What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-03-29 compared with 2022-03-31 · 272 added, 359 removed, 224 unchanged (74% of the section changed)

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion should be read in conjunction with our consolidated financial statements and related notes included in this Form

Abeona is a clinical-stage biopharmaceutical company

developing cell and gene therapies for life-threatening rare genetic diseases.

Our lead clinical program is EB-101, an autologous, gene-corrected

cell therapy for recessive dystrophic epidermolysis bullosa (“RDEB”), which is currently in the pivotal Phase 3 VIITAL™

clinical trial.

Following a comprehensive portfolio review in early 2022, we have decided

to focus our research and development resources on the VIITAL™ readout while actively pursuing a potential commercialization partner

for EB-101 with the objective of reducing operating expenses and extending our cash runway.

As part of this portfolio prioritization,

we have intensified our pursuit of a strategic partnership to take over development activities for our adeno-associated virus

(“AAV”)-based gene therapy ABO-102 for Sanfilippo syndrome type A (“MPS IIIA”) and we have discontinued development

of our AAV-based gene therapy ABO-101 for Sanfilippo syndrome type B (“MPS IIIB”).

plan to continue to develop AAV-based gene therapies designed to treat ophthalmic and other diseases and next-generation AAV-based gene

therapies 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.

REVIEW OF KEY ACTIVITIES IN 2021

2021, we continued our mission of providing novel cell and gene therapies to patients who currently have no approved treatment

options as we continued to advance the EB-101 pivotal study toward completion to support a U.S.

Biologics License Application

(BLA) submission.

At the same time, we continued to make steady progress with other preclinical programs.

Here is a recap of our

recent accomplishments.

(Autologous, Gene-Corrected Cell Therapy) for RDEB

In 2021, we continued to enroll patients in

our pivotal Phase 3 VIITAL™ study for our investigational product for recessive dystrophic epidermolysis bullosa (RDEB),

Under the study protocol, the enrollment target is approximately 36 randomized large chronic wounds.

To increase patient

enrollment, we activated a second clinical trial site in the VIITAL™ study.

We achieved target enrollment in the first quarter

We anticipate topline data readout in the third quarter of 2022.

We are focusing our research and development resources on

the VIITAL™ readout while actively pursuing a potential commercialization partner.

We are optimistic about EB-101’s

potential based on updated Phase 1/2a results presented at various medical congresses.

have continued to prepare our cGMP commercial facility in Cleveland, Ohio for manufacturing EB-101 drug product to support our planned

EB-101 study drug product for all our VIITAL study participants has been manufactured at our Cleveland facility and we have

now completed of the update to Module 3 of the Investigational New Drug Application describing the in-house production of both retroviral vector and the final drug product.

Based on feedback from the FDA, we believe that we have alignment with the FDA on

the CMC requirements for EB-101, including characterization and validation plans.

(AAV-based Gene Therapy) for MPS IIIA

part of our portfolio prioritization in early 2022, we have intensified our pursuit of a strategic partnership to take over development

activities for ABO-102.

As part of the FDA’s feedback on the Statistical Analysis Plan in January 2022, the FDA recommended that

all participants be followed to an age of at least 60 months, which would shift timing of the neurocognitive outcomes data readout to

late-2024/early-2025, as compared to our prior projection of the second quarter of 2023.

(AAV-based Gene Therapy) for MPS IIIB

In 2021, we discontinued enrollment in our ABO-101 study and in March

2022, we decided to discontinue all further ABO-101 development activities.

our clinical programs are currently focused on rare diseases, we intend to address larger areas of unmet medical need in the future,

and our preclinical programs are investigating novel AAV capsids in five undisclosed ophthalmic conditions each with estimated U.S.

ranging from 5,000 to 15,000 patients.

In 2021, we shared data from studies in non-human primates that will help to determine

optimal routes of administration and believe we have made significant progress toward measuring efficacy in the preclinical setting.

