ABEONA THERAPEUTICS INC. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2026 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-15771 ABEONA THERAPEUTICS INC. (Exact name of registrant as specified in its charter) Delaware 83-0221517 (State or Other Jurisdiction of incorporation or Organization) (I.R.S. Employer Identification No.) 6555 Carnegie Avenue , 4 th Floor Cleveland , OH 44103 (Address of principal executive offices, zip code) (646) 813-4701 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.01 par value ABEO Nasdaq Capital Market Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The number of shares outstanding of the registrant’s common stock as of August 10, 2026 was 57,184,017 shares. ABEONA THERAPEUTICS INC. Form 10-Q For the Quarter Ended June 30, 2026 INDEX Page No. PART I - FINANCIAL INFORMATION Item 1. Financial Statements: 3 Unaudited Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 3 Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended June 30, 2026 and 2025 4 Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025 5 Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 7 Notes to Unaudited Condensed Consolidated Financial Statements 8 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 30 Item 3. Quantitative and Qualitative Disclosures About Market Risk 38 Item 4. Controls and Procedures 38 PART II - OTHER INFORMATION Item 1. Legal Proceedings 39 Item 1A. Risk Factors 39 Item 5. Other Information 39 Item 6. Exhibits 40 SIGNATURES 41 1 FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (including information incorporated by reference) contains statements that express management’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “could,” “would,” “seeks,” “estimates,” and variations of such words and similar expressions, and the negatives thereof, are intended to identify such forward-looking statements. Such “forward-looking statements” speak only as of the date made and are not guarantees of future performance and involve certain risks, uncertainties, estimates, and assumptions by management that are difficult to predict. Various factors, some of which are beyond the Company’s control, could cause actual results to differ materially from those expressed in, or implied by, such forward-looking statements. In addition, we disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of this report, except as may otherwise be required by the federal securities laws. Forward-looking statements necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in forward-looking statements due to a number of factors. These statements include statements about: our ability to successfully commercialize ZEVASKYN ® and generate future revenue; the deprioritization of our AAV-based ophthalmology programs; the development of ABO-701; our pipeline of product candidates, including the achievement of or expected timing, progress and results of clinical development, clinical trials and potential regulatory approvals; our estimates regarding expenses, capital requirements, and needs for additional financing; anticipated losses and negative cash flows; the potential effects on the relative equity ownership of existing investors resulting from any future sales of equity securities; the potential effects of fundraising activities involving collaborations, strategic alliances, or license arrangements with third parties; our intended use of cash; our intellectual property position and our ability to obtain, maintain and enforce intellectual property protection and exclusivity for our proprietary assets; and future economic conditions or performance. Important factors that could affect performance and cause results to differ materially from management’s expectations are described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as updated from time to time in the Company’s SEC filings, including this Quarterly Report on Form 10-Q. These factors include: our ability to maintain existing and obtain additional regulatory approvals of ZEVASKYN ® and any future product candidates; our ability to successfully commercialize and market ZEVASKYN ® and any future product candidates, if approved, and the timing of any commercialization and marketing efforts; our ability to manufacture sufficient batches of ZEVASKYN ® to meet demand; our ability to manufacture ZEVASKYN ® batches that meet certain product release specifications that were required by FDA at the time of BLA approval and implemented based on a limited clinical dataset; the FDA’s willingness to revise such release specifications to reflect real-world manufacturing experience; our ability to manufacture from provided biopsy material a ZEVASKYN ® batch for which revenue may ultimately be recognized, which depends on such factors as qualified treatment centers obtaining biopsy samples from ZEVASKYN ® patients of sufficient quality to act as starting material for manufacturing ZEVASKYN ® , patient-to-patient variability in cell growth during the ZEVASKYN ® manufacturing process, patient health deterioration in close proximity to ZEVASKYN ® treatment such that treatment is no longer possible, and expiration of ZEVASKYN ® ’s 84-hour shelf-life before surgical application of ZEVASKYN ® can be performed; our ability to activate additional qualified treatment centers to administer ZEVASKYN ® on patients; the ability of qualified treatment centers to enroll patients for treatment or administer ZEVASKYN ® on patients; our ability submit an investigational new drug application for ABO-701 and enroll patients in new clinical trials; our ability to access additional financial resources and/or our financial flexibility to reduce operating expenses if required; our ability to obtain additional equity funding from current or new stockholders; the potential impact of unpredicted changes in the structure and/or administration of the United States government or its agencies; our ability to out-license technology and/or other assets, deferring and/or eliminating planned expenditures, restructuring operations and/or reducing headcount, and sales of assets; the dilutive effect that raising additional funds by selling additional equity securities would have on the relative equity ownership of our existing investors, including under our existing at-the-market sale agreement; the outcome of any interactions with the FDA or other regulatory agencies relating to any of our products or product candidates; our ability to continue to secure and maintain regulatory designations for our product candidates; our ability to develop manufacturing capabilities compliant with current good manufacturing practices for our product candidates; our ability to manufacture cell and gene therapy products and produce an adequate product supply to support clinical trials and potentially future commercialization; the rate and degree of market acceptance of our product candidates for any indication once approved; our ability to meet our obligations contained in license agreements to which we are party; and macroeconomic uncertainty resulting from changes to U.S. trade policy, including current or future tariffs or other trade restrictions. This Quarterly Report on Form 10-Q includes our trademarks, trade names and service marks, such as “ZEVASKYN ® ” and “AIM™,” which are protected under applicable intellectual property laws and are the property of Abeona Therapeutics Inc. or its subsidiaries. Solely for convenience, trademarks, trade names and service marks referred to in this report appear without the ® and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties. 2 PART I – FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Abeona Therapeutics Inc. and Subsidiaries Condensed Consolidated Balance Sheets ($ in thousands, except share and per share amounts) (Unaudited) June 30, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 56,229 $ 78,437 Short-term investments 90,597 112,967 Accounts receivable, net 9,394 6,147 Inventory 5,921 5,493 Other receivables 495 568 Prepaid expenses and other current assets 1,942 1,294 Total current assets 164,578 204,906 Property and equipment, net 10,152 9,921 Operating lease right-of-use assets 3,950 3,962 Other assets 827 781 Total assets $ 179,507 $ 219,570 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 2,994 $ 7,889 Accrued expenses 7,197 8,467 Current portion of long-term debt 13,333 12,222 Current portion of operating lease liability 1,280 864 Accrued taxes and other current liabilities 2 128 Total current liabilities 24,806 29,570 Long-term operating lease liabilities 3,604 4,069 Long-term debt 1,655 7,813 Deferred revenue 677 — Warrant liabilities 20,707 18,902 Total liabilities 51,449 60,354 Commitments and contingencies - - Stockholders’ equity: Preferred stock - $ 0.01 par value; authorized 2,000,000 shares; No shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively — — Common stock - $ 0.01 par value; authorized 200,000,000 shares; 57,225,919 and 55,043,413 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 572 550 Additional paid-in capital 906,906 900,603 Accumulated deficit ( 779,341 ) ( 742,075 ) Accumulated other comprehensive (loss) income ( 79 ) 138 Total stockholders’ equity 128,058 159,216 Total liabilities and stockholders’ equity $ 179,507 $ 219,570 The accompanying notes are an integral part of these unaudited condensed consolidated statements. 3 Abeona Therapeutics Inc. and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income ($ in thousands, except share and per share amounts) (Unaudited) 2026 2025 2026 2025 For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Revenues: Product revenue, net $ 11,380 $ — $ 20,100 $ — License and other revenues — 400 — 400 Total revenues 11,380 400 20,100 400 Costs and expenses: Cost of sales 4,177 — 6,873 — Royalties — 100 — 100 Research and development 5,021 5,943 14,576 15,884 Selling, general and administrative 15,835 17,149 35,337 26,935 Total costs and expenses 25,033 23,192 56,786 42,919 Loss from operations ( 13,653 ) ( 22,792 ) ( 36,686 ) ( 42,519 ) Interest income 1,355 1,027 2,709 2,337 Interest expense ( 696 ) ( 957 ) ( 1,526 ) ( 1,955 ) Change in fair value of warrant liabilities ( 7,191 ) ( 5,388 ) ( 1,805 ) 1,857 Gain from sale of priority review voucher, net — 152,366 — 152,366 Other (loss) income, net ( 6 ) 89 44 230 (Loss) income before income taxes ( 20,191 ) 124,345 ( 37,264 ) 112,316 Income tax expense — 15,512 2 15,512 Net (loss) income $ ( 20,191 ) $ 108,833 $ ( 37,266 ) $ 96,804 Basic (loss) income per common share $ ( 0.35 ) $ 2.07 $ ( 0.66 ) $ 1.89 Dilutive (loss) income per common share $ ( 0.35 ) $ 1.71 $ ( 0.66 ) $ 1.47 Weighted average number of common shares outstanding: Basic 57,048,385 52,524,510 56,835,833 51,159,240 Dilutive 57,048,385 66,640,620 56,835,833 65,111,330 Other comprehensive (loss) income: Change in unrealized losses related to available-for-sale debt securities ( 58 ) 22 ( 217 ) ( 53 ) Comprehensive (loss) income $ ( 20,249 ) $ 108,855 $ ( 37,483 ) $ 96,751 The accompanying notes are an integral part of these unaudited condensed consolidated statements. 4 Abeona Therapeutics Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity ($ in thousands, except share amounts) (Unaudited) Shares Amount Capital Deficit Income (Loss) Equity Accumulated Additional Other Total Common Stock Paid-in Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Income (Loss) Equity Balance at March 31, 2025 48,953,171 $ 490 $ 866,260 $ ( 825,287 ) $ ( 67 ) $ 41,396 Stock-based compensation expense — — 2,830 — — 2,830 Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement 96,255 — ( 6 ) — — ( 6 ) Issuance of common stock, net of offering costs under open market sale agreement (ATM) 2,198,606 22 10,479 — — 10,501 Net income — — — 108,833 — 108,833 Other comprehensive income — — — — 22 22 Balance at June 30, 2025 51,248,032 $ 512 $ 879,563 $ ( 716,454 ) $ ( 45 ) $ 163,576 Accumulated Additional Other Total Common Stock Paid-in Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Income (Loss) Equity Balance at December 31, 2024 45,644,091 $ 457 $ 856,824 $ ( 813,258 ) $ 8 $ 44,031 Stock-based compensation expense — — 5,531 — — 5,531 Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement 2,093,052 20 ( 57 ) — — ( 37 ) Issuance of common stock, net of offering costs under open market sale agreement (ATM) 3,510,889 35 17,265 — — 17,300 Net income — — — 96,804 — 96,804 Other comprehensive loss — — — — ( 53 ) ( 53 ) Balance at June 30, 2025 51,248,032 $ 512 $ 879,563 $ ( 716,454 ) $ ( 45 ) $ 163,576 The accompanying notes are an integral part of these unaudited condensed consolidated statements. 