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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark one)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission
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(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
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Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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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.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
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|
| Emerging
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares outstanding of the registrant’s common stock as of August 10, 2026 was shares.
ABEONA THERAPEUTICS INC.
Form 10-Q
For the Quarter Ended June 30, 2026
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: our ability to successfully commercialize ZEVASKYN® and generate future revenue; the deprioritization of our AAV-based ophthalmology programs; the development of ABO-701; our pipeline of product candidates, including the achievement of or expected timing, progress and results of clinical development, clinical trials and potential regulatory approvals; our estimates regarding expenses, capital requirements, and needs for additional financing; anticipated losses and negative cash flows; the potential effects on the relative equity ownership of existing investors resulting from any future sales of equity securities; the potential effects of fundraising activities involving collaborations, strategic alliances, or license arrangements with third parties; our intended use of cash; our intellectual property position and our ability to obtain, maintain and enforce intellectual property protection and exclusivity for our proprietary assets; 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, 2025, as updated from time to time in the Company’s SEC filings, including this Quarterly Report on Form 10-Q. These factors include: our ability to maintain existing and obtain additional regulatory approvals of ZEVASKYN® and any future product candidates; our ability to successfully commercialize and market ZEVASKYN® and any future product candidates, if approved, and the timing of any commercialization and marketing efforts; our ability to manufacture sufficient batches of ZEVASKYN® to meet demand; our ability to manufacture ZEVASKYN® batches that meet certain product release specifications that were required by FDA at the time of BLA approval and implemented based on a limited clinical dataset; the FDA’s willingness to revise such release specifications to reflect real-world manufacturing experience; our ability to manufacture from provided biopsy material a ZEVASKYN® batch for which revenue may ultimately be recognized, which depends on such factors as qualified treatment centers obtaining biopsy samples from ZEVASKYN® patients of sufficient quality to act as starting material for manufacturing ZEVASKYN®, patient-to-patient variability in cell growth during the ZEVASKYN® manufacturing process, patient health deterioration in close proximity to ZEVASKYN® treatment such that treatment is no longer possible, and expiration of ZEVASKYN®’s 84-hour shelf-life before surgical application of ZEVASKYN® can be performed; our ability to activate additional qualified treatment centers to administer ZEVASKYN® on patients; the ability of qualified treatment centers to enroll patients for treatment or administer ZEVASKYN® on patients; our ability submit an investigational new drug application for ABO-701 and enroll patients in new clinical trials; 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 impact of unpredicted changes in the structure and/or administration of the United States government or its agencies; 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 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 potentially future commercialization; the rate and degree of market acceptance of our product candidates for any indication once approved; our ability to meet our obligations contained in license agreements to which we are party; and macroeconomic uncertainty resulting from changes to U.S. trade policy, including current or future tariffs or other trade restrictions.
This Quarterly Report on Form 10-Q includes our trademarks, trade names and service marks, such as “ZEVASKYN®” and “AIM™,” which are protected under applicable intellectual property laws and are the property of Abeona Therapeutics Inc. or its subsidiaries. Solely for convenience, trademarks, trade names and service marks referred to in this report appear without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties.
| 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, 2026 | December 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| 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 | ||||||||
| Accrued taxes and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term operating lease liabilities | ||||||||
| Long-term debt | ||||||||
| Deferred revenue | ||||||||
| Warrant liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - $ par value; authorized shares; shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | ||||||||
| Common stock - $ par value; authorized shares; and shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Accumulated other comprehensive (loss) income | ( |
) | ||||||
| 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 (Loss) Income
($ in thousands, except share and per share amounts)
(Unaudited)
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product revenue, net | $ | $ | $ | $ | ||||||||||||
| License and other revenues | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Royalties | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total costs and expenses | ||||||||||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Change in fair value of warrant liabilities | ( |
) | ( |
) | ( |
) | ||||||||||
| Gain from sale of priority review voucher, net | ||||||||||||||||
| Other (loss) income, net | ( |
) | ||||||||||||||
| (Loss) income before income taxes | ( |
) | ( |
) | ||||||||||||
| Income tax expense | ||||||||||||||||
| Net (loss) income | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Basic (loss) income per common share | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Dilutive (loss) income per common share | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Weighted average number of common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Dilutive | ||||||||||||||||
| Other comprehensive (loss) income: | ||||||||||||||||
| Change in unrealized losses related to available-for-sale debt securities | ( |
) | ( |
) | ( |
) | ||||||||||
| Comprehensive (loss) income | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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
($ in thousands, except share amounts)
(Unaudited)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
| 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 income | — | |||||||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
| 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 income | — | |||||||||||||||||||||||
| Other comprehensive loss | — | ( |
) | ( |
) | |||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
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, Continued
($ in thousands, except share amounts)
(Unaudited)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
| 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 upon exercise of pre-funded warrants, net of shares settled | ( |
) | ||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||
| Other comprehensive loss | — | ( |
) | ( |
) | |||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||
| 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 upon exercise of pre-funded warrants, net of shares settled | ( |
) | ||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||
| Other comprehensive loss | — | ( |
) | ( |
) | |||||||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
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, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | ( |
) | $ | ||||
| Adjustments to reconcile net (loss) income to cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation expense | ||||||||
| Change in fair value of warrant liabilities | ( |
) | ||||||
| Accretion and interest on short-term investments | ||||||||
| Amortization of right-of-use lease assets | ||||||||
| Non-cash interest | ||||||||
| Gain from sale of priority review voucher | ( |
) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( |
) | ||||||
| Inventory | ( |
) | ( |
) | ||||
| Other receivables | ||||||||
| Prepaid expenses and other current assets | ( |
) | ( |
) | ||||
| Other assets | ( |
) | ( |
) | ||||
| Accounts payable and accrued expenses | ( |
) | ||||||
| Lease liabilities | ( |
) | ( |
) | ||||
| Deferred revenue | ||||||||
| Accrued taxes and other current liabilities | ( |
) | ||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of priority review voucher, net of transaction costs of $ |
||||||||
| Capital expenditures | ( |
) | ( |
) | ||||
| Purchases of short-term investments | ( |
) | ( |
) | ||||
| Proceeds from maturities of short-term investments | ||||||||
| Net cash 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 | ( |
) | ( |
) | ||||
| Payments of long-term debt | ( |
) | ||||||
| Net cash (used in) provided by financing activities | ( |
) | ||||||
| Net (decrease) increase 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 | $ | $ | ||||||
| Changes in accrued property and equipment | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
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
Background
Abeona Therapeutics Inc. (together with the Company’s subsidiaries, “Abeona” or the “Company”), a Delaware corporation, is a commercial-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. On April 28, 2025, the U.S. Food and Drug Administration (“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 recessive dystrophic epidermolysis bullosa (“RDEB”), a serious and debilitating genetic skin disease. The Company’s development portfolio also features ABO-701, a recently licensed, radically novel engineered T-cell therapy, targeting Prostate-Specific Membrane Antigen (“PSMA”) to treat prostate cancer.
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 ZEVASKYN and other product candidates, business planning, raising capital, establishing its intellectual property portfolio, acquiring or discovering product candidates, and providing selling, 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, other than the year ended December 31, 2025, with the gain on sale of its Priority Review Voucher (“PRV”). The Company anticipates such losses and negative cash flows will continue until ZEVASKYN can provide sufficient revenue for the Company to be profitable and generate positive cash flows. Through June 30, 2026, the Company has relied primarily on its sale of equity securities, its proceeds from the sale of its PRV, its proceeds from sales of ZEVASKYN, its proceeds from credit facilities, and strategic collaboration arrangements to finance its operations. The Company expects that its capital resources will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of these condensed consolidated financial statements. The Company may need to raise additional capital to fully implement its business plans through the issuance of equity, borrowings, or strategic alliances with partner companies. However, if such financing is not available at adequate levels, the Company would need to reevaluate its operating plans.
NOTE 2 – 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, 2025, other than those identified below.
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, 2025 condensed consolidated balance sheet was derived from the audited statements but does not include all disclosures required by U.S. GAAP.
| 8 |
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, 2025, which was filed with the SEC on March 17, 2026.
Use of Estimates
The preparation of unaudited interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 condensed 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, variable consideration associated with revenue recognition and the determination of the standalone selling price of material rights, fair value of warrant liabilities, the incremental borrowing rate related to the Company’s operating leases, stock-based compensation, accrued expenses, impairment of long-lived assets and income taxes. Due to the uncertainty inherent in such estimates, actual results could differ from these estimates and assumptions.
Accounts Receivable
Accounts receivable represents amounts arising from product sales and licensing revenue and is recorded net of allowances for prompt payment discounts, returns, and credit losses. The Company estimates an allowance for credit losses by considering factors such as the aging of its accounts receivable, the history of write-offs for uncollectible accounts, the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company reviews the credit quality of its accounts receivable by monitoring the aging of its accounts receivable, the history of write-offs for uncollectible accounts, the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company has no historical write-offs of its accounts receivable, and the Company has determined that an allowance for credit losses is not required as of June 30, 2026.
Accounts receivable, net comprises the following categories (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Product sales | $ | $ | ||||||
| License revenues | ||||||||
| Total accounts receivable, net | $ | $ | ||||||
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, 2026 and December 31, 2025, the Company had employee retention credits receivables
of $
| 9 |
Concentration of Credit Risk and Off-Balance Sheet Risk
Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents, short-term investments, accounts receivable, net and other receivables. The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are subject to minimal credit risk. The Company is exposed to credit risk in the event of default by the financial institutions to the extent amounts recorded on the consolidated balance sheets are in excess of insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company’s investment securities, which primarily consist of U.S. federal agency securities, U.S. treasury securities and certificates of deposit, potentially subject the Company to concentrations of credit risk. The Company has no financial instruments with off-balance sheet risk of loss.
Inventory and Costs of Sales
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 sales.
During the three and six months ended June 30, 2026, cost of sales includes inventory, period costs related to overhead and manufacturing costs of ZEVASKYN, and royalties due to our licensor. Prior to receiving FDA approval in April 2025, costs associated with the manufacturing of ZEVASKYN were expensed as research and development costs.
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, 2026, the Company’s available-for-sale investments were in securities that are issued by the U.S. treasury, U.S. federal agencies and certificates of deposits, 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, the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company’s accounts receivables are with customers that do not have a history of uncollectibility nor a history of significantly aged accounts receivables. As of June 30, 2026, the Company did not recognize a credit loss allowance for its investments or accounts receivable.
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 14 – Segment Information for further information related to the Company’s segment.
Revenue Recognition
The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
| 10 |
Product Revenue
The Company generates revenue from sales in the United States of its commercially approved ZEVASKYN. The Company’s customers for ZEVASKYN are qualified treatment centers. Revenue from product sales is a single performance obligation recognized at the point in time when the customer obtains control of the product, which is typically upon the completion of a final quality inspection of the product at the qualified treatment center. There is no obligation for the qualified treatment centers to use ZEVASKYN, and the Company has no contractual right to receive payment until the final quality inspection of the product at the qualified treatment centers and transfer of control is completed.
The Company is a party to various commercial arrangements and government programs, which include payor rebates, co-payment assistance and prompt pay discounts, which impact the transaction price and represent forms of variable consideration. Revenue from product sales is reduced at the time of recognition for these forms of variable consideration. The Company’s contracts can include the right to receive an outcomes-based rebate and a subsequent treatment discount of ZEVASKYN under certain conditions. The Company has determined that the rebate and discount create a material right and allocates transaction consideration to ZEVASKYN and the material right on a relative standalone selling price basis. The standalone selling price for ZEVASKYN is the wholesale acquisition cost. The standalone selling price for the material right is determined by quantifying the discount a customer would receive upon exercise of the option adjusting for the likelihood the option will be exercised. Transaction consideration allocated to the material right is deferred and recognized when either (a) the subsequent purchase of ZEVASKYN occurs, or (b) the time period during which a subsequent purchase of ZEVASKYN could be made, expires. The Company deferred $0.3 million and nil for the three months ended June 30, 2026 and 2025, respectively and $0.7 million and nil for the six months ended June 30, 2026 and 2025, respectively.
License and other revenues
The Company enters into license agreements that are within the scope of ASC 606, under which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.
If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are combined with other performance obligations, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The measure of progress, and thereby periods over which revenue should be recognized, are subject to estimates by management and may change over the course of the research and development and licensing agreement. Such a change could have a material impact on the amount of revenue the Company records in future periods.
| 11 |
Milestone Payments
At the inception of each arrangement that includes research or development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant cumulative revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant cumulative revenue reversal would not occur. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment.
