalty Obligation – Related Party

In July 2024, we entered into the Royalty Agreement with Samsara. Under the Royalty Agreement, we redeemed 10,080 shares of our common stock, with a fair value of $32,000 from Samsara. In return, we are obligated to pay Samsara royalties on a product-by-product and country-by-country basis at low single-digit royalty rates on future net product sales. At the effective date of the agreement, we recognized an obligation to make future royalty payments to Samsara at estimated fair value as a liability on the condensed consolidated balance sheet and as a research and development expense in the condensed consolidated statement of operations and comprehensive loss. Once royalty payments to Samsara are deemed probable and estimable, and if such amounts exceed the royalty liability balance recognized at the effective date of the agreement, we will impute interest to accrete the royalty liability on a prospective basis based on such estimates. The fair value of the royalty obligation at the effective date of the Royalty Agreement 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. Significant changes to any of the following assumptions would significantly impact the estimated liability amount: future timing and amounts of net product revenues, estimated probabilities of success based on a stage of product development and the discount rate.

Stock-Based Compensation Expense

We measure stock-based awards made to employees and non-employees based on the estimated fair value of the awards as of the grant date using the Black-Scholes option-pricing model. The model requires management to make a number of assumptions including common stock fair value, expected volatility, expected term, risk-free interest rate and expected dividend yield.

Fair Value of Common Stock - Prior to the closing of the Merger, the fair market value of our common stock was determined by our board of directors with assistance from management and external valuation experts. Our approach to estimating the fair market value of our common stock was consistent with the methods outlined in the American Institute of Certified Public Accountants’ Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. Following the Merger, the fair market value of our common stock is based on its closing price on the Nasdaq Global Market as reported on the date of the stock option grant.

Expected Volatility – Expected volatility is estimated by studying the volatility of the prices of shares of common stock of comparable public companies for similar terms. We will continue to apply this process until enough historical information regarding the volatility of our stock price becomes available.

Expected Term – Expected term represents the period that our stock-based awards are expected to be outstanding and is determined using the simplified method.

Risk-Free Interest Rate – The risk-free interest rate is based on the U.S. Treasury zero-coupon bonds issued in effect at the time of grant for periods corresponding with the expected term of the option.

Expected Dividend – The Black-Scholes valuation model calls for a single expected dividend yield as an input. To date, we have not declared or paid any dividends and we do not expect to declare or pay any dividends in the future.

Significant changes in the estimated fair value of common stock, expected volatility and expected term would significantly impact recognized stock-based compensation expense amounts. The intrinsic value of all outstanding stock options as of March 31, 2025 was approximately $44.7 million, based on the fair value of $8.03 per share of our common stock, of which approximately $14.1 million related to vested stock options, and approximately $30.6 million related to unvested stock options.

Emerging Growth Company Status and Smaller Reporting Company

We are an emerging growth company ("EGC"), as defined in the Jumpstart Our Business Startup Act (“JOBS Act”), and we may remain an EGC until the last day of the fiscal year following the fifth anniversary of the initial public offering of AlloVir’s common stock. For so long as we remain an EGC, we are permitted and intend to rely on certain exemptions from various public company disclosure and reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, we have provided only two years of audited financial statements and have not included all of the executive compensation-related information that would be required if we were not an EGC. Accordingly, the information contained herein may not be comparable with the information stockholders receive from other public companies in which they may hold stock. Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with certain or new or revised accounting standards until the earlier of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of AlloVir’s initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, (ii) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period, or (iii) if we affirmatively and irrevocably opts out of the extended transition period provided by the JOBS Act.

We are also a “smaller reporting company” because the market value of our stock held by non-affiliates was less than $700.0 million and our annual revenue was less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue was less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to EGCs, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer ("“CEO"”), and Chief Accounting Officer ("“CAO"”) (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of ~~March~~June 3130, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "“Exchange Act"”), means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's (or "SEC") rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on their evaluation, the CEO and the CAO have concluded that our disclosure controls and procedures were not effective as of March 31, 2025, because of the material weaknesses in our internal control over financial reporting described below. 40

Wedesigned ~~have~~to ~~identified~~ensure ~~material~~that ~~weaknesses~~information required to be disclosed by an issuer in ~~our~~the ~~internal~~reports ~~control~~that ~~over~~it ~~financial~~files ~~reporting~~or assubmits ofunder ~~March~~the 31Exchange Act is recorded, ~~2025~~processed, summarized and ~~December 31~~reported, ~~2024.~~within Athe ~~material~~time ~~weakness~~periods isspecified ain ~~deficiency,~~the orSEC's arules ~~combination~~and offorms. ~~deficiencies~~Disclosure controls and procedures include, inwithout ~~internal~~limitation, ~~control~~controls ~~over~~and ~~financial~~procedures ~~reporting~~designed ~~such~~to ensure that ~~there~~information isrequired ato ~~reasonable~~be ~~possibility~~disclosed by an issuer in the reports that ait ~~material~~files ~~misstatement~~or ofsubmits under the ~~annual~~Exchange orAct ~~interim~~is ~~financial~~accumulated ~~statements~~and ~~would~~communicated ~~not~~to bethe ~~prevented~~issuer’s management, including its principal executive and principal financial officers, or ~~detected~~persons onperforming asimilar functions, as appropriate to allow timely ~~basis~~decisions regarding required disclosure.

