What changed in this filing

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Item 9A. Controls and Procedures

2026-03-17 compared with 2025-03-20 · 1060 added, 869 removed, 808 unchanged (70% of the section changed)

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OTHER INFORMATION

the fiscal quarter ended December 31, 2024, the following officers, as defined in Rule 16a-1(f) under the Exchange Act, as amended, adopted

a “Rule 10b5-1 trading arrangement” as defined in Regulation S-K Item 408, as follows:

November 23, 2024 , Don Wuchterl , a member of the Company’s board of directors, adopted

a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate

of up to 40,176 shares of our common stock.

The duration of the trading arrangement is until

February 24, 2026, or earlier if all transactions under the trading arrangement are completed.

the fiscal quarter ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1 under the Exchange Act) adopted ,

modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 105b-1 trading arrangement” (as those

terms are defined in Item 408 of Regulation S-K).

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

and Executive Officers

and Reports of Beneficial Ownership .

The information required by this Item is incorporated herein by reference from the information

to be contained in our 2025 Proxy Statement to be filed with the SEC within 120 days after December 31, 2024, in connection with the

solicitation of proxies for our 2025 Annual Meeting of Stockholders (the “2025 Proxy Statement”).

We have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of our employees (including

executive officers) and directors.

appearing in our Notice of Annual Meeting of Stockholders and Proxy Statement for the 2026 Annual Meeting of Stockholders (the “2026

Proxy Statement”), including information appearing under “Proxy Statement Summary,” “Corporate Governance Matters,”

and “Audit Committee Matters” is incorporated herein by reference.

We will file the 2026 Proxy Statement with the SEC pursuant

to Regulation 14A within 120 days after the end of the fiscal year.

have adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of our employees (including executive

officers) and directors.

The Code is available on our website at www.abeonatherapeutics.com under the heading “Investors

& Media—Corporate Governance—Governance—Governance Documents.” We intend to satisfy the disclosure requirement

regarding any waiver of a provision of the Code applicable to any executive officer or director, by posting such information on such

We shall provide to any person without charge, upon request, a copy of the Code.

Any such request must be made in writing to

Abeona Therapeutics Inc., c/o Investor Relations, 6555 Carnegie Ave, 4th Floor, Cleveland, OH 44103.

corporate governance guidelines and the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance

Committee of the Board of Directors are available on our website at www.abeonatherapeutics.com under the heading “Investors

& Media—Corporate Governance—Governance—Governance Documents.” We shall provide to any person without charge,

upon request, a copy of any of the foregoing materials.

Any such request must be made in writing to Abeona Therapeutics Inc., c/o Investor

Relations, 6555 Carnegie Ave, 4th Floor, Cleveland, OH 44103.

regarding any amendment to, or waiver from a provision of the Code applicable to any executive officer or director, by posting such information

on our website.

EXECUTIVE COMPENSATION

information required by this Item is contained in the 2025 Proxy Statement and is incorporated herein by reference.

contained in the 2026 Proxy Statement, including information appearing under “Corporate Governance Matters,” “Compensation

of Directors,” and “Executive Compensation” in the 2026 Proxy Statement, is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

information required by this Item is contained in the 2025 Proxy Statement and is incorporated herein by reference.

contained in the 2026 Proxy Statement, including information appearing under “Security Ownership of Certain Beneficial Owners and

Management” in the 2026 Proxy Statement, is incorporated herein by reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

information required by this Item is contained in the 2025 Proxy Statement and is incorporated herein by reference.

contained in the 2026 Proxy Statement, including information appearing under “Corporate Governance Matters” and “Compensation

of Directors” in the 2026 Proxy Statement, is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

information required by this Item is contained in the 2025 Proxy Statement and is incorporated herein by reference.

contained in the 2026 Proxy Statement, including information appearing under “Independent Registered Public Accounting Firm Fees

and Services” in the 2026 Proxy Statement, is incorporated herein by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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Consolidated Balance Sheets at December 31, 2025 and 2024

Consolidated Statements of Operations and Comprehensive Loss for 2024 and 2023

Consolidated Statements of Operations and Comprehensive Income (Loss) for 2025 and 2024

Consolidated Statements of Stockholders’ Equity for 2025 and 2024

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Amended and Restated Bylaws of Abeona Therapeutics Inc.

(incorporated by reference to Exhibit 3.1 of our Form 8-K filed on July 9, 2024).

Form of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of our Form 8-K filed on May 2, 2022)

Form of Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.2 of our Form 8-K filed on May 2, 2022)

2015 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 to our Form S-8 filed May 11, 2015)

2015 Equity Incentive Plan Amendment (incorporated by reference to our Definitive Proxy Statement on Schedule 14A filed on April 4, 2016)

Description of Capital Stock of Abeona Therapeutics Inc.

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and Avenue Venture Opportunities Fund II, L.P., dated as of January 8, 2024 (incorporated by reference to Exhibit 4.2 of our Form 8-K filed on January 8, 2024)

Warrant to Purchase Common Stock, by and between Abeona Therapeutics Inc.

and Avenue Venture Opportunities Fund, L.P., dated as of July 18, 2025 (incorporated by reference to Exhibit 4.1 of our Form 8-K filed on July 18, 2025)

Warrant to Purchase Common Stock, by and between Abeona Therapeutics Inc.

and Avenue Venture Opportunities Fund II, L.P., dated as of July 18, 2025 (incorporated by reference to Exhibit 4.2 of our Form 8-K filed on July 18, 2025)

401(k) Plan (incorporated by reference to Exhibit 10.20 of our Form 10-K for the year ended December 31, 1999)

2005 Equity Incentive Plan (incorporated by reference to Exhibit 1 of our Proxy Statement filed on April 18, 2005)

2015 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to our Form S-8 filed on August 30, 2022)

Second Amended and Restated 2023 Equity Incentive Plan (incorporated by reference to Appendix A of our Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on November 12, 2024)

2023 Employment Inducement Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to our Form S-8 filed on October 10, 2023)

Director Designation Agreement dated November 15, 2007, between the Company and SCO Capital Partners LLC (incorporated by reference to Exhibit 10.26 of our Form S-1 filed on March 11, 2008)

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1 to Open Market Sale Agreement, dated November 19, 2021, amending the Open Market Agreement, by and between the Company and Jefferies LLC, dated August 17, 2018 (incorporated by reference to Exhibit 1.2 of Form 8-K filed on November 19, 2021)

Settlement Agreement and Mutual Release, dated November 12, 2021, between the Company and REGENXBIO Inc.

(incorporated by reference to Exhibit 10.14 of our Form 10-K for the year ended December 31, 2021)

Form of Securities Purchase Agreement between Abeona Therapeutics Inc.

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and Ultragenyx Pharmaceutical Inc., dated May 16, 2022 (incorporated by reference to Exhibit 10.3 of our Form 10-Q for the quarter ended June 30, 2022)

Retention Bonus Letter, dated June 15, 2023, to Vishwas Seschadri, Ph.D.

Retention Bonus Letter, dated June 15, 2023, to Vishwas Seshadri, Ph.D.

(incorporated by reference to Exhibit 10.3 of our Form 10-Q for the quarter ended June 30, 2023)

Retention Bonus Letter, dated June 15, 2023, to Joseph Vazzano, Ph.D.

Retention Bonus Letter, dated June 15, 2023, to Joseph Vazzano.

(incorporated by reference to Exhibit 10.4 of our Form 10-Q for the quarter ended June 30, 2023)

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Supplement to the Loan and Security Agreement, by and among Abeona Therapeutics, Inc., MacroChem Corporation, Abeona Therapeutics LLC, Avenue Venture Opportunities Fund, L.P., as Agent, and Avenue Venture Opportunities Fund II, L.P., dated as of January 8, 2024 (incorporated by reference to Exhibit 10.2 of our Form 8-K filed on January 8, 2024)

Underwriting Agreement, dated May 3, 2024 (incorporated by reference to Exhibit 1.1 of our Form 8-K filed on May 3, 2024)

Letter from Whitley Penn addressed to the United States Securities and Exchange Commission, dated October 17, 2023 (incorporated by reference to Exhibit 16.1 of our Form 8-K filed on October 18, 2023)

Priority Review Voucher Asset Purchase Agreement dated May 9, 2025 (incorporated by reference to Exhibit 10.1 of our Form 10-Q for the quarter ended June 30, 2025)

First Amendment to Loan and Security Agreement and Supplement, by and among Abeona Therapeutics Inc., MacroChem Corporation, Abeona Therapeutics LLC, Avenue Venture Opportunities Fund, L.P., as Agent, and Avenue Venture Opportunities Fund II, L.P., dated as of July 18, 2025 (incorporated by reference to Exhibit 10.1 of our Form 8-K filed on July 18, 2025)

Policy on Insider Trading and Confidentiality

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Principal Financial Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934

Certification Pursuant to 18 U.S.C.

Certification

Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Management contract or compensatory plan required to be filed as an exhibit to this report pursuant to Item 15(a)(3) of Form 10-K.

Management contract or compensatory plan or arrangement.

Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

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OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the stockholders and the Board of Directors of Abeona Therapeutics Inc

the shareholders and the Board of Directors of Abeona Therapeutics Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Abeona Therapeutics Inc (the “Company”) as of December 31,

2024 and 2023, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each

of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the

“financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of

the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United

States of America.

These financial statements are the responsibility of the Company’s management.

We have audited the accompanying consolidated balance sheets of Abeona Therapeutics Inc.

and subsidiaries (the “Company”) as

of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), stockholders’

equity and cash flows, for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to

as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years

in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

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laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

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estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

We believe that our audits

provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated

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matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

and Security Agreement and Common Stock Warrants — Refer to Notes 9 and 10 to the financial statements

Revenue- Product revenue, net— Refer

to Notes 2 and 3 to the financial statements

Audit Matter Description

As more fully described in Notes 9 and 10 to the financial statements, on January 8, 2024, the Company entered into a Loan and Security

Agreement, as supplemented by a Supplement, with Avenue Venture Opportunities Fund, L.P.

and Avenue Venture Opportunities Fund II, L.P.

The Loan Agreement provides for senior secured term loans in an aggregate principal amount up to $50 million.

Pursuant to the Supplement

to the Loan and Security Agreement, Avenue also has the right to convert up to $3 million of the outstanding principal of the Loans into

shares of Company common stock (the “Conversion Right”) at a price per share equal to 120% of the exercise price of the Warrants

at any time while the Loans are outstanding, subject to certain terms and conditions, including ownership limitations.

On January 8, 2024,

in connection with entering into the Loan and Security Agreement, the Company issued to each of Avenue and Avenue II warrants to purchase

up to $480,000 and $1,920,000 worth of shares, respectively, of Company common stock.

identified the assessment of the accounting for the Loan and Security Agreement and related Common Stock Warrants as a critical

audit matter because of the complexity in applying the accounting framework and the significant judgments made by management in the

determination of the existence of embedded derivative liabilities and classification of the Common Stock Warrants related to the

Loan and Security Agreement.

Auditing these conclusions required a high

degree of auditor judgment and an increased extent of effort.

more fully described in Notes 2 and 3 to the financial statements, product revenue is generated from sales of ZEVASKYN®, which received

regulatory approval and reached its commercialization stage upon the treatment of the first patient in 2025.

The Company’s contracts

can include the right to receive both an outcome-based rebate and a subsequent treatment discount.

from product sales is recognized at the point in time that the customer obtains control of the product.

The Company has determined that

the rebate and discount create a material right and allocates the transaction consideration to the product and material right on a relative

standalone selling price basis.

Consideration allocated to the material right is deferred and recognized when the subsequent purchase

occurs or the option expires.

identified the Company’s initial application of Revenue from Contracts with Customers (“ASC 606”) to its product revenue

as a critical audit matter, given the complexity involved with the identification of material rights and in the estimation of the standalone

selling price of the material right.

Auditing these conclusions involved especially subjective judgment and audit effort.

the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to accounting for the Loan and Security Agreement and Common Stock Warrants included the following, among

We obtained and read the agreements associated with the Loan and Security Agreements, including the related Common Stock Warrant agreement,

and tested the accuracy and completeness of the significant terms identified by management for purposes identifying embedded derivative

liabilities and classification of the common stock warrants.

With the assistance of professionals in our firm having expertise in the accounting treatment for debt and equity instruments, including

warrants, we evaluated the Company’s conclusions regarding the accounting treatment applied to the Loan and Security Agreement and

Common Stock Warrants, including the identification and recognition of embedded derivatives, initial classification of embedded derivatives

as a liability, and classification of Common Stock Warrants as a liability.

We also evaluated the Company’s subsequent reclassification

of the derivative liability associated with the Conversion Right to equity on September 30, 2024 as it was considered indexed to the Company’s

Evaluated the completeness and accuracy of the disclosures related to the Loan and Security Agreement and Common Stock Warrants.

Our audit procedures related to the application of

ASC 606 to the Company’s product revenue included the following, among others:

We evaluated the Company’s significant account policies related to revenue recognition for reasonableness.

For a selection of revenue agreements, we obtained and read the underlying agreement between the Company and its customers.

With the assistance of professionals in our firm having expertise in the accounting treatment for revenue arrangements,

we evaluated the Company’s assessment of the accounting treatment for such arrangements, including the identification of material

rights and the methodology used to estimate the standalone selling price of the material right.

We evaluated the Company’s determination

of the allocation of the transaction price to the product and the material right using a relative standalone selling price methodology.

Deloitte & Touche LLP

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Balance Sheets

thousands, except share and per share amounts)

December 31, 2024

December 31, 2023

in thousands, except share and per share amounts)

and cash equivalents

receivable, net

expenses and other current assets

current assets

Cash and cash equivalents

Short-term investments

Restricted cash

Other receivables

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Operating lease right-of-use assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

and equipment, net

lease right-of-use assets

AND STOCKHOLDERS’ EQUITY

portion of long-term debt

portion of operating lease liability

current liabilities

Accounts payable

Accrued expenses

Current portion of long-term debt

Current portion of operating lease liability

Current portion payable to licensor

Other current liabilities

Total current liabilities

Long-term operating lease liabilities

Long-term debt

Warrant liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Preferred stock - $ 0.01 par value;

current liabilities

operating lease liabilities

and contingencies

Stockholders’

stock - $ 0.01 par value;

authorized 2,000,000 shares;

No shares issued and outstanding as of December 31, 2025 and 2024, respectively

Common stock - $ 0.01 par value;

stock - $ 0.01 par value;

authorized 200,000,000 shares;

45,644,091 and 26,523,878 shares issued and outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Total stockholders’ equity

Total liabilities and stockholders’ equity

55,043,413 and 45,644,091 shares issued and outstanding as of December 31,

2025 and 2024, respectively

paid-in capital

other comprehensive loss

stockholders’ equity

liabilities and stockholders’ equity

accompanying notes are an integral part of these consolidated statements.