Collaborative Arrangements
The Company analyzes its collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of ASC 808, Collaborative Arrangements (“ASC 808”). This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606. Amounts that are owed to collaboration partners are recognized as an offset to collaboration revenue as such amounts are incurred by the collaboration partner. For those elements of the arrangement that are accounted for pursuant to ASC 606, the Company applies the five-step model described above under ASC 606.
Royalties
The Company has license agreements with various third parties. Under these agreements, the Company is obligated to pay royalty payments based on a percentage of net sales or sublicense revenues. Royalties are included in either accounts payable or accrued expenses in the condensed consolidated balance sheets. See Note 13 – License/Supplier Agreements for details of the Company’s license agreements and resulting royalties recognized.
Basic net (loss) income per share is computed by dividing net (loss) income 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 (loss) income per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common 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.
| 12 |
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net (loss) income 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 (loss) income per share - adjusted weighted average shares used in computing net (loss) income per share - dilutive | ||||||||||||||||
| Earnings per share: | ||||||||||||||||
| Basic (loss) income per common share | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| Dilutive (loss) income 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, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| 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 | ||||||||||||||||
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“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.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract. The guidance in ASU 2025-07 refines the scope of derivative accounting under ASC 815, Derivatives and Hedging (“ASC 815”) by expanding an existing scope exception to exclude certain non-exchange traded contracts with underlyings based on the operations or activities of one of the contract parties from derivative classification. The ASU also provides guidance under Topic 606 on the accounting for share-based noncash consideration received from a customer in a revenue contract, including measurement and timing considerations. ASU 2025-07 is effective for annual and interim periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-07.
| 13 |
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This standard clarifies current interim reporting requirements on Topic 270 and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This standard will be effective for fiscal years beginning after December 15, 2027, with the option to apply it retrospectively. Early adoption is allowed. Currently, the Company is assessing the potential impact of this guidance on its consolidated financial statement disclosures.
NOTE 3 – REVENUE
Revenue comprises the following categories (in thousands):
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Product revenue, net | $ | $ | $ | $ | ||||||||||||
| License and other revenues | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
Allowances and discounts
Revenue from product sales is reduced at the time of recognition for payor rebates, prompt pay discounts and co-payment assistance, which are attributed to various commercial arrangements and government programs. The following table summarizes changes in allowances and discounts for the six months ended June 30, 2026 (in thousands):
| Rebates | Prompt Pay | Co-payment Assistance | Total | |||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ||||||||||||
| Provisions | ||||||||||||||||
| Payments/Credits | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Balance at June 30, 2026 | $ | $ | $ | $ | ||||||||||||
Rebate and co-payment assistance accruals are included in accrued expenses on the condensed consolidated balance sheets. Prompt pay is recorded as an allowance against accounts receivable, net on the condensed consolidated balance sheets. Provision for rebates, prompt pay and other co-payment assistance are recorded as a reduction to product revenue, net on the condensed consolidated statements of operations and comprehensive (loss) income.
| 14 |
Deferred revenue
The Company’s contracts can include the right to receive an outcomes-based rebate and a subsequent treatment discount of ZEVASKYN under certain conditions. The Company has determined that the rebate and discount create a material right and allocates transaction consideration to ZEVASKYN and the material right on a relative standalone selling price basis. The standalone selling price for ZEVASKYN is the wholesale acquisition cost. The standalone selling price for the material right is determined by quantifying the discount a customer would receive upon exercise of the option adjusting for the likelihood the option will be exercised. Transaction consideration allocated to the material right is deferred and recognized when either (a) the subsequent purchase of ZEVASKYN occurs, or (b) the time period during which a subsequent purchase of ZEVASKYN could be made, expires.
The following table provides a summary of the activity on the deferred revenue (in thousands):
| Deferred revenue balance as of December 31, 2025 | $ | |||
| Additions to deferred revenue during the period | ||||
| Revenue recognized during the period | ||||
| Deferred revenue balance as of June 30, 2026 | $ |
NOTE 4 – SHORT-TERM INVESTMENTS
The following table provides a summary of the short-term investments (in thousands):
| June 30, 2026 | ||||||||||||||||
| 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, 2025 | ||||||||||||||||
|
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 | $ | $ | ||||||||||||||
As of June 30, 2026, 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 condensed consolidated balance sheets. Unrealized losses on available-for-sale securities as of June 30, 2026, 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, 2026.
There
were
| 15 |
NOTE 5 – INVENTORY
Inventory consists of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total inventory | $ | $ | ||||||
For
the three and six months ended June 30, 2026 and 2025, there were
NOTE 6 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Laboratory equipment | $ | $ | ||||||
| Furniture, software and office equipment | ||||||||
| Leasehold improvements | ||||||||
| Construction-in-progress | ||||||||
| Total property and equipment, cost | ||||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation
and amortization on property and equipment was $
NOTE 7 – 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 taxes and accrued expenses approximate their carrying amounts due to the relatively short maturity of these instruments. The
estimated fair value of the Loan Agreement (as Defined in Note 10 – Debt) as of June 30, 2026 and December 31, 2025, was $
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.
| 16 |
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 and liabilities measured at fair value on a recurring and non-recurring basis (in thousands):
| Description |
Fair Value at June 30, 2026 |
Level 1 | Level 2 | Level 3 | ||||||||||||
| Recurring Assets | ||||||||||||||||
| Cash equivalents | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Money market deposit account | ||||||||||||||||
| Short-term investments | ||||||||||||||||
| U.S. treasury securities | ||||||||||||||||
| U.S. federal agency securities | ||||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
| Description | Fair Value at December 31, 2025 |
Level 1 | Level 2 | Level 3 | ||||||||||||
| Recurring Assets | ||||||||||||||||
| Cash equivalents | ||||||||||||||||
| Money market funds | $ | $ | $ | $ | ||||||||||||
| Money market deposit account | ||||||||||||||||
| Short-term investments | ||||||||||||||||
| U.S. treasury securities | ||||||||||||||||
| U.S. federal agency securities | ||||||||||||||||
| Certificates of deposit | ||||||||||||||||
| Total assets measured at fair value | $ | $ | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| Total liabilities measured at fair value | $ | $ | $ | $ | ||||||||||||
| 17 |
Warrant Liabilities
As of June 30, 2026 and December 31, 2025, the Company had the following outstanding warrants that are classified as liabilities:
| June 30, 2026 | December 31, 2025 | |||||||
| Warrants issued as part of the 2021 public offering, expiration date December 2026, exercise price of $ |
||||||||
| Warrants issued as part of the 2022 Private Placement Offering, expiration date November 2027, exercise price $ |
||||||||
| Warrants issued as part of the 2024 Loan Agreement, expiration date January 2029, exercise price $ |
||||||||
| Warrants issued as part of the 2024 Loan Agreement Amendment, expiration date July 2030, exercise price $ |
||||||||
The common stock warrants related to the 2021 public offering, the 2022 private placement, and the common stock warrants issued in connection with the Loan Agreement and the Loan Agreement Amendment, are not indexed to the Company’s own stock and therefore have been classified as liabilities at their estimated fair value. Changes in the estimated fair value of the warrant liabilities are recorded as changes in fair value of warrant liabilities in the condensed consolidated statement of operations and comprehensive (loss) income.
The following table provides a summary of the activity on the warrant liabilities (in thousands):
| Warrant liabilities as of December 31, 2025 | $ | |||
| Issuance of warrants | ||||
| Loss recognized in earnings from change in fair value | ||||
| Warrant liabilities as of June 30, 2026 | $ |
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.
The following table outlines the key inputs for the Black-Scholes option-pricing model:
| June 30, 2026 | December 31, 2025 | |||||||
| Common share price | $ | $ | ||||||
| Expected term (years) | ||||||||
| Risk-free interest rate (%) | ||||||||
| Volatility (%) | ||||||||
| Expected dividend yield (%) |
|
|
||||||
| 18 |
NOTE 8 – ACCRUED EXPENSES
The following table provides a summary of the components of accrued expenses (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Accrued employee compensation | $ | $ | ||||||
| Accrued contracted services and other | ||||||||
| Accrued rebates | ||||||||
| Total accrued expenses | $ | $ | ||||||
NOTE 9 – LEASES
The Company leases space under operating leases for administrative, manufacturing and laboratory facilities in Cleveland, Ohio. 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 following table provides a summary of the Company’s operating lease liabilities (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| Current operating lease liability | $ | $ | ||||||
| Non-current operating lease liability | ||||||||
| Total operating lease liability | $ | $ | ||||||
Lease costs and rent are reflected in selling, general and administrative expenses and research and development expenses in the condensed consolidated statements of operations and comprehensive (loss) income, 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, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| 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 $
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, 2026 were as follows (in thousands):
| Future minimum lease payments and obligations | Operating Leases | |||
| 2026, remainder | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 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
| 19 |
NOTE 10 – DEBT
The following table provides a summary of the Company’s debt, net of debt issuance costs and discounts (in thousands):
| June 30, 2026 | December 31, 2025 | |||||||
| 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 | $ | $ | ||||||
Loan and Security Agreement
On
January 8, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement, as supplemented by a Supplement,
dated as of January 8, 2024 (collectively, the “Loan 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”).
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 February 1, 2026. The Loans bear interest at a rate per annum
(subject to increase during an event of default) equal to the greater of (i) the prime rate, as published by the Wall Street Journal
from time to time, plus
The
Company may, subject to certain parameters, voluntarily prepay the Loans, in whole, at any time. If prepayment occurs after January 8,
2025 and on or before January 8, 2026,
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 $
| 20 |
Pursuant
to the Supplement to the Loan and Security Agreement, Avenue also has the right to convert up to $
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 “Warrant Holders”) warrants to purchase up to $
The future payment obligations of the principal are as follows as of June 30, 2026 (in thousands):
| 2026, remainder | $ | |||
| 2027 | ||||
| Total principal | $ |
NOTE 11 – EQUITY
Preferred Stock
The aggregate number of authorized shares of the Company’s preferred stock is shares with a par value of one cent ($). There is preferred stock outstanding as of June 30, 2026 and December 31, 2025.
Common Stock and Warrants
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, 2026, there were
| 21 |
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 $
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 shares of its common stock under the ATM Agreement during the three months ended June 30, 2025 resulting in net
proceeds of $
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 $
| 22 |
As
of June 30, 2026, 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 $
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 the Warrant Holders warrants
to purchase up to $
The Warrant Holders may exercise the January Warrants at any time, or from time to time up to and including January 8, 2029, by making a cash payment equal to the exercise price multiplied by the quantity of shares. The Warrant Holders 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.
On
July 18, 2025, in connection with entering into the Loan Agreement Amendment, the Company issued the Lenders warrants to purchase up
to an aggregate of shares of Company common stock (collectively, the “July 2025 Avenue Warrants”). The July 2025 Avenue
Warrants expire on July 18, 2030 and have an exercise price per share equal to $. 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 accounted for the stock purchase warrants as liabilities, which were recorded at the closing date fair value of $
| 23 |
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 Abeona Therapeutics Inc. 2023 Equity Incentive Plan (the “2023 Incentive Plan”) which was approved by stockholders on May 17, 2023. On April 24, 2024, stockholders approved an amendment to the 2023 Incentive Plan to increase the shares authorized for issuance from shares to shares. On December 20, 2024, stockholders approved an additional increase in the shares authorized for issuance under the 2023 Incentive Plan from shares to shares. On June 12, 2026, stockholders approved an additional increase in the shares authorized for issuance under the 2023 Incentive Plan from to shares. As of June 30, 2026, 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, 2026, 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, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
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 recognizes 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 t grant any stock options in the six months ended June 30, 2026 and 2025.
The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise.
| 24 |
|
Number of Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value (in thousands) |
|||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Granted | $ | — | $ | — | ||||||||||||
| Cancelled/forfeited | ( |
) | $ | — | $ | — | ||||||||||
| Exercised | $ | — | $ | — | ||||||||||||
| Outstanding at June 30, 2026 | $ | $ | ||||||||||||||
| 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, 2026, there was no unrecognized compensation cost related to non-vested option awards not yet recognized.
Restricted Stock
|
Number of Awards |
Weighted Average Grant Date Fair Value Per Unit |
|||||||
| Outstanding at December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Cancelled/forfeited | ( |
) | $ | |||||
| Vested | ( |
) | $ | |||||
| Outstanding at June 30, 2026 | $ | |||||||
As of June 30, 2026, 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 was $ million during the six months ended June 30, 2026.