WeBased ~~did~~on ~~not~~their ~~fully~~evaluation, ~~maintain~~the ~~components~~CEO ofand the ~~Committee~~CAO ofhave ~~Sponsoring~~concluded ~~Organizations~~that ofour ~~the~~disclosure ~~Treadway~~controls ~~Commission~~and ~~framework,~~procedures ~~including~~were ~~elements~~not ofeffective ~~the~~as ~~control~~of ~~environment,~~June ~~risk assessment~~30, ~~monitoring activities~~2025, ~~information~~because ~~and~~of ~~communication,~~the ~~and~~material ~~control~~weaknesses ~~activities~~in ~~components, relating to: (i)~~ our ~~commitment~~internal tocontrol ~~attract,~~over ~~develop,~~financial ~~and~~reporting ~~retain~~described ~~competent~~below. ~~individuals; (ii) identifying, assessing,~~

44We have identified material weaknesses in our internal control over financial reporting as of December 31, 2024 which remain unremediated as of June 30, 2025. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis.

We did not fully maintain components of the Committee of Sponsoring Organizations of the Treadway Commission framework, including elements of the control environment, risk assessment, monitoring activities, information and communication, and control activities components, relating to: (i) our commitment to attract, develop, and retain competent individuals; (ii) identifying, assessing, and communicating appropriate internal control objectives, (iii) identifying and analyzing risks to achieve these objectives; (iv) selecting, developing, and performing ongoing evaluations to ascertain whether the components of internal controls are present and functioning; (v) communicating accurate information internally and externally, including providing information pursuant to objectives, responsibilities, and functions of internal control; (vi) selecting and developing control activities that contribute to the mitigation of risks and support achievement of objectives and (vii) deploying control activities through policies that establish what is expected and procedures that put policies into action.

Remediation Plans

We have begun taking measures, and plan to continue to take measures, to remediate these material weaknesses. We are actively recruiting additional accounting personnel with appropriate experience, certification, education and training. For example, following the closing of the Merger, AlloVir’s Chief Accounting Officer serves as our Chief Accounting Officer, and AlloVir’s Controller serves as our Controller. In addition, wein ~~recently~~April 2025, we appointed a new member to our board of directors, who was also appointed as chair of the audit committee of the board of directors and iswas deemed to be an audit committee financial expert. We are in the process of implementing additional measures and risk assessment procedures designed to improve our disclosure controls and procedures and internal control over financial reporting to address the underlying causes of these material weaknesses, including the implementation of appropriate segregation of duties, formalization of accounting policies and controls, and implementation of accounting systems to automate manual processes. We have engaged financial consultants to assist with the implementation of internal controls over financial reporting and are actively recruiting a chief financial officer. To the extent that we are not able to hire and retain such individuals or are unable to successfully design and implement such controls, the material weaknesses identified may not be remediated and we may be required to record additional adjustments to our financial statements in the future or otherwise not be able to produce timely or accurate financial statements. The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above, the controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are effective. These remediation measures will be time-consuming and require financial and operational resources. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations.

Changes in Internal Control Over Financial Reporting

Except as discussed above under “Remediation Plans”, there were no changes in our internal control over financial reporting during the three months ended ~~March~~June 3130, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

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 (the “Court”) 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~~asserted 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~~asserted 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~~sought, 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~~July 1730, 2025, the ~~plaintiff moved for preliminary approval of the settlement and authorized providing notice of the settlement to class members. On April 23, 2025, the~~ Court entered an order granting ~~preliminary~~final approval of the settlement. Aand ~~final~~dismissing ~~approval~~the ~~hearing~~Securities isClass ~~scheduled~~Action towith ~~take place on July 30, 2025~~prejudice.

On October 21, 2024, a purported AlloVir stockholder of 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~~alleged, 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~~were based on substantially identical allegations as the complaint in the above-listed Securities Class Action. The lawsuit ~~seeks~~sought, 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~~On ~~moved~~August ~~to dismiss the case on May 6~~1, 2025~~. Under the current schedule~~, the ~~motion~~plaintiff tofiled ~~dismiss~~a isnotice ~~due~~voluntarily todismissing ~~become~~the ~~fully~~derivative ~~briefed~~lawsuit onwithout ~~August 21, 2025~~prejudice.

Litigation ~~related~~Related to the Merger

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this Quarterly Report, including our financial statements and the related notes included in this Quarterly Report, before deciding to invest in our common stock. These risks, some of which have occurred and any of which may occur in the future, can have a material adverse effect on our business, prospects, operating results and financial condition. In such event, the trading price of our common stock could decline and you might lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business, prospects, operating results and financial condition.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant losses since our inception. We expect to continue to incur significant expenses and operating losses for the foreseeable future, and may never achieve or maintain profitability.

