ABEO 10-K & 10-Q changes, risk factors and insider trading
Abeona Therapeutics Inc. · Nasdaq · Pharmaceutical Preparations · CIK 318306 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Risks Related to the Commercialization of ZEVASKYN® and our Ability to Generate Revenue”
New heading “We are in the early stages of commercializing ZEVASKYN® and our limited operating history as a commercial-stage company makes it difficult to predict the long-term success of our business.”
New heading “Our financial performance depends on the commercial success of ZEVASKYN® and we have limited experience as a commercial-stage company. As such, we may not be able to successfully commercialize ZEVASKYN® and the revenue that we generate from its sales, if any, may be limited.”
New heading “The commercial success of ZEVASKYN® will depend upon the extent of market acceptance by physicians, patients, payors, and other stakeholders.”
New heading “Our revenues currently depend on sales of ZEVASKYN®, which increases our exposure to risks associated with a single product.”
New heading “We may encounter challenges with engaging or coordinating with qualified treatment centers needed for the ongoing commercialization of ZEVASKYN®.”
New heading “The manufacturing, testing and delivery of ZEVASKYN® present significant challenges for us, and we may not be able to produce ZEVASKYN® at the quality, quantities, or timing needed to support commercialization.”
New heading “We rely on third-party suppliers for our manufacturing of ZEVASKYN®, and supply interruptions could disrupt commercialization.”
New heading “Post-marketing requirements and ongoing regulatory obligations could restrict or delay commercialization.”
New heading “Our commercialization efforts may expose us to increased risk of product liability and other litigation.”
New heading “Our commercial success depends in part on our ability to protect and enforce our intellectual property rights relating to ZEVASKYN®.”
New heading “We and our third-party suppliers, laboratories, and manufacturers may be unable to comply with our specifications, cGMP requirements and with other FDA, state, and foreign regulatory requirements.”
New heading “Changes in and uncertainty surrounding U.S. trade policy could have a material adverse impact on our business, financial condition, cash flow, and results of operations.”
New heading “Our ability to successfully develop and commercialize our product candidates will substantially depend upon the availability of reimbursement funds for the costs of the resulting drugs and related treatments.”
New heading “Regulatory requirements governing cell and gene therapy products have evolved and may continue to change in the future.”
New heading “There is no guarantee that we will be able to obtain or maintain orphan drug designation for our product candidates or receive or maintain any corresponding benefits, including periods of exclusivity.”
New heading “Disruptions at FDA and other government agencies, such as those that may be caused by funding shortages, could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved, or commercialized in a timely manner or at all, which could negatively impact our business.”
New heading “If the estimates we make, or the assumptions on which we rely, in preparing our consolidated financial statements are incorrect, our actual results may vary from those reflected in our projections and accruals.”
New heading “Our ability to use our net operating loss carryforwards to offset future taxable income and taxes may be subject to certain limitations.”
New heading “General Risk Factors”
New heading “Actual or potential sales of our common stock by our employees, including our executive officers, pursuant to pre-arranged stock trading plans could cause our stock price to fall or prevent it from increasing for numerous reasons, and actual or potential sales by such persons could be viewed negatively by other investors.”
Removed heading “Regulatory requirements governing cell and gene therapy products have evolved and may continue to change in the future. For example, the FDA has established the Office Tissues and Advanced Therapies within CBER to consolidate the review of gene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review.”
Removed heading “Certain of our product candidates have received orphan drug designation from the FDA, there is no guarantee that we will be able to maintain this designation, receive this designation for any of our other product candidates, or receive or maintain any corresponding benefits, including periods of exclusivity.”
Removed heading “The Complete Response Letter related to our Biologics License Application for pz-cel for the treatment of patients with recessive dystrophic epidermolysis bullosa may impair our ability to successfully commercialize pz-cel.”
Removed heading “The widespread outbreak of an illness, communicable disease, or any other public health crisis could adversely affect our business, results of operations and financial condition.”
Removed heading “Risks related to commercializing our product candidates”
Removed heading “If we do not obtain the necessary U.S. or worldwide regulatory approvals to commercialize pz-cel, we will not be able to sell pz-cel.”
Removed heading “Even if we receive regulatory approval for pz-cel, our lead drug candidate, we may not be able to successfully commercialize the product and the revenue that we generate from its sales, if any, may be limited.”
Removed heading “Our ability to successfully develop and commercialize our drug candidates will substantially depend upon the availability of reimbursement funds for the costs of the resulting drugs and related treatments.”
Removed heading “Risks related to our common stock”
Removed heading “Our ability to use our net operating loss carry forwards may be subject to limitation.”
Removed heading “Risks related to cybersecurity”
Largest changes
“Following FDA approval, we remain subject to ongoing regulatory obligations, including post-marketing requirements, pharmacovigilance reporting, quality system regulation compliance, and potential FDA inspections. If we fail to comply with these requirements, the FDA may impose sanctions, including warning letters or other enforcement actions, fines, product recalls or withdrawals, restrictions on marketing, or suspension or withdrawal of approval. …”see in full comparison
“We could be negatively impacted by the widespread outbreak of an illness, communicable disease, or any other public health crisis that results in economic or trade disruptions, including the disruption of global supply chains. The COVID-19 pandemic negatively impacted the economy on a global, national, and local level, disrupted global supply chains, and created volatility and disruption of financial markets. …”see in full comparison
“The complexity of announced or future tariffs may also increase the risk that we or our customers or suppliers may be subject to civil or criminal enforcement actions in the United States or foreign jurisdictions related to compliance with trade regulations. Foreign governments may also adopt non-tariff measures, such as procurement preferences or informal disincentives to engage with, purchase from or invest in U.S. entities, which may limit our ability to compete internationally and attract non-U.S. investment, employees, customers and suppliers. …”see in full comparison
“Current or future tariffs or other trade restrictions may result in increased research and development expenses, including with respect to increased costs associated with raw materials, laboratory equipment, and research materials and components. In addition, such tariffs may increase our supply chain complexity and could also potentially disrupt our existing supply chain. Unlike consumer goods, pharmaceuticals face unique regulatory constraints that make rapid supply chain adjustments particularly difficult and costly. …”see in full comparison
“Our commercialization efforts may expose us to increased risk of product liability and other litigation.”see in full comparison
“We and our third-party suppliers, laboratories, and manufacturers may be unable to comply with our specifications, cGMP requirements and with other FDA, state, and foreign regulatory requirements.”see in full comparison
Full comparison: every changed paragraph (137)
Our business, financial condition, financial results, and future growth prospects are subject to a number of risks and uncertainties, including those set forth below. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, financial results, and future growth prospects. These disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect us and our securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether such factors have occurred in the past or their likelihood of occurring in the future.
Risks Related to the Commercialization of ZEVASKYN® and our Ability to Generate Revenue
We are in the early stages of commercializing ZEVASKYN® and our limited operating history as a commercial-stage company makes it difficult to predict the long-term success of our business.
We received FDA approval for ZEVASKYN® in 2025, and we are currently in our first full year of commercial sales. Thus, we have limited historical experience operating as a commercial-stage company and limited data on which to base our expectations regarding future revenues, gross margins, operating expenses, and cash flows. Transitioning from a clinical-stage company to a commercial-stage organization requires us to develop, refine, and scale capabilities across sales, marketing, patient services, manufacturing, distribution, compliance, and financial reporting. These activities require significant management attention and financial resources and may present challenges that we have not previously encountered. If we are unable to effectively manage this transition, execute our commercial strategy, or appropriately align our cost structure with revenues, our business, financial condition, cash flow, results of operations, and growth prospects could be adversely affected.
Our financial performance depends on the commercial success of ZEVASKYN® and we have limited experience as a commercial-stage company. As such, we may not be able to successfully commercialize ZEVASKYN® and the revenue that we generate from its sales, if any, may be limited.
Our ability to generate significant revenue from product sales depends on ZEVASKYN®’s successful commercialization. Successful commercialization requires success in many areas, including, but not limited to:
If the patient demand is not as significant as we estimate, or the reasonably predicted population for treatment is narrowed by competition, physician choice, or treatment guidelines, or for any other reason, we may not generate significant revenue from the sale of ZEVASKYN®.
The commercial success of ZEVASKYN® will depend upon the extent of market acceptance by physicians, patients, payors, and other stakeholders.
The degree of market acceptance of ZEVASKYN® depends on several factors, many of which are outside our control, including:
If ZEVASKYN® does not achieve broad market acceptance, we may not generate sufficient revenues to achieve or sustain profitability.
Our revenues currently depend on sales of ZEVASKYN®, which increases our exposure to risks associated with a single product.
Because ZEVASKYN® is our only approved product, our revenues depend highly on its commercial success. Any adverse development affecting ZEVASKYN®, including safety concerns, regulatory actions, supply disruptions, competitive pressures, unfavorable clinical data, or changes in reimbursement, could materially and adversely affect our business, financial condition, cash flow, and results of operations. We do not expect to have additional commercial products in the near term, and we may not be able to successfully develop or acquire additional products.
We may encounter challenges with engaging or coordinating with qualified treatment centers needed for the ongoing commercialization of ZEVASKYN®.
Our commercial strategy is to engage epidermolysis bullosa centers of excellence as qualified treatment centers for the collection of patient biopsy and administration of the drug product once manufactured. To ensure that the qualified treatment centers are prepared to collect biopsies and to ship them to our product in accordance with our specifications and regulatory requirements, we train and conduct quality assessments of each center as part of engagement. These qualified treatment centers are the first and last points on our complex supply chain to reach patients in the commercial setting. We may encounter challenges or delays in engaging and interacting with our qualified treatment centers, and such challenges could impact a qualified treatment centers’ willingness and ability to administer ZEVASKYN®.
Furthermore, we may fail to manage the logistics of collecting and shipping patient material to the manufacturing site and shipping the drug product back to the patient. Logistical and shipment delays and problems caused by us, our third-party vendors, or other factors not in our control, such as weather, could prevent or delay the manufacture of or delivery of ZEVASKYN® to patients. If our qualified treatment centers fail to perform satisfactorily, we may suffer reputational, operational, or business harm. Additionally, delays with treatment at the qualified treatment centers due to, for instance, the patient’s schedule or health condition or such center’s capacity, or due to the need for multiple biopsies, could result in a patient becoming medically ineligible for our treatment or selecting an alternative treatment, the drug product becoming unusable, or loss of medical coverage, which would have a material adverse effect on commercial sales. These delays may also affect our relationship with our qualified treatment center network. Any failure in our engagement or interaction with our qualified treatment centers due to delays in treatment or complications related to manufacturing, among other things, may limit patient access to our therapies and, accordingly, have a material adverse effect on our commercial forecasts and business.
