Core Insights - Abeona Therapeutics and Beacon Therapeutics have entered into an agreement for the evaluation of Abeona's patented AAV204 capsid for potential gene therapies targeting ophthalmology indications [1][2] - The collaboration aims to address high unmet medical needs in treating rare and prevalent ophthalmic diseases [1][2] Company Overview - Abeona Therapeutics is a clinical-stage biopharmaceutical company focused on developing cell and gene therapies for serious diseases, including a gene therapy for recessive dystrophic epidermolysis bullosa [4] - The company has a fully integrated cGMP manufacturing facility capable of supporting commercial production upon FDA approval [4] - Abeona's development portfolio includes AAV-based gene therapies targeting ophthalmic diseases with significant unmet medical needs [4] Technology and Innovation - AAV204 is a novel AAV capsid from the AIM™ capsid library, licensed from the University of North Carolina at Chapel Hill, demonstrating high transduction levels in the retina [2][3] - The AIM™ capsid library consists of novel AAV serotypes designed to improve delivery to key tissues affected by genetic diseases [3] Agreement Details - Under the agreement, Beacon will evaluate AAV204 for a 12-month period, with options for a worldwide, non-exclusive license for up to five gene or disease targets [2] - Abeona will receive an upfront payment upon the licensing option's exercise, along with milestone payments and tiered royalties on worldwide net sales of licensed products [2] - Beacon will be responsible for the development and commercialization of all licensed products, which will target distinct indications from those currently in development at Abeona [2] Beacon Therapeutics Overview - Beacon Therapeutics, founded in 2023, focuses on gene therapies for prevalent and rare retinal diseases, including X-linked retinitis pigmentosa and age-related macular degeneration [5] - The company is supported by various investors, including Syncona and Forbion [5]

Company Overview - Abeona Therapeutics Inc. is a clinical-stage biopharmaceutical company focused on developing cell and gene therapies for serious diseases [2] - The company is currently developing Prademagene zamikeracel (pz-cel), an investigational autologous, COL7A1 gene-corrected epidermal sheet for recessive dystrophic epidermolysis bullosa [2] - Abeona has a fully integrated cell and gene therapy cGMP manufacturing facility that supports the production of pz-cel for its Phase 3 VIITAL™ trial and is capable of commercial production upon FDA approval [2] - The company is also working on AAV-based gene therapies for ophthalmic diseases, utilizing next-generation AAV capsids to enhance tropism profiles for various diseases [2] Upcoming Events - Abeona's CEO, Vish Seshadri, and Chief Commercial Officer, Madhav Vasanthavada, will participate in a virtual fireside chat at the Stifel Virtual Cell Therapy Forum on July 9, 2024, at 9:45 a.m. Eastern Time [1] - A live webcast of the event will be available on the Investors section of the Abeona website and will be archived for 30 days [1]

Core Insights - Abeona Therapeutics Inc. is participating in a virtual fireside chat at the Stifel Virtual Cell Therapy Forum on July 9, 2024, at 9:45 a.m. Eastern Time [1] - The company is focused on developing cell and gene therapies for serious diseases, including its investigational product pz-cel for recessive dystrophic epidermolysis bullosa [2] Company Overview - Abeona Therapeutics is a clinical-stage biopharmaceutical company specializing in cell and gene therapies [2] - The company has a fully integrated cGMP manufacturing facility that supports the production of pz-cel for its Phase 3 VIITAL™ trial and potential commercial production upon FDA approval [2] - Abeona is also developing AAV-based gene therapies targeting ophthalmic diseases with high unmet medical needs, utilizing next-generation AAV capsids to enhance tropism profiles [2]

Group 1 - Abeona Therapeutics Inc. will participate in a fireside chat at the Jefferies Global Healthcare Conference on June 6, 2024, at 11:30 a.m. Eastern Time [1] - The company will also engage in one-on-one investor meetings during the conference [1] - A live webcast of the fireside chat will be available on the company's website and archived for 30 days [1] Group 2 - Abeona Therapeutics is a clinical-stage biopharmaceutical company focused on developing cell and gene therapies for serious diseases [2] - The company's investigational product, Prademagene zamikeracel (pz-cel), is in development for recessive dystrophic epidermolysis bullosa [2] - Abeona has a fully integrated cGMP manufacturing facility that supports the production of pz-cel for its Phase 3 VIITAL™ trial and potential commercial production upon FDA approval [2] - The company is also developing AAV-based gene therapies for ophthalmic diseases with high unmet medical needs, utilizing next-generation AAV capsids to improve tropism profiles [2]

Core Viewpoint - Pomerantz LLP is investigating potential securities fraud or unlawful business practices by Abeona Therapeutics Inc. and its officers or directors following a significant stock price drop after a regulatory setback with the FDA [1][2]. Group 1: Regulatory Update - On April 22, 2024, Abeona announced that the FDA issued a Complete Response Letter (CRL) regarding its Biologics License Application (BLA) for prademagene zamikeracel (pz-cel) intended for treating recessive dystrophic epidermolysis bullosa (RDEB) [2]. - The CRL indicated that additional information was required to meet Chemistry Manufacturing and Controls (CMC) standards before the application could be approved [2]. - Abeona committed to providing the necessary CMC data prior to BLA approval and full validation reports after approval in mid-2024 [2]. Group 2: Stock Price Impact - Following the announcement of the CRL, Abeona's stock price fell by $3.95 per share, representing a 53.67% decrease, closing at $3.41 per share on April 23, 2024 [2]. Group 3: Pomerantz LLP Overview - Pomerantz LLP is recognized as a leading firm in corporate, securities, and antitrust class litigation, with a history of recovering billions in damages for victims of securities fraud and corporate misconduct [3]. - The firm has been active for over 85 years, continuing the legacy of its founder, Abraham L. Pomerantz, who was a pioneer in securities class actions [3].