NOTE 13 – LICENSE/SUPPLIER AGREEMENTS
License and Joint Development Agreement Relating to SIR-T™ Technology for PSMA-Positive Prostate Cancer
On March 18, 2026, the Company entered into a License and Joint Development Agreement (the “Initial Agreement”) with Reverence Enterprises, LLC (“Reverence”), a private biotechnology company based in California. Reverence is a subsidiary of Angeles Therapeutics, Inc.
Under the terms of the Initial Agreement, which covers the first phase of development (inclusive of a Phase 1 Study), Abeona obtained an exclusive license (“License Grant”) to develop and commercialize Reverence’s synthetic immune receptors (“SIR-T™”) for PSMA positive prostate cancer. PSMA SIR-T™ is an autologous adult donor-derived T-cell product. Pursuant to an agreed-upon Scope of Work between the parties, during the term of the Initial Agreement, Abeona has agreed to file an IND with the FDA relating to the PSMA SIR-T™ Product and conduct a Phase 1 Study.
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Following the completion of the first Phase 1 Study, Abeona, at its sole discretion, will have 30 days to notify Reverence of its decision whether to proceed with further product development. If Abeona wishes to proceed with further development of the product, Reverence, at its sole discretion, will have 30 days to elect to proceed in negotiating with Abeona either (i) a Joint Development Agreement or (ii) a License Agreement (each a “Subsequent Agreement”) governing the further licensing, development, manufacture, distribution and/or commercialization of the PSMA SIR-T™ product. Under the Initial Agreement, the parties agreed to certain payment terms that would be included in any future executed Subsequent Agreement, subject to additional customary terms upon execution. Abeona, at its sole discretion, has the right to decline to enter into any such Subsequent Agreement.
The
payment terms of the Initial Agreement include (i) an upfront payment of $
License Agreement Relating to Recessive Dystrophic Epidermolysis Bullosa (RDEB)
In 2016, the Company entered into two licensing agreements between the Company and The Board of Trustees of Leland Stanford Junior University (“Stanford”) to develop EB-101 (LZRSE-Col7A1 Engineered Autologous Epidermal Sheets (LEAES)) and EB-201 (AAV DJ COL7A1) and to license the invention “Gene Therapy for Recessive Dystrophic EB using Genetically Corrected Autologous Keratinocytes.” Under the terms of the licensing agreements, the Company paid an upfront of licensing fees in cash and is subject to annual license maintenance fees. In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments, and royalty payments in the low single digit percentage on annual net sales of the licensed product. Royalty payments are included in cost of sales in the condensed consolidated statement of operations and comprehensive (loss) income.
License Agreement Relating to Novel AAV Capsids
In 2016, the Company licensed an international patent family from The University of North Carolina at Chapel Hill (“UNC”) covering novel AAV capsids (“AIM™ capsids”) that may potentially be used to deliver a wide variety of therapeutic transgenes to human cells to treat genetic diseases. Under the terms of the licensing agreements, the Company paid an upfront licensing fee in cash and is subject to on-going patent expenses incurred in relation to the patents licensed under this agreement and annual license maintenance fees. In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments, and royalty payments in the low single digits on annual net sales of the licensed product.
License Agreement Relating to Rett Syndrome
In 2019, the Company licensed rights to one patent family from UNC and two patent families from The University Court of the University of Edinburgh (“U. Edinburgh”) and The University Court of the University of Glasgow relating to gene therapy for the treatment of Rett Syndrome. Under the terms of the licensing agreements, the Company paid an upfront of licensing fees in cash and is subject to on-going patent expenses incurred in relation to the patents licensed under this agreement and annual license maintenance fees. In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments, and royalty payments in the low single digits on annual net sales of the licensed product. The Company subsequently sublicensed the license to Taysha, see detail of the sublicense agreement below. As part of the agreement with UNC, the Company is obligated to pay to UNC and U. Edinburgh a percentage of any sublicense revenue that the Company receives under the agreement.
License Agreement Relating to AAV Capsids
In 2024, the Company entered into a license agreement with a third party for certain of the Company’s AAV capsids. 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 the third party was at a point in time.
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The
transaction price of the contract includes (i) $
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 UNC, U. 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) $
As
of June 30, 2026, the Company did not have any contract assets or contract liabilities as a result of this transaction. As of December
31, 2025, the Company had $
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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-digits to 8% on net sales, as well as up to $
NOTE 14 – SEGMENT INFORMATION
Operating
segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the CODM,
or decision-making group, in deciding how to allocate resources in assessing performance. The Company is a commercial-stage biopharmaceutical
company developing cell and gene therapies for life-threatening diseases and has
The accounting policies of the commercial-stage biopharmaceutical segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the commercial-stage biopharmaceutical segment based on net (loss) income, which is reported on the consolidated statements of operations and comprehensive (loss) as consolidated net (loss) income. The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. Expenditures for additions to long-lived assets, which include purchases of property and equipment, are included in total consolidated assets reviewed by the chief operating decision maker and are reported on the consolidated statements of cash flows.
To date, the Company has generated limited product revenue. The Company will continue to incur significant expenses and operating losses until ZEVASKYN can provide sufficient revenue for the Company to be profitable. As such, the CODM uses cash forecast models in deciding how to invest into the commercial-stage biopharmaceutical segment. Such cash forecast models are reviewed to make decisions about allocating resources and assessing the entity-wide operating results and performance. Net (loss) income is used to monitor budget versus actual results. Monitoring budgeted versus actual results is used to make decisions about allocating resources, assessing the performance of the segment and in establishing management’s compensation, along with cash forecast models.
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The table below summarizes the significant expense categories regularly reviewed by the CODM (in thousands):
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product revenue, net | $ | $ | $ | $ | ||||||||||||
| License and other revenues | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Royalties | ||||||||||||||||
| Research and development costs: | ||||||||||||||||
| Salaries & related costs | ||||||||||||||||
| Non-cash stock-based compensation | ||||||||||||||||
| Other research and development costs (a) | ||||||||||||||||
| Total research and development costs | ||||||||||||||||
| Selling, general and administrative costs: | ||||||||||||||||
| Salaries & related costs | ||||||||||||||||
| Non-cash stock-based compensation | ||||||||||||||||
| Commercial costs | ||||||||||||||||
| Other selling, general and administrative costs (b) | ||||||||||||||||
| Total selling, general and administrative costs | ||||||||||||||||
| Other segment items, net (c) | ( |
) | ( |
) | ||||||||||||
| Net (loss) income | $ | ( |
) | $ | $ | ( |
) | $ | ||||||||
| (a) | |
| (b) | |
| (c) |
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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, 2025 (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
We are a commercial-stage biopharmaceutical company developing cell and gene therapies for serious diseases. Abeona’s ZEVASKYN® (“prademagene zamikeracel”) is the first and only autologous cell-based gene therapy for the treatment of wounds in adults and pediatric patients with recessive dystrophic epidermolysis bullosa (“RDEB”). Our fully integrated cell and gene therapy cGMP manufacturing facility in Cleveland, Ohio serves as the manufacturing site for ZEVASKYN commercial production. Our development portfolio features ABO-701 (“PSMA-SIR-T™”), a potentially first-in-class engineered T-cell therapy targeting PSMA, engineered to overcome the core failures of cell therapies in solid tumors.
Recent Developments
Qualified Treatment Center Activations
On July 21, 2026, we announced activation of Cincinnati Children’s as the newest qualified treatment center for the administration of ZEVASKYN. This represents the seventh available qualified treatment center for the administration of ZEVASKYN.
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RESULTS OF OPERATIONS
Comparison of Three Months Ended June 30, 2026 and June 30, 2025
| For the three months ended June 30, | Change | |||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | ||||||||||||
| Revenues: | ||||||||||||||||
| Product revenue, net | $ | 11,380 | $ | — | $ | 11,380 | 100 | % | ||||||||
| License and other revenues | — | 400 | (400 | ) | (100 | )% | ||||||||||
| Total revenues | 11,380 | 400 | 10,980 | 2,745 | % | |||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales | $ | 4,177 | $ | — | $ | 4,177 | 100 | % | ||||||||
| Royalties | — | 100 | (100 | ) | (100 | )% | ||||||||||
| Research and development | 5,021 | 5,943 | (922 | ) | (16 | )% | ||||||||||
| Selling, general and administrative | 15,835 | 17,149 | (1,314 | ) | (8 | )% | ||||||||||
| Total costs and expenses | 25,033 | 23,192 | 1,841 | 8 | % | |||||||||||
| Loss from operations | (13,653 | ) | (22,792 | ) | 9,139 | (40 | )% | |||||||||
| Interest income | 1,355 | 1,027 | 328 | 32 | % | |||||||||||
| Interest expense | (696 | ) | (957 | ) | 261 | (27 | )% | |||||||||
| Change in fair value of warrant liabilities | (7,191 | ) | (5,388 | ) | (1,803 | ) | 33 | % | ||||||||
| Gain from sale of priority review voucher, net | — | 152,366 | (152,366 | ) | (100 | )% | ||||||||||
| Other (loss) income, net | (6 | ) | 89 | (95 | ) | (107 | )% | |||||||||
| (Loss) income before income taxes | (20,191 | ) | 124,345 | (144,536 | ) | (116 | )% | |||||||||
| Income tax expense | — | 15,512 | (15,512 | ) | (100 | )% | ||||||||||
| Net (loss) income | $ | (20,191 | ) | $ | 108,833 | $ | (129,024 | ) | (119 | )% | ||||||
Product revenue, net
Product revenue, net, resulting from the sale of ZEVASKYN, for the three months ended June 30, 2026 was $11.4 million. There was no product revenue for the three 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 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
Cost of sales during the three months ended June 30, 2026 was $4.2 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.
Research and development
Research and development expenses include, but are not limited to, payroll and personnel expenses, preclinical lab supplies, preclinical and development 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 three months ended June 30, 2026 was $5.0 million, as compared to $5.9 million for the same period of 2025, a decrease of $0.9 million. The reduction in expenses was primarily due to costs capitalized into inventory and other production costs that are no longer considered research and development due to FDA approval of ZEVASKYN in April of 2025.
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We expect our research and development activities to increase as we work towards advancing our other product candidate towards potential regulatory approval, reflecting costs associated with the following:
| ● | employee and consultant-related expenses; | |
| ● | preclinical and developmental costs; | |
| ● | clinical trial costs; | |
| ● | development and regulatory milestones associated with licensing agreements; | |
| ● | the cost of acquiring and manufacturing clinical trial materials; and | |
| ● | costs associated with regulatory approvals. |
Selling, general and administrative
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 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.
Total selling, general and administrative expenses were $15.8 million for the three months ended June 30, 2026, as compared to $17.1 million for the same period of 2025, a decrease of $1.3 million. The decrease in expenses was primarily due to $0.9 million of costs that were allocated to costs of sales related to overhead costs and a reduction in recruiting costs of $0.4 million as we had fewer increases in new employees.
Interest income
Interest income was $1.4 million for the three months ended June 30, 2026, as compared to $1.0 million in the same period of 2025. The increase resulted from increased average short-term investment balances.
Interest expense
Interest expense was $0.7 million for the three months ended June 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.
Change in fair value of warrant liabilities
The change in fair value of warrant liabilities was a loss of $7.2 million for the three 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 quarter offset by a shorter term of the outstanding warrants.
The change in fair value of warrant liabilities was a loss of $5.4 million for the three months ended June 30, 2025. The loss in the fair value of warrant liabilities was primarily due to the increase in our stock price year over year offset by a shorter 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.
| 32 |
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 $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced the Company’s taxable income and resulting income tax expense for the year ended December 31, 2025.
