What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-20 compared with 2024-03-18 · 227 added, 260 removed, 289 unchanged (63% of the section changed)

9 unchanged sentences

bullosa (“RDEB”).

We have announced positive data from the VIITAL™ study evaluating the efficacy, safety and tolerability

The VIITAL™ study met both its two co-primary efficacy endpoints demonstrating statistically significant, clinically

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

The VIITAL™ study met both its 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

In September 2023, we submitted a Biologics

License Application (“BLA”) for pz-cel to the U.S.

Food and Drug Administration (“FDA”).

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

Under the Prescription Drug User Fee Act (“PDUFA”), the FDA has set a target action date of May 25, 2024.

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.

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.

We have also begun discussions with high volume treatment centers of excellence to onboard them for pz-cel application

upon potential FDA approval.

In November 2023, the

FDA accepted and granted priority review for our BLA for pz-cel, and subsequently, under the Prescription Drug User Fee Act (“PDUFA”),

the FDA set a target action date of May 25, 2024.

In April 2024, the FDA issued a Complete Response Letter (“CRL”) in response

The CRL noted that certain additional information needed to satisfy the Chemistry Manufacturing and Controls (“CMC”)

requirements of the pz-cel BLA must be satisfactorily resolved before the application can be approved.

The CRL did not identify any deficiencies

related to the clinical efficacy or clinical safety data in the BLA, and the FDA did not request any new clinical trials or clinical

data to support the approval of pz-cel.

In August 2024, we completed a Type A Meeting with the FDA to discuss our forthcoming resubmission

of our BLA and in October 2024, we resubmitted our BLA.

The FDA notified the Company in November 2024 that the BLA was accepted

for review, with an assigned PDUFA target action date of April 29, 2025.

have continued to prepare our current Good Manufacturing Practices (“cGMP”) facility in Cleveland, Ohio for

manufacturing commercial grade pz-cel drug product to support our planned commercial launch of pz-cel, if approved.

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.

We have also begun discussions with high volume

treatment centers of excellence to onboard them for pz-cel application upon potential FDA approval.

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.

using the novel AIM™ capsids that we have exclusively licensed from the University of North Carolina at Chapel Hill and developed

internally through our AAV vector research programs.

preclinical programs are investigating the use of novel AAV capsids in AAV-based therapies for serious genetic eye diseases, including

2 unchanged sentences

preclinical development plans and regulatory requirements to support first-in-human trials.

January 8, 2024, we entered into a $50 million credit facility with the Avenue Venture Opportunities Fund, L.P.

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.

Additionally,

the Bioresearch Monitoring (“BIMO”) inspection was conducted from January 22, 2024 through January 24, 2024 at our headquarters

in Cleveland, Ohio, and reviewed the conduct and practices that pertain to the clinical studies of pz-cel.

The FDA inspector did not

issue any observations or FDA Form 483s during the inspection.

The formal report from the FDA regarding the BIMO inspection will be

received at a later date.

FDA’s BIMO program is a comprehensive program of on-site inspections, data audits, and remote

regulatory assessments designed to monitor all aspects of the conduct and reporting of FDA regulated research.

The BIMO program was established

to assure the quality and integrity of data submitted to the agency in support of new product approvals and marketing applications.

the BIMO inspection, the BLA mid-cycle review meeting took place on January 25, 2024.

The FDA reaffirmed its earlier indication that

it does not currently plan to convene an Advisory Committee for pz-cel.

In addition, the FDA advised that Risk Evaluation and Mitigation

Strategies (REMS) are not anticipated for the pz-cel application at this time, though application review is ongoing, and reconfirmed

the PDUFA target action date of May 25, 2024, on which an approval decision on the pz-cel BLA is expected.

Subsequent to the mid-cycle review meeting, the FDA completed a Pre-License

Inspection (PLI) of our Cleveland, Ohio manufacturing facility related to our BLA for pz-cel.

During the inspection, the FDA reviewed

the facilities, systems, and processes at our Cleveland site.

The FDA also observed the manufacturing process for pz-cel, as well as performance

of in-process and release assays.

The two-week PLI, which was conducted by five FDA inspectors, concluded on March 1, 2024.

Upon completion

of the inspection, a Form 483 was issued with observations related to process controls.

On March 15, 2024, we submitted a response to

the FDA, outlining already implemented and ongoing steps toward resolution that follow FDA guidance provided during the audit.

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.

October 18, 2024, we signed a lease for 16,566 square feet of office space at 6700 Euclid Avenue, Cleveland, Ohio.

