UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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Indicate
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| Smaller reporting company | |
| Emerging growth company |
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The number of shares outstanding of the registrant’s common stock as of August 2, 2024 was shares.
ABEONA THERAPEUTICS INC.
Form 10-Q
For the Quarter Ended June 30, 2024
INDEX
| 1 |
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (including information incorporated by reference) contains statements that express management’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “could,” “would,” “seeks,” “estimates,” and variations of such words and similar expressions, and the negatives thereof, are intended to identify such forward-looking statements. Such “forward-looking statements” speak only as of the date made and are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by management that are difficult to predict. Various factors, some of which are beyond the Company’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as may otherwise be required by the federal securities laws.
Forward-looking statements necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in forward-looking statements due to a number of factors. These statements include statements about, among other things: our ability to address the items raised in the FDA’s complete response letter related to our Biologics License Application for pz-cel; the timing and outcome of our resubmission of a Biologics License Application for pz-cel; our plans to continue development of AAV-based gene therapies designed to treat ophthalmic diseases; the achievement of or expected timing, progress and results of clinical development, clinical trials and potential regulatory approvals; our pipeline of product candidates; our belief that pz-cel could potentially benefit patients with RDEB; our belief in the adequacy of the clinical trial data from our VIITAL™ clinical trial, together with the data generated in the program to date, to support regulatory approvals; our dependence upon our third-party customers and vendors and their compliance with regulatory bodies; our estimates regarding expenses, future revenues, capital requirements, and needs for additional financing; our intellectual property position and our ability to obtain, maintain and enforce intellectual property protection and exclusivity for our proprietary assets; our estimates regarding the size of the potential markets for our product candidates, the strength of our commercialization strategies and our ability to serve and supply those markets; and future economic conditions or performance.
Important factors that could affect performance and cause results to differ materially from management’s expectations are described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as updated from time to time in the Company’s SEC filings, including this Quarterly Report on Form 10-Q. These factors include: the timing and outcome of our resubmission of the Biologics License Application for pz-cel; our ability to access our existing at-the-market sale agreement; our ability to access additional financial resources and/or our financial flexibility to reduce operating expenses if required; our ability to obtain additional equity funding from current or new stockholders; the potential impacts of global healthcare emergencies, such as pandemics, on our business, operations, and financial condition; our ability to out-license technology and/or other assets, deferring and/or eliminating planned expenditures, restructuring operations and/or reducing headcount, and sales of assets; the dilutive effect that raising additional funds by selling additional equity securities would have on the relative equity ownership of our existing investors, including under our existing at-the-market sale agreement; the outcome of any interactions with the U.S. Food and Drug Administration (“FDA”) or other regulatory agencies relating to any of our products or product candidates; our ability to continue to secure and maintain regulatory designations for our product candidates; our ability to develop manufacturing capabilities compliant with current good manufacturing practices for our product candidates; our ability to manufacture cell and gene therapy products and produce an adequate product supply to support clinical trials and potential future commercialization; the rate and degree of market acceptance of our product candidates for any indication once approved; and our ability to meet our obligations contained in license agreements to which we are party.
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Abeona Therapeutics Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
($ in thousands, except share and per share amounts)
(Unaudited)
| June 30, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Restricted cash | ||||||||
| Other receivables | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Current portion of long-term debt | ||||||||
| Current portion of operating lease liability | ||||||||
| Current portion payable to licensor | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term operating lease liabilities | ||||||||
| Long-term debt | ||||||||
| Derivative liabilities | ||||||||
| Warrant liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - $ par value; authorized shares; shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | ||||||||
| Common stock - $ par value; authorized shares; and shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated statements.
| 3 |
Abeona Therapeutics Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
($ in thousands, except share and per share amounts)
(Unaudited)
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues: | ||||||||||||||||
| License and other revenues | $ | $ | $ | $ | ||||||||||||
| Expenses: | ||||||||||||||||
| Royalties | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Gain on operating lease right-of-use assets | ( | ) | ( | ) | ||||||||||||
| Total expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of warrant and derivative liabilities | ( | ) | ( | ) | ||||||||||||
| Other income | ||||||||||||||||
| Net Income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Basic income (loss) per common share | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Dilutive loss per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Dilutive | ||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Change in unrealized gains (losses) related to available-for-sale debt securities | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated statements.