Comparison of Six Months Ended June 30, 2026 and June 30, 2025
| For the six months ended June 30, | Change | |||||||||||||||
| ($ in thousands) | 2026 | 2025 | $ | % | ||||||||||||
| Revenues: | ||||||||||||||||
| Product revenue, net | $ | 20,100 | $ | — | $ | 20,100 | 100 | % | ||||||||
| License and other revenues | — | 400 | (400 | ) | (100 | )% | ||||||||||
| Total revenues | 20,100 | 400 | 19,700 | 4,925 | % | |||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales | $ | 6,873 | $ | — | $ | 6,873 | 100 | % | ||||||||
| Royalties | — | 100 | (100 | ) | (100 | )% | ||||||||||
| Research and development | 14,576 | 15,884 | (1,308 | ) | (8 | )% | ||||||||||
| Selling, general and administrative | 35,337 | 26,935 | 8,402 | 31 | % | |||||||||||
| Total costs and expenses | 56,786 | 42,919 | 13,867 | 32 | % | |||||||||||
| Loss from operations | (36,686 | ) | (42,519 | ) | 5,833 | (14 | )% | |||||||||
| Interest income | 2,709 | 2,337 | 372 | 16 | % | |||||||||||
| Interest expense | (1,526 | ) | (1,955 | ) | 429 | (22 | )% | |||||||||
| Change in fair value of warrant liabilities | (1,805 | ) | 1,857 | (3,662 | ) | (197 | )% | |||||||||
| Gain from sale of priority review voucher, net | — | 152,366 | (152,366 | ) | (100 | )% | ||||||||||
| Other income, net | 44 | 230 | (186 | ) | (81 | )% | ||||||||||
| (Loss) income before income taxes | (37,264 | ) | 112,316 | (149,580 | ) | (133 | )% | |||||||||
| Income tax expense | 2 | 15,512 | (15,510 | ) | (100 | )% | ||||||||||
| Net (loss) income | $ | (37,266 | ) | $ | 96,804 | $ | (134,070 | ) | (138 | )% | ||||||
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.
| 33 |
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.
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Other income, net
Other income, net consisted of $44,000 for the six months ended June 30, 2026, as compared to $0.2 million in the same period of 2025. The decrease was primarily a result of not having sublease income in 2026. The sublease of our NY office ended in September of 2025.
Income tax expense
We recorded a current income tax expense of $2,000 for the six months ended June 30, 2026 which included the impact of our generation of sufficient tax losses, after consideration of discrete 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 $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced the Company’s taxable income and resulting income tax expense for the year ended December 31, 2025.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows for the Six Months Ended June 30, 2026 and 2025
| For the six months ended June 30, | ||||||||
| ($ in thousands) | 2026 | 2025 | ||||||
| Total cash, cash equivalents and restricted cash (used in) provided by: | ||||||||
| Operating activities | $ | (37,300 | ) | $ | (37,186 | ) | ||
| Investing activities | 20,649 | 160,101 | ||||||
| Financing activities | (5,557 | ) | 17,263 | |||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (22,208 | ) | $ | 140,178 | |||
Operating activities
Net cash used in operating activities was $37.3 million for the six months ended June 30, 2026, primarily comprised of our net loss of $37.3 million, decreases in operating assets and liabilities of $10.5 million and net non-cash charges of $10.4 million. Non-cash charges consisted primarily of $1.8 million of loss as a result of the change in fair value of warrant liabilities, $6.3 million of stock-based compensation and $1.4 million of depreciation and amortization.
Net cash used in operating activities was $37.2 million for the six months ended June 30, 2025, primarily comprised of our net income of $96.8 million and increases in operating assets and liabilities of $12.4 million offset by net non-cash charges of $146.2 million. Non-cash charges consisted primarily of $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, $5.5 million of stock-based compensation and $1.1 million of depreciation and amortization.
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Investing activities
Net cash provided by investing activities was $20.6 million for the six months ended June 30, 2026, primarily comprised of proceeds from maturities of short-term investments of $65.8 million, offset by purchases of short-term investments of $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.
Financing activities
Net cash used in financing activities was $5.6 million for the six months ended June 30, 2026, comprised of $5.6 million in payments on our long-term debt.
Net cash provided by financing activities was $17.3 million for the six months ended June 30, 2025, primarily comprised of proceeds of $17.3 million from open market sales of common stock pursuant to the ATM Agreement (as defined below).
We have historically funded our operations primarily through our sale of equity securities, our most recent gain on sale of our PRV, and strategic collaboration arrangements.
Our principal source of liquidity is cash, cash equivalents and short-term investments, collectively referred to as our cash resources. As of June 30, 2026, our cash resources were $146.8 million. We believe that our current cash and cash equivalents and short-term investments are sufficient to fund operations through at least the next 12 months from the date of this report on Form 10-Q. 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, 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 six months ended June 30, 2025. There were no sales of our common stock under the ATM agreement during the six months ended June 30, 2026. Under the ATM Agreement and as of June 30, 2026, we have remaining shares of our common stock for an aggregate sales price of up to $51.5 million.
Since our 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 commercialization efforts. Excluding 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. As a 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 be profitable and cash flow generating.
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 assure that we will ever be able to generate sufficient product sales or royalty revenue to achieve profitability on a sustained basis, or at all.
If we raise additional funds by selling additional equity securities, the relative equity ownership of our existing investors will be diluted, and the new investors could obtain terms more favorable than previous investors. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves.
| 36 |
Our future capital requirements and adequacy of available funds depend on many factors, including:
| ● | the successful commercialization of ZEVASKYN; | |
| ● | the successful development, regulatory approval and commercialization of our cell and gene therapy and other product candidates, including ABO-701; | |
| ● | the ability to establish and maintain collaborative arrangements with corporate partners for the research, development, and commercialization of products; | |
| ● | continued scientific progress in our research and development programs; | |
| ● | the magnitude, scope and results of preclinical testing and clinical trials; | |
| ● | the costs involved in filing, prosecuting, and enforcing patent claims; | |
| ● | the costs involved in conducting clinical trials; | |
| ● | competing technological developments; | |
| ● | the cost of manufacturing and scale-up; | |
| ● | the ability to establish and maintain effective commercialization arrangements and activities; and | |
| ● | the successful outcome of our regulatory filings. |
Due to uncertainties and certain of the risks described above, under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, it is not possible to reliably predict future spending or time to completion by project or product category or the period in which material net cash inflows from significant projects are expected to commence. If we are unable to timely complete a particular project, our research and development efforts could be delayed or reduced, our business could suffer depending on the significance of the project and we might need to raise additional capital to fund operations, as discussed in the risks above.
We plan to continue our policy of investing any available funds in suitable certificates of deposit, money market funds, government securities and investment-grade, interest-bearing securities. We do not invest in derivative financial instruments.
Critical Accounting Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:
| ● | it requires assumptions to be made that were uncertain at the time the estimate was made, and | |
| ● | changes in the estimate or different estimates that could have been selected could have a material impact in our results of operations or financial condition. |
While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates, and the differences could be material. For a discussion of the critical accounting estimates that affect the unaudited condensed consolidated financial statements, see “Critical Accounting Estimates” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.
See Note 2 to our unaudited condensed consolidated financial statements for a discussion of our significant accounting policies.
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Recently Issued Accounting Standards Not Yet Effective or Adopted
See Note 2 to our unaudited condensed consolidated financial statements for a discussion of recently issued accounting standards not yet effective or adopted.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls and Procedures”), as of June 30, 2026, as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Conclusion of Evaluation — Based on this Disclosure Controls and Procedures evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our Disclosure Controls and Procedures as of the end of the period covered by this report were effective.
Changes in Internal Control Over Financial Reporting – There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Our business and financial results are subject to numerous risks and uncertainties. There have been no material changes to the risk factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, except as set 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) The following table provides information about purchases of equity securities that are registered pursuant to Section 12 of the Exchange Act for the quarter ended June 30, 2026:
| Total number of shares (or units) purchased (a) | Average price paid per share (or unit) | |||||||
| Shares delivered or withheld pursuant to restricted stock awards | ||||||||
| April 1, 2026 - April 30, 2026 | — | $ | — | |||||
| May 1, 2026 - May 31, 2026 | — | $ | — | |||||
| June 1, 2026 - June 30, 2026 | 222 | $ | 5.67 | |||||
| 222 | $ | 5.67 | ||||||
| (a) | Reflects shares of common stock surrendered to the Company for payment of tax withholding obligations in connection with the vesting of restricted stock. |
ITEM 5. OTHER INFORMATION
Securities Trading Arrangements of Directors and Executive Officers
During
the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act)
| 39 |
ITEM 6. EXHIBITS
See Exhibit Index below, which is incorporated by reference herein.
Exhibit Index
| Exhibits: | Description of Document | |
| 10.1† | Exclusive (Equity) Agreement, between the Company and The Board of Trustees of the Leland Stanford Junior University, dated August 8, 2016.* | |
| 31.1 | Principal Executive Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.* | |
| 31.2 | Principal Financial Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.* | |
| 32** | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | |
| 101 | The following materials from Abeona’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025 (unaudited), (ii) Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended June 30, 2026 and 2025 (unaudited), (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025 (unaudited), (iv) Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2026 and 2025 (unaudited), and (v) Notes to Condensed Consolidated Financial Statements (unaudited). | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
** Pursuant to Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filing.
† Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ABEONA THERAPEUTICS INC. | ||
| Date: August 13, 2026 | By: | /s/ Vishwas Seshadri |
| Vishwas Seshadri | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 13, 2026 | By: | /s/ Joseph Vazzano |
| Joseph Vazzano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
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Exhibit 10.1
Certain confidential information contained in this document, marked by [***], has been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both (i) not material and (ii) the type of information that the registrant treats as private or confidential.
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
Execution Copy
EXCLUSIVE (EQUITY) AGREEMENT
This Exclusive (Equity) Agreement (“Agreement”) is entered into between THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (‘‘Stanford”), an institution of higher education having powers under the laws of the State of California, and Abeona Therapeutics Inc. (“Abeona”), a Delaware corporation, having a principal place of business at 1325 Avenue of the Americas, 27th Floor, New York, NY 10019. is effective on the 3rd day of August, 2016 (“Effective Date”).
| 1. | BACKGROUND |
Stanford has an assignment of an invention entitled ‘“Gene Therapy for Recessive Dystrophic Epidermolysis Bullosa using Genetically Corrected Autologous Keratinocytes,” described in Stanford Docket S15-479, invented by Paul Khavari, Alfred Lane. Ngon Nguyen, Zurab Siprashvilli, and Jean Tang, employees of Stanford, and by M. Peter Marinkovich, an employee of Stanford and the United States Department of Veterans Affairs (“VA”).
The invention was made in the course of research supported by the National Institutes of Health, the EB Medical Research Foundation and the EB Research Partnership. Stanford wants to have the invention perfected and marketed as soon as possible so that resulting products may be available for public use and benefit.
This invention is subject to the Cooperative Technology Administration Agreement between Stanford and the VA, effective January 31, 2013, that authorizes Stanford to exclusively manage this invention on behalf of both Stanford and the VA (the “VA Agreement”) and Stanford has the authority to license the invention subject to the reservation of rights to the VA specified in this Agreement.
Abeona is a Delaware corporation that is focused on developing and delivering gene therapy products for severe and life-threatening rare diseases. Abeona has entered into an agreement with the Epidermolysis Bullosa Research Partnership, a New York not-for-profit corporation, to expand its product development efforts to include products for the treatment of Epidermolysis Bullosa. Abeona’s initial focus with respect to Epidermolysis Bullosa will be [***] EB-101 (LZRSE-Col7Al Engineered Autologous Epidermal Sheets (LEAES)) [***].
