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What changed in ABEONA THERAPEUTICS INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ABEONA THERAPEUTICS INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+347 added−389 removedSource: 10-K (2024-03-18) vs 10-K (2023-03-29)

Top changes in ABEONA THERAPEUTICS INC.'s 2023 10-K

347 paragraphs added · 389 removed · 270 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

119 edited+20 added−16 removed185 unchanged
Biggest changeThe patent family directed to synthetic MeCP2 polypeptides has pending applications in the United States and other geographical regions. Patents issuing from applications in the Edinburgh patent families are not expected to expire before 2038. In October 2020, we entered into an agreement exclusively sublicensing these UNC and University of Edinburgh patent rights to Taysha Gene Therapies. 5.
Biggest changeIn October 2020, we entered into an agreement exclusively sublicensing these UNC and University of Edinburgh patent rights to Taysha Gene Therapies. 5. Multipartite AAV Delivery of Large Transgenes We own a patent family directed to multipartite delivery of large transgenes using AAV vectors and have filed national stage applications in the United States, Europe and other geographical regions.
PPACA amended the intent requirement of certain of these criminal statutes under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it, to have committed a violation; and 21 ● state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and European Union and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways, may be stricter than those applicable in the US and may not have the same effect, thus complicating compliance efforts.
PPACA amended the intent requirement of certain of these criminal statutes under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it, to have committed a violation; and ● state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and European Union and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways, may be stricter than those applicable in the US and may not have the same effect, thus complicating compliance efforts.
A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to commit a violation; ● the federal false claims and civil monetary penalties laws, including the civil False Claims Act (the “FCA”), which prohibit, among other things, individuals, or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent, or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government.
A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to commit a violation; 22 ● the federal false claims and civil monetary penalties laws, including the civil False Claims Act (the “FCA”), which prohibit, among other things, individuals, or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent, or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government.
The FDA will seek to ensure the sponsor of a breakthrough therapy product candidate receives the following: intensive guidance on an efficient drug development program; intensive involvement of senior managers and experienced staff on a proactive, collaborative, and cross-disciplinary review; and rolling review. 15 ● Priority review: A product candidate is eligible for priority review if it treats a serious condition and, if approved, it would be a significant improvement in the safety or effectiveness of the treatment, diagnosis or prevention of a serious condition compared to marketed products.
The FDA will seek to ensure the sponsor of a breakthrough therapy product candidate receives the following: intensive guidance on an efficient drug development program; intensive involvement of senior managers and experienced staff on a proactive, collaborative, and cross-disciplinary review; and rolling review. ● Priority review: A product candidate is eligible for priority review if it treats a serious condition and, if approved, it would be a significant improvement in the safety or effectiveness of the treatment, diagnosis or prevention of a serious condition compared to marketed products.
The co-primary endpoints of the study were: (1) the proportion of RDEB wound sites with greater than or equal to 50% healing from baseline, comparing randomized treated with matched untreated (control) wound sites at the six-month timepoint, as determined by direct investigator assessment; and (2) pain reduction associated with wound dressing change assessed by the mean differences in scores of the Wong-Baker FACES scale between randomized treated and matched untreated (control) wounds at the six-month timepoint.
The co-primary endpoints of the study were: (1) the proportion of RDEB wound sites with greater than or equal to 50% healing from baseline, comparing randomized treated with matched untreated (control) wound sites at the six-month timepoint, as determined by direct investigator assessment; and (2) pain reduction associated with wound dressing change assessed by the mean differences in scores of the Wong-Baker FACES ® Pain Rating Scale between randomized treated and matched untreated (control) wounds at the six-month timepoint.
We have focused on establishing internal Chemistry, Manufacturing and Controls (“CMC”) capabilities that drive value for our organization through process development, assay development and manufacturing. We have also deployed robust quality systems governing all aspects of product lifecycle from preclinical through commercial stage. 3 Establishing Additional Cell and Gene Therapy Franchises and Adjacencies through In-Licensing and Strategic Partnerships.
We have focused on establishing internal Chemistry, Manufacturing and Controls (“CMC”) capabilities that drive value for our organization through process development, assay development and manufacturing. We have also deployed robust quality systems governing all aspects of product lifecycle from preclinical through commercial stage. Establishing Additional Cell and Gene Therapy Franchises and Adjacencies through In-Licensing and Strategic Partnerships.
The benefits of a regenerative advanced therapy designation include early interactions with the FDA to expedite development and review, benefits available to breakthrough therapies, potential eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints. Post-approval requirements Rigorous and extensive FDA regulation of biologic products continues after approval, particularly with respect to cGMP requirements.
The benefits of a regenerative advanced therapy designation include early interactions with the FDA to expedite development and review, benefits available to breakthrough therapies, potential eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints. 17 Post-approval requirements Rigorous and extensive FDA regulation of biologic products continues after approval, particularly with respect to cGMP requirements.
Our success may depend in part on our ability to obtain and maintain patent and other protections for commercially important technology, inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and intellectual property rights of third parties.
Our success may depend in part on our ability to obtain and maintain patents and other protections for commercially important technology, inventions, and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and other intellectual property rights of third parties.
However, many companies and other institutions, not otherwise subject to the NIH Guidelines, voluntarily follow them. 10 The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.
However, many companies and other institutions, not otherwise subject to the NIH Guidelines, voluntarily follow them. The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.
The European Commission grants or refuses marketing authorization in light of the opinion delivered by EMA. 19 Innovative medicinal products are authorized in the European Union based on a full marketing authorization application (as opposed to an application for marketing authorization that relies on data in the marketing authorization dossier for another, previously approved medicinal product).
The European Commission grants or refuses marketing authorization in light of the opinion delivered by EMA. Innovative medicinal products are authorized in the European Union based on a full marketing authorization application (as opposed to an application for marketing authorization that relies on data in the marketing authorization dossier for another, previously approved medicinal product).
Under some limited circumstances, however, the FDA may approve a BLA based upon a single Phase 3 clinical study plus confirmatory evidence or a single large multicenter trial without confirmatory evidence. 11 Additional kinds of data may also help to support a BLA, such as patient experience data.
Under some limited circumstances, however, the FDA may approve a BLA based upon a single phase 3 clinical study plus confirmatory evidence or a single large multicenter trial without confirmatory evidence. Additional kinds of data may also help to support a BLA, such as patient experience data.
The first phase, completed in 2018, was a 6,000 square foot state-of-the-art cGMP production facility for the manufacturing of cell and gene therapies. The facility is designed to initially manufacture clinical drug products with later intent of manufacturing commercial grade cGMP drug product.
The first phase, completed in 2018, was a 6,000 square foot state-of-the-art cGMP production facility for the manufacturing of cell and gene therapies. The facility is designed to initially manufacture clinical drug products with intent of manufacturing commercial grade cGMP drug product.
Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. 22 In the EU, pricing and reimbursement schemes vary widely from country to country.
Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. In the EU, pricing and reimbursement schemes vary widely from country to country.
Any country that has price controls or reimbursement limitations may not allow favorable reimbursement and pricing arrangements. Health Reform The United States and some foreign jurisdictions are considering or have enacted a number of reform proposals to change the healthcare system.
Any country that has price controls or reimbursement limitations may not allow favorable reimbursement and pricing arrangements. 24 Health Reform The United States and some foreign jurisdictions are considering or have enacted a number of reform proposals to change the healthcare system.
Once the CTA request is approved in accordance with the European Union and the European Union Member State’s requirements, clinical trial development may proceed. The requirements and processes governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.
Once the CTA request is approved in accordance with the European Union and the European Union Member State’s requirements, clinical trial development may proceed. 20 The requirements and processes governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.
The SEC’s website, www.sec.gov, contains reports, proxy statements, and other information that we file electronically with the SEC. The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K.
The SEC’s website, www.sec.gov, contains reports, proxy statements, and other information that we file electronically with the SEC. The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K. 26
BLA application fees for products designated as orphan drugs by the FDA are waived. Before testing any biologic product candidate on humans, including a gene therapy product candidate, the product candidate must undergo preclinical testing.
BLA application fees for products designated as orphan drugs by the FDA are waived. 11 Before testing any biologic product candidate on humans, including a gene therapy product candidate, the product candidate must undergo preclinical testing.
We seek to be the partner of choice in cell and gene therapy treatment and have closely collaborated with leading academic institutions, key opinion leaders, patient foundations, and industry partners to accelerate research and development, understand the needs of patients and their families, and generate novel intellectual property. Maintaining and Growing our IP Portfolio.
We seek to be the partner of choice in cell and gene therapy treatments and have closely collaborated with leading academic institutions, key opinion leaders, patient foundations, and industry partners to accelerate research and development, understand the needs of patients and their families, and generate novel intellectual property. Maintaining and Growing our IP Portfolio.
As a result of the genetic defect, RDEB patients have fragile skin, which can easily damage to produce open and blistering wounds, disfiguring scars throughout the body, fused fingers and toes, limits in range of motion at joints (e.g., arms and legs), and an abnormal narrowing of the esophagus.
As a result of the genetic defect, RDEB patients have fragile skin, which can easily damage to produce open and blistering wounds, disfiguring scars throughout the body, fused fingers and toes, limits in range of motion at joints (e.g., arms and legs), corneal abrasions, and an abnormal narrowing of the esophagus.
Our mission is to create, develop, manufacture, and deliver cell and gene therapies to transform the lives of people impacted by life-threatening diseases. In 2022, we continued to make progress toward fulfilling our goal of harnessing the promise of genetic medicine and redefining the standard of care through cell and gene therapies.
Our mission is to create, develop, manufacture, and deliver cell and gene therapies to transform the lives of people impacted by life-threatening diseases. In 2023, we continued to make progress toward fulfilling our goal of harnessing the promise of genetic medicine and redefining the standard of care through cell and gene therapies.
We are a party to various license agreements that give us rights to use specific technologies in our research and development, and future commercialization. Licensed Technologies and Intellectual Property 1. Recessive Dystrophic Epidermolysis Bullosa To support our EB franchise, we have licensed a patent family from Stanford University covering EB-101 and its use in the treatment of RDEB.
We are a party to various license agreements that give us rights to use specific technologies in our research and development, and future commercialization. Licensed Technologies and Intellectual Property 1. Recessive Dystrophic Epidermolysis Bullosa To support our EB franchise, we have licensed a patent family from Stanford University covering pz-cel and its use in the treatment of RDEB.
We expect to continue to expand our intellectual property portfolio by aggressively seeking patent rights for promising aspects of our product engine and product candidates. Developing Next-Generation Cell and Gene Therapy EB-101 for the Treatment of RDEB Disease Overview RDEB belongs to a broad group of genetic skin disorders known as epidermolysis bullosa.
We expect to continue to expand our intellectual property portfolio by aggressively seeking patent rights for promising aspects of our product engine and product candidates. Developing Next-Generation Cell and Gene Therapy Pz-cel for the Treatment of RDEB Disease Overview RDEB belongs to a broad group of genetic skin disorders known as epidermolysis bullosa.
The VIITAL™ study met its two co-primary efficacy endpoints demonstrating statistically significant, clinically meaningful improvements in wound healing and pain reduction in large chronic RDEB wounds. EB-101 was shown to be well-tolerated with no serious treatment-related adverse events observed, consistent with past clinical experience.
The VIITAL™ study met its two co-primary efficacy endpoints demonstrating statistically significant, clinically meaningful improvements in wound healing and pain reduction in large chronic RDEB wounds. Pz-cel was shown to be well-tolerated with no serious treatment-related adverse events observed, consistent with past clinical experience.
The second phase, completed in 2019, was the completion of an additional 8,000 square feet of state-of-the-art laboratory space to support our expanding quality control, process development, and assay development teams. The second phase also included nearly 2,000 square feet of cGMP Inventory Control space. We have advanced our in-house manufacturing capabilities for EB-101.
The second phase, completed in 2019, was the completion of an additional 8,000 square feet of state-of-the-art laboratory space to support our expanding quality control, process development, and assay development teams. The second phase also included nearly 2,000 square feet of cGMP Inventory Control space. We have advanced our in-house manufacturing capabilities for pz-cel.
We plan to continue development of AAV-based gene therapies designed to treat ophthalmic diseases with high unmet medical need using the novel AIM™ capsid platform that we have exclusively licensed from the University of North Carolina at Chapel Hill (“UNC”), and internal AAV vector research programs.
We plan to continue development of adeno-associated virus (“AAV”) based gene therapies designed to treat ophthalmic diseases with high unmet medical need using the novel AIM™ capsid platform that we have exclusively licensed from the University of North Carolina at Chapel Hill (“UNC”), and internal AAV vector research programs.
Using genetic modeling of COL7A1 variants, which is believed to cause RDEB, Stanford University estimated the incidence of RDEB to be approximately 63 per million births, and prevalence could be up to 3,850 patients in the U.S., whose wounds may benefit from COL7A1-mediated treatments such as EB-101.
Using genetic modeling of COL7A1 variants, which is believed to cause RDEB, Stanford University estimated the incidence of RDEB to be approximately 63 per million births, and prevalence could be up to 3,850 patients in the U.S., whose wounds may benefit from COL7A1-mediated treatments such as pz-cel.
Our facility is led by a team of highly-skilled production, process/assay development and QC scientists with expertise in cell and gene therapy, particularly in cell culture, upstream manufacturing, downstream purification, assay development and wet lab techniques. We have completed our 16,000+ square foot manufacturing build-out in Cleveland, Ohio.
Our facility is led by a team of highly skilled production, process/assay development and quality control scientists with expertise in cell and gene therapy, particularly in cell culture, upstream manufacturing, downstream purification, assay development and wet lab techniques. 7 We have completed our 16,000+ square foot manufacturing build-out in Cleveland, Ohio.
There were no deaths or instances of positive replication-competent retrovirus results, and no systemic immunologic responses were reported during the study, as well as no squamous cell carcinoma at treatment sites after application of EB-101. Two subjects reported at least one serious adverse event unrelated to EB-101.
There were no deaths or instances of positive replication-competent retrovirus results, and no systemic immunologic responses were reported during the study, as well as no squamous cell carcinoma at treatment sites after application of pz-cel. Two subjects reported at least one serious adverse event unrelated to pz-cel.
We have continued to prepare our cGMP commercial facility in Cleveland for manufacturing EB-101 to support our planned BLA filing. EB-101 study drug product for all our VIITAL™ study participants has been manufactured at our Cleveland facility. ABO-503 for the treatment of X-linked Retinoschisis (“XLRS”).
We have continued to prepare our cGMP commercial facility in Cleveland for manufacturing pz-cel to support our planned BLA filing. Pz-cel study drug product for all our VIITAL™ study participants has been manufactured at our Cleveland facility. ABO-503 for the treatment of X-linked Retinoschisis (“XLRS”).