We have also generated appropriate mouse models, produced recombinant capsids, and started dosing mice in proof-of-concept studies that

we hope will yield data beginning in mid-2022 to support pre-IND meetings with the FDA.

OF COVID-19 PANDEMIC ON OUR BUSINESS

continue to monitor the impact of the COVID-19 pandemic on our business and take appropriate actions to manage our spending activities

and preserve our cash resources.

While there have been vaccines developed and administered, and the spread of COVID-19 may eventually

be contained or mitigated, we cannot predict the timing of vaccine adoption or roll-out globally or the efficacy of such vaccines, including

against variants that emerge, and we do not yet know how businesses and our partners will operate in a post COVID-19 environment.

we are unable to determine or predict the extent, duration or scope of the overall impact the COVID-19 pandemic will have on our business,

operations, financial condition or liquidity, we believe it is important to keep our stakeholders informed about how our response to

COVID-19 is progressing and how our operations and financial condition may change.

extent of the impact of the COVID-19 pandemic on our business, operations, and clinical trials continues to evolve and will depend on

certain developments, including:

(i) the duration of the declared health emergencies;

(ii) future actions taken by governmental authorities

and regulators with respect to the pandemic, including reinstituting state and local lockdowns;

(iii) the impact on our partners, collaborators,

and suppliers;

and (iv) actions being taken by us in response to this crisis.

We remain dedicated to communicating regularly and openly

with our stakeholders as more information becomes available, including updates on material changes to prior guidance as we continue to

follow applicable government, regulatory and institutional guidelines.

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”).

In November 2022, we announced positive topline data from the VIITAL™ study evaluating the efficacy, safety and tolerability of

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.

Food and Drug Administration (“FDA”) in late second

quarter of 2023 or early third quarter of 2023.

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.

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.

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).

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.

The Company expects to present new preclinical data from these programs at a future medical meeting in second

quarter of 2023.

OF OPERATIONS

of Years Ended December 31, 2022 and December 31, 2021

For the years ended December 31,

For the year ended December 31,

($ in thousands)

License and other revenues

$ (7,000,000 )

Total revenues

Research and development

General and administrative

Depreciation and amortization

Goodwill impairment charge

Licensed technology impairment charge

(32,916,000 )

Impairment of goodwill

Impairment of licensed technology

Impairment of right-of-use lease assets

Impairment of construction-in-progress

Total expenses

Loss from operations

(89,836,000 )

(81,420,000 )

Gain on settlement with licensor

PPP loan payable forgiveness income

Interest and miscellaneous income

Interest and other expense

$ (84,936,000 )

$ (84,234,000 )

N/A - not applicable or not meaningful.

License and other revenues

and other revenues for the year ended December 31, 2021 were $3.0 million, as compared to $10.0 million for the same period of 2020.

The revenue in 2021 resulted from a clinical milestone achieved in December 2021 under a sublicense agreement we entered into with Taysha

Gene Therapies (“Taysha”) in August 2020 for ABO-202, an AAV gene therapy for CLN1 disease (also known as infantile Batten

The revenue in 2020 resulted from (i) the aforementioned sublicense agreement with Taysha along with an inventory purchase

agreement we entered into with Taysha in August 2020 for ABO-202 and (ii) a sublicense agreement we entered into with Taysha in October

2020 for a gene therapy for Rett syndrome and MECP2 gene constructs and regulation of their expression.

The sublicense agreements grant

to Taysha worldwide exclusive rights to intellectual property developed by scientists at the University of North Carolina at Chapel Hill,

the University of Edinburgh and us, and our know-how relating to the research, development and manufacture of the gene therapies for

CLN1 and Rett syndrome.

sublicense agreements for CLN1 and Rett include additional event-based milestone payments, sales-based milestone payments and other royalty-based

payments based on net sales.

We will recognize revenue for these payments at the later of (i) when the related event or sales occur,

or (ii) when the performance obligation has been satisfied.