Since inception, we have incurred significant operating losses. Our net losses were $1021.25 million and $39.41 million for the ~~three~~six months ended ~~March~~June 3130, 2025 and 2024, respectively. As of ~~March~~June 3130, 2025, we had cash and cash equivalents of $~~101~~88.04 million and an accumulated deficit of $~~126~~138.81 million.

We do not have any products approved for sale and have not generated any revenue from product sales or otherwise. To date, we have funded our operations primarily from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and from cash and cash equivalents of AlloVir received in the Merger. We have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, acquiring our technology, establishing our intellectual property portfolio and performing research and development of our product candidate. We are in the early stages of development of our lead product candidate, TH103. We received investigational new drug (“IND”), clearance for TH103 for the treatment of patients with neovascular, or wet, age-related macular degeneration (“nAMD”), in June 2024 and, in August 2024, we treated the first patient in our Phase 1 open-label clinical trial to investigate the safety, tolerability, dose range and pharmacokinetic profile or intravitreal injection of TH103 in patients with nAMD. 42

We do not have any products approved for sale and have not generated any revenue from product sales or otherwise. To date, we have funded our operations primarily from sales of redeemable convertible preferred stock, issuances of convertible promissory notes and a SAFE, and from cash and cash equivalents of AlloVir received in the Merger. We have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, acquiring our technology, establishing our intellectual property portfolio and performing research and development of our product candidate. We are in the early stages of development of our lead product candidate, TH103. We received investigational new drug (“IND”) clearance for TH103 for the treatment of patients with neovascular, or wet, age-related macular degeneration (“nAMD”), in June 2024 and, in August 2024, we treated the first patient in our Phase 1 open-label clinical trial to investigate the safety, tolerability, dose range and pharmacokinetic profile or intravitreal injection of TH103 in patients with nAMD.

We expect to continue to incur significant expenses and operating losses for the foreseeable future, including costs associated with operating as a public company. We anticipate that our expenses will increase substantially if and as we:

•

conduct our ongoing Phase 1 clinical trial of TH103 in patients with nAMD;

•

continue to progress the development of TH103 in future preclinical studies and clinical trials;

•

advance any future product candidate that we may develop into preclinical and clinical development;

•

maintain, expand, enforce and protect our intellectual property portfolio;

•

seek regulatory and marketing approvals for TH103 and any other product candidate that successfully completes clinical trials;

•

seek to identify and maintain additional collaborations and license agreements, and the success of those collaborations and license agreements;

•

ultimately establish a sales, marketing and distribution infrastructure to commercialize any product candidate for which we may obtain marketing approval;

•

generate revenue from commercial sales of product candidates that may receive marketing approval;

•

hire additional clinical, regulatory, manufacturing, quality control, development and scientific personnel;

•

in-license or acquire additional technologies or product candidates;

•

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.

Our expenses could increase beyond our expectations, if, among other things:

•

we are required by regulatory authorities in the United States, Europe, or other jurisdictions to perform trials or studies in addition to, or different than, those that we currently expect;

•

there are any delays in establishing appropriate manufacturing arrangements for or completing the development of TH103 or any other product candidate we may develop; or

•

there are any third-party challenges to our intellectual property or we need to defend against any intellectual property-related claim.

Even if we obtain marketing approval for and are successful in commercializing one or more product candidates, we expect to incur substantial additional product development and other expenditures to develop and market additional product candidates or to expand the approved indications of any marketed product. We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue.

We have never generated revenue from product sales and may never achieve or maintain profitability.

We ~~only recently~~ initiated clinical development of our lead product candidate, TH103, in June 2024, and expect that it will be many years, if ever, before we have a product candidate ready for commercialization. To become and remain profitable, we must succeed in completing development of, obtaining marketing approval for and eventually commercializing, one or more products that generate significant revenue. The ability to achieve this success will require us to be effective in a range of challenging activities, including:

•

completing preclinical and clinical trials;

•

identifying additional product candidates;

•

obtaining marketing approval for these product candidates;

•

manufacturing, marketing and selling any products for which we may obtain marketing approval; and

•

achieving market acceptance of products for which we may obtain marketing approval as viable treatment options.

We may never succeed in these activities and, even if we do, we may never generate revenues that are significant enough to achieve profitability. Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our product development efforts, diversify our pipeline or even continue our operations.

We only recently initiated our first clinical trial, have no products that are approved for commercial sale and may never be able to develop marketable products. We expect that a substantial portion of our efforts and expenditures for the foreseeable future will be devoted to TH103. Our business currently depends heavily on the successful development, marketing approval and commercialization of TH103. We cannot be certain that TH103 will achieve success in ongoing or future clinical trials, receive marketing approval or be successfully commercialized.

If we were required to discontinue development of TH103, or if TH103 does not receive marketing approval for one or more of the indications we pursue, fails to achieve significant market acceptance, or fails to receive adequate reimbursement, we may be delayed by many years in our ability to achieve profitability, if ever, and may not be able to generate sufficient revenue to continue our business.