Moreover, we are required to maintain a complex chain of identity and chain of custody with respect to patient material as it moves through the manufacturing process, from the qualified treatment center to the manufacturing facility, and back to the patient. Failure to maintain chain of identity and chain of custody could result in adverse patient outcomes, loss of product, or regulatory action.
The manufacturing, testing and delivery of ZEVASKYN® present significant challenges for us, and we may not be able to produce ZEVASKYN® at the quality, quantities, or timing needed to support commercialization.
The manufacturing of ZEVASKYN® is complex and requires significant expertise. Even with the relevant experience and expertise, manufacturing cell therapy products often leads to difficulties in production, particularly in scaling out and validating initial production, managing the transition from clinical manufacturing to commercial manufacturing, and ensuring that the product meets required specifications. These problems include difficulties with production costs and yields, quality control, quality assurance testing, operator error, scarcity of qualified manufacturing and quality control testing personnel, shortages of any production raw materials as well as compliance with strictly enforced federal, state and foreign regulations.
We are susceptible to production interruptions that may impede our ability to manufacture cell and gene therapy products and produce an adequate product supply to support commercialization of ZEVASKYN®. Several factors could cause production interruptions, including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, public health emergencies, disruption in utility services, human error, or disruptions in the operations of our suppliers. ZEVASKYN® and product candidates are biologic drugs requiring processing steps that are more complex than those required for most chemical pharmaceuticals. We characterize our processes and products, and perform testing to ensure the safety, quality and efficacy of each product produced. While we take significant measures to fully understand and characterize each product, the steps we take may not be sufficient to ensure that a given lot will perform in the intended manner.
For example, we manufactured a full batch of ZEVASKYN® following patient biopsy collection in August 2025 that, despite being a bonafide drug product, could not be released because a rapid sterility assay, mandated by the FDA as a release assay during the final stage of the BLA review, initially yielded a false positive result for sterility. Although we resumed biopsy collection in November 2025 upon completion of assay optimization and the necessary regulatory submission for its implementation, this false positive caused a manufacturing rejection, which caused a delay in our launch of ZEVASKYN®. Additional or similar issues associated with manufacturing and testing can have an adverse impact on our business, financial condition, cash flow, and results of operations.
There are several risks specific to the manufacturing process for ZEVASKYN® that require close attention. As an autologous product there are challenges associated with viability of biopsies as an incoming material. Due to variables such as the fragility of RDEB skin and site of the biopsy, initiation of autologous keratinocyte growth and expansion can be challenging or may be extended beyond the scheduled timing. Another concern during manufacturing is the slowing of cell proliferation, resulting in extended manufacturing time. If pre-release criteria are not met, the production process must be stopped, and a new biopsy must be obtained. If release criteria are out of range, epidermal sheets must be discarded and the manufacturing process must be repeated.
We rely on third-party suppliers for our manufacturing of ZEVASKYN®, and supply interruptions could disrupt commercialization.
Our reliance on third-party suppliers for the manufacturing of ZEVASKYN® exposes us to risks, including manufacturing delays or disruptions, quality control failures, regulatory compliance issues, capacity constraints, and financial instability of suppliers. Any interruption in the manufacture or supply of ZEVASKYN® could impair our ability to meet demand and adversely affect our commercial efforts.
We currently do not have a backup manufacturer to supply manufacturing material for ZEVASKYN®. An alternative manufacturer would need to be qualified through regulatory filings, which could result in production delays. Regulatory authorities also may require additional clinical trials if a new supplier is relied upon for commercial production. Accordingly, identifying and contracting with alternative manufacturer or supplier would significantly affect our ability to meet demand for ZEVASKYN®.
Post-marketing requirements and ongoing regulatory obligations could restrict or delay commercialization.
Following FDA approval, we remain subject to ongoing regulatory obligations, including post-marketing requirements, pharmacovigilance reporting, quality system regulation compliance, and potential FDA inspections. If we fail to comply with these requirements, the FDA may impose sanctions, including warning letters or other enforcement actions, fines, product recalls or withdrawals, restrictions on marketing, or suspension or withdrawal of approval. In addition, previously unknown adverse events may be identified after broader commercial use, which could result in changes to the labeling of ZEVASKYN®, restrictions on its use, or withdrawal from the market.
Our commercialization efforts may expose us to increased risk of product liability and other litigation.
The commercialization of ZEVASKYN® exposes us to the risk of product liability claims and other litigation, including claims related to adverse events, off-label promotion, false advertising, pricing, or reimbursement practices. Even if we are successful in defending ourselves against such claims, litigation could be costly, time-consuming, and damaging to our reputation. If we are unable to obtain or maintain adequate insurance coverage on acceptable terms, our financial condition could be adversely affected.
Our commercial success depends in part on our ability to protect and enforce our intellectual property rights relating to ZEVASKYN®.
Our ability to maintain market exclusivity for ZEVASKYN® depends on our intellectual property portfolio and regulatory exclusivities. If our patents are challenged, invalidated, circumvented or expire earlier than expected, or if we are unable to enforce our intellectual property rights effectively, competitors may develop and commercialize competing products more rapidly than anticipated, which could significantly harm our commercial prospects.
The 12-year exclusivity granted to ZEVASKYN® may not adequately protect us from biosimilar or other product competition. There may also be changes in regulatory exclusivity policies. For example, there have been efforts to decrease the biologic period of exclusivity to a shorter timeframe. Future proposed budgets, international trade agreements and other arrangements or proposals may affect periods of exclusivity. If another company pursues approval of a product that is biosimilar to ZEVASKYN® or any other biologic product for which we receive FDA approval, we may need to pursue costly and time-consuming patent infringement actions, which may include certain statutorily specified regulatory steps before an infringement action may be brought. Biosimilar applicants may also be able to bring an action for declaratory judgment concerning our patents, requiring that we spend time and money defending the action.
We
have concentrated our therapeutic product research and development efforts on our cell and gene therapy platform, and our future success
depends on the successful development of this therapeutic approach. There can be no assurance that any development problems we experience
in the future related to our cell and gene therapy platform will not cause significant delays or unanticipated costs, or that such development
problems can be solved. We may also experience delays in developing a sustainable, reproducible and commercial-scale manufacturing process
or transferring that process to commercial partners, which may prevent us from completing our clinical studies or commercializing our
products on a timely or profitable basis, if at all.
In
addition, the clinical study requirements of the FDA, the EMA, and other regulatory agencies and the criteria these regulators use to
determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use
and market of the potential products. The regulatory approval process for novel product candidates such as ours can be more expensive
and take longer than for other, better known or more extensively studied pharmaceutical or other product candidates. Given that only
a few gene therapy products have been approved in the Western world, it is not possible to predict how long it will take or how much
it will cost to obtain regulatory approvals for our product candidates in the United States, the EU or other jurisdictions. Approvals
by the EMA and the European Commission may not be indicative of what the FDA may require for approval.
Regulatory
requirements governing cell and gene therapy products have evolved and may continue to change in the future. For example, the FDA has
established the Office Tissues and Advanced Therapies within CBER to consolidate the review of gene therapy and related products, and
the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review.
Regulatory
requirements in the United States and in other jurisdictions governing gene therapy products have changed frequently and will continue
to change in the future as scientific knowledge is acquired. The FDA and EMA have each expressed interest in further regulating gene
therapy. For example, the FDA has established the Office Tissues and Advanced Therapies within CBER to consolidate the review of gene
therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. Over the last
few years, FDA, through CBER, has provided significant guidance regarding the development of gene therapies. Additionally, the EMA advocates
a risk-based approach to the development of a gene therapy product. Agencies at both the federal and state level in the United States,
as well as the U.S. congressional committees and other governments or governing agencies, have also expressed interest in further regulating
the biotechnology industry. Such action may delay or prevent commercialization of some, or all, of our product candidates. These regulatory
review agencies, committees and advisory groups and the new requirements and guidelines they promulgate may lengthen the regulatory review
process, require us to perform additional or larger studies, increase our development costs, lead to changes in regulatory positions
and interpretations, delay or prevent approval and commercialization of these treatment candidates or lead to significant post-approval
studies, limitations, or restrictions. As we advance our product candidates, we will be required to consult with these regulatory and
advisory groups and comply with applicable requirements and guidelines. If we fail to do so, we may be required to delay or discontinue
development of our product candidates. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary
to bring a potential product to market could decrease our ability to generate sufficient product revenue to maintain our business.
Before
obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies
to demonstrate the safety, purity and potency, and efficacy, of the product candidates in humans. Clinical testing is expensive, time-consuming,
and uncertain as to outcome. This is especially true for rare and/or complicated diseases. We cannot guarantee that any clinical studies
will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of
testing.
Delays
in launching clinical trials resulting from FDA or other regulatory actions, such as a clinical hold letter, would delay the commercialization
of our product candidates and our ability to generate revenue, which would have an adverse effect on our business. For example, in September
2019, we received a clinical hold letter in connection with our phase 3 clinical trial for pz-cel stating that the FDA would not provide
approval for us to begin our planned phase 3 clinical trial for pz-cel until we submitted additional data points on transport stability
of pz-cel to clinical sites. Although the FDA removed the clinical hold in December 2019 and provided clearance for us to proceed with
our planned phase 3 clinical trial, we may encounter similar delays in our clinical studies in the future.
Significant
delays relating to any preclinical or clinical trials 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. This may prevent us from receiving
marketing approvals and impair our ability to successfully commercialize our product candidates. If any of the foregoing were to occur,
our business, financial condition, results of operations, and prospects will be materially harmed.
We
may not be able to identify, recruit or enroll a sufficient number of patients, or those with required or desired characteristics to
achieve diversity in a study, to complete our clinical studies in a timely manner. Patient enrollment is affected by factors including:
If
we have difficulty enrolling a sufficient number of patients to conduct our clinical studies as planned our development costs may increase,
the time for completion of clinical trials may increase, we may need to delay, limit or terminate ongoing or planned clinical studies,
any of which would have an adverse effect on our business.
Certain
of our product candidates have received orphan drug designation from the FDA, there is no guarantee that we will be able to maintain
this designation, receive this designation for any of our other product candidates, or receive or maintain any corresponding benefits,
including periods of exclusivity.
