Abeona Therapeutics Inc 10-Q for FY2026 Q3
Abeona Therapeutics Inc. (ABEO)
About this 10-Q
Abeona Therapeutics Inc filed this 10-Q on November 9, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Abeona acquired Phase 3-ready ABO-801 for eosinophilic esophagitis from Ellodi for $20 million in stock. Ellodi is eligible for $30 million upon FDA approval and up to an additional $30 million upon sales milestones. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $13.49M
- Net loss
- $4.81M
- compared with a net loss of $5.16M a year earlier
- Diluted EPS
- -$0.08
- compared with -$0.10 a year earlier
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 __________
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Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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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
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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.
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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. ☐
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The number of shares outstanding of the registrant’s common stock as of November 5, 2026 was shares.
ABEONA THERAPEUTICS INC.
Form 10-Q
For the Quarter Ended September 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,” “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 to realize the anticipated benefits of the Company’s acquisition of ABO-801, including the integration of ABO-801 into our business; that ABO-801 may not progress through clinical development or receive required regulatory approvals within expected timelines or at all; that clinical trials may not confirm any safety, potency or other product characteristics described or anticipated for ABO-801; that our use of the dysphagia symptom questionnaire (“DSQ”) in the next ABO-801 study may be unsuccessful; our ability to successfully conduct a Phase 3 clinical trial for ABO-801 and obtain FDA approval of, and successfully commercialize, ABO-801, if approved; our ability to obtain, maintain, defend, and enforce patent and other intellectual property protection for ABO-801, and to successfully defend against any third-party challenges to the validity, scope, or enforcement of such intellectual property; our ability to consummate the private placement transaction announced on November 9, 2026 or realize the anticipated benefits from the transaction; the risk that commercial demand for FAYUVI may be less than anticipated and we thus may not receive any milestone, royalty, or other payments from Ultragenyx pursuant to our licensing agreement; 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)
| September 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 September 30, 2026 and December 31, 2025, respectively | ||||||||
| Common stock - $ par value; authorized shares; and shares issued and outstanding as of September 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)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the three months ended September 30, | For the nine months ended September 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 (benefit) | ( | ) | ||||||||||||||
| 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)
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income (Loss) | Equity | |||||||||||||||||||
| Balance at June 30, 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 warrants | ||||||||||||||||||||||||
| Reclassification of warrant liability | — | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | 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) | ||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||||||
| Reclassification of warrant liability | — | |||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||
| Other comprehensive income | — | |||||||||||||||||||||||
| Balance at September 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)
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||
| Balance at June 30, 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 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at September 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 | — | ( | ) | ( | ) | |||||||||||||||||||
| Net income (loss) | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||||||
| Other comprehensive income (loss) | — | ( | ) | ( | ) | |||||||||||||||||||
| Balance at September 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)
| 2026 | 2025 | |||||||
For the nine months ended September 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 | ( | ) | ||||||
| Proceeds from exercise of warrants | ||||||||
| 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 | $ | $ | ||||||
| Warrant additions associated with loan and security agreement | $ | $ | ||||||
| Reclassification of warrant liability to equity | $ | $ | ||||||
| Changes in accrued property and equipment | $ | ( | ) | $ | ||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
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 September 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 U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and disclosure of contingent assets and liabilities at the date of the 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 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 September 30, 2026.
Accounts receivable, net comprises the following categories (in thousands):
SCHEDULE OF ACCOUNTS RECEIVABLE
| September 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 September 30, 2026 and December 31, 2025, the Company had employee retention credits receivables
of $
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.
| 9 |
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 nine months ended September 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 September 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.. As of September 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, qualified treatment center
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 did
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.
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.
| 11 |
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 |
SCHEDULE OF NUMERATORS AND DENOMINATORS OF BASIC AND DILUTED NET (LOSS) INCOME PER SHARE AMOUNTS
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the three months ended September 30, | For the nine months ended September 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 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| 13 |
SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE
For the three months ended September 30, | For the nine months ended September 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.
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.
| 14 |
NOTE 3 – REVENUE
Revenue comprises the following categories (in thousands):
SCHEDULE OF REVENUE
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
For the three months ended September 30, | For the nine months ended September 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, qualified treatment center 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 nine months ended September 30, 2026 (in thousands):
SCHEDULE OF CHANGES IN ALLOWANCES AND DISCOUNTS
| Rebates | Prompt Pay | Co-payment Assistance | Total | |||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | $ | ||||||||||||
| Provisions | ||||||||||||||||
| Payments/Credits | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance at September 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.