The lease commences

on January 1, 2025 and the lease term matches the term for our existing 6555 Carnegie Avenue facility.

The additional space at the 6700

Euclid Avenue facility will allow us to convert office space at the 6555 Carnegie Avenue facility into additional manufacturing space

to increase pz-cel manufacturing capacity.

OF OPERATIONS

5 unchanged sentences

General and administrative

Impairment of licensed technology

Loss/(gain) on operating lease right-of-use assets

Impairment of construction-in-progress

Gain on operating lease right-of-use assets

Total expenses

2 unchanged sentences

Interest expense

Change in fair value of warrant liabilities

Change in fair value of warrant and derivative liabilities

- not applicable or not meaningful

and other revenues

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.

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.

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.

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.

The increase in expense was due to royalties owed to our licensors resulting from the milestones due from Taysha

related to Rett syndrome.

and other revenues for the year ended December 31, 2024 was nil, as compared to $3.5 million for the same period of 2023.

license or other revenue in 2024 as no clinical development milestones were met in 2024.

The revenue in 2023 consists of revenue resulting

from achieving clinical development 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.

royalty expenses were nil for the year ended December 31, 2024, as compared to $1.6 million for the same period of 2023.

expense in 2023 was due to royalties owed to our licensors resulting from the milestones due from Taysha related to Rett syndrome.

and development

2 unchanged sentences

supplies and manufacturing facilities, and consultant-related expenses.

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 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.

research and development spending for the year ended December 31, 2024 was $34.4 million, as compared to $31.1 million for the same period

of 2023, an increase of $3.3 million.

The increase in expenses was primarily due to a $4.0 million increase in salaries and $0.5 million

in non-cash stock-based compensation costs due to increased headcount related to manufacturing capacity expansion preparing for the potential

launch of pz-cel, partially offset by a decrease in clinical and development work costs of $1.3 million due to reduced spending on clinical

trials as the majority of our clinical trials have finalized except for our long-term follow up trials.

expect our research and development activities to continue as we work towards advancing our product candidates towards potential regulatory

14 unchanged sentences

non-cash stock-based compensation of $1.4 million;

partially offset by

other costs such as insurance, rent and offering costs of $2.9 million.

of licensed technology

of licensed technology was nil for the year ended December 31, 2023, as compared to $1.4 million in the same period of 2022.

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.

other costs such as recruiting and professional fees of $2.1 million.

on operating lease right-of-use assets

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 gain on operating lease right-of-use assets for 2023 was related

to the termination of our operating leases for office space that we no longer use, resulting in a gain from the difference between the

carrying value of the right-of-use lease assets and the related lease liabilities.

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.

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 nil for the year ended December 31, 2023, as compared to $1.8 million in the same period of 2022.

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 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.

gain on operating lease right-of-use assets was $1.1 million for the year ended December 31, 2023.

The gain on operating lease right-of-use

assets for 2023 was related to the termination of our operating leases for office space that we no longer use, resulting in a gain from

the difference between the carrying value of the right-of-use lease assets and the related lease liabilities.

There was no such gain

during the year ended December 31, 2024.

income was $4.2 million for the year ended December 31, 2024, as compared to $2.1 million in the same period of 2023.

2 unchanged sentences

expense was $4.2 million for the year ended December 31, 2024, as compared to $0.4 million in the same period of 2023.

The decrease results

primarily from the $5.0 million settlement payment made in November 2022 of a disputed liability owed to our prior licensor, REGENXBIO,

in fair value of warrant liabilities

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.

The increase was

primarily due to the Avenue credit facility entered into by the Company in January 2024, resulting in recognized interest expense of

$3.8 million.

in fair value of warrant and derivative liabilities

change in fair value of warrant and derivative liabilities was a loss of $0.8 million for the year ended December 31, 2024, as compared

to a loss of $11.7 million in the same period of 2023.

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

In addition, the conversion feature in our loan agreement is required to be classified as a liability and valued at fair market value

at each reporting period.

The change in the fair value of warrant and derivative liabilities was primarily due to the increase in our

stock price year over the year offset by a reduced term of each of the warrants and derivative liabilities.

At September 30, 2024, the

conversion feature in our loan agreement no longer met the criteria of a derivative liability, and the derivative liability was reclassified

income was $1.2 million for the year ended December 31, 2024, as compared to $2.9 million in the same period of 2023.

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

primarily a result of $2.1 million in other income related to the impact of the employee retention credit that was recorded in 2023,

partially offset by a refundable job creation tax credit of $0.5 million received in 2024.