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AND SUBSIDIARIES

Statements of Operations and Comprehensive Loss

thousands, except share and per share amounts)

For the years ended December 31,

License and other revenues

Research and development

Statements of Operations and Comprehensive Income (Loss)

in thousands, except share and per share amounts)

the years ended December 31,

and other revenues

and expenses:

and development

general and administrative

Gain on operating lease right-of-use assets

Total expenses

Loss from operations

Interest income

Interest expense

Change in fair value of warrant and derivative liabilities

Basic and diluted loss per common share

Weighted average number of common shares outstanding - basic and diluted

Other comprehensive income (loss):

Change in unrealized gains related to available-for-sale debt securities

Foreign currency translation adjustments

Comprehensive loss

costs and expenses

from operations

in fair value of warrant and derivative liabilities

from sale of priority review voucher, net

(loss) before income taxes

tax (benefit) expense

income (loss)

income (loss) per common share

average number of common shares outstanding:

comprehensive income (loss):

in unrealized gains related to available-for-sale debt securities

Comprehensive

income (loss)

accompanying notes are an integral part of these consolidated statements.

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Statements of Stockholders’ Equity

thousands, except share amounts)

in thousands, except share amounts)

Comprehensive

Stockholders’

Balance at December 31, 2022

at December 31, 2023

$ ( 749,524 )

Stock-based compensation expense

Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement

Issuance of common stock, net of offering costs under open market sale agreement (ATM)

Issuance of common stock, net of offering costs under direct placement offering

Other comprehensive income

Balance at December 31, 2023

compensation expense

of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement

of common stock, net of offering costs under open market sale agreement (ATM)

of common stock in connection with public offering, net of offering costs

of common stock upon exercise of pre-funded warrants, net of shares settled

Reclassification

of derivative liability

comprehensive income

at December 31, 2024

$ ( 813,258 )

Stock-based compensation expense

Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement

Issuance of common stock, net of offering costs under open market sale agreement (ATM)

Issuance of common stock in connection with public offering, net of offering costs

Issuance of common stock upon exercise of pre-funded warrants, net of shares settled

Reclassification of derivative liability

Other comprehensive income

Balance at December 31, 2024

compensation expense

of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement

of common stock, net of offering costs under open market sale agreement (ATM)

of common stock upon exercise of warrants

Reclassification

of warrant liability

income (loss)

comprehensive income

at December 31, 2025

$ ( 742,075 )

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Statements of Cash Flows

For the year ended December 31,

Cash flows from operating activities:

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation and amortization

Stock-based compensation expense

Change in fair value of warrant and derivative liabilities

Gain on operating lease right-of-use assets

Accretion and interest on short-term investments

Amortization of right-of-use lease assets

Non-cash interest

(Gain) loss on disposal of property and equipment

Change in operating assets and liabilities:

Other receivables

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Lease liabilities

Change in payable to licensor

Other current liabilities

Net cash used in operating activities

Cash flows from investing activities:

Capital expenditures

Proceeds from disposal of property and equipment

Purchases of short-term investments

Proceeds from maturities of short-term investments

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Proceeds from ATM sales of common stock, net of issuance costs

Proceeds from sales of common stock under direct placement offering, net of issuance costs

Payments related to net settlement of restricted share awards

Proceeds from sales of common stock, net of issuance costs

Proceeds from issuance of long-term debt

Payment of debt issuance costs

Net cash provided by financing activities

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Supplemental cash flow information:

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash

Supplemental non-cash flow information:

Right-of-use asset obtained in exchange for new operating lease liabilities

Derivative and warrant additions associated with loan and security agreement

Reclassification of derivative liability to equity

Changes in accrued property and equipment

Cash paid for interest

Cash paid for taxes

in thousands)

the year ended December 31,

flows from operating activities:

income (loss)

to reconcile net income (loss) to cash used in operating activities:

and amortization

compensation expense

in fair value of warrant and derivative liabilities

and interest on short-term investments

of right-of-use lease assets

on disposal of property and equipment

from sale of priority review voucher

in operating assets and liabilities:

expenses and other current assets

payable and accrued expenses

in payable to licensor

current liabilities

cash used in operating activities

flows from investing activities:

from sale of priority review voucher, net of transaction costs of $ 2.6 million

from disposal of property and equipment

of short-term investments

from maturities of short-term investments

cash provided by (used in) investing activities

flows from financing activities:

from ATM sales of common stock, net of issuance costs

related to net settlement of restricted share awards

from underwritten sales of common stock, net of issuance costs

from exercise of warrants

from issuance of long-term debt

of debt issuance costs

cash provided by financing activities

increase in cash, cash equivalents and restricted cash

cash equivalents and restricted cash at beginning of period

cash equivalents and restricted cash at end of period

cash flow information:

and cash equivalents

cash, cash equivalents and restricted cash

non-cash flow information:

asset obtained in exchange for new operating lease liabilities

and warrant additions associated with loan and security agreement

Reclassification

of derivative and warrant liability to equity

in accrued property and equipment

paid for interest

paid for taxes

accompanying notes are an integral part of these consolidated statements.

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to Consolidated Financial Statements

1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1 – NATURE OF OPERATIONS

Therapeutics Inc.

(together with the Company’s subsidiaries, “Abeona” or the “Company”), a Delaware corporation,

is a clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases.

The Company’s lead

clinical program is for pz-cel, an autologous, cell-based gene therapy currently in development for recessive dystrophic epidermolysis

bullosa (“RDEB”).

The Company’s development portfolio also features adeno-associated virus (“AAV”)-based

gene therapies designed to treat ophthalmic diseases with high unmet need using novel AIM™ capsids that the Company has exclusively

licensed from the University of North Carolina at Chapel Hill and developed internally through its AAV vector research programs.

is a commercial-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases.

On April 28, 2025,

Food and Drug Administration (“FDA”) approved ZEVASKYN ® (prademagene zamikeracel) gene-modified cellular

sheets, also known as ZEVASKYN ® , as the first and only autologous cell-based gene therapy for the treatment of wounds

in adult and pediatric patients with recessive dystrophic epidermolysis bullosa (“RDEB”), a serious and debilitating genetic

skin disease.

The Company’s development portfolio also features adeno-associated virus (“AAV”)-based gene therapies

designed to treat ophthalmic diseases with high unmet need using novel AIM™ capsids.

accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern , the Company has evaluated whether

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a biopharmaceutical organization, the Company has devoted substantially all of its resources since inception to research and development

activities for pz-cel and other product candidates, business planning, raising capital, establishing its intellectual property portfolio,

acquiring or discovering product candidates, and providing general and administrative support for these operations.

As a result, the

Company has incurred significant operating losses and negative cash flows from operations since its inception and anticipates such losses

and negative cash flows will continue for the foreseeable future.

its inception, the Company has funded its operations primarily with proceeds from sales of shares of its stock.

The Company has incurred

recurring losses since its inception, including net losses of $ 63.7 million and $ 54.2 million for the years ended December 31, 2024 and

2023, respectively.

As of December 31, 2024, the Company had an accumulated deficit of $ 813.3 million.

To date, the Company has not generated

any significant revenues and expects to continue to generate operating losses for the foreseeable future.

As of the issuance date of

these consolidated financial statements, the Company expects that its existing cash, cash equivalents, restricted cash and short-term

investments of $ 98.1 million as of December 31, 2024, in addition to the $ 4.8 million in net proceeds from the Company’s subsequent

sale of common stock under the ATM Agreement, will be sufficient to fund its operating expenses and capital expenditure requirements

for at least the next 12 months from the issuance date of these consolidated financial statements.

the Company believes its capital resources are sufficient to fund the Company’s on-going operations for the next 12 months from

the issuance date of these consolidated financial statements, the Company’s liquidity could be materially affected over this period

(1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding;

(2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements;

(3) negative regulatory events

or unanticipated costs related to pz-cel;

(4) any other unanticipated material negative events or costs.

One or more of these events

or costs could materially affect the Company’s liquidity.

If the Company is unable to meet its obligations when they become due,

the Company may have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to

its operating plan.

The accompanying consolidated financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

activities for ZEVASKYN ® and other product candidates, business planning, raising capital, establishing its intellectual

property portfolio, acquiring or discovering product candidates, and providing selling, general and administrative support for these

a result, the Company has incurred significant operating losses and negative cash flows from operations since its inception, other than

the year ended December 31, 2025 with the gain on sale of its Priority Review Voucher (“PRV”).

The Company anticipates such

losses and negative cash flows will continue until ZEVASKYN ® can provide sufficient revenue for the Company to be profitable

and generate positive cash flows.

Through December 31, 2025, the Company has relied primarily on its sale of equity securities, its proceeds

from the sale of its PRV, and strategic collaboration arrangements to finance its operations.

The Company expects that its capital resources

will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the issuance

date of these consolidated financial statements.

The Company may need to raise additional capital to fully implement its business plans

through the issuance of equity, borrowings, or strategic alliances with partner companies.

However, if such financing is not available

at adequate levels, the Company would need to reevaluate its operating plans.

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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America (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the reported amount of assets and

disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue

and expenses during the reported period.

The Company’s significant estimates include, but are not limited to, fair value of warrant

and derivative liabilities, the incremental borrowing rate related to the Company’s operating leases and stock-based compensation.

Due to the uncertainty inherent in such estimates, actual results could differ from these estimates and assumptions.

GAAP”) requires management to make estimates and assumptions that affect the reported amount of assets

and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of

revenue and expenses during the reported period.

The Company’s significant estimates include, but are not limited to, variable

consideration associated with revenue recognition and the determination of the standalone selling price of material rights, fair value of warrant and derivative liabilities, the incremental borrowing rate

related to the Company’s operating leases, stock-based compensation, accrued expenses, impairment of long-lived assets and

income taxes.

Due to the uncertainty inherent in such estimates, actual results could differ from these estimates and

and Cash Equivalents

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The Company has not experienced any losses related to amounts in excess of FDIC limits.

cash serves as collateral for leased office space.

cash served as collateral for leased office space that expired in September 2025.

investments consist of investments in U.S.

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not recoverable within a reasonable period of time.

receivable represents amounts arising from product sales and licensing revenue and is recorded net of allowances for prompt payment discounts,

returns, and credit losses.

The Company estimates an allowance for credit losses by considering factors such as the aging of its accounts

receivable, the history of write offs for uncollectible accounts, and the credit quality of its significant customers, the current economic

environment/macroeconomic trends, supportable forecasts, and other relevant factors.

The Company reviews the credit quality of its accounts

receivables by monitoring the aging of its accounts receivable, the history of write offs for uncollectible accounts, and the credit

quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant

The Company has no historical write-offs of its accounts receivable and the Company has determined that an allowance for credit

losses is not required as of December 31, 2025.

receivable, net comprises the following categories (in thousands):

OF ACCOUNTS RECEIVABLE

For the year ended December 31,

Product sales

License revenues

Total accounts receivable, net

receivables include employee retention credits (“ERC”), sublease rent receivables and other miscellaneous receivables that

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As of December 31, 2025 and 2024, the Company had ERC receivables of $ 0.5

million and $ 2.1 million, respectively which was recorded in other receivables and as a component of other income in the consolidated

statements of operations and comprehensive loss.

million and $ 1.6

million, respectively, which was recorded in other receivables

and as a component of other income, net in the consolidated statements of operations and comprehensive income (loss).

Concentration

of Credit Risk and Off-Balance Sheet Risk

instruments that subject the Company to credit risk primarily consist of cash and cash equivalents, short-term investments, accounts

receivable, net and other receivables.

The Company maintains its cash and cash equivalent balances with high-quality financial institutions

and, consequently, the Company believes that such funds are subject to minimal credit risk.

The Company is exposed to credit risk in

the event of default by the financial institutions to the extent amounts recorded on the consolidated balance sheets are in excess of

insured limits.

The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant

credit risk on these funds.

The Company’s investment securities, which primarily consist of U.S.

federal agency securities, U.S.

treasury securities and certificates of deposit, potentially subject the Company to concentrations of credit risk.

The Company has no

financial instruments with off-balance sheet risk of loss.

and Costs of Sales

Company capitalizes inventory costs associated with products when future economic benefit is expected to be realized.

These costs consist

of raw materials, manufacturing-related costs, personnel costs, facility costs, and other indirect overhead costs.

Prior to receiving

FDA approval for ZEVASKYN ® in April 2025, the Company expensed costs related to inventory for clinical and pre-commercial

purposes directly to research and development expense.

Following the FDA’s approval of ZEVASKYN ® , the Company began

capitalizing inventory related to commercialized products held for sale, in-process of production for sale, and raw materials to be used

in the manufacturing of inventory.

Company values its inventory at the lower-of-cost and net realizable value, on a first-in, first-out basis.

The Company adjusts the net

realizable value of any excess, obsolete or unsalable inventory in the period in which they are identified.

Such impairment charges,

should they occur, are recorded within cost of sales.

of sales includes inventory and period costs related to overhead and manufacturing costs of ZEVASKYN ® during the twelve

months ended December 31, 2025, including costs associated with the manufacturing of non-conforming products.

Prior to receiving FDA

approval in April 2025, costs associated with the manufacturing of ZEVASKYN ® were expensed as research and development

and Equipment

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of exercise, the Company includes the renewal period in its lease term.

Company has entered into agreements to license the rights to certain technologies.

The Company records the purchase price paid for the

license, which represents fair value, on its consolidated balance sheet.

Licensed technology is amortized over the life of the patent

or the agreement.

The Company maintains licensed technology on its consolidated balance sheet until either the licensed technology agreement

underlying it is completed or the asset becomes impaired.

When the Company determines that an asset has become impaired, as discussed

below, or the Company abandons a project, the Company writes down the carrying value of the related intangible asset to its fair value

and recognizes an impairment charge in the period in which the impairment occurs.

The Company has fully written off the licensed technology

as of December 31, 2024 and December 31, 2023.

of Long-Lived Assets

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trends, supportable forecasts, and other relevant factors.

