AEON Biopharma, Inc. 10-Q

Item 1. Financial Statements ​ AEON BIOPHARMA, INC. CONDENSED CONSOLIDATED BALANCE SHEET S (in thousands, except share data and par value amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2024 2023 ​ ​ ​ (Unaudited) ​ ​ ​ ASSETS ​ ​ ​ Current assets: ​ ​ ​ Cash and cash equivalents ​ $ 537 ​ $ 5,158 ​ Prepaid expenses and other current assets ​ 1,834 ​ 1,064 ​ Total current assets ​ 2,371 ​ 6,222 ​ Property and equipment, net ​ 258 ​ 332 ​ Operating lease right-of-use asset ​ 1,346 ​ 262 ​ Other assets ​ 29 ​ 29 ​ Total assets ​ $ 4,004 ​ $ 6,845 ​ LIABILITIES AND STOCKHOLDERS' DEFICIT ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ $ 4,630 ​ $ 3,388 ​ Accrued clinical trials expenses ​ 1,373 ​ 5,128 ​ Accrued compensation ​ 1,563 ​ 943 ​ Other accrued expenses ​ 3,160 ​ 3,590 ​ Total current liabilities ​ 10,726 ​ 13,049 ​ Convertible notes at fair value, including related party amount of $ 15,170 and $ 0 , at September 30, 2024 and December 31, 2023, respectively ​ 15,170 ​ — ​ Operating lease liability ​ 1,204 ​ — ​ Warrant liability ​ ​ 1,844 ​ ​ 1,447 ​ Contingent consideration liability ​ ​ 6,886 ​ ​ 104,350 ​ Embedded forward purchase agreements and derivative liabilities ​ ​ 264 ​ ​ 41,043 ​ Total liabilities ​ 36,094 ​ 159,889 ​ Commitments and contingencies ​ ​ ​ Stockholders’ Deficit: ​ ​ ​ ​ Class A common stock, $ 0.0001 par value; 500,000,000 shares authorized at September 30, 2024 and December 31, 2023, and 39,587,630 and 37,159,600 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively ​ 4 ​ 4 ​ Additional paid-in capital ​ 401,585 ​ 381,264 ​ Subscription receivables ​ ​ — ​ ​ ( 60,710 ) ​ Accumulated deficit ​ ( 433,679 ) ​ ( 473,602 ) ​ Total stockholders' deficit ​ ( 32,090 ) ​ ( 153,044 ) ​ Total liabilities and stockholders' deficit ​ $ 4,004 ​ $ 6,845 ​ ​ See accompanying notes to the consolidated financial statements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1 Table of Contents AEON BIOPHARMA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (in thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2024 2023 ​ 2024 2023 ​ ​ ​ Successor ​ ​ Successor July 22 to September 30 ​ Predecessor July 1 to July 21 ​ Successor ​ ​ Successor July 22 to September 30 ​ Predecessor January 1 to July 21 Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative ​ $ 3,044 ​ $ 5,265 ​ ​ $ 1,055 ​ $ 11,014 ​ $ 5,265 ​ ​ $ 9,841 Research and development ​ 972 ​ 6,388 ​ ​ 1,573 ​ 11,144 ​ 6,388 ​ ​ 19,803 Acquired in-process research and development ​ ​ — ​ ​ 348,000 ​ ​ ​ — ​ ​ — ​ ​ 348,000 ​ ​ ​ — Change in fair value of contingent consideration ​ — ​ ( 75,939 ) ​ ​ — ​ ( 97,464 ) ​ ( 75,939 ) ​ ​ — Total operating costs and expenses ​ 4,016 ​ 283,714 ​ ​ 2,628 ​ ( 75,306 ) ​ 283,714 ​ ​ 29,644 (Loss) income from operations ​ ( 4,016 ) ​ ( 283,714 ) ​ ​ ( 2,628 ) ​ 75,306 ​ ( 283,714 ) ​ ​ ( 29,644 ) Other (loss) income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of convertible notes ​ ( 1,878 ) ​ — ​ ​ ( 13,249 ) ​ ( 170 ) ​ — ​ ​ ( 19,359 ) Change in fair value of warrants ​ ( 377 ) ​ 1,593 ​ ​ — ​ ( 15,376 ) ​ 1,593 ​ ​ — Income (loss) on embedded forward purchase agreements and derivative liabilities, net ​ ​ 81 ​ ​ ( 15,776 ) ​ ​ ​ ( 11,789 ) ​ ​ ( 19,931 ) ​ ( 15,776 ) ​ ​ ( 11,789 ) Other income, net ​ 19 ​ 186 ​ ​ 5 ​ 94 ​ 186 ​ ​ 114 Total other loss, net ​ ( 2,155 ) ​ ( 13,997 ) ​ ​ ( 25,033 ) ​ ( 35,383 ) ​ ( 13,997 ) ​ ​ ( 31,034 ) (Loss) income before taxes ​ ( 6,171 ) ​ ( 297,711 ) ​ ​ ( 27,661 ) ​ 39,923 ​ ( 297,711 ) ​ ​ ( 60,678 ) Income taxes ​ — ​ — ​ ​ — ​ — ​ — ​ ​ — Net (loss) income ​ $ ( 6,171 ) ​ $ ( 297,711 ) ​ ​ $ ( 27,661 ) ​ $ 39,923 ​ $ ( 297,711 ) ​ ​ $ ( 60,678 ) Basic net (loss) income per share ​ $ ( 0.16 ) ​ $ ( 8.01 ) ​ ​ $ ( 0.20 ) ​ $ 1.04 ​ $ ( 8.01 ) ​ ​ $ ( 0.44 ) Diluted net (loss) income per share ​ $ ( 0.16 ) ​ $ ( 8.01 ) ​ ​ $ ( 0.20 ) ​ $ 0.97 ​ $ ( 8.01 ) ​ ​ $ ( 0.44 ) Weighted average shares of common stock outstanding used to compute basic net (loss) income per share ​ ​ 39,515,292 ​ ​ 37,159,600 ​ ​ ​ 138,848,177 ​ ​ 38,545,882 ​ ​ 37,159,600 ​ ​ ​ 138,848,177 Weighted average shares of common stock outstanding used to compute diluted net (loss) income per share ​ 39,515,292 ​ 37,159,600 ​ ​ 138,848,177 ​ 41,318,831 ​ 37,159,600 ​ ​ 138,848,177 ​ ​ ​ ​ ​ ​ ​ See accompanying notes to the consolidated financial statements ​ 2 Table of Contents ​ AEON BIOPHARMA, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (in thousands, except share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Non- Total ​ ​ Preferred Stock ​ ​ Common Stock ​ Paid-in ​ Subscription ​ ​ Accumulated ​ ​ Treasury Stock ​ controlling ​ Stockholders' ​ ​ Shares Amount ​ ​ Shares ​ Amount ​ Capital ​ Receivables ​ Deficit ​ Shares ​ Amount ​ Interest ​ Deficit Balance as of July 1, 2024 (Successor) — ​ $ — ​ 39,122,238 ​ $ 4 ​ $ 399,557 ​ $ — ​ $ ( 427,508 ) ​ — ​ $ — ​ $ — ​ $ ( 27,947 ) Net loss — ​ — ​ — ​ — ​ — ​ — ​ ( 6,171 ) ​ — ​ — ​ — ​ ( 6,171 ) Issuance of shares related to at-the-market offering, net ​ — ​ ​ — ​ ​ 65,392 ​ ​ — ​ ​ 50 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 50 Issuance of common stock — ​ — ​ 400,000 ​ — ​ 384 ​ — ​ — ​ — ​ — ​ — ​ 384 Stock-based compensation expense ​ — ​ — ​ — ​ — ​ 1,594 ​ — ​ — ​ — ​ — ​ — ​ ​ 1,594 Balance as of September 