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) Presents Abeona Therapeutics Inc.'s unaudited condensed consolidated financial statements for Q1 2024, including balance sheets, statements of operations, stockholders' equity, cash flows, and detailed notes [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202024%20and%20December%2031%2C%202023) Details the company's financial position, including assets, liabilities, and stockholders' equity, as of March 31, 2024, and December 31, 2023 - **Total assets increased from $64.0 million to $74.8 million**, driven by cash, cash equivalents, and short-term investments[9](index=9&type=chunk) - **Total liabilities significantly increased from $49.2 million to $83.7 million**, primarily due to new long-term debt, derivative liabilities, and a substantial rise in warrant liabilities[9](index=9&type=chunk) - **Total stockholders' equity shifted from a positive $14.8 million to a deficit of $(8.9) million**[9](index=9&type=chunk) Condensed Consolidated Balance Sheets (in thousands) | --- | --- | --- | | **ASSETS** | **March 31, 2024 (in thousands)** | **December 31, 2023 (in thousands)** | | Current assets: | | | | Cash and cash equivalents | $17,558 | $14,473 | | Short-term investments | 44,786 | 37,753 | | Restricted cash | 338 | 338 | | Other receivables | 2,232 | 2,444 | | Prepaid expenses and other current assets | 1,811 | 729 | | Total current assets | 66,725 | 55,737 | | Property and equipment, net | 3,767 | 3,533 | | Operating lease right-of-use assets | 4,222 | 4,455 | | Other assets | 114 | 277 | | **Total assets** | **$74,828** | **$64,002** | | **LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY** | | | | Current liabilities: | | | | Accounts payable | $3,362 | $1,858 | | Accrued expenses | 2,791 | 5,985 | | Current portion of operating lease liability | 1,044 | 998 | | Current portion of payable to licensor | 4,691 | 4,580 | | Other current liabilities | — | 1 | | Total current liabilities | 11,889 | 13,422 | | Long-term operating lease liabilities | 4,046 | 4,402 | | Long-term debt | 18,079 | — | | Derivative liabilities | 1,005 | — | | Warrant liabilities | 48,690 | 31,352 | | **Total liabilities** | **83,709** | **49,176** | | Stockholders' (deficit) equity: | | | | Common stock | 276 | 265 | | Additional paid-in capital | 772,129 | 764,151 | | Accumulated deficit | (781,102) | (749,524) | | Accumulated other comprehensive loss | (184) | (66) | | **Total stockholders' (deficit) equity** | **(8,881)** | **14,826** | | **Total liabilities and stockholders' equity** | **$74,828** | **$64,002** | [Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Presents the company's financial performance, including revenues, expenses, and net loss, for the three months ended March 31, 2024, and 2023 - **Net loss for Q1 2024 was $(31.6) million**, a significant increase from $(9.1) million in the prior year period[11](index=11&type=chunk) - This was primarily driven by a **$(17.3) million loss from the change in fair value of warrant and derivative liabilities**, increased general and administrative expenses (up **78% to $7.1 million**), and increased interest expense (up **843% to $1.0 million**)[11](index=11&type=chunk)[125](index=125&type=chunk) - **Research and development expenses decreased by 10% to $7.2 million**[11](index=11&type=chunk)[125](index=125&type=chunk) Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share amounts) | --- | --- | --- | | | **For the three months ended March 31, 2024 (in thousands)** | **For the three months ended March 31, 2023 (in thousands)** | | Revenues: | | | | License and other revenues | $— | $— | | Expenses: | | | | Research and development | 7,207 | 8,041 | | General and administrative | 7,123 | 3,997 | | Total expenses | 14,330 | 12,038 | | Loss from operations | (14,330) | (12,038) | | Interest income | 843 | 364 | | Interest expense | (952) | (101) | | Change in fair value of warrant and derivative liabilities | (17,301) | 2,265 | | Other income | 162 | 403 | | **Net loss** | **$(31,578)** | **$(9,107)** | | Basic and diluted loss per common share | $(1.16) | $(0.54) | | Weighted average number of common shares outstanding – basic and diluted | 27,315,537 | 16,904,024 | | Other comprehensive income (loss): | | | | Change in unrealized (losses) gains related to available-for-sale debt securities | (118) | 64 | | **Comprehensive loss** | **$(31,696)** | **$(9,043)** | [Unaudited Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(Deficit)%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Details changes in stockholders' equity (deficit) for the three months ended March 31, 2024, and 2023, reflecting net loss, stock issuances, and compensation - **Total stockholders' equity shifted from a positive $14.8 million to a deficit of $(8.9) million**[9](index=9&type=chunk)[13](index=13&type=chunk) - This change was primarily due to the **net loss of $(31.6) million**, partially offset by proceeds from common stock issuances (**$6.5 million from ATM sales**) and stock-based compensation (**$1.5 million**)[11](index=11&type=chunk)[13](index=13&type=chunk)[84](index=84&type=chunk)[95](index=95&type=chunk) Condensed Consolidated Statements of Stockholders' Equity (Deficit) (in thousands, except share amounts) | --- | --- | --- | --- | --- | --- | --- | | | **Common Shares** | **Common Stock Amount (in thousands)** | **Additional Paid-in Capital (in thousands)** | **Accumulated Deficit (in thousands)** | **Accumulated Other Comprehensive Loss (in thousands)** | **Total Stockholders' Equity (Deficit) (in thousands)** | | **Balance at December 31, 2023** | 26,523,878 | $265 | $764,151 | $(749,524) | $(66) | $14,826 | | Stock-based compensation expense | — | — | 1,546 | — | — | 1,546 | | Issuance of common stock in