The Company’s accounts receivable are with customers that do not have

The Company’s accounts receivables are with customers that do not have

a history of uncollectibility nor a history of significantly aged accounts receivables.

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operating decision maker (“CODM”), its Chief Executive Officer, in accordance with ASC 280, Segment Reporting .

Company has determined that it operates in a single business segment, which is a clinical-stage biopharmaceutical company developing

Company has determined that it operates in a single business segment, which is a commercial-stage biopharmaceutical company developing

cell and gene therapies for life-threatening diseases.

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to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within

the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance

obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the

transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Company enters into licensing agreements that are within the scope of ASC 606, under which it may exclusively license rights to research,

contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised

within each contract, determines those that are performance obligations and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation

when (or as) the performance obligation is satisfied.

part of the accounting for these arrangements, the Company applies significant judgment to determine:

(a) the number of performance obligations

based on the determination under step (ii) above;

(b) the transaction price under step (iii) above;

and (c) the stand-alone selling price

for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above.

respect to the transaction price, to the extent the transaction price includes variable consideration, the Company estimates the amount

of variable consideration that should be included in the transaction price using the expected value method or most likely amount method,

depending upon the nature of the underlying variable consideration.

As it pertains to license agreement, the Company primarily applies

the most likely amount method, except for sales-based royalties, to estimating variable consideration.

The Company determines the standalone

selling price for performance obligations in its contracts with customers using an adjusted market approach, until such time sales transaction

volume is at sufficient level to establish standalone selling price using observable inputs.

Company generates revenue from sales in the United States of its commercially approved ZEVASKYN ® .

The Company’s

customers for ZEVASKYN ® are qualified treatment centers.

Revenue from product sales is a single performance

obligation recognized at the point in time when the customer obtains control of the product, which is typically upon the completion

of a final quality inspection of the product at the qualified treatment center.

There is no obligation for the qualified treatment

centers to use ZEVASKYN ® , and the Company has no contractual right to receive payment until the final quality

inspection of the product at the qualified treatment centers and transfer of control is completed.

Company is a party to various commercial arrangements and government programs, which include payor rebates, co-payment assistance

and prompt pay discounts, which impact the transaction price and represent forms of variable consideration.

Revenue from product

sales is reduced at the time of recognition for these forms of variable consideration.

The Company’s contracts can include the

right to receive an outcomes-based rebate and a subsequent treatment discount of ZEVASKYN ® under certain conditions.

The Company has determined that the rebate and discount create a material right and allocates transaction consideration to

ZEVASKYN ® and the material right on a relative standalone selling price basis.

The standalone selling price for

ZEVASKYN ® is the wholesale acquisition cost.

The standalone selling price for the material right is determined by

quantifying the discount a customer would receive upon exercise of the option adjusting for the likelihood the option will be

Transaction consideration allocated to the material right is deferred and recognized when either (a) the subsequent

purchase of ZEVASKYN ® occurs, or (b) the time period during which a subsequent purchase of ZEVASKYN ®

could be made, expires.

deferral of revenue for the years ended December 31, 2025 or 2024.

and other revenues

Company enters into license agreements that are within the scope of ASC 606, under which it may exclusively license rights to research,

develop, manufacture and commercialize its product candidates to third parties.

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and royalties on net sales of licensed products.

part of the accounting for these arrangements, the Company must use significant judgment to determine:

(a) the number of performance

obligations based on the determination under step (ii) above;

(b) the transaction price under step (iii) above;

and (c) the stand-alone

selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above.

The Company uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included in

the transaction price as described further below.

The transaction price is allocated to each performance obligation on a relative stand-alone

selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

Amounts received prior to revenue recognition are recorded as deferred revenue.

the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified

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in the transaction price.

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

payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of

being achieved until those approvals are received.

The Company evaluates 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, the Company re-evaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its

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.

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals,

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

The Company evaluates 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

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

to constraint and, if necessary, adjusts its 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.

Collaborative

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of the arrangement that are accounted for pursuant to ASC 606, the Company applies the five-step model described above under ASC 606.

Company has license agreements with various third parties.

Under these agreements, the Company is obligated to pay royalty payments

based on a percentage of net sales or sublicence revenues.

Royalties are included in either accounts payable or accrued expenses in

the consolidated balance sheets.

See Note 13 – License/Supplier Agreements for details of the Company’s license

agreements and resulting royalties recognized.

and Development Expenses

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Research 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.

of materials and equipment or facilities that are acquired for research and development activities and that have alternative future uses

are capitalized when acquired.

and Administrative Expenses

and administrative expenses primarily consist of personnel, contract personnel, personnel-related expenses to support the Company’s

expense, lab supplies, preclinical and development cost, clinical trial expense, manufacturing related to clinical phase products, 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.

General and Administrative Expenses

general and administrative expenses primarily consist of personnel, contract personnel, personnel-related expenses to support the Company’s

administrative and operating activities, facility costs, professional expenses (i.e., legal, audit, advisory expenses) and commercial

readiness costs.

readiness and launch costs.

taxes are accounted for under the asset and liability method.

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Interest costs and penalties related

to income taxes are classified as interest expense and general and administrative costs, respectively, in the consolidated financial

to income taxes are classified as interest expense and selling, general and administrative costs, respectively, in the consolidated financial

For the years ended December 31, 2025 and 2024, the Company did not recognize any uncertain tax positions, interest or penalty

expense related to income taxes.

It is not reasonably likely for the amounts of unrecognized tax benefits to significantly increase or

decrease within the next 12 months.

The Company files U.S.

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does not have any open income tax audits.

Loss Per Share

and diluted net loss per share is computed by dividing net loss attributable to common shareholders by the weighted-average number of

shares of common stock outstanding during the period.

The weighted average number of shares of common stock includes the weighted average

effect of outstanding pre-funded warrants for the purchase of shares of common stock for which the remaining unfunded exercise price

is $ 0.0001 or less per share (Note 10).

The Company does not include the potential impact of dilutive securities in diluted net loss

per share, as the impact of these items is anti-dilutive.

Potential dilutive securities result from outstanding restricted stock, stock

options, conversion features of loan agreements, and stock purchase warrants.

following table sets forth the potential securities that could potentially dilute basic loss per share in the future that were not included

in the computation of diluted net loss per share because to do so would have been anti-dilutive for the periods presented:

OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

For the year ended December 31,

Shares of common stock issuable upon exercise of stock options

Shares of common stock underlying restricted stock

Shares of common stock issuable upon exercise of conversion feature of loan agreement

Shares of common stock issuable upon exercise of warrants

January 2024 as part of the Loan and Security Agreement, see Note 9, the Company issued warrants to purchase $ 2,400,000 worth of shares

of the Company’s stock which have an exercise price equal to the lesser of (i) $ 4.75 and (ii) the price per share of the Company’s

net bona fide round of equity financing before September 30, 2024 (the “2024 Loan Agreement Warrants”).

In connection with

the underwritten common stock offering consummated on May 7, 2024, pursuant to the terms of the 2024 Loan Agreement Warrants, the exercise

price was reduced to $ 4.07 per share and the shares issuable was calculated at 589,681 shares.

On September 30, 2024, per the terms of

the 2024 Loan Agreement Warrants, the exercise price and the number of shares became set at $ 4.07 per share and 589,681 shares, respectively.

The Company included these shares for the year ended December 31, 2024 as shares of common stock issuable upon exercise of warrants in

the table above and no shares for the year ended December 31, 2023.

Income (Loss) Per Share

net income (loss) per share is computed by dividing net income (loss) attributable to common shareholders by the weighted-average

number of shares of common stock outstanding during the period.

The weighted average number of shares of common stock includes the

weighted average effect of outstanding pre-funded warrants for the purchase of shares of common stock for which the remaining

unfunded exercise price is $ 0.0001

or less per share.

Diluted net income (loss) per share is computed based on the weighted average number of shares of common stock

plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and if-converted

Dilutive potential securities result from outstanding restricted stock, stock options, stock purchase warrants and

conversion features in the Company’s Loan Agreement (as defined in Note 10 – Debt).

When the Company has a net loss

during the period, the Company does not include the potential impact of dilutive securities in diluted net loss per share, as the

impact of these items is anti-dilutive.

reconciliation of the numerators and the denominators of the basic and diluted net income (loss) per share computations are as follows

(in thousands, except share and per share amounts):

OF NUMERATORS AND DENOMINATORS OF BASIC AND DILUTED NET INCOME (LOSS) PER SHARE AMOUNTS

the year ended December 31,

income (loss) used for basic net income (loss) per share

of dilutive securities:

value adjustments for warrant liabilities

for dilutive net income (loss) per share - net income (loss) available for common shareholders’ after the effect of dilutive

average number of common shares outstanding - basic

of dilutive shares:

of common stock issuable upon exercise of stock options

of common stock underlying restricted stock

of common stock issuable upon exercise of warrants

of common stock issuable upon exercise of conversion feature of loan agreement

potential common shares

for dilutive net income (loss) per share - adjusted weighted average shares used in computing net income (loss) per share - dilutive

income (loss) per common share

following table sets forth the potential securities that could potentially dilute basic income (loss) per share in the future that were

not included in the computation of diluted net income (loss) per share because to do so would have been anti-dilutive for the periods

SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE

the year ended December 31,

of common stock issuable upon exercise of stock options

of common stock underlying restricted stock

of common stock issuable upon exercise of conversion feature of loan agreement

of common stock issuable upon exercise of warrants

Company accounts for stock-based compensation expense in accordance with ASC 718, Stock Based Compensation .

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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

At September 30, 2024, the conversion feature no longer met the criteria of a derivative liability, and the derivative liability

was reclassified to equity.

and derivative liabilities in the consolidated statement of operations and comprehensive income (loss) until the derivative is exercised,

expired, reclassified, or otherwise settled.

At September 30, 2024, the conversion feature no longer met the criteria of a derivative

liability, and the derivative liability was reclassified to equity.

There are no outstanding derivative liabilities as of December 31,

2025 or 2024.

May 7, 2024, the Company issued pre-funded warrants to purchase 6,142,656 shares of common stock, with an exercise price of $ 4.0699 per

share (“2024 Pre-Funded Warrants”).

The prefunded warrants are classified as equity in accordance with ASC 815, Derivatives

and Hedging , given the prefunded warrants are indexed to the Company’s own shares of common stock and meet the requirements

to be classified in equity.

The prefunded warrants were recorded at their relative fair value at issuance in the stockholders’

equity section of the consolidated balance sheet and the prefunded warrants are considered outstanding shares in the basic earnings per

share calculation given their nominal exercise price.

On June 24, 2024 and December 2, 2024, 700,000 and 1,228,511 , respectively of the

2024 Pre-Funded Warrants were exercised, leaving 4,214,125 of 2024 Pre-Funded Warrants outstanding as of December 31, 2024

share (the “2024 Pre-Funded Warrants”).

The 2024 Pre-Funded Warrants are classified as equity in accordance with ASC 815,

Derivatives and Hedging , given the prefunded warrants are indexed to the Company’s own shares of common stock and meet the

requirements to be classified in equity.

The 2024 Pre-Funded Warrants were recorded at their relative fair value at issuance in the stockholders’

equity section of the consolidated balance sheet and the 2024 Pre-Funded Warrants are considered outstanding shares in the basic earnings

per share calculation given their nominal exercise price.

On June 24, 2024, December 2, 2024, and October 29, 2025, 700,000 , 1,228,511 ,

and 1,719,944 , respectively, of the 2024 Pre-Funded Warrants were exercised, leaving 2,494,181 of 2024 Pre-Funded Warrants outstanding

as of December 31, 2025.

January 8, 2024, the Company issued warrants to purchase up to $ 2,400,000 worth of shares of the Company’s common stock.

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The 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.

30, 2024, per the terms of the 2024 Loan Agreement Warrants, the exercise price and the number of shares became set at $ 4.07 per share

and 589,681 shares, respectively.

in the fair value between reporting periods recorded in the consolidated statements of operations and comprehensive income (loss).

September 30, 2024, per the terms of the 2024 Loan Agreement Warrants, the exercise price and the number of shares became set at $ 4.07

per share and 589,681 shares, respectively, all of which are outstanding as of December 31, 2025.

July 2025, as part of the Loan Agreement Amendment, see Note 10, the Company issued 16,474 common stock warrants, all of which are outstanding

as of December 31, 2025.

The July 2025 Avenue Warrants (as defined in Note 11 – Equity) expire on July 18, 2030, and have an exercise

price per share equal to $ 6.07 .

The common stock warrants issued in connection with the Loan Agreement Amendment issuance were determined

to be liability classified under ASC 815 as the common stock warrants were not considered indexed to the Company’s stock.

July 6, 2023, the Company issued pre-funded warrants to purchase 2,919,140 shares of common stock, with an exercise price of $ 4.0299

per share (“2023 Pre-Funded Warrants”.

The prefunded warrants are classified as equity in accordance with ASC 815, Derivatives

and Hedging , given the prefunded warrants are indexed to the Company’s own shares of common stock and meet the requirements

to be classified in equity.

The prefunded warrants were recorded at their relative fair value at issuance in the stockholders’

equity section of the consolidated balance sheet and the prefunded warrants are considered outstanding shares in the basic earnings per

share calculation given their nominal exercise price.

The 2023 Pre-Funded Warrants are classified as equity in accordance with ASC 815,

Derivatives and Hedging , given the prefunded warrants are indexed to the Company’s own shares of common stock and meet the

requirements to be classified in equity.

The 2023 Pre-Funded Warrants were recorded at their relative fair value at issuance in the stockholders’

equity section of the consolidated balance sheet and the 2023 Pre-Funded Warrants are considered outstanding shares in the basic earnings

per share calculation given their nominal exercise price.

On May 9, 2024, 300,000 of the 2023 Pre-Funded Warrants were exercised, leaving

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subject to customary adjustments thereunder.

On December 17, 2021, the Company issued warrants to purchase 1,788,000 shares of common

stock, with an exercise price of $ 9.75 per share, subject to customary adjustments thereunder.

The warrants issued in 2022 and 2021 were

determined to be freestanding instruments as they are legally detachable and separately exercisable from each other and from the common

stock issued.

The common stock warrants are accounted for as liabilities in the consolidated balance sheets at their estimated fair value

because they are not indexed to the Company’s own stock.

The 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.

On August 25, 2025 and December 30, 2025, 1,086,956 and 760,870 , respectively, of November

3, 2022 warrants were exercised, leaving 5,762,053 of the November 3, 2022 warrants outstanding as of December 31, 2025.