In consideration of the recitals set forth in this Section 1 and for other good and valuable consideration specified in this Agreement, Stanford and Abeona hereby agree as follows:
| 2. | DEFINITIONS |
| 2.1 | “Affiliates” means any person, corporation, or other business entity which controls, is controlled by, or is under common control with Company; and for this purpose, “control” of a corporation means the direct or indirect ownership of more than fifty percent (50%) of its voting stock, and “control” of any other business entity means the direct or indirect ownership of greater than a fifty percent (50%) interest in the income of such entity. |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| 2.2 | “Change of Control” means the following, as applied only to the entirety of that part of Abeona’s business that exercises all of the rights granted under this Agreement: |
| (A) | acquisition of ownership—directly or indirectly, beneficially or of record—by any person or group (within the meaning of the Exchange Act and the rules of the SEC or equivalent body under a different jurisdiction) of the capital stock of Abeona representing more than 50% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding capital stock of Abeona (or such lesser maximum percentage permitted in those jurisdictions where majority ownership by foreign entities is prohibited): and/or |
| (B) | the sale of all or substantially all Abeona’s assets and/or business in one transaction or in a series of related transactions. |
| (C) | For the avoidance of doubt, it is understood and agreed that a Change of Control shall not include (i) the grant of a sublicense or (ii) any transaction or series of related transactions effected primarily for the purpose of providing financing to Abeona or (iii) any transaction or series of related transactions effected primarily for the purpose of reincorporating in another jurisdiction. |
| 2.3 | “Exclusive” means that, subject to Articles 3 and 5, Stanford will not grant further licenses under the Licensed Patents in the Licensed Field of Use in the Licensed Territory. |
| 2.4 | “FDA” means the United States Food and Drug Administration, or any successor thereto. |
| 2.5 | “FD&C Act’” means the United States Federal Food, Drug and Cosmetic Act of 1938 and applicable regulations promulgated thereunder, as amended from time to time. |
| 2.6 | “IND” means an investigational new drug application, as defined in the FD&C Act, or any equivalent document filed with the FDA and necessary for beginning clinical trials of any product in humans or any application or other documentation filed with any Regulatory Authority of a country other than the United States prior to beginning clinical trials of any product in humans in that country. |
| 2.7 | RESERVED. |
| 2.8 | “Licensed Field of Use” means the prevention or treatment or diagnosis of Epidermolysis Bullosa (EB) in humans. |
| PAGE 2 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| 2.9 | “Licensed Patent” means (i) Stanford and the VA’s U.S. patent application, Serial number 62/274,700 filed on January- 4, 2016 for the invention entitled “Gene Therapy for Recessive Dystrophic Epidermolysis Bullosa using Genetically Corrected Autologous Keratinocytes”; (ii) any continuation or division of such patent application but excluding any continuation-in-part (“CIP”) of such patent application; (iii) any reissue, reexamination, renewal, substitution or extension of the patent applications described in clauses (i) or (ii); and (iv) any foreign patent application or Letters Patent or supplementary protection certificates or the equivalent thereof in respect of these patent applications. Stanford agrees not to file any CIP without prior written consent by Abeona. Upon notice from Stanford that Stanford wishes to file a CIP, Abeona may request that such CIP be added to this Agreement. |
| 2.10 | “Licensed Product” means a product or part of a product, the making, using, importing or selling of which, absent the license granted under this Agreement, would infringe a Valid Claim of a Licensed Patent. |
| 2.11 | “Licensed Territory” means all the countries of the World. |
| 2.12 | “Net Sales” means the amounts invoiced for sales or transfers for value of Licensed Products by Abeona, its Affiliates or any of its sublicensee to an independent third party distributor, agent or end user (other than sales of Licensed Products at cost by Abeona, its Affiliates or sublicensees to a third party for use in a clinical study prior to regulatory approval of such Licensed Product) less deductions selected as appropriate from: |
(i) customary discounts in the trade for quantity purchased, prompt payment or wholesalers and distributors; (ii) credits or refunds separately and actually credited or paid to customers for defective, spoiled, damaged, outdated or returned Licensed Products that do not exceed the original invoice amount; (iii) discounts mandated by, or granted to meet the requirements of, applicable state, provincial or federal law, paid or credited to a wholesaler, purchaser, third party or other contractee including required chargebacks and retroactive price reductions; (iv) rebates actually paid or credited to any governmental agency (or branch thereof) or to any third party payor, administrator or contractee; (v) sales, excise or use taxes paid, absorbed or allowed excluding net income tax, imposed upon the sale of the Licensed Product.Net Sales shall not include revenue received by Abeona (or any of its Affiliates) from transactions with an Affiliate, where the Licensed Product in question will be resold to an independent third-party distributor, agent or end user by the Affiliate (such revenue to be considered Net Sales at the time of such later sale or transfer for value of Licensed Products by such Affiliate or its sublicensee to an independent third party distributor, agent or end user).
Net Sales shall not include units of Licensed Product disposed of by Abeona and not sold for purposes directly related to pre-clinical or clinical studies, regulatory approval or clearance, that are reasonable or customary in the trade.
| 2.13 | “Nonroyalty Sublicensing Consideration” means any consideration received by Abeona from a sublicensee hereunder but excluding any consideration for: |
| (A) | royalties on products sales paid to Abeona by a sublicensee based upon Net Sales by the sublicensee (royalties on product sales by sublicensees will be treated as if Abeona made the sale of such product); |
| PAGE 3 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| (B) | equity investments in Abeona stock by a sublicensee at the fair market value; |
| (C) | research and development expenses concerning the Licensed Products paid to Abeona by a sublicensee in a bona fide transaction calculated on a fully burdened basis; |
| (D) | loan proceeds paid to Abeona by a sublicensee in an arm’s length, full recourse debt financing; and |
| (E) | reimbursement of out-of-pocket patent prosecution and maintenance expenses for Patent Matters. |
| 2.14 | “Patent Matters” means preparing, filing, and prosecuting broad and extensive patent claims (including any interference or reexamination actions) for Stanford’s benefit in the Licensed Territory and for maintaining all Licensed Patents. |
| 2.15 | “Phase I Clinical Trial” means for the purpose of obtaining regulatory approval a study in humans the purpose of which is preliminary determination of safety of a Licensed Product in healthy individuals or patients that would satisfy the requirements of 21 C.F.R. 312.21(a). |
| 2.16 | “Phase II Clinical Trial” means for the purpose of obtaining regulatory approval a study in humans of the safety, dose range and efficacy of a Licensed Product that is prospectively designed to generate sufficient data to commence a Phase III Clinical Trial that would satisfy the requirements of 21 C.F.R. 312.21(b). |
| 2.17 | “Phase III Clinical Trial” means a controlled study in humans of the efficacy and safety of a Licensed Product that is prospectively designed to demonstrate statistically whether such Licensed Product is effective and safe for use in a particular indication in a manner sufficient to obtain regulatory approval to market such Licensed Product that would satisfy the requirements of 21 C.F.R. 312.21(c). |
| 2.18 | “Regulatory Authority” means any national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in the Territory, including, without limitation, the FDA. |
| 2.19 | “Indemnitees” means the VA, Stanford, Stanford Health Care, and Lucile Packard Children’s Hospital at Stanford, and their respective trustees, officers, employees, students, agents, faculty, representatives, and volunteers. |
| 2.20 | “Sublicense” means any agreement between Abeona and a third party that contains a grant to Stanford’s Licensed Patents regardless of the name given to the agreement by the parties; however, an agreement to make, have made, use or sell Licensed Products on behalf of Abeona is not considered a Sublicense. |
| PAGE 4 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| 2.21 | “Valid Claim” means (1) an unexpired claim of an issued patent which has not been found to be un-patentable, invalid or unenforceable by a court or other authority in the subject country, from which decision no appeal is taken or can be taken; or (2) a claim of a pending application, which application claims a first priority no more than 10 years prior to the date upon which pendency is determined. For purposes of clarification, if a claim in an application has been pending for more than ten (10) years from its priority date, and a patent subsequently issues containing such claim, then upon issuance of the patent, the claim shall thereafter be considered a Valid Claim. |
| 2.22 | Other Defined Terms. The following terms The following terms shall have the meanings set forth in the section appearing opposite such term |
| “Abeona” | Recitals | |
| “Agreement” | Recitals | |
| “BLA” | Section 7.7 | |
| “Business Plan” | Appendix A | |
| “Change of Control Fee” | Section 16.1 | |
| “Effective Date” | Recitals | |
| “First Commercial Sale” | Section 7.8 | |
| “Regulatory Approval” | Section 7.7 | |
| “Stanford” | Recitals. |
| 3. | GRANT |
| 3.1 | Grant. Subject to the terms and conditions of this Agreement, Stanford grants Abeona an Exclusive, royalty-bearing, license in the Licensed Field of Use and in the Licensed Territory under the Licensed Patents, including the right to make, have made, use, import, offer to sell and sell Licensed Products for use in Licensed Field of Use in the Licensed Territory. |
| 3.2 | Reserved. |
| 3.3 | Reserved. |
| 3.4 | Retained Rights. Stanford retains the right, on behalf of itself, Stanford Health Care and Lucile Packard Children’s Hospital at Stanford and all other non-profit research institutions, to practice the Licensed Patents for any non-profit purpose, including sponsored research and collaborations. Abeona agrees that, notwithstanding any other provision of this Agreement, it has no right to enforce the Licensed Patents against any such institution. Stanford and any such other institution have the right to publish any information included in a Licensed Patent. |
| 3.5 | Specific Exclusion. Stanford does not: |
| (A) | grant to Abeona any licenses, implied or otherwise, to any patents or other rights of Stanford or the VA other than those rights granted under Section 3.1 with respect to Licensed Patents, regardless of whether the patents or other rights are dominant or subordinate to any Licensed Patent, or are required to exploit any Licensed Patent; |
| PAGE 5 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| (B) | commit to Abeona to bring suit against third parties for infringement, except as described in Article 14; and |
| (C) | agree to furnish to Abeona any technology or technological information or to provide Abeona with any assistance. |
| 4. | SUBLICENSING |
| 4.1 | Permitted Sublicensing. Abeona may grant Sublicenses in the Licensed Field of Use only during the Exclusive term and only if Abeona is developing or selling Licensed Products. Sublicenses with any exclusivity must include diligence requirements commensurate with the diligence requirements of Appendix A. Stanford agrees that Abeona may apportion without discrimination between Abeona patents and Licensed Patents a commercially reasonable percentage of sublicensing payments made to Stanford pursuant to Section 4.6, provided however that Abeona provides Stanford with the proposed apportionment and justification prior Abeona’s payment pursuant to Section 8.1. Stanford and Abeona agree to meet to discuss such proposed apportionment if in Stanford’s opinion the apportionment does not reasonably reflect the value of the Licensed Patents. |
| 4.2 | Required Sublicensing. If Abeona is not developing or commercializing Licensed Product with respect to a market or indication and Abeona or Stanford receives a bona fide request from a third party for a sublicense to the Licensed Patents with respect to such indication or market, then Abeona will, at Stanford’s request, negotiate in good faith a Sublicense with any such sublicensee toward granting at least a non-exclusive sublicense to such third party for such third party’s proposed product. As an alternative to negotiating a sublicense to a third party, Abeona (or one of its Affiliates or sublicensees) may submit to Stanford, within three (3) months after such third party’s request for a sublicense, a plan for prompt and diligent development of a Licensed Product for the applicable indication or market. If Stanford approves this plan, such approval not to be unreasonably withheld, no third-party sublicense shall be required pursuant to this Section 4.2. Stanford would like licensees to address unmet needs, such as those of neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world. |
| 4.3 | Sublicense Requirements. Any Sublicense: |
| (A) | is subject to this Agreement; |
| (B) | will reflect that any sublicensee will not further sublicense; |
| (C) | will prohibit sublicensee from paying royalties to an escrow or other similar account; |
| (D) | will expressly include the provisions of Articles 8, 9, 10 and 13 for the benefit of Stanford; and |
| (E) | will include the provisions of Section 4.4 and require the transfer of all the sublicensee’s obligations to Abeona, including the payment of royalties specified in the Sublicense, to Stanford or its designee, if this Agreement is terminated. If the sublicensee is a spin-out from Abeona, Abeona must guarantee the sublicensee’s performance with respect to the payment of Stanford’s share of Sublicense royalties. |
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| 4.4 | Litigation by Sublicensee. Any Sublicense must include the following clauses: |
| (A) | In the event sublicensee brings an action seeking to invalidate any Licensed Patent: |
| (1) | sublicensee will double the payment paid to Abeona during the pendency of such action. Moreover, should the outcome of such action determine that any claim of a patent challenged by the sublicensee is both valid and infringed by a Licensed Product, sublicensee will pay triple times the payment paid under the original Sublicense; |
| (2) | sublicensee will have no right to recoup any royalties paid before or during the period challenge; |
| (3) | any dispute regarding the validity of any Licensed Patent shall be litigated in the courts located in Santa Clara County, and the parties agree not to challenge personal jurisdiction in that forum; and |
| (4) | sublicensee shall not pay royalties into any escrow or other similar account. |
| (B) | Sublicensee will provide written notice to Stanford at least [***] prior to bringing an action seeking to invalidate a Licensed Patent. Sublicensee will include with such written notice an identification of all prior art it believes invalidates any claim of the Licensed Patent. |
| 4.5 | Copy of Sublicenses and Sublicensee Royalty Reports. Abeona will submit to Stanford a copy of each Sublicense, any subsequent amendments and all copies of sublicensees’ royalty reports. Beginning with the first Sublicense, the Chief Financial Officer or equivalent will certify- annually regarding the name and number of sublicensees. |
| 4.6 | Sharing of Sublicensing Income. Abeona will pay to Stanford [***] of all Nonroyalty Sublicensing Consideration for the Sublicense of Licensed Patents. |
| 4.7 | Royalty-Free Sublicenses. Subject to Section 7.8(c) (concerning instances where Abeona may as part of an infringement or potential infringement dispute in which it believes it may be subject to infringement proceedings elect to as part of the resolution of such matter to enter into a royalty-free cross-licensing arrangement with a third party) and Section 14.7(C), if Abeona pays all royalties due Stanford from a sublicensee’s Net Sales, Abeona may grant that sublicensee a royalty-free or non-cash: |
| (A) | Sublicense; or |
| (B) | cross-license. |
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| 5. | GOVERNMENT RIGHTS |
| 5.1 | This Agreement is subject to Title 35 Sections 200-204 of the United States Code. Among other things, these provisions provide the United States Government with nonexclusive rights in the Licensed Patent. They also impose the obligation that Licensed Product sold or produced in the United States be “manufactured substantially in the United States.” Abeona will ensure all obligations of these provisions are met. |
| 5.2 | In addition to any government rights under 5.1 above, the United States Government shall have the nonexclusive, nontransferable, irrevocable, royalty-free, paid-up right to practice or have practiced the Licensed Patent throughout the world by or on behalf of the United States Government and on behalf of any foreign government or international organization pursuant to any existing or future treaty or agreement to which the United States Government is a signatory. |
| 5.3 | Abeona represents and warrants that Abeona is in good standing to do business with the federal government regarding debarment, suspension, proposed debarment or other matters rendering them ineligible to do business with the federal government. |
| 6. | DILIGENCE |
| 6.1 | Milestones. |
| (A) | Abeona will use commercially reasonable efforts to develop, commercialize, market and sell Licensed Products, in a manner consistent with the efforts normally used by similarly situated biotechnology companies with respect to a product to which such companies hold similar rights which is of similar market potential at a similar stage in the development or life of such product, taking into account issues of safety, efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the product, the regulatory structure involved, profitability of the product and other relevant commercial factors. Stanford shall have the right to terminate the License Agreement if Abeona shall fail to apply such commercially reasonable efforts to develop, commercialize, market and sell Licensed Products. |
| (B) | A determination of Abeona’s satisfaction of its diligence obligations shall be made according to the requirements set forth in Appendix A. |
| 6.2 | Progress Report. By [***] of each year, Abeona will submit a written annual report to Stanford covering the preceding calendar year. The report will include information sufficient to enable Stanford to satisfy reporting requirements of the U.S. Government and for Stanford to ascertain progress by Abeona toward meeting this Agreement’s diligence requirements. Each report will describe, where relevant: [***]. Abeona will specifically describe how each Licensed Product is related to each Licensed Patent. |
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| 6.3 | Clinical Trial Notice. Abeona is currently conducting clinical trials at Stanford; Abeona will notify the Stanford University Office of Technology Licensing of any further clinical trials prior to commencing such further trials at Stanford. |
| 7. | ROYALTIES |
| 7.1 | Issue Royalty. Abeona will pay to Stanford a non-creditable, nonrefundable license issue royalty of [***] within [***] of the Effective Date. |
| 7.2 | RESERVED. |
| 7.3 | RESERVED. |
| 7.4 | RESERVED. |
| 7.5 | RESERVED. |
| 7.6 | License Maintenance Fee. Abeona will pay Stanford a yearly license maintenance fee within [***] after each of the anniversaries of the Effective Date, as set forth below: |
| (A) | [***] on the [***] anniversaries of the Effective Date: |
| (B) | [***] on the [***] anniversaries of the Effective Date; and |
| (C) | [***] on the [***] anniversary of the Effective Date. |
Yearly maintenance payments are nonrefundable, but they are creditable each year as described in Section 7.10.