AND CAPITAL RESOURCES

6 unchanged sentences

Financing activities

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

Net increase in cash, cash equivalents and restricted cash

cash used in operating activities was $56.0 million for the year ended December 31, 2024, primarily comprised of our net loss of

$63.7 million and decreases in operating assets and liabilities of $4.4 million, partially offset by net non-cash charges of $12.1

Non-cash charges consisted primarily of $0.8 million of the change in fair value of warrant and derivative liabilities,

$6.6 million of stock-based compensation, $1.5 million of non-cash interest expense and $2.0 million of depreciation and

amortization.

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.

1 unchanged sentence

compensation and $2.2 million of depreciation and amortization.

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.

cash used in investing activities was $39.2 million for the year ended December 31, 2024, primarily comprised of purchases of short-term

investments of $157.0 million and capital expenditures of $2.4 million, partially offset by proceeds from maturities of short-term investments

of $120.2 million.

cash provided by investing activities was $0.2 million for the year ended December 31, 2023, primarily comprised of proceeds from maturities

1 unchanged sentence

by purchases of short-term investments of $51.6 million and capital expenditures of $0.3 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 financing activities was $104.1 million for the year ended December 31, 2024, primarily comprised of proceeds of $70.2

million in net proceeds from our May 2024 underwritten offering, $15.5 million from open market sales of common stock pursuant to the

ATM Agreement (as defined below) and net proceeds of $19.0 million from our credit facility entered into in January 2024.

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.

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.

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

3 unchanged sentences

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.

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.

restricted cash and short-term investments are sufficient to fund operations through at least the next 12 months from the date of this

report on Form 10-K.

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.

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

7 unchanged sentences

$14.6 million of net proceeds during the year ended December 31, 2023.

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.

Subsequent to December 31, 2024 and through March 11, 2025, we

sold 915,925 shares of our common stock under the ATM Agreement resulting in $4.8 million in net proceeds.

our inception, we have incurred negative cash flows from operations and have expended, and expect to continue to expend, substantial

41 unchanged sentences

organizations for supply manufacturing and with vendors for preclinical research studies and other services and products for operating

These contractual obligations are cancelable at any time by us, generally upon prior written notice to the vendor, and are

thus not included in the contractual obligations table.

These contractual obligations are cancelable at any time by us, generally upon prior written notice to the vendor.

lease amounts represent future minimum lease payments under our non-cancelable operating lease agreements.

10 unchanged sentences

Transaction, as defined in the Settlement Agreement.

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.

As of December 31, 2024, we have paid all amounts due under the Settlement Agreement.

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

4 unchanged sentences

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.

During the next 12 months, certain contingent payments could become due upon potential BLA approval and sales of pz-cel or any other

developmental milestones for sub-licensed products related to such license agreements.

Accounting Estimates

7 unchanged sentences

actual results could differ from those estimates and the differences could be material.

While our significant accounting policies are described

in greater detail in Note 1 to our consolidated financial statements appearing elsewhere in this Annual Report, we believe that the following

accounting policies are the most critical to the judgements and estimates used in the preparation of our consolidated financial statements.

our significant accounting policies are described in greater detail in Note 2 to our consolidated financial statements appearing elsewhere

in this Annual Report, we believe that the following accounting policies are the most critical to the judgements and estimates used in

the preparation of our consolidated financial statements.

account for the fair value of the conversion right embedded within the loan agreement in accordance with the guidance in ASC 815, which

requires us to bifurcate and separately account for the conversion feature as an embedded derivative contained in our loan agreement.

Accordingly, we account for the conversion feature as a derivative liability in our condensed consolidated balance sheet.

are measured at their fair value on the balance sheet.

In determining the appropriate fair value, we use a Monte Carlo simulation model,

which incorporated assumptions and estimates to value the derivatives.

The derivative liability is remeasured at each reporting period

with the change in fair value recorded to change in fair value of warrant and derivative liabilities in the consolidated statement of

operations until the derivative is exercised, expired, reclassified, or otherwise settled.

At September 30, 2024, the conversion feature

in the Company’s loan agreement no longer met the criteria of a derivative liability, and the $1.1 million derivative liability

was reclassified to equity.

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.

we have no external borrowings, the incremental borrowing rates are determined using information on indicative borrowing rates that

would be available to us based on the value, currency and borrowing term provided by financial institutions, adjusted for company

and market specific factors.

Although we do not expect our estimates of the incremental borrowing rates to generate material

differences within a reasonable range of sensitivities, judgement is involved in selecting an appropriate rate, and the rate

selected for each lease will have an impact on the value of the lease liability and corresponding right-of-use lease asset in the

consolidated balance sheets.