17, 2021, the Company issued warrants to purchase 1,788,000 shares of common stock, with an exercise price of $ 9.75 per share, subject

to customary adjustments thereunder.

The warrants issued in 2022 and 2021 were determined to be freestanding instruments as they are

legally detachable and separately exercisable from each other and from the common stock issued.

The common stock warrants are accounted

for as liabilities in the consolidated balance sheets at their estimated fair value because they are not indexed to the Company’s

The 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 income (loss).

Adopted Accounting Pronouncements

November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07,

“Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ” (“ASU 2023-07”).

requires additional disclosures for segment reporting, including disclosure of the title and position of the Chief Operating Decision

Maker and requires a public entity that has a single reportable segment to provide all the disclosures required by the amendments in

ASU 2023-07, and all existing segment disclosures in Topic 280.

ASU 2023-07 is effective for fiscal periods beginning after December

15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-07 effective for its

Annual Report on Form 10-K for the year ended December 31, 2024 and subsequent interim periods.

Since ASU 2023-07 addresses only disclosures,

the adoption of ASU 2023-07 did not have a significant impact on the Company’s consolidated financial statements.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 is intended

to enhance the transparency and decision usefulness of income tax information through improvements to income tax disclosures by requiring

additional information related to the effective tax rate reconciliations, income taxes paid, and income tax expense and pretax income

by jurisdiction.

The Company adopted ASU 2023-09 effective January 1, 2025 on a prospective basis.

Accordingly, the enhanced income tax

disclosures are presented beginning in fiscal year 2025, and prior period disclosures have not been recast.

The adoption of this guidance

did not have an impact on the Company’s consolidated results of operations, financial position, or cash flows, as the amendments

relate solely to disclosure requirements.

See Note 15 – Income Taxes for the related enhanced disclosures.

Issued Accounting Pronouncements

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evaluating this guidance to determine the impact it may have on its consolidated financial statements.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 is intended

to enhance the transparency and decision usefulness of income tax information through improvements to income tax disclosures primarily

related to the rate reconciliation and income taxes paid information.

The standard is effective for annual reporting periods beginning

after December 15, 2024, with early adoption permitted.

The requirements of this ASU are disclosure related and will not have an impact

on the Company’s financial condition, results of operations, or cash flows.

The Company is currently evaluating the impact of adopting

this ASU on its income tax disclosures.

September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic

Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract.

The guidance in ASU 2025-07 refines the scope of derivative accounting under ASC 815 by expanding an existing scope exception to exclude

certain non-exchange traded contracts with underlyings based on the operations or activities of one of the contract parties from derivative

classification.

The ASU also provides guidance under Topic 606 on the accounting for share-based noncash consideration received from

a customer in a revenue contract, including measurement and timing considerations.

ASU 2025-07 is effective for annual and interim periods

beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2025-07.

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements.

This standard clarifies

current interim reporting requirements on Topic 270 and introduces a disclosure principle requiring entities to disclose events since

the end of the last annual reporting period that have a material impact on the entity.

This standard will be effective for fiscal years

beginning after December 15, 2027, with the option to apply it retrospectively.

Early adoption is allowed.

Currently, the Company is

assessing the potential impact of this guidance on its consolidated financial statement disclosures.

comprises the following categories (in thousands):

the year ended December 31,

and other revenues

Company generates product revenue from sales of ZEVASKYN ® in the United States.

The Company ships and sells

ZEVASKYN ® directly to qualified treatment centers based on approved agreements.

For these sales, the Company

recognizes ZEVASKYN ® revenue equal to the allocated transaction consideration at the point in time that the

completion of a final quality inspection of the product is completed at the qualified treatment centers.

from product sales is reduced at the time of recognition for payor rebates, co-payment assistance and prompt pay discounts, which

are attributed to various commercial arrangements and government programs.

Product revenue was reduced by $ 0.7

million of government rebates based on contracted rebate rates for the year ended December 31, 2025.

There were no co-payment

assistance or prompt pay discounts for the year ended December 31, 2025.

Company’s contracts can include the right to receive an outcomes-based rebate and a subsequent treatment discount of

ZEVASKYN ® under certain conditions.

The Company has determined that the rebate and discount create a material right

and allocates transaction consideration to ZEVASKYN ® and the material right on a relative standalone selling price

The standalone selling price for ZEVASKYN ® is the wholesale acquisition cost.

The standalone selling price for

the material right is determined by quantifying the discount a customer would receive upon exercise of the option adjusting for the

likelihood the option will be exercised.

Transaction consideration allocated to the material right is deferred and recognized when

either (a) the subsequent purchase of ZEVASKYN ® occurs, or (b) the time period during which a subsequent purchase of

ZEVASKYN ® could be made, expires.

There was no deferral of revenue or contract assets and liabilities for the years

ended December 31, 2025 or 2024.

and other revenues

Company enters into license agreements that are within the scope of ASC 606, under which it may exclusively license rights to

research, develop, manufacture and commercialize its product candidates to third parties.

The terms of these arrangements typically

include payment to the Company of one or more of the following:

non-refundable, upfront license fees;

reimbursement of certain

customer option exercise fees;

development, regulatory and commercial milestone payments;

and royalties on net sales of

licensed products.

See Note 13 – License/Supplier Agreements for detailed information on the Company’s licenses

agreements and revenues from these agreements.

Concentration

of credit risk

credit risk exposure for both ZEVASKYN ® and licensed revenue has been evaluated for the Company’s accounts receivable

in accordance with ASC 326, Financial Instruments – Credit Losses .

The loss percentage is calculated through the use of

current and historical economic and financial information.

As of December 31, 2025, there were no estimated losses applied to the accounts

receivables balance.

Company’s total percentage of revenue and accounts receivable balances were comprised of the following concentrations from its

largest customers, based on whose revenue or accounts receivable concentration is greater than 10% of total revenue or total accounts

receivable in the periods disclosed below.

OF CONCENTRATION OF CREDIT RISK

the year ended and as of December 31, 2025

of Accounts Receivable

was no revenue or accounts receivable as of December 31, 2024.

4 – SHORT-TERM INVESTMENTS

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SCHEDULE OF AVAILABLE FOR SALE SHORT-TERM INVESTMENTS

December 31, 2024

Amortized Cost

Gross Unrealized Gain

Gross Unrealized Loss

Available-for-sale, short-term investments:

Available-for-sale,

short-term investments:

treasury securities

federal agency securities

Certificates of deposit

Total available-for-sale, short-term investments

December 31, 2023

Amortized Cost

Gross Unrealized Gain

Gross Unrealized Loss

available-for-sale, short-term investments

Available-for-sale,

short-term investments:

treasury securities

federal agency securities

Total available-for-sale, short-term investments

available-for-sale, short-term investments

of December 31, 2025, the available-for-sale securities classified as short-term investments mature in one year or less.

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December 31, 2025 or 2024.

5 – INVENTORY

consists of the following (in thousands):

As of December 31,

Raw materials

Work-in-progress

Finished goods

Total inventory

For the year ended December 31, 2025 and 2024, there

were no t inventory write-downs.

6 – PROPERTY AND EQUIPMENT

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lives (years)

As of December 31,

Useful lives (years)

Laboratory equipment

Furniture, software and office equipment

Leasehold improvements

Shorter of remaining lease term or useful life

of December 31,

lives (years)

software and office equipment

of remaining lease term or useful life

Construction-in-progress

accumulated depreciation

Total property and equipment, net

and amortization on property and equipment was $ 2.0 million and $ 2.3 million for the years ended December 31, 2024 and 2023, respectively.

The Company incurred a gain on disposal of equipment of $ 2,000 and a loss on disposal of $ 47,000 during the years ended December 31,

2024 and 2023, respectively, which is reflected in other income in the consolidated statements of operations and comprehensive loss.

property and equipment, net

2024, construction-in-progress related to leasehold improvements for the Company’s new office space as well as for conversion of

existing office space into additional manufacturing space to increase ZEVASKYN ® manufacturing capacity, all of which was

completed in 2025.

and amortization on property and equipment was $ 2.5 million

and $ 2.0 million

for the years ended December 31, 2025 and 2024, respectively.

The Company incurred a gain on disposal of nil and $ 2,000 during

the years ended December 31, 2025 and 2024, respectively, which is reflected in other income, net in the consolidated statements of

operations and comprehensive income (loss).

Company capitalized into inventory $ 0.2 million relating to depreciation associated with manufacturing equipment and production facilities

for the year ended December 31, 2025.

The capitalized costs associated are added to inventory and are expensed through cost of sales

in the consolidated statement of operations and comprehensive income (loss) upon the commercial sales of ZEVASKYN ® .

7 – FAIR VALUE MEASUREMENTS

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The estimated fair value of other receivables, prepaid expenses and other current assets, other assets, accounts payable,

accrued expenses, and payables to licensor approximate their carrying amounts due to the relatively short maturity of these instruments.

The estimated fair value of the Loan Agreement as of December 31, 2024, was $ 24.7 million.

Both observable and unobservable inputs were

used to determine the fair value of long-term debt, which was classified within the Level 3 category.

accrued taxes and accrued expenses approximate their carrying amounts due to the relatively short maturity of these instruments.

estimated fair value of the Loan Agreement (as Defined in Note 10 – Debt) as of December 31, 2025 and December 31, 2024, was $ 21.2

million and $ 24.7 million, respectively.

Both observable and unobservable inputs were used to determine the fair value of long-term debt,

which was classified within the Level 3 category.

GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in

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date in the table below.

following table provides a summary of financial assets measured at fair value on a recurring and non-recurring basis (in thousands):

following table provides a summary of financial assets and liabilities measured at fair value on a recurring and non-recurring basis

(in thousands):

SCHEDULE OF FAIR VALUE, ASSETS AND LIABILITIES MEASURED ON RECURRING AND NON-RECURRING BASIS

Fair Value at

Recurring Assets

Cash equivalents

Money market funds

Money market deposit account

Short-term investments

market deposit account

treasury securities

federal agency securities

Certificates of deposit

Total assets measured at fair value

Warrant liabilities

Total liabilities measured at fair value

Fair Value at

Recurring Assets

Cash equivalents

Money market fund

Short-term investments

assets measured at fair value

liabilities measured at fair value

market deposit account

treasury securities

federal agency securities

Total assets measured at fair value

Payable to licensor

Warrant liabilities

Total liabilities measured at fair value

of December 31, 2024 and 2023, the Company had the following outstanding warrants:

assets measured at fair value

liabilities measured at fair value

of December 31, 2025 and 2024, the Company had the following outstanding warrants that are classified as warrant liabilities:

SCHEDULE OF OUTSTANDING WARRANT LIABILITIES

As of December 31,

Warrants issued as part of the 2021 public offering, expiration date December 2026 , exercise price of $ 9.75 per share

Warrants issued as part of the 2022 Private Placement Offering, expiration date November 2027 , exercise price $ 4.75 per share

Warrants issued as part of the 2024 Loan Agreement, expiration date January 2029 , exercise price $ 4.07 per share

Outstanding warrant liabilities

of December 31,

issued as part of the 2021 public offering, expiration date December 2026, exercise price of $ 9.75 per share

issued as part of the 2022 Private Placement Offering, expiration date November 2027, exercise price $ 4.75 per share

issued as part of the 2024 Loan Agreement, expiration date January 2029, exercise price $ 4.07 per share

issued as part of the 2024 Loan Agreement Amendment, expiration date July 2030, exercise price $ 6.07 per share

Outstanding warrants liabilities

common stock warrants related to the 2021 Public Offering and the 2022 Private Placement are not indexed to the Company’s own stock

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The common stock warrants issued in connection with

the Loan Agreement issuance were determined to be liability classified under ASC 815 as the common stock warrants were not considered

indexed to the Company’s stock.

Changes in the estimated fair value of the warrant liabilities is recorded as changes in fair value

of warrant liabilities in the consolidated statement of operations and comprehensive loss.

January 2024, as part of the Loan and Security Agreement, see Note 9, the Company issued warrants to purchase $ 2,400,000 worth of shares

of the Company’s stock which have an exercise price equal to the lesser of (i) $ 4.75 and (ii) the price per share of the Company’s

next bona fide round of equity financing before September 30, 2024 (the “2024 Loan Agreement Warrants”).

In connection with

the underwritten common stock offering consummated on May 7, 2024, pursuant to the terms of the 2024 Loan Agreement Warrants, the exercise

price was reduced to $ 4.07 per share and the shares issuable was calculated at 589,681 shares.

On September 30, 2024, per the terms of

the 2023 Loan Agreement Warrants, the exercise price and the number of shares became set at $ 4.07 per share and 589,681 shares, respectively.

the Loan Agreement issuance were determined to be liability classified under ASC 815, Derivatives and Hed ging (“ASC 815”)

as the common stock warrants were not considered indexed to the Company’s stock.

Changes in the estimated fair value of the warrant

liabilities are recorded as changes in fair value of warrant liabilities in the consolidated statement of operations and comprehensive

income (loss).

January 2024, as part of the Loan Agreement, see Note 10 – Debt, the Company issued warrants to purchase $ 2.4

million worth of shares of the Company’s stock which have an exercise price of $ 4.07

per share and the shares issuable were calculated at 589,681

In July 2025, as part of the Loan Agreement Amendment, see Note 10 – Debt, the Company issued 16,474

common stock warrants.

The July 2025 Avenue Warrants (as defined in Note 11 – Equity) expire on July 18, 2030, and have an

exercise price per share equal to $ 6.07 .

The common stock warrants issued in connection with the Loan Agreement and the Loan Agreement Amendment were determined to be

liability classified under ASC 815 as the common stock warrants were not considered indexed to the Company’s stock.

in the estimated fair value of the warrant liabilities is recorded as changes in fair value of warrant liabilities in the consolidated

statement of operations and comprehensive income (loss).

following table provides a summary of the activity on the warrant liabilities (in thousands):

SCHEDULE OF ACTIVITY OF WARRANT LIABILITIES

As of December 31,

Beginning warrant liabilities

Fair value of warrants issued in connection with the Loan Agreement

of December 31,

warrant liabilities

Reclassification

of warrants to equity as part of warrant exercise

loss recognized in earnings from change in fair value

Ending warrant liabilities

warrant liabilities

warrant liabilities are valued using significant inputs not observable in the market.