Patents covering our investigational EB-101 product have been granted by the European Patent Office (EP3400287B1) and in other geographical regions, and are expected to expire in early 2037. Patent applications remain pending in the United States which, if granted, would be expected to expire in 2037.
Patents covering our investigational pz-cel product have been granted by the European Patent Office (EP3400287B1) and in other geographical regions, and are expected to expire in early 2037. Patent applications remain pending in the United States which, if granted, would be expected to expire in 2037.
We plan to continue to develop our chimeric AAV capsids capable of improved tissue targeting for various indications and potentially evading immunity to wildtype AAV vectors. Leveraging our Leadership Position in Commercial-Scale Cell and Gene Therapy Manufacturing.
We plan to continue to develop our chimeric AAV capsids capable of improved tissue targeting for various indications and potentially evading immunity to wild-type AAV vectors. 3 Leveraging our Leadership Position in Commercial-Scale Cell and Gene Therapy Manufacturing.
To date, there have been no reported serious adverse events. On November 3, 2022, we announced positive topline data from VIITAL™ study. The pivotal Phase 3 VIITAL™ study evaluated the efficacy, safety and tolerability of EB-101 in 43 large chronic wound pairs in 11 subjects with RDEB.
To date, there have been no reported serious adverse events. In November 2022, we announced positive topline data from our VIITAL™ study. The pivotal phase 3 VIITAL™ study evaluated the efficacy, safety, and tolerability of pz-cel in 43 large chronic wound pairs in 11 subjects with RDEB.
The FDA adjusts the PDUFA user fees on an annual basis. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for product candidates designated as orphan drugs, unless the product candidate also includes a non-orphan indication.
Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business. Additionally, no user fees are assessed on BLAs for product candidates designated as orphan drugs, unless the product candidate also includes a non-orphan indication.
Recent proof-of-concept studies have extended these findings by showing expression of ABCA4 mRNA and full-length ABCA4 protein in the retina of subretinally dosed abca4-/- knockout mice, at levels similar to endogenous ABCA4 in wild-type animals.
Recent proof-of-concept studies, presented at the 2023 ASGCT Annual Meeting, have extended these findings by showing expression of ABCA4 mRNA and full-length ABCA4 protein in the retina of subretinally dosed abca4-/- knockout mice, at levels similar to endogenous ABCA4 in wild-type animals.
RDEB patients have, on average, 11 active wounds on their bodies, with the majority > 20 cm 2 (Stanford University; Solis, D., et al., 2017). In 2020, a survey of RDEB patients reported that approximately 60% have active wounds covering greater than 30% of their bodies (Bruckner et al.; Orphanet Journal of Rare Diseases, 2020).
RDEB patients have an active disease with the majority of the wounds typically > 20 cm 2 (Stanford University; Solis, D., et al., 2017). In 2020, a survey of RDEB patients reported that approximately 60% have active wounds covering greater than 30% of their bodies (Bruckner et al.; Orphanet Journal of Rare Diseases, 2020).
A key component to the EB-101 drug product manufacturing process is the retroviral vector, which delivers the functional copy of the Collagen VII Alpha 1 cDNA to the autologous patient cells.
A key component to the pz-cel drug product manufacturing process is the retroviral vector, which delivers the functional copy of the Collagen VII Alpha 1 cDNA to the autologous patient cells.
Results from a completed Phase ½ study that enrolled 7 patients with large and chronic RDEB wounds at Stanford University showed that EB-101 was well-tolerated and resulted in significant and durable wound healing (Siprashvili, Z., et al., 2016), with up to eight years of follow-up (So. Y, Nazaraoff, et al., Orphanet Journal Rare Disease 2022).
Results from a completed Phase 1/2a study that enrolled seven patients with large and chronic RDEB wounds at Stanford University showed that pz-cel was well-tolerated and resulted in significant and durable wound healing (Siprashvili, Z., et al., 2016), with up to eight years of follow-up (So. Y, Nazaraoff, et al., Orphanet Journal Rare Disease 2022).
EB-101 has been granted Orphan Drug and Rare Pediatric Disease (“RPD”) designations by the U.S. Food and Drug Administration (“FDA”) and Orphan Drug Designation by the European Medicines Agency (“EMA”).
Pz-cel has been granted Orphan Drug and Rare Pediatric Disease (“RPD”) designations by the U.S. Food and Drug Administration (“FDA”) and Orphan Drug Designation by the European Medicines Agency (“EMA”).
Under the terms of our agreement with Ultragenyx, we are eligible to receive payments based on the achievement of certain sales milestones and royalties on net sales.
Under the terms of our agreement with Ultragenyx, we are eligible to receive payments based on the achievement of certain sales milestones and royalties on net sales. Under our agreements with Taysha, we are eligible to receive payments based on certain clinical, regulatory, and sales milestones and royalties on net sales.
Patients with RDEB have a defect in the COL7A1 gene, resulting in the inability to produce Type VII collagen, which plays a vital role in anchoring the skin’s dermal and epidermal layers.
Patients with RDEB have a defect in the COL7A1 gene, resulting in the inability to produce Type VII collagen, which plays a vital role in skin functioning by anchoring the skin’s dermal and epidermal layers to one another.
Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biologic product candidate has been associated with unexpected serious harm to patients. The FDA or an IRB may also impose conditions on the conduct of a clinical trial.
Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biologic product candidate has been associated with unexpected serious harm to patients.
We may also rely on the additional protection afforded by data exclusivity (currently 12 years for biologics like EB-101), other market exclusivity such as orphan drug exclusivity, and patent term extensions, where applicable. 8 2.
We may also rely on the additional protection afforded by data exclusivity (currently 12 years for biologics like pz-cel), other market exclusivity such as orphan drug exclusivity (currently seven years), and patent term extensions, where applicable. 2.
Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic.
Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as the reference product and, for products administered multiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. 19 A reference biologic is granted 12 years of exclusivity from the time of first licensure of the reference product.
The review process and the PDUFA goal date may also be extended if new information is submitted to the application. 14 Orphan drug designation Under the Orphan Drug Act, the FDA may designate a biologic product as an “orphan drug” if it is intended to treat a rare disease or condition (generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a biologic product available in the United States for treatment of the disease or condition will be recovered from sales of the product).
Orphan drug designation Under the Orphan Drug Act, the FDA may designate a biologic product as an “orphan drug” if it is intended to treat a rare disease or condition (generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a biologic product available in the United States for treatment of the disease or condition will be recovered from sales of the product).
We have also filed United States patent applications directed to the packaging and transport of EB-101, which, if granted, are not expected to expire before 2040.
We have also filed United States and Canadian patent applications directed to the packaging and transport of pz-cel, which, if granted, are not expected to expire before 2040.
We have made significant investments in developing optimized manufacturing processes and believe that our processes and methods developed to date provide a comprehensive manufacturing process for EB-101 and AAV-based vector therapies, including: ● sufficient scale to support commercial manufacturing requirements for EB-101 ● processes related to biopsy, cell collection, storage and transportation as part of manufacturing for EB-101 ● processes related to product release testing for EB-101 ● processes related to the manufacture and release testing of retroviral supernatant ● establishing transportation and packaging processes and materials for finished EB-101 product ● proprietary AAV vector manufacturing processes and techniques that produce a highly purified product candidate ● AAV serum-free suspension technology that is readily scalable ● multiple assays to accurately characterize our process and the AAV vectors we produce ● a series of purification processes, which may be adapted and customized for multiple different AAV capsids, with a goal of higher concentrations of active vectors, and that are essentially free of empty capsids. 7 We believe that these improvements will enable us to develop best-in-class, next-generation cell and gene therapy products.
We have made significant investments in developing optimized manufacturing processes and believe that our processes and methods developed to date provide a comprehensive manufacturing process for pz-cel and AAV-based vector therapies, including: ● sufficient scale to support commercial manufacturing requirements for pz-cel ● processes related to biopsy, cell collection, storage and transportation as part of manufacturing for pz-cel ● processes related to product release testing for pz-cel ● processes related to the manufacture and release testing of retroviral vector ● establishing transportation and packaging processes and materials for finished pz-cel product ● proprietary AAV vector manufacturing processes and techniques that produce a highly purified product candidate ● AAV serum-free suspension technology that is readily scalable ● multiple assays to accurately characterize our process and the AAV vectors we produce ● a series of purification processes, which may be adapted and customized for multiple different AAV capsids, with a goal of higher concentrations of active vectors, and that are essentially free of empty capsids.
The product is manufactured as a multilayer cellular sheet containing corrected keratinocytes that is fastened to a petrolatum gauze backing with surgical hemoclips. Engineered sheets are applied over wound areas, where they are expected to produce keratinocytes with functioning Type VII collagen, providing immediate wound coverage and allowing for long-term wound healing.
The product is manufactured as a multilayer cellular sheet containing corrected keratinocytes that is fastened to a petrolatum gauze backing with surgical titanium ligating clips. Engineered sheets are applied over wound areas, where they provide keratinocytes with functional Type VII collagen, providing immediate wound coverage and allowing for long-term wound healing.
Preclinical studies have confirmed expression of Opa1 in both cell culture and the retinas of dosed wild-type and disease model animals. Initial efficacy results suggest an improvement in retinal signaling to the brain, and improved visual acuity in treated mutant mice.
Preclinical studies have confirmed expression of Opa1 in both cell culture and the retinas of dosed wild-type and disease model animals. Initial efficacy results suggest an improvement in retinal signaling to the brain and improved visual acuity in treated mutant mice. These studies were presented at the ASGCT Annual Meeting in May 2023.
In addition, changes to the manufacturing process or facility generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.
Further, should new safety information arise, additional testing or FDA notification may be required. In addition, changes to the manufacturing process or facility generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.
We have also created and characterized a cGMP master cell bank and a working cell bank to support the cGMP production of the retroviral vector. We have established AAV vector manufacturing capabilities that use the triple plasmid transient transfection method.
In order to support licensure, we have produced three cGMP process validation lots and have also created and characterized a cGMP master cell bank and a working cell bank to support the cGMP production of the retroviral vector. We have established AAV vector manufacturing capabilities that use the triple plasmid transient transfection method.
Initially developed at the Indiana University Vector Production Facility, we have transferred the cGMP manufacturing process for the LZRSE-Col7A1 retroviral vector to our Cleveland facility and have produced three cGMP lots for analytical and clinical comparability.
Initially developed at the Indiana University Vector Production Facility, we have transferred the cGMP manufacturing process for the LZRSE-Col7A1 retroviral vector to our Cleveland facility and have demonstrated analytical comparability between IUVPF and Abeona-produced retroviral vector.
Under our agreements with Taysha, we are eligible to receive payments based on certain clinical, regulatory, and sales milestones and royalties on net sales. 6 Leveraging Leadership Position in Commercial-Scale Cell and Gene-Therapy Manufacturing We have established a cGMP manufacturing facility, the Elisa Linton Center located in Cleveland, Ohio, which enables us to enhance supply chain control, establish tighter quality control testing, increase supply capacity, reduce production costs and gain manufacturing efficiency for clinical trials related to our product candidates and ensure commercial demand is met in the event our therapies receive marketing approval.
Leveraging Leadership Position in Commercial-Scale Cell and Gene-Therapy Manufacturing We have established a cGMP manufacturing facility, the Elisa Linton Center located in Cleveland, Ohio, which enables us to enhance supply chain control, establish tighter quality control testing, increase supply capacity, reduce production costs and gain manufacturing efficiency for clinical trials related to our product candidates and ensure commercial demand is met in the event our therapies receive marketing approval.
ABO-505 is designed to express a functional copy of human Opa1 in the retina following para-retinal injection. ABO-505 aims to take advantage of the robust optic nerve and retinal ganglion cell (RGC) transduction ability of AAV204 to deliver its genetic payload to the cells most affected by ADOA.
Currently, there is no approved treatment for people living with ADOA. ABO-505 is designed to express a functional copy of human Opa1 in the retina following para-retinal injection. ABO-505 aims to take advantage of the robust optic nerve and RGC transduction ability of AAV204 to deliver its genetic payload to the cells most affected by ADOA.
Before approving a BLA, the FDA will inspect the facilities at which the product candidate is manufactured. The FDA will not approve the product candidate unless it determines that the manufacturing processes and facilities comply with cGMP requirements and are adequate to assure consistent production of the product candidate within required specifications.
The FDA will not approve the product candidate unless it determines that the manufacturing processes and facilities comply with cGMP requirements and are adequate to assure consistent production of the product candidate within required specifications.
ITEM 1. BUSINESS Business Abeona Therapeutics Inc., a Delaware corporation (together with our subsidiaries, “we,” “our,” “Abeona” or the “Company”), is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. Our lead clinical program is EB-101, an autologous, engineered cell therapy currently in development for recessive dystrophic epidermolysis bullosa (“RDEB”).
ITEM 1. BUSINESS Business Abeona Therapeutics Inc., a Delaware corporation (together with our subsidiaries, “we,” “our,” “Abeona” or the “Company”), is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. Our lead clinical program is for prademagene zamikeracel (“pz-cel”), our investigational autologous, COL7A1 gene-corrected epidermal sheets currently in development for recessive dystrophic epidermolysis bullosa (“RDEB”).
Marketing authorization may be granted to a similar medicinal product for the same orphan indication if: ● The second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; ● The holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or ● The holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal product.
Marketing authorization may be granted to a similar medicinal product for the same orphan indication if: ● The second applicant can establish in its application that its medicinal product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior; ● The holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or ● The holder of the marketing authorization for the original orphan medicinal product cannot supply sufficient quantities of orphan medicinal product. 21 An orphan product can also obtain an additional two years of market exclusivity in the European Union for the conduct of pediatric trials.
The patent family licensed from UNC at Chapel Hill are directed to viral genomes designed to regulate expression of the MeCP2 gene, which is mutated in patients with Rett Syndrome. This family has pending applications in the United States, Europe and other geographical regions. Patents issuing from these applications are not expected to expire before 2039.
Glasgow”) relating to gene therapy for the treatment of Rett Syndrome. The patent family licensed from UNC at Chapel Hill are directed to viral genomes designed to regulate expression of the MeCP2 gene, which is mutated in patients with Rett Syndrome. This patent family has pending applications in the United States, Europe and other geographical regions.
The AIM™ vector system is a platform of AAV capsids capable of widespread central nervous system gene transfer and can be used to confer high transduction efficiency for various therapeutic indications.
Gene Therapy Treatments anchored in AIM™ Vector Platform In 2016, we licensed a library of novel AAV capsids from UNC. The AIM™ vector system is a platform of AAV capsids capable of widespread central nervous system gene transfer and can be used to confer high transduction efficiency for various therapeutic indications.
