Company: RNAC
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0001453687-25-000060
Chunk: 1

Company: Cartesian Therapeutics, Inc.
Filing Date: 2025-03-13
Form: 10-K
Item: Item 8
Chunk 1
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 Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2024.

Remediation of Previously Identified Material Weakness

We previously reported a material weakness, identified in 2023, in our internal controls specifically related to the documentation of the assumptions supporting the valuation of the in-process research and development intangible assets acquired in connection with the Old Cartesian material business combination and the initial and on-going contingent value right obligation issued at that time to legacy Selecta stockholders. This material weakness included a lack of sufficient documentation to provide evidence of the associated management review controls. 

Although we have not entered into any business combination transactions since November 2023, the annual impairment testing required for our in-process research and development intangible assets necessitates similar valuation processes and controls. For example, both could require the development of sophisticated long-range cash flow forecasts, by indication and market, appropriately adjusted for probability of success, which include but are not limited to: (i) revenues from product sales and/or royalties; (ii) expenses, including costs of goods sold, research and development, general and administrative and sales and marketing; (iii) expectations of long-term effective tax rates; (iv) consideration of capital expenditures which may be required in order to achieve revenue; and (v) working capital requirements. The resulting forecasts are then subjected to a discounted cash flow analysis in order to arrive at an estimate of fair value. A similar cash flow forecasting process and discounted cash flow analysis is utilized at each reporting period to determine the estimated fair value of the contingent value right obligation. 

For the Company’s required annual impairment testing (performed as of October 1, 2024) of its in-process research and development intangible assets, management documented and reviewed the significant inputs and assumptions used in the purchase accounting for the Old Cartesian material business combination. As proscribed in “ASC 350 – Intangibles – Goodwill and Other,” management began with a qualitative assessment to determine whether it was necessary to perform the quantitative testing. Management’s qualitative assessment resulted in a determination that it was not more likely than not that the Company’s in-process research and development assets were impaired. Therefore, quantitative testing was not required to be performed. 

At each reporting period during fiscal 2024, management documented and