While
orphan drug designation provides certain advantages, it neither shortens the development time or regulatory review time of a product
candidate nor gives the product candidate any advantage in the regulatory review or approval process. Generally, if a product candidate
with orphan drug designation subsequently receives marketing approval before another product considered by the FDA or comparable foreign
regulatory authorities to be the same, for the same orphan indication, the product is entitled to a period of marketing exclusivity,
which precludes the FDA or comparable foreign regulatory authorities from approving another marketing application for the same drug or
biologic for the same indication for seven years. We may not be able to obtain any future orphan drug designations that we apply for,
orphan drug designations do not guarantee that we will be able to successfully develop our product candidates, and there is no guarantee
that we will be able to maintain any orphan drug designations that we receive. For instance, orphan drug designation may be revoked if
the FDA finds that the request for designation contained an untrue statement of material fact or omitted material information, or if
the FDA finds that the product candidate was not eligible for designation at the time of the submission of the request. Moreover, we
may ultimately not receive any period of regulatory exclusivity if our product candidates are approved. For instance, we may not receive
orphan product regulatory exclusivity if the indication for which we receive FDA approval is broader than the designation. Orphan exclusivity
may also be lost for the same reasons that the designation may be lost. Orphan exclusivity may further be lost if we are unable to assure
a sufficient quantity of the product to meet the needs of patients with the rare disease or condition.
Even
if we obtain orphan exclusivity for any of our current or future product candidates, that exclusivity may not effectively protect the
product from competition as different products can be approved for the same condition or products that are the same as ours can be approved
for different conditions. Even after an orphan product is approved, the FDA or comparable foreign regulatory authorities can also subsequently
approve a product containing the same principal molecular features for the same condition if the FDA concludes that the later product
is clinically superior. The FDA may further grant orphan drug designation to multiple sponsors for the same compound or active molecule
and for the same indication. If another sponsor receives FDA or comparable foreign regulatory authority approval for such product before
we do, we would be prevented from launching our product for the orphan indication for a period of at least seven years unless we can
demonstrate clinical superiority. FDA’s thinking around sameness with respect to gene therapies, and thus the circumstances when
clinical superiority would need to be shown, is evolving. While the agency has issued guidance on the topic, certain decisions may need
to be made on a case by case basis, given the novelty of the technology. Moreover, third-party payors may reimburse for products off-label
even if not indicated for the orphan condition.
The
Complete Response Letter related to our Biologics License Application for pz-cel for the treatment of patients with recessive dystrophic
epidermolysis bullosa may impair our ability to successfully commercialize pz-cel.
In
April 2024, we received a CRL related to our BLA for pz-cel for the treatment of patients with RDEB. In the CRL, the FDA noted that
certain additional information needed to satisfy CMC requirements must be satisfactorily resolved before the application can be approved.
In August 2024, we completed a Type A Meeting with the FDA to discuss our forthcoming resubmission of our BLA and in October 2024,
we resubmitted our BLA. The FDA notified the Company in November 2024 that the BLA was accepted for review, with an assigned PDUFA
target action date of April 29, 2025. A delay in receiving approval of the BLA could shorten any periods during which we may have the
exclusive right to commercialize our pz-cel or allow our competitors to bring products to market before we do. This may impair our ability
to successfully commercialize pz-cel. If any of the foregoing were to occur, our business, financial condition, results of operations,
and prospects will be materially harmed.
We
are susceptible to production interruptions that may impede our ability to manufacture cell and gene therapy products and produce an
adequate product supply to support commercialization or clinical trials and potentially future commercialization.trials. Several factors could cause production interruptions, including
including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, public health emergenciesemergencies,
such as the COVID-19 pandemic, disruption in utility services, human error, or disruptions in the operations of our suppliers. Our products
and product candidates are biologic drugs
requiring processing steps that are more complex than those required for most chemical pharmaceuticals.
We characterize our processes
and products, and perform testing to ensure the safety, quality and efficacy of each product produced.
While we take significant measures
to fully understand and characterize each product, the steps we take may not be sufficient to ensure
that a given lot will perform in
the intended manner.
There
are several risks specific to the manufacturing process for pz-cel which require close attention. As an autologous product there are
challenges associated with viability of biopsies as an incoming material. Due to variables such as the fragility of RDEB skin and site
of the biopsy, initiation of autologous keratinocyte growth and expansion can be challenging or may be extended beyond the scheduled
timing. Another concern during manufacturing is the slowing of cell proliferation, resulting in extended manufacturing time. If pre-release
criteria are not met, the production process must be stopped, and a new biopsy must be obtained. If release criteria are out of range,
epidermal sheets must be discarded and the manufacturing process must be repeated.
We
currently do not have a backup manufacturer to supply clinical trial material for pz-cel. An alternative manufacturer would need to be
qualified, through regulatory filings, which could result in delays to our clinical trial timeline. The regulatory authorities also may
require additional clinical trials if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve
substantial costs and could result in a delay in our desired clinical and commercial timelines.
Accordingly,We
we employ multiple steps to control our manufacturing process to assureensure that the products or product candidate is made strictly and consistently
in compliance with the process. Problems with the manufacturing process, including even minor deviations from the normal process, could
result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims, or insufficient
inventory. We may encounter problems achieving adequate quantities and quality of clinical grade materials that meet FDA, EU or other
applicable standards or specifications with consistent and acceptable production yields and costs. In addition, the FDA, EMA and other
foreign regulatory authorities may require us to submit samples of any lot of any approved product together with the protocols showing
the results of applicable tests at any time. Under some circumstances, the FDA, EMA or other foreign regulatory authorities may require
that we not distribute a lot until the agency authorizes its release. Slight deviations in the manufacturing process, including those
affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product
recalls for approved and marketed products.
Lot
failures or product recalls could cause us to delay sales, product launcheslaunches, or clinical trials, which could be costly to us and
otherwise harm
our business, financial condition, cash flow, results of operations and prospects. We also may encounter problems
hiring and retaining the experienced
scientific, quality control and manufacturing personnel needed to operate our manufacturing
process, which could result in delays in
our production or difficulties in maintaining compliance with applicable regulatory
requirements. Any problems in our manufacturing process
or facilities could make us a less attractive collaborator for potential
partners, including qualified treatment centers for ZEVASKYN®, larger pharmaceutical companiescompanies, and academic research
research institutions, which could limit our access to additional attractive development programs. Problems in our manufacturing process
including in internal and external facilities providing supply necessary for manufacturing or challenges with procuring supplies,
such such
as due to global trade policies, also could restrict our ability to meet customer or clinical trial supply demand, and eventuallyas well
as market demand for
ZEVASKYN® or any future product candidates for which we may receive marketing
approval. Disruptions in our manufacturing process may delay or disrupt our
commercialization efforts.
If
we or any of our vendors, contract laboratories or suppliers are found to be out of compliance with cGMP,cGMP or other regulations, we may
experience delays or
disruptions in manufacturing while we implement corrective actions or work with these third parties to remedy the
violation or while
we work to identify suitable replacement vendors, contract laboratories or suppliers.
To
obtainmaintain regulatory approval for commercial manufacturing, we will need to continue to ensure that all of our processes, methods and equipment
are compliant with cGMP and perform extensive audits of vendors, contract laboratories and suppliers. The cGMP requirements govern quality
control of the manufacturing process and documentation policies and procedures. Complying with cGMP requires us to expendspend time, money
and effort in production, record keeping and quality control to assure that the product meets applicable specifications and other requirements.
If we fail to comply with these requirements, we wouldwill be subject to possible regulatory action and may not be permitted to sell any
products that we may develop.ZEVASKYN®.
We
may rely on third parties to conduct aspects of our product manufacturing, and these third parties may not perform satisfactorily. We
also may rely on third parties to produce certain materials for our product candidates and, therefore, we cancannot control onlyevery certain aspectsaspect
of their activities.
We and our third-party suppliers, laboratories, and manufacturers may be unable to comply with our specifications, cGMP requirements and with other FDA, state, and foreign regulatory requirements.
WeInadequate
and our third-party suppliers, laboratories, and manufacturers may be unable to comply with our specifications, cGMP requirements and
with other FDA, state, and foreign regulatory requirements. Poor control of production processes can lead to the introduction of adventitious
agents or other contaminants, or to inadvertent changes
in the properties or stability of a product candidate that may not be detectable
in final product testing. If we or our contract manufacturers
cannot successfully manufacture material that conforms to our specifications
and the strict regulatory requirements of the FDA or other
regulatory authorities, we or our contract manufacturers will not be able
to secure or maintain regulatory approval for theirsuch manufacturing
facilities. Any such deviations may also require remedial measures
that may be costly and/or time-consuming for us or a third party to
implement and may include the temporary or permanent suspension of
a clinical trial or commercial sales or the temporary or permanent
closure of a facility. Any such remedial measures imposed upon or
by us or third parties with whom we contract could materially harm
our business. Any delays in obtaining products or product candidates
that comply with the applicable regulatory requirements may result
in delays to our sales of ZEVASKYN® as well as clinical trials, product approvals, and commercialization.commercialization for our other
product candidates. It may also require that we conduct additional studies.
We
have manufacturing agreements with third parties that provide for, among other things, production of product candidates for our current
and future early-stage clinical trials. Under certain circumstances, the other party is entitled to terminate its arrangement with us.
If we need to enter into alternative arrangements, it could delay our product development activities. Our reliance on third parties for
certain manufacturing activities will reduce our control over these activities but will not relieve us of our responsibility to ensure
compliance with all required regulations. If a third party does not successfully carry out its contractual duties, meet expected deadlines
or manufacture our product candidates in accordance with regulatory requirements, or if there are disagreements between us and any such
third party, we will not be able to complete, or may be delayed in completing, the preclinical studies required to support future IND
submissions and the clinical trials required for approval of our product candidates. In such instances, we may need to enter into an
appropriate replacement third-party relationship, which may not be readily available or on acceptable terms, which would cause additional
delay or increased expense prior to the approval of our product candidates and would thereby have a material adverse effect on our business,
financial condition, results of operations and prospects.