| 4 |
Abeona Therapeutics Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
($ in thousands, except share amounts)
(Unaudited)
| Three months ended June 30, 2024 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | (Deficit) Equity | |||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Cancellation of common stock in connection with restricted share awards, net of issuances and shares settled for tax withholding settlement | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Issuance of common stock, net of offering costs under open market sale agreement (ATM) | ||||||||||||||||||||||||
| Issuance of common stock in connection with underwritten offering, net of offering costs | ||||||||||||||||||||||||
| Issuance of common stock upon exercise of pre-funded warrants, net of shares settled | ( | ) | ||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Six months ended June 30, 2024 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | | ||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Cancellations of common stock in connection with restricted share awards, net of issuances and shares settled for tax withholding settlement | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Issuance of common stock, net of offering costs under open market sale agreement (ATM) | ||||||||||||||||||||||||
| Issuance of common stock in connection with underwritten offering, net of offering costs | ||||||||||||||||||||||||
| Issuance of common stock upon exercise of pre-funded warrants, net of shares settled | ( | ) | ||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated statements.
| 5 |
Abeona Therapeutics Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Deficit), Continued
($ in thousands, except share amounts)
(Unaudited)
| Three months ended June 30, 2023 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | | ||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of common stock, net of offering costs under open market sale agreement (ATM) | ||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Six months ended June 30, 2023 | ||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | | ||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||
| Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement | ( | ) | ( | ) | ||||||||||||||||||||
| Issuance of common stock, net of offering costs under open market sale agreement (ATM) | ||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated statements.
| 6 |
Abeona Therapeutics Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
| For the six months ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Change in fair value of warrant and derivative liabilities | ( | ) | ||||||
| Non-cash gain of right-of-use lease assets | ( | ) | ||||||
| Accretion and interest on short-term investments | ( | ) | ( | ) | ||||
| Amortization of right-of-use lease assets | ||||||||
| Non-cash interest | ||||||||
| (Gain) loss on disposal of property and equipment | ( | ) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivables | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Other current liabilities | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | ( | ) | ( | ) | ||||
| Proceeds from disposal of property and equipment | ||||||||
| Purchases of short-term investments | ( | ) | ( | ) | ||||
| Proceeds from maturities of short-term investments | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from ATM sales of common stock, net of issuance costs | ||||||||
| Payments related to net settlement of restricted share awards | ( | ) | ( | ) | ||||
| Proceeds from underwritten sales of common stock, net of issuance costs | ||||||||
| Proceeds from issuance of long-term debt | ||||||||
| Payment of debt issuance costs | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
| Supplemental non-cash flow information: | ||||||||
| Right-of-use asset obtained in exchange for new operating lease liabilities | $ | $ | ||||||
| Derivative and warrant additions associated with loan and security agreement | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated statements.
| 7 |
ABEONA THERAPEUTICS INC. AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1 – NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Background
Abeona Therapeutics Inc. (together with the Company’s subsidiaries, “Abeona” or the “Company”), a Delaware corporation, is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. The Company’s lead clinical program is for pz-cel, an autologous, cell-based gene therapy currently in development for recessive dystrophic epidermolysis bullosa (“RDEB”). The Company’s development portfolio also features adeno-associated virus (“AAV”)-based gene therapies designed to treat ophthalmic diseases with high unmet need using novel AIM™ capsids that the Company has exclusively licensed from the University of North Carolina at Chapel Hill and developed internally through its AAV vector research programs.
Basis of Presentation
The Company’s unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, except as otherwise disclosed, necessary for the fair presentation of the financial position, results of operations, and changes in financial position for such periods, have been made. These unaudited interim condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. Certain information that is normally required by U.S. GAAP has been condensed or omitted in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The December 31, 2023 condensed consolidated balance sheet was derived from the audited statements but does not include all disclosures required by U.S. GAAP.
Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 18, 2024.
Liquidity
In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited interim condensed consolidated financial statements were issued.
As a biopharmaceutical organization, the Company has devoted substantially all of its resources since inception to research and development activities for pz-cel and other product candidates, business planning, raising capital, establishing its intellectual property portfolio, acquiring or discovering product candidates, and providing general and administrative support for these operations. As a result, the Company has incurred significant operating losses and negative cash flows from operations since its inception and anticipates such losses and negative cash flows will continue for the foreseeable future.