We expect to devote substantial financial resources to our ongoing and planned activities, particularly as we conduct our ongoing clinical trial of TH103; prepare for future preclinical studies and clinical trials of TH103; prepare for, initiate and conduct preclinical studies and clinical trials of other product candidates we may develop; and potentially seek marketing approval for any of the product candidates we may develop. We expect our expenses to increase substantially over time in connection with our ongoing and planned activities, particularly as we advance our preclinical activities and our ongoing and planned clinical trials. In addition, if we obtain marketing approval for TH103 or any other product candidate we may develop, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution. Furthermore, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise additional capital or obtain adequate funds when needed or on acceptable terms, we may be required to delay, limit, reduce or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. In addition, attempting to secure additional financing may divert the time and attention of our management from day-to-day activities and distract from our product development efforts.

Our future capital requirements will depend on many factors, including:

•

the progress, costs and results of our ongoing Phase 1 clinical trial of TH103 and future preclinical studies and clinical trials of TH103;

•

the scope, progress, costs and results of preclinical and clinical development for any product candidates we may develop;

•

the success of any collaborations with third parties;

•

our ability to scale up our manufacturing processes and capabilities to support clinical trials of TH103 and other product candidates we may develop;

•

the costs, timing and outcome of regulatory review of TH103 and other product candidates we may develop;

•

potential changes in the regulatory environment and enforcement rules;

•

our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;

•

the payment of license fees and other costs of our technology license arrangements;

•

the costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for TH103 and other product candidates we may develop for which we may receive marketing approval;

•

our ability to obtain and maintain acceptance of any approved products by patients, the medical community and third-party payors;

•

the amount and timing of revenue, if any, received from commercial sales of TH103 and any other product candidates we may develop for which we receive marketing approval;

•

potential changes in pharmaceutical pricing and reimbursement infrastructure;

•

the availability of raw materials for use in production of our product candidates;

•

the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims; and

•

the extent to which we in-license or acquire additional technologies or product candidates.

As of ~~March~~June 3130, 2025, we had cash and cash equivalents of $~~101~~88.04 million. Based on our current operating plans, our management expects that our cash and cash equivalents as of ~~March~~June 3130, 2025 will be sufficient to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2026. However, we have based these estimates on assumptions that may prove to be wrong, and our operating plans may change as a result of many factors currently unknown to us. In addition, changing circumstances could cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more than currently expected because of circumstances beyond our control. As a result, we could deplete our capital resources sooner than we currently expect. In addition, because the successful development of TH103 or other product candidates that we may pursue is highly uncertain, at this time we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the development of any product candidate. Identifying potential product candidates and conducting preclinical studies and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. We will not generate commercial revenues unless and until we can achieve sales of products, which we do not anticipate for a number of years, if at all. Accordingly, we will need to obtain substantial additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all, and we may be impacted by the economic climate and market conditions. For example, market volatility resulting from general United States or global economic or market conditions, including related to any health epidemics, pandemics or other contagious outbreaks ~~(including any resurgence of the COVID-19 pandemic),~~ could also adversely impact our ability to access capital as and when needed. Alternatively, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

Until such time, if ever, as we can generate significant revenues from product sales, we expect to finance our operations through a combination of public or private equity offerings or debt financings, or potentially other capital sources, such as collaboration or licensing arrangements with third parties or other strategic transactions. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders’. Any debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness.

4945

of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders’. Any debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures, declaring dividends or encumbering our assets to secure future indebtedness.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed or on terms acceptable to us, we would be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess the our future viability.

Legacy Kalaris was incorporated and commenced operations in 2019. We are a clinical-stage company with a limited operating history. Our operations to date have been limited to organizing and staffing, business planning, raising capital, acquiring our technology, establishing our intellectual property portfolio and performing research and development of our product candidate. Our prospects must be considered in light of the uncertainties, risks, expenses and difficulties frequently encountered by companies in their early-stages of operations. We have not yet demonstrated our ability to successfully develop any product candidate, obtain marketing approvals, manufacture a commercial scale product or arrange for a third party to do so on our behalf, or conduct sales, marketing and distribution activities necessary for successful product commercialization. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing, obtaining marketing approval for and commercializing products.

In addition, as our business grows, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown obstacles. We will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition. As we continue to build our business, we expect our financial condition and operating results to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

We have identified material weaknesses in our internal control over financial reporting as of December ~~March~~ 31, ~~2025~~2024 ~~and~~which ~~December~~remain 31unremediated as of June 30, ~~2024~~2025. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements would not be prevented or detected on a timely basis.

We did not fully maintain components of the Committee of Sponsoring Organizations of the Treadway Commission framework, including elements of the control environment, risk assessment, monitoring activities, information and communication, and control activities components, relating to: (i) our commitment to attract, develop, and retain competent individuals; (ii) identifying, assessing, and communicating appropriate objectives, (iii) identifying and analyzing risks to achieve these objectives; (iv) selecting, developing, and performing ongoing evaluations to ascertain whether the components of internal controls are present and functioning; (v) communicating accurate information internally and externally, including providing information pursuant to objectives, responsibilities, and functions of internal control; (vi) selecting and developing control activities that contribute to the mitigation of risks and support achievement of objectives and (vii) deploying control activities through policies that establish what is expected and procedures that put policies into action.