5 Abeona Therapeutics Inc. and Subsidiaries Condensed Consolidated Statements of Stockholders’ Equity, Continued ($ in thousands, except share amounts) (Unaudited) Accumulated Additional Other Total Common Stock Paid-in Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Loss Equity Balance at March 31, 2026 56,866,381 $ 568 $ 903,542 $ ( 759,150 ) $ ( 21 ) $ 144,939 Stock-based compensation expense — — 3,369 — — 3,369 Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement 179,706 2 ( 3 ) — — ( 1 ) Issuance of common stock upon exercise of pre-funded warrants, net of shares settled 179,832 2 ( 2 ) — — — Net loss — — — ( 20,191 ) — ( 20,191 ) Other comprehensive loss — — — — ( 58 ) ( 58 ) Balance at June 30, 2026 57,225,919 $ 572 $ 906,906 $ ( 779,341 ) $ ( 79 ) $ 128,058 Accumulated Additional Other Total Common Stock Paid-in Accumulated Comprehensive Stockholders’ Shares Amount Capital Deficit Income (Loss) Equity Balance at December 31, 2025 55,043,413 $ 550 $ 900,603 $ ( 742,075 ) $ 138 $ 159,216 Balance 55,043,413 $ 550 $ 900,603 $ ( 742,075 ) $ 138 $ 159,216 Stock-based compensation expense — — 6,326 — — 6,326 Issuance of common stock in connection with restricted share awards, net of cancellations and shares settled for tax withholding settlement 2,002,674 20 ( 21 ) — — ( 1 ) Issuance of common stock upon exercise of pre-funded warrants, net of shares settled 179,832 2 ( 2 ) — — — Net loss — — — ( 37,266 ) — ( 37,266 ) Net income (loss) — — — ( 37,266 ) — ( 37,266 ) Other comprehensive loss — — — — ( 217 ) ( 217 ) Other comprehensive income (loss) — — — — ( 217 ) ( 217 ) Balance at June 30, 2026 57,225,919 $ 572 $ 906,906 $ ( 779,341 ) $ ( 79 ) $ 128,058 Balance 57,225,919 $ 572 $ 906,906 $ ( 779,341 ) $ ( 79 ) $ 128,058 The accompanying notes are an integral part of these unaudited condensed consolidated statements. 6 Abeona Therapeutics Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows ($ in thousands) (Unaudited) 2026 2025 For the six months ended June 30, 2026 2025 Cash flows from operating activities: Net (loss) income $ ( 37,266 ) $ 96,804 Adjustments to reconcile net (loss) income to cash used in operating activities: Depreciation and amortization 1,355 1,078 Stock-based compensation expense 6,326 5,531 Change in fair value of warrant liabilities 1,805 ( 1,857 ) Accretion and interest on short-term investments 90 290 Amortization of right-of-use lease assets 347 505 Non-cash interest 509 598 Gain from sale of priority review voucher — ( 152,366 ) Change in operating assets and liabilities: Accounts receivable ( 3,247 ) — Inventory ( 428 ) ( 2,686 ) Other receivables 73 22 Prepaid expenses and other current assets ( 648 ) ( 947 ) Other assets ( 46 ) ( 242 ) Accounts payable and accrued expenses ( 6,337 ) 1,301 Lease liabilities ( 384 ) ( 667 ) Deferred revenue 677 — Accrued taxes and other current liabilities ( 126 ) 15,450 Net cash used in operating activities ( 37,300 ) ( 37,186 ) Cash flows from investing activities: Proceeds from sale of priority review voucher, net of transaction costs of $ 2.6 million — 152,366 Capital expenditures ( 1,414 ) ( 4,302 ) Purchases of short-term investments ( 43,706 ) ( 68,499 ) Proceeds from maturities of short-term investments 65,769 80,536 Net cash provided by investing activities 20,649 160,101 Cash flows from financing activities: Proceeds from ATM sales of common stock, net of issuance costs — 17,300 Payments related to net settlement of restricted share awards ( 1 ) ( 37 ) Payments of long-term debt ( 5,556 ) — Net cash (used in) provided by financing activities ( 5,557 ) 17,263 Net (decrease) increase in cash, cash equivalents and restricted cash ( 22,208 ) 140,178 Cash, cash equivalents and restricted cash at beginning of period 78,437 23,695 Cash, cash equivalents and restricted cash at end of period $ 56,229 $ 163,873 Supplemental cash flow information: Cash and cash equivalents $ 56,229 $ 163,535 Restricted cash — 338 Total cash, cash equivalents and restricted cash $ 56,229 $ 163,873 Supplemental non-cash flow information: Right-of-use asset obtained in exchange for new operating lease liabilities $ 335 $ 1,097 Changes in accrued property and equipment $ 107 $ 1,364 Cash paid for interest $ 1,017 $ 1,358 The accompanying notes are an integral part of these unaudited condensed consolidated statements. 7 ABEONA THERAPEUTICS INC. AND SUBSIDIARIES Notes to Unaudited Condensed Consolidated Financial Statements NOTE 1 – NATURE OF OPERATIONS Background Abeona Therapeutics Inc. (together with the Company’s subsidiaries, “Abeona” or the “Company”), a Delaware corporation, is a commercial-stage biopharmaceutical company developing cell and gene therapies for life-threatening diseases. On April 28, 2025, the U.S. 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 ABO-701, a recently licensed, radically novel engineered T-cell therapy, targeting Prostate-Specific Membrane Antigen (“PSMA”) to treat prostate cancer. Liquidity In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the accompanying unaudited interim condensed consolidated financial statements were issued. As a biopharmaceutical organization, the Company has devoted substantially all of its resources since inception to research and development 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 operations. As 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 June 30, 2026, the Company has relied primarily on its sale of equity securities, its proceeds from the sale of its PRV, its proceeds from sales of ZEVASKYN, its proceeds from credit facilities, 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 condensed 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. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, other than those identified below. Basis of Presentation The Company’s unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, except as otherwise disclosed, necessary for the fair presentation of the financial position, results of operations, and changes in financial position for such periods, have been made. These unaudited interim condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period. Certain information that is normally required by U.S. GAAP has been condensed or omitted in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The December 31, 2025 condensed consolidated balance sheet was derived from the audited statements but does not include all disclosures required by U.S. GAAP. 8 Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 17, 2026. Use of Estimates The preparation of unaudited interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 condensed 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 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 assumptions. Accounts Receivable Accounts 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, 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 receivable by monitoring the aging of its accounts receivable, the history of write-offs for uncollectible accounts, the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. 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 June 30, 2026. Accounts receivable, net comprises the following categories (in thousands): SCHEDULE OF ACCOUNTS RECEIVABLE June 30, 2026 December 31, 2025 Product sales $ 9,394 $ 3,147 License revenues — 3,000 Total accounts receivable, net $ 9,394 $ 6,147 Other receivables Other receivables include employee retention credits, sublease rent receivables and other miscellaneous receivables that are expected to be collected within the next twelve months. As of June 30, 2026 and December 31, 2025, the Company had employee retention credits receivables of $ 0.4 million and $ 0.5 million, respectively which were recorded in other receivables and as a component of other income, net in the condensed consolidated statements of operations and comprehensive (loss) income. 9 Concentration of Credit Risk and Off-Balance Sheet Risk Financial 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. Inventory and Costs of Sales The 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. The 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. During the three and six months ended June 30, 2026, cost of sales includes inventory, period costs related to overhead and manufacturing costs of ZEVASKYN, and royalties due to our licensor. Prior to receiving FDA approval in April 2025, costs associated with the manufacturing of ZEVASKYN were expensed as research and development costs. Credit Losses The Company reviews its available-for-sale investments for credit losses on a collective basis by major security type and in line with the Company’s investment policy. As of June 30, 2026, the Company’s available-for-sale investments were in securities that are issued by the U.S. treasury, U.S. federal agencies and certificates of deposits, are highly rated, and have a history of zero credit losses. 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, the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company’s accounts receivables are with customers that do not have a history of uncollectibility nor a history of significantly aged accounts receivables. As of June 30, 2026, the Company did not recognize a credit loss allowance for its investments or accounts receivable. Segments The Company determines and presents operating segments based on the information that is internally provided to the Company’s chief operating decision maker (“CODM”), its Chief Executive Officer, in accordance with ASC 280, Segment Reporting . The 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. Refer to Note 14 – Segment Information for further information related to the Company’s segment. Revenue Recognition The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. 10 Product Revenue The 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. The 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 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. The Company deferred $0.3 million and nil for the three months ended June 30, 2026 and 2025, respectively and $0.7 million and nil for the six months ended June 30, 2026 and 2025, respectively. License and other revenues The 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 costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are combined with other performance obligations, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The measure of progress, and thereby periods over which revenue should be recognized, are subject to estimates by management and may change over the course of the research and development and licensing agreement. Such a change could have a material impact on the amount of revenue the Company records in future periods. 11 Milestone Payments At the inception of each arrangement that includes research or development milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant cumulative revenue reversal would not occur, the associated milestone value is included in the transaction price. 