Since
its inception, the Company has funded its operations primarily with proceeds from sales of shares of its stock. The Company has incurred
recurring losses since its inception, including net losses of $
| 8 |
While the Company believes its capital resources are sufficient to fund the Company’s on-going operations for the next 12 months from the issuance date of these unaudited condensed consolidated financial statements, the Company’s liquidity could be materially affected over this period by: (1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding; (2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements; (3) negative regulatory events or unanticipated costs related to pz-cel; (4) any other unanticipated material negative events or costs. One or more of these events or costs could materially affect the Company’s liquidity. If the Company is unable to meet its obligations when they become due, the Company may have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to its operating plan. The accompanying unaudited interim condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Use of Estimates
The preparation of unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and disclosure of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from these estimates and assumptions.
Other receivables
Other
receivables include employee retention credits (“ERC”), sublease rent receivables and other miscellaneous receivables. As
of June 30, 2024 and December 31, 2023, the Company had ERC receivables of $
Summary of Significant Accounting Policies
There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 that are of significance, or potential significance, to the Company.
Credit Losses
The Company reviews its available-for-sale investments for credit losses on a collective basis by major security type and in line with the Company’s investment policy. As of June 30, 2024, the Company’s available-for-sale investments were in certificates of deposits and securities that are issued by the U.S. treasury and U.S. federal agencies, are highly rated, and have a history of zero credit losses. The Company reviews the credit quality of its accounts receivables by monitoring the aging of its accounts receivable, the history of write offs for uncollectible accounts, and the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company’s accounts receivable are with customers that do not have a history of uncollectibility nor a history of significantly aged accounts receivables. As of June 30, 2024, the Company did not recognize a credit loss allowance for its investments or accounts receivable.
Basic net income (loss) per share is computed by dividing net income (loss) attributable to common shareholders by the weighted-average number of shares of common stock outstanding during the period. The weighted average number of shares of common stock includes the weighted average effect of outstanding pre-funded warrants for the purchase of shares of common stock for which the remaining unfunded exercise price is $ or less per share. Diluted net income (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential commons shares outstanding during the period using the treasury stock method and if-converted method. Dilutive potential securities result from outstanding restricted stock, stock options, stock purchase warrants and conversion features in the Company’s loan agreement. When the Company has a net loss during the period, the Company does not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive.
| 9 |
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) used for basic net income (loss) per share | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Effect of dilutive securities: | ||||||||||||||||
| Fair value adjustments for warrant and derivative liabilities | ( | ) | ||||||||||||||
| Numerator for dilutive net income (loss) per share - net income available for common shareholders’ after the effect of dilutive securities | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted average number of common shares outstanding - basic | ||||||||||||||||
| Effect of dilutive shares: | ||||||||||||||||
| Shares of common stock issuable upon exercise of stock options | ||||||||||||||||
| Shares of common stock underlying restricted stock | ||||||||||||||||
| Shares of common stock issuable upon exercise of warrants | ||||||||||||||||
| Shares of common stock issuable upon exercise of conversion feature of loan agreement | ||||||||||||||||
| Dilutive potential common shares | ||||||||||||||||
| Denominator for dilutive net income (loss) per share - adjusted weighted average shares used in computing net income (loss) per share - dilutive | ||||||||||||||||
| Earnings per share: | ||||||||||||||||
| Basic income (loss) per common share | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Dilutive income (loss) per common share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following table sets forth the potential securities that could potentially dilute basic loss per share in the future that were not included in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Shares of common stock issuable upon exercise of stock options | ||||||||||||||||
| Shares of common stock underlying restricted stock | ||||||||||||||||
| Shares of common stock issuable upon exercise of conversion feature of loan agreement | ||||||||||||||||
| Shares of common stock issuable upon exercise of warrants | ||||||||||||||||
| Total | ||||||||||||||||
In
January 2024 as part of the Loan and Security Agreement, see Note 8, the Company issued warrants to purchase $
Recently Adopted Accounting Pronouncements
The Company did not adopt any new accounting pronouncements during the three and six months ended June 30, 2024.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The standard is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The requirements of this ASU are disclosure related and will not have an impact on the Company’s financial condition, results of operations, or cash flows. The Company is currently evaluating the impact of adopting this ASU on its income tax disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024, with early adoption permitted. The requirements of this ASU are disclosure related and will not have an impact on the Company’s financial condition, results of operations, or cash flows. The Company is currently evaluating the impact of adopting this ASU on its reportable segment disclosures.