connection with restricted share awards, net | 137,500 | 2 | (16) | — | — | (14) | | Issuance of common stock, net of offering costs under open market sale agreement (ATM) | 889,315 | 9 | 6,448 | — | — | 6,457 | | Net loss | — | — | — | (31,578) | — | (31,578) | | Other comprehensive income | — | — | — | — | (118) | (118) | | **Balance at March 31, 2024** | **27,550,693** | **$276** | **$772,129** | **$(781,102)** | **$(184)** | **$(8,881)** | | **Balance at December 31, 2022** | 17,719,720 | $177 | $722,049 | $(695,336) | $(129) | $26,761 | | Stock-based compensation expense | — | — | 770 | — | — | 770 | | Issuance of common stock in connection with restricted share awards, net | 111,064 | 1 | (5) | — | — | (4) | | Issuance of common stock, net of offering costs under open market sale agreement (ATM) | 98,560 | 1 | 255 | — | — | 256 | | Net loss | — | — | — | (9,107) | — | (9,107) | | Other comprehensive income | — | — | — | — | 64 | 64 | | **Balance at March 31, 2023** | **17,929,344** | **$179** | **$723,069** | **$(704,443)** | **$(65)** | **$18,740** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%202023) Summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2024, and 2023 - **Net cash used in operating activities increased to $(14.5) million** for Q1 2024 from $(11.7) million in the prior year, primarily due to the increased net loss[15](index=15&type=chunk)[136](index=136&type=chunk) - **Net cash used in investing activities was $(7.8) million**, a shift from $2.2 million provided in the prior year, mainly due to increased purchases of short-term investments[15](index=15&type=chunk)[137](index=137&type=chunk) - **Net cash provided by financing activities significantly increased to $25.4 million** from $(4) thousand in the prior year, driven by **$6.4 million from ATM sales** and **$19.0 million from the January 2024 Loan Agreement**[15](index=15&type=chunk)[138](index=138&type=chunk) - Overall, there was a **net increase in cash, cash equivalents, and restricted cash of $3.1 million** for the period, compared to a decrease of $(9.5) million in the prior year[15](index=15&type=chunk) Condensed Consolidated Statements of Cash Flows (in thousands) | --- | --- | --- | | | **For the three months ended March 31, 2024 (in thousands)** | **For the three months ended March 31, 2023 (in thousands)** | | Cash flows from operating activities: | | | | Net loss | $(31,578) | $(9,107) | | Adjustments to reconcile net loss to cash used in operating activities: | | | | Depreciation and amortization | 491 | 661 | | Stock-based compensation expense | 1,546 | 770 | | Change in fair value of warrant and derivative liabilities | 17,301 | (2,265) | | Accretion and interest on short-term investments | (59) | (117) | | Amortization of right-of-use lease assets | 233 | 227 | | Non-cash interest | 345 | 100 | | Change in operating assets and liabilities: | | | | Other receivables | 252 | (75) | | Prepaid expenses and other current assets | (1,232) | (1,199) | | Other assets | 163 | (56) | | Accounts payable and accrued expenses | (1,690) | (376) | | Lease liabilities | (310) | (308) | | Other current liabilities | — | 1 | | **Net cash used in operating activities** | **$(14,538)** | **$(11,744)** | | Cash flows from investing activities: | | | | Capital expenditures | (725) | (218) | | Purchases of short-term investments | (29,343) | (7,964) | | Proceeds from maturities of short-term investments | 22,251 | 10,393 | | **Net cash (used in) provided by investing activities** | **$(7,817)** | **$2,211** | | Cash flows from financing activities: | | | | Proceeds from ATM sales of common stock, net of issuance costs | 6,417 | — | | Payment from net settlement of restricted share awards | (14) | (4) | | Proceeds from issuance of long-term debt | 20,000 | — | | Payment of debt issuance costs | (963) | — | | **Net cash provided by (used in) financing activities** | **$25,440** | **$(4)** | | Net increase (decrease) in cash, cash equivalents and restricted cash | 3,085 | (9,537) | | Cash, cash equivalents and restricted cash at beginning of period | 14,811 | 14,555 | | **Cash, cash equivalents and restricted cash at end of period** | **$17,896** | **$5,018** | | Supplemental cash flow information: | | | | Cash and cash equivalents | $17,558 | $4,680 | | Restricted cash | 338 | 338 | | Total cash, cash equivalents and restricted cash | $17,896 | $5,018 | | Supplemental non-cash flow information: | | | | Derivative and warrant additions associated with loan and security agreement | $1,042 | $— | | Cash paid for interest | $607 | $— | | Cash paid for taxes | $8 | $6 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering significant accounting policies and specific financial items [NOTE 1 – Nature of Operations and Significant Accounting Policies](index=9&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20OPERATIONS%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines Abeona Therapeutics Inc.'s business, its clinical-stage biopharmaceutical focus, and key accounting policies, including its liquidity outlook - Abeona Therapeutics Inc. is a clinical-stage biopharmaceutical company developing cell and gene therapies, with **pz-cel for RDEB as its lead clinical program**[18](index=18&type=chunk) - The Company expects its existing cash resources of **$62.7 million** as of March 31, 2024, plus **$75.0 million gross proceeds from a May 2024 offering**, to fund operations for at least the next 12 months[23](index=23&type=chunk)[25](index=25&type=chunk) Net Loss and Potential Dilutive Securities | Metric | 3 Months Ended March 31, 2024 | 3 Months Ended March 31, 2023 | | :------------------------------------------------------------------ | :---------------------------- | :---------------------------- | | Net Loss (in