| 7.7 | Milestone Payments. Abeona will pay Stanford the following milestone payments upon the occurrence of each of the milestone events listed below. Milestones shall be due for the first two Licensed Products that achieve the particular milestone regardless of the number of Licensed Products that achieve such milestone; provided that if either of the first two Licensed Products does not achieve any milestone(s), such non-achieved milestones shall be paid on any subsequent Licensed Product that achieves such milestone until Stanford has been paid [***] in aggregate milestones. In the event that a milestone payment is received by Abeona from a sublicensee for attaining any of the milestones listed below. Abeona shall pay to Stanford an amount equal to the greater of (i) the amount due under Section 4.6 in respect to sublicensing income, or (ii) the applicable milestone payment listed immediately below: |
| Milestone Event | Payment | |
| (1) [***] | [***] | |
| (2) [***] | [***] | |
| (3) First Regulatory Approval of the Licensed Product. | [***] |
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| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
“BLA” means a biologicals license application, as defined in the FD&C Act, or any equivalent document filed with the FDA and necessary for the commercial distribution of a biologicals product for humans or any application or other documentation filed with any Regulatory Authority of a country other than the U.S. required for commercial distribution of any biologicals product for humans in that country.
“Regulatory Approval” means, for any country in the Territory, those authorizations by the appropriate Regulatory Authority(ies) required for the manufacture, importation, marketing and sale of the Licensed Product(s) in such country, including approval of the price and the reimbursement category (where relevant) for the Licensed Product as established from time to time by the relevant Regulatory Authority in the applicable country in the Territory.
Abeona shall pay milestone payments within [***] of the applicable milestone event, if achieved by Abeona, and within the earlier of [***] of the applicable event or [***] following the receipt of funds milestones, if a sublicensee achieves the milestone.
| 7.8 | Earned Royalty. |
| (A) | Commencing with the [***] in any country, Abeona will pay Stanford earned royalties by country for the most recent three-month period then ended with respect to Licensed Products covered by Valid Claims of Licensed Patents, equal to [***] of Net Sales of such Licensed Product. Abeona shall pay Stanford royalties with respect to Net Sales of Licensed Products that are not covered by Valid Claims in the country where the sale is made but are covered by Valid Claims in another country at a rate equal to [***] of Net Sales of such Licensed Product. |
| (B) | Abeona shall pay royalties with respect to each Licensed Product on a country by country basis until the later of (i) [***] in the country in which the Licensed Product is manufactured or sold, or (ii) if no Licensed Patent exists in the relevant country covering the manufacture, use or sale of the relevant Licensed Product, until [***] from the First Commercial Sale of such Licensed Product in such country. “First Commercial Sale” of Licensed Product(s) means any transfer for value in an arms-length transaction to an independent third party distributor, agent or end user in a country after obtaining all approvals or authorizations from applicable regulatory authorities required for the manufacture, importation, marketing, promotion, pricing, reimbursement and sale of the Licensed Product(s) in such country. |
| (C) | If Abeona, in its reasonable judgment, elects to pay royalties or similar payments to one or more third parties for patented technology to avoid infringement by a Licensed Product or the manufacture of a Licensed Product of such third party patent(s), Abeona may. beginning from the date of such third party license, deduct [***] of the amount of royalties paid to such third party on sales of Licensed Product under such licenses from the amounts payable to Stanford, provided that earned royalties due Stanford will in no event be lower than [***] of Net Sales with respect to such Licensed Product as a result of deductions pursuant to this Section 7.8(C). |
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| 7.9 | Earned Royalty if Abeona Challenges the Patent. Notwithstanding the above, should Abeona bring an action seeking to invalidate any Licensed Patent, Abeona will pay royalties to Stanford at the rate of [***] of the Net Sales of all Licensed Products sold during the pendency of such action. Moreover, should the outcome of such action determine that any claim of a patent challenged by Abeona is both valid and infringed by a Licensed Product, Abeona will pay royalties at the rate of [***] of the Net Sales of all Licensed Products sold. |
| 7.10 | Creditable Payments. The license maintenance fee for a year may be offset against earned royalty payments due on Net Sales occurring in that year. |
For example:
| (A) | if Abeona pays Stanford a [***] maintenance payment for year Y. and according to Section 7.8 [***] in earned royalties are due Stanford for Net Sales in year Y, Abeona will only need to pay Stanford an additional [***] for that year’s earned royalties. |
| (B) | if Abeona pays Stanford a [***] maintenance payment for year Y. and according to Section 7.8 [***] in earned royalties are due Stanford for Net Sales in year Y, Abeona will not need to pay Stanford any earned royalty payment for that year. Abeona will not be able to offset the remaining [***] against a future year’s earned royalties. |
| 7.11 | Obligation to Pay Royalties. A royalty is due Stanford under this Agreement for any activity conducted under the licenses granted. For convenience’s sake, the amount of that royalty is calculated using Net Sales. Nonetheless, if certain Licensed Products are made, used, imported, or offered for sale before the date this Agreement terminates, and those Licensed Products are sold after the termination date, Abeona will pay Stanford an earned royalty for its exercise of rights based on the Net Sales of those Licensed Products. |
| 7.12 | No Escrow. Abeona shall not pay royalties into any escrow or other similar account. |
| 7.13 | Currency. Abeona will calculate the royalty on sales in currencies other than U.S. Dollars using the appropriate foreign exchange rate for the currency quoted by the Wall Street Journal on the close of business on the last banking day of each calendar quarter. Abeona will make royalty payments to Stanford in U.S. Dollars. |
| 7.14 | Non-U.S. Taxes. Abeona will pay all non-U.S. taxes (if any) related to royalty payments. These payments are not deductible from any payments due to Stanford. |
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| 7.15 | Interest. Any payments not made when due will bear interest at the lower of (a) the Prime Rate published in the Wall Street Journal plus [***] basis points or (b) the maximum rate permitted by law. |
| 8. | ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING |
| 8.1 | Quarterly Earned Royalty Payment and Report. Beginning with the first sale of a Licensed Product by Abeona or a sublicensee. Abeona will submit to Stanford a written report (even if there are no sales) and an earned royalty payment within [***] after the end of each calendar quarter. This report will be in the form of Appendix B and will state the number, description, and aggregate Net Sales of Licensed Product during the completed calendar quarter. The report will include an overview of the process and documents relied upon to permit Stanford to understand how the earned royalties are calculated. With each report Abeona will include any earned royalty payment due Stanford for the completed calendar quarter (as calculated under Article 7). |
| 8.2 | No Refund. In the event that a validity or non-infringement challenge of a Licensed Patent brought by Abeona is successful, Abeona will have no right to recoup any royalties paid before or during the period challenge. |
| 8.3 | Termination Report. Abeona will pay to Stanford all applicable royalties and submit to Stanford a written report within [***] after the license terminates. Abeona will continue to submit earned royalty payments and reports to Stanford after the license terminates, until all Licensed Products made or imported under the license have been sold. |
| 8.4 | Accounting. Abeona will maintain complete and accurate records showing sufficient information to permit Stanford to determine the accuracy and calculation of royalty payments, sublicensing revenue, and milestone achievement in respect of Licensed Products for [***] from the date of sale of the applicable unit of Licensed Product. Such records shall be kept in accordance with U.S. Generally Accepted Accounting Practices or International Financial Reporting Standards, as applicable, and will include information in sufficient detail to enable Stanford to determine the royalties and other amounts payable under this Agreement. |
| 8.5 | Audit by Stanford. Abeona will allow an independent, certified public accountant selected by Stanford and reasonably acceptable to Abeona, which acceptance will not be unreasonably withheld or delayed to audit or inspect those records of Abeona relating to any amounts payable to Stanford under this Agreement for the purpose of verifying the accuracy of the reports required under Section 8.1. Such inspection will be conducted during Abeona’s normal business hours at such place where such records are customarily kept, no more than once in any [***] period and upon at least [***] prior written notice by Stanford to Abeona. Stanford agrees to hold in confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent necessary for Stanford to reveal such information in order to enforce its rights under this Agreement or if disclosure is required by law. regulation or judicial order. Any person or entity conducting such audit or inspection will agree in writing with Abeona to: |
| (A) | treat all records reviewed in the course of the audit or inspection as the confidential information of Abeona; |
| (B) | disclose to Stanford only the amount and accuracy of payments reported and actually paid or otherwise payable under this Agreement and the specific details concerning any discrepancies; and (c) provide a copy of the report to Abeona at the same time it is provided to Stanford. |
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| 8.6 | Paying for Audit. Stanford will pay for any audit done under Section 8.5. But if the audit reveals an underreporting of earned royalties due Stanford of [***] or more for the period being audited, Abeona will pay the audit costs. |
| 8.7 | Reserved. |
| 9. | EXCLUSIONS AND NEGATION OF WARRANTIES |
| 9.1 | Negation of Warranties. Stanford provides Abeona the rights granted in this Agreement AS IS and WITH ALL FAULTS. Stanford makes no representations and extends no warranties of any kind, either express or implied. Among other things, Stanford disclaims any express or implied warranty: |
| (A) | of merchantability, of fitness for a particular purpose; |
| (B) | of non-infringement; or |
| (C) | arising out of any course of dealing. |
| 9.2 | No Representation of Licensed Patent. Abeona also acknowledges that Stanford does not represent or warrant: |
| (A) | the validity or scope of any Licensed Patent; or | |
| (B) | that the exploitation of Licensed Patents will be successful. |
| 10. | INDEMNITY |
| 10.1 | Indemnification. Abeona will, and will require sublicensees to. indemnify, hold harmless, and defend all Indemnitees against any claim of any kind arising out of or related to the exercise of any rights granted Abeona under this Agreement or the breach of this Agreement by Abeona or any of its sublicensees. To receive the benefit of indemnification under this Section 10.1. Stanford Indemnitees must promptly notify Abeona in writing of any claim or suit brought against Stanford Indemnitees in respect of which Stanford Indemnitees intend to invoke the provisions of this Section 10.1. Notwithstanding the foregoing, the delay or failure of any Stanford Indemnitee to give reasonably prompt notice to Abeona of any such claim or suit shall not affect the rights of such Stanford Indemnitee under this Section 10.1 unless, and then solely to the extent that, such failure actually and materially prejudices the rights of Abeona. To receive the benefit of indemnification under this Section 10.1, the Stanford Indemnitees must also provide reasonable cooperation (at Abeona’s expense) in the defense or settlement of such claim or suit; and tender to Abeona (and its insurer) full authority to defend or settle the claim or suit, subject to the limitation set forth below with respect to settlement by Abeona. Abeona shall keep the Stanford Indemnitees informed on a current basis of its defense of any claims or suits under this Section 10.1. Abeona will not settle any claim or suit against Stanford Indemnitees without Stanford’s written consent where (1) such settlement would include any admission of liability or admission of wrong doing on the part of the indemnified party, (2) such settlement would impose any restriction on Stanford Indemnitees conduct of any of its activities, or (3) such settlement would not include an unconditional release of Stanford Indemnitees from all liability for claims that arc the subject matter of the settled claim. Abeona has no obligation to indemnify Stanford Indemnitees in connection with any settlement made without Abeona’s written consent. |
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| 10.2 | No Indirect Liability. Stanford is not liable for any special, consequential, lost profit, expectation, punitive or other indirect damages in connection with any claim arising out of or related to this Agreement, whether grounded in tort (including negligence), strict liability, contract, or otherwise. |
| 10.3 | Workers’ Compensation. Abeona will comply with all statutory workers’ compensation and employers’ liability requirements for activities performed under this Agreement. |
| 10.4 | Insurance. During the term of this Agreement, Abeona will maintain General Liability Insurance, with a reputable and financially secure insurance carrier to cover the activities of Abeona and its Sublicensees. In addition, commencing on the first use of Licensed Product in a clinical trial or in a human patient Abeona will include Product Liability Insurance: such insurance will provide minimum limits of liability of [***] and will include all Indemnitees as additional insureds. Insurance must cover claims incurred, discovered, manifested, or made during or after the expiration of this Agreement and must be placed with carriers with ratings of at least A- as rated by A.M. Best. Within [***] of the Effective Date of this Agreement. Abeona will furnish a Certificate of Insurance evidencing primary coverage and additional insured requirements. Abeona will provide to Stanford [***] prior written notice of cancellation or material change to this insurance coverage. Abeona will advise Stanford in writing that it maintains excess liability coverage (following form) over primary insurance for at least the minimum limits set forth above. All insurance of Abeona will be primary coverage: insurance of Stanford Health Care and Lucile Packard Children’s Hospital at Stanford will be excess and noncontributory. |
| 11. | EXPORT |
Abeona and its Affiliates and sublicensees shall comply with all United States laws and regulations controlling the export of licensed commodities and technical data. (For the purpose of this paragraph, “licensed commodities” means any article, material or supply but does not include information; and “technical data” means tangible or intangible technical information that is subject to U.S. export regulations, including blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals and instructions.) These laws and regulations may include, but are not limited to, the Export Administration Regulations (15 CFR 730-774), the International Traffic in Arms Regulations (22 CFR 120-130) and the various economic sanctions regulations administered by the U.S. Department of the Treasury (31 CFR 500-600).