| 10 |
NOTE 2 – SHORT-TERM INVESTMENTS
The following table provides a summary of the short-term investments (in thousands):
| June 30, 2024 | ||||||||||||||||
| Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | |||||||||||||
| Available-for-sale, short-term investments: | ||||||||||||||||
| U.S. treasury securities | $ | ( | ) | $ | ||||||||||||
| U.S. federal agency securities | ( | ) | ||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Total available-for-sale, short-term investments | $ | ( | ) | $ | ||||||||||||
| December 31, 2023 | ||||||||||||||||
| Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | |||||||||||||
| Available-for-sale, short-term investments: | ||||||||||||||||
| U.S. treasury securities | $ | ( | ) | $ | ||||||||||||
| U.S. federal agency securities | ( | ) | ||||||||||||||
| Total available-for-sale, short-term investments | $ | ( | ) | $ | ||||||||||||
As of June 30, 2024, the available-for-sale securities classified as short-term investments mature in one year or less. The Company carries its available-for-sale securities at fair value in the unaudited condensed consolidated balance sheets. Unrealized losses on available-for-sale securities as of June 30, 2024, were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. None of the short-term investments have been in a continuous unrealized loss position for more than 12 months. Accordingly, no other-than-temporary impairment was recorded for the three and six months ended June 30, 2024.
There
were
NOTE 3 – PROPERTY AND EQUIPMENT, NET
Property and equipment are stated at cost and depreciated or amortized using the straight-line method based on useful lives as follows (in thousands):
| Useful lives (years) | June 30, 2024 | December 31, 2023 | ||||||||
| Laboratory equipment | $ | $ | ||||||||
| Furniture, software and office equipment | ||||||||||
| Leasehold improvements | ||||||||||
| Subtotal | ||||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||||
| Total property and equipment, net | $ | $ | ||||||||
| 11 |
Depreciation
and amortization are reflected in research and development and general and administrative expenses in the consolidated statements of
operations and comprehensive income (loss), as determined by the underlying activities. Depreciation and amortization on property and equipment
was $
NOTE 4 – FAIR VALUE MEASUREMENTS
The Company calculates the fair value of the Company’s assets and liabilities that qualify as financial instruments and includes additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of other receivables, prepaid expenses and other current assets, other assets, accounts payable, accrued expenses, and payables to licensor approximate their carrying amounts due to the relatively short maturity of these instruments.
U.S. GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. This guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 - Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. | |
| ● | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar valuation techniques that use significant unobservable inputs. |
The Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below.
The following table provides a summary of financial assets measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 (in thousands):
| Description | Fair Value at June 30, 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||
| Recurring Assets | ||||||||||||||||
| Cash equivalents | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Short-term investments | ||||||||||||||||
| U.S. treasury securities | ||||||||||||||||
| U.S. federal agency securities | ||||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Payable to licensor | $ | $ | $ | $ | ||||||||||||
| Derivative liabilities | ||||||||||||||||
| Warrant liabilities | ||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
| 12 |
| Description | Fair Value at December 31, 2023 | Level 1 | Level 2 | Level 3 | ||||||||||||
| Recurring Assets | ||||||||||||||||
| Cash equivalents | ||||||||||||||||
| Money market fund | $ | $ | $ | $ | ||||||||||||
| Short-term investments | ||||||||||||||||
| U.S. treasury securities | ||||||||||||||||
| U.S. federal agency securities | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Payable to licensor | $ | $ | $ | $ | ||||||||||||
| Warrant liabilities | ||||||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
Warrant Liabilities
As of June 30, 2024 and December 31, 2023, the Company had the following outstanding warrant liabilities:
| June 30, 2024 | December 31, 2023 | |||||||
| Warrants issued as part of the 2021 public offering, expiration date |
||||||||
| Warrants issued as part of the 2022 Private Placement Offering, expiration date |
||||||||
| Warrants issued as part of the 2024 loan agreement, expiration date |
||||||||
For
the warrants issued as part of the 2024 loan agreement, the Company utilized the exercise price of $
The common stock warrants related to the 2021 Public Offering and the 2022 Private Placement are not indexed to the Company’s own stock and therefore have been classified as liabilities at their estimated fair value. The common stock warrants related to the Loan Agreement were determined to be liability classified under ASC 815 as the common stock warrants do not include an explicit share limit and the number of shares issuable under the warrant agreements are variable based on the exercise price. Changes in the estimated fair value of the warrant liabilities is recorded as changes in fair value of warrant liabilities in the consolidated statement of operations and comprehensive income (loss).