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.
Deferred revenue as of September 30, 2026 is presented as a long-term liability on the consolidated balance sheet as the term of the deferral is greater than one year. The following table provides a summary of the activity on the deferred revenue (in thousands):
SCHEDULE OF ACTIVITY ON DEFERRED REVENUE
| 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 September 30, 2026 | $ |
| 15 |
NOTE 4 – SHORT-TERM INVESTMENTS
The following table provides a summary of the short-term investments (in thousands):
SCHEDULE OF AVAILABLE FOR SALE SHORT-TERM INVESTMENTS
| September 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 September 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 September 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 nine months ended September 30, 2026.
There
were
NOTE 5 – INVENTORY
Inventory consists of the following (in thousands):
SCHEDULE OF INVENTORY
| September 30, 2026 | December 31, 2025 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total inventory | $ | $ | ||||||
For
the three and nine months ended September 30, 2026, the Company wrote-off $
| 16 |
NOTE 6 – PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following (in thousands):
SCHEDULE OF PROPERTY AND EQUIPMENT
| September 30, 2026 | December 31, 2025 | |||||||
| Laboratory equipment | $ | $ | ||||||
| Furniture, software and office equipment | ||||||||
| Leasehold improvements | ||||||||
| 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 September 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.
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. |
| 17 |
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):
SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING AND NON-RECURRING BASIS
| Description | Fair Value at September 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 | $ | $ | $ | $ | ||||||||||||
| 18 |
Warrant Liabilities
As of September 30, 2026 and December 31, 2025, the Company had the following outstanding warrants that are classified as liabilities:
SCHEDULE OF OUTSTANDING WARRANT LIABILITIES
| Expiration Date | Exercise price per share | September 30, 2026 | December 31, 2025 | ||||||||||||
| Warrants issued as part of the 2021 public offering | $ | ||||||||||||||
| Warrants issued as part of the 2022 Private Placement Offering | $ | ||||||||||||||
| Warrants issued as part of the 2024 Loan Agreement | $ | ||||||||||||||
| Warrants issued as part of the 2024 Loan Agreement Amendment | $ | ||||||||||||||
| Outstanding warrants liabilities | |||||||||||||||
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):
SCHEDULE OF ACTIVITY OF WARRANT LIABILITIES
| Warrant liabilities as of December 31, 2025 | $ | |||
| Issuance of warrants | ||||
| Gain recognized in earnings from change in fair value | ( | ) | ||
| Warrant liabilities as of September 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:
SCHEDULE OF ESTIMATE FAIR VALUE OF WARRANTS
| September 30, 2026 | December 31, 2025 | |||||||
| Common share price | ||||||||
| Expected term (years) | ||||||||
| Risk-free interest rate (%) | ||||||||
| Volatility (%) | ||||||||
| Expected dividend yield (%) | ||||||||
| 19 |
NOTE 8 – ACCRUED EXPENSES
The following table provides a summary of the components of accrued expenses (in thousands):
SCHEDULE OF ACCRUED EXPENSES
| September 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):
SUMMARY OF OPERATING LEASE LIABILITIES
| September 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):
SCHEDULE OF COMPONENTS OF LEASE COST
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
For the three months ended September 30, | For the nine months ended September 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 $
| 20 |
Future minimum lease payments and obligations, which do not include short-term leases, related to the Company’s operating lease liabilities as of September 30, 2026 were as follows (in thousands):
SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES
| 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
NOTE 10 – DEBT
The following table provides a summary of the Company’s debt, net of debt issuance costs and discounts (in thousands):
SCHEDULE OF DEBT AND NET OF DEBT ISSUANCE COSTS
| September 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, 2026, the Company is required to pay a fee equal to 1.00% of the principal amount of the Loans. A final payment fee of 5.00% of the principal amount of the funded Tranche 1 Loans, Tranche 2 Loans and Discretionary Tranche Loans is also due upon maturity on July 1, 2027, or any earlier date of prepayment.
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 $
| 21 |
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 September 30, 2026 (in thousands):
SCHEDULE OF FUTURE PAYMENT OBLIGATIONS
| 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 September 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 September 30, 2026, there were
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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 nine months ended September 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 $
As
of September 30, 2026, there were
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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
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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 September 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 September 30, 2026, there were shares available to be granted under the Inducement Plan.