millions) | $(31.6) | $(9.1) | | Basic and Diluted Loss Per Common Share | $(1.16) | $(0.54) | | Weighted Average Common Shares Outstanding (Basic & Diluted) | 27,315,537 | 16,904,024 | | Potential Dilutive Securities (not included due to anti-dilution): | | | | Shares issuable upon exercise of stock options | 179,001 | 234,697 | | Shares underlying restricted stock | 2,542,619 | 929,946 | | Shares issuable upon exercise of warrants | 9,903,142 | 9,397,879 | | Total Potential Dilutive Securities | 12,624,762 | 10,562,522 | [NOTE 2 – Short-Term Investments](index=12&type=section&id=NOTE%202%20%E2%80%93%20SHORT-TERM%20INVESTMENTS) Details the company's short-term investments, primarily U.S. treasury and federal agency securities, and their fair value measurement - The company's short-term investments, primarily U.S. treasury and federal agency securities, totaled **$44.8 million** as of March 31, 2024, up from $37.8 million at December 31, 2023[37](index=37&type=chunk)[38](index=38&type=chunk) - These available-for-sale securities are carried at fair value, with unrealized losses attributed to interest rate changes, and no significant realized gains or losses were recognized[38](index=38&type=chunk)[39](index=39&type=chunk) Short-Term Investments (Available-for-sale) (in thousands) | Investment Type | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------------------- | :---------------------------- | :------------------------------- | | U.S. treasury securities | $36,832 | $8,393 | | U.S. federal agency securities | $7,954 | $29,360 | | **Total Fair Value** | **$44,786** | **$37,753** | | Gross Unrealized Loss (March 31, 2024) | $(183) | $(66) | [NOTE 3 – Property and Equipment, Net](index=13&type=section&id=NOTE%203%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT%2C%20NET) Reports on the company's property and equipment, net, including additions and depreciation, for the reported periods - **Property and equipment, net, increased to $3.8 million** as of March 31, 2024, from $3.5 million at December 31, 2023, reflecting additions to various assets[41](index=41&type=chunk) - **Depreciation and amortization on property and equipment decreased to $0.5 million** for Q1 2024 from $0.7 million for the same period in 2023[41](index=41&type=chunk) Property and Equipment, Net (in thousands) | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------------------------- | :---------------------------- | :------------------------------- | | Laboratory equipment | $7,498 | $6,935 | | Furniture, software and office equipment | $1,045 | $986 | | Leasehold improvements | $8,706 | $8,603 | | Subtotal | $17,249 | $16,524 | | Less: accumulated depreciation | $(13,482) | $(12,991) | | **Total property and equipment, net** | **$3,767** | **$3,533** | [NOTE 4 – Fair Value Measurements](index=13&type=section&id=NOTE%204%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) Discusses the fair value measurements of financial assets and liabilities, categorizing them into Level 1, 2, and 3 inputs - As of March 31, 2024, **total assets measured at fair value were $62.3 million**, primarily in Level 1 and Level 2 categories[47](index=47&type=chunk) - **Total liabilities measured at fair value significantly increased to $54.4 million**, all classified as Level 3 due to unobservable inputs in valuation models[47](index=47&type=chunk) Financial Assets and Liabilities Measured at Fair Value (in thousands) | Description | Fair Value at March 31, 2024 (in thousands) | Fair Value at December 31, 2023 (in thousands) | Level 1 (2024) (in thousands) | Level 2 (2024) (in thousands) | Level 3 (2024) (in thousands) | | :----------------------------------------- | :---------------------------- | :------------------------------- | :------------- | :------------- | :------------- | | **Recurring Assets:** | | | | | | | Cash equivalents (Money market fund) | $17,558 | $1,034 | $17,558 | $— | $— | | Short-term investments (U.S. treasury) | $36,832 | $8,393 | $36,832 | $— | $— | | Short-term investments (U.S. federal agency) | $7,954 | $29,360 | $— | $7,954 | $— | | **Total Assets Measured at Fair Value** | **$62,344** | **$38,787** | **$54,390** | **$7,954** | **$—** | | **Liabilities:** | | | | | | | Payable to licensor | $4,691 | $4,580 | $— | $— | $4,691 | | Derivative liabilities | $1,005 | $— | $— | $— | $1,005 | | Warrant liabilities | $48,690 | $31,352 | $— | $— | $48,690 | | **Total Liabilities Measured at Fair Value** | **$54,386** | **$35,932** | **$—** | **$—** | **$54,386** | Warrant Liabilities Activity (in thousands) | Activity | Amount (in thousands) | | :-------------------------------------------------------------------- | :-------------------- | | Warrant liabilities as of December 31, 2023 | $31,352 | | Fair value of warrants issued in connection with Loan Agreement | $200 | | Loss recognized in earnings from change in fair value | $17,138 | | **Warrant liabilities as of March 31, 2024** | **$48,690** | Derivative Liabilities Activity (in thousands) | Activity | Amount (in thousands) | | :-------------------------------------------------------------------- | :-------------------- | | Derivative liabilities as of December 31, 2023 | $— | | Fair value of derivatives issued in connection with Loan Agreement | $800 | | Loss recognized in earnings from change in fair value | $205 | | **Derivative liabilities as of March 31, 2024** | **$1,005** | [NOTE 5 – Settlement Liability](index=17&type=section&id=NOTE%205%20%E2%80%93%20SETTLEMENT%20LIABILITY) Details the company's settlement agreement with REGENXBIO Inc., including past payments and the remaining present value due - The Company entered into a settlement agreement with REGENXBIO Inc. for **$30.0 million**, with **$20.0 million paid in November 2021** and **$5.0 million paid in November 