Among other things, these laws and regulations prohibit or require a license for the export or retransfer of certain commodities and technical data to specified countries, entities and persons. Abeona hereby gives written assurance that it will comply with, and will cause its Affiliates and sublicensees to comply with all United States export control laws and regulations, that it bears sole responsibility for any violation of such laws and regulations by itself or its Affiliates or sublicensees, and that it will indemnify, defend and hold Stanford harmless for the consequences of any such violation.
| 12. | MARKING |
Before any Licensed Patent issues. Abeona will mark Licensed Product with the words “Patent Pending.” Otherwise. Abeona will mark Licensed Product with the number of any issued Licensed Patent.
| 13. | STANFORD NAMES AND MARKS |
Abeona will not use (i) Stanford’s or the VA’s name or other trademarks, (ii) the name or trademarks of any organization related to Stanford or the VA, or (iii ) the name of any Stanford faculty member, employee, student or volunteer, or any VA employee without the prior written consent of Stanford or the VA. as the case may be. Permission may be withheld at Stanford’s or the VA’s sole discretion. This prohibition includes, but is not limited to, use in press releases, advertising, marketing materials, other promotional materials, presentations, case studies, reports, websites, application or software interfaces, and other electronic media.
| 14. | PROSECUTION AND PROTECTION OF PATENTS |
| 14.1 | Patent Prosecution. |
| (A) | Following the Effective Date and subject to Stanford’s approval, Abeona will be responsible for Patent Matters. Abeona will use its best efforts with respect to the Patent Matters and in doing so will act in good faith irrespective of other patents, patent applications, or other rights that Abeona may possess. Abeona will notify Stanford before taking any substantive actions in prosecuting the claims, and Stanford will have final approval on how to proceed with any such actions. To aid Abeona in this process. Stanford will provide information, execute and deliver documents and do other acts as Abeona shall reasonably request from time to time. If Stanford at any time believes that Abeona has failed to satisfy the standards of this Section 14.1(A), it may, upon [***] notice, terminate this Section 14.1(A) in which case Section 14.1(B) shall take effect. |
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| (B) | If Section 14.1(A) is not in effect, then Stanford will control, in consultation with Abeona and at Abeona’s expense the preparation and prosecution of all patent applications and the maintenance of all patents related to Licensed Patents. Patent counsel will directly notify Abeona and provide Abeona copies of any official communications from United States and foreign patent offices relating to prosecution of the Licensed Patents, as well as copies of relevant communications to the various patent offices so that Abeona may be informed and apprised of the continuing prosecution of Licensed Patents. Abeona will have reasonable opportunities to participate in key decisions affecting filing, prosecution and maintenance of the Licensed Patents, including, without limitation, opportunity to review and provide comment on amendments and responses in the course of the prosecution of Licensed Patents. Stanford will consider in good faith Abeona’s reasonable suggestions regarding said prosecution. Stanford will use reasonable efforts to amend any patent application to include claims reasonably requested by Abeona in order to cover a Licensed Product. No case will be abandoned without giving Abeona at least [***] notice and opportunity to pursue the application. Abeona will reimburse Stanford upon receipt of invoice for all documented expenses upon receipt of invoice incurred in connection with the filing and prosecution of the patent applications and maintenance of the patents. If Abeona is not interested in filing patent applications covering Licensed Patents in a particular jurisdiction and Stanford determines that it wishes to file patent applications in said jurisdiction, Stanford may do so at its expense and Abeona’s license shall not include rights in such jurisdiction. |
| (C) | Abeona will reimburse Stanford for Stanford’s reasonable costs incurred in complying with such requests. Stanford and Abeona agree that Stanford is the client of record for the attorney prosecuting the Licensed Patents and agree to have Appendix C fully executed by the appropriate parties upon execution of this Agreement. At Stanford’s request, Abeona will provide all information and assistance to Stanford to ensure that Licensed Patent is as extensive as possible. If Stanford has terminated Section 14.1(A), any agreement in the form of Appendix C will be deemed to be amended immediately without prior action by any party to revise Appendix C, Section 1 to require the Firm (as defined in Appendix C) to interact directly with Stanford only. |
| 14.2 | Patent Costs. Within [***] after receiving a statement from Stanford. Abeona will reimburse Stanford: |
| (A) | [***] to offset Licensed Patent’s patenting expenses, including any interference or reexamination matters, incurred by Stanford before the Effective Date: and |
| (B) | for all Licensed Patent’s patenting expenses, including any interference or reexamination matters, incurred by Stanford after the Effective Date. In all instances, Stanford will pay the fees prescribed for large entities to the United States Patent and Trademark Office. |
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| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| 14.3 | Infringement Procedure. Abeona will promptly notify Stanford if it believes a third party infringes a Licensed Patent or if a third party files a declaratory judgment action with respect to any Licensed Patent. Abeona shall have the right to institute a suit against or defend any declaratory judgment action initiated by this third party as provided in Section 14,4 through and including Section 14.8. |
| 14.4 | Stanford and VA Suit. Subject to Section 14.6. Stanford and the VA have the first right to institute suit on either of their own account, and may name Abeona as a party for standing purposes. If Stanford or the VA decides to institute suit pursuant to this Section 14.4. Stanford will notify Abeona in writing. If Abeona does not notify Stanford in writing that it desires to jointly prosecute the suit within [***] after the date of the notice, Abeona will assign and hereby does assign to Stanford or the VA. as the case may be. all rights, causes of action, and damages resulting from the alleged infringement. Stanford or the VA will bear the entire cost of the litigation and will retain the entire amount of any recovery or settlement in a suit it institutes pursuant to this Section 14.4. |
| 14.5 | Joint Suit. If Stanford and Abeona so agree, they may institute suit or defend the declaratory judgment action jointly. If so, they will: |
| (A) | prosecute the suit in both their names; |
| (B) | bear the out-of-pocket costs equally; |
| (C) | share any recovery or settlement equally: and |
| (D) | agree how they will exercise control over the action. |
| 14.6 | Abeona Suit. Abeona shall have a [***] option to institute and prosecute a suit or defend any declaratory judgment action with respect to patents licensed exclusively to Abeona so long as it conforms with the requirements of this Section 14.6. If Abeona is unsuccessful in persuading the alleged infringer to desist and is not diligently prosecuting an infringement action, or if Abeona notifies Stanford that it does not intend to bring suit against the alleged infringer. Stanford may prosecute such matter in accordance with Section 14.4. If Abeona exercises its option pursuant to this Section 14.6. Abeona will diligently pursue the suit and Abeona will bear the entire cost of the litigation, including expenses and counsel fees incurred by Stanford or the VA. Abeona will keep Stanford reasonably apprised of all developments in the suit, and will seek Stanford’s input and approval on any substantive submissions or positions taken in the litigation regarding the scope, validity and enforceability of the Licensed Patent. Abeona will not prosecute, settle or otherwise compromise any such suit in a manner that adversely affects Stanford’s interests without Stanford’s prior written consent. Stanford or the VA may be named as a party only if: |
| (A) | Abeona’s and Stanford’s respective counsel recommend that such action is necessary in their reasonable opinion to achieve standing: |
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| (B) | Neither Stanford nor the VA are the first named party in the action: and |
| (C) | the pleadings and any public statements about the action state that Abeona is pursuing the action and that Abeona has the right to join Stanford and the VA as a party. |
| 14.7 | Recovery. If Abeona sues under Section 14.6. then any recovery in excess of any unrecovered litigation costs and fees will be shared with Stanford as follows: |
| (A) | any payment for past sales and any royalties payable in respect of future Net Sales (excluding any lump sum payments) will be deemed Net Sales, and Abeona will pay Stanford royalties at the rates specified in Section 7.8; |
| (B) | any Nonroyalty Sublicensing Consideration payment, including any lump sum payments for future sales will be deemed a payment under a Sublicense, and royalties will be shared as specified in Section 4.6.: and |
| (C) | Abeona and Stanford will negotiate in good faith appropriate compensation to Stanford for any non-cash settlement or non-cash cross-license. |
| 14.8 | Abandonment of Suit. If either Stanford or Abeona commences a suit and then wants to abandon the suit, it will give timely notice to the other party. The other party may continue prosecution of the suit after Stanford and Abeona agree on the sharing of expenses and any recovery in the suit. |
| 14.9 | VA Cooperation. The VA’s cooperation in litigation proceedings instituted under this Agreement is subject to U.S. Department of Justice approval on a case-by-case basis. |
| 15. | TERMINATION |
| 15.1 | Term. The license granted under Section 3.1 shall take effect as of the Effective Date and will remain in effect until the later of (a) the last-to-expire Licensed Patent or (b) 10 years following the First Commercial Sale of Licensed Product (if the Licensed Product does not embody any Licensed Patent). |
| 15.2 | Termination by Abeona. Abeona may terminate this Agreement by giving Stanford written notice at least 30 days in advance of the effective date of termination selected by Abeona. |
| 15.3 | Termination by Stanford. |
| (A) | Stanford may also terminate this Agreement if Abeona: |
| (1) | is delinquent on any report or payment; |
| (2) | misses a milestone described in Section 6.1(b): |
| (3) | is in breach of any provision of this Agreement: or |
| (4) | provides any false report. |
| PAGE 17 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| (B) | Termination under this Section 15.3 will take effect 60 days after written notice by Stanford unless Abeona remedies the problem in that 60-day period. Stanford may terminate the License Agreement with 60 days’ notice to Abeona if Abeona commits a material breach unless the nonpayment or breach is cured within the applicable notice period. |
| 15.4 | Surviving Provisions. Surviving any termination or expiration are: |
| (A) | Abeona’s obligation to pay royalties accrued or accruable; |
| (B) | any claim of Abeona or Stanford, accrued or to accrue, because of any breach or default by the other party; and |
| (C) | the provisions of Articles 8, 9, and 10 and any other provision that by its nature is intended to survive. |
| 16. | CHANGE OF CONTROL AND NON-ASSIGNABILITY |
| 16.1 | Change of Control. Upon Change of Control, Abeona will pay Stanford a [***] fee (“Change of Control Fee”). |
| 16.2 | Conditions of Assignment under Change of Control. Abeona may assign this Agreement as part of a Change of Control upon complete performance of the following conditions: |