In
addition, if the FDA or a comparable foreign regulatory authority does not approve our or a third party’s facilities for the manufacture
of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities,
which would significantly impact our ability to develop, obtain and maintain regulatory approval for or market our product candidates,
if approved. Any new manufacturers would need to either obtain or develop the necessary manufacturing know-how, and obtain the necessary
equipment and materials, which may take substantial time and investment. We must also receive FDA approval for the use of any new manufacturers
for commercial supply. We may not succeed in our efforts to establish manufacturing relationships or other alternative arrangements for
any of our product candidates, components, and programs. For example, our product candidates may compete with other products and product
candidates for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and
that are both capable of manufacturing for us and willing to do so.
The
manufacture of biologic products requires significant expertise and capital investment, including the development of advanced manufacturing
techniques and process controls. Manufacturers of therapeutics often encounter difficulties in production, particularly in scaling up
initial production. These problems include difficulties with production costs and yields, quality control, including stability of the
product candidate and quality assurance testing, shortages of qualified personnel, and compliance with strictly enforced federal, state,
and foreign regulations. If we or our manufacturers were to encounter any of these difficulties and were unable to perform as agreed,
our ability to provide product candidates to patients in our clinical trials and for commercial use, if approved, would be jeopardized.
Our
reliance on these third parties entails risks to which we would not be subject if we manufactured the product candidates ourselves, including:
Any
of these events could lead to clinical trial delays or failure to obtain regulatory approval or impact our ability to successfully commercialize
future product candidates. Some of these events could be the basis for FDA action or action of equivalent competent authorities in foreign
jurisdictions, including injunction, recall, seizure or total or partial suspension of product manufacturing. Failure to comply with
ongoing regulatory requirements could cause us to suspend production or put in place costly or time-consuming remedial measures.
Management's Discussion & Analysis (MD&A)
Removed heading “N/A - not applicable or not meaningful”
Removed heading “Derivative Liability”
Removed heading “Impairment of Long-Lived Assets”
Largest changes
“Abeona is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. Our lead clinical program is pz-cel, investigational autologous, COL7A1 gene-corrected epidermal sheets, currently in development for recessive dystrophic epidermolysis bullosa (“RDEB”). In 2022, we announced positive data from the VIITAL™ study evaluating the efficacy, safety and tolerability of pz-cel. …”see in full comparison
“Long-Lived Assets consist of property and equipment, licensed technology, and right-of-use (“ROU”) assets. We test our long-lived assets for impairment on an annual basis, or when events and circumstances indicate that the carrying value of an asset or group of assets may not be fully recoverable. If indicators are present or changes in circumstance suggest that impairment may exist. We assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. …”see in full comparison
“On November 12, 2021, we entered into a Settlement Agreement with REGENXBIO to resolve all current disputes between the parties including the aforementioned AAA arbitration and New York State Supreme Court action. …”see in full comparison
“License and other revenues for the year ended December 31, 2025 was $3.4 million as compared to nil for the same period of 2024. The revenue in 2025 consists primarily of revenue resulting from achieving a clinical development milestone under a sublicense agreement we entered into with Taysha in October 2020 relating to an investigational AAV-based gene therapy for Rett syndrome. Additionally in 2025, we also recorded $0.4 million resulting from a third party exercising its option to license certain of our AAV capsids. …”see in full comparison
Full comparison: every changed paragraph (88)
We are a commercial-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. On April 28, 2025, the FDA approved ZEVASKYN® (prademagene zamikeracel) gene-modified cellular sheets, also known as ZEVASKYN®, as the first and only autologous cell-based gene therapy for the treatment of wounds in adult and pediatric patients with RDEB, a serious and debilitating genetic skin disease. There is no cure for RDEB, and ZEVASKYN® is the only FDA-approved product to treat RDEB wounds with a single application. ZEVASKYN® was granted Orphan Drug and Rare Pediatric Disease designations by the FDA.
ZEVASKYN® is manufactured at our current cGMP manufacturing facility in Cleveland, Ohio, and is made available through ZEVASKYN® qualified treatment centers.
Abeona
is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. Our lead clinical program
is pz-cel, investigational autologous, COL7A1 gene-corrected epidermal sheets, currently in development for recessive dystrophic epidermolysis
bullosa (“RDEB”). In 2022, we announced positive data from the VIITAL™ study evaluating the efficacy, safety and tolerability
of pz-cel. The VIITAL™ study met both its co-primary efficacy endpoints demonstrating statistically significant, clinically
meaningful improvements in wound healing and pain reduction in large chronic RDEB wounds. In September 2023, we submitted a Biologics
License Application (“BLA”) for pz-cel to the U.S. Food and Drug Administration (“FDA”). In November 2023, the
FDA accepted and granted priority review for our BLA for pz-cel, and subsequently, under the Prescription Drug User Fee Act (“PDUFA”),
the FDA set a target action date of May 25, 2024. In April 2024, the FDA issued a Complete Response Letter (“CRL”) in response
to the BLA. The CRL noted that certain additional information needed to satisfy the Chemistry Manufacturing and Controls (“CMC”)
requirements of the pz-cel BLA must be satisfactorily resolved before the application can be approved. The CRL did not identify any deficiencies
related to the clinical efficacy or clinical safety data in the BLA, and the FDA did not request any new clinical trials or clinical
data to support the approval of pz-cel. In August 2024, we completed a Type A Meeting with the FDA to discuss our forthcoming resubmission
of our BLA and in October 2024, we resubmitted our BLA. The FDA notified the Company in November 2024 that the BLA was accepted
for review, with an assigned PDUFA target action date of April 29, 2025.
We
have continued to prepare our current Good Manufacturing Practices (“cGMP”) facility in Cleveland, Ohio for
manufacturing commercial grade pz-cel drug product to support our planned commercial launch of pz-cel, if approved. Pz-cel study
drug product for all our VIITAL™ study participants has been manufactured at our Cleveland facility. As part of our commercial
planning, we continue to engage with stakeholders across the healthcare system, including public and private payors, and healthcare
providers to better understand market access and potential pricing for pz-cel. We have also begun discussions with high volume
treatment centers of excellence to onboard them for pz-cel application upon potential FDA approval.
Our
development portfolio also features adeno-associated virus (“AAV”) based gene therapies designed to treat ophthalmic diseases
with high unmet need using the novel AIM™ capsids. Abeona’s novel, next-generation AAV capsids thatare webeing haveevaluated exclusivelyto licensedimprove
tropism fromprofiles thefor Universitya variety of Northdevastating Carolina at Chapel Hill and developed
internally through our AAV vector research programs.diseases.
Since we resumed manufacturing operations in mid-January after a planned facility shutdown, a patient treatment has been completed, multiple biopsies have been collected for scheduled ZEVASKYN® treatments in the coming weeks, and additional biopsies are scheduled.
On
October 18, 2024, we signed a lease for 16,566 square feet of office space at 6700 Euclid Avenue, Cleveland, Ohio. The lease commences
on January 1, 2025 and the lease term matches the term for our existing 6555 Carnegie Avenue facility. The additional space at the 6700
Euclid Avenue facility will allow us to convert office space at the 6555 Carnegie Avenue facility into additional manufacturing space
to increase pz-cel manufacturing capacity.
Product revenue, net
On April 28, 2025, the FDA approved ZEVASKYN® as the first and only autologous cell-based gene therapy for the treatment of wounds in adult and pediatric patients with RDEB. Product revenue, net, resulting from the sale of ZEVASKYN®, for the year ended December 31, 2025 was $2.4 million. On December 8, 2025, we announced the first commercial patient treatment with FDA-approved ZEVASKYN® at Lucile Packard Children’s Hospital Stanford in Palo Alto, CA. There was no product revenue for the year ended December 31, 2024 as the approval by the FDA for ZEVASKYN® did not occur until 2025.
License and other revenues for the year ended December 31, 2025 was $3.4 million as compared to nil for the same period of 2024. The revenue in 2025 consists primarily of revenue resulting from achieving a clinical development milestone under a sublicense agreement we entered into with Taysha in October 2020 relating to an investigational AAV-based gene therapy for Rett syndrome. Additionally in 2025, we also recorded $0.4 million resulting from a third party exercising its option to license certain of our AAV capsids. There was no license or other revenue in 2024 as no clinical development milestones were met in 2024.
Cost of sales
Cost of sales during the year ended December 31, 2025 was $1.5 million and primarily includes costs associated with the first commercial patient treatment with FDA-approved ZEVASKYN® in December of 2025 and costs associated with the August 2025 production of a full batch of ZEVASKYN® that could not be released due to technical issues that arose in implementing the rapid sterility lot release assay that was mandated by the FDA during BLA review. There was no cost of sales in the same period of 2024, as ZEVASKYN® was approved by the FDA in April 2025.
N/A
- not applicable or not meaningful
License
and other revenues
License
and other revenues for the year ended December 31, 2024 was nil, as compared to $3.5 million for the same period of 2023. There was no
license or other revenue in 2024 as no clinical development milestones were met in 2024. The revenue in 2023 consists of revenue resulting
from achieving clinical development milestones achieved under a sublicense agreement we entered into with Taysha Gene Therapies in October
2020 relating to an investigational AAV-based gene therapy for Rett syndrome.
Total
royalty expenses were nil$1.9 million for the year ended December 31, 2024,2025, as compared to $1.6 millionnil for the same period of 2023.2024. The royaltyincrease
expense in 2023was wasprimarily due to royalties owed to our licensors resulting from the milestonesmilestone due from Taysha related to Rett syndrome.
Research
and development expenses include, but are not limited to, payroll and personnel expense,expenses, preclinical lab supplies, preclinical and development
costs, costs,
clinical trial costs, preclinical manufacturing and manufacturing facility costs, costs associated with regulatory approvals,
preclinical depreciation on lab
supplies and manufacturing facilities, and preclinical consultant-related expenses.
Total
research and development spending for the year ended December 31, 20242025 was $34.4$26.8 million, as compared to $31.1$34.4 million for the same period
of 2023,2024, ana increasedecrease of $3.3$7.6 million. The increasereduction in expenses was primarily due to acosts $4.0capitalized millioninto increase in salariesinventory and $0.5engineering
runs million
inand non-cashother stock-based compensationproduction costs that are no longer considered research and development due to increasedFDA headcount related to manufacturing capacity expansion preparing for the potential
launchapproval of pz-cel, partially offset by a decreaseZEVASKYN® in clinical and development work costs
April of $1.3 million due to reduced spending on clinical
trials as the majority of our clinical trials have finalized except for our long-term follow up trials.2025.