2022**[58](index=58&type=chunk) - A remaining payment of **$5.0 million is due by November 2024** or upon a Strategic Transaction's closing[58](index=58&type=chunk) - As of March 31, 2024, the **present value of the amount due was $4.7 million**, calculated using a **9.6% effective interest rate**[59](index=59&type=chunk) [NOTE 6 – Accrued Expenses](index=17&type=section&id=NOTE%206%20%E2%80%93%20ACCRUED%20EXPENSES) Reports on the components and changes in accrued expenses, highlighting the primary drivers of reduction - **Total accrued expenses decreased to $2.8 million** as of March 31, 2024, from $6.0 million at December 31, 2023[61](index=61&type=chunk) - This reduction was primarily driven by a decrease in accrued employee compensation and accrued contracted services and other expenses[61](index=61&type=chunk) Components of Accrued Expenses (in thousands) | Component | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------------------ | :---------------------------- | :------------------------------- | | Accrued employee compensation | $1,328 | $3,688 | | Accrued contracted services and other | $1,463 | $2,297 | | **Total accrued expenses** | **$2,791** | **$5,985** | [NOTE 7 – Leases](index=17&type=section&id=NOTE%207%20%E2%80%93%20LEASES) Provides details on operating lease liabilities, costs, and expected sublease income for the reported periods - **Total operating lease liabilities decreased to $5.1 million** as of March 31, 2024, from $5.4 million at December 31, 2023[63](index=63&type=chunk) - **Operating lease costs for Q1 2024 were $0.4 million**, a decrease from $0.47 million in the prior year[65](index=65&type=chunk) - The Company expects to receive **$1.0 million in future sublease income through September 2025** from two sublease agreements[62](index=62&type=chunk) Operating Lease Liabilities (in thousands) | Category | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :------------------------------ | :---------------------------- | :------------------------------- | | Current operating lease liability | $1,044 | $998 | | Non-current operating lease liability | $4,046 | $4,402 | | **Total operating lease liability** | **$5,090** | **$5,400** | Operating Lease Costs (in thousands) | Component | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :------------------------ | :------------------------------------------- | :------------------------------------------- | | Operating lease cost | $334 | $415 | | Variable lease cost | $74 | $39 | | Short-term lease cost | $23 | $18 | | **Total operating lease costs** | **$431** | **$472** | [NOTE 8 – Debt](index=19&type=section&id=NOTE%208%20%E2%80%93%20DEBT) Outlines the terms of the January 2024 Loan and Security Agreement, including principal, interest rates, and associated derivative liabilities - In January 2024, the company entered into a **$50 million Loan and Security Agreement**, with a committed **Tranche 1 of $20 million funded at closing**[73](index=73&type=chunk) - The loans bear interest at **13.50%** as of March 31, 2024, and are repayable in equal monthly installments beginning April 8, 2025[74](index=74&type=chunk) - The agreement includes a Conversion Right for Avenue to convert up to **$3 million of principal into common stock**, classified as a derivative liability, and warrants were issued to lenders[78](index=78&type=chunk)[80](index=80&type=chunk) Debt, Net of Issuance Costs and Discounts (in thousands) | Component | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------------------- | :---------------------------- | :------------------------------- | | Loan Agreement principal | $20,000 | $— | | Accreted final payment fee | $74 | $— | | Unamortized debt issuance costs and discounts | $(1,995) | $— | | **Total debt** | **$18,079** | **$—** | [NOTE 9 – Equity](index=20&type=section&id=NOTE%209%20%E2%80%93%20EQUITY) Details common stock issuances, warrant classifications, and pre-funded warrants, impacting the company's equity structure - The Company sold **889,315 shares of common stock** under its ATM Agreement during Q1 2024, generating **net proceeds of $6.5 million**[84](index=84&type=chunk) - Warrants from the 2021 Public Offering (**1,788,000 shares**), 2022 Private Placement (**7,609,879 shares**), and 2024 Loan Agreement (**505,263 shares**) are classified as liabilities and re-measured at fair value[49](index=49&type=chunk)[51](index=51&type=chunk)[82](index=82&type=chunk)[86](index=86&type=chunk)[89](index=89&type=chunk) - The 2023 Direct Placement Offering included **2,919,140 pre-funded warrants**, classified as equity and considered outstanding shares for basic EPS calculation[88](index=88&type=chunk) [NOTE 10 – Stock-Based Compensation](index=22&type=section&id=NOTE%2010%20%E2%80%93%20STOCK-BASED%20COMPENSATION) Reports on stock-based compensation expense, its allocation, and unrecognized compensation costs for options and restricted stock awards - **Stock-based compensation expense for Q1 2024 increased to $1.5 million** from $0.8 million in the prior year, with a significant portion allocated to general and administrative expenses[95](index=95&type=chunk) - As of March 31, 2024, **total unrecognized compensation cost for non-vested option awards was approximately $1.0 million**, with a weighted average remaining vesting period of 1.1 years[99](index=99&type=chunk) - As of March 31, 2024, there was **$7.4 million of total unrecognized compensation expense** related to unvested restricted stock awards, expected to be recognized over a weighted average vesting period of 2.2 years[101](index=101&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | 3 Months Ended March 31, 2024 (in thousands) | 3 Months Ended March 31, 2023 (in thousands) | | :--------------------------- | :------------------------------------------- | :------------------------------------------- | | Research