Interest income

Interest expense

Change in fair value of warrant liabilities

- not applicable or not meaningful

and other revenues

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.

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.

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.

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).

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

and development

and development expenses include, but are not limited to, payroll and personnel expense, lab supplies, preclinical, and development cost,

clinical trial expense, manufacturing, regulatory, and consulting.

The cost of materials and equipment or facilities that are acquired

for research and development activities and that have alternative future uses are capitalized when acquired.

research and development spending for the year ended December 31, 2021 was $34.3 million, as compared to $30.1 million for the

same period of 2020, an increase of $4.2 million.

The increase in expenses was primarily due to:

clinical and development work for our cell and gene therapy product candidates and

other related costs of $3.2 million;

and development expenses include, but are not limited to, payroll and personnel expense, lab supplies, preclinical and development costs,

clinical trial costs, manufacturing and manufacturing facility costs, costs associated with regulatory approvals, depreciation on lab

supplies and manufacturing facilities, and consultant-related expenses.

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.

The decrease in expenses was primarily due to:

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;

non-cash stock compensation expenses of $3.2 million;

salary and related costs of $1.0 million;

partially offset by

other costs of $0.1 million.

expect our research and development activities to continue as we attempt to advance our product

candidates towards potential regulatory approval reflecting costs associated with the following:

expect our research and development activities to continue as we attempt to advance our product candidates towards potential regulatory

approval, reflecting costs associated with:

and consultant-related expenses;

● preclinical

and developmental costs;

2 unchanged sentences

and administrative

and administrative expenses primarily consist of personnel, contract personnel, personnel-related expenses to support our administrative

and operating activities, facility costs and professional expenses (i.e., legal expenses) and investor relations fees.

expect our general and administrative costs to continue as we seek potential regulatory approval and potential commercialization of our

product candidate s .

general and administrative expenses were $22.8 million for the year ended December 31, 2021, as compared to $23.8 million for

the same period of 2020, a decrease of $1.0 million.

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

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.

The decrease in expenses was primarily due to:

salary and related costs of $3.3 million resulting from severance costs of $1.3 million

recorded in 2020 and lower compensation costs of $2.0 million due to reduced general

and administrative headcount in 2021;

partially offset by

non-cash stock-based compensation of $0.7 million;

professional fees of $3.9 million;

non-cash stock-based compensation of $2.7 million;

partially offset by

other costs of $0.8 million;

Depreciation and amortization

and amortization was $3.3 million for the year ended December 31, 2021, as compared to $4.6 million for the same period in 2020, a decrease

of $1.3 million.

The decrease was driven by decreased amortization expense of $1.3 million on licensed technology in 2021, as compared

to 2020, due to the write-off of the REGENXBIO licensed technology in the first quarter of 2020.

Goodwill impairment charge

impairment charge was $32.5 million for the year ended December 31, 2021, as compared to nil in the same period of 2020.

salary and related costs of $1.4 million.

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.

Licensed technology impairment charge

license agreement with REGENXBIO terminated on May 2, 2020.

Since our impairment testing indicated that the carrying value of the license

agreement with REGENXBIO exceeded its fair value, we recorded a $32.9 million non-cash impairment charge during the year ended December

Gain on settlement with licensor

on settlement with licensor was $6.7 million for the year ended December 31, 2021, as compared to nil in the same period of 2020.

November 12, 2021, we entered into a Settlement Agreement with REGENXBIO to resolve all current disputes between the parties.

As of December

31, 2021, we have recorded the payable to licensor in the balance sheet based on the present value of the remaining payments due to REGENXBIO

under the Settlement Agreement.

The accounting for the Settlement Agreement resulted in a $6.7 million gain on settlement with REGENXBIO

during the year ended December 31, 2021.

PPP loan payable forgiveness income

Paycheck Protection Program (“ PPP”)

loan payable forgiveness income was $1.8 million

for the year ended December 31, 2021, as compared to nil in the same period of 2020.