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SCHEDULE OF ESTIMATE FAIR VALUE OF WARRANTS

As of December 31,

Common share price

Expected term (years)

Risk-free interest rate (%)

4.16 % – 4.24 %

3.84 % – 3.92 %

Volatility (%)

92.64 % - 100.00 %

Expected dividend yield (%)

Conversion Right embedded within the Loan Agreement (see Note 9 below) required bifurcation as certain adjustments to the conversion

price were not indexed to the Company’s own stock and therefore the Conversion Right was recorded as a derivative liability.

derivative liability is remeasured at each reporting period with the change in fair value recorded to changes in fair value of warrants

and derivative liabilities in the condensed consolidated statement of operations until the derivative is exercised, expired, reclassified,

or otherwise settled.

of December 31,

interest rate (%)

dividend yield (%)

Conversion Right embedded within the Loan Agreement (see Note 10 – Debt below) required bifurcation as certain adjustments to

the conversion price were not indexed to the Company’s own stock and therefore the Conversion Right was recorded as a

derivative liability.

The derivative liability is remeasured at each reporting period with the change in fair value recorded to

changes in fair value of warrants and derivative liabilities in the consolidated statement of operations and comprehensive income

(loss) until the derivative is exercised, expired, reclassified, or otherwise settled.

September 30, 2024, pursuant to the Loan Agreement, the conversion price was fixed at $ 4.88 and is considered indexed to the Company’s

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following table provides a summary of the activity on the derivative liabilities (in thousands):

SCHEDULE OF ACTIVITY OF DERIVATIVE LIABILITIES

As of December 31,

Beginning derivative liabilities

Fair value of derivatives issued in connection with Loan Agreement

Loss recognized in earnings from change in fair value

Reclassification of derivative liability in connection with the Loan Agreement

Ending derivative liabilities

6 – SETTLEMENT LIABILITY

November 12, 2021, the Company entered into a settlement agreement (“Settlement Agreement”) with the Company’s prior

licensor REGENXBIO Inc.

(“REGENXBIO”) to resolve all existing disputes between the parties.

In accordance with the Settlement

Agreement, the Company agreed to pay REGENXBIO a total of $ 30.0 million, payable as follows:

(1) $20.0 million paid in November 2021

after execution of the Settlement Agreement, (2) $5.0 million on the first anniversary of the effective date of the Settlement Agreement

(paid in November 2022), and (3) $5.0 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 (paid in November 2024).

Company recorded the payable due to REGENXBIO in the consolidated balance sheet based on the present value of the remaining payments

due to REGENXBIO under the Settlement Agreement using an effective interest rate of 9.6 %.

The Company paid all amounts due in November

2024 and therefore there were no amounts outstanding as of December 31, 2024.

The present value of the amount due as of December 31,

2023 was $ 4.6 million.

OF ACTIVITY OF DERIVATIVE LIABILITIES

of December 31,

derivative liabilities

value of derivatives issued in connection with Loan Agreement

recognized in earnings from change in fair value

Reclassification

of derivative liability in connection with the Loan Agreement

derivative liabilities

8 – ACCRUED EXPENSES

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SCHEDULE OF ACCRUED EXPENSES

As of December 31,

Accrued employee compensation

Accrued contracted services and other

Total accrued expenses

of December 31,

employee compensation

contracted services and other

accrued expenses

Company leases space under operating leases for administrative, manufacturing and laboratory facilities in Cleveland, Ohio.

also leases office space in New York, New York, that the Company sublets.

The Company also leases certain office equipment under operating

leases, which have a non-cancelable lease term of less than one year and the Company has elected the practical expedient to exclude these

short-term leases from the Company’s right-of-use assets and lease liabilities.

leased office space in New York, New York, which the Company sublet.

The lease for office space in New York, New York terminated in September

2025, which was the end of the lease term.

The Company also leases certain office equipment under operating leases, which have a non-cancelable

lease term of less than one year and the Company has elected the practical expedient to exclude these short-term leases from the Company’s

right-of-use assets and lease liabilities.

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

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agreement, the lease term 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.

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

The additional space at the 6700 Euclid Avenue facility will allow the Company 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 the

Company does not have access to the leased space until January 1, 2025, the impact of this lease agreement is not reflected in the consolidated

financial statements of the Company as of December 31, 2024.

2023, the Company terminated one of its operating leases for office space.

The termination resulted in a gain of $ 1.1 million representing

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

This gain was recorded in the year

ended December 31, 2023, and is included in gain on operating lease right-of-use assets in the consolidated statement of operations and

comprehensive loss.

2023, the Company modified one of its operating leases for office space to add up to 14,032 square feet to the Company’s existing

facility in Cleveland, Ohio.

The lease modification resulted in the recognition of $ 0.4 million of additional right-of-use assets and

related lease liabilities in the Company’s consolidated balance sheet during the year ended December 31, 2023.

$ 1.5 million.

The impact of this lease agreement was to increase the Company’s operating right-of-use lease assets and operating

lease liabilities by $ 1.0 million on January 1, 2025.

2022 and 2023, the Company entered into two sublease agreements with unrelated third parties to occupy the Company’s administrative

offices in New York, New York.

The Company expects to receive $ 0.5 million in future sublease income through September 2025 from the

two subleases noted above.

The sublease agreements terminated in September 2025 at the same time the Company’s lease terminated.

following table provides a summary of the Company’s operating lease liabilities (in thousands):

SUMMARY OF OPERATING LEASE LIABILITIES

As of December 31,

Current operating lease liability

Non-current operating lease liability

Total operating lease liability

costs and rent are reflected in general and administrative expenses and research and development expenses in the consolidated statements

of operations and comprehensive loss, as determined by the underlying activities.

of December 31,

operating lease liability

costs and rent are reflected in selling, general and administrative expenses and research and development expenses in the consolidated

statements of operations and comprehensive income (loss), as determined by the underlying activities.

following table provides a summary of the components of lease costs and rent (in thousands):

SCHEDULE OF COMPONENTS OF LEASE COST

For the year ended December 31,

Operating lease cost

Variable lease cost

Short-term lease cost

Total operating lease costs

the year ended December 31,

operating lease costs

paid for amounts included in the measurement of operating lease liabilities was $ 1.7 million and $ 1.3 million for the years ended December

31, 2025 and 2024, respectively.

Cash received as part of tenet leasehold improvement allowance was $ 0.7 million for the year ended December

There was no cash received for the year ended December 31, 2024.

minimum lease payments and obligations, which do not include short-term leases, related to the Company’s operating lease liabilities

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SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

Future minimum lease payments and obligations

Operating Leases

Total undiscounted operating lease payments

minimum lease payments and obligations

undiscounted operating lease payments

imputed interest

Present value of operating lease liabilities

value of operating lease liabilities

weighted-average remaining term of the Company’s operating leases was 60 months, and the weighted-average discount rate used to

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Company received $ 0.4 million and $ 0.6 million during the years ended December 31, 2025 and 2024, respectively, of sublease income which

is recorded in other income on the consolidated statements of operations and comprehensive loss.

Future cash receipts from the Company’s

sublease agreements as of December 31, 2024 are as follows (in thousands):

SCHEDULE OF FUTURE CASH RECEIPTS FROM OPERATING SUBLEASE

Future cash receipts

Total future cash receipts

is recorded in other income, net on the consolidated statements of operations and comprehensive income (loss).

The sublease ended on

September 30, 2025, and there are no future cash receipts.

following table provides a summary of the Company’s debt, net of debt issuance costs and discounts (in thousands):

OF DEBT AND NET OF DEBT ISSUANCE COSTS

As of December 31,

Loan Agreement Principal

Accreted final payment fee

Unamortized debt issuance costs and discounts

Total long-term debt

SCHEDULE OF DEBT AND NET OF DEBT ISSUANCE COSTS

of December 31,

Agreement Principal

final payment fee

debt issuance costs and discounts

long-term debt

current maturities

Long-term debt, net of current maturities

debt, net of current maturities

and Security Agreement

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$ 10 million which may be advanced upon the request of the Company between June 30, 2024 and September 30, 2024, subject to the Company

obtaining FDA approval of pz-cel in recessive dystrophic epidermolysis bullosa, with the issuance of a Priority Review Voucher (“Tranche

2”), and (iii) a discretionary tranche of up to $ 20 million which may be advanced between March 31, 2025 and March 31, 2026 (the

“Discretionary Tranche”) provided at the discretion of the Lenders.

The Loans are due and payable on July 1, 2027 (the “Maturity

As of December 31, 2024, the Tranche 2 is no longer available as the Company did not meet the Tranche 2 criteria.

loan principal is repayable in equal monthly installments beginning on May 1, 2025.

The Loans bear interest at a rate per annum (subject

to increase during an event of default) equal to the greater of (i) the prime rate, as published by the Wall Street Journal from time

to time, plus 5.00 % and (ii) 13.50 %.

The stated interest rate and effective interest rate as of December 31, 2024 was 13.50 % and 22.09 %,

respectively.

obtaining FDA approval of ZEVASKYN ® in RDEB, with the issuance of a Priority Review Voucher (“Tranche 2”),

and (iii) a discretionary tranche of up to $ 20 million which may be advanced between March 31, 2025 and March 31, 2026 (the “Discretionary

Tranche”) provided at the discretion of the Lenders.

The Loans are due and payable on July 1, 2027.

As of September 30, 2024, the

Tranche 2 was no longer available as the Company did not meet the Tranche 2 criteria.

loan principal is repayable in equal monthly installments beginning on February 1, 2026.

On April 28, 2025, with the FDA approval of

ZEVASKYN ® and in accordance with the Loan Agreement, the start date of the loan principal monthly installments was extended

from May 1, 2025 to February 1, 2026.

The Loans bear interest at a rate per annum (subject to increase during an event of default) equal

to the greater of (i) the prime rate, as published by the Wall Street Journal from time to time, plus 5.00 % and (ii) 13.50 %.

18, 2025, the Company entered into an amendment (the “Amendment”) to the Loan Agreement that reduces the interest rate for

senior secured term loan owed under the Loan Agreement from 13.5 % to a fixed rate of 11.75 % per annum.

The stated interest rate and effective

interest rate as of December 31, 2025 was 11.75 % and 18.42 %, respectively.

In connection with the Amendment, the Company issued the Lenders

warrants to purchase up to an aggregate of 16,474 shares of Company common stock (collectively, the “July 2025 Avenue Warrants”).

The July 2025 Avenue Warrants expire on July 18, 2030, and have an exercise price per share equal to $ 6.07 .

Company may, subject to certain parameters, voluntarily prepay the Loans, in whole, at any time.

If prepayment occurs on or before the

one-year anniversary of the Closing Date, the Company is required to pay a prepayment fee equal to 3.00% of the principal amount of the

Loans prepaid;

if prepayment occurs after the one-year anniversary of the Closing Date and on or before the two-year anniversary of the

Closing Date, the Company is required to pay a fee equal to 2.00% of the principal amount of the Loans; if prepayment occurs after

the two-year anniversary of the Closing Date, the Company is required to pay a fee equal to 1.00% of the principal amount of the Loans.

A final payment fee of 5.00% of the principal amount of the funded Tranche 1, Tranche 2 Loans and Discretionary Tranche Loans is also

due upon the Maturity Date or any earlier date of prepayment.

If prepayment occurs after January 8,

2025 and on or before January 8, 2026, the Company is required to pay a fee equal to 2.00% of the principal amount of the Loans;

if prepayment occurs after January 8, 2026, the Company is required to pay a fee equal to 1.00% of the principal amount of the Loans.

A final payment fee of 5.00% of the principal amount of the funded Tranche 1 Loans, Tranche 2 Loans and Discretionary Tranche Loans is

also due upon maturity on July 1, 2027, or any earlier date of prepayment .

Company’s obligations under the Loan Agreement are secured by a pledge of substantially all of the Company’s assets.

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is remeasured at each reporting period with the change in fair value recorded to change in fair value of warrants and derivative liabilities

in the condensed consolidated statement of operations until the derivative is exercised, expired, reclassified, or otherwise settled.

On September 30, 2024, pursuant to the Loan Agreement, the conversion price was fixed at $ 4.88 and is considered indexed to the Company’s

At September 30, 2024, the Conversion Right no longer met the criteria of a derivative liability and the derivative liability

of $ 1.1 million was reclassified to equity.

in the consolidated statement of operations and comprehensive income (loss) until the derivative is exercised, expired, reclassified,

or otherwise settled.

On September 30, 2024, pursuant to the Loan Agreement, the conversion price was fixed at $ 4.88 and is considered

indexed to the Company’s own stock.

On September 30, 2024, the Conversion Right no longer met the criteria of a derivative liability

and the derivative liability of $ 1.1 million was reclassified to equity.

addition, subject to applicable law and specified provisions set forth in the Supplement to the Loan and Security Agreement and solely

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the “Warrant Holders”) warrants to purchase up to $ 480,000 and $ 1,920,000 of Company common stock, respectively, which is

more fully described in Note 10 below.

more fully described in Note 11 – Equity below.

future payment obligations of the principal are as follows (in thousands):

OF FUTURE PAYMENT OBLIGATIONS

Total principal

SCHEDULE OF FUTURE PAYMENT OBLIGATIONS

aggregate number of authorized shares of the Company’s preferred stock is 2,000,000 shares with a par value of one cent ($ 0.01 ).

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There was no warrant activity during the year

ended December 31, 2024 and 2023, other than the change in fair value of the warrants.

ended December 31, 2025 and 2024, other than the change in fair value of the warrants for the stock purchase warrants issued as part

of this public offering.

May 7, 2024, the Company sold 12,285,056 shares of its common stock and, in lieu of common stock, pre-funded warrants to purchase 6,142,656

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On June 24, 2024, 700,000 of the 2024

Pre-Funded Warrants were exercised and on December 2, 2024 1,228,531 of the 2024 Pre-Funded Warrants were exercised, leaving 4,214,125

2024 Pre-Funded Warrants outstanding as of December 31, 2024.

The 2024 Pre-Funded Warrants are classified as equity in accordance with

ASC 815, Derivatives and Hedging , given the prefunded warrants are indexed to the Company’s own shares of common stock and

meet the requirements to be classified in equity.

The 2024 Pre-Funded warrants were recorded at their relative fair value at issuance

in the stockholders’ equity section of the consolidated balance sheet and the 2024 Pre-Funded Warrants are considered outstanding

shares in the basic and diluted earnings per share calculation for year ended December 31, 2024 given their nominal exercise price.