The following table provides a summary of the activity on the warrant liabilities (in thousands):
| Warrant liabilities as of December 31, 2023 | $ | |||
| Fair value of warrants issued in connection with Loan Agreement | ||||
| Gain recognized in earnings from change in fair value | ( | ) | ||
| Warrant liabilities as of June 30, 2024 | $ |
| 13 |
The warrant liabilities are valued using significant inputs not observable in the market. Accordingly, the warrant liability is measured at fair value on a recurring basis using unobservable inputs and are classified as Level 3 inputs within the fair value hierarchy. Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. The Company’s valuation of the common stock warrants utilized the Black-Scholes option-pricing model, which incorporated assumptions and estimates to value the common stock warrants. The Company assessed these assumptions and estimates at the end of each reporting period.
| June 30, 2024 | December 31, 2023 | |||||||
| Common share price | $ | $ | ||||||
| Expected term (years) | ||||||||
| Risk-free interest rate (%) | ||||||||
| Volatility (%) | ||||||||
| Expected dividend yield (%) | ||||||||
Derivative Liabilities
The Conversion Right embedded within the Loan Agreement (see Note 8 below) required bifurcation as certain adjustments to the conversion price were not indexed to the Company’s own stock and therefore the Conversion Right was recorded as a derivative liability. The derivative liability is remeasured at each reporting period with the change in fair value recorded to changes in fair value of warrants and derivative liabilities in the condensed consolidated statement of operations until the derivative is exercised, expired, reclassified, or otherwise settled.
The following table provides a summary of the activity on the derivative liabilities (in thousands):
| Derivative liabilities as of December 31, 2023 | $ | |||
| Fair value of derivatives issued in connection with Loan Agreement | ||||
| Gain recognized in earnings from change in fair value | ( | ) | ||
| Derivative liabilities as of June 30, 2024 | $ |
The derivative liabilities are valued using significant inputs not observable in the market. Accordingly, the derivative liability is measured at fair value on a recurring basis using unobservable inputs and are classified as Level 3 inputs within the fair value hierarchy. Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. The Company’s valuation of the derivatives utilized the Monte Carlo simulation model, which incorporated assumptions and estimates to value the derivatives. The Company assessed these assumptions and estimates at the end of each reporting period.
| June 30, 2024 | December 31, 2023 | |||||||
| Common share price | $ | |||||||
| Expected term (years) | — | |||||||
| Risk-free interest rate (%) | % | |||||||
| Volatility (%) | % | |||||||
NOTE 5 – SETTLEMENT LIABILITY
On
November 12, 2021, the Company entered into a settlement agreement (“Settlement Agreement”) with the Company’s prior
licensor REGENXBIO Inc. (“REGENXBIO”) to resolve all existing disputes between the parties. In accordance with the Settlement
Agreement, the Company agreed to pay REGENXBIO a total of $
| 14 |
As
of June 30, 2024, the Company recorded the payable due to REGENXBIO in the condensed consolidated balance sheets based on the present
value of the remaining payments due to REGENXBIO under the Settlement Agreement using an effective interest rate of
NOTE 6 – ACCRUED EXPENSES
The following table provides a summary of the components of accrued expenses (in thousands):
| June 30, 2024 | December 31, 2023 | |||||||
| Accrued employee compensation | $ | $ | ||||||
| Accrued contracted services and other | ||||||||
| Total accrued expenses | $ | $ | ||||||
NOTE 7 – LEASES
The Company leases space under operating leases for administrative, manufacturing and laboratory facilities in Cleveland, Ohio. The Company also leases office space in New York, New York, that the Company sublets. The Company also leases certain office equipment under operating leases, which have a non-cancelable lease term of less than one year and the Company has elected the practical expedient to exclude these short-term leases from the Company’s right-of-use assets and lease liabilities.