On October 24, 2014, we changed our name to PlasmaTech Biopharmaceuticals, Inc. On May 15, 2015, we acquired Abeona Therapeutics LLC and on June 19, 2015, we changed our name to Abeona Therapeutics Inc. Suppliers Some of the materials we use are specialized. We obtain materials from several suppliers based in different countries around the world.
On May 15, 2015, we acquired Abeona Therapeutics LLC and on June 19, 2015, we changed our name to Abeona Therapeutics Inc. Suppliers Some of the materials we use are specialized. We obtain materials from several suppliers based in different countries around the world. If materials are unavailable from one supplier, we generally have alternate suppliers available.
These competitors also may compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
These competitors also may compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Human clinical trials typically are conducted in three sequential phases that may overlap or be combined: ● Phase 1: The biologic product candidate initially is introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early understanding of its effectiveness.
Further, the export of investigational products outside of the United States is subject to regulatory requirements of the receiving country as well as U.S. export requirements under the FDCA. 12 Human clinical trials typically are conducted in three sequential phases that may overlap or be combined: ● Phase 1: The biologic product candidate initially is introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early understanding of its effectiveness.
Abeona’s internal research and development team developed ABO-504, which is designed to efficiently reconstitute the full-length ABCA4 gene by implementing a dual AAV vector strategy using the Cre-LoxP recombinase system.
Abeona’s internal research and development team developed ABO-504, which is designed to efficiently reconstitute the full-length ABCA4 gene by implementing a dual AAV vector strategy using the Cre-LoxP recombinase system. Abeona previously reported preclinical data demonstrating the ability of the dual AAV vector system to produce full length ABCA4 protein in cell culture.
The United States Patent and Trademark Office (“USPTO”), in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. 17 Pediatric exclusivity Pediatric exclusivity is a type of non-patent marketing exclusivity in the United States that, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity.
Pediatric exclusivity Pediatric exclusivity is a type of non-patent marketing exclusivity in the United States that, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity, including the non-patent and orphan exclusivity.
We were incorporated in Wyoming in 1974 as Chemex Corporation, and in 1983 we changed our name to Chemex Pharmaceuticals, Inc. We changed our state of incorporation from Wyoming to Delaware on June 30, 1989. In 1996 we merged with Access Pharmaceuticals, Inc., a private Texas corporation, and changed our name to Access Pharmaceuticals, Inc.
We changed our state of incorporation from Wyoming to Delaware on June 30, 1989. In 1996 we merged with Access Pharmaceuticals, Inc., a private Texas corporation, and changed our name to Access Pharmaceuticals, Inc. On October 24, 2014, we changed our name to PlasmaTech Biopharmaceuticals, Inc.
In an effort to increase competition in the biologic product marketplace, Congress, the executive branch, and the FDA have taken certain legislative and regulatory steps. For example, in 2020 the FDA finalized a guidance to facilitate product importation.
The biosimilar applicant may also be able to bring an action for declaratory judgment concerning the patent. In an effort to increase competition in the biologic product marketplace, Congress, the executive branch, and the FDA have taken certain legislative and regulatory steps. For example, in 2020 the FDA finalized a guidance to facilitate product importation.
We anticipate facing intense and increasing competition as new product candidates enter the market and advanced technologies become available. We expect any product candidates that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, convenience of administration and delivery, price, and the availability of reimbursement from government and other third-party payors.
We expect any product candidates that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, convenience of administration and delivery, price, and the availability of reimbursement from government and other third-party payors.
We are actively seeking U.S. and international patent protection for a variety of technologies, including the following: research tools and methods, methods for transferring genetic material into cells, AAV-based biological products, methods of designing novel AAV constructs, methods for treating diseases of interest and methods for manufacturing, packaging, and transporting our product candidates.
We are actively seeking U.S. and international patent protection, together with our licensors, for a variety of technologies, including AAV capsids, AAV-based biological products, methods of designing novel AAV constructs, methods for treating diseases of interest, including RDEB, and methods for manufacturing, packaging, and transporting our product candidates.
Competitors additionally may receive approval of different products for the same indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity. Orphan medicinal product status in the European Union has similar, but not identical, benefits.
Competitors additionally may receive approval of different products for the same indication for which the orphan product has exclusivity or obtain approval for the same product but for a different indication for which the orphan product has exclusivity.
Data Privacy and Security ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH Act, and similar state laws impose obligations on certain entities with respect to safeguarding the privacy, security and transmission of protected health information.
Furthermore, efforts to ensure that business activities and business arrangements comply with applicable healthcare laws and regulations can be costly. 23 Data Privacy and Security ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH Act, and similar state laws impose obligations on certain entities with respect to safeguarding the privacy, security and transmission of protected health information.
Expedited development and review programs The FDA is authorized to expedite the review of BLAs in several ways. Under the Fast Track program, the sponsor of a biologic product candidate may request the FDA to designate the product for a specific indication as a Fast Track product concurrent with or after the filing of the IND.
Under the Fast Track program, the sponsor of a biologic product candidate may request the FDA to designate the product for a specific indication as a Fast Track product concurrent with or after the filing of the IND.
The first U.S. patent in this patent family, U.S. Patent No. 10,532,110 (the “’110 Patent”), was issued to UNC on January 14, 2020. The ’110 Patent is entitled to 352 days of patent term adjustment, making its projected expiration date November 6, 2036. The second U.S. patent in this patent family, U.S.
The ‘110 Patent is entitled to 352 days of patent term adjustment, making its projected expiration date November 6, 2036. The second U.S. patent in this patent family, U.S. Patent No. 10,561,743 (the “‘743 Patent”), was issued to UNC on February 18, 2020. The ‘743 Patent is expected to expire on November 20, 2035.
The ‘242 Patent is entitled to 429 days of patent term adjustment and will not expire before January 22, 2037. We have exclusive rights to these patents under our license with UNC. We also own a second patent family directed to certain AAV capsids and have filed national stage applications in the United States, Europe and other geographical regions.
We have exclusive rights to these patents under our license with UNC. 9 We also own a second patent family directed to certain AAV capsids and have filed national stage applications in the United States, Europe and other geographical regions. Patents issuing from these applications are not expected to expire before 2039. 3.
Additional regulation for gene therapy clinical trials In addition to the regulations discussed above, there are a number of additional standards that apply to clinical trials involving the use of gene therapy.
The FDA or an IRB may also impose conditions on the conduct of a clinical trial. 13 Additional regulation for gene therapy clinical trials In addition to the regulations discussed above, there are a number of additional standards that apply to clinical trials involving the use of gene therapy.
This same bill also includes provisions with respect to shared and separate REMS programs for reference and generic drug products. 18 Rare Pediatric Disease Voucher Program Under the Rare Pediatric Disease Voucher Program, the FDA can award priority review vouchers to sponsors of rare pediatric disease products where the product is intended to treat serious or life-threatening diseases that primarily affect individuals up to age 18.
Rare Pediatric Disease Voucher Program Under the Rare Pediatric Disease Voucher Program, the FDA can award priority review vouchers to sponsors of rare pediatric disease products where the product is intended to treat serious or life-threatening diseases that primarily affect individuals up to age 18.
We will also provide to any person without charge, upon request, a copy of any of the foregoing materials. Any such request must be made in writing to us at: Abeona Therapeutics Inc. c/o Investor Relations, 1330 Avenue of the Americas, 33 rd Floor, New York, NY 10019.
We will also provide to any person without charge, upon request, a copy of any of the foregoing materials. Any such request must be made in writing to us at: Abeona Therapeutics Inc. c/o Investor Relations, 6555 Carnegie Ave, 4 th Floor, Cleveland, OH 44103.
The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time.
The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time. The review process and the PDUFA goal date may also be extended if new information is submitted to the application.
We have established and maintained strong and collaborative relationships with third-party companies specializing in the testing of cell and gene therapy material to complement our process and assay development needs.
At the end of the incubation period, the newly generated AAV vectors are harvested, filtered, and purified in a multi-step process. We have established and maintained strong and collaborative relationships with third-party companies specializing in the testing of cell and gene therapy material to complement our process and assay development needs.
We intend to commercialize our assets either by ourselves or through strategic partnerships, subject to FDA approval. Developing Novel In-Vivo Gene Therapies Using AIM™ Capsid Technology. We are researching and developing AAV-based gene therapy using our novel capsids developed from the AIM™ Capsid Technology Platform and additional Company-invented AAV capsids.
Developing Novel In-Vivo Gene Therapies Using AIM™ Capsid Technology. We are researching and developing AAV-based gene therapy using our novel capsids developed from the AIM™ Capsid Technology Platform and additional Company-invented AAV capsids.
Maintain Strong Intellectual Property Protection We strive to protect our commercially important proprietary technology, inventions, and know-how, including by seeking, maintaining, and defending patent rights, both for inventions developed internally and for inventions licensed from third parties.
As we look to commercialize pz-cel (subject to FDA approval), we have filed our BLA to support commercial manufacturing of pz-cel from our Cleveland facility. 8 Maintain Strong Intellectual Property Protection We strive to protect our commercially important proprietary technology, inventions, and know-how, including by seeking, maintaining, and defending patent rights, both for inventions developed internally and for inventions licensed from third parties.
Our competitors’ product candidates may be more effective, or more effectively marketed and sold, than any product candidate we may commercialize and may render our treatments obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates. 23 Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors.
Our competitors’ product candidates may be more effective, or more effectively marketed and sold, than any product candidate we may commercialize and may render our treatments obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe do not have significant operating revenue and may never achieve profitability. ● Failure to achieve and maintain effective internal controls could have a material adverse effect on our business. ● We expect to continue to need to raise additional capital to operate our business, and our failure to obtain funding when needed or on terms that are favorable to us may force us to delay, reduce or eliminate our development programs or aspects thereof. ● The market price of our common stock may be volatile and adversely affected by several factors. ● Raising additional funds by issuing securities or through licensing or lending arrangements or through our at-the-market sale agreement may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights. ● Our quarterly operating results may fluctuate significantly. ● Provisions of our charter documents could discourage an acquisition of our company. 26 Risks related to the discovery and development of our product candidates Our cell and gene therapy product candidates are based on proprietary methodologies, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval.
Biggest changeWe do not have significant operating revenue and may never achieve profitability. ● We expect to continue to need to raise additional capital to operate our business, and our failure to obtain funding when needed or on terms that are favorable to us may force us to delay, reduce or eliminate our development programs or aspects thereof. ● Failure to achieve and maintain effective internal controls could have a material adverse effect on our business. ● The market price of our common stock may be volatile and adversely affected by several factors. ● Raising additional funds by issuing securities or through licensing or lending arrangements or through our at-the-market sale agreement may cause dilution to our existing stockholders, restrict our operations or require us to relinquish proprietary rights. ● Breaches of data security or unauthorized disclosures of personal information could effect our business or make us subject to liability.
FDA’s thinking around sameness with respect to gene therapies, and thus the circumstances when clinical superiority would need to be shown, is evolving. While the agency has issued a guidance on the topic, certain decisions may need to be made on a case by case basis, given the novelty of the technology.
FDA’s thinking around sameness with respect to gene therapies, and thus the circumstances when clinical superiority would need to be shown, is evolving. While the agency has issued guidance on the topic, certain decisions may need to be made on a case by case basis, given the novelty of the technology.
We cannot be sure that reimbursement will be available for any of these products. Also, we cannot be sure that coverage or reimbursement amounts will not reduce the demand for, or the price of, our products. We have not commenced efforts to have our product candidates reimbursed by government or third-party payors.
We cannot be sure that reimbursement will be available for any of these products. Also, we cannot be sure that coverage or reimbursement amounts will not reduce the demand for, or the price of, our products. We have not commenced efforts to have our product candidates reimbursed by the government or third-party payors.
Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us.
Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such an option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us.
We anticipate that our expenses will increase substantially if and as we: ● seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies; ● continue our research and preclinical and clinical development of our product candidates; ● further develop the manufacturing process for our vectors or our product candidates; ● expand the scope of our current clinical studies for our product candidates; ● change or add additional manufacturers or suppliers; ● seek to identify and validate additional product candidates; ● acquire or in-license other product candidates and technologies; ● make milestone or other payments under any license agreements; ● maintain, protect and expand our intellectual property portfolio; 50 ● establish a sales, marketing and distribution infrastructure in the United States and Europe to commercialize any products for which we may obtain marketing approval; ● attract and retain skilled personnel; ● build additional infrastructure to support our operations as a larger public company and our product development and planned future commercialization efforts, including manufacturing capacity; and ● experience any delays or encounter issues with any of the above.
We anticipate that our expenses will increase substantially if and as we: ● seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies; ● continue our research and preclinical and clinical development of our product candidates; ● further develop the manufacturing process for our vectors or our product candidates; ● expand the scope of our current clinical studies for our product candidates; ● change or add additional manufacturers or suppliers; ● seek to identify and validate additional product candidates; ● acquire or in-license other product candidates and technologies; ● make milestone or other payments under any license agreements; ● maintain, protect and expand our intellectual property portfolio; ● establish a sales, marketing and distribution infrastructure in the United States and Europe to commercialize any products for which we may obtain marketing approval; ● attract and retain skilled personnel; ● build additional infrastructure to support our operations as a larger public company and our product development and planned future commercialization efforts, including manufacturing capacity; and ● experience any delays or encounter issues with any of the above.
For instance, the FDA or comparable foreign regulatory authorities may require changes to our study design that make further study impractical or not financially prudent; ● we may have delays in adding new investigators or clinical trial sites, or we may experience a withdrawal of clinical trial sites; ● there may be regulatory questions or disagreements regarding interpretations of data and results, or new information may emerge regarding our product candidates; ● we may make changes to our product candidates or their manufacturing process that necessitate additional studies or that result in our product candidates not performing as expected; 28 ● the FDA or comparable foreign regulatory authorities may disagree with our study design, including endpoints, or our interpretation of data from preclinical studies and clinical trials or find that a product candidate’s benefits do not outweigh its safety risks; ● the FDA or comparable foreign regulatory authorities may not accept data from studies with clinical trial sites in foreign countries; ● the FDA or comparable regulatory authorities may disagree with our intended indications; ● the FDA or comparable foreign regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes or our contract manufacturer’s manufacturing facility for clinical and future commercial supplies; ● the data collected from clinical trials of our product candidates may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of a marketing application, or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere; ● if one of our product candidates does not receive marketing approval in one country, it may impact our ability to receive marketing approval in other countries; ● the FDA or comparable regulatory authorities may take longer than we anticipate to make a decision on our product candidates; and ● we may not be able to demonstrate that a product candidate provides an advantage over current standards of care or current or future competitive therapies in development.