SCHEDULE OF STOCK BASED COMPENSATION
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the three months ended September 30, | For the nine months ended September 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 nine months ended September 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.
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SCHEDULE OF STOCK OPTION ACTIVITY
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 September 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 September 30, 2026, there was no unrecognized compensation cost related to non-vested option awards not yet recognized.
Restricted Stock
SCHEDULE OF RESTRICTED STOCK AWARD ACTIVITY
Number of Awards | Weighted Average Grant Date Fair Value Per Unit | |||||||
| Outstanding at December 31, 2025 | $ | |||||||
| Granted | $ | |||||||
| Cancelled/forfeited | ( | ) | $ | |||||
| Vested | ( | ) | $ | |||||
| Outstanding at September 30, 2026 | $ | |||||||
As of September 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 nine months ended September 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 September 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 FDA approval
that took place in September 2026, 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):
SCHEDULE OF SIGNIFICANT EXPENSE CATEGORIES
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the three months ended September 30, | For the nine months ended September 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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NOTE 15 – SUBSEQUENT EVENTS
Asset Purchase Agreement
On November 6, 2026 (the “Closing Date”), the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Ellodi Pharmaceuticals, L.P., a Delaware limited partnership (“Ellodi”), pursuant to which Ellodi sold and assigned to the Company, and the Company purchased and assumed from Ellodi, substantially all assets related to the research, development, manufacture, and commercialization of Ellodi’s clinical-stage development candidate known as APT-1011. APT-1011 is designed to treat eosinophilic esophagitis (“EoE”), a chronic, progressive inflammatory disease that can cause esophageal strictures, leading to a variety of symptoms including dysphagia and food impaction. APT-1011, which has been evaluated in a Phase 3 clinical trial in healthy volunteers, is an orally disintegrating tablet formulation containing fluticasone propionate as its active pharmaceutical ingredient.
Pursuant to the Asset Purchase Agreement, the Company issued to Ellodi $
Private Placement
On November 6, 2026, the Company entered into a Securities Purchase Agreement
with a group of investors (the “Purchasers”) providing for the private placement (the “Private Placement”) to
the Purchasers of (i) shares of common stock, and (ii) pre-funded warrants to purchase
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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
Asset Acquisition
On November 9, 2026 (“the Closing Date”), we announced the acquisition of APT-1011, now ABO-801, from Ellodi Pharmaceuticals L.P. (“Ellodi”). ABO-801 is a Phase 3-ready, once-daily oral disintegrating tablet formulation of fluticasone propionate in development for eosinophilic esophagitis (EoE). Under the terms of the asset purchase agreement, we issued Ellodi $20 million in value of our common stock, par value $0.01 per share, which amounted to 4,494,383 shares (the “Upfront Shares”), based on the 20-trading-day volume weighted average price of the our common stock ending on the trading day immediately before the Closing Date. No upfront cash consideration is being paid to Ellodi. Ellodi is also eligible to receive payments of $30 million upon FDA approval of ABO-801 and up to an additional $30 million upon achievement of specified sales milestones. In addition, Ellodi is eligible to receive tiered royalties on net sales of ABO-801 ranging from low to mid teen percentages.
Private Placement
On November 6, 2026, we entered into a Securities Purchase Agreement (with a group of investors (the “Purchasers”) providing for the private placement (the “Private Placement”) to the Purchasers of (i) 6,400,000 shares of common stock, and (ii) pre-funded warrants to purchase 1,600,043 shares of common stock (the “Pre-Funded Warrants”), for an aggregate purchase price of approximately $30 million in gross proceeds before fees and expenses. Each Pre-Funded Warrant has an exercise price of $0.0001 per share of common stock. The closing of the Private Placement is expected to occur on November 10, 2026.
Qualified Treatment Center Activations
On July 21, 2026, we announced activation of Cincinnati Children’s Hospital Medical Center as a qualified treatment center for the administration of ZEVASKYN.
On September 16, 2026, we announced activation of University of Florida Health as the newest qualified treatment center for the administration of ZEVASKYN. This represents the eighth available qualified treatment center for the administration of ZEVASKYN.