In July 2021, we received notice from the SBA that

our PPP loan had been forgiven so the PPP loan payable was reversed during the year ended December 31, 2021.

Interest and miscellaneous income

and miscellaneous income was $0.1 million for the year ended December 31, 2021, as compared to $1.3 million of the same period in 2020.

The decrease resulted from lower earnings on short-term investments driven by lower interest rates and a lower average balance of short-term

Interest and other expense

and other expense was $3.7 million for the year ended December 31, 2021, as compared to $4.1 million for the same period of 2020.

decrease results primarily from accrued interest under the prior license agreement with REGENXBIO, which amount is discussed in Note

4 of Notes to Consolidated Financial Statements in Part II, Item 8.

loss for the year ended December 31, 2021 was $84.9 million, or a $0.86 basic and diluted loss per common share as compared

to a net loss of $84.2 million, or a $0.91 basic and diluted loss per common share, for the same period in 2020.

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.

of licensed technology

of licensed technology was $1.4 million for the year ended December 31, 2022, as compared to nil in the same period of 2021.

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.

of right-of-use lease assets

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.

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.

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.

of construction-in-progress

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.

construction-in-progress was for a facility for the ABO-102 and ABO-101 development programs.

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.

on settlement with licensor

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.

November 12, 2021, we entered into a settlement agreement with REGENXBIO, Inc.

(“REGENXBIO”) to resolve all current disputes

between us and REGENXBIO.

The accounting for this settlement agreement resulted in a $6.7 million gain on settlement with REGENXBIO in

the year ended December 31, 2021.

loan payable forgiveness income

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.

In July 2021, we received notice from the SBA that our PPP loan had been forgiven so the PPP loan payable was reversed in the year ended

December 31, 2021.

income was $0.4 million for the year ended December 31, 2022, as compared to $40,000 in the same period of 2021.

The increase resulted

from higher earnings on short-term investments driven by higher interest rates and a higher average balance of short-term investments.

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 decrease results

primarily from the resolution of a disputed liability owed to our prior licensor, REGENXBIO.

in fair value of warrant liabilities

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

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.

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.

AND CAPITAL RESOURCES

have historically funded our operations primarily through sales of common stock.

The COVID-19 pandemic has negatively affected the global

economy and created significant volatility and disruption of financial markets.

An extended period of economic disruption could negatively

affect our business, financial condition, and access to sources of liquidity.

principal source of liquidity is cash, cash equivalents, restricted cash and short-term investments.

As of December 31, 2021 and 2020,

our cash resources were $50.9 million and $96.0 million, respectively.

Following a comprehensive portfolio review in early 2022, we

have decided to focus our research and development resources on the EB-101 program with the objective of reducing operating expenses

and extending our cash runway.

As part of this portfolio prioritization, we have intensified our pursuit of a strategic partnership to

take over development activities for our AAV-based gene therapy ABO-102 for MPS IIIA and we have discontinued development

of our AAV-based gene therapy ABO-101 for MPS IIIB.

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 this report on Form 10-K.

We will need to secure additional funding

beyond the next 12 months to carry out all of our planned research and development 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.

For the years ended December 31,

Flows for the Years Ended December 31, 2022 and 2021

For the year ended December 31,

($ in thousands)

Total cash, cash equivalents and restricted cash (used in) provided by:

Operating activities

$ (65,665,000 )

$ (35,019,000 )

Investing activities

(83,714,000 )

Financing activities

Net increase/(decrease) in cash, cash equivalents and restricted cash

$ (116,797,000 )

Net (decrease) increase in cash, cash equivalents and restricted cash

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 $18.3 million, partially offset by net non-cash charges of $37.5 million.

million and decrease in operating assets and liabilities of $5.9 million and net non-cash charges of $2.1 million.