These material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement of our annual or interim financial statements that would not be prevented or detected. We have begun taking measures, and plan to continue to take measures, to remediate these material weaknesses. We are actively recruiting additional accounting personnel with appropriate experience, certification, education and training. For example, following the closing of the Merger, AlloVir’s Chief Accounting Officer serves as our Chief Accounting Officer, and AlloVir’s Controller serves as our Controller. In addition, wein ~~recently~~April 2025, we appointed a new member to our board of directors, who was also appointed as chair of the audit committee of the board of directors and iswas deemed to be an audit committee financial expert. We are in the process of implementing additional measures and risk assessment procedures designed to improve our disclosure controls and procedures and internal control over financial reporting to address the underlying causes of these material weaknesses, including the implementation of appropriate segregation of duties, formalization of accounting policies and controls, and implementation of accounting systems to automate manual processes. We have engaged financial consultants to assist with the implementation of internal controls over financial reporting and are actively recruiting a chief financial officer. To the extent that we are not able to hire and retain such individuals or are unable to successfully design and implement such controls, the material weaknesses identified may not be

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additional measures and risk assessment procedures designed to improve our disclosure controls and procedures and internal control over financial reporting to address the underlying causes of these material weaknesses, including the implementation of appropriate segregation of duties, formalization of accounting policies and controls, and implementation of accounting systems to automate manual processes. We have engaged financial consultants to assist with the implementation of internal controls over financial reporting and are actively recruiting a chief financial officer. To the extent that we are not able to hire and retain such individuals or are unable to successfully design and implement such controls, the material weaknesses identified may not be remediated and management may be required to record additional adjustments to our financial statements in the future or otherwise not be able to produce timely or accurate financial statements. The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above, the controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are effective. These remediation measures will be time-consuming and require financial and operational resources. If our management concludes that our internal control over financial reporting is not effective, such a determination could adversely affect investor confidence in us and the valuation of our common stock.

While we are implementing measures to remediate the material weaknesses, we cannot predict the success of such measures or the outcome of our assessment of these measures at this time. We can give no assurance that these measures will remediate the deficiencies in internal control over financial reporting or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations.

Our ability to use our net operating loss carryforwards (“NOLs”) and research and development tax credit carryforwards to offset future taxable income may be subject to certain limitations.

We have a history of cumulative losses and we anticipate that we will continue to incur significant losses in the foreseeable future. As a result, we do not know whether or when we will generate taxable income necessary to utilize our NOLs or research and development tax credit carryforwards. As of December 31, 2024, Legacy Kalaris had federal and state NOLs of $34.9 million and $4.2 million, respectively, and federal and state research and development tax credit carryforwards totaling $2.2 million and $0.1 million, respectively.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended and corresponding provisions of state law, a corporation that undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period, is subject to limitations on its ability to utilize its pre-change NOLs and research and development tax credit carryforwards to offset future taxable income. As of December 31, 2024, Kalaris completed the Section 382 analysis from inception through the year ended December 31, 2024. Legacy Kalaris experienced an ownership change in March 2022 related to a redeemable convertible preferred stock financing. Net operating loss of $3.6 million generated prior to the 2022 change in ownership will be permanently limited for California tax purposes. Net federal operating losses are not limited as they can be carried forward indefinitely. We may experience ownership changes in the future (which may be outside our control). As a result, if and to the extent we earn net taxable income, our ability to use our pre-change NOLs and research and development tax credit carryforwards to offset such taxable income may be subject to limitations.

Risks Related to Research and Development of Our Product Candidates

We are early in our development efforts. We received IND clearance for TH103 for the treatment of patients with nAMD in June 2024 and, in August 2024, we treated the first patient in our Phase 1 clinical trial of TH103 for patients with nAMD. Our ability to generate revenues from product sales, which we do not expect will occur for many years, if ever, will depend heavily on the successful development, marketing approval and eventual commercialization of TH103 or one or more other product candidates, which may never occur. The success of TH103 and any other product candidate we may develop will depend on many factors, including the following:

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successfully completing preclinical studies;

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successfully enrolling patients in our Phase 1 clinical trial of TH103 and completing the clinical trial;

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successfully initiating and completing future clinical trials;

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scaling up manufacturing processes and capabilities to support clinical trials of TH103 and any other product candidate we may develop;

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applying for and receiving marketing approvals from applicable regulatory authorities;

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obtaining and maintaining intellectual property protection and regulatory exclusivity for TH103 and any other product candidates we may develop;

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making arrangements with third-party manufacturers, or establishing commercial manufacturing capabilities, for both clinical and commercial supplies of our product candidates;

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establishing sales, marketing and distribution capabilities and launching commercial sales of our products, if and when approved, whether alone or in collaboration with others;

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acceptance of TH103 and any other product candidate we may develop, if and when approved, by patients, the medical community and third-party payors;

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effectively competing with other therapies;

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obtaining and maintaining coverage, adequate pricing and adequate reimbursement from third-party payors, including government payors;

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maintaining, enforcing, defending and protecting our rights in our intellectual property portfolio;

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not infringing, misappropriating or otherwise violating others’ intellectual property or proprietary rights; and

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maintaining a continued acceptable safety profile of our products following receipt of any marketing approvals.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully develop and commercialize TH103 and any other product candidate we may develop, which would materially harm our business. As a company, we have limited experience in clinical development. Any predictions about the future success or viability of TH103 or any product candidates we may develop in the future may not be as accurate as they could be if we had a history of conducting clinical trials.