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

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.

As we have no external borrowings, the incremental borrowing

rates are determined using information on indicative borrowing rates that would be available to us based on the value, currency and borrowing

terms provided by financial institutions, adjusted for company and market specific factors.

Although we do not expect our estimates of

the incremental borrowing rates to generate material differences within a reasonable range of sensitivities, judgement is involved in

selecting an appropriate rate, and the rate selected for each lease will have an impact on the value of the lease liability and corresponding

right-of-use lease asset in the consolidated balance sheets.

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 lease term.

We do not have any leases classified as finance leases.

13 unchanged sentences

period in our lease term.

October 2024, we signed a lease for 16,566 square feet of office space at 6700 Euclid Avenue, Cleveland, Ohio.

Pursuant to the lease

agreement, the lease commences on January 1, 2025 with an initial term through December 30, 2030.

Annual lease payments during the term

of the lease are approximately $0.3 million.

The total lease payments over the duration of the lease term are approximately $1.5 million.

The additional space at the 6700 Euclid Avenue facility will allow us to convert office space at the 6555 Carnegie Avenue facility into

additional manufacturing space to increase pz-cel manufacturing capacity.

As the lease does not commence and we do not have access to

the leased space until January 1, 2025, the impact of this lease agreement is not reflected in our consolidated financial statements

as of December 31, 2024.

June 2023, we terminated one of our operating leases for office space.

1 unchanged sentence

ended December 31, 2023, representing the difference between the carry value of the right-of-use assets and the related lease liabilities.

This gain is included in loss/(gain) on right-of-use lease assets in the consolidated statement of operations and comprehensive loss.

This gain is included in gain on right-of-use lease assets in the consolidated statement of operations and comprehensive loss.

June of 2023, we modified one of our operating leases for office space to add up to 14,032 square feet to our existing facility in Cleveland,

1 unchanged sentence

in our consolidated balance sheet during the year ended December 31, 2023.

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.

Both impairment charges are

included in loss/(gain) on operating lease right-of-use assets in the consolidated statement of operations and comprehensive loss.

of Long-Lived Assets

9 unchanged sentences

of the asset to the present value of the expected future cash flows associated with the use of the asset.

The undiscounted future operating cash flows require considerable judgement and are sensitive to changes in underlying assumptions such

as operating costs related to our current facilities, headcount requirements and our clinical costs.

As a result, there can be no assurance

that the estimates and assumptions made for purpose of our impairment determinations would prove to be an accurate predication of the

The undiscounted future operating

cash flows require considerable judgement and are sensitive to changes in underlying assumptions such as operating costs related to our

current facilities, headcount requirements and our clinical costs.

As a result, there can be no assurance that the estimates and assumptions

made for purpose of our impairment determinations would prove to be an accurate prediction of the future.

account for revenue under ASC 606, Revenue from Contracts with Customers , (“ASC 606”).

10 unchanged sentences

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

Exclusive Licenses

For licenses that are combined with other performance

obligation, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance

obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of

recognizing revenue.

We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and

related revenue recognition.

The measure of progress, and thereby periods over which revenue should be recognized, are subject to estimates

by management and may change over the course of the research and development and licensing agreement.

Such a change could have a material

impact on the amount of revenue we record in future periods.

Milestone Payments

At the inception of each arrangement that includes

research or development milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate

the amount to be included in the transaction price using the most likely amount method.

If it is probable that a significant cumulative

revenue reversal would not occur, the associated milestone value is included in the transaction price.

An output method is generally used

to measure progress toward complete satisfaction of a milestone.

Milestone payments that are not within our control or the licensee, such

as regulatory approvals, are not considered probable of being achieved until those approvals are received.

We evaluate factors such as

the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making

this assessment.

There is considerable judgment involved in determining whether it is probable that a significant cumulative revenue reversal

would not occur.

At the end of each subsequent reporting period, we re-evaluate the probability of achievement of all milestones subject

to constraint and, if necessary, adjust our estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative

catch-up basis, which would affect revenue and earnings in the period of adjustment.

licenses that are combined with other performance obligations, we utilize judgment to assess the nature of the combined performance obligation

to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate

method of measuring progress for purposes of recognizing revenue.

We evaluate the measure of progress each reporting period and, if necessary,

adjust the measure of performance and related revenue recognition.

The measure of progress, and therefore periods over which revenue

should be recognized, are subject to estimates by management and may change over the course of the research and development and licensing

Such a change could have a material impact on the amount of revenue we record in future periods.

the inception of each arrangement that includes research or development milestone payments, we evaluate whether the milestones are considered

probable of being achieved and estimate the amount to be included in the transaction price using the most likely amount method.

is probable that a significant cumulative revenue reversal would not occur, the associated milestone value is included in the transaction

An output method is generally used to measure progress toward complete satisfaction of a milestone.