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RESULTS OF OPERATIONS
Comparison of Three Months Ended September 30, 2026 and September 30, 2025
| For the three months ended September 30, | ||||||||||||
| ($ in thousands) | 2026 | 2025 | $ Change | |||||||||
| Revenues: | ||||||||||||
| Product revenue, net | $ | 13,491 | $ | — | $ | 13,491 | ||||||
| Costs and expenses: | ||||||||||||
| Cost of sales | 5,713 | 488 | 5,225 | |||||||||
| Research and development | 3,672 | 4,216 | (544 | ) | ||||||||
| Selling, general and administrative | 17,107 | 19,314 | (2,207 | ) | ||||||||
| Total costs and expenses | 26,492 | 24,018 | 2,474 | |||||||||
| Loss from operations | (13,001 | ) | (24,018 | ) | 11,017 | |||||||
| Interest income | 2,263 | 1,672 | 591 | |||||||||
| Interest expense | (557 | ) | (901 | ) | 344 | |||||||
| Change in fair value of warrant liabilities | 6,507 | 2,760 | 3,747 | |||||||||
| Other (loss) income, net | (2 | ) | 129 | (131 | ) | |||||||
| Loss before income taxes | (4,790 | ) | (20,358 | ) | 15,568 | |||||||
| Income tax expense (benefit) | 18 | (15,197 | ) | 15,215 | ||||||||
| Net loss | $ | (4,808 | ) | $ | (5,161 | ) | $ | 353 | ||||
Product revenue, net
Product revenue, net, resulting from the sale of ZEVASKYN, for the three months ended September 30, 2026 was $13.5 million. There was no product revenue for the three months ended September 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.
Cost of sales
Cost of sales during the three months ended September 30, 2026 were $5.7 million and primarily includes costs associated with the commercial sale of ZEVASKYN including royalties due to our licensor, Stanford. Cost of sales during the three months ended September 30, 2025 primarily includes costs associated with the August 2025 production of a full batch of ZEVASKYN® that could not be released due to technical issues that arose in implementing the rapid sterility lot release assay, mandated by the FDA during BLA review.
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.
Research and development expenses for the three months ended September 30, 2026 were $3.7 million, as compared to $4.2 million for the same period of 2025, a decrease of $0.5 million. The reduction in expenses was primarily due to a reduction in costs associated with pre-clinical programs that were discontinued.
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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.
Selling, general and administrative expenses were $17.1 million for the three months ended September 30, 2026, as compared to $19.3 million for the same period of 2025, a decrease of $2.2 million. The decrease in expenses was primarily due to $2.1 million in costs associated with engineering runs that took place in the prior period.
Interest income
Interest income was $2.3 million for the three months ended September 30, 2026, as compared to $1.7 million in the same period of 2025. The increase resulting from timing of maturity and mix of our money market funds and short-term investment balances, offset by a decrease in the average money market funds and short-term investment balances period over period.
Interest expense
Interest expense was $0.6 million for the three months ended September 30, 2026 compared to $0.9 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 non-cash gain of $6.5 million for the three months ended September 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 gain in the fair value of warrant liabilities was primarily due to the decrease in our stock price over the quarter and by a shorter term of the outstanding warrants.
The change in fair value of warrant liabilities was a non-cash gain of $2.8 million for the three months ended September 30, 2025. The gain in the fair value of warrant liabilities was primarily due to the decrease in our stock price over the quarter and a shorter term of the outstanding warrants.
Other (loss) income, net
Other (loss) income, net consisted of a loss of $2,000 for the three months ended September 30, 2026, as compared to income of $0.1 million 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.
Income tax expense
We recorded an income tax expense of $18,000 for the three months ended September 30, 2026. The amount relates to 2025 return to provision adjustments and included the impact of our generation of sufficient tax losses, after consideration of discrete items, to reduce our income tax expense for the period.
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We recorded a current income tax benefit of $15.2 million for the three months ended September 30, 2025 related to the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced our taxable income and resulted in a current tax benefit for the three months ended September 30, 2025.