For instance, the FDA or comparable foreign regulatory authorities may require changes to our study design that make further study impractical or not financially prudent; ● we may have delays in adding new investigators or clinical trial sites, or we may experience a withdrawal of clinical trial sites; ● there may be regulatory questions or disagreements regarding interpretations of data and results, or new information may emerge regarding our product candidates; ● we may make changes to our product candidates or their manufacturing process that necessitate additional studies or that result in our product candidates not performing as expected; ● the FDA or comparable foreign regulatory authorities may disagree with our study design, including endpoints, or our interpretation of data from preclinical studies and clinical trials or find that a product candidate’s benefits do not outweigh its safety risks; ● the FDA or comparable foreign regulatory authorities may not accept data from studies with clinical trial sites in foreign countries; ● the FDA or comparable regulatory authorities may disagree with our intended indications; ● the FDA or comparable foreign regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes or our contract manufacturer’s manufacturing facility for clinical and future commercial supplies; 30 ● the data collected from clinical trials of our product candidates may not be sufficient to the satisfaction of the FDA or comparable foreign regulatory authorities to support the submission of a marketing application, or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the United States or elsewhere; ● if one of our product candidates does not receive marketing approval in one country, it may impact our ability to receive marketing approval in other countries; ● the FDA or comparable regulatory authorities may take longer than we anticipate to make a decision on our product candidates; and ● we may not be able to demonstrate that a product candidate provides an advantage over current standards of care or current or future competitive therapies in development.
Additionally, our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated. ● Our drug candidates are subject to the risks of failure inherent in the development of pharmaceutical products based on new technologies, and our failure to develop safe and commercially viable drugs would severely limit our ability to become profitable or to achieve significant revenues. 25 ● We may be unable to successfully develop, market, or commercialize our products or our product candidates without establishing new relationships and maintaining current relationships and our ability to successfully commercialize, and market our product candidates could be limited if a number of these existing relationships are terminated. ● We may incur substantial product liability expenses due to the use or misuse of our products for which we may be unable to obtain insurance coverage. ● Our ability to successfully develop and commercialize our drug candidates will substantially depend upon the availability of reimbursement funds for the costs of the resulting drugs and related treatments. ● The market may not accept any pharmaceutical products that we develop, and adverse public perception of gene therapy products may negatively affect demand for, or regulatory approval of, our product candidates. ● We may be subject to federal, state, and foreign healthcare laws and regulations, including fraud and abuse laws, false claims laws, health information privacy and security laws and data privacy laws.
Additionally, our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated. ● Our drug candidates are subject to the risks of failure inherent in the development of pharmaceutical products based on new technologies, and our failure to develop safe and commercially viable drugs would severely limit our ability to become profitable or to achieve significant revenues. ● We may be unable to successfully develop, market, or commercialize our products or our product candidates without establishing new relationships and maintaining current relationships and our ability to successfully commercialize, and market our product candidates could be limited if a number of these existing relationships are terminated. ● We may incur substantial product liability expenses due to the use or misuse of our products for which we may be unable to obtain insurance coverage. 27 ● Our ability to successfully develop and commercialize our drug candidates will substantially depend upon the availability of reimbursement funds for the costs of the resulting drugs and related treatments. ● The market may not accept any pharmaceutical products that we develop, and adverse public perception of gene therapy products may negatively affect demand for, or regulatory approval of, our product candidates. ● We may be subject to federal, state, and foreign healthcare laws and regulations, including fraud and abuse laws, false claims laws, health information privacy and security laws and data privacy laws.
If we are unwilling or unable to perform our obligations under any license or collaboration arrangement, a third party may have the right to terminate such arrangement with us. 38 We are subject to extensive governmental regulation, which increases our cost of doing business and may affect our ability to commercialize any new products that we may develop.
If we are unwilling or unable to perform our obligations under any license or collaboration arrangement, a third party may have the right to terminate such arrangement with us. We are subject to extensive governmental regulation, which increases our cost of doing business and may affect our ability to commercialize any new products that we may develop.
Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of production. 36 Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.
Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of production. Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.
These market fluctuations may also materially and adversely affect the market price of our common stock. Raising additional funds by issuing securities or through licensing or lending arrangements or through our at-the-market sale agreement may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish proprietary rights.
These market fluctuations may also materially and adversely affect the market price of our common stock. 53 Raising additional funds by issuing securities or through licensing or lending arrangements or through our at-the-market sale agreement may cause dilution to our existing stockholders, restrict our operations, or require us to relinquish proprietary rights.
In addition to the foregoing, the risks associated with patent rights that we license from third parties will also apply to patent rights we may own in the future. 43 Further, in many of our license agreements we are responsible for bringing any actions against any third party for infringing the patents we have licensed.
In addition to the foregoing, the risks associated with patent rights that we license from third parties will also apply to patent rights we may own in the future. Further, in many of our license agreements we are responsible for bringing any actions against any third party for infringing the patents we have licensed.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Third-parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could harm our business.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. 49 Third-parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could harm our business.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our and our licensors’ patent protection. We may not be aware of all third-party intellectual property rights potentially relating to our product candidates.
Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our and our licensors’ patent protection. 47 We may not be aware of all third-party intellectual property rights potentially relating to our product candidates.
There are a limited number of manufacturers that operate under cGMP regulations and that are both capable of manufacturing for us and willing to do so. 34 The manufacture of biologic products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.
There are a limited number of manufacturers that operate under cGMP regulations and that are both capable of manufacturing for us and willing to do so. The manufacture of biologic products requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls.
Delays in obtaining governmental regulatory approval could adversely affect our marketing as well as our ability to generate significant revenues from commercial sales. Our drug candidates may not receive FDA or other regulatory approvals on a timely basis or at all.
Delays in obtaining governmental regulatory approval could adversely affect our marketing as well as our ability to generate significant revenues from commercial sales. 41 Our drug candidates may not receive FDA or other regulatory approvals on a timely basis or at all.
If we or our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, they will not be able to secure or maintain regulatory approval for their manufacturing facilities.
If we or our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, we or our contract manufacturers will not be able to secure or maintain regulatory approval for their manufacturing facilities.
Drugs resulting from our research and development efforts or from our joint efforts with collaborative partners therefore may not be commercially competitive with our competitors’ existing products or products under development. Our products and product candidates may face competition sooner than anticipated.
Drugs resulting from our research and development efforts or from our joint efforts with collaborative partners therefore may not be commercially competitive with our competitors’ existing products or products under development. 42 Our products and product candidates may face competition sooner than anticipated.
We will need to raise additional capital to fund our future operations and we cannot be certain that funding will be available to us on acceptable terms on a timely basis, or at all.
We may need to raise additional capital to fund our future operations and we cannot be certain that funding will be available to us on acceptable terms on a timely basis, or at all.
Physicians, patients, or the medical community in general may not accept or use any drugs that we may develop independently or with our collaborative partners and if they do not, our business could suffer. 40 Adverse public perception of gene therapy products may negatively affect demand for, or regulatory approval of, our product candidates.
Physicians, patients, or the medical community in general may not accept or use any drugs that we may develop independently or with our collaborative partners and if they do not, our business could suffer. 43 Adverse public perception of gene therapy products may negatively affect demand for, or regulatory approval of, our product candidates.
We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. 45 We sometimes collaborate with non-profit and academic institutions to accelerate our preclinical research or development under written agreements with these institutions.
We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. 48 We sometimes collaborate with non-profit and academic institutions to accelerate our preclinical research or development under written agreements with these institutions.
For example, the development of our product candidates for pediatric use is an important part of our current business strategy, and if we are unable to obtain regulatory approval for the desired age ranges, our business may suffer. 30 We have received and may apply for additional designations intended to facilitate or encourage product candidate development.
For example, the development of our product candidates for pediatric use is an important part of our current business strategy, and if we are unable to obtain regulatory approval for the desired age ranges, our business may suffer. 32 We have received and may apply for additional designations intended to facilitate or encourage product candidate development.
We may also experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: ● regulators or IRBs may not authorize us or our investigators to commence or continue a clinical trial, conduct a clinical trial at a prospective trial site, or amend trial protocols, or regulators or IRBs may require that we modify or amend our clinical trial protocols; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and our CROs; ● regulators may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing, surveillance, or REMS requirements to maintain regulatory approval; ● flaws in a clinical trial may not become apparent until the trial is well advanced; ● clinical trials of our product candidates may produce negative or inconclusive results, or our studies may fail to reach the necessary level of statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; ● clinical trials of our product candidates may require us to provide follow-up patient visits for safety for a minimum of five years even if we were to terminate and/or abandon a product development program; ● our third-party contractors may fail to comply with regulatory requirements or the clinical trial protocol, or fail to meet their contractual obligations to us in a timely manner, or at all, or we may be required to engage in additional clinical trial site monitoring; ● we, the regulators, or IRBs may require the suspension or termination of clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects, or other unexpected characteristics (alone or in combination with other products) of the product candidate, or due to findings of undesirable effects caused by a chemically or mechanistically similar therapeutic or therapeutic candidate; ● changes in marketing approval and regulatory review policies or changes in or the enactment of additional statutes or regulations; ● the cost of clinical trials of and marketing applications for our product candidates may be greater than we anticipate; ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials may be insufficient or inadequate; ● we may decide, or regulators may require us, to conduct or gather, as applicable, additional clinical trials, analyses, reports, data, or preclinical trials, or we may abandon product development programs; ● we may fail to reach an agreement with regulators or IRBs regarding the scope, design, or implementation of our clinical trials.
Preclinical and early clinical studies may also reveal unfavorable product candidate characteristics, including safety concerns. 29 We may also experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: ● regulators or IRBs may not authorize us or our investigators to commence or continue a clinical trial, conduct a clinical trial at a prospective trial site, or amend trial protocols, or regulators or IRBs may require that we modify or amend our clinical trial protocols; ● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites and our contract research organizations (“CROs’); ● regulators may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing, surveillance, or REMS requirements to maintain regulatory approval; ● flaws in a clinical trial may not become apparent until the trial is well advanced; ● clinical trials of our product candidates may produce negative or inconclusive results, or our studies may fail to reach the necessary level of statistical significance, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; ● clinical trials of our product candidates may require us to provide follow-up patient visits for safety for a minimum of five years even if we were to terminate and/or abandon a product development program; ● our third-party contractors may fail to comply with regulatory requirements or the clinical trial protocol, or fail to meet their contractual obligations to us in a timely manner, or at all, or we may be required to engage in additional clinical trial site monitoring; ● we, the regulators, or IRBs may require the suspension or termination of clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks, undesirable side effects, or other unexpected characteristics (alone or in combination with other products) of the product candidate, or due to findings of undesirable effects caused by a chemically or mechanistically similar therapeutic or therapeutic candidate; ● changes in marketing approval and regulatory review policies or changes in or the enactment of additional statutes or regulations; ● the cost of clinical trials of and marketing applications for our product candidates may be greater than we anticipate; ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials may be insufficient or inadequate; ● we may decide, or regulators may require us, to conduct or gather, as applicable, additional clinical trials, analyses, reports, data, or preclinical trials, or we may abandon product development programs; ● we may fail to reach an agreement with regulators or IRBs regarding the scope, design, or implementation of our clinical trials.
New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations, and decisions, that relate to healthcare availability, methods of delivery or payment for products and services, or sales, marketing, or pricing, may limit our potential revenue, and we may need to revise our research and development programs.
New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations, and decisions, which relate to healthcare availability, methods of delivery or payment for products and services, or sales, marketing, or pricing, may limit our potential revenue, and we may need to revise our research and development programs.
Furthermore, efforts to ensure that business activities and business arrangements comply with applicable healthcare laws and regulations can be costly. Comparable laws and regulations apply internationally. 41 We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business.
Furthermore, efforts to ensure that business activities and business arrangements comply with applicable healthcare laws and regulations can be costly. Comparable laws and regulations apply internationally. 44 We are subject to extensive laws and regulations related to data privacy, and our failure to comply with these laws and regulations could harm our business.
Moreover, third-party payors may reimburse for products off-label even if not indicated for the orphan condition. 31 Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.
Moreover, third-party payors may reimburse for products off-label even if not indicated for the orphan condition. 33 Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.
Additionally, regulatory requirements governing cell and gene therapy products have evolved and may continue to change in the future. ● If we do not obtain the necessary U.S. or worldwide regulatory approvals to commercialize EB-101, we will not be able to sell EB-101. ● Even if we receive regulatory approval for EB-101, our lead drug candidate, we may not be able to successfully commercialize the product and the revenue that we generate from its sales, if any, may be limited. ● We may encounter substantial delays in our clinical studies or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.
Additionally, regulatory requirements governing cell and gene therapy products have evolved and may continue to change in the future. ● If we do not obtain the necessary U.S. or worldwide regulatory approvals to commercialize pz-cel, we will not be able to sell pz-cel. ● Even if we receive regulatory approval for pz-cel, our lead drug candidate, we may not be able to successfully manufacture or commercialize the product and the revenue that we generate from its sales, if any, may be limited. ● We may encounter substantial delays in our clinical studies, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.
We currently do not have a backup manufacturer to supply clinical trial material for EB-101. An alternative manufacturer would need to be qualified, through regulatory filings, which could result in delays to our clinical trial timeline. The regulatory authorities also may require additional clinical trials if a new manufacturer is relied upon for commercial production.
We currently do not have a backup manufacturer to supply clinical trial material for pz-cel. An alternative manufacturer would need to be qualified, through regulatory filings, which could result in delays to our clinical trial timeline. The regulatory authorities also may require additional clinical trials if a new manufacturer is relied upon for commercial production.
If we cannot obtain regulatory approval for EB-101, we will not be able to generate revenue from this product candidate. As a result, our ability to generate revenue from product commercialization may be further delayed. We cannot assure you that we will receive the approvals necessary to commercialize EB-101 or any other product candidate we may develop in the future.
If we cannot obtain regulatory approval for pz-cel, we will not be able to generate revenue from this product candidate. As a result, our ability to generate revenue from product commercialization may be further delayed. We cannot assure you that we will receive the approvals necessary to commercialize pz-cel or any other product candidate we may develop in the future.
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. There are several risks specific to the manufacturing process for EB-101 which require close attention.
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. There are several risks specific to the manufacturing process for pz-cel which require close attention.
For example, in September 2019, we received a clinical hold letter in connection with our Phase 3 clinical trial for EB-101 stating that the FDA would not provide approval for us to begin our planned Phase 3 clinical trial for EB-101 until we submitted additional data points on transport stability of EB-101 to clinical sites.
For example, in September 2019, we received a clinical hold letter in connection with our phase 3 clinical trial for pz-cel stating that the FDA would not provide approval for us to begin our planned phase 3 clinical trial for pz-cel until we submitted additional data points on transport stability of pz-cel to clinical sites.
We cannot assure you that we will receive the approvals necessary to commercialize any product candidate for sale outside the U.S. Even if we receive regulatory approval for EB-101, our lead drug candidate, we may not be able to successfully commercialize the product and the revenue that we generate from its sales, if any, may be limited.