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 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. Collaborative Arrangements The Company analyzes its collaboration arrangements to assess whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities and therefore within the scope of ASC 808, Collaborative Arrangements (“ASC 808”). This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and which elements of the collaboration are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to ASC 606. Amounts that are owed to collaboration partners are recognized as an offset to collaboration revenue as such amounts are incurred by the collaboration partner. For those elements of the arrangement that are accounted for pursuant to ASC 606, the Company applies the five-step model described above under ASC 606. Royalties The 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 sublicense revenues. Royalties are included in either accounts payable or accrued expenses in the condensed consolidated balance sheets. See Note 13 – License/Supplier Agreements for details of the Company’s license agreements and resulting royalties recognized. Net (Loss) Income Per Share Basic net (loss) income per share is computed by dividing net (loss) income 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 (loss) income 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 method. Dilutive potential securities result from outstanding restricted stock, stock options, stock purchase warrants and conversion features in the Company’s loan agreement. 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. 12 A reconciliation of the numerators and the denominators of the basic and diluted net (loss) income per share computations are as follows (in thousands, except per share amounts): SCHEDULE OF NUMERATORS AND DENOMINATORS OF BASIC AND DILUTED NET INCOME (LOSS) PER SHARE AMOUNTS 2026 2025 2026 2025 For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Numerator: Net (loss) income used for basic net income (loss) per share $ ( 20,191 ) $ 108,833 $ ( 37,266 ) $ 96,804 Effect of dilutive securities: Fair value adjustments for warrant and derivative liabilities — 4,834 — ( 1,180 ) Numerator for dilutive net income (loss) per share - net income available for common shareholders’ after the effect of dilutive securities $ ( 20,191 ) $ 113,667 $ ( 37,266 ) $ 95,624 Denominator: Weighted average number of common shares outstanding - basic 57,048,385 52,524,510 56,835,833 51,159,240 Effect of dilutive shares: Shares of common stock issuable upon exercise of stock options — 176,173 — 176,273 Shares of common stock underlying restricted stock — 5,126,127 — 4,962,006 Shares of common stock issuable upon exercise of warrants — 8,199,559 — 8,199,560 Shares of common stock issuable upon exercise of conversion feature of loan agreement — 614,251 — 614,251 Dilutive potential common shares — 14,116,110 — 13,952,090 Denominator for dilutive net (loss) income per share - adjusted weighted average shares used in computing net (loss) income per share - dilutive 57,048,385 66,640,620 56,835,833 65,111,330 Earnings per share: Basic (loss) income per common share $ ( 0.35 ) $ 2.07 $ ( 0.66 ) $ 1.89 Dilutive (loss) income per common share $ ( 0.35 ) $ 1.71 $ ( 0.66 ) $ 1.47 The 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: SCHEDULE OF ANTI-DILUTIVE SECURITIES EXCLUDED FROM COMPUTATION OF EARNINGS PER SHARE For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Shares of common stock issuable upon exercise of stock options 168,670 — 168,670 — Shares of common stock underlying restricted stock 4,747,485 — 4,747,485 — Shares of common stock issuable upon exercise of conversion feature of loan agreement 614,251 — 614,251 — Shares of common stock issuable upon exercise of warrants 8,156,208 1,788,000 8,156,208 1,788,000 Total 13,686,614 1,788,000 13,686,614 1,788,000 Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The amendments in ASU 2024-03 address investor requests for more detailed expense information and require additional disaggregated disclosures in the notes to financial statements for certain categories of expenses that are included on the face of the income statement. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): 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, Derivatives and Hed ging (“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. 13 In 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. NOTE 3 – REVENUE Revenue comprises the following categories (in thousands): SCHEDULE OF REVENUE 2026 2025 2026 2025 For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Product revenue, net $ 11,380 $ — $ 20,100 $ — License and other revenues — 400 — 400 Total revenues $ 11,380 $ 400 $ 20,100 $ 400 Allowances and discounts Revenue from product sales is reduced at the time of recognition for payor rebates, prompt pay discounts and co-payment assistance, which are attributed to various commercial arrangements and government programs. The following table summarizes changes in allowances and discounts for the six months ended June 30, 2026 (in thousands): SCHEDULE OF CHANGES IN ALLOWANCES AND DISCOUNTS TABLE TEXT BLOCK Rebates Prompt Pay Co-payment Assistance Total Balance at December 31, 2025 $ 727 $ — $ — $ 727 Provisions 916 236 100 1,252 Payments/Credits ( 727 ) ( 189 ) ( 3 ) ( 919 ) Balance at June 30, 2026 $ 916 $ 47 $ 97 $ 1,060 Rebate and co-payment assistance accruals are included in accrued expenses on the condensed consolidated balance sheets. Prompt pay is recorded as an allowance against accounts receivable, net on the condensed consolidated balance sheets. Provision for rebates, prompt pay and other co-payment assistance are recorded as a reduction to product revenue, net on the condensed consolidated statements of operations and comprehensive (loss) income. 14 Deferred revenue 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 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. The following table provides a summary of the activity on the deferred revenue (in thousands): SCHEDULE OF ACTIVITY ON DEFERRED REVENUE Deferred revenue balance as of December 31, 2025 $ — Additions to deferred revenue during the period 677 Revenue recognized during the period — Deferred revenue balance as of June 30, 2026 $ 677 NOTE 4 – SHORT-TERM INVESTMENTS The following table provides a summary of the short-term investments (in thousands): SCHEDULE OF AVAILABLE FOR SALE SHORT-TERM INVESTMENTS June 30, 2026 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Available-for-sale, short-term investments: U.S. treasury securities $ 17,232 — ( 14 ) $ 17,218 U.S. federal agency securities 4,444 — ( 22 ) 4,422 Certificates of deposit 69,000 — ( 43 ) 68,957 Total available-for-sale, short-term investments $ 90,676 — ( 79 ) $ 90,597 December 31, 2025 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Available-for-sale, short-term investments: U.S. treasury securities $ 25,057 31 — $ 25,088 U.S. federal agency securities 17,772 2 — 17,774 Certificates of deposit 70,000 105 — 70,105 Total available-for-sale, short-term investments $ 112,829 138 — $ 112,967 As of June 30, 2026, the available-for-sale securities classified as short-term investments mature in one year or less. The Company carries its available-for-sale securities at fair value in the condensed consolidated balance sheets. Unrealized losses on available-for-sale securities as of June 30, 2026, were not significant and were primarily due to changes in interest rates, including market credit spreads, and not due to increased credit risks associated with specific securities. None of the short-term investments have been in a continuous unrealized loss position for more than 12 months. Accordingly, no other-than-temporary impairment was recorded for the three and six months ended June 30, 2026. There were no significant realized gains or losses recognized on the sale or maturity of available-for-sale investments during the three and six months ended June 30, 2026 or 2025. 15 NOTE 5 – INVENTORY Inventory consists of the following (in thousands): SCHEDULE OF INVENTORY June 30, 2026 December 31, 2025 Raw materials $ 5,279 $ 5,493 Work-in-progress 642 — Finished goods — — Total inventory $ 5,921 $ 5,493 For the three and six months ended June 30, 2026 and 2025, there were no inventory write-downs. NOTE 6 – PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following (in thousands): SCHEDULE OF PROPERTY AND EQUIPMENT June 30, 2026 December 31, 2025 Laboratory equipment $ 11,025 $ 10,061 Furniture, software and office equipment 2,159 1,962 Leasehold improvements 15,482 15,116 Construction-in-progress 59 — Total property and equipment, cost 28,725 27,139 Less: accumulated depreciation ( 18,573 ) ( 17,218 ) Total property and equipment, net $ 10,152 $ 9,921 Depreciation and amortization on property and equipment was $ 0.7 million and $ 0.6 million for the three months ended June 30, 2026 and 2025, respectively and $ 1.4 million and $ 1.1 million for the six months ended June 30, 2026 and 2025, respectively. The Company capitalized into inventory $ 0.2 million and $ 0.1 million relating to depreciation associated with manufacturing equipment and production facilities for the three months ended June 30, 2026 and 2025, respectively and $ 0.3 million and $ 0.1 million for the six months ended June 30, 2026 and 2025, respectively. The capitalized costs are added to inventory and are expensed through cost of sales in the condensed consolidated statement of operations and comprehensive (loss) income upon the commercial sale of ZEVASKYN. NOTE 7 – FAIR VALUE MEASUREMENTS The Company calculates the fair value of the Company’s assets and liabilities that qualify as financial instruments and includes additional information in the notes to the consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of other receivables, prepaid expenses and other current assets, other assets, accounts payable, accrued taxes and accrued expenses approximate their carrying amounts due to the relatively short maturity of these instruments. The estimated fair value of the Loan Agreement (as Defined in Note 10 – Debt) as of June 30, 2026 and December 31, 2025, was $ 16.0 million and $ 21.2 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. U.S. 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 the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. This guidance establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. 16 The three levels of inputs used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets or liabilities. ● Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. ● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar valuation techniques that use significant unobservable inputs. The Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The 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 Description Fair Value at June 30, 2026 Level 1 Level 2 Level 3 Recurring Assets Cash equivalents Money market funds $ 55,546 $ 55,546 $ — $ — Money market deposit account 182 182 — — Short-term investments U.S. treasury securities 17,218 17,218 — — U.S. federal agency securities 4,422 — 4,422 — Certificates of deposit 68,957 — 68,957 — Total assets measured at fair value $ 146,325 $ 72,946 $ 73,379 $ — Liabilities Warrant liabilities $ 20,707 $ — $ — $ 20,707 Total liabilities measured at fair value $ 20,707 $ — $ — $ 20,707 Description Fair Value at December 31, 2025 Level 1 Level 2 Level 3 Recurring Assets Cash equivalents Money market funds $ 73,854 $ 73,854 $ — $ — Money market deposit account 182 182 — — Short-term investments U.S. treasury securities 25,088 25,088 — — U.S. federal agency securities 17,774 — 17,774 — Certificates of deposit 70,105 — 70,105 — Total assets measured at fair value $ 187,003 $ 99,124 $ 87,879 $ — Liabilities Warrant liabilities $ 18,902 $ — $ — $ 18,902 Total liabilities measured at fair value $ 18,902 $ — $ — $ 18,902 17 Warrant Liabilities As of June 30, 2026 and December 31, 2025, the Company had the following outstanding warrants that are classified as liabilities: SCHEDULE OF OUTSTANDING WARRANT LIABILITIES June 30, 2026 December 31, 2025 Warrants issued as part of the 2021 public offering, expiration date December 2026, exercise price of $ 9.75 per share 1,788,000 1,788,000 Warrants issued as part of the 2022 Private Placement Offering, expiration date November 2027, exercise price $ 4.75 per share 5,762,053 5,762,503 Warrants issued as part of the 2024 Loan Agreement, expiration date January 2029, exercise price $ 4.07 per share 589,681 589,681 Warrants issued as part of the 2024 Loan Agreement Amendment, expiration date July 2030, exercise price $ 6.07 per share 16,474 16,474 Outstanding warrants liabilities 16,474 16,474 The common stock warrants related to the 2021 public offering, the 2022 private placement, and the common stock warrants issued in connection with the Loan Agreement and the Loan Agreement Amendment, are not indexed to the Company’s own stock and therefore have been classified as liabilities at their estimated fair value. Changes in the estimated fair value of the warrant liabilities are recorded as changes in fair value of warrant liabilities in the condensed consolidated statement of operations and comprehensive (loss) income. The following table provides a summary of the activity on the warrant liabilities (in thousands): SCHEDULE OF ACTIVITY OF WARRANT LIABILITIES Warrant liabilities as of December 31, 2025 $ 18,902 Issuance of warrants — Loss recognized in earnings from change in fair value 1,805 Warrant liabilities as of June 30, 2026 $ 20,707 The warrant liabilities are valued using significant inputs not observable in the market. Accordingly, the warrant liability is measured at fair value on a recurring basis using unobservable inputs and are classified as Level 3 inputs within the fair value hierarchy. Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. The Company’s valuation of the common stock warrants utilized the Black-Scholes option-pricing model, which incorporated assumptions and estimates to value the common stock warrants. The Company assessed these assumptions and estimates at the end of each reporting period. The following table outlines the key inputs for the Black-Scholes option-pricing model: SCHEDULE OF ESTIMATE FAIR VALUE OF WARRANTS June 30, 2026 December 31, 2025 Common share price $ 6.18 $ 5.27 Expected term (years) 0.47 – 4.05 0.96 – 4.54 Risk-free interest rate (%) 3.91 % – 4.09 % 3.41 % – 3.63 % Volatility (%) 77.22 % – 100.00 % 78.97 % – 100.00 % Expected dividend yield (%) 0 % 0 % 18 NOTE 8 – ACCRUED EXPENSES The following table provides a summary of the components of accrued expenses (in thousands): SCHEDULE OF ACCRUED EXPENSES June 30, 2026 December 31, 2025 Accrued employee compensation $ 4,370 $ 5,636 Accrued contracted services and other 1,911 2,104 Accrued rebates 916 727 Total accrued expenses $ 7,197 $ 8,467 NOTE 9 – LEASES The Company leases space under operating leases for administrative, manufacturing and laboratory facilities in Cleveland, Ohio. 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. The following table provides a summary of the Company’s operating lease liabilities (in thousands): SUMMARY OF OPERATING LEASE LIABILITIES June 30, 2026 December 31, 2025 Current operating lease liability $ 1,280 $ 864 Non-current operating lease liability 3,604 4,069 Total operating lease liability $ 4,884 $ 4,933 Lease costs and rent are reflected in selling, general and administrative expenses and research and development expenses in the condensed consolidated statements of operations and comprehensive (loss) income, as determined by the underlying activities. The following table provides a summary of the components of lease costs and rent (in thousands): SCHEDULE OF COMPONENTS OF LEASE COST 2026 2025 2026 2025 For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Operating lease cost $ 282 $ 380 $ 563 $ 752 Variable lease cost 158 79 340 195 Short-term lease cost 14 11 29 19 Total operating lease costs $ 454 $ 470 $ 932 $ 966 Cash paid for amounts included in the measurement of operating lease liabilities was $ 0.3 million for the three months ended June 30, 2026 and 2025, and $ 0.6 million and $ 0.7 million for the six months ended June 30, 2026 and 2025, respectively. Future minimum lease payments and obligations, which do not include short-term leases, related to the Company’s operating lease liabilities as of June 30, 2026 were as follows (in thousands): SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES Future minimum lease payments and obligations Operating Leases 2026, remainder $ 633 2027 1,295 2028 1,325 2029 1,357 2030 1,387 Total undiscounted operating lease payments 5,997 Less: imputed interest 1,113 Present value of operating lease liabilities $ 4,884 The weighted-average remaining term of the Company’s operating leases was 54 months, and the weighted-average discount rate used to measure the present value of the Company’s operating lease liabilities was 9.1 % as of June 30, 2026. 19 NOTE 10 – DEBT The following table provides a summary of the Company’s debt, net of debt issuance costs and discounts (in thousands): SCHEDULE OF DEBT AND NET OF DEBT ISSUANCE COSTS June 30, 2026 December 31, 2025 Loan Agreement Principal $ 14,444 $ 20,000 Accreted final payment fee 863 711 Unamortized debt issuance costs and discounts ( 319 ) ( 676 ) Total long-term debt 14,988 20,035 Less: current maturities 13,333 12,222 Long-term debt, net of current maturities $ 1,655 $ 7,813 Loan and Security Agreement On January 8, 2024 (the “Closing Date”), the Company entered into a Loan and Security Agreement, as supplemented by a Supplement, dated as of January 8, 2024 (collectively, the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P., a Delaware limited partnership, as administrative agent and collateral agent (“Avenue” and the “Agent”) and Avenue Venture Opportunities Fund II, L.P., a Delaware limited partnership (“Avenue 2” and, together with Avenue, the “Lenders”). The Loan Agreement provides for senior secured term loans (the “Loans”) in an aggregate principal amount up to $ 50 million, with (i) a committed tranche of $ 20 million advanced on the Closing Date (“Tranche 1”), (ii) a committed tranche of up to $ 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 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 June 30, 2026, there are no available tranches. The loan principal is repayable in equal monthly installments beginning on 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) 11.75 %. The stated interest rate and effective interest rate as of June 30, 2026 was 11.75 % and 18.42 %, respectively. The Company may, subject to certain parameters, voluntarily prepay the Loans, in whole, at any time. 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. The Company’s obligations under the Loan Agreement are secured by a pledge of substantially all of the Company’s assets. Pursuant to the Loan Agreement, the Company is subject to a financial covenant requiring the Company to maintain at all times $ 5 million in unrestricted cash. The Loan Agreement also contains affirmative and negative covenants customary for financings of this type that, among other things, limit the ability of the Company and its subsidiaries to (i) incur additional debt, guarantees or liens; (ii) pay dividends; (iii) enter into certain change of control transactions; (iv) sell, transfer, lease, license, or otherwise dispose of certain assets; (v) make certain investments or loans; and (vi) engage in certain transactions with related persons, in each case, subject to certain exceptions. The Loan Agreement also includes events of default customary for financings of this type, in certain cases subject to customary periods to cure, following which the Agent may accelerate all amounts outstanding under the Loans. 20 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 (further discussed below) at any time while the Loans are outstanding, subject to certain terms and conditions, including ownership limitations. 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. In addition, subject to applicable law and specified provisions set forth in the Supplement to the Loan and Security Agreement and solely to the extent permitted under applicable stock exchange rules without requiring stockholder approval, the Lenders may participate in certain equity financing transactions of the Company in an aggregate amount of up to $ 1 million on the same terms, conditions and pricing offered by the Company to other investors participating in such financing transactions (such right, the “Participation Right”). The Participation Right automatically terminates upon the earliest of (i) July 1, 2027, (ii) such time that the Lenders have purchased $1.0 million of the Company’s equity securities in the aggregate pursuant to the Participation Right, and (iii) the repayment in full of all of the obligations under the Loan Agreement. On the Closing Date and pursuant to the funding of Tranche 1 of the Loan 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 of Company common stock, respectively, which is more fully described in Note 11 – Equity below. The future payment obligations of the principal are as follows as of June 30, 2026 (in thousands): SCHEDULE OF FUTURE PAYMENT OBLIGATIONS 2026, remainder $ 6,666 2027 7,778 Total principal $ 14,444 NOTE 11 – EQUITY Preferred Stock The 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 ). There is no preferred stock outstanding as of June 30, 2026 and December 31, 2025. Common Stock and Warrants Public Offerings On December 21, 2021, the Company closed an underwritten public offering of 1,788,000 shares of common stock at a public offering price of $ 9.75 per share and stock purchase warrants to purchase 1,788,000 shares of common stock at an exercise price of $ 9.75 . The net proceeds to the Company were $ 16.0 million, after deducting $ 1.5 million of underwriting discounts and commissions and offering expenses payable by the Company. The net proceeds were allocated to the warrant liability as noted below with the remainder of $ 7.0 million recorded in common stock and additional paid-in capital. 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. Therefore, the Company accounted for the stock purchase warrants as liabilities, which were recorded at the closing date fair value of $ 9.0 million which was based on a Black-Scholes option pricing model. The remainder of the proceeds were allocated to common stock issued and recorded as a component of equity. As of June 30, 2026, there were 1,788,000 stock purchase warrants outstanding related to this public offering. These stock purchase warrants expire on December 21, 2026 . During such time as each warrant is outstanding, the holder of the warrant is entitled to participate in any dividends or other distribution of assets to holders of shares of common stock. There was no warrant activity during the three and six months ended June 30, 2026, other than the change in fair value of the warrants for the stock purchase warrants issued as part of this public offering. 21 On 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 shares of its common stock (the “2024 Pre-Funded Warrants”), for an aggregate purchase price of $ 75.0 million gross, or $ 70.2 million net of related costs. The offering price for each share of common stock was $ 4.07 , and the offering price for the 2024 Pre-Funded Warrants was $ 4.0699 , which represents the per share offering price for the Company’s common stock less a $ 0.0001 per share exercise price for each 2024 Pre-Funded Warrant. The 2024 Pre-Funded Warrants are immediately exercisable at a nominal exercise price of $ 0.0001 per share and may be exercised at any time until the pre-funded warrants are exercised in full. On June 4, 2026, 179,832 of the 2024 Pre-Funded Warrants were exercised leaving 2,314,349 2024 Pre-Funded Warrants outstanding as of June 30, 2026. 