30, 2024 (Successor) — ​ $ — ​ 39,587,630 ​ $ 4 ​ $ 401,585 ​ $ — ​ $ ( 433,679 ) ​ — ​ $ — ​ $ — ​ $ ( 32,090 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of July 22, 2023 (Successor) — ​ $ — ​ 37,159,600 ​ $ 4 ​ $ 377,498 ​ $ ( 60,710 ) ​ $ ( 149,648 ) ​ ​ — ​ $ — ​ $ — ​ $ 167,144 Net loss ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 297,711 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 297,711 ) Stock-based compensation expense ​ — ​ ​ — ​ — ​ ​ — ​ ​ 2,171 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,171 Balance as of September 30, 2023 (Successor) — ​ $ — ​ 37,159,600 ​ $ 4 ​ $ 379,669 ​ $ ( 60,710 ) ​ $ ( 447,359 ) ​ — ​ $ — ​ $ — ​ $ ( 128,396 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of July 1, 2023 (Predecessor) 21,257,708 ​ $ 137,949 ​ 138,848,177 ​ $ 14 ​ $ 204,384 ​ $ — ​ $ ( 507,856 ) ​ ​ ( 22,821 ) ​ $ ( 23 ) ​ $ 19,592 ​ $ ( 283,889 ) Net loss — ​ — ​ — ​ — ​ — ​ — ​ ( 27,661 ) ​ — ​ — ​ — ​ ( 27,661 ) Stock-based compensation expense — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 730 ​ ​ 730 Balance as of July 21, 2023 (Predecessor) 21,257,708 ​ $ 137,949 ​ 138,848,177 ​ $ 14 ​ $ 204,384 ​ $ — ​ $ ( 535,517 ) ​ ( 22,821 ) ​ $ ( 23 ) ​ $ 20,322 ​ $ ( 310,820 ) ​ ​ ​ 3 Table of Contents AEON BIOPHARMA, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (in thousands, except share data) (Unaudited) (Continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible ​ ​ ​ Additional ​ ​ ​ ​ ​ ​ ​ Non- Total ​ ​ Preferred Stock ​ ​ Common Stock ​ Paid-in ​ Subscription ​ Accumulated ​ ​ Treasury Stock ​ controlling ​ Stockholders' ​ ​ Shares Amount ​ ​ Shares ​ Amount ​ Capital ​ Receivables ​ Deficit ​ Shares ​ Amount ​ Interest ​ Deficit Balance as of January 1, 2024 (Successor) — ​ $ — ​ 37,159,600 ​ $ 4 ​ $ 381,264 ​ $ ( 60,710 ) ​ $ ( 473,602 ) ​ — ​ $ — ​ $ — ​ $ ( 153,044 ) Net income — ​ — ​ — ​ — ​ — ​ — ​ 39,923 ​ — ​ — ​ — ​ 39,923 Termination of Forward Purchase Agreements ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 60,710 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 60,710 Issuance of shares related to cashless warrant exercises — ​ — ​ 1,962,638 ​ — ​ 14,979 ​ — ​ — ​ — ​ — ​ — ​ 14,979 Issuance of shares related to at-the-market offering, net — ​ — ​ 65,392 ​ — ​ 50 ​ — ​ — ​ — ​ — ​ — ​ 50 Issuance of common stock ​ — ​ ​ — ​ ​ 400,000 ​ ​ — ​ ​ 384 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 384 Stock-based compensation expense ​ — ​ — ​ — ​ — ​ 4,908 ​ — ​ — ​ — ​ — ​ — ​ 4,908 Balance as of September 30, 2024 (Successor) — ​ $ — ​ 39,587,630 ​ $ 4 ​ $ 401,585 ​ $ — ​ $ ( 433,679 ) ​ — ​ $ — ​ $ = ​ $ ( 32,090 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of July 22, 2023 (Successor) — ​ $ — ​ ​ 37,159,600 ​ $ 4 ​ $ 377,498 ​ $ ( 60,710 ) ​ $ ( 149,648 ) ​ — ​ $ — ​ $ — ​ $ 167,144 Net loss ​ — ​ — ​ — ​ — ​ — ​ — ​ ( 297,711 ) ​ — ​ — ​ — ​ ​ ( 297,711 ) Stock-based compensation expense ​ — ​ — ​ — ​ — ​ 2,171 ​ — ​ — ​ — ​ — ​ — ​ ​ 2,171 Balance as of September 30, 2023 (Successor) — ​ $ — ​ 37,159,600 ​ $ 4 ​ $ 379,669 ​ $ ( 60,710 ) ​ $ ( 447,359 ) ​ — ​ $ — ​ $ — ​ $ ( 128,396 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 1, 2023 (Predecessor) 21,257,708 ​ $ 137,949 ​ 138,848,177 ​ $ 14 ​ $ 187,348 ​ $ — ​ $ ( 474,839 ) ​ ( 22,821 ) ​ $ ( 23 ) ​ $ 17,087 ​ $ ( 270,413 ) Net loss — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 60,678 ) ​ — ​ ​ — ​ ​ — ​ ​ ( 60,678 ) Stock-based compensation expense — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ 3,235 ​ ​ 3,235 Debt extinguishment due to warrant modification ​ — ​ — ​ — ​ ​ — ​ ​ 17,036 ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ 17,036 Balance as of July 21, 2023 (Predecessor) 21,257,708 ​ $ 137,949 ​ 138,848,177 ​ $ 14 ​ $ 204,384 ​ $ — ​ $ ( 535,517 ) ​ ( 22,821 ) ​ $ ( 23 ) ​ $ 20,322 ​ $ ( 310,820 ) ​ ​ See accompanying notes to the consolidated financial statements ​ ​ 4 Table of Contents AEON BIOPHARMA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ September 30, ​ ​ 2024 ​ 2023 ​ ​ ​ Successor ​ ​ Successor July 22 to September 30 ​ ​ ​ Predecessor January 1 to July 21 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ 39,923 ​ $ ( 297,711 ) ​ ​ $ ( 60,678 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation ​ 74 ​ 21 ​ ​ ​ 54 Stock-based compensation expense ​ ​ 4,908 ​ 2,171 ​ ​ ​ 3,235 Write-off of acquired in-process research and development ​ — ​ 348,000 ​ ​ ​ — Change in fair value of convertible notes ​ 170 ​ — ​ ​ ​ 19,359 Change in fair value of warrants ​ ​ 15,376 ​ ( 1,593 ) ​ ​ ​ — Change in fair value of embedded forward purchase agreements and derivative liabilities ​ ​ 19,931 ​ 15,776 ​ ​ ​ 11,789 Change in fair value of contingent consideration ​ ​ ( 97,464 ) ​ ( 75,939 ) ​ ​ ​ — Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Prepaid expenses and other current assets ​ ( 770 ) ​ ( 363 ) ​ ​ ​ 36 Accounts payable ​ 1,242 ​ ( 3,716 ) ​ ​ ​ ( 248 ) Accrued expenses and other liabilities ​ ( 3,181 ) ​ ( 1,701 ) ​ ​ ​ 4,736 Other assets and liabilities ​ 120 ​ ( 6 ) ​ ​ ​ ( 28 ) Net cash used in operating activities ​ ( 19,671 ) ​ ( 15,061 ) ​ ​ ​ ( 21,745 ) Net cash used in investing activities ​ — ​ — ​ ​ ​ — Cash flows from financing activities: ​ ​ ​ ​ ​ ​ Proceeds from issuance of convertible notes ​ 15,000 ​ — ​ ​ ​ 14,000 Proceeds