Drug development involves a lengthy and expensive process, with an uncertain outcome. The results of preclinical studies and early clinical trials may not be predictive of future results. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of TH103 or any other product candidate we may develop.

We dosed the first patient in our Phase 1 clinical trial of TH103 in August 2024. The risk of failure for TH103 and any other product candidate we may develop is high. It is impossible to predict when or if TH103 or any other product candidate we may develop will prove effective or safe in humans or will receive marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of a product candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of such product candidate in humans. Clinical trials may fail to demonstrate that TH103 or any of our other product candidates are safe for humans and effective for indicated uses. Even if the clinical trials are successful, changes in marketing approval policies during the development period, changes in or the enactment or promulgation of additional statutes, regulations or guidance or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application for marketing approval.

Before we can commence clinical trials for any product candidate we may develop other than TH103, we must complete extensive preclinical testing and studies, manufacturing process development studies, and analytical development studies that support our planned INDs and other applications to regulatory authorities in the United States or similar applications in other jurisdictions. We cannot be certain of the timely completion or outcome of our preclinical testing and studies and cannot predict if the outcome of our preclinical testing and studies will ultimately support the further development of our current or future product candidates or whether regulatory authorities will accept our proposed clinical programs. In addition, before we can commence clinical trials of TH103 for Diabetic Macular Edema, diabetic retinopathy, and Retinal Vein Occlusion, or any other intraocular indication, we must submit and clear INDs for the applicable indications in the United States or similar applications in other jurisdictions. As a result, we may not be able to submit applications to initiate clinical development of product candidates on the timelines we expect, if at all, and the submission of these applications may not result in regulatory authorities allowing clinical trials to begin. Furthermore, product candidates are subject to continued preclinical safety studies, which may be conducted concurrently with our clinical testing. The outcomes of these safety studies may delay the launch of or enrollment in future clinical trials and could impact our ability to continue to conduct our clinical trials.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to the outcome. We cannot guarantee that any of our clinical trials will be conducted as planned or completed on schedule, or at all. A failure of one or more clinical trials can occur at any stage of testing, which may result from a multitude of factors, including, among other things, flaws in study design, dose selection issues, placebo effects, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits.

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flaws in study design, dose selection issues, placebo effects, patient enrollment criteria and failure to demonstrate favorable safety or efficacy traits.

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize any product candidates, including:

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regulators or institutional review boards (“IRBs”) may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site or at all;

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we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

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regulators may determine that the planned design of our clinical trials is flawed or inadequate;

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clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

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we may be unable to establish clinical endpoints that applicable regulatory authorities consider clinically meaningful;

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preclinical testing may produce results based on which we may decide, or regulators may require us, to conduct additional preclinical studies before we proceed with certain clinical trials, limit the scope of our clinical trials, halt ongoing clinical trials or abandon product development programs;

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the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;

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third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

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we may decide, or regulators or IRBs may require us, to suspend or terminate clinical trials of our product candidates for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

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regulators or IRBs may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing requirements to maintain marketing approval;

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regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate;

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the cost of clinical trials of our product candidates may be greater than we anticipate;

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the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate;

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our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our clinical investigators, regulators or IRBs to suspend or terminate the trials;

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regulators may withdraw their approval of a product or impose restrictions on our distribution; and

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business interruptions resulting from any health epidemics, pandemics or other contagious outbreaks ~~(including any resurgence of the COVID-19 pandemic)~~ may result in adverse effects on our business and operations.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, if there are safety concerns or if we determine that the observed safety or efficacy profile would not be competitive in the marketplace, we may:

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incur unplanned costs;

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be delayed in obtaining marketing approval;

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not obtain marketing approval at all;

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obtain marketing approval in some countries and not in others;

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obtain approval for indications or patient populations that are not as broad as intended or desired;

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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

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be subject to additional post-marketing testing requirements; or

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have the product removed from the market after obtaining marketing approval.

Our product development costs will also increase if we experience delays in preclinical studies or clinical trials or in obtaining marketing or other regulatory approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. We may also determine to change the design or protocol of one or more of our clinical trials, including to add additional patients or arms, which could result in increased costs and expenses or delays. Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

We may conduct clinical trials at sites outside the United States. The Food and Drug Administration (the “FDA”) may not accept data from trials conducted in such locations, and the conduct of trials outside the United States could subject us to additional delays and expense.