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, partially offset by an increase in operating assets and liabilities of $1.6 million and net non-cash charges of $47.6 million.

cash provided by investing activities was $66.1 million for the year ended December 31, 2021, primarily comprised of proceeds from maturities

of short-term investments of $90.4 million, partially offset by purchases of short-term investments of $20.2 million and capital expenditures

of $4.1 million.

million and decrease in operating assets and liabilities of $18.3 million, partially offset by net non-cash charges of $37.5 million.

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.

cash provided by investing activities was $66.1 million for the year ended December 31, 2021, primarily comprised of proceeds from maturities

of short-term investments of $90.4 million, partially offset by purchases of short-term investments of $20.2 million and capital expenditures

of $4.1 million.

Net cash provided by financing activities was $24.9 million for the year ended December 31, 2021, primarily comprised of proceeds of $17.4

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.

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 (as defined below) 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.

cash provided by financing activities was $1.9 million for the year ended December 31, 2020, primarily comprised of proceeds from loan

payable of $1.7 million and proceeds from the exercise of stock options of $0.2 million.

Equity Offerings

an underwritten public offering consummated on December 21, 2021, we issued (1) 44,700,000 shares of common stock at $0.39 per share

and (2) warrants to purchase 44,700,000 shares of common stock with an exercise price of $0.39 per warrant.

The gross proceeds to us

were approximately $17.5 million, before deducting the underwriting discounts and commissions and estimated offering expenses payable

August 17, 2018, we entered into an open market sale agreement with Jefferies LLC (the “ATM Agreement”).

Pursuant to the

terms of the ATM Agreement, we are able to sell from time to time, through Jefferies LLC, shares of our common stock for an aggregate

sales price of up to $150 million.

Any sales of shares pursuant to the ATM Agreement are made under an effective “shelf”

registration statement on Form S-3 that is on file with and has been declared effective by the SEC.

On November 19, 2021, we entered

into an amendment to the ATM Agreement (the “Amendment”) in connection with the filing of a new shelf registration statement

on Form S-3 (File No.

333-256850) (the “Registration Statement”), filed with the Securities and Exchange Commission (the

“SEC”) on June 7, 2021 and declared effective by the SEC on October 22, 2021.

The Amendment amends the ATM Agreement to reflect

the filing of the new Registration Statement (due to the prior Form S-3 (File No.

333-224867) expiring in June 2021).

sold 3,671,794 shares of our common stock under the ATM Agreement and received $8.1 million of net proceeds during the year ended December

Cumulatively, as of December 31, 2021, we have sold an aggregate of 6,758,744 shares of our common stock under the ATM Agreement

and received $25.0 million of net proceeds.

under Settlement Agreement

with REGENXBIO

discussed above in Item 3.

Legal Proceedings, we entered into the Settlement Agreement with REGENXBIO on November 12, 2021.

to the Settlement Agreement, we paid $20.0 million to REGENXBIO in November 2021, and are required to pay (i) $5.0 million on the first

anniversary of the effective date of the Settlement Agreement and (ii) $5.0 million on the earlier of (a) the third anniversary of the

effective date of the Settlement Agreement, or (b) the closing of a Strategic Transaction, as defined in the Settlement Agreement.

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 have not been profitable since inception and to date have received limited

revenues from the sale of products.

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.

have historically funded our operations primarily through sales of common stock.

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 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.

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.

have an open market sale agreement with Jefferies LLC (as amended, the “ATM Agreement”) pursuant to which, we may sell

from time to time, through Jefferies LLC, shares of our common stock for an aggregate sales price of up to $150.0 million.

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 are currently subject to General Instruction I.B.6 of Form S-3, as a result

of which the amount of funds we can raise through primary public offerings of securities in any 12-month period using our

registration statement on Form S-3 is limited to one-third of the aggregate market value of the voting and non-voting common equity

held by non-affiliates.

We remain subject to this one-third limitation until such time our public float exceeds $75 million.

146,872 shares of our common stock under the ATM Agreement and received $8.1 million of net proceeds during the year ended December

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.