from issuance of at-the-market shares ​ 50 ​ — ​ ​ ​ — Net cash provided by financing activities ​ 15,050 ​ — ​ ​ ​ 14,000 Net decrease in cash ​ ( 4,621 ) ​ ( 15,061 ) ​ ​ ​ ( 7,745 ) Cash and cash equivalents at beginning of period ​ 5,158 ​ 31,238 ​ ​ ​ 9,746 Cash and cash equivalents at end of period ​ $ 537 ​ $ 16,177 ​ ​ $ 2,001 ​ ​ ​ ​ See accompanying notes to the consolidated financial statements ​ 5 Table of Contents AEON BIOPHARMA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization Description of Business AEON Biopharma, Inc. (formerly known as Priveterra Acquisition Corp.; “AEON” or the “Company”) is a biopharmaceutical company focused on developing its proprietary botulinum toxin complex, ABP-450 (prabotulinumtoxinA) injection (“ABP-450”), for debilitating medical conditions. The Company is headquartered in Irvine, California. On July 21, 2023 (the “Closing Date”), the Company completed the acquisition of AEON Biopharma Sub, Inc. (formerly known as AEON Biopharma, Inc.) (“Old AEON”) pursuant to the definitive agreement dated December 12, 2022 (the “Business Combination Agreement”), as amended April 27, 2023, by and among Priveterra Acquisition Corp. (“Priveterra”), Priveterra’s wholly-owned subsidiary, Priveterra Merger Sub, Inc., and Old AEON. Old AEON was incorporated in Delaware in February 2012 under the name Alphaeon Corporation as a wholly-owned subsidiary of Strathspey Crown Holdings Group, LLC (“SCH”). On December 18, 2019, the Company changed its name to “AEON Biopharma, Inc.” On the Closing Date, Old AEON merged with Priveterra Merger Sub, Inc., with Old AEON surviving the merger as a wholly-owned subsidiary of the Company. Also on the Closing Date, the Company changed its name from “Priveterra Acquisition Corp.” to “AEON Biopharma, Inc.” and is referred to herein as “AEON,” or the “Company.” Unless the context otherwise requires, references to “Priveterra” herein refer to the Company prior to the Closing Date. Under the Business Combination Agreement, the Company agreed to acquire all outstanding equity interests of Old AEON for approximately 16,500,000 shares of Class A common stock, par value $ 0.0001 per share (“common stock”), which Old AEON’s stockholders received in the form of shares of common stock of the Company (the consummation of the Merger and the other transactions contemplated by the Business Combination Agreement, collectively, the “Merger”). In addition, following the closing of the Merger (the “Closing”), certain AEON stockholders will be issued up to 16,000,000 additional shares of common stock to the extent certain milestones are achieved. Prior to the Closing, Priveterra shares were listed on Nasdaq as “PMGM.” The post-Merger Company common stock and warrants commenced trading on the NYSE American under the symbols “AEON” and “AEON WS,” respectively, on July 24, 2023. See Note 3 Forward Merger for additional details. Liquidity and Going Concern The accompanying condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. The Company has experienced recurring losses from operations and has a net capital deficiency and negative cash flows from operations since its inception. As of September 30, 2024, the Company reported cash and cash equivalents of $ 0.5 million and an accumulated deficit of $ 433.7 million. The Company expects to incur losses and use cash in its operations for the foreseeable future. On May 3, 2024, the Company announced preliminary top-line results from its planned interim analysis of the Phase 2 trial with ABP-450 in the preventative treatment of chronic migraine, which did not meet the primary or secondary endpoints. The Company originally intended to pursue submission of an Original BLA seeking one or more potential therapeutic indications for ABP-450. However, in May 2024, the Company announced the discontinuation of its Phase 2 clinical trials for episodic and chronic migraine in order to implement certain cash preservation measures. On July 9, 2024, the Company announced a strategic reprioritization to pursue a Section 351(k) biosimilar regulatory pathway for ABP-450, using AbbVie Inc.’s product Botox as a proposed reference product. The Company held an initial meeting with the FDA in the third quarter of 2024 during which it aligned with the FDA on next steps to develop a Botox biosimilar. The Company anticipates commencing comparative analytic studies in the fourth quarter of 2024 and preparing for a potential Biosimilar Biological Product Development (“BPD”) meeting with the FDA in 2025 to review the results from the studies. On August 14, 2024, the Company entered into an “at-the-market” sales agreement with Leerink Partners LLC (“Leerink Partners”) relating to an at-the-market offering program (the “ATM”), pursuant to which the Company may offer and sell, from time to time at its sole discretion, shares of common stock, registered pursuant to a shelf registration statement on Form S-3 that the Securities and Exchange Commission (the “SEC”) declared effective on August 21, 2024, having aggregate gross proceeds of up to 6 Table of Contents $ 50.0 million through Leerink Partners as sales agent. As of September 30, 2024, the Company issued 65,392 shares under the ATM for net proceeds of $ 50 thousand and approximately $ 49.9 million of common stock remained available to be sold under the ATM. See