We may conduct one or more clinical trials at trial sites that are located outside the United States. The acceptance by the FDA or other regulatory authorities of study data from clinical trials conducted outside their jurisdiction may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless (1) the data are applicable to the United States population and United States medical practice; (2) the trials were performed by clinical investigators of recognized competence and pursuant to Good Clinical Practices (“GCP”) regulations; and (3) the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means.

In addition, even where the foreign study data are not intended to serve as the sole basis for approval, the FDA will not accept the data as support for an application for marketing approval unless the study is well-designed and well-conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Many foreign regulatory authorities have similar approval requirements. In addition, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA or any comparable foreign regulatory authority will accept data from trials conducted outside of the United States or the applicable jurisdiction. If the FDA or any comparable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which could be costly and time-consuming, and which may result in TH103 or any other product candidate we may develop not receiving approval for commercialization in the applicable jurisdiction.

Conducting clinical trials outside the United States also exposes us to additional risks, including risks associated with:

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additional foreign regulatory requirements;

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foreign exchange fluctuations;

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compliance with foreign manufacturing, customs, shipment and storage requirements;

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cultural differences in medical practice and clinical research;

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diminished protection of intellectual property in some countries; and

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interruptions or delays in our trials resulting from geopolitical events, such as war or terrorism.

The results of early-stage clinical trials and preclinical studies may not be predictive of future results. Initial success in clinical trials may not be indicative of results obtained when these trials are completed or in later stage trials.

The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and preliminary or interim results of a clinical trial do not necessarily predict final results. In addition, initial success in clinical trials may not be indicative of results obtained when such trials are completed. In particular, the small number of patients in our ongoing or future early clinical trials may make the results of these trials less predictive of the outcome of later clinical trials. For example, even if successful, the results of our Phase 1 clinical trial of TH103 may not be predictive of the results of further clinical trials of TH103 or any other

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indicative of results obtained when such trials are completed. In particular, the small number of patients in our ongoing or future early clinical trials may make the results of these trials less predictive of the outcome of later clinical trials. For example, even if successful, the results of our Phase 1 clinical trial of TH103 may not be predictive of the results of further clinical trials of TH103 or any other product candidate we may develop. Our product candidates may also fail to show the desired safety and efficacy in clinical development despite positive results in preclinical studies or having successfully advanced through initial clinical trials.

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. Our current or future clinical trials may not ultimately be successful or support further clinical development of any of our product candidates and we cannot assure you that any clinical trials that we may conduct will demonstrate consistent or adequate efficacy and safety to support marketing approval. There is a high failure rate for product candidates proceeding through clinical trials. Many companies in the biopharmaceutical industry have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials, and we cannot be certain that we will not face similar setbacks. Any such setbacks in our clinical development could materially harm our business and results of operations.

Interim and preliminary results from our clinical trials that we announce or publish from time to time may change as more participant data becomes available and are subject to audit and verification procedures, which could result in material changes in the final data.

From time to time, we may announce or publish interim or preliminary results from our clinical trials. Interim results from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as participant enrollment continues and more participant data become available. We also make assumptions, estimations, calculations, and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully evaluate all data. Preliminary or interim results also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could be material and could significantly harm our reputation and business prospects.

If we experience delays or difficulties in the enrollment of patients in our clinical trials for TH103 or any other product candidate we develop, our receipt of necessary marketing approvals could be delayed or prevented.

Identifying and qualifying patients to participate in our Phase 1 clinical trial for TH103 and any other product candidate we may develop is critical to our success. Successful and timely completion of clinical trials will require that we enroll a sufficient number of patients who remain in the trial until its conclusion. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside of the United States. In particular, our Phase 1 clinical trial of TH103 is open for enrollment and the first patient was treated in August 2024. In addition, some of our competitors have ongoing clinical trials for product candidates that treat the same indications as TH103, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. We cannot predict how successful we will be at enrolling subjects in future clinical trials. Patient enrollment is affected by a variety of other factors, including:

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the prevalence and severity of the disease under investigation;

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the eligibility criteria for the trial in question;

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the perceived risks and benefits of the product candidate under trial;

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the requirements of the trial protocols;

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the availability of existing FDA approved or off-label treatments for the indications for which we are conducting clinical trials;

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the ability to recruit clinical trial investigators with the appropriate competencies and experience;

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the efforts to facilitate timely enrollment in clinical trials;

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the patient referral practices of physicians;

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the ability to monitor patients adequately during and after treatment;

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our ability to obtain and maintain patient consents;

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the proximity and availability of clinical trial sites for prospective patients;

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the conduct of clinical trials by competitors for product candidates that treat the same indications or address the same patient populations as our product candidates;

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the cost to, or lack of adequate compensation for, prospective patients; and

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the impact of any health epidemics, pandemics or other contagious outbreaks ~~(including any resurgence of the COVID-19 pandemic).~~

Our inability to locate and enroll a sufficient number of patients for our clinical trials would result in significant delays, could require us to abandon one or more clinical trials altogether and could delay or prevent our receipt of necessary marketing approvals. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which could cause the value of our business to decline and limit our ability to obtain additional financing.

