Abeona Therapeutics Inc.
11/12/2025 | Press release | Distributed by Public on 11/12/2025 06:36
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
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, 2024 (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
Abeona 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 pz-cel, 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. There is no cure for RDEB, and ZEVASKYN® is the only FDA-approved product to treat RDEB wounds with a single application. ZEVASKYN® was granted Orphan Drug and Rare Pediatric Disease designations by the FDA.
ZEVASKYN® is manufactured at our current Good Manufacturing Practices ("cGMP") manufacturing facility in Cleveland, Ohio, and is made available through ZEVASKYN® Qualified Treatment Centers ("QTCs").
Our development portfolio also features adeno-associated virus ("AAV") based gene therapies designed to treat ophthalmic diseases with high unmet need using novel AIM™ capsids. Abeona's novel, next-generation AAV capsids are being evaluated to improve tropism profiles for a variety of devastating diseases.
Preclinical Pipeline
Our preclinical programs are investigating the use of novel AAV capsids in AAV-based therapies for serious genetic eye diseases, including ABO-504 for Stargardt disease, ABO-503 for X-linked retinoschisis ("XLRS") and ABO-505 for autosomal dominant optic atrophy ("ADOA"). We completed pre-Investigational New Drug Application ("pre-IND") meetings with the FDA regarding the preclinical development plans and regulatory requirements to support first-in-human trials.
Recent Updates
During the third quarter, we manufactured a full batch of drug product following patient biopsy collection in August 2025. Although we produced bonafide drug product, it could not be released because a rapid sterility assay, mandated by the FDA as a release assay during the final stage of the Biologics License Application (BLA) review, initially yielded a false positive result for sterility. We immediately implemented a temporary pause on collecting patient biopsies and worked diligently to optimize the release assay to ensure reliable results and avoid any unnecessary future lot rejections. Upon completion of assay optimization and the necessary regulatory submission for its implementation, we resumed biopsy collection in November 2025.
On October 8, 2025, we announced the activation of the newest QTC for ZEVASKYN® at Children's Hospital Colorado. As a result, RDEB patients will be able to access ZEVASKYN® at Lucile Packard Children's Hospital Stanford, Lurie Children's Hospital of Chicago and Children's Hospital Colorado.
On October 13, 2025, we announced that ABO-503 for XLRS was selected by the FDA for Rare Disease Endpoint Advancement Pilot ("RDEA") Program. The RDEA program facilitates the development and timely approval of rare disease therapies by supporting the use of novel efficacy endpoints in clinical trials. As part of the RDEA program, Abeona will have opportunities for enhanced communication and collaboration with the FDA, including frequent advice and regular ad-hoc conversations to accelerate the development and validation of product-specific novel efficacy endpoints for Abeona's XLRS program.
On October 20, 2025, we announced the appointment of James A. Gow, MD, MBA, MS, MHCM, as the Senior Vice President, Head of Clinical Development & Medical Affairs, effective immediately. Dr. Gow has over 20 years of industry experience in clinical development and medical affairs and is a recognized expert in gene therapy, especially in ophthalmology.
On October 30, 2025, we announced that the Centers for Medicare and Medicaid Services ("CMS") has established a permanent Healthcare Common Procedure Coding System ("HCPCS") J-code for ZEVASKYN®. The new J-code for ZEVASKYN®, J3389 (Topical administration, prademagene zamikeracel, per treatment) becomes effective on January 1, 2026.
RESULTS OF OPERATIONS
Comparison of Three Months Ended September 30, 2025 and September 30, 2024
|
For the three months ended September 30, |
Change | |||||||||||||||
| ($ in thousands) | 2025 | 2024 | $ | % | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales | $ | 488 | $ | - | $ | 488 | 100 | % | ||||||||
| Research and development | 4,216 | 8,941 | (4,725 | ) | (53 | )% | ||||||||||
| Selling, general and administrative | 19,314 | 6,404 | 12,910 | 202 | % | |||||||||||
| Total costs and expenses | 24,018 | 15,345 | 8,673 | 57 | % | |||||||||||
| Loss from operations | (24,018 | ) | (15,345 | ) | (8,673 | ) | 57 | % | ||||||||
| Interest income | 1,672 | 1,189 | 483 | 41 | % | |||||||||||
| Interest expense | (901 | ) | (1,102 | ) | 201 | (18 | )% | |||||||||
| Change in fair value of warrant and derivative liabilities | 2,760 | (15,156 | ) | 17,916 | (118 | )% | ||||||||||
| Other income | 129 | 145 | (16 | ) | (11 | )% | ||||||||||
| Loss before income taxes | (20,358 | ) | (30,269 | ) | 9,911 | (33 | )% | |||||||||
| Income tax benefit | (15,197 | ) | - | (15,197 | ) | 100 | % | |||||||||
| Net loss | $ | (5,161 | ) | $ | (30,269 | ) | $ | 25,108 | (83 | )% | ||||||
Cost of sales
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. There was no cost of sales in the same period of 2024, as ZEVASKYN® was approved by the FDA in April 2025.
Research and development
Research and development expenses include, but are not limited to, payroll and personnel expenses, preclinical lab supplies, preclinical and development costs, clinical trial costs, preclinical manufacturing and manufacturing facility costs, costs associated with regulatory approvals, preclinical depreciation on lab supplies and manufacturing facilities, and preclinical consultant-related expenses.
Total research and development spending for the three months ended September 30, 2025 was $4.2 million, as compared to $8.9 million for the same period of 2024, a decrease of $4.7 million. The reduction in expenses was primarily due to costs capitalized into inventory and engineering runs and other production costs that are no longer considered research and development due to FDA approval of ZEVASKYN® in April of 2025.
We expect our research and development activities to continue as we work towards advancing other product candidates towards potential regulatory approval, reflecting costs associated with the following:
| ● | employee and consultant-related expenses; | |
| ● | preclinical and developmental costs; | |
| ● | clinical trial costs; | |
| ● | 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 reporting company related costs, professional fees (e.g., legal expenses), selling and other costs for commercial launch 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 launch ZEVASKYN® and advance other product candidates toward potential regulatory approval.
Total selling, general and administrative expenses were $19.3 million for the three months ended September 30, 2025, as compared to $6.4 million for the same period of 2024, an increase of $12.9 million. The increase in expenses was primarily due to increases in commercial costs related to our continued commercialization efforts, increased legal costs associated with commercialization, increases of salaries and stock-based compensation due to new hires, and costs related to engineering runs and other production costs that are no longer considered research and development due to FDA approval in April of 2025.
Interest income
Interest income was $1.7 million for the three months ended September 30, 2025, as compared to $1.2 million in the same period of 2024. The increase resulted from higher earnings on short-term investments driven by increased average short-term investment balances.
Interest expense
Interest expense was $0.9 million for the three months ended September 30, 2025 compared to $1.1 million in the same period of 2024. 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.
Change in fair value of warrant and derivative liabilities
The change in fair value of warrant liabilities was a gain of $2.8 million for the three months ended September 30, 2025. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. The gain in the fair value of warrant liabilities was primarily due to the decrease in our stock price over the quarter and a shorter term of the outstanding warrants.
The change in fair value of warrant and derivative liabilities was a loss of $15.2 million for the three months ended September 30, 2024. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. In addition, the conversion feature in our loan agreement is required to be classified as a liability and valued at fair market value at each reporting period. The loss in the fair value of warrant and derivative liabilities was primarily due to the increase in our stock price over the quarter offset by the reduced term of each of the warrants and derivative liabilities.
Other income
Other income, which consists primarily of sublease income, was $0.1 million for the three months ended September 30, 2025, as compared to $0.1 million in the same period of 2024.