Note 8 Common Stock for additional information. The commencement of studies, preparation for the potential BPD meeting and any further development of ABP-450 would require additional funding in the form of equity financings or debt. There can be no assurance that such efforts will be successful or that, in the event that they are successful, the terms and conditions of such financing will be commercially acceptable. Furthermore, the use of equity as a source of financing would dilute existing shareholders. The Company is actively attempting to secure additional capital to fund its operations. However, there can be no assurance that the Company will be able to raise additional capital on commercially reasonable terms or at all. As a result of these conditions, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that these condensed consolidated financial statements are issued. The preparation of these condensed consolidated financial statements does not include any adjustments that may result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company ’ s assets and the satisfaction of the Company ’ s liabilities and commitments in the normal course of business and does not include any adjustments to reflect the possible future effects of the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The Company’s future operations are highly dependent on a combination of factors, including (1) the success of its research and development programs; (2) the timely and successful completion of any additional financing; (3) the development of competitive therapies by other biotechnology and pharmaceutical companies; (4) the Company’s ability to manage growth of the organization; (5) the Company’s ability to protect its technology and products; and, ultimately (6) regulatory approval and successful commercialization and market acceptance of its product candidates. Note 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries. On July 21, 2023, AEON completed the Merger with Old AEON, with Old AEON surviving the merger as a wholly-owned subsidiary of the Company, the accounting acquirer. The transaction was accounted for as a forward merger asset acquisition. Unless the context otherwise requires, the “Company,” for periods prior to the Closing, refers to Old AEON, AEON Biopharma Sub, Inc. (“Predecessor”), and for the periods after the Closing, refers to AEON Biopharma, Inc., including AEON Biopharma Sub, Inc. (“Successor”). As a result of the Merger, the results of operations, financial position and cash flows of the Predecessor and Successor are not directly comparable. AEON Biopharma Sub, Inc. was deemed to be the predecessor entity. Accordingly, the historical financial statements of AEON Biopharma Sub, Inc. became the historical financial statements of the combined Company, upon the consummation of the Merger. As a result, the financial statements included in this report reflect (i) the historical operating results of AEON Biopharma Sub, Inc. prior to the Merger and (ii) the combined results of the Company, including AEON Biopharma Sub, Inc., following the Closing. The accompanying financial statements include Predecessor periods from January 1, 2023 to July 21, 2023 and July 1, 2023 to July 21, 2023, and Successor periods for the period from July 22, 2023 to September 30, 2023, and the three and nine months ended September 30, 2024. A black line between the Successor and Predecessor periods has been placed in the condensed consolidated financial statements and in the tables to the notes to the condensed consolidated financial statements to highlight the lack of comparability between these two periods. Unaudited Interim Financial Information The accompanying interim condensed consolidated balance sheets as of September 30, 2024 (Successor), the condensed consolidated statements of operations and comprehensive (loss) income and stockholders’ deficit for the three and nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 7 Table of Contents (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor) and the related note disclosures are unaudited. The balance sheet information as of December 31, 2023 (Successor) is derived from the Successor’s audited financial statements. These unaudited interim financial statements have been prepared in accordance with U.S. GAAP and, in management’s opinion, on a basis consistent with the audited financial statements and reflect all adjustments which only include normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2024 (Successor) and its results of operations and comprehensive (loss) income and cash flows for the three and nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor). The results for the three and nine months ended September 30, 2024 (Successor) are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or any other interim period. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes. The Company’s most significant estimates relate to the research and development accruals, valuation of common stock and related stock-based compensation, and the fair values of the contingent consideration, forward purchase agreements, in-process research and development, warrant liabilities and convertible notes. Although the Company bases estimates on historical experience, knowledge of current events and actions it may undertake in the future, and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments over the carrying values of assets and liabilities, this process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements. Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company provides segment financial information and results for its segments based on the segregation of revenues and expenses that its chief operating decision makers review for purposes of allocating resources and evaluating its financial performance. As of September 30, 2024 and December 31, 2023, the Company operates and manages its business as one operating and reportable segment. Risk and Uncertainties The Company is subject to risks common to early-stage companies in the pharmaceutical industry including, but not limited to, dependency on the clinical and commercial success of its current and any future product candidates, ability to obtain regulatory approval of its current and any future product candidates, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and patients and significant competition. The Company relies on Daewoong Pharmaceutical Co., LTD. (“Daewoong”), a South Korean pharmaceutical manufacturer, as an exclusive and sole supplier to manufacture the Company’s source material for product candidates. Any termination or loss of significant rights, including exclusivity, under the Company’s license and supply agreement with Daewoong (the “Daewoong Agreement”) would materially and adversely affect the Company’s commercialization of its products. See Note 7 Commitments and Contingencies for a discussion of the Daewoong Agreement. Property and Equipment Property and equipment are carried at cost less accumulated depreciation and amortization. The cost of property and equipment is depreciated over the estimated useful lives of the respective assets. The Company’s furniture and fixtures are depreciated on a straight-line basis over a period of seven years . Equipment is depreciated over a useful life of five years . Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the related lease term. 8 Table of Contents Property and equipment, net, as of September 30, 2024 and December 31, 2023 (unaudited) are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ December 31, ​ ​ 2024 ​ 2023 ​ Furniture and fixtures ​ $ 199 ​ ​ $ 199 ​ Equipment ​ 237 ​ ​ 237 ​ Leasehold improvements ​ 66 ​ ​ 66 ​ Property and equipment ​ 502 ​ ​ 502 ​ Accumulated depreciation ​ ( 244 ) ​ ​ ( 170 ) ​ Property and equipment, net ​ $ 258 ​ ​ $ 332 ​ ​ Other Accrued Expenses Other accrued expenses were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ December 31, ​ ​ ​ 2024 ​ ​ ​ 2023 Legal expenses ​ $ 1,779 ​ ​ $ 1,867 Excise tax liability ​ ​ 569 ​ ​ ​ 569 Operating lease liability - short term portion ​ ​ 128 ​ ​ ​ 278 Daewoong vial usage ​ ​ 444 ​ ​ ​ 33 Remaining other accrued expenses ​ ​ 240 ​ ​ ​ 843 Total other accrued expenses ​ $ 3,160 ​ $ 3,590 ​ Convertible Notes The Company elected to account for its convertible promissory notes at fair value at inception and at each subsequent reporting date. Subsequent changes in fair value are recorded as a component of non-operating income (loss) in the condensed consolidated statements of operations and comprehensive (loss) income or as a component of other comprehensive (loss) income for changes related to instrument-specific credit risk. As a result of electing the fair value option, direct costs and fees related to the convertible promissory notes are expensed as incurred. The Predecessor convertible promissory notes were converted into shares of the Company’s common stock at the Closing. Contingent Consideration (Successor) The Company accounts for its contingent consideration as either equity-classified or liability-classified instruments based on an assessment of the Contingent Consideration Shares specific terms (as further defined in Note 6 Fair Value Measurements ) and applicable authoritative guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and Derivatives and Hedging (“ASC 815”). The Contingent Consideration Shares are classified as a liability on the Successor’s condensed consolidated balance sheets and remeasured at each reporting period with changes to fair value recorded to the Successor’s condensed consolidated statements of operations and comprehensive (loss) income. Forward Purchase Agreements (Successor) Based on the applicable guidance in ASC 480, ASC 815, Equity (“ASC 505”) and Staff Accounting Bulletin Topic 4.E, Receivables from Sale of Stock (“SAB 4E”), the Company had determined that each of its forward purchase agreements entered in connection with the Merger was a freestanding hybrid financial instrument comprising a subscription receivable and embedded features, which were bifurcated and accounted for separately as derivative instruments. The Company recorded the derivatives as liabilities and measured them at fair value each reporting period. For more information, see Note 3 Forward Merger . Subsequent changes in the bifurcated derivatives were recorded in the Successor’s condensed consolidated statements of operations and comprehensive (loss) income. The forward purchase agreements were terminated in March 2024, and the loss related to the termination was recorded to the condensed consolidated statement of operations and comprehensive (loss) income. 