Abeona Therapeutics(ABEO) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements The unaudited condensed consolidated financial statements for June 30, 2025, reflect significant financial improvement, driven by a $152.4 million PRV gain and resulting in $96.8 million net income Condensed Consolidated Balance Sheets As of June 30, 2025, total assets significantly increased to $246.2 million, primarily due to a rise in cash and cash equivalents, leading to positive stockholders' equity Balance Sheet Highlights ($ in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $163,535 | $23,357 | | Total current assets | $232,262 | $100,853 | | Total assets | $246,233 | $108,931 | | Liabilities & Equity | | | | Total liabilities | $82,657 | $64,900 | | Total stockholders' equity | $163,576 | $44,031 | | Total liabilities and stockholders' equity | $246,233 | $108,931 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For the six months ended June 30, 2025, the company achieved a net income of $96.8 million, a significant turnaround from a $24.2 million loss in 2024, primarily due to a $152.4 million PRV gain Income Statement Highlights ($ in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | License and other revenues | $400 | $0 | | Research and development | $15,884 | $16,425 | | Selling, general and administrative | $26,935 | $15,769 | | Loss from operations | ($42,519) | ($32,194) | | Gain from sale of priority review voucher, net | $152,366 | $0 | | Net income (loss) | $96,804 | ($24,172) | | Basic income (loss) per common share | $1.89 | ($0.72) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash increased by $140.2 million to $163.9 million, driven by $160.1 million from investing activities, primarily the PRV sale Cash Flow Summary ($ in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($37,186) | ($27,222) | | Net cash provided by (used in) investing activities | $160,101 | ($51,949) | | Net cash provided by financing activities | $17,263 | $99,124 | | Net increase in cash, cash equivalents and restricted cash | $140,178 | $19,953 | | Cash, cash equivalents and restricted cash at end of period | $163,873 | $34,764 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's transition to a commercial-stage entity, highlighting the $152.4 million PRV sale, initial license revenue, inventory capitalization, and sufficient capital for the next 12 months - On April 28, 2025, the FDA approved ZEVASKYN™ for the treatment of wounds in patients with recessive dystrophic epidermolysis bullosa (RDEB), marking the company's transition to a commercial-stage biopharmaceutical company[25] - Following FDA approval, the company began capitalizing inventory costs related to ZEVASKYN™ As of June 30, 2025, inventory consisted of $2.7 million in raw materials[32][13] - In June 2025, a third party exercised an option to license certain of the company's AAV capsids, resulting in $0.4 million of license revenue The agreement includes potential future milestone and royalty payments[97][99] - The company sold a Priority Review Voucher (PRV) in June 2025, receiving gross proceeds of $155.0 million and recognizing a net gain of $152.4 million after transaction costs[118] - The company recorded an income tax expense of $15.5 million for the first half of 2025, driven by the pre-tax income from the PRV sale The company is assessing the impact of new tax legislation which may reduce its 2025 tax liability[114][117] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's transition to a commercial-stage entity, highlighting the $155.0 million PRV sale, ZEVASKYN™ commercial launch preparations, and sufficient liquidity for the next 12 months - Abeona is now a commercial-stage company after the FDA approved ZEVASKYN™ on April 28, 2025, for treating wounds in RDEB patients[121] - The company sold its Rare Pediatric Disease Priority Review Voucher (PRV) for gross proceeds of $155.0 million, with the transaction closing on June 27, 2025[122] - Commercial launch of ZEVASKYN™ is underway, with the first Qualified Treatment Center (QTC) activated in May 2025 and treatments expected to start in Q3 2025[123] - As of June 30, 2025, cash resources were $225.9 million, which management believes is sufficient to fund operations for at least the next 12 months[167] Results of Operations For Q2 2025, net income reached $108.8 million, primarily due to the $152.4 million PRV gain, while R&D decreased 36% and SG&A increased 98% due to commercialization efforts Financial Performance ($ in thousands) | Item | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | License and other revenues | $400 | $0 | 100% | | Research and development | $5,943 | $9,218 | (36)% | | Selling, general and administrative | $17,149 | $8,646 | 98% | | Gain from sale of PRV, net | $152,366 | $0 | 100% | | Net income | $108,833 | $7,406 | 1,370% | - The decrease in Q2 R&D spending was primarily due to $1.4 million of costs capitalized into inventory and $4.9 million of production costs reclassified as SG&A following ZEVASKYN™'s FDA approval[132] - The increase in Q2 SG&A expenses was driven by approximately $4.9 million in reclassified production costs and a $3.7 million increase in salaries, stock-based compensation, and other professional fees related to commercial launch preparations[134] Liquidity and Capital Resources The company's liquidity significantly improved to $225.9 million as of June 30, 2025, primarily from the $155.0 million PRV sale, with current capital sufficient for the next 12 months Cash Flow Summary ($ in thousands) | Item | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($37,186) | ($27,222) | | Net cash provided by (used in) investing activities | $160,101 | ($51,949) | | Net cash provided by financing activities | $17,263 | $99,124 | - The company's principal source of liquidity is its $225.9 million in cash resources as of June 30, 2025, which includes the proceeds from the PRV sale[167] - During the first six months of 2025, the company raised $17.3 million in net proceeds from selling 3,510,889 shares under its ATM Agreement As of June 30, 2025, up to $51.5 million remains available for sale under the agreement[168] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the current reporting period - The company has indicated that quantitative and qualitative disclosures about market risk are not applicable[178] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, 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, 2025[180] - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[181] PART II - OTHER INFORMATION Legal Proceedings The company reported no legal proceedings during the current period - There are no legal proceedings to report[184] Risk Factors The company highlights new risks related to commercializing its first product, ZEVASKYN™, including revenue generation challenges, NOL limitations, and potential government agency disruptions - As a newly commercial-stage company with its first approved product, ZEVASKYN™, it is difficult to assess future viability, and the company may not be able to sustain profitability[186] - The company's ability to generate significant revenue depends on the successful commercialization of ZEVASKYN™, which involves overcoming challenges in market acceptance, reimbursement, and patient identification[187][188] - The company's ability to use its $416.1 million in U.S. federal net operating loss (NOL) carryforwards may be materially limited due to multiple historical ownership changes under Section 382, with a full analysis expected by year-end 2025[191][192] - Disruptions at the FDA and other government agencies, such as those caused by funding shortages, hiring freezes, or reorganization, could delay or prevent product approvals and commercialization, negatively impacting the business[194] Unregistered Sale of Equity Securities and Use of Proceeds During Q2 2025, the company reported the surrender of 885 common shares at $6.24 per share to satisfy tax withholding obligations from restricted stock vesting Shares Surrendered for Tax Withholding | Period | Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | June 1, 2025 - June 30, 2025 | 885 | $6.24 | | Total Q2 2025 | 885 | $6.24 | - The shares were surrendered to the company to cover tax withholding obligations from the vesting of restricted stock awards[199] Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025[201] Exhibits This section lists exhibits filed with the Form 10-Q, including the PRV Asset Purchase Agreement, officer certifications, and interactive data files - Key exhibits filed include the Priority Review Voucher Asset Purchase Agreement dated May 9, 2025, and certifications from the Principal Executive Officer and Principal Financial Officer[207]