GeneralSelling,
general and administrative
GeneralSelling,
general and administrative expenses primarily consist of payroll and personnel costs, office facility costs, public reporting
company related
costs, professional fees (e.g., legal expenses), pre-commercialselling and other costs for commercial launch activity costs and other general
operating expenses not otherwise
included in research and development expenses. We expect our selling, general, and administrative
costs to continue to increase as we expand our commercialization of ZEVASKYN® and advance other product candidates
toward potential regulatory approval.
Total
selling, general and administrative expenses were $29.9$65.0 million for the year ended December 31, 2024,2025, as compared to $19.0$29.9 million
for the same
period of 2023,2024, an increase of $10.9$35.1 million. The increase in expenses was primarily due to: increases in commercial
costs of $2.3 million, related to our continued commercialization efforts, increases in salaries and stock-based compensation of
$18.6 million due to new hires, and $4.8 million of costs related to engineering runs with the remainder due to other
commercial costs upon FDA approval in April of 2025.
Gain
on operating lease right-of-use assets
The
gain on operating lease right-of-use assets was $1.1 million for the year ended December 31, 2023. The gain on operating lease right-of-use
assets for 2023 was related to the termination of our operating leases for office space that we no longer use, resulting in a gain from
the difference between the carrying value of the right-of-use lease assets and the related lease liabilities. There was no such gain
during the year ended December 31, 2024.
Interest
income was $4.2$5.6 million for the year ended December 31, 2024,2025, as compared to $2.1$4.2 million in the same period of 2023.2024. The increase resulted
from higher earnings on short-term investments driven by higher interest rates and increased average short-term investment balances.
Interest
expense was $4.2$3.7 million for the year ended December 31, 2024,2025, as compared to $0.4$4.2 million in the same period of 2023.2024. TheInterest increase expense
was
primarily due to the Avenue credit facility we entered into by the Company in January 2024,2024 resultingand indecreased recognizedas a result of the July 2025 amendment to the credit facility
reducing the interest expenserate of
$3.8for million.the senior secured term loan thereunder from 13.5% to 11.75%.
The
change in fair value of warrant and derivative liabilities was a loss of $0.8 million for the year ended December 31, 2024, as compared
to a loss of $11.7 million in the same period of 2023.
We
issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period.
In addition, the conversion feature in our loan agreement is required to be classified as a liability and valued at fair market value
at each reporting period. The change in the fair value of warrant and derivative liabilities was primarily due to the increase in our
stock price year over the year offset by a reduced term of each of the warrants and derivative liabilities. At September 30, 2024, the
conversion feature in our loan agreement no longer met the criteria of a derivative liability, and the derivative liability was reclassified
to equity.
The change in fair value of warrant liabilities resulted in a gain of $6.1 million for the year ended December 31, 2025. The gain in the fair value of warrant liabilities was primarily due to the decrease in our stock price as of December 31, 2025 compared to December 31, 2024 and to the shorter expected term period over period.
The change in fair value of warrant and derivative liabilities was a loss of $0.8 million for the year ended December 31, 2024. The loss on the fair value of warrant and derivative liabilities was primarily due to the increase in our stock price year over the year offset by a reduced term of each of the warrants and derivative liabilities. At September 30, 2024, the conversion feature in our loan agreement no longer met the criteria of a derivative liability, and the derivative liability was reclassified to equity.
Gain from sale of priority review voucher, net
In May 2025, we sold our PRV awarded to us following the FDA approval of ZEVASKYN®. We received gross proceeds of $155.0 million during the year ended December 31, 2025 and recognized a gain from the PRV sale of $152.4 million, net of transaction costs of $2.6 million, as it did not have a carrying value at the time of sale.
Other
incomeincome, net
Other
incomeincome, net was $1.2$0.4 million for the year ended December 31, 2024,2025, as compared to $2.9$1.2 million in the same period of 2023.2024. The change
was was
primarily a result of $2.1 million in other income related to the impact of the employee retention credit that was recorded in 2023,
partially offset by a refundable job creation tax credit of $0.5 million received in 2024.2024 that was not received in 2025.
Income tax expense
We recorded a current income tax expense of $0.1 million for the year ended December 31, 2025. We did not record an income tax expense for the year ended December 31, 2024 as we generated sufficient tax losses, after consideration of discrete items. The current income tax expense for the year ended December 31, 2025 was primarily driven by pre-tax income from the gain on sale of the PRV.
Net cash used in operating activities was $76.3 million for the year ended December 31, 2025, primarily comprised of our net income of $71.2 million, offset by decreases in operating assets and liabilities of $5.4 million, the $152.4 million gain on sale of priority review voucher for which the cash proceeds are recorded in investing activities, and net non-cash charges of $10.2 million. Non-cash charges consisted primarily of $6.1 million of gain as a result of the change in fair value of warrant and derivative liabilities, $10.8 million of stock-based compensation and $2.5 million of depreciation and amortization.
Net
cash used in operating activities was $37.0 million for the year ended December 31, 2023, primarily comprised of our net loss of $54.2
million and increases in operating assets and liabilities of $1.8 million partially offset by net non-cash charges of $19.0 million.
Non-cash charges consisted primarily of $11.7 million of the change in fair value of warrant liabilities, $4.8 million of stock-based
compensation and $2.2 million of depreciation and amortization.
Net cash provided by investing activities was $105.0 million for the year ended December 31, 2025, primarily comprised of net proceeds from sale of priority review voucher of $152.4 million, proceeds from maturities of short-term investments of $167.3 million, offset by purchases of short-term investments of $206.6 million and capital expenditures of $8.0 million.
Net
cash provided by investing activities was $0.2 million for the year ended December 31, 2023, primarily comprised of proceeds from maturities
of short-term investments of $51.9 million and proceeds from the disposal of property and equipment of $0.2 million, partially offset
by purchases of short-term investments of $51.6 million and capital expenditures of $0.3 million.
Net cash provided by financing activities was $26.0 million for the year ended December 31, 2025, primarily comprised of proceeds of $17.3 million from open market sales of common stock pursuant to the ATM Agreement (as defined below) and proceeds of $8.8 million from the exercise of stock purchase warrants.
Net
cash provided by financing activities was $37.1 million for the year ended December 31, 2023, primarily comprised of proceeds of $14.4
million from open market sales of common stock pursuant to the ATM Agreement (as defined below) and net proceeds of $23.0 million from
our July 2023 direct placement offering of common stock.
We
have historically funded our operations primarily through salesour sale of commonequity stock.securities, our most recent gain on sale of our PRV, and
strategic collaboration arrangements.
Our
principal source of liquidity is cash, cash equivalents, restricted cash and short-term investments, collectively referred to as our
cash resources. As of December 31, 2024,2025, our cash resources were $98.1$191.4 million. We believe that our current cash and cash equivalents,
restricted cash and short-term investments are sufficient to fund operations through at least the next 12 months from the date of this
annual report on Form 10-K. We may need to secure additional funding to carry out all of our planned research and development and potential
commercialization activities. If we are unable to obtain additional financing or generate license or product revenue, the lack of liquidity
and sufficient capital resources could have a material adverse effect on our future prospects.
We
have an open market sale agreement with Jefferies LLC (as amended, the “ATM Agreement”) pursuant to which,which we may sell from
time to time, through Jefferies LLC, shares of our common stock for an aggregate sales price of up to $75.0 million. Any sales of shares
pursuant to this agreement are made under our effective “shelf” registration statement on Form S-3 that is on file with and
has been declared effective by the SEC. We sold 3,510,889 shares of our common stock under the ATM Agreement and received $17.3 million
of net proceeds during the year ended December 31, 2025. We sold 2,825,954 shares of our common stock under the ATM Agreement and received
$15.5 million
of net proceeds during the year ended December 31, 2024. We sold 3,659,882 shares of our common stock under the ATM Agreement and received
$14.6 million of net proceeds during the year ended December 31, 2023.2024. SubsequentUnder tothe ATM Agreement and as of December 31, 2024 and through March 11, 2025, we have remaining
sold 915,925 shares of our common stock underfor thean ATMaggregate Agreementsales resultingprice inof $4.8up millionto in$51.5 net proceeds.million.
Since
our inception,inception and excluding the gain on sale of our priority review voucher, we have incurred negative cash flows from operations and
have expended, and expect to continue to expend, substantial
funds to complete our planned product development and potential commercialization
efforts. WeExcluding the gain on sale of our priority review voucher, we have not been profitable since inception
and to date have received
limited revenues from the sale of products or licenses. WeAs expecta result, we have incurred significant operating losses and negative cash
flows from operations since our inception and anticipate such losses and negative cash flows will continue until ZEVASKYN® can
provide sufficient revenue for us to incurbe losses for the next several years
as we continue to invest in commercialization, product researchprofitable and development, preclinical studies, clinical trials, and regulatory
compliance and cannot provide assurance that we will ever be able to generate sufficientpositive productcash sales or royalty revenue to achieve
profitability on a sustained basis, or at all.flow.
We may incur losses for the next several years as we continue to invest in commercialization, product research and development, preclinical studies, clinical trials, and regulatory compliance and cannot provide assurance that we will ever be able to generate sufficient product sales or royalty revenue to achieve profitability on a sustained basis, or at all.
Operating lease amounts represent future minimum lease payments under our non-cancelable operating lease agreements. The total future payments for our operating lease obligations that had commenced as of December 31, 2025 were $6.2 million, of which $1.0 million is due in the next twelve months and the remaining payments are due over the terms of the respective leases. The minimum lease payments above do not include any related common area maintenance charges or real estate taxes.
On
November 12, 2021, we entered into a Settlement Agreement with REGENXBIO to resolve all current disputes between the parties including
the aforementioned AAA arbitration and New York State Supreme Court action. In accordance with the Settlement Agreement, we agreed to
pay REGENXBIO a total of $30 million, payable as follows: (1) $20 million payable that was paid in 2021 after execution of the Settlement
Agreement, (2) $5 million on the first anniversary of the effective date of the Settlement Agreement that was paid in 2022, and (3) $5
million upon the earlier of: (i) the third anniversary of the effective date of the Settlement Agreement or (ii) the closing of a Strategic
Transaction, as defined in the Settlement Agreement. As of December 31, 2024, we have paid all amounts due under the Settlement Agreement.
In
addition, we are also party to other license agreements,agreements whichthat include contingent payments. However, contingent payments related to these
license agreements are not disclosed as the satisfaction of these contingent payments is uncertain as of December 31, 20242025 and, if satisfied,
the timing of payment for these amounts was not reasonably estimable as of December 31, 2024.2025. Commitments related to the license agreements
include contingent payments that will become payable if and when certain development, regulatory and commercial milestones are achieved.