We cannot assure you that we will receive the approvals necessary to commercialize any product candidate for sale outside the U.S. Even if we receive regulatory approval for pz-cel, our lead drug candidate, we may not be able to successfully commercialize the product and the revenue that we generate from its sales, if any, may be limited.
Generally, a change of more than 50% in the ownership of a company’s stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes. An ownership change may limit our ability to use our net operating loss carryforwards attributable to the period prior to the change.
Generally, a change of more than 50% in the ownership of a company’s stock, by value, over a three-year period constitutes an ownership change for U.S. federal income tax purposes or applicable state tax law. An ownership change may limit our ability to use our net operating loss carryforwards attributable to the period prior to the change.
In order to obtain FDA approval of EB-101 or any other product candidate requiring FDA approval, we must successfully complete an FDA BLA review. Obtaining FDA approval of any other product candidate generally requires significant research and testing, referred to as preclinical studies, as well as human tests, referred to as clinical trials.
In order to obtain FDA approval of pz-cel or any other product candidate requiring FDA approval, we must successfully complete an FDA BLA review. Obtaining FDA approval of any other product candidate generally requires significant research and testing, referred to as preclinical studies, as well as human tests, referred to as clinical trials.
Delays in obtaining regulatory approvals may: ● delay commercialization of, and our ability to derive product revenues from, EB-101 or any other product candidate; ● impose costly procedures on us; and ● diminish any competitive advantages that we may otherwise enjoy. 37 Even if we comply with all FDA requests, the FDA may ultimately reject our BLA.
Delays in obtaining regulatory approvals may: ● delay commercialization of, and our ability to derive product revenues from, pz-cel or any other product candidate; ● impose costly procedures on us; and ● diminish any competitive advantages that we may otherwise enjoy. Even if we comply with all FDA requests, the FDA may ultimately reject our BLA.
A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business. Risks related to with commercializing our product candidates If we do not obtain the necessary U.S. or worldwide regulatory approvals to commercialize EB-101, we will not be able to sell EB-101.
A competitor’s discovery of our trade secrets would impair our competitive position and have an adverse impact on our business. 39 Risks related to with commercializing our product candidates If we do not obtain the necessary U.S. or worldwide regulatory approvals to commercialize pz-cel, we will not be able to sell pz-cel.
If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties. ● Our business could suffer if we lose the services of, or fail to attract, key personnel. ● Trends toward managed health care and downward price pressures on medical products and services may limit our ability to profitably sell any drugs that we may develop. ● Our rights to develop and commercialize our product candidates are subject to, in part, the terms and conditions of licenses granted to us by others. ● If we are unable to obtain and maintain patent protection for our product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours. ● Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation. ● We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses. ● We may not be able to protect our intellectual property rights around the world. ● Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.
If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties. ● Trends toward managed health care and downward price pressures on medical products and services may limit our ability to profitably sell any drugs that we may develop. ● Our rights to develop and commercialize our product candidates are subject to, in part, the terms and conditions of licenses granted to us by others. ● If we are unable to obtain and maintain patent protection for our product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours. ● Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation. ● We may not be successful in obtaining necessary rights to our product candidates through acquisitions and in-licenses. ● Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.
In addition, the FDA could determine that we must test additional subjects or require that we conduct further studies with more subjects. We may never obtain regulatory approval for EB-101, or any other future potential product candidate.
In addition, the FDA could determine that we must test additional subjects or require that we conduct further studies with more subjects. We may never obtain regulatory approval for pz-cel, or any other future potential product candidate.
In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline. As of December 31, 2022, our cash, cash equivalents, restricted cash and short-term investments were $52.5 million.
In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline. 51 As of December 31, 2023, our cash, cash equivalents, restricted cash and short-term investments were $52.6 million.
The market price of our common stock could fluctuate significantly in response to various factors and events, including: ● our ability to integrate operations, technology, products, and services; ● our ability to execute our business plan; ● operating results below expectations; ● announcements concerning product development results, including clinical trial results; ● regulatory or legal developments in the U.S. or EU, including decisions from regulatory agencies relating to our product candidates; ● litigation or public concern about the safety of our potential products; ● our issuance of additional securities, including debt or equity or a combination thereof, which will be necessary to fund our operating expenses; ● announcements of technological innovations or new products by us or our competitors; ● loss of any strategic relationship; ● industry developments, including, without limitation, changes in healthcare policies or practices or third-party reimbursement policies; ● economic and other external factors; ● period-to-period fluctuations in our financial results; and ● whether an active trading market in our common stock develops and is maintained. 52 In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.
The market price of our common stock could fluctuate significantly in response to various factors and events, including: ● our ability to integrate operations, technology, products, and services; ● our ability to execute our business plan; ● operating results below expectations; ● announcements concerning product development results, including clinical trial results; ● regulatory or legal developments in the U.S. or EU, including decisions from regulatory agencies relating to our product candidates; ● litigation or public concern about the safety of our potential products; ● our issuance of additional securities, including debt or equity or a combination thereof, which will be necessary to fund our operating expenses; ● announcements of technological innovations or new products by us or our competitors; ● loss of any strategic relationship; ● industry developments, including, without limitation, changes in healthcare policies or practices or third-party reimbursement policies; ● economic and other external factors; ● period-to-period fluctuations in our financial results; and ● whether an active trading market in our common stock develops and is maintained.
Disruptions in our manufacturing process may delay or disrupt our commercialization efforts. 33 If we or any of our vendors, contract laboratories or suppliers are found to be out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we implement corrective actions or work with these third parties to remedy the violation or while we work to identify suitable replacement vendors, contract laboratories or suppliers.
If we or any of our vendors, contract laboratories or suppliers are found to be out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we implement corrective actions or work with these third parties to remedy the violation or while we work to identify suitable replacement vendors, contract laboratories or suppliers.
Patient enrollment is affected by factors including: ● severity of the disease under investigation; ● design of the study protocol; ● size and nature of the patient population; ● eligibility criteria for and design of the study in question; ● perceived risks and benefits of the product candidate under study, including as a result of adverse effects observed in similar or competing therapies; ● proximity and availability of clinical study sites for prospective patients; ● availability of competing therapies and clinical studies; ● efforts to facilitate timely enrollment in clinical studies; ● ability to compensate patients for their time and effort; ● risk that enrolled patients will drop out before completion or not return for post-treatment follow-up; ● inability to obtain or maintain patient informed consents; 29 ● effectiveness of publicity created by clinical trial sites regarding the trial; ● patient referral practices of physicians; and ● ability to monitor patients adequately during and after treatment.
Patient enrollment is affected by factors including: ● severity of the disease under investigation; ● design of the study protocol; ● size and nature of the patient population; ● eligibility criteria for and design of the study in question; ● perceived risks and benefits of the product candidate under study, including as a result of adverse effects observed in similar or competing therapies; ● proximity and availability of clinical study sites for prospective patients; ● availability of competing therapies and clinical studies; ● efforts to facilitate timely enrollment in clinical studies; ● ability to compensate patients for their time and effort; ● risk that enrolled patients will drop out before completion or not return for post-treatment follow-up; ● inability to obtain or maintain patient informed consents; ● effectiveness of publicity created by clinical trial sites regarding the trial; ● patient referral practices of physicians; and ● ability to monitor patients adequately during and after treatment. 31 We also plan to seek initial marketing approval in the European Union in addition to the U.S.
If approved for marketing, the commercial success of EB-101 will depend upon the product’s acceptance by the medical community, including physicians, patients and healthcare payors.
If approved for marketing, the commercial success of pz-cel will depend upon the product’s acceptance by the medical community, including physicians, patients and healthcare payors.
As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may become subject to limitations, which could potentially result in increased future tax liability for us. As of December 31, 2022, we had net operating loss carryforwards aggregating approximately $359.0 million.
As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal and state taxable income may become subject to limitations, which could potentially result in increased future tax liability for us. As of December 31, 2023, we had net operating loss carryforwards aggregating $377.5 million.
If we are unable to obtain PTE or the duration of any such extension is less than we request, the period during which we will have the right to exclusively market our product may be shortened and our competitors may obtain approval of competing products following our patent expiration, and our revenue could be materially reduced. 49 Intellectual property rights do not necessarily address all potential threats.
If we are unable to obtain PTE or the duration of any such extension is less than we request, the period during which we will have the right to exclusively market our product may be shortened and our competitors may obtain approval of competing products following our patent expiration, and our revenue could be materially reduced.
In the next couple of years, we expect limited revenues from product sales, if any, and any amounts that we receive under strategic partnerships and research or drug development collaborations that we may establish and, as a result, we may be unable to achieve or maintain profitability in the future or to achieve significant revenues in order to fund our operations. 51 Failure to achieve and maintain effective internal controls could have a material adverse effect on our business.
In the next couple of years, we expect limited revenues from product sales, if any, and any amounts that we receive under strategic partnerships and research or drug development collaborations that we may establish and, as a result, we may be unable to achieve or maintain profitability in the future or to achieve significant revenues in order to fund our operations.
Moreover, any such designations may not lead to faster development or regulatory review or approval and it does not increase the likelihood that our product candidates will receive marketing approval. ● While certain of our product candidates have received orphan drug designation from the FDA, there is no guarantee that we will be able to maintain this designation, receive this designation for any of our other product candidates, or receive or maintain any corresponding benefits, including periods of exclusivity. ● Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny. ● The COVID-19 pandemic and efforts to reduce its spread have affected our operations and significantly impacted worldwide economic conditions, and could continue to have a material effect on our operations, business, and financial condition. ● We could experience production problems in our manufacturing facilities that result in delays in our development or commercialization programs.
Moreover, any such designations may not lead to faster development or regulatory review or approval and it does not increase the likelihood that our product candidates will receive marketing approval. ● While certain of our product candidates have received orphan drug designation from the FDA, there is no guarantee that we will be able to maintain this designation, receive this designation for any of our other product candidates, or receive or maintain any corresponding benefits, including periods of exclusivity. ● Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny. ● We could experience production problems in our manufacturing facility that result in delays in our development or commercialization programs.
Lower prices for pharmaceutical products or reduced profitability may result from: ● third-party-payors’ increasing challenges to the prices charged for medical products and services, including by limiting coverage and reimbursement and requiring payment of increased manufacturer rebates; ● the trend toward managed health care in the U.S. and the concurrent growth of Health Maintenance Organizations (“HMOs”) and similar organizations that can control or significantly influence the purchase of healthcare services and products; and ● state, federal, and foreign legislative proposals to control drug prices, reform healthcare or reduce government insurance programs.
Lower prices for pharmaceutical products or reduced profitability may result from: ● third-party-payors’ increasing challenges to the prices charged for medical products and services, including by limiting coverage and reimbursement and requiring payment of increased manufacturer rebates; ● the trend toward managed health care in the U.S. and the concurrent growth of Health Maintenance Organizations (“HMOs”) and similar organizations that can control or significantly influence the purchase of healthcare services and products; and ● state, federal, and foreign legislative proposals to control drug prices, reform healthcare or reduce government insurance programs. 45 The cost containment measures that healthcare providers are instituting, including practice protocols and guidelines and clinical pathways, and the effect of any healthcare reform, could limit our ability to profitably sell any drugs that we may successfully develop.
The degree of market acceptance for our drug candidate will depend on a number of factors, including: ● actual and perceived efficacy and safety of EB-101; ● relative convenience, dosing burden and ease of administration; ● potential or perceived advantages or disadvantages over alternative treatments; ● potential post-marketing commitments imposed by regulatory authorities, such as patient registries; ● strength of sales, marketing and distribution support; ● price of our future products, both in absolute terms and relative to alternative treatments; ● the effect of current and future healthcare laws on EB-101; and ● availability of coverage and reimbursement from government and other third party payers.
The degree of market acceptance for our drug candidate will depend on a number of factors, including: ● actual and perceived efficacy and safety of pz-cel; ● relative convenience, dosing burden and ease of administration; ● potential or perceived advantages or disadvantages over alternative treatments; ● potential post-marketing commitments imposed by regulatory authorities, such as patient registries; ● strength of sales, marketing and distribution support; ● price of our future products, both in absolute terms and relative to alternative treatments; ● the effect of current and future healthcare laws on pz-cel; and ● availability of coverage and reimbursement from government and other third party payers. 40 If our drug candidate is approved but does not achieve an adequate level of acceptance by physicians, healthcare payors and patients, we may not generate sufficient revenue and we may not be able to achieve or sustain profitability.
If we are slow or unable to adapt to changes in existing requirements, standards of care, or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and be subject to regulatory enforcement action. 32 Should any of the above actions take place, they could adversely affect our ability to achieve or sustain profitability.
If we are slow or unable to adapt to changes in existing requirements, standards of care, or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and be subject to regulatory enforcement action.
Only a few gene therapy products have been approved in the U.S. and the EU. We have concentrated our therapeutic product research and development efforts on our cell and gene therapy platform, and our future success depends on the successful development of this therapeutic approach.
We have concentrated our therapeutic product research and development efforts on our cell and gene therapy platform, and our future success depends on the successful development of this therapeutic approach.
The FDA’s policies may change, and additional government regulations may be enacted, that could prevent, limit or delay regulatory approval of our product candidates, that could limit the marketability of our product candidates, or that could impose additional regulatory obligations on us.
The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenues. 34 The FDA’s policies may change, and additional government regulations may be enacted, that could prevent, limit or delay regulatory approval of our product candidates, that could limit the marketability of our product candidates, or that could impose additional regulatory obligations on us.
We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all.
We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of testing.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, reputation, financial condition, results of operations and prospects. 47 Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, reputation, financial condition, results of operations and prospects.
The widespread outbreak of an illness, communicable disease, or any other public health crisis could adversely affect our business, results of operations and financial condition. We could be negatively impacted by the widespread outbreak of an illness, communicable disease, or any other public health crisis that results in economic or trade disruptions, including the disruption of global supply chains.
We could be negatively impacted by the widespread outbreak of an illness, communicable disease, or any other public health crisis that results in economic or trade disruptions, including the disruption of global supply chains. The COVID-19 pandemic negatively impacted the economy on a global, national, and local level, disrupted global supply chains, and created volatility and disruption of financial markets.
As a result, the issuance, scope, validity, enforceability, and commercial value of our and our licensors’ patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or product candidates or which effectively prevent others from commercializing competitive technologies and product candidates.
Our pending and future patent applications may not result in patents being issued which protect our technology or product candidates or which effectively prevent others from commercializing competitive technologies and product candidates.
In such instances, we may need to enter into an appropriate replacement third-party relationship, which may not be readily available or on acceptable terms, which would cause additional delay or increased expense prior to the approval of our product candidates and would thereby have a material adverse effect on our business, financial condition, results of operations and prospects.