The
Company has entered into two sublease agreements with unrelated third parties to occupy the Company’s administrative offices in
New York, New York. The Company expects to receive $
The following table provides a summary of the Company’s operating lease liabilities (in thousands):
| June 30, 2024 | December 31, 2023 | |||||||
| Current operating lease liability | $ | $ | ||||||
| Non-current operating lease liability | ||||||||
| Total operating lease liability | $ | $ | ||||||
Lease costs and rent are reflected in general and administrative expenses and research and development expenses in the consolidated statements of operations and comprehensive income (loss), as determined by the underlying activities. The following table provides a summary of the components of lease costs and rent (in thousands):
For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Variable lease cost | ||||||||||||||||
| Short-term lease cost | ||||||||||||||||
| Total operating lease costs | $ | $ | $ | $ | ||||||||||||
Cash
paid for amounts included in the measurement of operating lease liabilities was $
| 15 |
Future minimum lease payments and obligations, which do not include short-term leases, related to the Company’s operating lease liabilities as of June 30, 2024 were as follows (in thousands):
| Future minimum lease payments and obligations | Operating Leases | |||
| 2024, remainder | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total undiscounted operating lease payments | ||||
| Less: imputed interest | ||||
| Present value of operating lease liabilities | $ | |||
The
weighted-average remaining term of the Company’s operating leases was
The
Company received sublease income, which is recorded in other income on the condensed consolidated statement of operations and comprehensive
income (loss), of $
| Operating | ||||
| Future cash receipts | Subleases | |||
| 2024, remainder | $ | |||
| 2025 | ||||
| Total future cash receipts | $ | |||
NOTE 8 – DEBT
The following table provides a summary of the Company’s debt, net of debt issuance costs and discounts (in thousands):
| June 30, 2024 | December 31, 2023 | |||||||
| Loan Agreement Principal | $ | $ | ||||||
| Accreted final payment fee | ||||||||
| Unamortized debt issuance costs and discounts | ( | ) | ||||||
| Total long-term debt | ||||||||
| Less: current maturities | ||||||||
| Long-term debt, net of current maturities | $ | $ | ||||||
| 16 |
Loan and Security Agreement
On
January 8, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Agreement”)
with Avenue Venture Opportunities Fund, L.P., a Delaware limited partnership, as administrative agent and collateral agent (“Avenue”
and the “Agent”) and Avenue Venture Opportunities Fund II, L.P., a Delaware limited partnership (“Avenue 2”
and, together with Avenue, the “Lenders”). Also on January 8, 2024, the Company entered into a Supplement to the Agreement
(collectively with the Agreement, the “Loan Agreement”) with the Agent and the Lenders. The Loan Agreement provides for senior
secured term loans (the “Loans”) in an aggregate principal amount up to $
The
Loan principal is repayable in equal monthly installments beginning on April 8, 2025, with the possibility of deferring principal payments
an additional nine to fifteen months contingent upon (i) the Company obtaining FDA approval of pz-cel in recessive dystrophic epidermolysis
bullosa, with the issuance of a Priority Review Voucher and (ii) the Company raising $
The
Company may, subject to certain parameters, voluntarily prepay the Loans, in whole, at any time. If prepayment occurs on or before the
one-year anniversary of the Closing Date,
The
Company’s obligations under the Loan Agreement are secured by a pledge of substantially all of the Company’s assets. Pursuant
to the Loan Agreement, the Company is subject to a financial covenant requiring the Company to maintain at all times $
Pursuant
to the Supplement to the Loan and Security Agreement, Avenue also has the right to convert up to $
| 17 |
In
addition, subject to applicable law and specified provisions set forth in the Supplement to the Loan and Security Agreement and solely
to the extent permitted under applicable stock exchange rules without requiring stockholder approval, the Lenders may participate in
certain equity financing transactions of the Company in an aggregate amount of up to $
On
the Closing Date and pursuant to the funding of Tranche 1 of the Loan Agreement, the Company issued to each of Avenue and Avenue 2 (collectively,
the “Warrantholders”) warrants to purchase up to $
The future payment obligations of the principal are as follows (in thousands):
| 2024, remainder | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total principal | $ |
NOTE 9 – EQUITY
Public Offerings
On
December 21, 2021, the Company closed an underwritten public offering of shares of common stock at a public offering price
of $ per share and stock purchase warrants to purchase
As
of June 30, 2024, there were
Open Market Sale Agreement
On
August 17, 2018, the Company entered into an open market sale agreement (as amended, the “ATM Agreement”) with Jefferies
LLC (“Jefferies”) pursuant to which, the Company may sell from time to time, through Jefferies, shares of its common stock
for an aggregate sales price of up to $
The
Company sold and shares of its common stock under the ATM Agreement during the three months ended June 30, 2024 and
2023, respectively, resulting in net proceeds of $
| 18 |
Private Placement Offerings
On
November 3, 2022, the Company sold shares of its common stock, and in lieu of shares of common stock, pre-funded warrants exercisable
for shares of common stock and accompanying warrants to purchase
In
the event of certain fundamental transactions involving the Company, the holders of the stock purchase warrants may require the Company
to make a payment based on a Black-Scholes valuation, using specific inputs that are not considered indexed to the Company’s stock
in accordance with ASC 815. Therefore, the Company is accounting for the stock purchase warrants as liabilities. On November 3, 2022,
the stock purchase warrants were recorded at the closing date fair value of $
As
of June 30, 2024, there were
Direct Placement Offering
On
July 6, 2023, the Company sold
shares of its common stock, and in lieu of shares of common stock, pre-funded warrants exercisable for
shares of common stock (the “2023 Pre-Funded Warrants”), to a group of existing institutional investors for an aggregate
purchase price of $
Underwritten Offering
On
May 7, 2024, the Company sold
shares of its common stock and, in lieu of common stock, pre-funded warrants to purchase
shares of its common stock (the “2024 Pre-Funded Warrants”), for an aggregate purchase price of $
| 19 |
Common Stock Warrants related to the Loan and Security Agreement
On
January 8, 2024, in connection with entering into the Loan and Security Agreement, the Company issued to each of Avenue and Avenue 2
(collectively, the “Warrantholders”) warrants to purchase up to $
The Warrantholders may exercise the January Warrants at any time, or from time to time up to and including the Expiration Date, by making a cash payment equal to the exercise price multiplied by the quantity of shares. The Warrantholders may also exercise the January Warrants on a cashless basis by receiving a net number of shares calculated pursuant to the formula set forth in the January Warrants. The January Warrants are subject to anti-dilution adjustments for stock dividends, stock splits, and reverse stock splits.
The Company previously granted stock options under its 2005 Equity Incentive Plan (the “2005 Incentive Plan”), under which no further grants can be made. In addition, prior to May 17, 2023, the Company had previously granted stock options and stock awards under the Abeona Therapeutics Inc. 2015 Equity Incentive Plan (the “2015 Incentive Plan”). As of May 17, 2023, no further grants can be made under the 2015 Incentive Plan. The Company now grants stock options and stock awards under the Amended and Restated Abeona Therapeutics Inc. 2023 Equity Incentive Plan (the “2023 Incentive Plan”) which was initially approved by stockholders on May 17, 2023 and amended and restated to increase the number of shares of Common Stock reserved for issuance thereunder, which amendment and restatement was approved by stockholders on April 24, 2024. As of June 30, 2024, there were shares available to be granted under the 2023 Incentive Plan. In addition, in 2023, the Company’s board of directors approved various restricted stock awards granted to certain new hires as inducement grants. On October 10, 2023, the Company’s board of directors approved the Abeona Therapeutics Inc. 2023 Employment Inducement Equity Incentive Plan (the “Inducement Plan”). As of June 30, 2024, there were shares available to be granted under the Inducement Plan.
| For the three months ended June 30 | For the six months ended June 30 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
| 20 |
Stock Options
The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The Company then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:
| ● | Expected volatility – the Company estimates the volatility of the share price at the date of grant using a “look-back” period which coincides with the expected term, defined below. The Company believes using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility. | |
| ● | Expected term – the Company estimates the expected term using the “simplified” method, as outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.” | |
| ● | Risk-free interest rate – the Company estimates the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant. | |
| ● | Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend. |
The Company did not grant any stock options in the six months ended June 30, 2024 and 2023.
The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise.
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Outstanding at December 31, 2023 | $ | $ | ||||||||||||||
| Granted | $ | — | $ | — | ||||||||||||
| Cancelled/forfeited | ( | ) | $ | — | $ | — | ||||||||||
| Exercised | $ | — | $ | — | ||||||||||||
| Outstanding at June 30, 2024 | $ | $ | ||||||||||||||
| Exercisable | $ | $ | ||||||||||||||
| Unvested | $ | $ | — | |||||||||||||
The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of June 30, 2024, the total compensation cost related to non-vested option awards not yet recognized was approximately $ million with a weighted average remaining vesting period of years.
| 21 |
Restricted Stock
| Number of Awards | Weighted Average Grant Date Fair Value Per Unit | |||||||
| Outstanding at December 31, 2023 | $ | |||||||
| Granted | $ | |||||||
| Cancelled/forfeited | ( | ) | $ | |||||
| Vested | ( | ) | $ | |||||
| Outstanding at June 30, 2024 | $ | |||||||
As of June 30, 2024, there was $ million of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average vesting period of years. The total fair value of restricted stock awards that vested during the six months ended June 30, 2024 was $ million.