During the next 12 months, certain contingent payments could become due upon potential BLA approval and sales of pz-celZEVASKYN® or any other developmental
developmental milestones for sub-licensed products related to such license agreements.
Derivative
Liability
We
account for the fair value of the conversion right embedded within the loan agreement in accordance with the guidance in ASC 815, which
requires us to bifurcate and separately account for the conversion feature as an embedded derivative contained in our loan agreement.
Accordingly, we account for the conversion feature as a derivative liability in our condensed consolidated balance sheet. Derivatives
are measured at their fair value on the balance sheet. In determining the appropriate fair value, we use a Monte Carlo simulation model,
which incorporated assumptions and estimates to value the derivatives. The derivative liability is remeasured at each reporting period
with the change in fair value recorded to change in fair value of warrant and derivative liabilities in the consolidated statement of
operations until the derivative is exercised, expired, reclassified, or otherwise settled. At September 30, 2024, the conversion feature
in the Company’s loan agreement no longer met the criteria of a derivative liability, and the $1.1 million derivative liability
was reclassified to equity.
Leases
We
account for leases pursuant to ASC 842, Leases (“ASC 842”). ASC 842 requires the recognition of lease assets and lease
liabilities by lessees for those leases classified as operating leases. We determine if an arrangement is a lease at inception
or when amended. Right-of-use lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent
our obligation to make lease payments arising from the lease. The classification of our leases as operating or finance leases along with
the initial measurement and recognition of the associated right-of-use assets and lease liabilities is performed at the lease commencement
date or when amended. The measurement of lease liabilities is based on the present value of future lease payments over the lease term.
As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease
commencement date in determining the present value of future lease payments. As we have no external borrowings, the incremental borrowing
rates are determined using information on indicative borrowing rates that would be available to us based on the value, currency and borrowing
terms provided by financial institutions, adjusted for company and market specific factors. Although we do not expect our estimates of
the incremental borrowing rates to generate material differences within a reasonable range of sensitivities, judgement is involved in
selecting an appropriate rate, and the rate selected for each lease will have an impact on the value of the lease liability and corresponding
right-of-use lease asset in the consolidated balance sheets.
The
right-of-use asset is based on the measurement of the lease liability and includes any lease payments made prior to or on lease commencement
or lease amendment and excludes lease incentives and initial direct costs incurred, as applicable. Rent expense for our operating leases
is recognized on a straight-line basis over the lease term. We do not have any leases classified as finance leases.
Our
leases do not have significant rent escalation, holidays, concessions, material residual value guarantees, material restrictive covenants
or contingent rent provisions. Our leases include both lease (e.g., fixed payments including rent, taxes, and insurance costs) and non-lease
components (e.g., common-area or other maintenance costs), which are accounted for as a single lease component as we have elected the
practical expedient to group lease and non-lease components for all leases. We have elected the practical expedient to exclude short-term
leases from our right-of-use assets and lease liabilities.
Most
leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion; therefore, the
majority of renewals to extend the lease terms are not included in our right-of-use assets and lease liabilities as they are not reasonably
certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal
period in our lease term.
In
October 2024, we signed a lease for 16,566 square feet of office space at 6700 Euclid Avenue, Cleveland, Ohio. Pursuant to the lease
agreement, the lease commences on January 1, 2025 with an initial term through December 30, 2030. Annual lease payments during the term
of the lease are approximately $0.3 million. The total lease payments over the duration of the lease term are approximately $1.5 million.
The additional space at the 6700 Euclid Avenue facility will allow us to convert office space at the 6555 Carnegie Avenue facility into
additional manufacturing space to increase pz-cel manufacturing capacity. As the lease does not commence and we do not have access to
the leased space until January 1, 2025, the impact of this lease agreement is not reflected in our consolidated financial statements
as of December 31, 2024.
In
June 2023, we terminated one of our operating leases for office space. The termination resulted in a gain of $1.1 million for the year
ended December 31, 2023, representing the difference between the carry value of the right-of-use assets and the related lease liabilities.
This gain is included in gain on right-of-use lease assets in the consolidated statement of operations and comprehensive loss.
In
June of 2023, we modified one of our operating leases for office space to add up to 14,032 square feet to our existing facility in Cleveland,
Ohio. The lease modification resulted in the recognition of $0.4 million of additional right-of-use assets and related lease liabilities
in our consolidated balance sheet during the year ended December 31, 2023.
Impairment
of Long-Lived Assets
What changed in the latest 10-Q
Risk Factors
New heading “The manufacturing, testing and delivery of ZEVASKYN® present significant challenges for us, and we may not be able to produce ZEVASKYN® at the quality, quantities, or timing needed to support commercialization.”
Largest changes
“The manufacturing, testing and delivery of ZEVASKYN® present significant challenges for us, and we may not be able to produce ZEVASKYN® at the quality, quantities, or timing needed to support commercialization.”see in full comparison
“The manufacturing of ZEVASKYN® is complex and requires significant expertise. Even with the relevant experience and expertise, manufacturing cell therapy products often leads to difficulties in production, particularly in scaling out and validating initial production, managing the transition from clinical manufacturing to commercial manufacturing, and ensuring that the product meets required specifications. …”see in full comparison
“We are susceptible to production interruptions that may impede our ability to manufacture cell and gene therapy products and produce an adequate product supply to support commercialization of ZEVASKYN®. Several factors could cause production interruptions, including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, public health emergencies, disruption in utility services, human error, or disruptions in the operations of our suppliers. …”see in full comparison
“We also manufactured a batch of ZEVASKYN® following patient biopsy collection in July 2026 that, despite being bonafide drug product, could not be released because a cellular identity test, mandated by the FDA as a release assay during the final stage of BLA review, was out of specification. The FDA authorized release of this batch of ZEVASKYN® to the treatment site under a single-patient IND, but would not authorize release of this batch as commercial product. …”see in full comparison
“There are several risks specific to the manufacturing process for ZEVASKYN® that require close attention. As an autologous product there are challenges associated with viability of biopsies as an incoming material. Due to variables such as the fragility of RDEB skin and site of the biopsy, initiation of autologous keratinocyte growth and expansion can be challenging or may be extended beyond the scheduled timing. Another concern during manufacturing is the slowing of cell proliferation, resulting in extended manufacturing time. …”see in full comparison
“For example, we manufactured a full batch of ZEVASKYN® following patient biopsy collection in August 2025 that, despite being bonafide drug product, could not be released because a rapid sterility assay, mandated by the FDA as a release assay during the final stage of the BLA review, initially yielded a false positive result for sterility. …”see in full comparison
Full comparison: every changed paragraph (7)
Our
business and financial results are subject to numerous risks and uncertainties. AsThere ahave result,been no material changes to the risks and uncertaintiesrisk
factors discussed in
Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 20252025, shouldexcept beas carefullyset considered.forth below.
The manufacturing, testing and delivery of ZEVASKYN® present significant challenges for us, and we may not be able to produce ZEVASKYN® at the quality, quantities, or timing needed to support commercialization.
The manufacturing of ZEVASKYN® is complex and requires significant expertise. Even with the relevant experience and expertise, manufacturing cell therapy products often leads to difficulties in production, particularly in scaling out and validating initial production, managing the transition from clinical manufacturing to commercial manufacturing, and ensuring that the product meets required specifications. These problems include difficulties with production costs and yields, quality control, quality assurance testing, operator error, scarcity of qualified manufacturing and quality control testing personnel, shortages of any production raw materials as well as compliance with strictly enforced federal, state and foreign regulations.
We are susceptible to production interruptions that may impede our ability to manufacture cell and gene therapy products and produce an adequate product supply to support commercialization of ZEVASKYN®. Several factors could cause production interruptions, including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, public health emergencies, disruption in utility services, human error, or disruptions in the operations of our suppliers. ZEVASKYN® and product candidates are biologic drugs requiring processing steps that are more complex than those required for most chemical pharmaceuticals. We characterize our processes and products, and perform testing to ensure the safety, quality and efficacy of each product produced. While we take significant measures to fully understand and characterize each product, the steps we take may not be sufficient to ensure that a given lot will perform in the intended manner.
For example, we manufactured a full batch of ZEVASKYN® following patient biopsy collection in August 2025 that, despite being bonafide drug product, could not be released because a rapid sterility assay, mandated by the FDA as a release assay during the final stage of the BLA review, initially yielded a false positive result for sterility. Although we resumed biopsy collection in November 2025 upon completion of assay optimization and the necessary regulatory submission for its implementation, this false positive caused a manufacturing rejection, which caused a delay in our launch of ZEVASKYN®.
We also manufactured a batch of ZEVASKYN® following patient biopsy collection in July 2026 that, despite being bonafide drug product, could not be released because a cellular identity test, mandated by the FDA as a release assay during the final stage of BLA review, was out of specification. The FDA authorized release of this batch of ZEVASKYN® to the treatment site under a single-patient IND, but would not authorize release of this batch as commercial product. We are currently working with the FDA toward revising the specification for this test, but we cannot guarantee that the FDA will accept our proposed revision. Additional or similar issues associated with manufacturing and testing can have an adverse impact on our business, financial condition, cash flow, and results of operations.
There are several risks specific to the manufacturing process for ZEVASKYN® that require close attention. As an autologous product there are challenges associated with viability of biopsies as an incoming material. Due to variables such as the fragility of RDEB skin and site of the biopsy, initiation of autologous keratinocyte growth and expansion can be challenging or may be extended beyond the scheduled timing. Another concern during manufacturing is the slowing of cell proliferation, resulting in extended manufacturing time. If pre-release criteria are not met, the production process must be stopped, and a new biopsy must be obtained. If release criteria are out of range, epidermal sheets must be discarded and the manufacturing process must be repeated.