Comparison of Nine months Ended September 30, 2026 and September 30, 2025
| For the nine months ended September 30, | ||||||||||||
| ($ in thousands) | 2026 | 2025 | $ Change | |||||||||
| Revenues: | ||||||||||||
| Product revenue, net | $ | 33,591 | $ | — | $ | 33,591 | ||||||
| License and other revenues | — | 400 | (400 | ) | ||||||||
| Total revenues | 33,591 | 400 | 33,191 | |||||||||
| Costs and expenses: | ||||||||||||
| Cost of sales | 12,586 | 488 | 12,098 | |||||||||
| Royalties | — | 100 | (100 | ) | ||||||||
| Research and development | 18,248 | 20,100 | (1,852 | ) | ||||||||
| Selling, general and administrative | 52,444 | 46,249 | 6,195 | |||||||||
| Total costs and expenses | 83,278 | 66,937 | 16,341 | |||||||||
| Loss from operations | (49,687 | ) | (66,537 | ) | 16,850 | |||||||
| Interest income | 4,972 | 4,009 | 963 | |||||||||
| Interest expense | (2,083 | ) | (2,856 | ) | 773 | |||||||
| Change in fair value of warrant liabilities | 4,702 | 4,617 | 85 | |||||||||
| Gain from sale of priority review voucher, net | — | 152,366 | (152,366 | ) | ||||||||
| Other income, net | 42 | 359 | (317 | ) | ||||||||
| (Loss) income before income taxes | (42,054 | ) | 91,958 | (134,012 | ) | |||||||
| Income tax expense | 20 | 315 | (295 | ) | ||||||||
| Net (loss) income | $ | (42,074 | ) | $ | 91,643 | $ | (133,717 | ) | ||||
Product revenue, net
Product revenue, net, resulting from the sale of ZEVASKYN, for the nine months ended September 30, 2026 was $33.6 million. There was no product revenue for the nine months ended September 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 nine months ended September 30, 2026 were 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 nine months ended September 30, 2026 were $12.6 million and primarily includes costs associated with the commercial sale of ZEVASKYN including royalties due to our licensor, Stanford. Cost of sales during the nine months ended September 30, 2025 primarily includes costs associated with the August 2025 production of a full batch of ZEVASKYN® that could not be released due to technical issues that arose in implementing the rapid sterility lot release assay, mandated by the FDA during BLA review.
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Royalties
Royalty expense for the nine months ended September 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
Research and development expenses for the nine months ended September 30, 2026 were $18.2 million, as compared to $20.1 million for the same period of 2025, a decrease of $1.9 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 expenses decreased $8.9 million. The reduction in expenses was primarily due to costs capitalized into inventory, engineering runs and other production costs that are no longer considered research and development due to FDA approval of ZEVASKYN in April of 2025, and a reduction in costs associated with pre-clinical programs that were discontinued.
Selling, general and administrative
Selling, general and administrative expenses were $52.4 million for the nine months ended September 30, 2026, as compared to $46.2 million for the same period of 2025, an increase of $6.2 million. The increase in expenses was primarily due to increases in salaries and stock-based compensation of $6.5 million due to new hires.
Interest income
Interest income was $5.0 million for the nine months ended September 30, 2026, as compared to $4.0 million in the same period of 2025. The increase resulted from increased average of our money market funds and short-term investment balances period over period.
Interest expense
Interest expense was $2.1 million for the nine months ended September 30, 2026 compared to $2.9 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 non-cash gain of $4.7 million for the nine months ended September 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 gain in the fair value of warrant liabilities was primarily due to the decrease in our stock price over the year and a shorter term of the outstanding warrants.
The change in fair value of warrant liabilities was a non-cash gain of $4.6 million for the nine months ended September 30, 2025. The gain in the fair value of warrant liabilities was primarily due to the decrease in our stock price as of September 30, 2025 compared to December 31, 2024 and 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 nine months ended September 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 $42,000 for the nine months ended September 30, 2026, as compared to $0.4 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 an income tax expense of $20,000 for the nine months ended September 30, 2026. The amount relates to 2025 return to provision adjustments and 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 $0.3 million for the nine months ended September 30, 2025 which was driven by pre-tax income from the gain on sale of the PRV, offset by the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced our taxable income and resulting income tax expense for the nine months ended September 30, 2025.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows for the Nine Months Ended September 30, 2026 and 2025
| For the nine months ended September 30, | ||||||||
| ($ in thousands) | 2026 | 2025 | ||||||
| Total cash, cash equivalents and restricted cash (used in) provided by: | ||||||||
| Operating activities | $ | (45,607 | ) | $ | (58,373 | ) | ||
| Investing activities | 42,353 | 95,474 | ||||||
| Financing activities | (8,899 | ) | 22,426 | |||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (12,153 | ) | $ | 59,527 | |||
Operating activities
Net cash used in operating activities was $45.6 million for the nine months ended September 30, 2026, primarily comprised of our net loss of $42.1 million, decreases in operating assets and liabilities of $11.2 million and net non-cash charges of $7.6 million. Non-cash charges consisted primarily of $4.7 million of gain as a result of the change in fair value of warrant liabilities, $9.1 million of stock-based compensation and $2.1 million of depreciation and amortization.