9 Table of Contents Warrants (Successor) The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments and meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own shares of common stock, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability and measured at their fair value on the date of issuance, and each balance sheet date thereafter until settlement. Changes in the estimated fair value of the warrants are recognized in the Successor’s condensed consolidated statements of operations and comprehensive (loss) income. Convertible Preferred Stock (Predecessor) The Company recorded its Predecessor convertible preferred stock at their respective issuance price, less issuance costs on the dates of issuance. The convertible preferred stock was classified outside of permanent equity as temporary equity in the accompanying Predecessor’s condensed consolidated balance sheets. Although the convertible preferred stock was not redeemable at the holder’s option, upon certain change in control events that are outside of the Company’s control, including liquidation, sale or transfer of control of the Company, holders of the convertible preferred stock may have had the right to receive their liquidation preference to any distribution of the proceeds under the terms of the Company’s amended and restated certificate of incorporation. The Company did not adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares since it is uncertain whether or when a redemption event will occur. Subsequent adjustments to increase the carrying values to the redemption values will be made only when it becomes probable that such redemption will occur. As part of the Merger, each share of Old AEON common stock issued with respect to the Old AEON convertible preferred stock was converted into approximately 2.328 shares of common stock and the right to receive a pro-rata portion of the contingent consideration. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a three-tiered valuation hierarchy, which is classified and disclosed by the Company in one of the three categories as follows: · Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; · Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, or can be corroborated by observable market data for substantially the full term of the asset or liability; and · Level 3 — Prices or valuation techniques that require unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Leases The Company determines whether a contract is, or contains, a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based upon the 10 Table of Contents estimated present value of unpaid lease payments over the lease term using the Company’s incremental borrowing rate applicable to the underlying asset unless the implicit rate is readily determinable. The Company determines the lease term as the noncancellable period of the lease, and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the balance sheets. Research and Development Expenses Research and development costs are expensed as incurred. Research and development expenses consist primarily of costs associated with clinical studies including clinical trial design, clinical site reimbursement, data management, travel expenses and the cost of products used for clinical trials and internal and external costs associated with the Company’s regulatory compliance and quality assurance functions, including the costs of outside consultants and contractors that assist in the process of submitting and maintaining regulatory filings, and overhead costs. Additionally, research and development expenses include employee compensation, including stock-based compensation, supplies, consulting, prototyping, testing, materials, travel expenses and an allocation of facility overhead expenses. Costs incurred in obtaining technology licenses are charged to acquired in-process research and development (“IPR&D”) if the technology licensed has not reached technological feasibility and has no alternative future use. The acquired IPR&D at the Closing was written off to the Successor’s consolidated income statement for the period ended September 30, 2023. The Company accrues the expenses for its clinical trial activities performed by third parties, including clinical research organizations and other service providers, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements. The Company determines these estimates through discussion with internal personnel and outside service providers as to progress or stage of completion of trials or services pursuant to contracts with clinical research organizations and other service providers and the agreed-upon fee to be paid for such services. Payments made to outside service providers in advance of the performance of the related services are recorded as prepaid expenses and other current assets until the services are rendered. There have been no material adjustments to the Company’s estimates for clinical trial expenses through September 30, 2024 (Successor) and December 31, 2023 (Successor). Stock-Based Compensation The Company recognizes compensation expense for all share-based awards. The Company accounts for stock-based compensation as measured at grant date, based on the fair value of the award. The Company measures the fair value of awards granted using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including the estimated fair