In such instances, we may need to enter into an appropriate replacement third-party relationship, which may not be readily available or on acceptable terms, which would cause additional delay or increased expense prior to the approval of our product candidates and would thereby have a material adverse effect on our business, financial condition, results of operations and prospects. 36 In addition, if the FDA or a comparable foreign regulatory authority does not approve our or a third party’s facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain and maintain regulatory approval for or market our product candidates, if approved.
If we fail to comply with our obligations under these license agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to develop, manufacture, or market products covered by the license or may face other penalties under the agreements.
If any dispute over in-licensed intellectual property prevents or impairs our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates. 46 If we fail to comply with our obligations under these license agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to develop, manufacture, or market products covered by the license or may face other penalties under the agreements.
Our reliance on these third parties for research and development activities reduces our control over these activities but does not relieve us of our responsibility to ensure compliance with all required regulations and study protocols.
In some cases, these third parties are academic, research or similar institutions that may not apply the same quality control protocols utilized in certain commercial settings. 38 Our reliance on these third parties for research and development activities reduces our control over these activities but does not relieve us of our responsibility to ensure compliance with all required regulations and study protocols.
If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could harm our business significantly.
If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could harm our business significantly. Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court. We may not be able to protect our trade secrets in court.
Accordingly, our competitors may succeed in obtaining FDA or other regulatory approvals for drug candidates more rapidly than we can. Companies that complete clinical trials, obtain required regulatory agency approvals, and commence commercial sale of their drugs before their competitors may achieve a significant competitive advantage.
Companies that complete clinical trials, obtain required regulatory agency approvals, and commence commercial sale of their drugs before their competitors may achieve a significant competitive advantage.
These current or future laws and regulations may impair our research, development, or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could harm our business, financial condition, results of operations and prospects.
Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could harm our business, financial condition, results of operations and prospects. The widespread outbreak of an illness, communicable disease, or any other public health crisis could adversely affect our business, results of operations and financial condition.
Effective internal controls are necessary for us to provide reliable financial reports. If we cannot provide reliable financial reports, our operating results could be harmed. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Failure to achieve and maintain effective internal controls could have a material adverse effect on our business. Effective internal controls are necessary for us to provide reliable financial reports. If we cannot provide reliable financial reports, our operating results could be harmed. All internal control systems, no matter how well designed, have inherent limitations.
Consequently, we will not be able to obtain any such patents to prevent others from using our technology for, and developing and marketing competing products to treat, these indications.
Consequently, we will not be able to obtain any such patents to prevent others from using our technology for, and developing and marketing competing products to treat, these indications. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenues.
Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity.
Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. Preclinical and early clinical studies may also reveal unfavorable product candidate characteristics, including safety concerns.
The results of preclinical studies, preliminary study results, and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials or the ultimately completed trial. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials.
As a result, our competitors may successfully develop technologies and drugs that are more effective or less costly than any that we are developing, which could render our technology and future products obsolete and noncompetitive. 39 In addition, some of our competitors have greater experience than we do in conducting preclinical and clinical trials and obtaining FDA and other regulatory approvals.
Many of our competitors have and employ greater financial and other resources, including larger research and development, marketing, and manufacturing organizations. As a result, our competitors may successfully develop technologies and drugs that are more effective or less costly than any that we are developing, which could render our technology and future products obsolete and noncompetitive.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biologic and hazardous materials. 35 In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, which have tended to become more stringent over time.
We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biologic and hazardous materials.
If we, our collaborators, or any third-party manufacturers we engage fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
Additionally, if supply from our facility is interrupted, there could be a significant disruption in commercial supply of any of our product candidates for which we obtain marketing approval, and in clinical supply for our product candidates. 37 If we, our collaborators, or any third-party manufacturers we engage fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
We may also experience delays in developing a sustainable, reproducible and commercial-scale manufacturing process or transferring that process to commercial partners, which may prevent us from completing our clinical studies or commercializing our products on a timely or profitable basis, if at all.
We may also experience delays in developing a sustainable, reproducible and commercial-scale manufacturing process or transferring that process to commercial partners, which may prevent us from completing our clinical studies or commercializing our products on a timely or profitable basis, if at all. 28 In addition, the clinical study requirements of the FDA, the EMA, and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type, complexity, novelty and intended use and market of the potential products.
Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results, or cause us to fail to meet our reporting obligations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 52 Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results, or cause us to fail to meet our reporting obligations.
Lot failures or product recalls could cause us to delay product launches or clinical trials, which could be costly to us and otherwise harm our business, financial condition, results of operations and prospects.
Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls for approved and marketed products. 35 Lot failures or product recalls could cause us to delay product launches or clinical trials, which could be costly to us and otherwise harm our business, financial condition, results of operations and prospects.
Based upon these current operating plans, our ability to access additional financial resources and/or our financial flexibility to further reduce operating expenses if required, we believe that we have sufficient resources to fund operations through at least the next 12 months from the date of the issuance of our consolidated financial statements.
Based upon our existing cash resources and our recently announced credit facility of up to $50 million, we believe that we have sufficient resources to fund operations through at least the next 12 months from the date of the issuance of our consolidated financial statements.
Further, the cost of compliance with post-approval regulations may have a negative effect on our operating results and financial condition. Risks related to manufacturing We could experience production problems in our manufacturing facilities that result in delays in our development or commercialization programs or otherwise adversely affect our business.
Risks related to manufacturing We could experience production problems in our manufacturing facilities that result in delays in our development or commercialization programs or otherwise adversely affect our business.
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. We have not paid cash dividends in the past and do not expect to pay cash dividends in the foreseeable future.
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. Our ability to use our net operating loss carry forwards may be subject to limitation.
Should any of these events occur, they could significantly harm our business, financial condition, results of operations and prospects. Risks related to our financial condition and capital requirements We have experienced a history of losses; we expect to incur future losses and we may be unable to obtain necessary additional capital to fund operations in the future.
Risks related to our financial condition and capital requirements We have experienced a history of losses; we expect to incur future losses and we may be unable to obtain necessary additional capital to fund operations in the future. We have recorded minimal revenue to date and have incurred an accumulated deficit of $749.5 million through December 31, 2023.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.
We require substantial capital for our development programs and operating expenses, to pursue regulatory clearances and to prosecute and defend our intellectual property rights. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.
Under some circumstances, the FDA, EMA or other foreign regulatory authorities may require that we not distribute a lot until the agency authorizes its release. Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls for approved and marketed products.
Under some circumstances, the FDA, EMA or other foreign regulatory authorities may require that we not distribute a lot until the agency authorizes its release.
Our losses have resulted principally from costs incurred in research and development activities related to our efforts to develop clinical drug candidates and from the associated administrative costs. We require substantial capital for our development programs and operating expenses, to pursue regulatory clearances and to prosecute and defend our intellectual property rights.
The net loss for the year ended December 31, 2023, was $54.2 million. Our losses have resulted principally from costs incurred in research and development activities related to our efforts to develop clinical drug candidates and from the associated administrative costs.
It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. 44 The patent position of biotechnology and pharmaceutical companies generally Is highly uncertain, involves complex legal and factual questions and has, in recent years, been the subject of much litigation.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has, in recent years, been the subject of much litigation. As a result, the issuance, scope, validity, enforceability, and commercial value of our and our licensors’ patent rights are highly uncertain.
Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management. 48 Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates. Our success depends heavily on intellectual property, especially on patents.
Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management. 50 If we do not obtain patent term extension and data exclusivity for our product candidates, our business may be harmed.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters are located in New York, New York, where we currently lease 10,400 square feet of office space. That lease expires in September 2025. We also lease 45,705 square feet of manufacturing, laboratory and office space in Cleveland, Ohio. That lease expires in December 2030.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters are located in Cleveland, Ohio, where we currently lease 45,705 square feet of manufacturing, laboratory and office space. That lease expires in December 2030. We also lease 10,400 square feet of office space located in New York, New York. That lease expires in December 2030 and has been sublet as of December 31, 2023.
We believe that our facilities are sufficient to meet our current needs and that suitable space will be available as and when needed.
We believe that our facilities are sufficient to meet our current needs and that suitable space will be available as and when needed for potential commercialization.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 54 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock has traded on the Nasdaq Capital Market (“Nasdaq”) under the symbol “ABEO” since June 22, 2015.
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Item 4. Mine Safety Disclosures 56 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 57 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 58 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 69 Item 8. Financial Statements and Supplementary Data 69
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We have never declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
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The payment of dividends, if any, in the future is within the discretion of our Board of Directors and will depend on our earnings, capital requirements and financial condition and other relevant facts. We currently intend to retain all future earnings, if any, to finance the development and growth of our business.
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The number of record holders of our common stock as of March 21, 2023 was approximately 39. Equity Compensation Plan Information The following table sets forth, as of December 31, 2022, information about shares of common stock outstanding and available for issuance under our existing equity compensation plans.
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Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders: 2015 Equity Incentive Plan 237,570 $ 37.11 109,544 2005 Equity Incentive Plan 3,200 $ 32.00 — Equity compensation plans not approved by security holders: — $ — — Total equity compensation plans 240,770 $ 37.04 109,544 Recent Sales of Unregistered Securities None.
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Issuer Repurchases of Equity Securities The following table provides information about purchases of equity securities that are registered pursuant to Section 12 of the Exchange Act for the three months ended December 31, 2022: Number of securities to Total number of shared (our units) purchased Weighted average Average price paid per share (or unit) (a) Shares delivered or withheld pursuant to restricted stock awards October 1, 2022 - October 31, 2022 207 $ 4.30 November 1, 2022 - November 30, 2022 — $ — December 1, 2022 - December 31, 2022 — $ — 207 $ 4.30 (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 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur future capital requirements and adequacy of available funds depend on many factors, including: ● 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; ● any continuing impact to our business, operations, and clinical programs from the COVID-19 pandemic and government actions related thereto; ● 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. 60 Due to uncertainties and certain of the risks described above, our ability to successfully commercialize our product candidates, our ability to obtain applicable regulatory approval to market our product candidates, our ability to obtain necessary additional capital to fund operations in the future, our ability to successfully manufacture our products and our product candidates in clinical quantities or for commercial purposes, government regulation to which we are subject, the uncertainty associated with preclinical and clinical testing, intense competition that we face, the potential necessity of licensing technology from third parties and protection of our intellectual property, 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.
Biggest changeDue to uncertainties and certain of the risks described above, our ability to successfully commercialize our product candidates, our ability to obtain applicable regulatory approval to market our product candidates, our ability to obtain necessary additional capital to fund operations in the future, our ability to successfully manufacture our products and our product candidates in clinical quantities or for commercial purposes, government regulation to which we are subject, the uncertainty associated with preclinical and clinical testing, intense competition that we face, the potential necessity of licensing technology from third parties and protection of our intellectual property, 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.
Investing activities Net cash used in investing activities was $24.0 million for the year ended December 31, 2022, primarily comprised of purchases of short-term investments of $78.2 million and capital expenditures of $0.1 million, partially offset by proceeds from maturities of short-term investments of $52.6 million and proceeds from the disposal of property and equipment of $1.7 million.
Net cash used in investing activities was $24.0 million for the year ended December 31, 2022, primarily comprised of purchases of short-term investments of $78.2 million and capital expenditures of $0.1 million, partially offset by proceeds from maturities of short-term investments of $52.6 million and proceeds from the disposal of property and equipment of $1.7 million.
Financing activities Net cash provided by financing activities was $43.2 million for the year ended December 31, 2022, primarily comprised of proceeds of $12.8 million from open market sales of common stock pursuant to the ATM Agreement (as defined below) and proceeds of $34.1 million from a private offering of common stock and warrants on November 3, 2022, partially offset by the proceeds and redemption of our convertible redeemable preferred stock.
Net cash provided by financing activities was $43.2 million for the year ended December 31, 2022, primarily comprised of proceeds of $12.8 million from open market sales of common stock pursuant to the ATM Agreement (as defined below) and proceeds of $34.1 million from a private offering of common stock and warrants on November 3, 2022, partially offset by the proceeds and redemption of our convertible redeemable preferred stock.
We 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 us and determined that the license has significant stand-alone functionality. Furthermore, we have no ongoing activities associated with the license to support or maintain the license’s utility.
We 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 us and determined that the license has significant stand-alone functionality. Furthermore, we have no ongoing activities associated with the license to support or maintain the license’s utility.
Based on this, we determined that the pattern of transfer of control of the license to Taysha was at a point in time.
Based on this, we determined that the pattern of transfer of control of the license to Taysha was at a point in time.
We expect to incur losses for the next several years as we continue to invest in 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.
We expect to 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.
In accordance with the Settlement Agreement, we agreed to pay REGENXBIO a total of $30 million, payable as follows: (1) $20 million payable that was paid in 2021 after execution of the Settlement Agreement, (2) $5 million on the first anniversary of the effective date of the Settlement Agreement, and (3) $5 million upon the earlier of: (i) the third anniversary of the effective date of the Settlement Agreement or (ii) the closing of a Strategic Transaction, as defined in the Settlement Agreement.
In accordance with the Settlement Agreement, we agreed to pay REGENXBIO a total of $30 million, payable as follows: (1) $20 million payable that was paid in 2021 after execution of the Settlement Agreement, (2) $5 million on the first anniversary of the effective date of the Settlement Agreement that was paid in 2022, and (3) $5 million upon the earlier of: (i) the third anniversary of the effective date of the Settlement Agreement or (ii) the closing of a Strategic Transaction, as defined in the Settlement Agreement.
At inception, we evaluated whether the milestone conditions had been achieved and if it was probable that a significant revenue reversal would not occur before recognizing the associated revenue and determined that these milestone payments were not within our control or the licensee’s control, such as regulatory approvals, and were not considered probable of being achieved until those approvals were received.
At inception, we evaluated whether the milestone conditions had been achieved and if it was probable that a significant cumulative revenue reversal would not occur before recognizing the associated revenue and determined that these milestone payments were not within our control or the licensee’s control, such as regulatory approvals, and were not considered probable of being achieved until those approvals were received.
Accordingly, at inception, we fully constrained the $26.0 million of event-based milestone payments until such time that it is probable that significant revenue reversal would not occur. The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license is deemed to be the predominant item to which the royalties relate.
Accordingly, at inception, we fully constrained the $26.0 million of event-based milestone payments until such time that it is probable that significant cumulative revenue reversal would not occur. The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license is deemed to be the predominant item to which the royalties relate.
We determined that these milestone payments are not within our control or the licensee’s control, such as regulatory approvals, and are not considered probable of being achieved until those approvals are received. Accordingly, we have fully constrained the $26.5 million of event-based milestone payments until such time that it is probable that significant revenue reversal would not occur.