Net cash used in operating activities was $58.4 million for the nine months ended September 30, 2025, primarily comprised of our net income of $91.6 million, offset by a decrease in operating assets and liabilities of $4.8 million and net non-cash charges of $145.2 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, $4.6 million of gain as a result of the change in fair value of warrant and derivative liabilities, $8.2 million of stock-based compensation and $1.7 million of depreciation and amortization.
Investing activities
Net cash provided by investing activities was $42.4 million for the nine months ended September 30, 2026, primarily comprised of proceeds from maturities of short-term investments of $115.8 million, offset by purchases of short-term investments of $71.8 million and capital expenditures of $1.6 million.
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Net cash provided by investing activities was $95.5 million for the nine months ended September 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 $118.8 million, offset by purchases of short-term investments of $168.9 million and capital expenditures of $6.8 million.
Financing activities
Net cash used in financing activities was $8.9 million for the nine months ended September 30, 2026, comprised of $8.9 million in payments on our long-term debt.
Net cash provided by financing activities was $22.4 million for the nine months ended September 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) and proceeds of $5.2 million from the exercise of stock purchase warrants.
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 September 30, 2026, our cash resources were $134.9 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 nine months ended September 30, 2025. There were no sales of our common stock under the ATM agreement during the nine months ended September 30, 2026. Under the ATM Agreement and as of September 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.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, strategic alliances, licensing arrangements, asset dispositions with third parties and other similar arrangements. 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, licensing arrangements, or asset dispositions 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.
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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.
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 September 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 September 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.
Risks associated with the acquisition of product candidates could cause substantial delays in the preclinical and clinical development of our product candidates.
We acquired ABO-801 from Ellodi Pharmaceuticals, L.P. on November 6, 2026. Because we were not involved in the preclinical or clinical development of ABO-801 (then APT-1011) prior to such date, we may experience difficulties in the transition of certain development activities from Ellodi and its affiliates to us, which may result in delays in clinical trials, as well as problems in our development efforts, particularly if we do not receive all of the necessary information, reports and data from Ellodi and its affiliates in a timely manner. Further, we have had no involvement with or control over the preclinical and clinical development of ABO-801 to date. As a result, our assumptions about ABO-801’s development potential are based in large part on the data generated from trials conducted by Ellodi and we may observe materially and adversely different results in any ongoing or future clinical trials. In addition, results from preclinical and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for ABO-801 is promising, compliance or data integrity issues may later arise and even if not, the data may not be sufficient to support approval by the FDA or comparable foreign regulatory authorities. Approval of ABO-801 may be delayed by several years or may require us to expend significantly more resources than we have available.
We have relied on Ellodi’s having conducted research and development in accordance with the applicable protocol, legal, regulatory and scientific standards, having accurately reported the results of all clinical trials conducted prior to our agreement with Ellodi and having correctly collected and interpreted the data from these trials. To the extent any of these have not occurred, expected development time and costs may be increased, which could adversely affect any future revenue from this product candidate.
We may also acquire or in-license additional product candidates for pre-clinical or clinical development in the future as we continue to build our pipeline. The risks associated with acquiring or in-licensing such future product candidates could result in delays in the commencement or completion of our preclinical studies and clinical trials, and our ability to generate revenues from our product candidates may be delayed.
We can provide no assurance that ABO-801 will obtain regulatory approval or that the results of clinical trials will be favorable.
The testing, marketing and manufacturing of ABO-801 will require the approval of the FDA or regulatory agencies of other countries. We cannot predict with any certainty the amount of time necessary to obtain regulatory approvals, including from the FDA or other foreign regulatory authorities, and whether any such approvals will ultimately be granted. Preclinical and clinical trials may reveal that ABO-801 is ineffective or unsafe, in which event its further development could be seriously delayed or terminated. ABO-801 (then APT-1011) has had two completed Phase 3 studies and neither study met its prespecified co-primary patient-reported symptom endpoint. Although we plan to use the dysphagia symptom questionnaire (“DSQ”) in the next Phase 3 study for ABO-801, which has been used in connection with the approval of EoE products approved to-date in the United States, there is no guarantee that the FDA will agree with this approach or that the next Phase 3 study will be successful. In addition, we cannot guarantee that our planned clinical trials will be initiated or conducted as planned or completed on schedule, if at all.