value of common stock, the expected volatility of the Company’s common stock, expected risk-free interest rate, and the option’s expected life. The Company also evaluates the impact of modifications made to the original terms of equity awards when they occur. The fair value of equity awards that are expected to vest is amortized on a straight-line basis over the requisite service period. Stock-based compensation expense is recognized net of actual forfeitures when they occur, as an increase to additional paid-in capital or noncontrolling interest in the condensed consolidated balance sheets and in selling, general and administrative or research and development expenses in the condensed consolidated statements of operations and comprehensive (loss) income. All stock-based compensation costs are recorded in the condensed consolidated statements of operations and comprehensive (loss) income based upon the underlying employee’s role within the Company. Income Taxes The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax basis of the Company’s assets and liabilities and their financial statement reported amounts. In addition, deferred tax assets are recorded for the future benefit of utilizing net operating losses and research and development credit carryforwards and are measured using the enacted tax rates and laws that will be in effect when such items are expected to reverse. A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized. The Company records uncertain tax positions on the basis of a two-step process whereby (i) it determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, it recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. 11 Table of Contents The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying condensed consolidated statements of operations and comprehensive (loss) income. Any accrued interest and penalties related to uncertain tax positions will be reflected as a liability in the condensed consolidated balance sheets. Net income (loss) Per Share Prior to the Merger, the Predecessor calculated basic and diluted net income (loss) per share to common stockholders in conformity with the two-class method required for companies with participating securities. The Company considered all series of convertible preferred stock to be participating securities as they participate in any dividends declared by the Company. Under the two-class method, undistributed earnings allocated to these participating stockholders were subtracted from net income in determining net income (loss) attributable to common stockholders. Net income (loss) was not allocated to convertible preferred stock as the holders of convertible preferred stock did not have a contractual obligation to share in losses. Subsequent to the Merger, the Company only has one class of shares. Basic net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive shares of common stock in Predecessor periods. For Predecessor periods, diluted net income (loss) per share was computed by dividing the net income (loss) by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period using the “treasury stock,” “if converted” or “two-class” method unless their inclusion would have been anti-dilutive. For purposes of the diluted net income (loss) per share calculation, convertible preferred stock, warrants, convertible notes and common stock options were considered as potentially dilutive securities. Since the Company was in a loss position for the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 1, 2023 to July 21, 2023 (Predecessor), July 22, 2023 to September 30, 2023 (Successor), and the three months ended September 30, 2024, basic net loss per share is the same as diluted net loss per share as the inclusion of all potentially dilutive shares of common stock was anti-dilutive. For the nine months ended September 30, 2024 (Successor), dilutive options of 1,924,428 and restrict stock units of 848,521 were included in the calculation for diluted net income per share. Basic and diluted net loss per share for the Predecessor periods from January 1, 2023 to July 21, 2023 and July, 1, 2023 to July 21, 2023 were calculated as follows (in thousands, except share and per share amounts) (unaudited): ​ ​ ​ ​ ​ Period from January 1, 2023 to July 21, 2023 (Predecessor) ​ Net loss ​ $ ( 60,678 ) Weighted average shares of common stock outstanding, basic and diluted ​ 138,848,177 Net loss per share, basic and diluted ​ $ ( 0.44 ) ​ ​ ​ ​ ​ Period from July 1, 2023 to July 21, 2023 (Predecessor) ​ Net loss $ ( 27,661 ) Weighted average shares of common stock outstanding, basic and diluted ​ 138,848,177 Net loss per share, basic and diluted $ ( 0.20 ) ​ Basic and diluted net (loss) income per share for the Successor periods from July 22, 2023 to September 30, 2023, and the three and nine months ended September 30, 2024 were calculated as follows (in thousands, except share and per share amounts) (unaudited): ​ ​ ​ ​ ​ Period from July 22, 2023 to September 30, 2023 (Successor) ​ Net loss $ ( 297,711 ) Weighted average shares of common stock outstanding, basic and diluted ​ 37,159,600 Net loss per share, basic and diluted $ ( 8.01 ) ​ ​ ​ ​ ​ Three months ended September 30, 2024 (Successor) ​ Net loss $ ( 6,171 ) Weighted average shares of common stock outstanding, basic and diluted ​ 39,515,292 Net loss per share, basic