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 three and six months ended June 30, 2026 given their nominal exercise price. Open Market Sale Agreement On August 17, 2018, the Company entered into an open market sale agreement (as amended, the “ATM Agreement”) with Jefferies LLC (“Jefferies”) pursuant to which, the Company may sell from time to time, through Jefferies, shares of its common stock for an aggregate sales price of up to $ 75.0 million. Any sales of shares pursuant to this agreement are made under the Company’s effective “shelf” registration statement on Form S-3 that is on file with and has been declared effective by the SEC. The Company sold 2,198,606 shares of its common stock under the ATM Agreement during the three months ended June 30, 2025 resulting in net proceeds of $ 10.5 million during the three months ended June 30, 2025. The Company sold 3,510,889 shares of its common stock under the ATM Agreement during the six months ended June 30, 2025 resulting in net proceeds of $ 17.3 million during the six months ended June 30, 2025. There were no sales of common stock under the ATM Agreement during the three and six months ended June 30, 2026. Private Placement Offerings On November 3, 2022, the Company sold 7,065,946 shares of its common stock, and in lieu of shares of common stock, pre-funded warrants exercisable for 543,933 shares of common stock and accompanying warrants to purchase 7,609,879 shares of its common stock to a group of new and existing institutional investors in a private placement. The offering price for each share of common stock and accompanying warrant was $ 4.60 , and the offering price for each pre-funded warrant and accompanying warrant was $ 4.59 , which equaled the offering price per share of the common stock and accompanying warrant, less the $ 0.01 per share exercise price of each pre-funded warrant. Each accompanying warrant 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 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 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. 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. Therefore, the Company is accounting for the stock purchase warrants as liabilities. On November 3, 2022, the stock purchase warrants were recorded at the closing date fair value of $ 22.0 million which was based on a Black-Scholes option pricing model. The remainder of the proceeds were allocated to common stock issued and recorded as a component of equity. 22 As of June 30, 2026, there were 5,762,053 warrants outstanding related to this private placement offering. The warrants expire on November 3, 2027. During such time as each warrant is outstanding, the holder of the warrant is entitled to participate in any dividends or other distribution of assets to holders of shares of common stock. There was no warrant activity during the three and six months ended June 30, 2026, other than the change in fair value of the warrants related to warrants issued as part of this private placement offering. Direct Placement Offering On 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 are immediately exercisable at a nominal exercise price of $ 0.0001 per share, may be exercised at any time and do not have an expiration date. As of June 30, 2026, there were 2,619,140 2023 Pre-Funded Warrants outstanding. 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. 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 for the three and six months ended June 30, 2026 given their nominal exercise price. Common Stock Warrants Related to the Loan and Security Agreement On 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 Warrants”). 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. The 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 on a cashless basis by receiving a net number of shares calculated pursuant to the formula set forth in the January Warrants. The January Warrants are subject to anti-dilution adjustments for stock dividends, stock splits, and reverse stock splits. On 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. Therefore, 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. 23 NOTE 12 – STOCK-BASED COMPENSATION Prior 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. The Company now grants stock options and stock awards under the Abeona Therapeutics Inc. 2023 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. On June 12, 2026, stockholders approved an additional increase in the shares authorized for issuance under the 2023 Incentive Plan from 8,400,000 to 11,500,000 shares. As of June 30, 2026, there were 4,540,249 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 Inc. 2023 Employment Inducement Equity Incentive Plan (the “Inducement Plan”). As of June 30, 2026, there were 62,354 shares available to be granted under the Inducement Plan. The following table summarizes stock-based compensation (in thousands): SCHEDULE OF STOCK BASED COMPENSATION 2026 2025 2026 2025 For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Research and development $ 294 $ 232 $ 517 $ 902 Selling, general and administrative 3,075 2,598 5,809 4,629 Total stock-based compensation expense $ 3,369 $ 2,830 $ 6,326 $ 5,531 Stock Options The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The Company 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). The Black-Scholes model incorporates the following assumptions: ● Expected volatility – the Company estimates the volatility of the share price at the date of grant using a “look-back” period which coincides with the expected term, defined below. The Company believes using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility. ● Expected term – the Company estimates the expected term using the “simplified” method, as outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.” ● Risk-free interest rate – the Company estimates the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant. ● Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend. The Company did no t grant any stock options in the six months ended June 30, 2026 and 2025. The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise. 24 The following table summarizes stock option activity during the six months ended June 30, 2026. SCHEDULE OF STOCK OPTION ACTIVITY Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2025 176,019 $ 38.72 4.85 $ 5 Granted — $ — — $ — Cancelled/forfeited ( 7,349 ) $ 24.42 — $ — Exercised — $ — — $ — Outstanding at June 30, 2026 168,670 $ 39.34 2.89 $ 8 Exercisable 168,670 $ 39.34 2.89 $ 8 Unvested — $ — — $ — The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of June 30, 2026, there was no unrecognized compensation cost related to non-vested option awards not yet recognized. Restricted Stock The following table summarizes restricted stock award activity during the six months ended June 30, 2026: SCHEDULE OF RESTRICTED STOCK AWARD ACTIVITY Number of Awards Weighted Average Grant Date Fair Value Per Unit Outstanding at December 31, 2025 4,180,981 $ 4.96 Granted 2,265,911 $ 5.30 Cancelled/forfeited ( 263,015 ) $ 5.13 Vested ( 1,436,392 ) $ 4.90 Outstanding at June 30, 2026 4,747,485 $ 5.13 As of June 30, 2026, there was $ 17.9 million of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average vesting period of 1.9 years. The total fair value of restricted stock awards that vested was $ 7.0 million during the six months ended June 30, 2026. NOTE 13 – LICENSE/SUPPLIER AGREEMENTS License and Joint Development Agreement Relating to SIR-T™ Technology for PSMA-Positive Prostate Cancer On March 18, 2026, the Company entered into a License and Joint Development Agreement (the “Initial Agreement”) with Reverence Enterprises, LLC (“Reverence”), a private biotechnology company based in California. Reverence is a subsidiary of Angeles Therapeutics, Inc. Under the terms of the Initial Agreement, which covers the first phase of development (inclusive of a Phase 1 Study), Abeona obtained an exclusive license (“License Grant”) to develop and commercialize Reverence’s synthetic immune receptors (“SIR-T™”) for PSMA positive prostate cancer. PSMA SIR-T™ is an autologous adult donor-derived T-cell product. Pursuant to an agreed-upon Scope of Work between the parties, during the term of the Initial Agreement, Abeona has agreed to file an IND with the FDA relating to the PSMA SIR-T™ Product and conduct a Phase 1 Study. 25 Following the completion of the first Phase 1 Study, Abeona, at its sole discretion, will have 30 days to notify Reverence of its decision whether to proceed with further product development. If Abeona wishes to proceed with further development of the product, Reverence, at its sole discretion, will have 30 days to elect to proceed in negotiating with Abeona either (i) a Joint Development Agreement or (ii) a License Agreement (each a “Subsequent Agreement”) governing the further licensing, development, manufacture, distribution and/or commercialization of the PSMA SIR-T™ product. Under the Initial Agreement, the parties agreed to certain payment terms that would be included in any future executed Subsequent Agreement, subject to additional customary terms upon execution. Abeona, at its sole discretion, has the right to decline to enter into any such Subsequent Agreement. The payment terms of the Initial Agreement include (i) an upfront payment of $ 7.0 million at contract execution, and (ii) up to $ 1.0 million of future event-based milestone payments. The event-based milestone payments are based on certain development and regulatory events occurring. As the License Grant relates to in-process research and development and does not have an alternative future use, the upfront payment was expensed as incurred to research and development expenses during the three months ended March 31, 2026. The milestone payments will be recognized when the underlying regulatory events are considered probable to occur. License Agreement Relating to Recessive Dystrophic Epidermolysis Bullosa (RDEB) In 2016, the Company entered into two licensing agreements between the Company and The Board of Trustees of Leland Stanford Junior University (“Stanford”) to develop EB-101 (LZRSE-Col7A1 Engineered Autologous Epidermal Sheets (LEAES)) and EB-201 (AAV DJ COL7A1) and to license the invention “Gene Therapy for Recessive Dystrophic EB using Genetically Corrected Autologous Keratinocytes.” Under the terms of the licensing agreements, the Company paid an upfront of licensing fees in cash and is subject to 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 digit percentage on annual net sales of the licensed product. Royalty payments are included in cost of sales in the condensed consolidated statement of operations and comprehensive (loss) income. License Agreement Relating to Novel AAV Capsids In 2016, the Company licensed an international patent family from The University of North Carolina at Chapel Hill (“UNC”) covering novel AAV capsids (“AIM™ capsids”) that may potentially be used to deliver a wide variety of therapeutic transgenes to human cells to treat genetic diseases. 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 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. License Agreement Relating to Rett Syndrome In 2019, the Company licensed rights to one patent family from UNC and two patent families from The University Court of the University of Edinburgh (“U. Edinburgh”) and The University Court of the University of Glasgow relating to gene therapy for the treatment of Rett Syndrome. Under the terms of the licensing agreements, the Company paid an upfront of 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. 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. License Agreement Relating to AAV Capsids In 2024, the Company entered into a license agreement with a third party for certain of the Company’s AAV capsids. 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. 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. 26 The 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) 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 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 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. Sublicense Agreement Relating to Rett Syndrome In October 2020, the Company entered into a sublicense agreement with Taysha for a gene therapy for Rett syndrome, including intellectual property related to MECP2 gene constructs and regulation of their expression. The agreement grants Taysha worldwide exclusive rights to intellectual property developed by scientists at UNC, U. Edinburgh and the Company, and the Company’s know-how relating to the research, development, and manufacture of the gene therapy for Rett syndrome and MECP2 gene constructs and regulation of their expression. 