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 have not been profitable since inception and to date have received limited revenues

from the sale of products or licenses.

We expect to incur losses for the next several years as we continue to invest in product research

10 unchanged sentences

that we would otherwise prefer to develop and market ourselves.

are carefully and continually reassessing key business activities and all associated spending decisions.

Nonetheless, we are spending

necessary funds on manufacturing activities and preclinical studies and clinical trials of potential products, including research and

development with respect to our acquired and developed technology.

Our future capital requirements and adequacy of available funds depend

on many factors, including:

impact to our business, operations, and clinical programs from the COVID-19 pandemic and

related effects on the U.S.

and global economy;

successful development and commercialization of our cell and gene therapy and other

product candidates;

ability to establish and maintain collaborative arrangements with corporate partners for

the research, development, and commercialization of products;

future capital requirements and adequacy of available funds depend on many factors, including:

successful development, regulatory approval and commercialization of our cell and gene therapy and other product candidates;

ability to establish and maintain collaborative arrangements with corporate partners for the research, development, and commercialization

scientific progress in our research and development programs;

2 unchanged sentences

costs involved in conducting clinical trials;

continuing impact to our business, operations, and clinical programs from the COVID-19 pandemic and government actions related thereto;

technological developments;

2 unchanged sentences

successful outcome of our regulatory filings.

to uncertainties and certain of the risks described above, including those relating to the COVID-19 pandemic, 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, market acceptance of our products, 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.

If we are unable to timely complete a particular project, our research and development efforts could

be delayed or reduced, our business could suffer depending on the significance of the project and we might need to raise additional capital

to fund operations, as discussed in the risks above.

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.

If we are unable to timely complete a particular

project, our research and development efforts could be delayed or reduced, our business could suffer depending on the significance of

the project and we might need to raise additional capital to fund operations, as discussed in the risks above.

plan to continue our policy of investing any available funds in suitable certificates of deposit, money market funds, government securities

1 unchanged sentence

We do not invest in derivative financial instruments.

following table summarizes our significant contractual obligations as of the payment due date by period as of December 31, 2021:

Payments Due by Period

After 5 years

Operating leases

Payable to licensor

enter into agreements in the normal course of business with clinical research organizations for clinical trials and clinical manufacturing

5 unchanged sentences

above do not include any related common area maintenance charges or real estate taxes.

noted above, on November 12, 2021, we entered into a Settlement Agreement with REGENXBIO to resolve all current disputes between the

parties including the aforementioned AAA arbitration and New York State Supreme Court action.

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.

As of December 31, 2021, we have recorded the payable to licensor in the contractual obligations

as the two remaining payments due to REGENXBIO under the Settlement Agreement.

November 12, 2021, we entered into a Settlement Agreement with REGENXBIO to resolve all current disputes between the parties including

the aforementioned AAA arbitration and New York State Supreme Court action.

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

(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.

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.

addition, we are also party to other license agreements, which include contingent payments.

6 unchanged sentences

Accounting Estimates

preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the U.S.

us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and

liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.

applying our accounting principles, we must often make individual estimates and assumptions regarding expected outcomes or uncertainties.

As one might expect, the actual results or outcomes are often different than the estimated or assumed amounts.

These differences are

usually minor and are included in our consolidated financial statements as soon as they are known.

Our estimates, judgments and assumptions

are continually evaluated based on available information and experience.

Because of the use of estimates inherent in the financial reporting

process, actual results could differ from those estimates.

January 1, 2019, we adopted the provisions of ASU 2016-02, Leases , as amended (“ASC 842”).

ASC 842 requires the recognition

of lease assets and lease liabilities by lessees for those leases classified as operating leases under the previous guidance of ASC 840,

We determine if an arrangement is a lease at inception or when amended.

Right-of-use lease assets represent our right

to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the

The classification of our leases as operating or finance leases along with the initial measurement and recognition of the associated

right-of-use assets and lease liabilities is performed at the lease commencement date or when amended.