and development | $346 | $584 | | General and administrative | $1,220 | $186 | | **Total stock-based compensation expense** | **$1,546** | **$770** | [NOTE 11 – License/Supplier Agreement](index=24&type=section&id=NOTE%2011%20%E2%80%93%20LICENSE%2FSUPPLIER%20AGREEMENT) Details sublicense and exclusive license agreements, including potential milestone payments and royalties, and revenue recognition policies - The Company has sublicense agreements with Taysha Gene Therapies for CLN1 disease and Rett syndrome, with potential event-based milestone payments up to **$26.0 million and $26.5 million**, and sales-based milestone payments up to **$30.0 million each**, plus royalties[104](index=104&type=chunk)[109](index=109&type=chunk) - An exclusive license agreement for ABO-102 (MPS IIIA) includes eligibility for **tiered royalties (mid-single-digit up to 10%)** on net sales and up to **$30.0 million in commercial milestone payments**[111](index=111&type=chunk) - No revenue was recognized from these licensing arrangements for Q1 2024 or 2023, as milestone payments are constrained until probable of not resulting in significant cumulative revenue reversal[105](index=105&type=chunk)[110](index=110&type=chunk) [NOTE 12 – Subsequent Events](index=25&type=section&id=NOTE%2012%20%E2%80%93%20SUBSEQUENT%20EVENTS) Reports on significant events occurring after the reporting period, specifically a May 2024 underwritten public offering and its net proceeds - On May 7, 2024, the Company closed an underwritten offering of **12,285,056 shares of common stock** and **6,142,656 pre-funded warrants** at **$4.07 per share**[113](index=113&type=chunk) - The estimated **net proceeds from this offering are approximately $70.2 million**, after deducting underwriting discounts, commissions, and estimated offering expenses[113](index=113&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's perspective on Q1 2024 financial condition and results, covering strategic overview, performance drivers, liquidity, and critical accounting estimates [Overview](index=26&type=section&id=OVERVIEW) Summarizes Abeona's strategic focus, lead clinical program pz-cel's FDA status, preclinical pipeline, and recent financing activities - Abeona's lead clinical program, **pz-cel for RDEB**, received a **Complete Response Letter (CRL) from the FDA in April 2024** due to Chemistry Manufacturing and Controls (CMC) requirements[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - The company is preparing its cGMP commercial facility in Cleveland, Ohio, for pz-cel manufacturing and engaging with healthcare stakeholders for market access and pricing[119](index=119&type=chunk) - Preclinical pipeline includes AAV-based gene therapies for Stargardt disease (ABO-504), X-linked retinoschisis (ABO-503), and autosomal dominant optic atrophy (ABO-505)[120](index=120&type=chunk)[121](index=121&type=chunk) - Recent financing activities include a **$50 million credit facility in January 2024** and a **May 2024 underwritten offering yielding approximately $70.2 million in net proceeds**[122](index=122&type=chunk)[123](index=123&type=chunk) [Results of Operations](index=27&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes the company's financial results for Q1 2024 compared to Q1 2023, focusing on key drivers of net loss and expense changes - For Q1 2024, Abeona reported a **net loss of $(31.6) million**, a significant increase from $(9.1) million in the prior year[125](index=125&type=chunk) - This was primarily driven by a **$(17.3) million loss from the change in fair value of warrant and derivative liabilities**, a **78% increase in general and administrative expenses to $7.1 million**, and an **843% increase in interest expense to $1.0 million**[125](index=125&type=chunk)[128](index=128&type=chunk)[131](index=131&type=chunk) - **Research and development expenses decreased by 10% to $7.2 million**, mainly due to reduced clinical and development work[125](index=125&type=chunk)[126](index=126&type=chunk) Consolidated Statements of Operations Comparison (Q1 2024 vs. Q1 2023) (in thousands) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Change ($) (in thousands) | Change (%) | | :------------------------------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | License and other revenues | $— | $— | $— | N/A | | Research and development expenses | $7,207 | $8,041 | $(834) | (10)% | | General and administrative expenses | $7,123 | $3,997 | $3,126 | 78% | | Total expenses | $14,330 | $12,038 | $2,292 | 19% | | Loss from operations | $(14,330) | $(12,038) | $(2,292) | 19% | | Interest income | $843 | $364 | $479 | 132% | | Interest expense | $(952) | $(101) | $(851) | 843% | | Change in fair value of warrant and derivative liabilities | $(17,301) | $2,265 | $(19,566) | (864)% | | Other income | $162 | $403 | $(241) | (60)% | | **Net loss** | **$(31,578)** | **$(9,107)** | **$(22,471)** | **247%** | [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses the company's cash resources, financing activities, cash flow trends, and future funding requirements - As of March 31, 2024, **cash resources were $62.7 million**, and with **$75.0 million gross proceeds from the May 2024 offering**, funds are sufficient for at least the next 12 months[23](index=23&type=chunk)[140](index=140&type=chunk) - **Net cash provided by financing activities was $25.4 million** for Q1 2024, driven by **$6.4 million from ATM sales** and **$19.0 million from the January 2024 Loan Agreement**[138](index=138&type=chunk) - **Net cash used in operating activities was $14.5 million**, and **net cash used in investing activities was $7.8 million** for Q1 2024[136](index=136&type=chunk)[137](index=137&type=chunk) - The Company