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. Based on this, the Company determined that the pattern of transfer of control of the license to Taysha was at a point in time. The 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. Edinburgh. 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 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. As of June 30, 2026, the Company did not have any contract assets or contract liabilities as a result of this transaction. As of December 31, 2025, the Company had $ 3.0 million included in accounts receivable in the condensed consolidated balance sheet as a result of clinical milestones achieved by our sublicensor as per the sublicense agreement noted above. 27 Ultragenyx License Agreement On May 16, 2022, the Company and Ultragenyx Pharmaceutical Inc. (“Ultragenyx”) entered into an exclusive license agreement (the “License Agreement”) for AAV gene therapy, ABO-102, for the treatment of Sanfilippo syndrome type A (MPS IIIA). Under the License Agreement, Ultragenyx assumed responsibility for the ABO-102 program from the Company, with the exclusive right to develop, manufacture, and commercialize ABO-102 worldwide. Also pursuant to the License Agreement, following regulatory approval, the Company is eligible to receive tiered royalties from mid-single-digits to 8% on net sales, as well as up to $ 30.0 million in commercial milestone payments. The tiered royalty range represents a reduction from the previously disclosed mid-single digits to 10% on net sales as a result of potential FDA approval occurring after December 31, 2025, in accordance with the terms of the License Agreement. Both forms of consideration comprise the transaction price to which the Company expects to be entitled in exchange for transferring the related intellectual property and certain, contractually-specified, transition services to Ultragenyx. The sales-based royalty and milestone payments are subject to the royalty recognition constraint. As such, these fees are not recognized as revenue until the later of: (a) the occurrence of the subsequent sale, and (b) the performance obligation to which they relate has been satisfied. NOTE 14 – SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the 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. The accounting policies of the commercial-stage biopharmaceutical segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the commercial-stage biopharmaceutical segment based on net (loss) income, which is reported on the consolidated statements of operations and comprehensive (loss) as consolidated net (loss) income. 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. To 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 (loss) income 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. 28 The table below summarizes the significant expense categories regularly reviewed by the CODM (in thousands): SCHEDULE OF SIGNIFICANT EXPENSE CATEGORIES 2026 2025 2026 2025 For the three months ended June 30, For the six months ended June 30, 2026 2025 2026 2025 Revenues: Product revenue, net $ 11,380 $ — $ 20,100 $ — License and other revenues — 400 — 400 Total revenues 11,380 400 20,100 400 Cost of sales 4,177 — 6,873 — Royalties — 100 — 100 Research and development costs: Salaries & related costs 1,926 2,235 3,659 6,916 Non-cash stock-based compensation 294 232 517 902 Other research and development costs (a) 2,801 3,476 10,400 8,066 Total research and development costs 5,021 5,943 14,576 15,884 Selling, general and administrative costs: Salaries & related costs 7,254 7,456 15,599 11,109 Non-cash stock-based compensation 3,075 2,598 5,809 4,629 Commercial costs 2,015 2,290 3,817 3,497 Other selling, general and administrative costs (b) 3,491 4,805 10,112 7,700 Total selling, general and administrative costs 15,835 17,149 35,337 26,935 Other segment items, net (c) ( 6,538 ) 131,625 ( 580 ) 139,323 Net (loss) income $ ( 20,191 ) $ 108,833 $ ( 37,266 ) $ 96,804 (a) Other 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. (b) Other selling, general and administrative costs primarily consist of office facility costs, public company reporting 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. (c) Other segment items include interest income, interest expense, change in fair value of warrant liabilities, gain on sale of priority review voucher, other income and income tax (benefit) expense. 29 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Annual Report”). This discussion and analysis contains forward-looking statements, which involve risks and uncertainties. As a result of many factors, such as those described under “Forward-Looking Statements,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements. OVERVIEW We are a commercial-stage biopharmaceutical company developing cell and gene therapies for serious diseases. Abeona’s ZEVASKYN ® (“prademagene zamikeracel”) is the first and only autologous cell-based gene therapy for the treatment of wounds in adults and pediatric patients with recessive dystrophic epidermolysis bullosa (“RDEB”). Our fully integrated cell and gene therapy cGMP manufacturing facility in Cleveland, Ohio serves as the manufacturing site for ZEVASKYN commercial production. Our development portfolio features ABO-701 (“PSMA-SIR-T™”), a potentially first-in-class engineered T-cell therapy targeting PSMA, engineered to overcome the core failures of cell therapies in solid tumors. Recent Developments Qualified Treatment Center Activations On July 21, 2026, we announced activation of Cincinnati Children’s as the newest qualified treatment center for the administration of ZEVASKYN. This represents the seventh available qualified treatment center for the administration of ZEVASKYN. 30 RESULTS OF OPERATIONS Comparison of Three Months Ended June 30, 2026 and June 30, 2025 For the three months ended June 30, Change ($ in thousands) 2026 2025 $ % Revenues: Product revenue, net $ 11,380 $ — $ 11,380 100 % License and other revenues — 400 (400 ) (100 )% Total revenues 11,380 400 10,980 2,745 % Costs and expenses: Cost of sales $ 4,177 $ — $ 4,177 100 % Royalties — 100 (100 ) (100 )% Research and development 5,021 5,943 (922 ) (16 )% Selling, general and administrative 15,835 17,149 (1,314 ) (8 )% Total costs and expenses 25,033 23,192 1,841 8 % Loss from operations (13,653 ) (22,792 ) 9,139 (40 )% Interest income 1,355 1,027 328 32 % Interest expense (696 ) (957 ) 261 (27 )% Change in fair value of warrant liabilities (7,191 ) (5,388 ) (1,803 ) 33 % Gain from sale of priority review voucher, net — 152,366 (152,366 ) (100 )% Other (loss) income, net (6 ) 89 (95 ) (107 )% (Loss) income before income taxes (20,191 ) 124,345 (144,536 ) (116 )% Income tax expense — 15,512 (15,512 ) (100 )% Net (loss) income $ (20,191 ) $ 108,833 $ (129,024 ) (119 )% Product revenue, net Product revenue, net, resulting from the sale of ZEVASKYN, for the three months ended June 30, 2026 was $11.4 million. There was no product revenue for the three months ended June 30, 2025 as the approval by the FDA for ZEVASKYN occurred in April of 2025 and we recorded our first sale in December of 2025. License and other revenues License and other revenues for the three months ended June 30, 2026 was nil as compared to $0.4 million for the same period of 2025. The revenue in 2025 of $0.4 million consists of revenue resulting from a third party exercising its option to license certain of our AAV capsids. Cost of sales Cost of sales during the three months ended June 30, 2026 was $4.2 million and primarily includes costs associated with the commercial sale of ZEVASKYN including royalties due to our licensor, Stanford. There was no cost of sales in the same period of 2025, as ZEVASKYN was approved by the FDA in April 2025 and we recorded our first sale in December of 2025. Research and development Research and development expenses include, but are not limited to, payroll and personnel expenses, preclinical lab supplies, preclinical and development costs, clinical trial costs, preclinical manufacturing and manufacturing facility costs, costs associated with regulatory approvals, preclinical depreciation on lab supplies and manufacturing facilities, and preclinical consultant-related expenses. Total research and development spending for the three months ended June 30, 2026 was $5.0 million, as compared to $5.9 million for the same period of 2025, a decrease of $0.9 million. The reduction in expenses was primarily due to costs capitalized into inventory and other production costs that are no longer considered research and development due to FDA approval of ZEVASKYN in April of 2025. 31 We expect our research and development activities to increase as we work towards advancing our other product candidate towards potential regulatory approval, reflecting costs associated with the following: ● employee and consultant-related expenses; ● preclinical and developmental costs; ● clinical trial costs; ● development and regulatory milestones associated with licensing agreements; ● the cost of acquiring and manufacturing clinical trial materials; and ● costs associated with regulatory approvals. Selling, general and administrative Selling, general and administrative expenses primarily consist of payroll and personnel costs, office facility costs, public company reporting related costs, professional fees (e.g., legal expenses), selling and commercialization costs and other general operating expenses not otherwise included in research and development expenses. We expect our selling, general, and administrative costs to continue to increase as we expand our commercialization of ZEVASKYN. Total selling, general and administrative expenses were $15.8 million for the three months ended June 30, 2026, as compared to $17.1 million for the same period of 2025, a decrease of $1.3 million. The decrease in expenses was primarily due to $0.9 million of costs that were allocated to costs of sales related to overhead costs and a reduction in recruiting costs of $0.4 million as we had fewer increases in new employees. Interest income Interest income was $1.4 million for the three months ended June 30, 2026, as compared to $1.0 million in the same period of 2025. The increase resulted from increased average short-term investment balances. Interest expense Interest expense was $0.7 million for the three months ended June 30, 2026 compared to $1.0 million in the same period of 2025. Interest expense was due to the credit facility entered into by the Company in January 2024 and decreased as a result of the July 2025 Loan Agreement Amendment plus a reduction of the principal loan amount due to principal payments made in 2026. Change in fair value of warrant liabilities The change in fair value of warrant liabilities was a loss of $7.2 million for the three months ended June 30, 2026. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. The loss in the fair value of warrant liabilities was primarily due to the increase in our stock price over the quarter offset by a shorter term of the outstanding warrants. The change in fair value of warrant liabilities was a loss of $5.4 million for the three months ended June 30, 2025. The loss in the fair value of warrant liabilities was primarily due to the increase in our stock price year over year offset by a shorter term of the outstanding warrants. Gain from sale of priority review voucher, net In May 2025, we sold our PRV awarded to us following the FDA approval of ZEVASKYN™. We received gross proceeds of $155.0 million during the three months ended June 30, 2025 and recognized a gain from the PRV sale of $152.4 million, net of transaction costs of $2.6 million, as it did not have a carrying value at the time of sale. Other (loss) income, net Other (loss) income, net consisted of a loss of $6,000 for the three months ended June 30, 2026, as compared to income of $89,000 in the same period of 2025. The decrease was primarily a result of not having sublease income in 2026. The sublease of our New York office ended in September of 2025. 