The measurement of lease liabilities

is based on the present value of future lease payments over the lease term.

As our leases do not provide an implicit rate, we use our

incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future

lease payments.

The right-of-use asset is based on the measurement of the lease liability and includes any lease payments made prior

to or on lease commencement or lease amendment and excludes lease incentives and initial direct costs incurred, as applicable.

for our operating leases is recognized on a straight-line basis over the lease term.

We do not have any leases classified as finance

preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires

management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements.

considers an accounting estimate to be critical if:

requires assumptions to be made that were uncertain at the time the estimate was made, and

in the estimate or different estimates that could have been selected could have a material impact in our results of operations or

financial condition.

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.

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.

Right-of-use lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent

our obligation to make lease payments arising from the lease.

The classification of our leases as operating or finance leases along with

the initial measurement and recognition of the associated right-of-use assets and lease liabilities is performed at the lease commencement

date or when amended.

The measurement of lease liabilities is based on the present value of future lease payments over the lease term.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease

commencement date in determining the present value of future lease payments.

The right-of-use asset is based on the measurement of the

lease liability and includes any lease payments made prior to or on lease commencement or lease amendment and excludes lease incentives

and initial direct costs incurred, as applicable.

Rent expense for our operating leases is recognized on a straight-line basis over the

We do not have any leases classified as finance leases.

leases do not have significant rent escalation, holidays, concessions, material residual value guarantees, material restrictive covenants

12 unchanged sentences

period in our lease term.

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.

As a result of this shift in priorities, we determined the portion of the lease that was dedicated to the future

facility for the ABO-101 and ABO-102 programs, had no future value and thus, we recorded an impairment charge of $1.6 million for the

year ended December 31, 2022.

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

maintain licensed technology on our consolidated balance sheet until either the licensed technology agreement underlying it is completed

3 unchanged sentences

licensed technology is amortized over the life of the patent or the agreement.

We test our intangible assets for impairment on an annual

basis, or more frequently if indicators are present or changes in circumstance suggest that impairment may exist.

Events that could result

in an impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or nonclinical data regarding

our drug candidate or a potentially competitive drug candidate, changes in the clinical development program for a drug candidate or new

information regarding potential sales for the drug.

In connection with each annual impairment assessment and any interim impairment assessment,

we compare the fair value of the asset as of the date of the assessment with the carrying value of the asset on our consolidated balance

considered the status of our discussions with REGENXBIO in March 2020 as a potential indicator of impairment in accordance with ASC 360-10-35-21.

Our impairment test indicated that the carrying value of the license agreement exceeded its fair value and we recorded a $32.9 million

non-cash impairment charge in 2020.

We test our intangible assets for impairment if indicators

are present or changes in circumstance suggest that impairment may exist.

Events that could result in an impairment, or trigger an interim

impairment assessment, include the receipt of additional clinical or nonclinical data regarding our drug candidate or a potentially competitive

drug candidate, changes in the clinical development program for a drug candidate or new information regarding potential sales for the

In connection with any impairment assessment, we compare the fair value of the asset as of the date of the assessment with the

carrying value of the asset on our consolidated balance sheets.

2022, in connection with the license of our ABO-102 asset for the treatment of Sanfilippo syndrome type A (MPS IIIA) to Ultragenyx and

the discontinuation of the ABO-101 program for the treatment of Sanfilippo syndrome type B (MPS IIIB), we recorded an impairment charge

of $1.4 million as we determined that there was no remaining value of the licensed technology.

2021, we did not impair any licensed technology.

of December 31, 2021 and 2020, we had goodwill of nil and $32.5 million, respectively, recorded on our consolidated balance sheet.

of Long-Lived Assets

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.

If indicators are present or changes in circumstance suggest that impairment may exist.

We assess the recoverability

of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future

operating cash flows.