Management's Discussion & Analysis (MD&A)
New heading “Comparison of Six Months Ended June 30, 2026 and June 30, 2025”
Largest changes
“We expect to file an Investigational New Drug (“IND”) application and commence first-in-human studies with ABO-701 in the second half of 2027 while engaging a contract development and manufacturing organization for supply readiness in the meantime. This development plan and timing allow us to maintain our focus on commercializing ZEVASKYN®.”see in full comparison
“ABO-701 is an autologous engineered T-cell product that carries a Synthetic Immune Receptor (“SIR-T™”) designed to overcome the limitations of CAR and TCR approaches. The SIR-T™ platform underlying ABO-701 was developed in the laboratory of Preet M. Chaudhary, M.D., Ph.D., Professor of Medicine and Chief of Jane Ann Nohl Division of Hematology and Center for the Study of Blood Diseases at University of Southern California (“USC”) Keck School of Medicine and Director of USC Blood and Marrow Transplant and Cell Therapy Program. …”see in full comparison
“We recorded a current income tax expense of $15.5 million for the three months ended June 30, 2025. The current income tax expense for the three months ended June 30, 2025 was driven by pre-tax income from the gain on sale of priority review voucher, resulting in $14.6 million of federal income tax expense and $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. …”see in full comparison
“We recorded a current income tax expense of $15.5 million for the six months ended June 30, 2025. The current income tax expense for the six months ended June 30, 2025 was driven by pre-tax income from the gain on sale of priority review voucher, resulting in $14.6 million of federal income tax expense and $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. …”see in full comparison
We are a commercial-stage biopharmaceutical company developing cell and gene therapies forsee in full comparisonlife-threateningserious diseases.On April 28, 2025, the FDA approvedAbeona’s ZEVASKYN® (“prademagene zamikeracel”)gene-modified cellular sheets, asis the first and only autologous cell-based gene therapy for the treatment of wounds inadultadults and pediatric patients withRDEB,recessiveadystrophic epidermolysisseriousbullosa (“RDEB”). Our fully integrated cell anddebilitatinggenegenetictherapyskincGMPdisease.manufacturing facility in Cleveland, OhioThereservesisasnothecuremanufacturing site forRDEB,ZEVASKYNandcommercialZEVASKYN®production.isOur development portfolio features ABO-701 (“PSMA-SIR-T™”), a potentially first-in-class engineered T-cell therapy targeting PSMA, engineered to overcome theonlycoreFDA-approvedfailuresproductoftocelltreattherapiesRDEBinwounds with a single application.solidZEVASKYN® was granted Orphan Drug and Rare Pediatric Disease designations by the FDA.tumors.
Full comparison: every changed paragraph (65)
We
are a commercial-stage biopharmaceutical company
developing cell and gene therapies for life-threateningserious diseases. On April 28, 2025,
the FDA approvedAbeona’s ZEVASKYN® (“prademagene zamikeracel”) gene-modified cellular sheets, as
is the first and only autologous cell-based
gene therapy for the treatment of wounds in adultadults and pediatric patients with RDEB,recessive adystrophic
epidermolysis seriousbullosa (“RDEB”). Our fully integrated cell and debilitatinggene genetictherapy skincGMP disease.manufacturing facility in Cleveland, Ohio
Thereserves isas nothe curemanufacturing site for RDEB,ZEVASKYN andcommercial ZEVASKYN®production. isOur development portfolio features ABO-701 (“PSMA-SIR-T™”),
a potentially first-in-class engineered T-cell therapy targeting PSMA, engineered to overcome the onlycore FDA-approvedfailures productof tocell treattherapies RDEBin wounds with a single application.solid
ZEVASKYN® was granted Orphan Drug and Rare Pediatric Disease designations by the FDA.tumors.
ZEVASKYN®
is manufactured at our cGMP manufacturing facility in Cleveland, Ohio, and is made available through ZEVASKYN® qualified
treatment centers.
On
April 2, 2026, we announced activation of NewYork-Presbyterian/Columbia University Irving Medical Center in New York City as another
qualified treatment center for the administration of ZEVASKYN®.
On
July May 11,21, 2026, we announced activation of Cincinnati Children’s
Hospital of Philadelphia as the newest qualified treatment center for the administration
of ZEVASKYN®.ZEVASKYN. This represents
the sixthseventh available qualified treatment center for the administration of ZEVASKYN®.ZEVASKYN.
Pipeline
Update
Building on our proven end-to-end competency in engineered
cell therapy, we will focus our development efforts on the development of ABO-701, a recently licensed radically novel engineered T-cell
therapy, targeting Prostate-Specific Membrane Antigen (“PSMA”) to treat prostate cancer. PSMA is a validated target for advanced
prostate cancer, which is a leading cause of cancer mortality, with more than 30,000 deaths annually in the U.S. despite multiple approved
therapies and recent advances in the field.
ABO-701 is an autologous engineered T-cell product that carries a Synthetic
Immune Receptor (“SIR-T™”) designed to overcome the limitations of CAR and TCR approaches. The SIR-T™ platform
underlying ABO-701 was developed in the laboratory of Preet M. Chaudhary, M.D., Ph.D., Professor of Medicine and Chief of Jane Ann Nohl Division of Hematology and Center for the Study of Blood
Diseases at University of Southern California (“USC”) Keck School of Medicine and Director of USC Blood and Marrow Transplant
and Cell Therapy Program.
The patents covering the SIR-T™ platform are owned by Angeles Therapeutics, Inc. In pre-clinical studies, ABO-701 has demonstrated
durable tumor control in mouse models and modest levels of cytokine release – a profile that has been elusive to other engineered
cell therapies in the solid tumors.
We expect to file an Investigational New Drug (“IND”)
application and commence first-in-human studies with ABO-701 in the second half of 2027 while engaging a contract development and manufacturing
organization for supply readiness in the meantime. This development plan and timing allow us to maintain our focus on commercializing
ZEVASKYN®.
As part of our portfolio optimization,
we have deprioritized our in-house ophthalmology programs.
Comparison
of Three Months Ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025
Product
revenue, net, resulting from the sale of ZEVASKYN®,ZEVASKYN, for the three months ended MarchJune 31,30, 2026 was $8.7$11.4 million. There
was no product revenue for the three months ended MarchJune 31,30, 2025 as the approval by the FDA for ZEVASKYN® didoccurred not occurin
until April of 2025 and we recorded our first sale in December of 2025.
License and other revenues
License and other revenues for the three months ended June 30, 2026 was nil as compared to $0.4 million for the same period of 2025. The revenue in 2025 of $0.4 million consists of revenue resulting from a third party exercising its option to license certain of our AAV capsids.
Cost
of sales during the three months ended MarchJune 31,30, 2026 was $2.7$4.2 million and primarily includes costs associated with the commercial sale
sale of ZEVASKYN® including royalties due to our licensor, Stanford. There was no cost of sales in the same period of 2025,
as ZEVASKYN® was approved
by the FDA in April 2025 and we recorded our first sale in December of 2025.
Total
research and development spending for the three months ended MarchJune 31,30, 2026 was $9.6$5.0 million, as compared to $9.9$5.9 million for the same
period of 2025, a decrease of $0.3 million. In March 2026, we entered a license and joint development agreement related to PSMA SIR-T™
which included an upfront payment of $7.0 million that was included in research and development expenses. Excluding this transaction,
research and development spending decreased $7.4$0.9 million. The reduction in expenses was primarily due to costs capitalized into inventory
and engineering runs and other
production costs that are no longer considered research and development due to FDA approval of ZEVASKYN®
in April of 2025.
We
expect our research and development activities to increase as we work towards advancing our other product candidatescandidate towards potential
regulatory regulatory
approval, reflecting costs associated with the following:
Selling,
general and administrative expenses primarily consist of payroll and personnel costs, office facility costs, public company reporting
related costs, professional fees (e.g., legal expenses), selling and commercialization costs and other general operating expenses not
not otherwise included in research and development expenses. We expect our selling, general, and administrative costs to continue to increase
increase as we expand our commercialization of ZEVASKYN® and pursue development of other product candidates.ZEVASKYN.
Total
selling, general and administrative expenses were $19.5$15.8 million for the three months ended MarchJune 31,30, 2026, as compared to $9.8$17.1 million
for the same period of 2025, ana increasedecrease of $9.7$1.3 million. The increasedecrease in expenses was primarily due to increases in salaries and stock-based
compensation of $5.4 million due to new hires, $1.9$0.9 million of costs relatedthat were allocated to engineeringcosts runsof with the remainder due to other
commercial costssales related to ouroverhead continuedcosts
and commercializationa efforts upon FDA approvalreduction in Aprilrecruiting costs of 2025.$0.4 million as we had fewer increases in new employees.
Interest
income was $1.4 million for the three months ended MarchJune 31,30, 2026, as compared to $1.3$1.0 million in the same period of 2025. The increase
resulted from higher earnings on short-term investments driven by increased average short-term investment balances.
Interest
expense was $0.8$0.7 million for the three months ended MarchJune 31,30, 2026 compared to $1.0 million in the same period of 2025. Interest expense
was due to the credit facility entered into by the Company in January 2024 and decreased as a result of the July 2025 Loan Agreement
Amendment plus a reduction of the principal loan amount due to principal payments made in 2026.
The
change in fair value of warrant liabilities was a gainloss of $5.4$7.2 million for the three months ended MarchJune 31,30, 2026. We issued stock purchase
warrants that are required to be classified as
a liability and valued at fair market value at each reporting period. The gainloss in the
fair value of warrant liabilities was primarily due to the decreaseincrease in our stock price over the quarter andoffset by a shorter term of the
outstanding outstanding
warrants.
The
change in fair value of warrant liabilities was a gainloss of $7.2$5.4 million for the three months ended MarchJune 31,30, 2025. The gainloss in the
fair fair
value of warrant liabilities was primarily due to the decreaseincrease in our stock price year over the year andoffset by a shorter term.term of the
outstanding warrants.
Gain from sale of priority review voucher, net
In May 2025, we sold our PRV awarded to us following the FDA approval of ZEVASKYN™. We received gross proceeds of $155.0 million during the three months ended June 30, 2025 and recognized a gain from the PRV sale of $152.4 million, net of transaction costs of $2.6 million, as it did not have a carrying value at the time of sale.
Other (loss) income, net
Other (loss) income, net consisted of a loss of $6,000 for the three months ended June 30, 2026, as compared to income of $89,000 in the same period of 2025. The decrease was primarily a result of not having sublease income in 2026. The sublease of our New York office ended in September of 2025.
Income tax expense
We did not record an income tax expense for the three months ended June 30, 2026 as we generated sufficient tax losses, after consideration of discrete items.
We recorded a current income tax expense of $15.5 million for the three months ended June 30, 2025. The current income tax expense for the three months ended June 30, 2025 was driven by pre-tax income from the gain on sale of priority review voucher, resulting in $14.6 million of federal income tax expense and $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced the Company’s taxable income and resulting income tax expense for the year ended December 31, 2025.