32 Income tax expense We did not record an income tax expense for the three months ended June 30, 2026 as we generated sufficient tax losses, after consideration of discrete items. We recorded a current income tax expense of $15.5 million for the three months ended June 30, 2025. The current income tax expense for the three months ended June 30, 2025 was driven by pre-tax income from the gain on sale of priority review voucher, resulting in $14.6 million of federal income tax expense and $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced the Company’s taxable income and resulting income tax expense for the year ended December 31, 2025. Comparison of Six Months Ended June 30, 2026 and June 30, 2025 For the six months ended June 30, Change ($ in thousands) 2026 2025 $ % Revenues: Product revenue, net $ 20,100 $ — $ 20,100 100 % License and other revenues — 400 (400 ) (100 )% Total revenues 20,100 400 19,700 4,925 % Costs and expenses: Cost of sales $ 6,873 $ — $ 6,873 100 % Royalties — 100 (100 ) (100 )% Research and development 14,576 15,884 (1,308 ) (8 )% Selling, general and administrative 35,337 26,935 8,402 31 % Total costs and expenses 56,786 42,919 13,867 32 % Loss from operations (36,686 ) (42,519 ) 5,833 (14 )% Interest income 2,709 2,337 372 16 % Interest expense (1,526 ) (1,955 ) 429 (22 )% Change in fair value of warrant liabilities (1,805 ) 1,857 (3,662 ) (197 )% Gain from sale of priority review voucher, net — 152,366 (152,366 ) (100 )% Other income, net 44 230 (186 ) (81 )% (Loss) income before income taxes (37,264 ) 112,316 (149,580 ) (133 )% Income tax expense 2 15,512 (15,510 ) (100 )% Net (loss) income $ (37,266 ) $ 96,804 $ (134,070 ) (138 )% Product revenue, net Product revenue, net, resulting from the sale of ZEVASKYN, for the six months ended June 30, 2026 was $20.1 million. There was no product revenue for the six months ended June 30, 2025 as the approval by the FDA for ZEVASKYN occurred in April of 2025 and we recorded our first sale in December of 2025. License and other revenues License and other revenues for the six months ended June 30, 2026 was nil as compared to $0.4 million for the same period of 2025. The revenue in 2025 of $0.4 million consists of revenue resulting from a third party exercising its option to license certain of our AAV capsids. Cost of sales Cost of sales during the six months ended June 30, 2026 was $6.9 million and primarily includes costs associated with the commercial sale of ZEVASKYN including royalties due to our licensor, Stanford. There was no cost of sales in the same period of 2025, as ZEVASKYN was approved by the FDA in April 2025 and we recorded our first sale in December of 2025. 33 Royalties Total royalty expense for the six months ended June 30, 2026 was nil as compared to $0.1 million for the same period of 2025. Royalties in 2025 consisted of amounts owed to the University of North Carolina at Chapel Hill resulting from the milestones due from the exercise of an option by a third party to license certain of our AAV capsids. Research and development Total research and development spending for the six months ended June 30, 2026 was $14.6 million, as compared to $15.9 million for the same period of 2025, a decrease of $1.3 million. In March 2026, we entered a license and joint development agreement related to PSMA SIR-T™ which included an upfront payment of $7.0 million that was included in research and development expenses. Excluding this transaction, research and development spending decreased $8.3 million. The reduction in expenses was primarily due to costs capitalized into inventory and, engineering runs and other production costs that are no longer considered research and development due to FDA approval of ZEVASKYN in April of 2025. Selling, general and administrative Total selling, general and administrative expenses were $35.3 million for the six months ended June 30, 2026, as compared to $26.9 million for the same period of 2025, an increase of $8.4 million. The increase in expenses was primarily due to increases in salaries and stock-based compensation of $5.7 million due to new hires, $1.9 million of costs related to engineering runs with the remainder due to other commercial costs related to our continued commercialization efforts upon FDA approval in April of 2025. Interest income Interest income was $2.7 million for the six months ended June 30, 2026, as compared to $2.3 million in the same period of 2025. The increase resulted from increased average short-term investment balances. Interest expense Interest expense was $1.5 million for the six months ended June 30, 2026 compared to $2.0 million in the same period of 2025. Interest expense was due to the credit facility entered into by the Company in January 2024 and decreased as a result of the July 2025 Loan Agreement Amendment plus a reduction of the principal loan amount due to principal payments made in 2026. Change in fair value of warrant and derivative liabilities The change in fair value of warrant liabilities was a loss of $1.8 million for the six months ended June 30, 2026. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. The loss in the fair value of warrant liabilities was primarily due to the increase in our stock price over the year offset by a shorter term of the outstanding warrants. The change in fair value of warrant liabilities was a gain of $1.9 million for the six months ended June 30, 2025. We issued stock purchase warrants that are required to be classified as a liability and valued at fair market value at each reporting period. The gain in the fair value of warrant liabilities was primarily due to the shorter term period over period. Gain from sale of priority review voucher, net In May 2025, we sold our PRV awarded to us following the FDA approval of ZEVASKYN™. We received gross proceeds of $155.0 million during the six months ended June 30, 2025 and recognized a gain from the PRV sale of $152.4 million, net of transaction costs of $2.6 million, as it did not have a carrying value at the time of sale. 34 Other income, net Other income, net consisted of $44,000 for the six months ended June 30, 2026, as compared to $0.2 million in the same period of 2025. The decrease was primarily a result of not having sublease income in 2026. The sublease of our NY office ended in September of 2025. Income tax expense We recorded a current income tax expense of $2,000 for the six months ended June 30, 2026 which included the impact of our generation of sufficient tax losses, after consideration of discrete items, to reduce our income tax expense for the period. We recorded a current income tax expense of $15.5 million for the six months ended June 30, 2025. The current income tax expense for the six months ended June 30, 2025 was driven by pre-tax income from the gain on sale of priority review voucher, resulting in $14.6 million of federal income tax expense and $0.9 million of state income tax expense. This was subsequently reduced in the third quarter of 2025 as a result of the favorable impact of the One Big Beautiful Bill Act, enacted on July 4, 2025. The legislation restored immediate expensing of domestic R&D expenditures, reinstated 100% bonus depreciation, and provided more favorable rules for determining the limitation on business interest expense, which collectively reduced the Company’s taxable income and resulting income tax expense for the year ended December 31, 2025. LIQUIDITY AND CAPITAL RESOURCES Cash Flows for the Six Months Ended June 30, 2026 and 2025 For the six months ended June 30, ($ in thousands) 2026 2025 Total cash, cash equivalents and restricted cash (used in) provided by: Operating activities $ (37,300 ) $ (37,186 ) Investing activities 20,649 160,101 Financing activities (5,557 ) 17,263 Net (decrease) increase in cash, cash equivalents and restricted cash $ (22,208 ) $ 140,178 Operating activities Net cash used in operating activities was $37.3 million for the six months ended June 30, 2026, primarily comprised of our net loss of $37.3 million, decreases in operating assets and liabilities of $10.5 million and net non-cash charges of $10.4 million. Non-cash charges consisted primarily of $1.8 million of loss as a result of the change in fair value of warrant liabilities, $6.3 million of stock-based compensation and $1.4 million of depreciation and amortization. Net cash used in operating activities was $37.2 million for the six months ended June 30, 2025, primarily comprised of our net income of $96.8 million and increases in operating assets and liabilities of $12.4 million offset by net non-cash charges of $146.2 million. Non-cash charges consisted primarily of $152.4 million gain on sale of priority review voucher for which the cash proceeds are recorded in investing activities, $1.9 million of gain as a result of the change in fair value of warrant and derivative liabilities, $5.5 million of stock-based compensation and $1.1 million of depreciation and amortization. 35 Investing activities Net cash provided by investing activities was $20.6 million for the six months ended June 30, 2026, primarily comprised of proceeds from maturities of short-term investments of $65.8 million, offset by purchases of short-term investments of $43.7 million and capital expenditures of $1.4 million. Net cash provided by investing activities was $160.1 million for the six months ended June 30, 2025, primarily comprised of net proceeds from sale of priority review voucher of $152.4 million, proceeds from maturities of short-term investments of $80.5 million, offset by purchases of short-term investments of $68.5 million and capital expenditures of $4.3 million. Financing activities Net cash used in financing activities was $5.6 million for the six months ended June 30, 2026, comprised of $5.6 million in payments on our long-term debt. Net cash provided by financing activities was $17.3 million for the six months ended June 30, 2025, primarily comprised of proceeds of $17.3 million from open market sales of common stock pursuant to the ATM Agreement (as defined below). We have historically funded our operations primarily through our sale of equity securities, our most recent gain on sale of our PRV, and strategic collaboration arrangements. Our principal source of liquidity is cash, cash equivalents and short-term investments, collectively referred to as our cash resources. As of June 30, 2026, our cash resources were $146.8 million. We believe that our current cash and cash equivalents and short-term investments are sufficient to fund operations through at least the next 12 months from the date of this report on Form 10-Q. We may need to secure additional funding to carry out all of our planned research and development and potential commercialization activities. If we are unable to obtain additional financing or generate license or product revenue, the lack of liquidity and sufficient capital resources could have a material adverse effect on our future prospects. We have an open market sale agreement with Jefferies LLC (as amended, the “ATM Agreement”) pursuant to which, we may sell from time to time, through Jefferies LLC, shares of our common stock for an aggregate sales price of up to $75.0 million. Any sales of shares pursuant to this agreement are made under our effective “shelf” registration statement on Form S-3 that is on file with and has been declared effective by the SEC. We sold 3,510,889 shares of our common stock under the ATM Agreement and received $17.3 million of net proceeds during the six months ended June 30, 2025. There were no sales of our common stock under the ATM agreement during the six months ended June 30, 2026. Under the ATM Agreement and as of June 30, 2026, we have remaining shares of our common stock for an aggregate sales price of up to $51.5 million. Since our inception and excluding the gain on sale of our priority review voucher, we have incurred negative cash flows from operations and have expended, and expect to continue to expend, substantial funds to complete our planned product development and commercialization efforts. Excluding the gain on sale of our priority review voucher, we have not been profitable since inception and to date have received limited revenues from the sale of products or licenses. As a result, we have incurred significant operating losses and negative cash flows from operations since our inception and anticipate such losses and negative cash flows will continue until ZEVASKYN can provide sufficient revenue for us to be profitable and cash flow generating. We may incur losses for the next several years as we continue to invest in commercialization, product research and development, preclinical studies, clinical trials, and regulatory compliance and cannot assure that we will ever be able to generate sufficient product sales or royalty revenue to achieve profitability on a sustained basis, or at all. If we raise additional funds by selling additional equity securities, the relative equity ownership of our existing investors will be diluted, and the new investors could obtain terms more favorable than previous investors. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves. 36 Our future capital requirements and adequacy of available funds depend on many factors, including: ● the successful commercialization of ZEVASKYN; ● the successful development, regulatory approval and commercialization of our cell and gene therapy and other product candidates, including ABO-701; ● the ability to establish and maintain collaborative arrangements with corporate partners for the research, development, and commercialization of products; ● continued scientific progress in our research and development programs; ● the magnitude, scope and results of preclinical testing and clinical trials; ● the costs involved in filing, prosecuting, and enforcing patent claims; ● the costs involved in conducting clinical trials; ● competing technological developments; ● the cost of manufacturing and scale-up; ● the ability to establish and maintain effective commercialization arrangements and activities; and ● the successful outcome of our regulatory filings. Due to uncertainties and certain of the risks described above, under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report, it is not possible to reliably predict future spending or time to completion by project or product category or the period in which material net cash inflows from significant projects are expected to commence. If we are unable to timely complete a particular project, our research and development efforts could be delayed or reduced, our business could suffer depending on the significance of the project and we might need to raise additional capital to fund operations, as discussed in the risks above. We plan to continue our policy of investing any available funds in suitable certificates of deposit, money market funds, government securities and investment-grade, interest-bearing securities. We do not invest in derivative financial instruments. Critical Accounting Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if: ● it requires assumptions to be made that were uncertain at the time the estimate was made, and ● changes in the estimate or different estimates that could have been selected could have a material impact in our results of operations or financial condition. While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates, and the differences could be material. For a discussion of the critical accounting estimates that affect the unaudited condensed consolidated financial statements, see “Critical Accounting Estimates” included in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report. See Note 2 to our unaudited condensed consolidated financial statements for a discussion of our significant accounting policies. 37 Recently Issued Accounting Standards Not Yet Effective or Adopted See Note 2 to our unaudited condensed consolidated financial statements for a discussion of recently issued accounting standards not yet effective or adopted. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including the Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), we have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls and Procedures”), as of June 30, 2026, as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Conclusion of Evaluation — Based on this Disclosure Controls and Procedures evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our Disclosure Controls and Procedures as of the end of the period covered by this report were effective. Changes in Internal Control Over Financial Reporting – There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 38 PART II — OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 1A. RISK FACTORS Our business and financial results are subject to numerous risks and uncertainties. There have been no material changes to the risk factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025, except as set forth below. The manufacturing, testing and delivery of ZEVASKYN ® present significant challenges for us, and we may not be able to produce ZEVASKYN ® at the quality, quantities, or timing needed to support commercialization. The manufacturing of ZEVASKYN ® is complex and requires significant expertise. Even with the relevant experience and expertise, manufacturing cell therapy products often leads to difficulties in production, particularly in scaling out and validating initial production, managing the transition from clinical manufacturing to commercial manufacturing, and ensuring that the product meets required specifications. These problems include difficulties with production costs and yields, quality control, quality assurance testing, operator error, scarcity of qualified manufacturing and quality control testing personnel, shortages of any production raw materials as well as compliance with strictly enforced federal, state and foreign regulations. We are susceptible to production interruptions that may impede our ability to manufacture cell and gene therapy products and produce an adequate product supply to support commercialization of ZEVASKYN ® . Several factors could cause production interruptions, including equipment malfunctions, facility contamination, raw material shortages or contamination, natural disasters, public health emergencies, disruption in utility services, human error, or disruptions in the operations of our suppliers. ZEVASKYN ® and product candidates are biologic drugs requiring processing steps that are more complex than those required for most chemical pharmaceuticals. We characterize our processes and products, and perform testing to ensure the safety, quality and efficacy of each product produced. While we take significant measures to fully understand and characterize each product, the steps we take may not be sufficient to ensure that a given lot will perform in the intended manner. For example, we manufactured a full batch of ZEVASKYN ® following patient biopsy collection in August 2025 that, despite being bonafide drug product, could not be released because a rapid sterility assay, mandated by the FDA as a release assay during the final stage of the BLA review, initially yielded a false positive result for sterility. Although we resumed biopsy collection in November 2025 upon completion of assay optimization and the necessary regulatory submission for its implementation, this false positive caused a manufacturing rejection, which caused a delay in our launch of ZEVASKYN ® . We also manufactured a batch of ZEVASKYN ® following patient biopsy collection in July 2026 that, despite being bonafide drug product, could not be released because a cellular identity test, mandated by the FDA as a release assay during the final stage of BLA review, was out of specification. The FDA authorized release of this batch of ZEVASKYN ® to the treatment site under a single-patient IND, but would not authorize release of this batch as commercial product. We are currently working with the FDA toward revising the specification for this test, but we cannot guarantee that the FDA will accept our proposed revision. Additional or similar issues associated with manufacturing and testing can have an adverse impact on our business, financial condition, cash flow, and results of operations. There are several risks specific to the manufacturing process for ZEVASKYN ® that require close attention. As an autologous product there are challenges associated with viability of biopsies as an incoming material. Due to variables such as the fragility of RDEB skin and site of the biopsy, initiation of autologous keratinocyte growth and expansion can be challenging or may be extended beyond the scheduled timing. Another concern during manufacturing is the slowing of cell proliferation, resulting in extended manufacturing time. If pre-release criteria are not met, the production process must be stopped, and a new biopsy must be obtained. If release criteria are out of range, epidermal sheets must be discarded and the manufacturing process must be repeated. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS (c) The following table provides information about purchases of equity securities that are registered pursuant to Section 12 of the Exchange Act for the quarter ended June 30, 2026: Total number of shares (or units) purchased (a) Average price paid per share (or unit) Shares delivered or withheld pursuant to restricted stock awards April 1, 2026 - April 30, 2026 — $ — May 1, 2026 - May 31, 2026 — $ — June 1, 2026 - June 30, 2026 222 $ 5.67 222 $ 5.67 (a) Reflects shares of common stock surrendered to the Company for payment of tax withholding obligations in connection with the vesting of restricted stock. ITEM 5. OTHER INFORMATION Securities Trading Arrangements of Directors and Executive Officer s During the three months ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted , modified or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act (a “Rule 10b5-1 trading arrangement”) or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K). 39 ITEM 6. EXHIBITS See Exhibit Index below, which is incorporated by reference herein. Exhibit Index Exhibits: Description of Document 10.1† Exclusive (Equity) Agreement, between the Company and The Board of Trustees of the Leland Stanford Junior University, dated August 8, 2016.* 31.1 Principal Executive Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.* 31.2 Principal Financial Officer Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.* 32** Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* 101 The following materials from Abeona’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025 (unaudited), (ii) Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and six months ended June 30, 2026 and 2025 (unaudited), (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025 (unaudited), (iv) Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2026 and 2025 (unaudited), and (v) Notes to Condensed Consolidated Financial Statements (unaudited). 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. ** Pursuant to Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filing. † Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. 40 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ABEONA THERAPEUTICS INC. Date: August 13, 2026 By: /s/ Vishwas Seshadri Vishwas Seshadri President and Chief Executive Officer (Principal Executive Officer) Date: August 13, 2026 By: /s/ Joseph Vazzano Joseph Vazzano Chief Financial Officer (Principal Financial Officer) 41