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.

accordance with ASC 350 — Intangibles — Goodwill and Other, we test goodwill for impairment on an annual basis and

21 unchanged sentences

In accordance with ASC 350, we recognized an impairment loss for that excess of carrying value over fair value

but limited to the total amount of goodwill recorded on our consolidated balance sheet.

but limited to the total amount of goodwill recorded on our consolidated balance sheets.

As a result, we recorded a goodwill impairment

charge of $32.5 million during the year ended December 31, 2021.

performed our annual goodwill impairment test as of year-end 2020 and determined that the fair value of our net assets exceeded carrying

As a result, we did not impair goodwill during the year ended December 31, 2020.

January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers , as amended (“ASC 606”).

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.

To determine revenue recognition for arrangements that we determine

are within the scope of ASC 606, we perform the following five steps:

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.

To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we

perform the following five steps:

(i) identify the contract(s) with our customer;

(ii) identify the

performance obligations in the contract;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance

obligations in the contract;

and (v) recognize revenue when (or as) we satisfy a performance obligation.

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize

revenue when (or as) we satisfy a performance obligation.

and Inventory Purchase Agreements Relating to CLN1 Disease :

31 unchanged sentences

sales-based or royalty revenue resulting from this licensing arrangement.

this arrangement, we recognized $7.0 million of revenue during the year ended December 31, 2020, which amount related solely to fixed

consideration.

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, we have a contract asset for $3.0 million but do not have any contract liabilities

as a result of this transaction.

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.

As of December

31, 2022 and 2021, we have a contract asset for nil and $3.0 million but did not have any contract liabilities as a result of this transaction.

We collected the $3.0 million of cash in January 2022 in full satisfaction of the contract asset.

33 unchanged sentences

We did not recognize any related revenue during the year ended December 31, 2021.

As of December 31, 2021, we do not have

any contract assets or contract liabilities as a result of this transaction.

Foundation revenues relate to a collaborative agreement between nine Sanfilippo foundations to provide up to approximately

$13.9 million of grants to Abeona in installments for the advancement of our clinical stage gene therapies for MPS IIIA and MPS IIIB,

subject to the achievement of certain milestones.

We have assessed the ASC 606-10-25-27 criteria used to determine whether foundation

revenue should be recognized over time and determined that our performance does not create an asset with an alternative use to the foundations

and we have an enforceable right to payment for performance completed to date.

We determined that the input method based on costs incurred

in accordance with ASC 606-10-55-20 would be the most appropriate method for measuring progress.

As a result, we have concluded that

cash received upfront from the foundations should be deferred on the balance sheet until the costs of the activities as outlined in the

manufacturing and clinical work plan are incurred by installment as outlined in the agreement with the foundations.

Effectively, this

matches the revenue up to the costs incurred by installment.

Should the aggregate cash received exceed the costs incurred by installment,

the excess of aggregate cash over costs will be deferred.

We have foundation revenue of $0.3 million recorded as deferred revenue on

the balance sheet as of December 31, 2021 and 2020.

In 2021 and 2020, we did not record any foundation revenues since no milestones were

As of December 31, 2022 and 2021, we

do not have any contract assets or contract liabilities as a result of this transaction.

Research and Development Expenses

33 unchanged sentences

$1.1 million and $3.7 million, respectively.

have issued warrants associated with capital raises from time to time.

We determine the accounting and value of any issued warrants in

accordance with ASC 480 , Distinguishing Liabilities from Equity and ASC 815, Derivatives and Hedging .

The first step is

to determine if the warrants are to be classified as either a liability or equity depending on the warrant terms.

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 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.

in fair value of warrant liability recognized for the years ended December 31, 2022 and 2021 was approximately $11.4 million and nil,

respectively.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

statements required by this Item are incorporated in this Annual Report on Form 10-K on pages F-1 through F-23 hereto.

Reference is made

to Item 15 of this Form 10-K.

statements required by this Item are incorporated in this Annual Report on Form 10-K starting on page F-1 hereto.

Reference is made to Item 15 of this Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis