Quarterly report [Sections 13 or 15(d)]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 30, 2025
Accounting Policies [Abstract]  
Basis of Presentation

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, 2024 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, 2024, which was filed with the SEC on March 20, 2025.

 

 
Use of Estimates

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 consolidated financial statements and the reported amounts of revenue and expenses during the reported period. The Company’s significant estimates include, but are not limited to, fair value of warrant and derivative liabilities, the incremental borrowing rate related to the Company’s operating leases and stock-based compensation. Due to the uncertainty inherent in such estimates, actual results could differ from these estimates and assumptions.

 
Inventory

Inventory

 

The Company capitalizes inventory costs associated with products when future economic benefit is expected to be realized. These costs consist of raw materials, manufacturing-related costs, personnel costs, facility costs, and other indirect overhead costs. Prior to receiving FDA approval for ZEVASKYN™ in April 2025, the Company expensed costs related to inventory for clinical and pre-commercial purposes directly to research and development expense. Following the FDA’s approval of ZEVASKYN™, the Company began capitalizing inventory related to commercialized products held for sale, in-process of production for sale, and raw materials to be used in the manufacturing of inventory.

 

The Company values its inventory at the lower-of-cost and net realizable value, on a first-in, first-out basis. The Company adjusts the net realizable value of any excess, obsolete or unsalable inventory in the period in which they are identified. Such impairment charges, should they occur, are recorded within cost of product revenue. For the three and six months ended June 30, 2025 there were no inventory write-downs. Inventory as of June 30, 2025 consisted of raw materials.

 
Other receivables

Other receivables

 

Other receivables include employee retention credits, sublease rent receivables and other miscellaneous receivables that are expected to be collected within the next twelve months. As of June 30, 2025 and December 31, 2024, the Company had employee retention credits receivables of $1.6 million.

 
Credit Losses

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, 2025, the Company’s available-for-sale investments were in 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 or a history of significantly aged accounts receivables. As of June 30, 2025, the Company did not recognize a credit loss allowance for its investments or accounts receivable.

 
Segments

Segments

 

The Company determines and presents operating segments based on the information that is internally provided to the Company’s chief operating decision maker (“CODM”), its Chief Executive Officer, in accordance with ASC 280, Segment Reporting. The Company has determined that it operates in a single business segment, which is a commercial-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. Refer to Note 12 – Segment Information for further information related to the Company’s segment.

 

 
Net Income (Loss) Per Share

Net Income (Loss) Per Share

 

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 $0.0001 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.

 

A reconciliation of the numerators and the denominators of the basic and diluted net income (loss) per share computations are as follows (in thousands, except per share amounts):

 

    2025     2024     2025     2024  
   

For the three months ended June 30,

    

For the six months ended June 30,

  
    2025     2024     2025     2024  
                         
Numerator:                                
Net income (loss) used for basic net income (loss) per share   $ 108,833     $ 7,406     $ 96,804     $ (24,172 )
Effect of dilutive securities:                                
Fair value adjustments for warrant and derivative liabilities     4,834       (20,854 )     (1,180 )     —  
Numerator for dilutive net income (loss) per share - net income available for common shareholders’ after the effect of dilutive securities   $ 113,667     $ (13,448 )   $ 95,624     $ (24,172 )
                                 
Denominator:                                
Weighted average number of common shares outstanding - basic     52,524,510       40,010,481       51,159,240       33,662,908  
Effect of dilutive shares:                                
Shares of common stock issuable upon exercise of stock options     176,173       178,931       176,273       —  
Shares of common stock underlying restricted stock     5,126,127       2,293,570       4,962,006       —  
Shares of common stock issuable upon exercise of warrants     8,199,559       8,165,236       8,199,560       —  
Shares of common stock issuable upon exercise of conversion feature of loan agreement     614,251       578,497       614,251       —  
Dilutive potential common shares     14,116,110       11,216,234       13,952,090       —  
Denominator for dilutive net income (loss) per share - adjusted weighted average shares used in computing net income (loss) per share - dilutive     66,640,620       51,226,715       65,111,330       33,662,908  
                                 
Earnings per share:                                
Basic income (loss) per common share   $ 2.07     $ 0.19     $ 1.89     $ (0.72 )
Dilutive income (loss) per common share   $ 1.71     $ (0.26 )   $ 1.47     $ (0.72 )

 

 

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,

  
    2025     2024     2025     2024  
                         
Shares of common stock issuable upon exercise of stock options     —       —       —       178,859  
Shares of common stock underlying restricted stock     —       —       —       1,647,666  
Shares of common stock issuable upon exercise of conversion feature of loan agreement     —       —       —       614,251  
Shares of common stock issuable upon exercise of warrants     1,788,000       1,788,000       1,788,000       9,987,560  
Total     1,788,000       1,788,000       1,788,000       12,428,336  

 
Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

 

In December 2023, the FASB issued ASU 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 adopted ASU 2023-09 effective January 1, 2025. Since ASU 2023-09 addresses only disclosures, the adoption of ASU 2023-09 did not have a significant impact on the Company’s interim condensed consolidated financial statements.

 
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in ASU 2024-03 address investor requests for more detailed expense information and require additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the income statement. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.