We determined that these milestone payments are not within our control or the licensee’s control, such as regulatory approvals, and are not considered probable of being achieved until those approvals are received. Accordingly, we have fully constrained the $26.5 million of event-based milestone payments until such time that it is probable that significant cumulative revenue reversal would not occur.
We use the Black-Scholes option pricing model to determine the fair value of options as of the grant date and the Hull White I lattice model as of any option repricing dates. The models used to determine the fair value of options includes assumptions for expected volatility, risk-free interest rate, dividend yield and estimated expected term.
We use the Black-Scholes option pricing model to determine the fair value of options as of the grant date and the Hull White I lattice model as of any option repricing dates. The model used to determine the fair value of options includes assumptions for expected volatility, risk-free interest rate, dividend yield and estimated expected term.
The event-based milestone payments are based on certain development and regulatory events occurring. We evaluated whether the milestone conditions have been achieved and if it is probable that a significant revenue reversal would not occur before recognizing the associated revenue.
The event-based milestone payments are based on certain development and regulatory events occurring. We evaluated whether the milestone conditions have been achieved and if it is probable that a significant cumulative revenue reversal would not occur before recognizing the associated revenue.
The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time.
The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time.
Impairment of construction-in-progress Impairment of construction-in-progress was $1.8 million for the year ended December 31, 2022, as compared to nil in the same period of 2021. The construction-in-progress was for a facility for the ABO-102 and ABO-101 development programs.
Impairment of construction-in-progress Impairment of construction-in-progress was nil for the year ended December 31, 2023, as compared to $1.8 million in the same period of 2022. The construction-in-progress was for a facility for the ABO-102 and ABO-101 development programs.
However, contingent payments related to these license agreements are not disclosed as the satisfaction of these contingent payments is uncertain as of December 31, 2022 and, if satisfied, the timing of payment for these amounts was not reasonably estimable as of December 31, 2022.
However, contingent payments related to these license agreements are not disclosed as the satisfaction of these contingent payments is uncertain as of December 31, 2023 and, if satisfied, the timing of payment for these amounts was not reasonably estimable as of December 31, 2023.
Impairment of licensed technology Impairment of licensed technology was $1.4 million for the year ended December 31, 2022, as compared to nil in the same period of 2021.
Impairment of licensed technology Impairment of licensed technology was nil for the year ended December 31, 2023, as compared to $1.4 million in the same period of 2022.
The licensed technology was for the ABO-102 and ABO-101 development programs, which, as a result of our shift in priorities, we determined the licensed technology had no future value and thus recorded impairment of $1.4 million for the year ended December 31, 2022.
The licensed technology was for the ABO-102 and ABO-101 development programs and as a result of our shift in priorities in 2022, we determined the remaining value of the licensed technology had no future value and thus recorded an impairment charge of $1.4 million for the year ended December 31, 2022.
As of December 31, 2022, we have recorded the payable to licensor in the contractual obligations as the one remaining payments due to REGENXBIO under the Settlement Agreement. In addition, we are also party to other license agreements, which include contingent payments.
As of December 31, 2023, we have recorded the payable to licensor in the contractual obligations as the one remaining payment due to REGENXBIO under the Settlement Agreement. 64 In addition, we are also party to other license agreements, which include contingent payments.
In 2021, we did not impair any licensed technology. Impairment of Long-Lived Assets Long-Lived Assets consist of property and equipment, licensed technology, and right-of-use (“ROU”) assets. We test our long-lived assets for impairment on an annual basis, or when events and circumstances indicate that the carrying value of an asset or group of assets may not be fully recoverable.
Impairment of Long-Lived Assets Long-Lived Assets consist of property and equipment, licensed technology, and right-of-use (“ROU”) assets. We test our long-lived assets for impairment on an annual basis, or when events and circumstances indicate that the carrying value of an asset or group of assets may not be fully recoverable.
General and administrative 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) and other general operating expenses not otherwise included in research and development expenses.
General and administrative 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), pre-commercial launch activity costs and other general operating expenses not otherwise included in research and development expenses.
Preclinical Pipeline Our preclinical programs are investigating the use of novel AAV capsids in AAV-based therapies for serious eye diseases, including ABO-504 for Stargardt disease, ABO-503 for X-linked retinoschisis (XLRS) and ABO-505 for autosomal dominant optic atrophy (ADOA).
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”).
ASC 842 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases . We determine if an arrangement is a lease at inception or when amended.
Leases We account for leases pursuant to ASC 842, Leases (“ASC 842”). ASC 842 requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases . We determine if an arrangement is a lease at inception or when amended.
A portion of the impairment was related to a lease for a future manufacturing facility for the ABO-102 and ABO-101 development programs, which, as a result of our shift in priorities, we determined the portion of this lease had no future value and thus recorded impairment of $1.6 million for the for the year ended December 31, 2022.
The loss on operating lease right-of-use assets for 2022 was related to a lease for a future manufacturing facility for the ABO-102 and ABO-101 development programs, which, as a result of our shift in priorities in 2022, we determined the remaining value of the portion of this lease had no future value and thus recorded an impairment charge of $1.6 million for the year ended December 31, 2022.
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 change in the fair value of warrant liabilities resulted in a gain of $11.4 million due primarily to the reduction in our stock price year over the year and a shorter term.
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 change in the fair value of warrant liabilities is primarily due to the fluctuation in our stock price year over year and a shorter term.
The increase resulted from higher earnings on short-term investments driven by higher interest rates and a higher average balance of short-term investments. Interest expense Interest expense was $0.7 million for the year ended December 31, 2022, as compared to $3.7 million in the same period of 2021.
The increase resulted from higher earnings on short-term investments driven by higher interest rates and increased average short-term investment balances. Interest expense Interest expense was $0.4 million for the year ended December 31, 2023, as compared to $0.7 million in the same period of 2022.
Stock option-based compensation expense recognized for the years ended December 31, 2022 and 2021 was approximately $2.0 million and $5.3 million, respectively. Restricted stock-based compensation expense recognized for the years ended December 31, 2022 and 2021 was approximately $1.1 million and $3.7 million, respectively. Warrants We have issued warrants associated with capital raises from time to time.
Restricted stock-based compensation expense recognized for the years ended December 31, 2023 and 2022 was $3.4 million and $1.1 million, respectively. Warrants We have issued warrants associated with capital raises from time to time.
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. 61 Leases We account for leases pursuant to ASC 842, Leases (“ASC 842”).
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.
As a result of our shift in priorities, we determined the construction-in-progress facility had no future value and thus recorded impairment of $1.8 million for the for the year ended December 31, 2022, which was net of a cash refund from the builder of approximately $1.5 million.
As a result of our shift in priorities, we determined the remaining value of the construction-in-progress facility had no future value and thus, we recorded impairment of $1.8 million for the for the year ended December 31, 2022, which was net of a cash refund from the builder of $1.5 million. 61 Interest income Interest income was $2.1 million for the year ended December 31, 2023, as compared to $0.4 million in the same period of 2022.
Revenue Recognition We account for revenue under ASC 606, Revenue from Contracts with Customers , (“ASC 606”). We recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
We recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.
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 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.
Impairment of right-of-use lease assets Impairment of right-of-use lease assets was $2.5 million for the year ended December 31, 2022, as compared to nil in the same period of 2021.
Loss/(gain) on operating lease right-of-use assets The gain on operating lease right-of-use assets was $1.1 million for the year ended December 31, 2023, as compared to a loss on operating lease right-of-use assets of $2.5 million in the same period of 2022.
The liability classified warrants are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded in the consolidated statements of operations and comprehensive loss.
Inputs used in the model include assumptions for expected volatility, risk-free interest rate, dividend yield and estimated expected term. The liability classified warrants are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded in the consolidated statements of operations and comprehensive loss.
To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses. 64 Share-Based Compensation Expense We account for share-based compensation expense in accordance with ASC 718, Stock Based Compensation .
To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses. Share-Based Compensation Expense We account for share-based compensation expense in accordance with ASC 718, Stock Based Compensation . We have share-based compensation plans under which incentive and qualified stock options and restricted shares may be granted to employees, directors, and consultants.
LIQUIDITY AND CAPITAL RESOURCES Cash Flows for the Years Ended December 31, 2022 and 2021 For the year ended December 31, ($ in thousands) 2022 2021 Total cash, cash equivalents and restricted cash (used in) provided by: Operating activities $ (43,483 ) $ (65,665 ) Investing activities (23,964 ) 66,062 Financing activities 43,173 24,861 Net (decrease) increase in cash, cash equivalents and restricted cash $ (24,274 ) $ 25,258 Operating activities Net cash used in operating activities was $43.5 million for the year ended December 31, 2022, primarily comprised of our net loss of $39.7 million and decrease in operating assets and liabilities of $5.9 million and net non-cash charges of $2.1 million.
LIQUIDITY AND CAPITAL RESOURCES Cash Flows for the Years Ended December 31, 2023 and 2022 For the year ended December 31, ($ in thousands) 2023 2022 Total cash, cash equivalents and restricted cash (used in) provided by: Operating activities $ (37,009 ) $ (43,483 ) Investing activities 208 (23,964 ) Financing activities 37,057 43,173 Net increase (decrease) in cash, cash equivalents and restricted cash $ 256 $ (24,274 ) Operating activities Net cash used in operating activities was $37.0 million for the year ended December 31, 2023, primarily comprised of our net loss of $54.2 million and increases in operating assets and liabilities of $1.8 million partially offset by net non-cash charges of $19.0 million.
The VIITAL™ study met its two co-primary efficacy endpoints demonstrating statistically significant, clinically meaningful improvements in wound healing and pain reduction in large chronic RDEB wounds. Based on the positive topline results, we intend to submit a Biologics License Application (“BLA”) for EB-101 to the U.S.
The VIITAL™ study met both its two co-primary efficacy endpoints demonstrating statistically significant, clinically meaningful improvements in wound healing and pain reduction in large chronic RDEB wounds. On September 25, 2023, we submitted a Biologics License Application (“BLA”) for pz-cel to the U.S. Food and Drug Administration (“FDA”).
Commitments related to the license agreements include contingent payments that will become payable if and when certain development, regulatory and commercial milestones are achieved. During the next 12 months, we do not expect to make milestone payments related to such license agreements.
Commitments related to the license agreements include contingent payments that will become payable if and when certain development, regulatory and commercial milestones are achieved. During the next 12 months, certain contingent payments could become due upon potential BLA approval and sales of pz-cel related to such license agreements.
The decrease in expenses was primarily due to: ● decreased professional fees of $3.9 million; ● decreased non-cash stock-based compensation of $2.7 million; partially offset by ● increased other costs of $0.8 million; and ● increased salary and related costs of $1.4 million.
The increase in expenses was primarily due to: ● increased salary and related costs of $1.8 million; ● increased pre-commercial preparation costs of $1.2 million; ● increased non-cash stock-based compensation of $1.6 million; partially offset by ● decreased other costs such as insurance, rent and offering costs of $2.9 million.
Our principal source of liquidity is cash, cash equivalents, restricted cash and short-term investments, collectively referred to as our cash resources. As of December 31, 2022, our cash resources were $52.5 million.
We have historically funded our operations primarily through sales of common stock. Our principal source of liquidity is cash, cash equivalents, restricted cash and short-term investments, collectively referred to as our cash resources. As of December 31, 2023, our cash resources were $52.6 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.
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 3,659,882 shares of our common stock under the ATM Agreement and received $14.4 million of net proceeds during the year ended December 31, 2023.
Our lead clinical program is EB-101, an autologous, engineered cell therapy currently in development for recessive dystrophic epidermolysis bullosa (“RDEB”). In November 2022, we announced positive topline data from the VIITAL™ study evaluating the efficacy, safety and tolerability of EB-101.
Our lead clinical program is pz-cel, investigational autologous, COL7A1 gene-corrected epidermal sheets, currently in development for recessive dystrophic epidermolysis bullosa (“RDEB”). We have announced positive data from the VIITAL™ study evaluating the efficacy, safety and tolerability of pz-cel.
We have two share-based compensation plans under which incentive and qualified stock options and restricted shares may be granted to employees, directors, and consultants. We measure the cost of the employee/director/consultant services received in exchange for an award of equity instruments based on the fair value for employees and directors and vesting date fair value of the award for consultants.
We measure the cost of the employee/director/consultant services received in exchange for an award of equity instruments based on the fair value for employees and directors and vesting date fair value of the award for consultants.
The decrease in expenses was primarily due to: ● decreased clinical and development work for our cell and gene therapy product candidates and other related costs of $5.7 million which primarily relates to the license out/discontinuation of our MPSIII programs; ● decreased non-cash stock compensation expenses of $3.2 million; and ● decreased salary and related costs of $1.0 million; partially offset by ● increased other costs of $0.1 million. 57 We expect our research and development activities to continue as we attempt to advance our product candidates towards potential regulatory approval, reflecting costs associated with: ● 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.
The increase in expenses was primarily due to an $2.2 million increase in salaries and $0.1 million in non-cash stock-based compensation costs due to increased headcount related to the filing of our BLA. 60 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.
We believe that our current cash and cash equivalents, restricted cash and short-term investments are sufficient resources to fund operations through at least the next 12 months from the date of this report on Form 10-K. We may need to secure additional funding to carry out all of our planned research and development activities.
We believe that our current cash and cash equivalents, restricted cash and short-term investments, as well as our credit facility with Avenue Venture Opportunities Fund, L.P, are sufficient to fund operations through at least the next 12 months from the date of this report on Form 10-K.
Total general and administrative expenses were $17.2 million for the year ended December 31, 2022, as compared to $21.6 million for the same period of 2021, a decrease of $4.4 million.
Total general and administrative expenses were $19.0 million for the year ended December 31, 2023, as compared to $17.3 million for the same period of 2022, an increase of $1.7 million.
Food and Drug Administration (“FDA”) in late second quarter of 2023 or early third quarter of 2023. Our development portfolio also features adeno-associated virus (“AAV”) based gene therapies designed to treat ophthalmic diseases using the novel AIM™ capsid platform that we have exclusively licensed from the University of North Carolina at Chapel Hill, and internal AAV vector research programs.
We have also begun discussions with high volume treatment centers of excellence to onboard them for pz-cel application upon potential FDA approval. 58 Our development portfolio also features adeno-associated virus (“AAV”) based gene therapies designed to treat ophthalmic diseases using the novel AIM™ capsid platform that we have exclusively licensed from the University of North Carolina at Chapel Hill, and internal AAV vector research programs.
Total research and development spending for the year ended December 31, 2022 was $28.9 million, as compared to $38.7 million for the same period of 2021, a decrease of $9.8 million.
Total research and development spending for the year ended December 31, 2023 was $31.1 million, as compared to $29.0 million for the same period of 2022, an increase of $2.1 million.