Pre-Funded Warrants were exercised, on December 2, 2024, 1,228,531 of the 2024 Pre-Funded Warrants were exercised, and on October 29,

2025, 1,719,944 of the 2024 Pre-Funded Warrants were exercised, leaving 2,494,181 2024 Pre-Funded Warrants outstanding as of December

The 2024 Pre-Funded Warrants are classified as equity in accordance with ASC 815, given the prefunded warrants are indexed

to the Company’s own shares of common stock and meet the requirements to be classified in equity.

The 2024 Pre-Funded warrants

were recorded at their relative fair value at issuance in the stockholders’ equity section of the consolidated balance sheet and

the 2024 Pre-Funded Warrants are considered outstanding shares in the basic and diluted earnings per share calculation for the year ended

December 31, 2025 and 2024 given their nominal exercise price.

Market Sale Agreement

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2024, respectively, resulting in net proceeds of $ 17.3 million and $ 15.5 million during the years ended December 31, 2025 and 2024, respectively.

Subsequent to December 31, 2024 and through March 1, 2025, the Company sold 915,925 shares of its common stock under the ATM Agreement resulting

in $ 4.8 million in net proceeds.

Placement Offering

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represents the right to purchase one share of the Company’s common stock at an exercise price of $ 4.75 per share of common stock.

The pre-funded warrants were exercised in December 2022 and converted to 543,933 shares of commons stock.

The pre-funded warrants were exercised in December 2022 and converted to 543,933 shares of common stock.

Total shares sold and converted

during the year ended December 31, 2022 were 7,609,879 for an aggregate purchase price of $ 35.0 million gross, or $ 32.6 million net of

related costs of $ 1.5 million which was expensed to general and administrative expenses and $ 0.9 million which was recorded as a reduction

to additional paid-in-capital.

The net proceeds were allocated to the warrant liability as noted below with the remainder of $ 12.9 million

and $ 0.1 million recorded in additional paid-in capital and common stock, respectively.

related costs of $ 1.5 million which was expensed to selling, general and administrative expenses and $ 0.9 million which was recorded

as a reduction to additional paid-in-capital.

The net proceeds were allocated to the warrant liability as noted below with the remainder

of $ 12.9 million and $ 0.1 million recorded in additional paid-in capital and common stock, respectively.

the event of certain fundamental transactions involving the Company, the holders of the stock purchase warrants may require the Company

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distribution of assets to holders of shares of common stock.

There was no warrant activity during the year ended December 31, 2024 and

2023, other than the change in fair value of the warrants.

In August 2025, 1,086,956 warrants were exercised for proceeds of $ 5.2 million.

In December 2025, 760,870 warrants were exercised for proceeds of $ 3.6 million.

Other than noted above, there was no additional warrant

activity during the years ended December 31, 2025 and 2024, other than the change in fair value of the warrants.

Placement Offering

July 6, 2023, the Company sold 3,284,407 shares of its common stock, and in lieu of shares of common stock, pre-funded warrants exercisable

for 2,919,140 shares of common stock (the “2023 Pre-Funded Warrants”), to a group of existing institutional investors for

an aggregate purchase price of $ 25.0 million gross, or $ 23.0 million net of related costs.

The offering price for each share of common

stock was $ 4.03 , and the offering price for the 2023 Pre-Funded Warrants was $ 4.0299 , which represents the per share offering price for

the Company’s common stock less a $ 0.0001 per share exercise price for each such 2023 Pre-Funded Warrant.

July 6, 2023, the Company sold 3,284,407 shares of its common stock, and

in lieu of shares of common stock, pre-funded warrants exercisable for 2,919,140 shares of common stock (the

“2023 Pre-Funded Warrants”) , to a group of existing institutional investors for an aggregate purchase price of $ 25.0

million gross, or $ 23.0 million net of related costs.

The offering price for each share of common stock was $ 4.03 , and the offering price

for the 2023 Pre-Funded Warrants was $ 4.0299 ,

which represents the per share offering price for the Company’s common stock less a $ 0.0001

per share exercise price for each such 2023 Pre-Funded Warrant .

The 2023 Pre-Funded Warrants

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as of December 31, 2025.

The 2023 Pre-Funded Warrants are classified as equity in accordance with ASC 815, Derivatives and Hedging ,

given the 2023 Pre-Funded Warrants are indexed to the Company’s own shares of common stock and meet the requirements to be classified

The 2023 Pre-Funded Warrants were recorded at their relative fair value at issuance in the stockholders’ equity section

of the consolidated balance sheet and the 2023 Pre-Funded Warrants are considered outstanding shares in the basic and diluted earnings

per share calculation for the year ended December 31, 2024 given their nominal exercise price.

The 2023 Pre-Funded Warrants are classified as equity in accordance with ASC 815, given the 2023 Pre-Funded

Warrants are indexed to the Company’s own shares of common stock and meet the requirements to be classified in equity.

Pre-Funded Warrants were recorded at their relative fair value at issuance in the stockholders’ equity section of the consolidated

balance sheet and the 2023 Pre-Funded Warrants are considered outstanding shares in the basic and diluted earnings per share calculation

for the years ended December 31, 2025 and 2024 given their nominal exercise price.

Stock Warrants related to the Loan and Security Agreement

January 8, 2024, in connection with entering into the Loan and Security Agreement, the Company issued to each of Avenue and Avenue 2

(collectively, the “Warrant Holders”) warrants to purchase up to $ 480,000 and $ 1,920,000 worth of shares, respectively, of

Company common stock (collectively, the “January Warrants”).

The Warrants expire on January 8, 2029 (the “Expiration

Date”) and upon issuance, had an exercise price per share equal to the lesser of (i) $ 4.75 and (ii) the price per share of the

Company’s next bona fide round of equity financing before September 30, 2024 in which the Company sells or issues shares of its

common stock, excluding certain excluded issuances as defined in the Supplement.

In connection with the underwritten common stock offering

consummated on May 7, 2024, and pursuant to the term of the January Warrants, the exercise price of the January Warrants was reduced

to $ 4.07 per share for 589,681 shares.

In addition, upon a change of control where the per share price of the Company common stock is

less than or equal to two times that of the exercise price, the Warrant Holders would be entitled to receive the shares of common stock

underlying the January Warrants without payment of the exercise price.

On January 8, 2024, the January Warrants did not include an explicit

share limit and the number of shares issuable under the warrant agreements were variable based on the exercise price and therefore the

January Warrants were liability classified based on a Black-Scholes valuation in accordance with ASC 815 and were recorded at the closing

date fair value of $ 0.2 million which was based on a Black-Scholes option pricing model.

On September 30, 2024, per the terms of the

January Warrants, the exercise price and the number of shares issuable became set at $ 4.07 per share and 589,681 shares, respectively.

Warrant Holders may exercise the January Warrants at any time, or from time to time up to and including the Expiration Date, by making

a cash payment equal to the exercise price multiplied by the quantity of shares.

January 8, 2024, in connection with entering into the Loan and Security Agreement, the Company issued to the Warrant Holders warrants

to purchase up to $ 0.5 million and $ 1.9 million worth of shares, respectively, of Company common stock (collectively, the “January

The January Warrants expire on January 8, 2029 and upon issuance, had an exercise price per share equal to the lesser

of (i) $ 4.75 and (ii) the price per share of the Company’s next bona fide round of equity financing before September 30, 2024 in

which the Company sells or issues shares of its common stock, excluding certain excluded issuances as defined in the Supplement.

In connection

with the underwritten common stock offering consummated on May 7, 2024, and pursuant to the term of the January Warrants, the exercise

price of the January Warrants was reduced to $ 4.07 per share for 589,681 shares.

In addition, upon a change of control where the per

share price of the Company common stock is less than or equal to two times that of the exercise price, the Warrant Holders would be entitled

to receive the shares of common stock underlying the January Warrants without payment of the exercise price.

On January 8, 2024, the

January Warrants did not include an explicit share limit and the number of shares issuable under the warrant agreements were variable

based on the exercise price, therefore, the January Warrants were liability classified based on a Black-Scholes valuation in accordance

with ASC 815 and were recorded at the closing date fair value of $ 0.2 million which was based on a Black-Scholes option pricing model.

On September 30, 2024, per the terms of the January Warrants, the exercise price and the number of shares issuable became set at $ 4.07

per share and 589,681 shares, respectively.

Warrant Holders may exercise the January Warrants at any time, or from time to time up to and including January 8, 2029, by making a

cash payment equal to the exercise price multiplied by the quantity of shares.

The Warrant Holders may also exercise the January Warrants

1 unchanged sentence

Warrants are subject to anti-dilution adjustments for stock dividends, stock splits, and reverse stock splits.

July 18, 2025, in connection with entering into the Loan Agreement Amendment, the Company issued the Lenders warrants to purchase up

to an aggregate of 16,474 shares of Company common stock (collectively, the “July 2025 Avenue Warrants”).

The July 2025 Avenue

Warrants expire on July 18, 2030 and have an exercise price per share equal to $ 6.07 .

In the event of certain fundamental transactions

involving the Company, the holders of the stock purchase warrants may require the Company to make a payment based on a Black-Scholes

valuation, using specific inputs that are not considered indexed to the Company’s stock in accordance with ASC 815.

the Company accounted for the stock purchase warrants as liabilities, which were recorded at the closing date fair value of $ 0.1 million

which was based on a Black-Scholes option pricing model.

12 – STOCK-BASED COMPENSATION

Company previously granted stock options under its 2005 Equity Incentive Plan (the “2005 Incentive Plan”), under which no

further grants can be made.

In addition, prior to May 17, 2023, the Company had previously granted stock options and stock awards under

the Abeona Therapeutics Inc.

to May 17, 2023, the Company had previously granted stock options and stock awards under the Abeona Therapeutics Inc.

2015 Equity Incentive

Plan (the “2015 Incentive Plan”).

As of May 17, 2023, no further grants can be made under the 2015 Incentive Plan.

now grants stock options and stock awards under the Abeona Therapeutics Inc.

2023 Equity Incentive Plan (the “2023 Incentive Plan”)

As of May 17, 2023, no further grants

can be made under the 2015 Incentive Plan.

The Company now grants stock options and stock awards under the Abeona Therapeutics Inc.

Equity Incentive Plan (the “2023 Incentive Plan”) which was approved by stockholders on May 17, 2023.

On April 24, 2024,

stockholders approved an amendment to the 2023 Incentive Plan to increase the shares authorized for issuance from 1,700,000 shares to

3,200,000 shares.

On December 20, 2024, stockholders approved an additional increase in the shares authorized for issuance under the

2023 Incentive Plan from 3,200,000 shares to 8,400,000 shares.

As of December 31, 2024, there were 5,251,251 shares available to be granted

under the 2023 Incentive Plan.

In addition, in 2023, the Company’s board of directors approved various restricted stock awards

granted to certain new hires as inducement grants.

On October 10, 2023, the Company’s board of directors approved the Abeona Therapeutics

2023 Employment Inducement Equity Incentive Plan (the “Inducement Plan”).

As of December 31, 2024, there were 584,700

shares available to be granted under the Inducement Plan.

which was approved by stockholders on May 17, 2023.

On April 24, 2024, stockholders approved an amendment to the 2023 Incentive Plan

to increase the shares authorized for issuance from 1,700,000 shares to 3,200,000 shares.

On December 20, 2024, stockholders approved

an additional increase in the shares authorized for issuance under the 2023 Incentive Plan from 3,200,000 shares to 8,400,000 shares.

As of December 31, 2025, there were 3,298,589 shares available to be granted under the 2023 Incentive Plan.

In addition, in 2023, the

Company’s board of directors approved various restricted stock awards granted to certain new hires as inducement grants.

10, 2023, the Company’s board of directors approved the Abeona Therapeutics Inc.

2023 Employment Inducement Equity Incentive Plan

(the “Inducement Plan”).

As of December 31, 2025, there were 214,284 shares available to be granted under the Inducement

following table summarizes stock-based compensation (in thousands):

OF STOCK BASED COMPENSATION

For the year ended December 31,

Research and development

SCHEDULE OF STOCK BASED COMPENSATION

the year ended December 31,

and development

general and administrative

Total stock-based compensation expense

stock-based compensation expense

Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model.

then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over

then recognizes the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over

the service period (generally the vesting period).

11 unchanged sentences

there any plans to declare a dividend.

Company did not grant any stock options in the year ended December 31, 2024 and 2023.

Company did no t grant any stock options in the year ended December 31, 2025 and 2024.

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

following table summarizes stock option activity during the year ended December 31, 2025 and 2024.

OF STOCK OPTION ACTIVITY

SCHEDULE OF STOCK OPTION ACTIVITY

Exercise Price

1 unchanged sentence

(in thousands)

Outstanding at December 31, 2022

at December 31, 2023

Cancelled/forfeited

Outstanding at December 31, 2023

at December 31, 2024

Cancelled/forfeited

Outstanding at December 31, 2024

at December 31, 2025

aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair

1 unchanged sentence

common stock.

As of December 31, 2024, the total compensation cost related to non-vested option awards not yet recognized was $ 0.3 million

As of December 31, 2025, the total compensation cost related to non-vested option awards not yet recognized was $ 2,000

with a weighted average remaining vesting period of 0.4 years.

of December 31, 2024, there are no options outstanding under the 2005 Incentive Plan.

Further information regarding options outstanding

under the 2015 Incentive Plan as of December 31, 2024 is summarized below:

information regarding options outstanding under the 2015 Incentive Plan as of December 31, 2025 is summarized below:

SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE

4 unchanged sentences

SCHEDULE OF RESTRICTED STOCK AWARD ACTIVITY

Weighted Average

Grant Date Fair

Value Per Unit

Outstanding at December 31, 2022

at December 31, 2023

Cancelled/forfeited

Outstanding at December 31, 2023

( 1,009,298 )

at December 31, 2024

Cancelled/forfeited

( 1,462,277 )

Outstanding at December 31, 2024

at December 31, 2025

of December 31, 2025, there was $ 13.7 million of total unrecognized compensation expense related to unvested restricted stock awards,

10 unchanged sentences

payments in the low single digits on annual net sales of the licensed product.

As of December 31, 2024, the Company is subject to remaining

milestone payments totaling approximately $ 0.2 million which is due upon FDA approval of pz-cel.

As of December 31, 2025, the Company paid the remaining

milestone payments of $ 0.3 million which became due upon FDA approval of ZEVASKYN ® on April 28, 2025 and is included in

selling, general and administrative costs in the consolidated statement of operations and comprehensive income (loss).

Under this arrangement

the Company recognized $ 43,000 of royalties due to Stanford during the year ended December 31, 2025 which is included in accrued expenses

in the consolidated balance sheet.