Milestone payments that are

not within our control or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals

are received.

We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to

achieve the particular milestone in making this assessment.

There is considerable judgment involved in determining whether it is probable

that a significant cumulative revenue reversal would not occur.

At the end of each subsequent reporting period, we re-evaluate the probability

of achievement of all milestones subject to constraint and, if necessary, adjust our estimate of the overall transaction price.

adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment.

and Inventory Purchase Agreements Relating to CLN1 Disease:

51 unchanged sentences

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.

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

such time that it is probable that a 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

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

2 unchanged sentences

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

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.

As of December 31, 2023 and 2022, we do not have any contract assets or contract

liabilities as a result of this transaction.

Research and Development Expenses

part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that

have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when

we have not yet been invoiced or otherwise notified of the actual costs.

The majority of our service providers invoice us in arrears

for services performed, on a pre-determined schedule or when contractual milestones are met;

this arrangement, we recognized nil and $3.5 million of revenue during the years ended December 31, 2024 and 2023, respectively, which

amount related solely to variable consideration.

As of December 31, 2024 and 2023, we do not have any contract assets or contract liabilities

as a result of this transaction.

part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses.

involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed

on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been

invoiced or otherwise notified of the actual costs.

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.

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 .

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.

Although we do not expect our estimates to be materially

different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status

and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period.

To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.

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.

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.

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.

Although we do not expect our estimates to be materially different from

amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing

of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period.

we have not made any material adjustments to our prior estimates of accrued expenses.

Compensation Expense

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.

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.

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.

Expected volatility is estimated considering the

Company’s own historical volatility.

The risk-free interest rate is based on a treasury

instrument whose term is consistent with the expected term of the stock options.

The expected dividend yield is assumed to be zero

as we have never paid dividends and have no current plans to pay any dividends on our common stock.

Expected term is

estimated using the “simplified” method, as outlined in SEC Staff Accounting Bulletin No.

We have 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 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.

Expected volatility is estimated considering the Company’s own historical volatility.

The risk-free

interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options.

The expected dividend

yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock.

term is estimated using the “simplified” method, as outlined in SEC Staff Accounting Bulletin No.

107, “Share-Based

Payment.” We use the closing price of our common stock as quoted on Nasdaq to determine the fair value of restricted stock.

account for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the

forfeitures arise.

account for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures

option-based compensation expense recognized for the years ended December 31, 2024 and 2023 was $1.1 million and $1.4 million, respectively.

10 unchanged sentences

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.

Inputs used in the model include assumptions

for expected volatility, risk-free interest rate, dividend yield and estimated expected term.

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.

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

1 unchanged sentence

periods recorded in the consolidated statements of operations and comprehensive loss.

Certain inputs used in this Black-Scholes pricing model may fluctuate in future

periods based upon factors that are outside of our control, including a potential change in control.

A significant change in one or more

of these inputs used in the calculation of the fair value may cause a significant change to the fair value of our warrant liabilities,

which could also result in material non-cash gains or losses being reported in the Company’s statement of operations.

the inputs we utilized to value our warrant liabilities are highly subjective.

The assumptions used in calculating the fair value of our

warrant liabilities represent our best estimates, but these estimates involve inherent uncertainties and the application of management

As a result, if factors change and we use different assumptions, the fair value of the warrant liabilities may be materially

different in the future.

change in fair value of warrant liability recognized for the year ended December 31, 2023 resulted in a loss of $11.7 million.

in fair value of warrant liability recognized for the year ended December 31, 2022 resulted in a gain of $11.4 million.

Certain inputs used in this Black-Scholes pricing

model may fluctuate in future periods based upon factors that are outside of our control, including a potential change in control.

significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair

value of our warrant liabilities, which could also result in material non-cash gains or losses being reported in the Company’s

statement of operations.

In addition, the inputs we utilized to value our warrant liabilities are highly subjective.

The assumptions

used in calculating the fair value of our warrant liabilities represent our best estimates, but these estimates involve inherent uncertainties

and the application of management judgment.

As a result, if factors change and we use different assumptions, the fair value of the warrant

liabilities may be materially different in the future.

change in fair value of warrant liability recognized for the year ended December 31, 2024 and 2023 resulted in a loss of $0.8 million

and $11.7 million, respectively.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

5 unchanged sentences

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