UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-15771

ABEONA THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)

Delaware		83-0221517
(State or Other Jurisdiction of incorporation or Organization		(I.R.S. Employer Identification No.)

1330 Avenue of the Americas, 33^rdFloor, New York, NY 10019

(Address of principal executive offices, zip code)

(646) 813-4701

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value		ABEO		Nasdaq Capital Market

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 Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
Emerging growth company ☐

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 standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of November 7, 2022 was 17,175,799 shares.

ABEONA THERAPEUTICS INC.

Form 10-Q

For the Quarter Ended September 30, 2022

INDEX

		Page No.
PART I - FINANCIAL INFORMATION

Item 1	Financial Statements:	3

	Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021	4

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 6.	Exhibits	26

SIGNATURES		27

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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,” “seeks,” “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 plans to submit a Biologics License Application for EB-101 and the timing thereof; the expected benefits of EB-101 being granted Orphan Drug and Rare Pediatric Disease designations by the FDA; our plans to continue development of AAV-based gene therapies designed to treat ophthalmic and other diseases and next-generation AAV-based gene therapies; the achievement of or expected timing, progress and results of clinical development, clinical trials and potential regulatory approvals; our pipeline of product candidates; our belief that EB-101 could potentially benefit patients with RDEB; development of our novel AAV-based gene therapy platform technology; our belief in the adequacy of the clinical trial data from our VIITAL™ clinical trial, together with the data generated in the program to date, to support regulatory approvals; our dependence upon our third-party and related-party customers and vendors and their compliance with regulatory bodies; our estimates regarding expenses, future revenues, capital requirements, and needs for additional financing; our intellectual property position and our ability to obtain, maintain and enforce intellectual property protection and exclusivity for our proprietary assets; our estimates regarding the size of the potential markets for our product candidates, the strength of our commercialization strategies and our ability to serve and supply those markets; 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, 2021, 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 successfully submit a Biologics License Application for EB-101 and the outcome thereof; our ability to find a potential commercialization partner for EB-101; our ability to access our existing at-the-market sale agreement; 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 impacts of global healthcare emergencies, such as pandemics, on our business, operations, and financial condition; 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 U.S. Food and Drug Administration (“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; and our ability to meet our obligations contained in license agreements to which we are party.

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)

	September 30, 2022			December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,733		$	32,938
Short-term investments		12,434			12,086
Restricted cash		5,338			5,891
Accounts receivable		—			3,000
Other receivables		1,047			—
Prepaid expenses and other current assets		945			2,377
Total current assets		25,497			56,292
Property and equipment, net		6,606			12,339
Right-of-use lease assets		6,638			9,403
Licensed technology, net		—			1,384
Other assets		20			168
Total assets	$	38,761		$	79,586
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,748		$	4,325
Accrued expenses		4,121			5,585
Current portion of lease liability		1,810			1,818
Current portion of payable to licensor		4,921			4,599
Deferred revenue		—			296
Total current liabilities		12,600			16,623
Payable to licensor		4,064			3,828
Other long-term liabilities		200			200
Long-term lease liabilities		6,484			7,560
Total liabilities		23,348			28,211
Commitments and contingencies		-			-
Stockholders’ equity:
Preferred stock - $0.01 par value; authorized 2,000,000 shares; No shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		—			—
Common stock - $0.01 par value; authorized 200,000,000 shares; 7,671,351 and 5,888,217 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		77			1,472
Additional paid-in capital		709,590			705,570
Accumulated deficit		(694,210	)		(655,640	)
Accumulated other comprehensive loss		(44	)		(27	)
Total stockholders’ equity		15,413			51,375
Total liabilities and stockholders’ equity	$	38,761		$	79,586

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

ABEONA THERAPEUTICS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share amounts)

	2022			2021			2022			2021
	For the three months ended September 30,						For the nine months ended September 30,
	2022			2021			2022			2021

Revenues:
License and other revenues	$	—		$	—		$	1,346		$	—

Expenses:
Royalties		—			—			350			—
Research and development		5,490			9,056			22,693			25,923
General and administrative		3,890			5,816			11,574			17,261
Impairment of licensed technology		—			—			1,355			—
Impairment of right-of-use lease asset		—			—			1,561			—
Impairment of construction-in-progress		—			—			1,792			—
Total expenses		9,380			14,872			39,325			43,184