There were no royalty payments during the year ended December 31, 2024.

Agreement Relating to Novel AAV Capsids (“AIM™ capsids”)

2 unchanged sentences

to human cells to treat genetic diseases.

Under the terms of the licensing agreements, the Company paid an upfront licensing fees in

cash and is subject to on-going patent expenses incurred in relation to the patents licensed under this agreement and annual license

maintenance fees.

In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments,

and royalty payments in the low single digits on annual net sales of the licensed product.

As of December 31, 2024, no milestone or royalty

payments under this agreement have been made.

Under the terms of the licensing agreements, the Company paid an upfront licensing fee in cash

and is subject to on-going patent expenses incurred in relation to the patents licensed under this agreement and annual license maintenance

In addition, the Company is subject to the achievement of certain milestones, regulatory approval milestone payments, and royalty

payments in the low single digits on annual net sales of the licensed product.

As of December 31, 2025, as a result of exercise of the

option to license certain of the Company’s AAV capsids, the Company paid $ 0.1 million to UNC as a royalty payment under this agreement.

Agreement Relating to CLN1 Disease

5 unchanged sentences

on annual net sales of the licensed product.

As of December 31, 2024, no milestone or royalty payments under this agreement have been

The Company subsequently sublicensed the license to Taysha Gene Therapies (“Taysha”), see detail of the sublicense

agreement below.

As part of the agreement with UNC, the Company is obligated to pay to UNC a percentage of any sublicense revenue that

the Company receives under the agreement.

The Company recognizes any payments under this agreement as royalties in the consolidated statement

of operations and comprehensive income.

The Company subsequently sublicensed the license to Taysha Gene Therapies (“Taysha”),

see detail of the sublicense agreement below.

As part of the agreement with UNC, the Company is obligated to pay to UNC a percentage

of any sublicense revenue that the Company receives under the agreement.

The Company recognizes any payments under this agreement as

royalties in the consolidated statement of operations and comprehensive income (loss).

As of December 31, 2025 and 2024, no milestone

or royalty payments under this agreement have been made.

On February 25, 2026, the Company, UNC, and Taysha jointly terminated both

the license agreement between Abeona and UNC and the corresponding sublicense agreement between Abeona and Taysha relating to Taysha’s

development program for TSHA-118 for CLN1 disease.

Agreement Relating to Rett Syndrome

9 unchanged sentences

and royalty payments in the low single digits on annual net sales of the licensed product.

As of December 31, 2024, no milestone or royalty

payments under this agreement have been made.

The Company subsequently sublicensed the license to Taysha, see detail of the sublicense

agreement below.

As part of the agreement with UNC, the Company is obligated to pay to UNC and U.

Edinburgh a percentage of any sublicense

revenue that the Company receives under the agreement.

The Company recognizes any payments under this agreement as royalties in the consolidated

statement of operations and comprehensive income.

and Inventory Purchase Agreements Relating to CLN1 Disease

August 2020, the Company entered into sublicense and inventory purchase agreements with Taysha relating to a potential gene therapy for

CLN1 disease.

Under the sublicense agreement, Taysha received worldwide exclusive rights to intellectual property and know-how relating

to the research, development, and manufacture of the potential gene therapy, which the Company had referred to as ABO-202.

inventory purchase agreement, the Company sold to Taysha certain inventory and other items related to ABO-202.

The Company assessed the

nature of the promised license to determine whether the license has significant stand-alone functionality and evaluated whether such

functionality can be retained without ongoing activities by the Company and determined that the license has significant stand-alone functionality.

Furthermore, the Company has no ongoing activities associated with the license to support or maintain the license’s utility.

on this, the Company determined that the pattern of transfer of control of the license to Taysha was at a point in time.

The Company subsequently sublicensed the license

to Taysha, see detail of the sublicense agreement below.

As part of the agreement with UNC, the Company is obligated to pay to UNC and

Edinburgh a percentage of any sublicense revenue that the Company receives under the agreement.

The Company recognizes any payments

under this agreement as royalties in the consolidated statement of operations and comprehensive income (loss).

Under this arrangement

the Company recognized $ 1.8 million of royalties due to UNC and U.

Edinburgh during the year ended December 31, 2025 which is included

in accounts payable in the consolidated balance sheet.

There were no royalty payments during the year ended December 31, 2024.

All milestone

payments during the year were related to clinical milestones achieved by our sublicensor as per the sublicense agreement noted below.

Other than the milestones achieved by our sublicensor and the subsequent royalties due to UNC and U.

Edinburgh, there were no milestone

payments under this agreement have been made during the year ended December 31, 2025 and 2024.

Agreement Relating to AAV Capsids

2024, the Company entered into a license agreement with a third party for certain of the Company’s AAV capsids.

This agreement

had an option to exercise before the terms of the agreement were activated.

In June 2025, the third party exercised its option as per

the agreement with a payment of $ 0.4 million included as license and other revenues in the statement of operations and comprehensive

income (loss).

Company assessed the nature of the promised license to determine whether the license has significant stand-alone functionality and evaluated

whether such functionality can be retained without ongoing activities by the Company and determined that the license has significant

stand-alone functionality.

Furthermore, the Company has no ongoing activities associated with the license to support or maintain the

license’s utility.

Based on this, the Company determined that the pattern of transfer of control of the license to the third party

was at a point in time.

transaction price of the contract includes (i) $ 0.4 million of fixed consideration, (ii) up to $ 24.0 million of variable consideration

in the form of event-based milestone payments, (iii) up to $ 45.0 million of variable consideration in the form of sales-based milestone

payments, and (iv) high single-digit royalty-based payments based on net sales.

payments, and (iv) low single-digit royalty-based payments based on net sales.

The Company is obligated to pay a portion of milestone

payments and royalties on net sales received from Taysha to the UNC..

payments and royalties on net sales received from the third party to UNC.

The event-based milestone payments are based on certain development

and regulatory events occurring.

The Company evaluated whether the milestone conditions have been achieved and if it is probable that

a significant cumulative revenue reversal would not occur before recognizing the associated revenue.

The Company determined that these

milestone payments are not within the Company’s control or the licensee’s control, such as regulatory approvals, and are

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

Accordingly, the Company has fully constrained the $ 24.0

million in event-based milestone payments until such time that it is probable that a significant cumulative revenue reversal would not

The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license is deemed

to be the predominant item to which the royalties relate.

The Company will recognize revenue for these payments at the later of (i) when

the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied

or partially satisfied.

To date, the Company has not recognized any sales-based or royalty revenue resulting from this licensing arrangement.

this arrangement, the Company recognized $ 0.4 million in revenue during the year ended December 31, 2025, and no revenue for year ended

December 31, 2024.

As of December 31, 2025 and 2024, the Company does no t have any contract assets or contract liabilities as a result

of this transaction.

and Inventory Purchase Agreements Relating to CLN1 Disease

August 2020, the Company entered into sublicense and inventory purchase agreements with Taysha relating to a potential gene therapy

for CLN1 disease.

Under the sublicense agreement, Taysha received worldwide exclusive rights to intellectual property and know-how

relating to the research, development, and manufacture of the potential gene therapy, which the Company had referred to as ABO-202 and which Taysha referred to as TSHA-118.

Under the inventory purchase agreement, the Company sold to Taysha certain inventory and other items related to ABO-202/TSHA-118.

assessed the nature of the promised license to determine whether the license has significant stand-alone functionality and evaluated

whether such functionality could be retained without ongoing activities by the Company and determined that the license has significant

stand-alone functionality.

Furthermore, the Company has no ongoing activities associated with the license to support or maintain the

license’s utility.

Based on this, the Company determined that the pattern of transfer of control of the license to Taysha was

at a point in time.

transaction price of the contract included (i) $ 7.0

million of fixed consideration, (ii) up to $ 26.0

million of variable consideration in the form of event-based

milestone payments, (iii) up to $ 30.0

million of variable consideration in the form of sales-based

milestone payments, and (iv) high single-digit royalty-based payments based on net sales.

The Company was obligated to pay a portion of

milestone payments and royalties on net sales received from Taysha to UNC.

The event-based milestone payments were based on certain development

and regulatory events occurring.

At inception, the Company evaluated whether the milestone conditions had been achieved and if it was

3 unchanged sentences

Accordingly, at inception, the Company fully constrained

the $ 26.0 million of event-based milestone payments until such time that it is probable that significant cumulative revenue reversal

would not occur.

The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license

is deemed to be the predominant item to which the royalties relate.

The Company will recognize revenue for these payments at the later

of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has

been satisfied or partially satisfied.

To date, the Company has not recognized any sales-based or royalty revenue resulting from this

licensing arrangement.

this arrangement, the Company has no t recognized any revenue during the years ended December 31, 2024 and 2023, respectively based on

event-based-milestone payments.

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 were to have been based on a level of sales for which the license was deemed to be the predominant item to which the royalties relate.

Company would have recognized revenue for these payments at the later of (i) when the related sales occurred, or (ii) when the performance obligation

to which some or all of the royalty had been allocated had been satisfied or partially satisfied.

To date, the Company has not recognized

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

On February 25, 2026, the Company, UNC, and Taysha jointly terminated both

the license agreement between Abeona and UNC and the corresponding sublicense agreement between Abeona and Taysha relating to Taysha’s

development program for TSHA-118 for CLN1 disease.

this arrangement, the Company did no t recognize any revenue during the years ended December 31, 2025 and 2024, respectively.

The Company has no contract assets or liabilities as of December 31, 2025 and 2024 as a result of this

14 unchanged sentences

a point in time.

transaction price of the contract includes (i) $ 3.0

million of fixed consideration, (ii) up to $ 26.5

million of variable consideration in the form of event-based milestone payments, (iii) up to $ 30.0

million of variable consideration in the form of sales-based milestone payments, and (iv) high single-digit royalty-based payments

based on net sales.

The Company is obligated to pay a portion of milestone payments and royalties on net sales received from Taysha

to the UNC and U.

The event-based milestone payments are based on certain development and regulatory events occurring.

The Company evaluated whether the milestone conditions have been achieved and if it is probable that a significant cumulative

revenue reversal would not occur before recognizing the associated revenue.

The Company determined that these milestone payments are

not within the Company’s control or the licensee’s control, such as regulatory approvals, and are not considered

probable of being achieved until those approvals are received.

Accordingly, the Company has fully constrained the $ 26.5

million in event-based milestone payments until such time that it is probable that a significant cumulative revenue reversal would

The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license

is deemed to be the predominant item to which the royalties relate.

The Company will recognize revenue for these payments at the

later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been

allocated has been satisfied or partially satisfied.

To date, the Company has not recognized any sales-based or royalty revenue

resulting from this licensing arrangement.

this arrangement, the Company recognized nil and $ 3.5 million in revenue during the years ended December 31, 2024 and 2023.

recognized was related to clinical milestones achieved by our sublicensor as per the sublicense agreement noted above.

transaction price of the contract includes (i) $ 3.0 million of fixed consideration, (ii) up to $ 26.5 million of variable consideration

in the form of event-based milestone payments, (iii) up to $ 30.0 million of variable consideration in the form of sales-based milestone

payments, and (iv) high single-digit royalty-based payments based on net sales.

The Company is obligated to pay a portion of milestone

payments and royalties on net sales received from Taysha to UNC and U.

The event-based milestone payments are based on certain

development and regulatory events occurring.

The Company evaluated whether the milestone conditions have been achieved and if it is probable

that a significant cumulative revenue reversal would not occur before recognizing the associated revenue.

The Company determined that

these milestone payments are not within the Company’s control or the licensee’s control, such as regulatory approvals, and

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

Accordingly, the Company fully constrained the $ 26.5

million in event-based milestone payments until such time that it is probable that a significant cumulative revenue reversal would not

The sales-based milestone payments and other royalty-based payments are based on a level of sales for which the license is deemed

to be the predominant item to which the royalties relate.

The Company will recognize revenue for these payments at the later of (i) when

the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied

or partially satisfied.

To date, the Company has not recognized any sales-based or royalty revenue resulting from this licensing arrangement.

this arrangement, the Company recognized revenue of $ 3.0 million and nil during the years ended December 31, 2025 and 2024, respectively.

The revenue recognized was related to clinical milestones achieved by our sublicensor as per the sublicense agreement noted above.

of December 31, 2025, the $ 3.0 million is included in accounts receivable in the consolidated balance sheet.

As of December 31, 2024,

31, 2024 and 2023, the Company does not have any contract assets or contract liabilities as a result of this transaction.

the Company did no t have any contract assets or contract liabilities as a result of this transaction.

License Agreement

12 unchanged sentences

the occurrence of the subsequent sale, and (b) the performance obligation to which they relate has been satisfied.

Additionally,

pursuant to the License Agreement, Ultragenyx will reimburse the Company for certain development and transition costs actually incurred

by the Company.

These costs are passed through to Ultragenyx without mark-up.

The Company has determined that these costs are not incurred

for the purpose of satisfying any performance obligation under the License Agreement.

Accordingly, the reimbursement of these costs is

recognized as a reduction of research and development costs.

As of December 31, 2024 and 2023, the Company does not have any contract

assets or contract liabilities as a result of this transaction.

As of December 31,

2025 and 2024, the Company does no t have any contract assets or contract liabilities as a result of this transaction.

14 – 401(k) PLAN

Company has a tax-qualified employee savings and retirement plan (the “401(k) Plan”) covering all the Company’s

employees in the United States.

Pursuant to the 401(k) Plan, employees may elect to reduce their current compensation by up to the

statutorily prescribed annual limit ($ 23,000

in 2024 and $ 22,500

in 2023 for employees who are under age 50 and $ 30,500

in 2024 and $ 30,000 in 2023 for employees who are age 50 and older) and to have the amount of such reduction contributed to the

The 401(k) Plan is intended to qualify under Section 401 of the Internal Revenue Code so that contributions by

employees or by us to the 401(k) Plan, and income earned on 401(k) Plan contributions, are not taxable to employees until withdrawn

from the 401(k) Plan, and so that contributions by us, if any, will be deductible by us when made.

At the direction of each

participant, the Company invests the assets of the 401(k) Plan in any of over 50

investment options.

Company contributions under the 401(k) Plan were $ 0.5

million and $ 0.3

million for the years ended December 31, 2024 and 2023.

Company has a tax-qualified employee savings and retirement plan (the “401(k) Plan”) covering all the Company’s employees

in the United States.