If dose limiting toxicities, serious adverse events, undesirable side effects or unexpected characteristics are identified during the development of TH103 or any other product candidate we may develop, we may need to abandon or limit our further clinical development of those product candidates.

Our Phase 1 clinical trial of TH103 is open for enrollment and the first patient was treated in August 2024. If TH103 or any other product candidate we may develop is associated with dose limiting toxicities, serious adverse events or undesirable side effects in clinical trials or have characteristics that are unexpected in clinical trials or preclinical testing, we may need to abandon development of such product candidate or limit development to more narrow uses or subpopulations in which the dose limiting toxicities, serious adverse events, undesirable side effects or unexpected characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. In pharmaceutical development, many compounds that initially showed promise in early-stage or clinical testing are later found to cause side effects that delay or prevent further development of the compound or decrease the size of the patient population for whom the compound could ultimately be prescribed.

Additionally, if the results of our clinical trials reveal undesirable side effects, we, regulatory authorities or the IRBs at the institutions in which our trials are conducted could suspend or terminate our clinical trials, regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications or we could be forced to materially modify the design of our clinical trials. Treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete any of our clinical trials or result in potential liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff. If we elect or are forced to suspend or terminate any clinical trial of our product candidates, the commercial prospects of such product candidate will be harmed, and our ability to generate revenues from sales of such product candidate will be delayed or eliminated. Any of these occurrences could materially harm our business.

If TH103 or any of other product candidate we may develop receives marketing approval and we, or others, later discover that the drug is less effective than previously believed or causes undesirable side effects that were not previously identified, our ability to market the drug could be compromised.

We have initiated a Phase 1 clinical trial of TH103 for nAMD. Clinical trials will be conducted in carefully defined subsets of patients who have agreed to enter into clinical trials. Consequently, it is possible that our clinical trials may indicate an apparent positive effect of TH103 that is greater than the actual positive effect, if any, or alternatively fail to identify undesirable side effects. If TH103 or any other product candidate we may develop receives marketing approval, and we, or others, later discover that they are less effective than previously believed, or cause undesirable side effects, a number of potentially significant negative consequences could result, including:

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withdrawal or limitation by regulatory authorities of approvals of such product;

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seizure of the product by regulatory authorities;

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recall of the product;

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restrictions on the marketing of the product or the manufacturing process for any component thereof;

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requirement by regulatory authorities of additional warnings on the label;

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requirement that we implement a risk evaluation and mitigation strategy or create a medication guide outlining the risks of such side effects for distribution to patients;

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commitment to expensive post-marketing studies as a prerequisite of approval by regulatory authorities of such product;

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the product may become less competitive;

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initiation of regulatory investigations and government enforcement actions;

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initiation of legal action against us to hold it liable for harm caused to patients; and

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harm to our reputation and resulting harm to physician or patient acceptance of our products.

In particular, we are developing TH103 to be a best-in-class anti-vascular endothelial growth factor (“VEGF”) therapeutic for common retinal neovascular and exudative diseases. Even if TH103 were to receive marketing approval for any such indication, it may fail to demonstrate longer acting and increased VEGF activity that results in improved real-world outcomes for patients. Any of these events could prevent us from achieving or maintaining market acceptance of a particular product candidate, if approved, and could significantly harm our business, financial condition, and results of operations.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on product candidates that we identify for specific indications. As a result, we may forego or delay the pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. We may curtail, pause, delay or cease development of product candidates at any stage of preclinical or clinical development based on a variety of factors, including our judgments regarding costs or timing of further development, probability of success of clinical development, regulatory requirements, commercial potential, relative benefits and costs and our overall corporate strategy. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on product development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. Failure to allocate resources or capitalize on strategies in a successful manner will have an adverse impact on our business.

Risks Related to the Commercialization of Our Product Candidates

Even if TH103 or any other product candidate we may develop receives marketing approval, we may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. There is already a large and well-established market for anti-VEGF therapies for retinal diseases, and patients may continue to rely on existing FDA approved or off-label therapies. Efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may not be successful. If our product candidates do not achieve an adequate level of acceptance, we may not generate significant revenues from product sales and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

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the efficacy and potential advantages of our product candidates compared to the advantages and relative risks of alternative treatments;

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the effectiveness of sales and marketing efforts;

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our ability to offer our products, if approved, for sale at competitive prices;

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the clinical indications for which the product is approved;

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the cost of treatment in relation to alternative treatments;

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the convenience and ease of administration compared to alternative treatments;

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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

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the strength of marketing and distribution support;

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the timing of market introduction of competitive products;

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the availability of third-party coverage and adequate reimbursement, and patients’ willingness to pay out of pocket for required co-payments or in the absence of third-party coverage or adequate reimbursement;

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product labeling or product insert requirements of the FDA, the European Medical Agency (the “EMA”) or other regulatory authorities, including any limitations or warnings contained in a product’s approved labeling;

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the prevalence and severity of any side effects;

Filing Compare · Kalaris Therapeutics, Inc.