NOTE 11 – LICENSE/SUPPLIER AGREEMENT
Sublicense and Inventory Purchase Agreements Relating to CLN1 Disease
In August 2020, the Company entered into sublicense and inventory purchase agreements with Taysha Gene Therapies (“Taysha”) relating to a potential gene therapy for CLN1 disease. Under the sublicense agreement, Taysha received worldwide exclusive rights to intellectual property and know-how relating to the research, development, and manufacture of the potential gene therapy, which the Company had referred to as ABO-202. Under the inventory purchase agreement, the Company sold to Taysha certain inventory and other items related to ABO-202. The Company assessed the nature of the promised license to determine whether the license has significant stand-alone functionality and evaluated whether such functionality can be retained without ongoing activities by the Company and determined that the license has significant stand-alone functionality. Furthermore, the Company has no ongoing activities associated with the license to support or maintain the license’s utility. Based on this, the Company determined that the pattern of transfer of control of the license to Taysha was at a point in time.
The
transaction price of the contract includes (i) $
Under
this arrangement, the Company recognized
| 22 |
Sublicense Agreement Relating to Rett Syndrome
In October 2020, the Company entered into a sublicense agreement with Taysha for a gene therapy for Rett syndrome, including intellectual property related to MECP2 gene constructs and regulation of their expression. The agreement grants Taysha worldwide exclusive rights to intellectual property developed by scientists at the University of North Carolina at Chapel Hill, the University of Edinburgh and the Company, and the Company’s know-how relating to the research, development, and manufacture of the gene therapy for Rett syndrome and MECP2 gene constructs and regulation of their expression.
The Company assessed the nature of the promised license to determine whether the license has significant stand-alone functionality and evaluated whether such functionality can be retained without ongoing activities by the Company and determined that the license has significant stand-alone functionality. Furthermore, the Company has no ongoing activities associated with the license to support or maintain the license’s utility. Based on this, the Company determined that the pattern of transfer of control of the license to Taysha was at a point in time.
The
transaction price of the contract includes (i) $
Under
this arrangement, the Company recognized and $
Ultragenyx License Agreement
On
May 16, 2022, the Company and Ultragenyx Pharmaceutical Inc. (“Ultragenyx”) entered into an exclusive license agreement (the
“License Agreement”) for AAV gene therapy, ABO-102, for the treatment of Sanfilippo syndrome type A (MPS IIIA). Under the
License Agreement, Ultragenyx assumed responsibility for the ABO-102 program from the Company, with the exclusive right to develop, manufacture,
and commercialize ABO-102 worldwide. Also pursuant to the License Agreement, following regulatory approval, the Company is eligible to
receive tiered royalties from mid-single-digit up to 10% on net sales and up to $
Additionally, pursuant to the License Agreement, Ultragenyx will reimburse the Company for certain development and transition costs actually incurred by the Company. These costs are passed through to Ultragenyx without mark-up. The Company has determined that these costs are not incurred for the purpose of satisfying any performance obligation under the License Agreement. Accordingly, the reimbursement of these costs is recognized as a reduction of research and development costs. As of June 30, 2024 and December 31, 2023, the Company does not have any contract assets or contract liabilities as a result of this transaction.
NOTE 12 – SUBSEQUENT EVENTS
In July of 2024, the compensation committee of the board of directors granted various employees and directors restricted stock awards, under which the holders have the right to receive an aggregate of shares of the Company’s common stock. Total stock compensation estimated for these awards at the time of grant was $ million, with $ million vesting in three equal annual installments and $ million vesting in one annual installment. Pursuant to the terms of the awards, the shares not vested are forfeited upon separation from the Company.
| 23 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”). This discussion and analysis contains forward-looking statements, which involve risks and uncertainties. As a result of many factors, such as those described under “Forward-Looking Statements,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements.
OVERVIEW
Abeona is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. Our lead clinical program is pz-cel, investiga