Income tax benefit
We recorded a current income tax benefit of $15.2 million for the three months ended September 30, 2025. We did not record an income tax expense for the three months ended September 30, 2024 as we generated sufficient tax losses, after consideration of discrete items. The current income tax benefit for the three months ended September 30, 2025 was by the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced our taxable income and resulted in a current tax benefit for the three months ended September 30, 2025.
Comparison of Nine Months Ended September 30, 2025 and September 30, 2024
|
For the nine months ended September 30, |
Change | |||||||||||||||
| ($ in thousands) | 2025 | 2024 | $ | % | ||||||||||||
| Revenues: | ||||||||||||||||
| License and other revenues | $ | 400 | $ | - | $ | 400 | 100 | % | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales | $ | 488 | $ | - | $ | 488 | 100 | % | ||||||||
| Royalties | 100 | - | 100 | 100 | % | |||||||||||
| Research and development | 20,100 | 25,366 | (5,266 | ) | (21 | )% | ||||||||||
| Selling, general and administrative | 46,249 | 22,173 | 24,076 | 109 | % | |||||||||||
| Total costs and expenses | 66,937 | 47,539 | 19,398 | 41 | % | |||||||||||
| Loss from operations | (66,537 | ) | (47,539 | ) | (18,998 | ) | 40 | % | ||||||||
| Interest income | 4,009 | 3,223 | 786 | 24 | % | |||||||||||
| Interest expense | (2,856 | ) | (3,126 | ) | 270 | (9 | )% | |||||||||
| Change in fair value of warrant and derivative liabilities | 4,617 | (7,530 | ) | 12,147 | (161 | )% | ||||||||||
| Gain from sale of priority review voucher, net | 152,366 | - | 152,366 | 100 | % | |||||||||||
| Other income | 359 | 531 | (172 | ) | (32 | )% | ||||||||||
| Income (loss) before income taxes | 91,958 | (54,441 | ) | 146,399 | (269 | )% | ||||||||||
| Income tax expense | 315 | - | 315 | 100 | % | |||||||||||
| Net income (loss) | $ | 91,643 | $ | (54,441 | ) | $ | 146,084 | (268 | )% | |||||||
License and other revenues
License and other revenues for the nine months ended September 30, 2025 was $0.4 million as compared to nil for the same period of 2024. 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, 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. There was no cost of sales in the same period of 2024, as ZEVASKYN® was approved by the FDA in April 2025.
Royalties
Total royalty expense for the nine months ended September 30, 2025 was $0.1 million as compared to nil for the same period of 2024. The increase in expense was due to royalties owed to the University of North Carolina at Chapel Hill resulting from the milestones due from the exercise of an option by a third party to license certain of our AAV capsids.
Research and development
Total research and development spending for the nine months ended September 30, 2025 was $20.1 million, as compared to $25.4 million for the same period of 2024, a decrease of $5.3 million. The reduction in expenses was primarily due to costs capitalized into inventory and engineering runs and other production costs that are no longer considered research and development due to FDA approval of ZEVASKYN® in April of 2025.
We expect our research and development activities to continue as we work towards advancing our product candidates towards potential regulatory approval, reflecting costs associated with the following:
| ● | employee and consultant-related expenses; | |
| ● | preclinical and developmental costs; | |
| ● | clinical trial costs; | |
| ● | the cost of acquiring and manufacturing clinical trial materials; and | |
| ● | costs associated with regulatory approvals. |
Selling, general and administrative
Total selling, general and administrative expenses were $46.2 million for the nine months ended September 30, 2025, as compared to $22.2 million for the same period of 2024, an increase of $24.0 million. The increase in expenses was primarily due to increases in commercial costs related to our continued commercialization efforts, increased legal costs associated with commercialization, increases of salaries and stock-based compensation due to new hires, and to costs related to engineering runs and other production costs that are no longer considered research and development due to FDA approval in April of 2025.
Interest income
Interest income was $4.0 million for the nine months ended September 30, 2025, as compared to $3.2 million in the same period of 2024. The increase resulted from higher earnings on short-term investments driven by increased average short-term investment balances.
Interest expense
Interest expense was $2.9 million for the nine months ended September 30, 2025, as compared to $3.1 million in the same period of 2024. 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.
Change in fair value of warrant and derivative liabilities
The change in fair value of warrant liabilities was a gain of $4.6 million for the nine months ended September 30, 2025. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. The gain in the fair value of warrant liabilities was primarily due to the decrease in our stock price as of September 30, 2025 compared to December 31, 2024 and to the shorter term period over period.
The change in fair value of warrant and derivative liabilities was a loss of $7.5 million for the nine months ended September 30, 2024. In 2024, we issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. In addition, the conversion feature in our loan agreement was required to be classified as a liability through September 30, 2024 and was valued at fair market value at each reporting period during the nine-month period ending September 30, 2024. The change in the fair value of warrant and derivative liabilities was primarily due to the increase in our stock price as of September 30, 2024 compared to December 31, 2023.
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.
Other income
Other income, which consists primarily of sublease income, was $0.4 million for the nine months ended September 30, 2025, as compared to $0.5 million in the same period of 2024.
Income tax expense
We recorded a current income tax expense of $0.3 million for the nine months ended September 30, 2025. We did not record an income tax expense for the nine months ended September 30, 2024 as we generated sufficient tax losses, after consideration of discrete items. The current income tax expense for the nine months ended September 30, 2025 was driven by pre-tax income from the gain on sale of the PRV, offset by the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced the Company's taxable income and resulting income tax expense for the nine months ended September 30, 2025.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows for the Nine Months Ended September 30, 2025 and 2024
|
For the nine months ended September 30, |
||||||||
| ($ in thousands) | 2025 | 2024 | ||||||
| Total cash, cash equivalents and restricted cash provided by (used in): | ||||||||
| Operating activities | $ | (58,373 | ) | $ | (39,456 | ) | ||
| Investing activities | 95,474 | (58,116 | ) | |||||
| Financing activities | 22,426 | 98,825 | ||||||
| Net increase in cash, cash equivalents and restricted cash | $ | 59,527 | $ | 1,253 | ||||
Operating activities
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.
Net cash used in operating activities was $39.5 million for the nine months ended September 30, 2024, primarily comprised of our net loss of $54.4 million and decreases in operating assets and liabilities of $0.5 million and net non-cash charges of $15.5 million. Non-cash charges consisted primarily of $7.5 million of the change in fair value of warrant and derivative liabilities, $4.7 million of stock-based compensation, $1.1 million of non-cash interest expense and $1.5 million of depreciation and amortization.
Investing activities
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.
Net cash used in investing activities was $58.1 million for the nine months ended September 30, 2024, primarily comprised of proceeds from maturities of short-term investments of $90.2 million, offset by purchases of short-term investments of $146.5 million and capital expenditures of $1.8 million.
Financing activities
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.
Net cash provided by financing activities was $98.8 million for the nine months ended September 30, 2024, primarily comprised of $70.2 million in net proceeds from sales of common stock, $10.0 million from open market sales of common stock pursuant to the ATM Agreement (as defined below) and net proceeds of $19.0 million from our January 2024 Loan Agreement.
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, restricted cash and short-term investments, collectively referred to as our cash resources. As of September 30, 2025, our cash resources were $207.5 million. We believe that our current cash and cash equivalents, restricted cash 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. We sold 1,902,376 shares of our common stock under the ATM Agreement and received $10.0 million of net proceeds during the nine months ended September 30, 2024. Under the ATM Agreement and as of September 30, 2025, 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 provide assurance that we will ever be able to generate sufficient product sales or royalty revenue to achieve profitability on a sustained basis, or at all.
If we raise additional funds by selling additional equity securities, the relative equity ownership of our existing investors will be diluted, and the new investors could obtain terms more favorable than previous investors. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves.
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; | |
| ● | 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 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.
Abeona Therapeutics Inc. published this content on November 12, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 12, 2025 at 12:36 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]