expects to incur losses for several years and will require additional funding through equity offerings, debt financings, or collaborations for product development and commercialization[142](index=142&type=chunk)[143](index=143&type=chunk) Cash Flows Summary (Q1 2024 vs. Q1 2023) (in thousands) | Activity | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :-------------------------------------------------------------------------- | :--------------------- | :--------------------- | | Net cash used in operating activities | $(14,538) | $(11,744) | | Net cash (used in) provided by investing activities | $(7,817) | $2,211 | | Net cash provided by (used in) financing activities | $25,440 | $(4) | | **Net increase (decrease) in cash, cash equivalents and restricted cash** | **$3,085** | **$(9,537)** | [Critical Accounting Estimates](index=32&type=section&id=Critical%20Accounting%20Estimates) Highlights key accounting estimates, specifically the fair value measurement of the derivative liability associated with the loan agreement - The fair value of the conversion right embedded within the loan agreement is accounted for as a derivative liability, measured using a Monte Carlo simulation model[149](index=149&type=chunk) [Recently Issued Accounting Standards Not Yet Effective or Adopted](index=32&type=section&id=Recently%20Issued%20Accounting%20Standards%20Not%20Yet%20Effective%20or%20Adopted) Identifies recently issued accounting pronouncements, ASU No. 2023-09 and ASU 2023-07, and their effective dates - The Company is assessing the impact of recently issued accounting pronouncements, **ASU No. 2023-09 (Income Taxes)** and **ASU 2023-07 (Segment Reporting)**[34](index=34&type=chunk)[35](index=35&type=chunk)[150](index=150&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) States that no quantitative and qualitative disclosures about market risk are applicable for the reported period [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's Disclosure Controls and Procedures were effective as of March 31, 2024[151](index=151&type=chunk) - There were no material changes in the Company's internal control over financial reporting during Q1 2024[152](index=152&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings for the quarter ended March 31, 2024 [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Highlights the new material risk factor of the FDA's Complete Response Letter (CRL) for pz-cel's BLA due to CMC requirements, potentially delaying commercialization - The FDA issued a **Complete Response Letter (CRL) for pz-cel's Biologics License Application (BLA)** due to Chemistry Manufacturing and Controls (CMC) requirements, posing a new material risk factor[155](index=155&type=chunk) - Failure to satisfy CRL requirements or delays could shorten exclusive commercialization rights, allow competitors to enter, and materially harm the company's business and prospects[155](index=155&type=chunk) [Item 2. Unregistered Sale of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or purchases of registered equity securities for the quarter ended March 31, 2024 [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) Details Rule 10b5-1 trading arrangements adopted by the President and CEO and CFO during Q1 2024 for common stock and restricted stock unit sales - President and CEO, Vishwas Seshadri, adopted a **Rule 10b5-1 trading arrangement on February 9, 2024**, for the sale of up to **20,000 shares of common stock** and restricted stock unit settlements, effective until October 30, 2025[159](index=159&type=chunk) - CFO, Joseph Vazzano, adopted two **Rule 10b5-1 trading arrangements on February 9 and February 12, 2024**, for the sale of up to **14,979 shares** and **47,302 shares from restricted stock units**, and an additional **5,500 shares**, effective until December 31, 2024[160](index=160&type=chunk)[161](index=161&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed as part of the Form 10-Q, including warrants, the Loan and Security Agreement, certifications, and XBRL data SIGNATURES - The report is duly signed on behalf of Abeona Therapeutics Inc. by its President and Chief Executive Officer, Vishwas Seshadri, and Chief Financial Officer, Joseph Vazzano, on May 15, 2024[167](index=167&type=chunk)[168](index=168&type=chunk)

Financial Performance - Net loss for the first quarter of 2024 was $31.6 million, or $1.16 loss per common share, compared to a net loss of $9.1 million, or $0.54 loss per common share in the same period of 2023[5]. - Research and development expenses for Q1 2024 were $7.2 million, a decrease from $8.0 million in Q1 2023[5]. - General and administrative expenses increased to $7.1 million in Q1 2024 from $4.0 million in Q1 2023[5]. Cash Position - Cash, cash equivalents, restricted cash, and short-term investments totaled $62.7 million as of March 31, 2024, up from $52.6 million as of December 31, 2023[4]. - Abeona Therapeutics closed a $75 million underwritten securities offering in May 2024, extending its cash runway into 2026[2]. Assets and Liabilities - Abeona's total assets increased to $74.8 million as of March 31, 2024, from $64.0 million as of December 31, 2023[13]. - Total liabilities rose to $83.7 million as of March 31, 2024, compared to $49.2 million as of December 31, 2023[13]. Regulatory and Development Updates - Abeona anticipates completing the BLA resubmission for pz-cel in the second half of 2024 following a Complete Response Letter from the FDA[2]. - The FDA's CRL did not identify deficiencies related to clinical efficacy or safety data, and no new clinical trials are required for pz-cel approval[2]. - The company is preparing for a potential U.S. commercial launch of pz-cel, including onboarding discussions with treatment sites and building supply chain capabilities[3].

Core Viewpoint - Abeona Therapeutics Inc. is focused on addressing FDA's Chemistry Manufacturing and Controls (CMC) deficiencies to resubmit its Biologics License Application (BLA) for prademagene zamikeracel (pz-cel) for recessive dystrophic epidermolysis bullosa (RDEB) in the second half of 2024, following a successful $75 million financing that extends its cash runway into 2026 [1][3][5]. Corporate Highlights - On May 7, 2024, the company closed a $75 million underwritten securities offering with participation from both new and existing investors [2]. - In January 2024, Abeona entered into a $50 million credit facility and received the first tranche of $20 million [2]. Product Development - The FDA issued a Complete Response Letter (CRL) in April 2024 regarding the BLA for pz-cel, citing the need for additional CMC information, but did not request new clinical trials or data [3]. - The company anticipates completing the BLA resubmission in the second half of 2024 and has accepted new long-term safety data for pz-cel for presentation at the Society for Investigative Dermatology Annual Meeting [3]. Commercial Launch Preparations - Abeona is advancing key commercial activities in preparation for a potential U.S. launch of pz-cel, including discussions with treatment sites and building supply chain capabilities [4]. Financial Results - As of March 31, 2024, the company reported cash and cash equivalents totaling $62.7 million, an increase from $52.6 million as of December 31, 2023 [5]. - The net loss for the first quarter of 2024 was $31.6 million, or $1.16 loss per common share, compared to a net loss of $9.1 million, or $0.54 loss per common share, in the same period of 2023 [6][7]. Research and Development Expenses - Research and development expenses for the first quarter of 2024 were $7.2 million, down from $8.0 million in the same period of 2023 [6]. - General and administrative expenses increased to $7.1 million in the first quarter of 2024, compared to $4.0 million in the same period of 2023 [6]. Balance Sheet Overview - Total assets as of March 31, 2024, were $74.8 million, compared to $64.0 million as of December 31, 2023 [17]. - Total liabilities increased to $83.7 million as of March 31, 2024, from $49.2 million as of December 31, 2023 [18].

Core Viewpoint - Abeona Therapeutics Inc. has announced an underwritten offering of common stock and pre-funded warrants, aiming to raise approximately $75 million to support its product candidate pz-cel and other corporate purposes [1][2]. Group 1: Offering Details - The offering consists of 12,285,056 shares of common stock and pre-funded warrants for 6,142,656 shares, priced at $4.07 per share, equal to the closing price on May 2, 2024 [1]. - The pre-funded warrants are immediately exercisable at a nominal price of $0.0001 per share and can be exercised at any time until fully exercised [1]. - The closing of the offering is expected around May 7, 2024, pending customary closing conditions [1]. Group 2: Investor Participation - The offering has attracted both new and existing investors, including notable firms such as Adage Capital Partners, L.P., Janus Henderson Investors, and Nantahala Capital [2]. - Stifel is serving as the sole bookrunner for this offering [2]. Group 3: Use of Proceeds - Abeona plans to utilize the net proceeds primarily for the resubmission of its Biologics License Application (BLA) for pz-cel, commercialization efforts, working capital, and general corporate purposes [2]. Group 4: Company Overview - Abeona Therapeutics is a clinical-stage biopharmaceutical company focused on developing cell and gene therapies for serious diseases, with pz-cel being an investigational treatment for recessive dystrophic epidermolysis bullosa [5]. - The company has a fully integrated cGMP manufacturing facility capable of supporting commercial production of pz-cel upon FDA approval [5]. - Abeona is also developing AAV-based gene therapies for ophthalmic diseases, utilizing next-generation AAV capsids to enhance treatment efficacy [5].

Core Viewpoint - Abeona Therapeutics Inc. (ABEO) experienced a significant stock drop of over 50% after receiving a Complete Response Letter (CRL) from the FDA regarding its Biologics License Application for pz-cel, which is a gene therapy for recessive dystrophic epidermolysis bullosa (RDEB) [2][3] Group 1: Company Overview - Pz-cel is designed to treat RDEB, a severe inherited connective tissue disorder, and can cover approximately 500 square centimeters with a single application of gene-corrected epidermal sheets [3] - The company estimates peak revenue in the U.S. to exceed $500 million by the fifth year post-approval [3] Group 2: Regulatory Challenges - The CRL highlighted manufacturing issues but did not raise concerns regarding clinical efficacy or safety data, which may enhance the likelihood of future approval once the identified issues are resolved [3] - ABEO plans to resubmit its BLA addressing the deficiencies identified in the CRL, with expectations for submission in Q2 or Q3 of 2024, potentially leading to a new PDUFA date in Q1 2025 [3] Group 3: Financial Position - As of the end of 2023, ABEO had $52 million in cash and $42 million in working capital, with a net loss of $54 million for the year [4] - The company raised $5.3 million from stock issuance and $20 million from a credit facility, which allows for an additional $30 million in lending contingent on FDA approval of pz-cel [4] - The quarterly cash burn rate is approximately $12 million, suggesting that current cash resources could last for about six quarters, extending into mid-2025 [4] Group 4: Market Sentiment and Investment Outlook - At the time of the report, ABEO was trading around $3.40, leading to a market cap of approximately $95 million and an enterprise value of around $50 million [5] - Given the potential for significant revenue and a previous price target of $38, there is speculative upside despite the risk of dilution [5] - The stock is expected to bottom out around $3.00, presenting a potential entry point for investors [5]