Pursuant to the 401(k) Plan, employees may elect to reduce their current compensation by up to the statutorily

prescribed annual limit ($ 23,500 in 2025 and $ 23,000 in 2024 for employees who are under age 50 and $ 31,000 in 2025 and $ 30,500 in 2024

for employees who are age 50 and older) and to have the amount of such reduction contributed to the 401(k) Plan.

The 401(k) Plan is intended

to qualify under Section 401 of the Internal Revenue Code so that contributions by employees or by us to the 401(k) Plan, and income

earned on 401(k) Plan contributions, are not taxable to employees until withdrawn from the 401(k) Plan, and so that contributions by

us, if any, will be deductible by us when made.

At the direction of each participant, the Company invests the assets of the 401(k) Plan

in any of over 50 investment options.

Company contributions under the 401(k) Plan were $ 1.0 million and $ 0.5 million for the years ended

December 31, 2025 and 2024.

15 – INCOME TAXES

tax expense differs from the statutory amounts for each of the following years (in thousands):

OF INCOME TAX EXPENSE

For the year ended December 31,

Income taxes at U.S.

statutory rate

State tax, net of federal benefit

Research and development credit

Deferred true ups

Valuation allowance

Change in fair value of warrant liabilities

tax expense for each of the following years consists of the following (in thousands):

OF PROVISION FOR INCOME TAXES

the year ended December 31,

current income tax expense

deferred income tax expense

income tax expense

reconciliation of the income tax expense the amount computed by applying the 21% statutory U.S federal income tax rate to income before

income taxes after the adoption of ASU 2023-09 as follows:

OF INCOME TAX RATE AND TAX PROVISION

thousands except for percentages

the year ended December 31, 2025

thousands except for percentages

federal statutory tax rate

and local income taxes, net of federal income tax effect (a)

and development (“R&D”) credit

in fair value of warrant liabilities

Expired tax losses and credits

Permanent differences

Total tax expense

credit expired (under statute or 382 study)

in valuation allowance

or nondeductible items

in FV of warrant liabilities

NOL’s expired (under statute or 382 limitation)

income tax expense

taxes in New York made up the majority (greater than 50 percent) of the tax effect in this

federal, state and local income taxes were paid during the period.

to US tax law enacted on July 4, 2025, allow for immediate expensing of domestic research and experimentation costs, accelerated depreciation

on eligible capital expenditures, and other tax law changes impacting 2025 with certain changes effective in 2026.

These changes are

reflected in our results for the year ended December 31, 2025.

previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU 2023-09, the following is a reconciliation of

the difference between the effective income tax rate and federal statutory rate (in thousands):

the year ended December 31, 2024

taxes at U.S.

statutory rate

tax, net of federal benefit

and development credit

in fair value of warrant liabilities

tax losses and credits

taxes are provided for the temporary differences between the financial reporting bases and the tax bases of the Company’s assets

2 unchanged sentences

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

For the year ended December 31,

Deferred tax assets (liabilities):

Net operating loss carryforwards

General business credit carryforwards

State credits

Property, equipment and goodwill

Stock based compensation

Intangible assets

Capitalized research and development

Gross deferred tax assets

the year ended December 31,

operating loss carryforwards

business credit carryforwards

Property and equipment

based compensation

to cash conversion

research and development

lease liabilities

Deferred tax assets before valuation allowance

Valuation allowance

Net deferred taxes

of December 31, 2024, the Company identified adjustments related primarily to the recognition of deferred tax assets for stock-based

compensation.

As a result, the Company has written off $ 8.0 million of deferred tax assets in the current period, with a corresponding

adjustment to the valuation allowance.

There was no impact to total tax expense in the prior periods or current period.

Total deferred tax assets

Deferred tax liabilities:

Property and equipment

Right-of-use asset

Total deferred tax liabilities

Net deferred tax asset (liability)

operating Loss and Other Carryforwards

of December 31, 2025, the Company had $ 310.7 million of U.S.

federal net operating loss carryforwards and $ 6.0 million of general business

credit carryforwards.

These carryforwards expire as follows (in thousands):

OF NET OPERATING LOSS AND GENERAL BUSINESS CREDIT CARRYFORWARDS

Net operating

loss carryforwards

business credit

carryforwards

December 22, 2017, the “Tax Cuts and Jobs Act” was signed into law.

The tax reform has the following effects on the Company:

(1) permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017,

(2) allows temporary 100% expensing for certain business assets and property placed in service after September 27, 2018 and before January

1, 2023, (3) disallows NOL carrybacks but allows for the indefinite carryforward of those NOLs which applies to losses arising in tax

years beginning after December 31, 2018 and, (4) limits NOL deductions for each year equal to the lesser of the available carryover or

80% of a taxpayer’s pre-NOL deduction taxable income.

This applies to losses arising in tax years ending on or after December 31,

As of December 31, 2024 and 2023, the Company has concluded that it is more likely than not that the Company will not realize the

benefit of its deferred tax assets due to its history of losses.

Accordingly, the net deferred tax assets have been fully reserved.

accordance with Section 382 of the Internal Revenue Code of 1986, as amended, a change in equity ownership of greater than 50% within

a three-year period results in an annual limitation on the Company’s ability to utilize its NOL carryforwards created during the

tax periods prior to the change in ownership.

The Company has not completed an ownership change analysis pursuant to Section 382.

the Company has incurred cumulative net operating losses since inception, all tax years remain open to examination by U.S.

state income tax authorities.

of December 31, 2024, the Company had $ 316.2 million of U.S.

federal net operating loss carryforwards that do not expire and can be carried

forward indefinitely.

Such net operating loss carryforwards can only be used to offset 80 % of taxable income in any given tax year.

Company also has $ 13.3 million of state net operating loss carryforwards in varying amounts depending on the different state tax laws.

Company acquired MacroChem Corporation on March 25, 2009, and Somanta Pharmaceuticals, Inc.

on January 4, 2008.

Both of these corporations

were loss-making entities at the time of acquisition.

As a result, the net operating losses related to those acquisitions may be subject

to annual limitations.

The Company has not performed a study to determine whether or not there is such a limitation.

federal net operating loss (“NOL”) carryforwards, $ 11.6 million

of state NOL carryforwards, $ 5.2 million of general business credit carryforwards, and $ 0.1 million of state credits.

Of the federal

NOLs, $ 308.1 million do not expire and may be carried forward indefinitely, subject to the limitation that they may offset no more than

80 % of taxable income in any tax year.

The remaining federal NOLs expire between 2026 and 2037 .

State NOL carryforwards have expiration

periods that vary by jurisdiction based on applicable state tax laws.

The federal general business credits begin to expire in 2043, and

the state credits expire in 2026.

utilization of NOLs and tax credits that have expiration dates will depend on the Company’s ability to generate sufficient taxable

income before those attributes expire.

Internal Revenue Code of 1986, as amended, includes provisions that may limit the Company’s ability to utilize its NOLs carryforwards

following certain events, including significant changes in ownership.

If such limitations apply and the Company generates taxable income

in excess of the annually permitted NOL utilization, the Company could incur federal income tax liabilities even though additional NOLs

would remain available for use in future years.

the year ended December 31, 2025, the Company completed a Section 382 study to evaluate whether historical equity transactions

resulted in an ownership change within the meaning of Section 382 of the Internal Revenue Code.

Based on this analysis, the Company

determined that there were numerous ownership changes.

As a result, certain NOL carryforwards will not be realizable due to the Section 382

Company had previously recorded a full valuation allowance against the deferred tax assets associated with these NOLs.

Accordingly, the

$ 96.6 million reduction in gross deferred tax assets resulting from the Section 382 analysis was fully offset by a corresponding

reduction in the valuation allowance and did not affect income tax expense or net income for the year ended December 31, 2025.

December 31, 2025 and 2024, the Company maintained a full valuation allowance on its deferred tax assets based on a history of cumulative

2 unchanged sentences

In 2025, the valuation allowance

increased by approximately $ 5.4 million.

decreased by approximately $ 39.5 million.

In 2024, the valuation allowance increased by approximately $ 5.4 million.

2 unchanged sentences

The Company is subject to U.S.

federal and state examinations

for 2020 and forward, and 2019 and forward, respectively.

However, net operating losses are subject to audit in any tax year in which

those losses are utilized, notwithstanding the year of origin.

federal and state

examinations for 2022 and forward, and 2021 and forward, respectively.

However, net operating losses are subject to audit in any tax

year in which those losses are utilized, notwithstanding the year of origin.

16 – COMMITMENTS AND CONTINGENCIES

6 unchanged sentences

17 – SEGMENT INFORMATION

segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the Chief Operating Decision Maker (“CODM”), or decision making group, in deciding how to allocate resources in assessing performance.

The Company is a

clinical-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases and has one reportable segment.

segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the Chief

Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources in assessing performance.

The Company is a commercial-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases and has

one reportable segment.

The Company’s CODM is the chief executive officer.

accounting policies of the clinical-stage biopharmaceutical segment are the same as those described in the summary of significant accounting

The CODM assesses performance for the clinical-stage biopharmaceutical segment based on net loss, which is reported on the

consolidated statements of operations and comprehensive loss as consolidated net loss.

The measure of segment assets is reported on the

consolidated balance sheet as total consolidated assets.

Expenditures for additions to long-lived assets, which include purchases of

property and equipment, are included in total consolidated assets reviewed by the chief operating decision maker and are reported on

the consolidated statements of cash flows.

date, the Company has not generated any product revenue.

The Company expects to continue to incur significant expenses and operating

losses while it seeks regulatory approval for pz-cel.

such, the CODM uses cash forecast models in deciding how to invest into the clinical-stage biopharmaceutical segment.

Such cash forecast

models are reviewed to make decisions about allocating resources and assessing the entity-wide operating results and performance.

loss is used to monitor budget versus actual results.

Monitoring budgeted versus actual results is used to make decisions about allocating

resources, assessing the performance of the segment and in establishing management’s compensation, along with cash forecast models.

table below summarizes the significant expense categories regularly reviewed by the CODM for the years ended December 31, 2024, and 2023:

accounting policies of the commercial-stage biopharmaceutical segment are the same as those described in the summary of significant accounting

The CODM assesses performance for the commercial-stage biopharmaceutical segment based on net income (loss), which is reported

on the consolidated statements of operations and comprehensive income (loss) as consolidated net income (loss).

The measure of segment

assets is reported on the consolidated balance sheet as total consolidated assets.

Expenditures for additions to long-lived assets, which

include purchases of property and equipment, are included in total consolidated assets reviewed by the chief operating decision maker

and are reported on the consolidated statements of cash flows.

date, the Company has generated limited product revenue.

The Company will continue to incur significant expenses and operating losses

until ZEVASKYN ® can provide sufficient revenue for the Company to be profitable.

As such, the CODM uses cash forecast

models in deciding how to invest into the commercial-stage biopharmaceutical segment.

Such cash forecast models are reviewed to make

decisions about allocating resources and assessing the entity-wide operating results and performance.

Net income (loss) is used to monitor

budget versus actual results.

Monitoring budgeted versus actual results is used to make decisions about allocating resources, assessing

the performance of the segment and in establishing management’s compensation, along with cash forecast models.

table below summarizes the significant expense categories regularly provided to the CODM for the years ended December 31, 2025, and 2024:

OF SIGNIFICANT EXPENSE CATEGORIES

For the year ended December 31,

License and other revenues

the year ended December 31,

and other revenues

and development costs:

& related costs

stock-based compensation

research and development costs (a)

research and development costs

Salaries & related costs

Non-cash stock-based compensation

Other research and development costs (a)

Total research and development costs

general and administrative costs:

Salaries & related costs

Non-cash stock-based compensation

Pre-commercial preparation costs

Other general and administrative costs (b)

Total general and administrative costs

Other segment items (c)

research and development expenses include, but are not limited to 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.

general and administrative expenses primarily consist of office facility costs, public reporting company related costs, professional

fees (e.g., legal expenses) and other general operating expenses not otherwise included in research and development expenses.

segment items includes royalties, interest income, interest expense, change in fair value of warrant and derivative liabilities and

other income.

& related costs

stock-based compensation

selling, general and administrative costs (b)

selling, general and administrative costs

segment items, net (c)

income (loss)

research and development costs include, but are not limited to preclinical lab supplies, preclinical and development costs, clinical

trial costs, preclinical manufacturing and manufacturing facility costs, costs associated with preclinical regulatory approvals,

preclinical depreciation on lab supplies and manufacturing facilities, and preclinical consultant-related expenses.

selling, general and administrative costs primarily consist of office facility costs, public reporting company related costs, professional

fees (e.g., legal expenses), regulatory costs, production costs not attributable to cost of sales and other general operating expenses

not otherwise included in research and development expenses.

segment items include interest income, interest expense, change in fair value of warrant and derivative liabilities, gain on sale

of priority review voucher, other income, net and income tax (benefit) expense.

18 – SALE OF NONFINANCIAL ASSETS

May 9, 2025, the Company entered into a definitive asset purchase agreement that transferred the rights to a PRV awarded to the Company

following the FDA approval of ZEVASKYN ® .

The PRV sale was subject to customary closing conditions and was completed in

June 2025 following the expiration of applicable U.S.

antitrust requirements.

The Company accounted for this transaction under ASC Topic

610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”).

The Company received the gross

proceeds of $ 155.0 million during the year ended December 31, 2025 and recognized a gain, net of transaction costs of $ 2.6 million, from

sale of priority review voucher of $ 152.4 million on the Company’s consolidated statement of operations and comprehensive income

(loss) as it did not have a carrying value at the time of sale.

19 – SUBSEQUENT EVENTS

January of 2025, the compensation committee of the board of directors granted various employees and directors restricted stock awards,

under which the holders have the right to receive an aggregate of 1,956,280 shares of the Company’s common stock.

Total stock compensation

estimated for these awards at the time of grant was $ 10.3 million, with $ 8.7 million vesting in three equal annual installments and $ 1.6

January of 2026, the compensation committee of the board of directors granted various employees and directors restricted stock

awards, under which the holders have the right to receive an aggregate of

2,034,526 shares of the Company’s common stock.

Total stock compensation estimated for these awards at the time of

grant was $ 10.8

million, with $ 9.2

million vesting in three equal annual installments and $ 1.6

million vesting in one annual installment.

Pursuant to the terms of the awards, the shares not vested are forfeited upon separation from

Pursuant to the terms of the awards, the shares not vested are forfeited upon separation

from the Company.

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 9A. Controls and Procedures