Potential licensees, partners, or collaborators may view ABO-801 with more skepticism because of its history of failed clinical trials, thereby requiring additional data and further explanations to overcome this skepticism and obtain commercially reasonable terms for future development or collaboration.
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Although the FDA approved FAYUVI™, also known as UX-111, which we have licensed to Ultragenyx, the royalties we expect to receive will depend on FAYUVI’s commercial performance and other factors that we do not control.
In 2022, we entered into a license agreement with Ultragenyx Pharmaceutical Inc. (“Ultragenyx”) granting Ultragenyx global development and commercialization rights to a gene therapy program (UX-111 or FAYUVI) for the treatment of Sanfilippo syndrome type A (MPS IIIA). The FDA approved FAYUVI™ (rebisufligene etisparvovec-hopf) in September 2026. Under the terms of our agreement with Ultragenyx, we are eligible to receive royalties on net sales and payments based on the achievement of certain sales milestones. There have as-yet been no commercial sales of FAYUVI, and we cannot predict the amount or timing of the royalties we will receive.
Ultragenyx has sole control over the commercialization of FAYUVI, including launch timing, pricing and discounting, payor contracting, and the sales and marketing resources it devotes to the product. Ultragenyx may prioritize other products over FAYUVI or change its commercial strategy. It may also sublicense or divest its rights in FAYUVI or undergo a change of control, and any successor in interest may have different commercial priorities.
We rely on Ultragenyx for sales information and for the accuracy of its royalty reports. Our audit rights are limited, audits are costly, and disputes over royalty calculations could delay or reduce payments. We are also exposed to Ultragenyx’s ability to pay amounts owed to us. If royalties from FAYUVI are lower or occur later than we expect, our results of operations and financial condition could be adversely affected.
Raising additional funds by issuing securities or through licensing or lending arrangements or through our at-the-market sale agreement would cause dilution to our existing stockholders, restrict our operations, or require us to relinquish rights to our technologies or product candidates and their future revenue streams.
We may need to raise additional capital to fund our future operations. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through equity offerings, debt financings, or other capital sources, including potential collaborations, strategic alliances, licensing arrangements, asset dispositions with third parties and other similar arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. If we raise additional capital by issuing equity securities, the share ownership of existing stockholders will be diluted. Any future debt financing may involve covenants that limit our ability to incur liens or additional debt, pay dividends, redeem, or repurchase our common stock, make certain investments or engage in certain merger, consolidation, or asset sale transactions. In addition, if we raise additional funds through collaborations, strategic alliances, licensing arrangements or asset dispositions with third parties, we may be required 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.
The terms of any financing may adversely affect the holdings or rights of our stockholders and the issuance of additional securities, whether equity or debt, or the possibility of such issuance, may cause the market price of our shares to decline. We may sell shares or other securities in other offerings, including under our open market sale agreement, at a price per share that is less than the prices per share paid by other investors, and investors purchasing shares of our common stock, preferred stock or other securities in the future could have rights superior to existing stockholders. The sale of additional equity or convertible securities would dilute all of our stockholders and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders.
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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. Demand for ZEVASKYN may be lower than expected.
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.
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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 September 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 | ||||||||
| July 1, 2026 - July 31, 2026 | 1,478 | $ | 6.53 | |||||
| August 1, 2026 - August 31, 2026 | — | $ | — | |||||
| September 1, 2026 - September 30, 2026 | — | $ | — | |||||
| 1,478 | $ | 6.53 | ||||||
| (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 September 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act (a “Rule 10b5-1 trading arrangement”) or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K), except as disclosed below.
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ITEM 6. EXHIBITS
See Exhibit Index below, which is incorporated by reference herein.
Exhibit Index
| Exhibits: | Description of Document | |
| 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 September 30, 2026, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at September 30, 2026 and December 31, 2025 (unaudited), (ii) Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended September 30, 2026 and 2025 (unaudited), (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025 (unaudited), (iv) Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 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: November 9, 2026 | By: | /s/ Vishwas Seshadri |
| Vishwas Seshadri | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 9, 2026 | By: | /s/ Joseph Vazzano |
| Joseph Vazzano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
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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 September 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: November 9, 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 September 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: November 9, 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 September 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: November 9, 2026 | By: | /s/ Vishwas Seshadri |
| Vishwas Seshadri | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: November 9, 2026 | By: | /s/ Joseph Vazzano |
| Joseph Vazzano | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) |