The decrease results primarily from the resolution of a disputed liability owed to our prior licensor, REGENXBIO. Change in fair value of warrant liabilities The change in fair value of warrant liabilities was $11.4 million for the year ended December 31, 2022, as compared to nil in the same period of 2021.
Change in fair value of warrant liabilities The change in fair value of warrant liabilities was a loss of $11.7 million for the year ended December 31, 2023, as compared to a gain of $11.4 million in the same period of 2022.
Accrued Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.
As of December 31, 2023 and 2022, we do not have any contract assets or contract liabilities as a result of this transaction. Accrued Research and Development Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses.
Sublicense and Inventory Purchase Agreements Relating to CLN1 Disease : In August 2020, we entered into sublicense and inventory purchase agreements with Taysha Gene Therapies (“Taysha”) relating to a potential gene therapy for CLN1 disease.
Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment. 66 Sublicense and Inventory Purchase Agreements Relating to CLN1 Disease: In August 2020, we entered into sublicense and inventory purchase agreements with Taysha Gene Therapies (“Taysha”) relating to a potential gene therapy for CLN1 disease.
There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expense accordingly.
There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period .
In addition, we sublet a portion of our leased properties which indicated that a portion of the lease had a reduced future value and thus recorded impairment of $0.9 million for the year ended December 31, 2022 Licensed Technology We maintain licensed technology on our consolidated balance sheet until either the licensed technology agreement underlying it is completed or the asset becomes impaired.
In addition, we sublet a portion of our leased properties which indicated that a portion of the lease had a reduced future value and thus recorded impairment of $0.9 million for the year ended December 31, 2022. Both impairment charges are included in loss/(gain) on operating lease right-of-use assets in the consolidated statement of operations and comprehensive loss.
The revenue in 2022 resulted from a clinical milestone achieved in the second quarter of 2022 under a sublicense agreement we entered into with Taysha Gene Therapies (“Taysha”) in October 2020 relating to an investigational AAV-based gene therapy for Rett syndrome, including certain intellectual property relating to MECP2 gene constructs and regulation of their expression.
The revenues in both periods mainly result from clinical milestones achieved under a sublicense agreement we entered into with Taysha Gene Therapies in October 2020 relating to an investigational AAV-based gene therapy for Rett syndrome.
The second step is to then determine the value of the warrants. We measure the value of any liability classified warrants on their issuance date based on their fair value using the Black-Scholes pricing model. The models used to determine the fair value of these warrants includes assumptions for expected volatility, risk-free interest rate, dividend yield and estimated expected term.
The second step is to then determine the value of the warrants. We measure the value of any liability classified warrants on their issuance date based on their fair value using the Black-Scholes pricing model. The model used to determine the fair value of these warrants utilizes certain unobservable inputs and this therefore considered a Level 3 fair value measurement.
Net cash used in operating activities was $65.7 million for the year ended December 31, 2021, primarily comprised of our net loss of $84.9 million and decrease in operating assets and liabilities of $18.3 million, partially offset by net non-cash charges of $37.5 million.
Net cash used in operating activities was $43.5 million for the year ended December 31, 2022, primarily comprised of our net loss of $39.7 million and decrease in operating assets and liabilities of $5.9 million partially offset by net non-cash charges of $2.1 million. 62 Investing activities Net cash provided by investing activities was $0.2 million for the year ended December 31, 2023, primarily comprised of proceeds from maturities of short-term investments of $51.9 million and proceeds from the disposal of property and equipment of $0.2 million, partially offset by purchases of short-term investments of $51.6 million and capital expenditures of $0.3 million.
If the carrying amount is not recoverable, we measure the amount of any impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset. 62 Goodwill In accordance with ASC 350 — Intangibles — Goodwill and Other, we test goodwill for impairment on an annual basis and in the interim if events and circumstances indicate that goodwill may be impaired.
If the carrying amount is not recoverable, we measure the amount of any impairment by comparing the carrying value of the asset to the present value of the expected future cash flows associated with the use of the asset.
To date, we have not recognized any sales-based or royalty revenue resulting from this licensing arrangement. 63 During the year ended December 31, 2021, Taysha achieved an event-based milestone payment and, accordingly, we recognized $3.0 million of revenue as of December 31, 2021. There was no revenue recognized under this agreement during the year ended December 31, 2022.
To date, we have not recognized any sales-based or royalty revenue resulting from this licensing arrangement. 67 Under this arrangement, we recognized $3.5 million and $1.0 million of revenue during the years ended December 31, 2023 and 2022, respectively, which amount related solely to variable consideration.
We have not been profitable since inception and to date have received limited revenues from the sale of products or licenses.
Since our inception, 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 potential commercialization efforts. We have not been profitable since inception and to date have received limited revenues from the sale of products or licenses.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and related notes included in this Form 10-K. Abeona is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis together with our consolidated financial statements and related notes included in this Form 10-K. This discussion and analysis contains forward-looking statements, which involve risks and uncertainties.
Net cash provided by financing activities was $24.9 million for the year ended December 31, 2021, primarily comprised of proceeds of $17.4 million from the issuance of common stock and warrants in a public offering, proceeds of $8.0 million from open market sales of common stock pursuant to the ATM Agreement and proceeds of $0.8 million from the exercise of stock options, partially offset by the payment of offering costs in a public offering of $1.5 million. 59 We have historically funded our operations primarily through sales of common stock.
Financing activities Net cash provided by financing activities was $37.1 million for the year ended December 31, 2023, primarily comprised of proceeds of $14.4 million from open market sales of common stock pursuant to the ATM Agreement (as defined below) and net proceeds of $23.0 million from our July 2023 direct placement offering of common stock.
Under this arrangement, we recognized $1.0 million of revenue during the year ended December 31, 2022, which amount related solely to fixed consideration. We did not recognize any related revenue during the year ended December 31, 2021. As of December 31, 2022 and 2021, we do not have any contract assets or contract liabilities as a result of this transaction.
There was no revenue recognized under this agreement during the years ended December 31, 2023 and 2022. As of December 31, 2023 and 2022, we have no contract assets or contract liabilities as a result of this transaction.
We sold 3,479,016 shares of our common stock under the ATM Agreement and received $12.8 million of net proceeds during the year ended December 31, 2022. Since our inception, 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 efforts.
We sold 3,479,016 shares of our common stock under the ATM Agreement and received $12.8 million of net proceeds during the year ended December 31, 2022. Subsequent to December 31, 2023 and through March 1, 2024, we sold 724,659 shares of our common stock under the ATM Agreement resulting in $5.3 million in net proceeds.
Royalties Total royalties expenses were $0.4 million for the year ended December 31, 2022, as compared to nil for the same period of 2021, an increase of $0.4 million. The increase in expense was due to royalties owed to our licensors resulting from the $1.0 million milestone due from Taysha.
In 2022, there was also $0.3 million in revenue consisting of the recognition of deferred revenue related to grants for the ABO-102 and ABO-101 development programs. Royalties Total royalty expenses were $1.6 million for the year ended December 31, 2023, as compared to $0.4 million for the same period of 2022, an increase of $1.2 million.
Other income Other income was $0.1 million for the year ended December 31, 2022, as compared to $15,000 in the same period of 2021. The increase was primarily a result of a gain on lease termination of $0.3 million partially offset by $0.1 million of losses on the disposal of fixed assets.
Other income Other income was $2.9 million for the year ended December 31, 2023, as compared to $0.1 million in the same period of 2022. The change was primarily a result of $2.1 million in other income related to the impact of the employee retention credit that we submitted for 2020 and 2021.
We regularly evaluate the renewal options and when they are reasonably certain of exercise, we include the renewal period in our lease term. On March 31, 2022, we announced that we were pursuing a strategic partner to take over development activities of ABO-102 and we were discontinuing development of ABO-101.
The lease modification resulted in the recognition of $0.4 million of additional right-of-use assets and related lease liabilities in our consolidated balance sheet during the year ended December 31, 2023. On March 31, 2022, we announced that we were pursuing a strategic partner to take over development activities of ABO-102 and we were discontinuing development of ABO-101.
We have continued to prepare our current Good Manufacturing Practices (“cGMP”) commercial facility in Cleveland, Ohio for manufacturing EB-101 drug product to support our planned BLA filing to the FDA. EB-101 study drug product for all our VIITAL™ study participants has been manufactured at our Cleveland facility.
Under the Prescription Drug User Fee Act (“PDUFA”), the FDA has set a target action date of May 25, 2024. We have continued to prepare our current Good Manufacturing Practices (“cGMP”) commercial facility in Cleveland, Ohio for manufacturing pz-cel drug product to support our planned commercial launch of pz-cel, if approved.
Change in fair value of warrant liability recognized for the years ended December 31, 2022 and 2021 was approximately $11.4 million and nil, respectively. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8.
The change in fair value of warrant liability recognized for the year ended December 31, 2022 resulted in a gain of $11.4 million. 68
The Company expects to present new preclinical data from these programs at a future medical meeting in second quarter of 2023. 56 RESULTS OF OPERATIONS Comparison of Years Ended December 31, 2022 and December 31, 2021 For the year ended December 31, Change ($ in thousands) 2022 2021 $ % Revenues: License and other revenues $ 1,414 $ 3,000 $ (1,586 ) (53 )% Expenses: Royalties 450 — 450 N/A Research and development 28,965 38,726 (9,761 ) (25 )% General and administrative 17,256 21,644 (4,388 ) (20 )% Impairment of goodwill — 32,466 (32,466 ) N/A Impairment of licensed technology 1,355 — 1,355 N/A Impairment of right-of-use lease assets 2,511 — 2,511 N/A Impairment of construction-in-progress 1,792 — 1,792 N/A Total expenses 52,329 92,836 (40,507 ) (44 )% Loss from operations (50,915 ) (89,836 ) 38,921 (43 )% Gain on settlement with licensor — 6,743 (6,743 ) N/A PPP loan payable forgiveness income — 1,758 (1,758 ) N/A Interest income 431 40 391 978 % Interest expense (736 ) (3,656 ) 2,920 (80 )% Change in fair value of warrant liabilities 11,383 — 11,383 N/A Other income 141 15 126 840 % Net loss $ (39,696 ) $ (84,936 ) $ 45,240 (53 )% N/A - not applicable or not meaningful License and other revenues License and other revenues for the year ended December 31, 2022 was $1.4 million, as compared to $3.0 million for the same period of 2021.
In addition, the FDA completed the clinical study site inspections of the two clinical sites in the U.S. that enrolled subjects in the pivotal Phase 3 VIITAL™ study supporting the pz-cel BLA with no Form 483 observations noted. 59 RESULTS OF OPERATIONS Comparison of Years Ended December 31, 2023 and December 31, 2022 For the year ended December 31, Change ($ in thousands) 2023 2022 $ % Revenues: License and other revenues $ 3,500 $ 1,414 $ 2,086 148 % Expenses: Royalties 1,605 450 1,155 257 % Research and development 31,091 28,965 2,126 7 % General and administrative 19,004 17,256 1,748 10 % Impairment of licensed technology — 1,355 (1,355 ) N/A Loss/(gain) on operating lease right-of-use assets (1,065 ) 2,511 (3,576 ) (142 )% Impairment of construction-in-progress — 1,792 (1,792 ) N/A Total expenses 50,635 52,329 (1,694 ) (3 )% Loss from operations (47,135 ) (50,915 ) 3,780 (7 )% Interest income 2,117 431 1,686 391 % Interest expense (418 ) (736 ) 318 (43 )% Change in fair value of warrant liabilities (11,695 ) 11,383 (23,078 ) (203 )% Other income 2,943 141 2,802 1,987 % Net loss $ (54,188 ) $ (39,696 ) $ (14,492 ) 37 % N/A - not applicable or not meaningful License and other revenues License and other revenues for the year ended December 31, 2023 was $3.5 million, as compared to $1.4 million for the same period of 2022.
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.
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. 63 Our future capital requirements and adequacy of available funds depend on many factors, including: ● 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.
We use the closing price of our common stock as quoted on Nasdaq to determine the fair value of restricted stock. We account for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise.
We account for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise. Stock option-based compensation expense recognized for the years ended December 31, 2023 and 2022 was $1.4 million and $2.0 million, respectively.
Removed
In 2022, we evaluated the ability of our gene constructs and capsids to deliver and express the recombinant protein in target eye tissues and rescue mutant phenotypes in mouse disease models. The Company has submitted a pre-Investigational New Drug (IND) application meeting request for XLRS to the FDA to gain alignment on IND enabling toxicity studies and clinical trial design.
Added
As a result of many factors, such as those described under “Forward-Looking Statements,” “Risk Factors” and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements. OVERVIEW Abeona is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases.
Removed
There was also revenue consisting of the recognition of deferred revenue related to grants for the ABO-102 and ABO-101 development programs and revenue related to the sublet of a portion of our existing leases.
Added
As part of the submission, we requested Priority Review, which, if granted, would shorten the FDA’s review period to six months from the filing acceptance of the BLA instead of ten months under standard review. In November 2023, the FDA accepted and granted priority review for our BLA for pz-cel.
Removed
The revenue in 2021 resulted from a clinical milestone achieved in December 2021 under a sublicense agreement we entered into with Taysha in August 2020 for ABO-202, an AAV gene therapy for CLN1 disease (also known as infantile Batten disease).
Added
Pz-cel study drug product for all our VIITAL™ study participants has been manufactured at our Cleveland facility. As part of our commercial planning, we continue to engage with stakeholders across the healthcare system, including public and private payors, and healthcare providers to better understand market access and potential pricing for pz-cel.
Removed
Impairment of goodwill Goodwill impairment charge was nil for the year ended December 31, 2022, as compared to $32.5 million in the same period of 2021. As of year-end 2021, the carrying value of our net assets was determined to exceed the fair value of our net assets, and therefore, we recorded a goodwill impairment charge of $32.5 million.
Added
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 Developments On January 8, 2024, we entered into a $50 million credit facility with the Avenue Venture Opportunities Fund, L.P.
Removed
Gain on settlement with licensor Gain on settlement with licensor was nil for the year ended December 31, 2022, as compared to $6.7 million in the same period of 2021. On November 12, 2021, we entered into a settlement agreement with REGENXBIO, Inc. (“REGENXBIO”) to resolve all current disputes between us and REGENXBIO.
Added
The credit agreement, which has a term of three and a half years, includes a first tranche of $20 million at closing, a second tranche of $10 million of committed capital, and an additional accordion option to upsize the credit facility by an additional $20 million upon satisfaction of certain terms and conditions.
Removed
The accounting for this settlement agreement resulted in a $6.7 million gain on settlement with REGENXBIO in the year ended December 31, 2021. PPP loan payable forgiveness income PPP loan payable forgiveness income was nil for the year ended December 31, 2022, as compared to $1.8 million in the same period of 2021.

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