Comparison of Six Months Ended June 30, 2026 and June 30, 2025
Product revenue, net
Product revenue, net, resulting from the sale of ZEVASKYN, for the six months ended June 30, 2026 was $20.1 million. There was no product revenue for the six months ended June 30, 2025 as the approval by the FDA for ZEVASKYN occurred in April of 2025 and we recorded our first sale in December of 2025.
License and other revenues
License and other revenues for the six months ended June 30, 2026 was nil as compared to $0.4 million for the same period of 2025. The revenue in 2025 of $0.4 million consists of revenue resulting from a third party exercising its option to license certain of our AAV capsids.
Cost of sales
Cost of sales during the six months ended June 30, 2026 was $6.9 million and primarily includes costs associated with the commercial sale of ZEVASKYN including royalties due to our licensor, Stanford. There was no cost of sales in the same period of 2025, as ZEVASKYN was approved by the FDA in April 2025 and we recorded our first sale in December of 2025.
Royalties
Total royalty expense for the six months ended June 30, 2026 was nil as compared to $0.1 million for the same period of 2025. Royalties in 2025 consisted of amounts owed to the University of North Carolina at Chapel Hill resulting from the milestones due from the exercise of an option by a third party to license certain of our AAV capsids.
Research and development
Total research and development spending for the six months ended June 30, 2026 was $14.6 million, as compared to $15.9 million for the same period of 2025, a decrease of $1.3 million. In March 2026, we entered a license and joint development agreement related to PSMA SIR-T™ which included an upfront payment of $7.0 million that was included in research and development expenses. Excluding this transaction, research and development spending decreased $8.3 million. The reduction in expenses was primarily due to costs capitalized into inventory and, engineering runs and other production costs that are no longer considered research and development due to FDA approval of ZEVASKYN in April of 2025.
Selling, general and administrative
Total selling, general and administrative expenses were $35.3 million for the six months ended June 30, 2026, as compared to $26.9 million for the same period of 2025, an increase of $8.4 million. The increase in expenses was primarily due to increases in salaries and stock-based compensation of $5.7 million due to new hires, $1.9 million of costs related to engineering runs with the remainder due to other commercial costs related to our continued commercialization efforts upon FDA approval in April of 2025.
Interest income
Interest income was $2.7 million for the six months ended June 30, 2026, as compared to $2.3 million in the same period of 2025. The increase resulted from increased average short-term investment balances.
Interest expense
Interest expense was $1.5 million for the six months ended June 30, 2026 compared to $2.0 million in the same period of 2025. Interest expense was due to the credit facility entered into by the Company in January 2024 and decreased as a result of the July 2025 Loan Agreement Amendment plus a reduction of the principal loan amount due to principal payments made in 2026.
Change in fair value of warrant and derivative liabilities
The change in fair value of warrant liabilities was a loss of $1.8 million for the six months ended June 30, 2026. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. The loss in the fair value of warrant liabilities was primarily due to the increase in our stock price over the year offset by a shorter term of the outstanding warrants.
The change in fair value of warrant liabilities was a gain of $1.9 million for the six months ended June 30, 2025. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. The gain in the fair value of warrant liabilities was primarily due to the shorter term period over period.
Gain from sale of priority review voucher, net
In May 2025, we sold our PRV awarded to us following the FDA approval of ZEVASKYN™. We received gross proceeds of $155.0 million during the six months ended June 30, 2025 and recognized a gain from the PRV sale of $152.4 million, net of transaction costs of $2.6 million, as it did not have a carrying value at the time of sale.
Other
income, net wasconsisted $50,000of $44,000 for the threesix months ended MarchJune 31,30, 2026, as compared to $141,000$0.2 million in the same period of 2025. The
decrease was
primarily a result of realizednot losseshaving onsublease foreign currency related to various vendors that we payincome in foreign2026. currencyThe duringsublease theof three
monthsour NY office ended Marchin 31,September 2026.of 2025.
We
recorded a current income tax expense of $2,000 for the threesix months ended MarchJune 31,30, 2026.2026 Wewhich didincluded not record an income tax expense for
the threeimpact monthsof endedour Marchgeneration 31, 2025 as we generated of
sufficient tax losses, after consideration of discrete items.items, to reduce our income tax expense for the period.
We recorded a current income tax expense of $15.5 million for the six months ended June 30, 2025. The current income tax expense for the six months ended June 30, 2025 was driven by pre-tax income from the gain on sale of priority review voucher, resulting in $14.6 million of federal income tax expense and $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced the Company’s taxable income and resulting income tax expense for the year ended December 31, 2025.
Cash
Flows for the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025
Net
cash used in operating activities was $19.8$37.3 million for the threesix months ended MarchJune 31,30, 2026, primarily comprised of our net loss of $37.3
$17.1 million andmillion, decreases in operating assets and liabilities of $1.4$10.5 million and net non-cash charges of $1.3$10.4 million. Non-cash charges
consisted primarily of $5.4$1.8 million of gainloss as a result of the change in fair value of warrant liabilities, $3.0$6.3 million of stock-based
compensation and $0.7$1.4 million of depreciation and amortization.
Net
cash used in operating activities was $18.4$37.2 million for the threesix months ended MarchJune 31,30, 2025, primarily comprised of our net lossincome of
$12.0$96.8 million and decreasesincreases in operating assets and liabilities of $3.4$12.4 million andoffset by net non-cash charges of $3.0$146.2 million. Non-cash
charges charges
consisted primarily of $7.2$152.4 million gain on sale of priority review voucher for which the cash proceeds are recorded in investing
activities, $1.9 million of gain as a result of the change in fair value of warrant and derivative liabilities, $2.7$5.5 million of stock-based
compensation and $0.5$1.1 million of depreciation and amortization.
Net
cash provided by investing activities was $5.0 million for the three months ended March 31, 2026, primarily comprised of proceeds from
maturities of short-term investments of $24.9 million, offset by purchases of short-term investments of $19.0 million and capital expenditures
of $0.9 million.
Net
cash provided by investing activities was $4.2$20.6 million for the threesix months ended MarchJune 31,30, 2025,2026, primarily comprised of proceeds from
maturities of short-term investments of $54.2$65.8 million, offset by purchases of short-term investments of $48.6$43.7 million and capital expenditures
of $1.4 million.
Net cash provided by investing activities was $160.1 million for the six months ended June 30, 2025, primarily comprised of net proceeds from sale of priority review voucher of $152.4 million, proceeds from maturities of short-term investments of $80.5 million, offset by purchases of short-term investments of $68.5 million and capital expenditures of $4.3 million.
ABEO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 19 filings (8 insiders, 11 trade dates, 368,197 shares, about $2.2M; 2 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -368,197 (purchases minus sales); net value about -$2.2M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-29 | Seshadri Vishwas |
Open-market sale | 19,608 | $5.16 | $101.2K |
| 2026-09-29 | Vazzano Joseph Walter |
Open-market sale | 9,191 | $5.16 | $47.4K |
| 2026-09-29 | O'malley Brendan M. |
Open-market sale | 6,727 | $5.16 | $34.7K |
| 2026-09-29 | Vasanthavada Madhav |
Open-market sale | 4,902 | $5.16 | $25.3K |
| 2026-09-01 | Alvino Mark |
Open-market sale | 15,000 | $5.86 | $87.9K |
| 2026-07-21 | Vazzano Joseph Walter |
Open-market sale | 1,478 | $6.53 | $9.7K |
| 2026-07-09 | Vazzano Joseph Walter |
Open-market sale | 24,880 | $6.96 | $173.2K |
| 2026-07-09 | Seshadri Vishwas |
Open-market sale | 67,971 | $6.96 | $473.1K |
| 2026-07-09 | O'malley Brendan M. |
Open-market sale | 12,050 | $6.96 | $83.9K |
| 2026-07-09 | Vasanthavada Madhav |
Open-market sale | 12,606 | $6.96 | $87.7K |
| 2026-06-30 | Alland Leila |
Open-market sale | 11,000 | $5.92 | $65.1K |
| 2026-06-16 | Vasanthavada Madhav |
Other | 222 | $5.67 | $1.3K |
| 2026-06-15 | Silverstein Christine Berni |
Open-market sale | 18,160 | $5.71 | $103.7K |
| 2026-06-09 | Vazzano Joseph Walter |
Open-market sale |
13,421 | $5.30 | $71.1K |
| 2026-06-09 | O'malley Brendan M. |
Open-market sale | 6,305 | $5.30 | $33.4K |
| 2026-06-09 | Vazzano Joseph Walter |
Open-market sale |
25,646 | $5.39 | $138.2K |
| 2026-06-09 | Seshadri Vishwas |
Open-market sale | 31,916 | $5.30 | $169.2K |
| 2026-06-09 | Vasanthavada Madhav |
Open-market sale | 5,450 | $5.30 | $28.9K |
| 2026-06-08 | Seshadri Vishwas |
Open-market sale | 24,428 | $5.43 | $132.6K |
| 2026-06-08 | Vazzano Joseph Walter |
Open-market sale |
10,271 | $5.43 | $55.8K |
| 2026-06-08 | O'malley Brendan M. |
Open-market sale | 4,826 | $5.43 | $26.2K |
| 2026-06-08 | Vasanthavada Madhav |
Open-market sale | 4,170 | $5.43 | $22.6K |
| 2026-05-26 | Alvino Mark |
Gift | 500 | — | — |
| 2026-05-22 | Alvino Mark |
Open-market sale | 6,500 | $5.46 | $35.5K |
| 2026-05-15 | Crombez Eric |
Open-market sale |
26,143 | $5.53 | $144.6K |
| 2026-05-11 | Vasanthavada Madhav |
Open-market sale | 5,548 | $5.96 | $33.1K |
Well-known investors holding ABEO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 259,401 | $1.6M | 0.0% | Added 365% |
| Millennium Management (Israel Englander) | 2026-06-30 | 211,335 | $1.3M | 0.0% | Reduced 50% |
| Renaissance Technologies | 2026-06-30 | 161,082 | $721.6K | — | Sold out |
| Two Sigma Investments | 2026-06-30 | 80,737 | $499.0K | 0.0% | New position |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 67,063 | $414.4K | 0.0% | Reduced 35% |
| D. E. Shaw & Co. | 2026-06-30 | 57,100 | $352.9K | 0.0% | Reduced 44% |