Loss from operations		(9,380	)		(14,872	)		(37,979	)		(43,184	)

Gain on settlement with licensor		—			6,743			—			6,743
PPP loan payable forgiveness income		—			1,758			—			1,758
Interest income		72			7			103			35
Interest expense		(157	)		(683	)		(558	)		(3,603	)
Other income (expense)		(19	)		3			(136	)		(2	)
Net loss	$	(9,484	)	$	(7,044	)	$	(38,570	)	$	(38,253	)
Deemed dividends related to Series A and Series B Convertible Redeemable Preferred Stock		—			—			(3,782	)		—
Net loss attributable to Common Shareholders	$	(9,484	)	$	(7,044	)	$	(42,352	)	$	(38,253	)

Basic and diluted loss per common share	$	(1.48	)	$	(1.80	)	$	(7.05	)	$	(9.93	)

Weighted average number of common shares outstanding – basic and diluted		6,421,245			3,924,024			6,009,902			3,853,318

Other comprehensive income (loss):
Change in unrealized gains (losses) related to available-for-sale debt securities		(4	)		1			(11	)		10
Foreign currency translation adjustments		(6	)		(9	)		(6	)		(9	)
Comprehensive loss	$	(9,494	)	$	(7,052	)	$	(42,369	)	$	(38,252	)

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

ABEONA THERAPEUTICS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

	Shares		Amount		Shares		Amount		Shares		Amount			Capital			Deficit			Loss			Equity
Three months ended September 30, 2022

	Convertible Redeemable Preferred Stock																			Accumulated
	Series A				Series B				Common Stock					Additional Paid-in			Accumulated			Other Comprehensive			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount			Capital			Deficit			Loss			Equity

Balance at June 30, 2022		—	$	—		—	$	—		5,870,375	$	1,467		$	703,379		$	(684,726	)	$	(34	)	$	20,086
Stock-based compensation expense		—		—		—		—		—		—			632			—			—			632
Issuance of common stock, net of offering costs under open market sale agreement (ATM)		—		—		—		—		1,038,134		10			4,179			—			—			4,189
Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax witholding settlement		—		—		—		—		762,842		8			(8	)		—			—			—
Reverse stock-split adjustment		—		—		—		—		—		(1,408	)		1,408			—			—			—
Net loss		—		—		—		—		—		—			—			(9,484	)		—			(9,484	)
Other comprehensive loss		—		—		—		—		—		—			—			—			(10	)		(10	)
Balance at September 30, 2022		—	$	—		—	$	—		7,671,351	$	77		$	709,590		$	(694,210	)	$	(44	)	$	15,413

Nine months ended September 30, 2022

	Convertible Redeemable Preferred Stock																							Accumulated
	Series A						Series B						Common Stock					Additional Paid-in			Accumulated			Other Comprehensive			Total Stockholders’
	Shares			Amount			Shares			Amount			Shares		Amount			Capital			Deficit			Loss			Equity

Balance at December 31, 2021		—		$	—			—		$	—			5,888,217	$	1,472		$	705,570		$	(655,640	)	$	(27	)	$	51,375
Stock-based compensation expense		—			—			—			—			—		—			2,218			—			—			2,218
Issuance of common stock, net of offering costs under open market sale agreement (ATM)		—			—			—			—			1,038,134		10			4,179			—			—			4,189
Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax witholding settlement		—			—			—			—			745,000		3			(3	)		—			—			—
Issuance of Series A and Series B Convertible Redeemable Preferred Stock		1,000,006			17,974			250,005			4,494			—		—			—			—			—			—
Deemed dividends related to Series A and Series B Convertible Redeemable Preferred Stock		—			3,026			—			756			—		—			(3,782	)		—			—			(3,782	)
Redemption of Series A and Series B Convertible Redeemable Preferred Stock		(1,000,006	)		(21,000	)		(250,005	)		(5,250	)		—		—			—			—			—			—
Reverse stock-split adjustment		—			—			—			—			—		(1,408	)		1,408			—

SEC Form 10-Q filed by Abeona Therapeutics Inc.