| (A) | Abeona must give Stanford written notice of the assignment no later [***] from the date of assignment of the Agreement, including the new assignee’s contact information: and |
| (B) | the new assignee must agree in writing to Stanford to be bound by this Agreement; and |
| (C) | Stanford must have received the full Change of Control Fee. |
| 16.3 | After the Assignment. Upon a permitted assignment of this Agreement pursuant to Article 16. Abeona will be released of liability under this Agreement and the term “Abeona” in this Agreement will mean the assignee. |
| 16.4 | Bankruptcy. In the event of a bankruptcy or insolvency, assignment by Abeona is permitted only to a party that can provide adequate assurance of future performance, including diligent development and sales, of Licensed Product. |
| PAGE 18 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| 16.5 | Nonassignability of Agreement. Except in conformity with Sections 16.2 and 16.4. this Agreement is not assignable by Abeona under any other circumstances and any attempt to assign this Agreement by Abeona is null and void. |
| 17. | DISPUTE RESOLUTION |
| 17.1 | Dispute Resolution by Arbitration. Any dispute between the parties regarding any payments made or due under this Agreement will be settled by arbitration in accordance with the JAMS Arbitration Rules and Procedures. The parties are not obligated to settle any other dispute that may arise under this Agreement by arbitration. |
| 17.2 | Request for Arbitration. Either party may request such arbitration. Stanford and Abeona will mutually agree in writing on a third party arbitrator within [***] of the arbitration request. The arbitrator’s decision will be final and non-appealable and may be entered in any court having jurisdiction. |
| 17.3 | Discovery. The parties will be entitled to discovery as if the arbitration were a civil suit in the California Superior Court. The arbitrator may limit the scope, time, and issues involved in discovery. |
| 17.4 | Place of Arbitration. The arbitration will be held in Stanford. California unless the parties mutually agree in writing to another place. |
| 17.5 | Patent Validity. Any dispute regarding the validity of any Licensed Patent shall be litigated in the courts located in Santa Clara County, California, and the parties agree not to challenge personal jurisdiction in that forum. |
| 18. | NOTICES |
| 18.1 | Legal Action. Abeona will provide written notice to Stanford at least three months prior to bringing an action seeking to invalidate any Licensed Patent or a declaration of non-infringement. Abeona will include with such written notice an identification of all prior art it believes invalidates any claim of the Licensed Patent. |
| 18.2 | All Notices. All notices under this Agreement are deemed fully given when written, addressed, and sent as follows: |
All general notices to Abeona are mailed or emailed to:
Abeona Therapeutics Inc.
1325 Avenue of the Americas, 27th Floor
New York, NY 10019
Attn: General Manager
__________@______com
| PAGE 19 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
All financial invoices to Abeona (i.e.. accounting contact) are e-mailed to:
Abeona Therapeutics, Inc.
1325 Avenue of the Americas, 27th Floor
New York, NY 10019
Attn: General Manager
___________@______com
All progress report invoices to Abeona (i.e., technical contact) are e-mailed to:
Abeona Therapeutics, Inc.
1325 Avenue of the Americas. 27th Floor
New York, NY 10019
Attn: General Manager
___________@______com
All general notices to Stanford are e-mailed or mailed to:
Office of Technology Licensing
3000 El Camino Real
Building 5, Suite 300
Palo Alto, CA 94306-2100
[***]
All payments to Stanford are mailed to:
Stanford University
Office of Technology Licensing
Department #44439
P.O. Box 44000
San Francisco, CA 94144-4439
All progress reports to Stanford are e-mailed or mailed to:
Office of Technology Licensing
3000 El Camino Real
Building 5, Suite 300
Palo Alto. CA 94306-2100
[***]
Any notice related to Section 7.4 or Section 7.5 (Stanford Purchase Rights) shall be copied concurrently to [***].
Either party may change its address with written notice to the other party.
| PAGE 20 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
| 19. | MISCELLANEOUS |
| 19.1 | Waiver. No term of this Agreement can be waived except by the written consent of the party waiving compliance. |
| 19.2 | Choice of Law. This Agreement and any dispute arising under it is governed by the laws of the State of California. United States of America, applicable to agreements negotiated, executed, and performed within California. |
| 19.3 | Entire Agreement. The parties have read this Agreement and agree to be bound by its terms, and further agree that it constitutes the complete and entire agreement of the parties and supersedes all previous communications, oral or written, and all other communications between them relating to the license and to the subject hereof. This Agreement may not be amended except by writing executed by authorized representatives of both parties. No representations or statements of any kind made by either party, which are not expressly stated herein, will be binding on such party. |
| 19.4 | Exclusive Forum. The state and federal courts having jurisdiction over Stanford, California, United States of America, provide the exclusive forum for any court action between the parties relating to this Agreement. Abeona submits to the jurisdiction of such courts, and waives any claim that such a court lacks jurisdiction over Abeona or constitutes an inconvenient or improper forum. |
| 19.5 | Headings. No headings in this Agreement affect its interpretation. |
| 19.6 | Electronic Copy. The parties to this document agree that a copy of the original signature (including an electronic copy) may be used for any and all purposes for which the original signature may have been used. The parties further waive any right to challenge the admissibility or authenticity of this document in a court of law based solely on the absence of an original signature. |
| PAGE 21 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
The parties execute this Agreement in duplicate originals by their duly authorized officers or representatives.
| THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY |
||
| Signature: | /s/ Mona Wan | |
| Name: | Mona Wan | |
| Title: | Associate Director | |
| Date: | 8/8/2016 | |
| ABEONA THERAPEUTICS INC. | ||
| Signature: | /s/ Steve H. Rouhandeh | |
| Name: | Steve H. Rouhandeh | |
| Title: | Executive Chairman | |
| Date: | 08/03/2016 | |
| PAGE 22 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
Appendix A - Milestones
| 1. | [***]. |
| 2. | [***]. |
| 3. | [***]. |
| 4. | [***]. |
| 5. | [***]. |
| 6. | [***]. |
| 7. | [***]. |
[***]
| PAGE 23 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
Appendix B - Sample Reporting Form
Stanford Docket No. S
This report is provided pursuant to the license agreement between Stanford University and Abeona
License Agreement Effective Date:
Name(s) of Licensed Products being reported:
| Report Covering Period | |
| Yearly Maintenance Fee | $ |
| Number of Sublicenses Executed | |
|
Gross Revenue U.S. Gross Revenue Non-U.S. Gross Revenue |
$ $ |
|
Net Sales U.S. Net Sales Non-U.S. Net Sales |
$ $ |
| Royalty Calculation | |
| Royalty Subtotal | $ |
| Credit | $ |
| Royalty Due | $ |
Comments:
| PAGE 24 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
Appendix C - Client and Billing Agreement
The Board of Trustees of the Leland Stanford Junior University (“STANFORD”); and Abeona Therapeutics a Corporation of the State of Delaware, with a principal place of business at 1325 Avenue of the Americas. 27th Floor. New York. NY 10019, (“ABEONA”); have agreed to use the law firm of Bozicevic, Field & Francis LLP (“FIRM”) to prepare, file and prosecute the pending patent applications listed in Exhibit A attached hereto and maintain the patents that issue thereon (“Patents”).
WHEREAS, FIRM desires to perform the legal serv ices related to obtaining and maintaining the Patents; and
WHEREAS, STANFORD remains the client of the FIRM; and
WHEREAS, ABEONA is the licensee of STANFORD’S interest in the Patents:
NOW THEREFORE, in consideration of the premises and the faithful performance of the covenants herein contained. IT IS AGREED:
1. FIRM can interact directly with ABEONA on all patent prosecution matters related to the Patents and will copy STANFORD and the U.S. Department of Veterans Affairs (“VA”) on all correspondence. STANFORD will be notified by FIRM prior to any substantive actions and will have final approval on proceeding with such actions. In addition, as prosecution proceeds, FIRM will notify STANFORD if there is any change in inventorship from the originally filed application.
2. ABEONA is responsible for the payment of all charges and fees by FIRM related to the prosecution and maintenance of the Patents. FIRM will invoice ABEONA and ABEONA must pay FIRM directly for all charges. If STANFORD requests, STANFORD will be copied on all invoices and payments. FIRM must inform STANFORD within [***] if the licensee is delinquent on payment. Otherwise, STANFORD will not be responsible for those expenses.
3. Notices and copies of all correspondence should be sent to the following:
To ABEONA:
Attn: General Manager
Abeona Therapeutics Inc.
1325 Avenue of the Americas. 27th Floor
New York, NY 10019
To STANFORD:
Irit Gal
Office of Technology Licensing
Stanford University
3000 El Camino Real
Building 5, Suite 300
Palo Alto. CA 94306-2100
| PAGE 25 OF 26 |
| S15-479:IG | EXCLUSIVE (EQUITY) AGREEMENT |
To FIRM:
Pam Sherwood
Bozicevic, Field & Francis LLP
1900 University Avenue Suite 200
East Palo Alto, CA 94303
To VA:
Director (122)
Technology Transfer Program
Office of Research and Development
U.S. Department of Veterans Affairs
810 Vermont Avenue N.W.
Washington, DC. 20420
4. The parties to this document agree that a copy of the original signature (including an electronic copy) may be used for any and all purposes for which the original signature may have been used. The parties further waive any right to challenge the admissibility or authenticity of this document in a court of law based solely on the absence of an original signature.
| ACCEPTED AND AGREED TO: | ||
| THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY | ||
| By: | /s/ Mona Wan | |
| Name: | Mona Wan | |
| Title: | Acting Director | |
| Date: | 8/8/2016 | |
| ABEONA THERAPEUTICS INC. | ||
| By: | /s/ Steven H. Rouhandeh | |
| Name: | Steven H. Rouhandeh | |
| Title: | Executive Chairman | |
| Date: | 8/03/2016 | |
| BOZICEVIC, FIELD & FRANCIS LLP | ||
| By: | ||
| Name: | ||
| Title: | ||
| Date: | ||
| Title: | ||
| Date: | ||
| BOZICEVIC, FIELD & FRANCIS LLP | ||
| By: | /s/ Bret Field | |
| Name: | Bret Field | |
| Title: | Partner | |
| Date: | August 4, 2016 | |
| PAGE 26 OF 26 |
EXHIBIT 31.1
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Vishwas Seshadri, certify that:
| 1. | I have reviewed this report on Form 10-Q for the quarterly period ended June 30, 2026, of Abeona Therapeutics Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2026 | By: | /s/ Vishwas Seshadri |
| Vishwas Seshadri | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) |
EXHIBIT 31.2
PRINCIPAL FINANCIAL OFFICER CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Joseph Vazzano, certify that:
| 1. | I have reviewed this report on Form 10-Q for the quarterly period ended June 30, 2026, of Abeona Therapeutics Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 13, 2026 | By: | /s/ Joseph Vazzano |
| Joseph Vazzano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |
EXHIBIT 32
CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Abeona Therapeutics Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Vishwas Seshadri, President and Chief Executive Officer of the Company, and Joseph Vazzano, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 13, 2026 | By: | /s/ Vishwas Seshadri |
| Vishwas Seshadri | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: August 13, 2026 | By: | /s/ Joseph Vazzano |
| Joseph Vazzano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |