Abeona Therapeutics(ABEO) - 2024 Q2 - Quarterly Report

PART I Financial Statements Unaudited financial statements for June 30, 2024, show increased cash from financing, a Q2 2024 net income of $7.4 million driven by warrant gains, and $99.1 million cash inflow from financing activities Condensed Consolidated Balance Sheets As of June 30, 2024, total assets increased to $134.0 million from $64.0 million, driven by cash from financing, with liabilities rising to $60.8 million and equity growing to $73.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $34,426 | $14,473 | | Short-term investments | $88,282 | $37,753 | | Total current assets | $125,904 | $55,737 | | Total assets | $134,003 | $64,002 | | Liabilities & Equity | | | | Total current liabilities | $16,843 | $13,422 | | Long-term debt | $16,133 | $0 | | Warrant liabilities | $24,100 | $31,352 | | Total liabilities | $60,762 | $49,176 | | Total stockholders' equity | $73,241 | $14,826 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For Q2 2024, the company reported net income of $7.4 million (vs. $16.7 million loss in Q2 2023), driven by a $24.9 million gain on warrant liabilities, with six-month net loss at $24.2 million and increased operating expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | License and other revenues | $0 | $3,500 | $0 | $3,500 | | Research and development | $9,218 | $8,523 | $16,425 | $16,564 | | General and administrative | $8,646 | $5,021 | $15,769 | $9,018 | | Loss from operations | $(17,864) | $(10,554) | $(32,194) | $(22,592) | | Change in fair value of warrant/derivative liabilities | $24,927 | $(8,629) | $7,626 | $(6,364) | | Net Income (Loss) | $7,406 | $(16,654) | $(24,172) | $(25,761) | | Basic EPS | $0.19 | $(0.92) | $(0.72) | $(1.48) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity significantly increased from $14.8 million at year-end 2023 to $73.2 million by June 30, 2024, driven by $70.2 million net proceeds from an underwritten offering and $10.0 million from ATM sales - For the six months ended June 30, 2024, the company raised $70.2 million (net) from an underwritten offering and $10.0 million (net) from its ATM sales agreement[13][93] - Total stockholders' equity increased from $14.8 million on December 31, 2023, to $73.2 million on June 30, 2024[13] Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash used in operations was $27.2 million, investing activities used $51.9 million, while financing activities provided a substantial $99.1 million, resulting in a net cash increase of $20.0 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(27,222) | $(22,028) | | Net cash (used in) provided by investing activities | $(51,949) | $7,422 | | Net cash provided by financing activities | $99,124 | $6,614 | | Net increase (decrease) in cash | $19,953 | $(7,992) | - Financing activities in the first half of 2024 included $70.2 million net proceeds from an underwritten stock sale, $10.0 million from ATM sales, and $20.0 million from the issuance of long-term debt[19][157] Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's clinical-stage biopharmaceutical operations, with pz-cel as its lead program, confirming $123.0 million cash is sufficient for 12 months, and cover fair value measurements, a new $50 million loan, and $75 million equity financing - The company's lead clinical program is pz-cel, an autologous, cell-based gene therapy for recessive dystrophic epidermolysis bullosa (RDEB)[22] - As of the report's issuance date, the company expects its existing cash, cash equivalents, and short-term investments of $123.0 million (as of June 30, 2024) to be sufficient to fund operations for at least the next 12 months[27] - In January 2024, the company entered into a Loan and Security Agreement for up to $50 million, drawing an initial $20 million tranche[81] - In May 2024, the company completed an underwritten offering, raising approximately $70.2 million in net proceeds[99] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses pz-cel development and the FDA's CRL on CMC issues, with BLA resubmission planned for H2 2024; Q2 2024 saw a shift to net income due to warrant gains, increased G&A expenses, and liquidity bolstered by a $75 million offering and new loan, with $123.0 million cash sufficient for 12 months - The FDA issued a Complete Response Letter (CRL) for the pz-cel BLA in April 2024, citing CMC issues. The company plans to resubmit the BLA in the second half of 2024 and expects a six-month PDUFA review cycle upon acceptance[123] - General and administrative expenses for Q2 2024 increased by $3.6 million (72%) compared to Q2 2023, driven by higher salary costs ($1.1 million), pre-commercial preparation costs ($1.1 million), and other professional fees ($1.0 million)[135] - The company's cash resources were $123.0 million as of June 30, 2024, which is believed to be sufficient to fund operations for at least the next 12 months[158] Results of Operations Comparison (Q2 2024 vs Q2 2023, in thousands) | Line Item | Q2 2024 | Q2 2023 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | License and other revenues | $0 | $3,500 | $(3,500) | (100)% | | Research and development | $9,218 | $8,523 | $695 | 8% | | General and administrative | $8,646 | $5,021 | $3,625 | 72% | | Loss from operations | $(17,864) | $(10,554) | $(7,310) | 69% | | Net income (loss) | $7,406 | $(16,654) | $24,060 | (144)% | Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the company, as it is a smaller reporting company - The company has indicated that this item is not applicable[169] Controls and Procedures Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's Disclosure Controls and Procedures were effective as of June 30, 2024[170] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[171] PART II - OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the period - The company has no legal proceedings to report[173] Risk Factors A key risk is the FDA's Complete Response Letter (CRL) for the pz-cel BLA, which could delay or prevent approval, shorten market exclusivity, and allow competitors to enter, with resubmission planned for H2 2024 - A key risk is the Complete Response Letter (CRL) for the pz-cel BLA, which could impair the ability to successfully commercialize the product[173] - The FDA's CRL cited Chemistry Manufacturing and Controls (CMC) requirements that must be resolved. The company plans to resubmit the BLA in the second half of 2024[174] - A delay in BLA approval could shorten market exclusivity for pz-cel and allow competitors to launch their products first, materially harming the company's prospects[174] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2024, 66,683 shares of common stock were surrendered by employees at an average price of $4.52 per share to cover tax withholding obligations from vesting restricted stock awards - In June 2024, 66,683 shares of common stock were surrendered to the company to satisfy tax withholding obligations from vesting restricted stock at an average price of $4.52 per share[177] Other Information On April 25, 2024, the company's CEO and CFO terminated their Rule 10b5-1 trading arrangements - On April 25, 2024, the CEO and CFO terminated their Rule 10b5-1 trading arrangements[179] Exhibits This section provides an index of exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - The report includes an index of exhibits filed, such as officer certifications and XBRL data[180][181][182]