and diluted $ ( 0.16 ) 12 Table of Contents ​ ​ ​ ​ ​ Nine months ended September 30, 2024 (Successor) ​ Net income ​ $ 39,923 Weighted average shares of common stock outstanding, basic ​ 38,545,882 Net income per share, basic ​ $ 1.04 Weighted average shares of common stock outstanding, diluted ​ 41,318,831 Net income per share, diluted ​ $ 0.97 ​ The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an anti-dilutive impact (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ Successor Successor July 22 to September 30 Predecessor July 1 to July 21 Successor Successor July 22 to September 30 Predecessor July 1 to July 21 Warrants ​ 3,988,952 ​ 14,479,999 ​ ​ 14,479,999 ​ 3,988,952 ​ 14,479,999 ​ ​ 14,479,999 Contingent consideration ​ 16,000,000 ​ 16,000,000 ​ ​ 16,000,000 ​ 16,000,000 ​ 16,000,000 ​ ​ 16,000,000 Contingent founder shares ​ 3,450,000 ​ 3,450,000 ​ ​ 3,450,000 ​ 3,450,000 ​ 3,450,000 ​ ​ 3,450,000 Common stock options and restricted stock units 8,966,962 4,888,537 ​ ​ 4,888,537 ​ 6,194,013 ​ 4,888,537 ​ ​ 4,888,537 ​ 32,405,914 38,818,536 ​ ​ 38,818,536 ​ 29,632,965 ​ 38,818,536 ​ ​ 38,818,536 ​ Contingencies The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company continually assesses litigation to determine if an unfavorable outcome would lead to a probable loss or reasonably possible loss which could be estimated. The Company accrues for all contingencies at the earliest date at which the Company deems it probable that a liability has been incurred and the amount of such liability can be reasonably estimated. If the estimate of a probable loss is a range and no amount within the range is more likely than another, the Company accrues the minimum of the range. In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the litigation, including an estimable range, if possible. Recent Accounting Standards In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures . This update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures . This update requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280, on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 31, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Other recent accounting pronouncements issued by the FASB, the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company’s financial position, results of operations or cash flows. ​ 13 Table of Contents Note 3. Forward Merger ​ On December 12, 2022, Old AEON and Priveterra entered into a Business Combination Agreement. On July 3, 2023, Priveterra held the special meeting of stockholders, at which the Priveterra stockholders considered and adopted, among other matters, a proposal to approve the transactions contemplated by the Business Combination Agreement, including the Merger. On July 21, 2023, the parties consummated the Merger. In connection with the Closing, Priveterra changed its name from Priveterra Acquisition Corp. to AEON Biopharma, Inc. At the effective time of the Merger (the “Effective Time”), each outstanding share of Old AEON common stock (on an as-converted basis after taking into effect the conversion of the outstanding warrants of Old AEON exercisable for shares of Old AEON preferred stock, the conversion of the shares of Old AEON preferred stock into Old AEON common stock in accordance with the governing documents of Old AEON as of the Effective Time, the conversion of the outstanding convertible notes of Old AEON into Old AEON common stock in accordance with the terms of such convertible notes and after giving effect to the issuance of Old AEON common stock in connection with the merger of ABP Sub, Inc. with and into Old AEON) issued and outstanding immediately prior to the Effective Time converted into the right to receive approximately 2.328 shares of the Company’s common stock and the right to receive a pro-rata portion of the contingent consideration. In addition, each share of Priveterra Class B common stock (“Founder Shares”), par value $ 0.0001 per share, issued and outstanding immediately prior to the Effective Time converted into one share of common stock totaling 6,900,000 shares of common stock (of which 3,450,000 Founder Shares are subject to certain vesting and forfeiture conditions). In connection with the Merger, on January 6, 2023, Priveterra and Old AEON entered into separate subscription agreements for convertible notes with each of Alphaeon 1 LLC (“A1”) and Daewoong (collectively, the “Original Committed Financing Agreements”), pursuant to which A1 and Daewoong agreed to purchase, and Priveterra and Old AEON agreed to sell to each of them, up to $ 15 million and $ 5 million, respectively, aggregate of principal of interim convertible notes or equity. Further, on June 8, 2023, Old AEON and Priveterra entered into a committed financing agreement with A1 (the “Additional Committed Financing Agreement”), pursuant to which A1 agreed to purchase, and Priveterra and Old AEON agreed to sell to A1, up to an additional $ 20 million aggregate principal of interim convertible notes or equity. Pursuant to such agreement, Old AEON issued $ 14 million of interim convertible notes to A1 in the first and second quarters of 2023. The notes were subsequently measured at fair value under a fair value option election, with changes in fair value reported in earnings of the Predecessor (Old AEON). Conversion of the notes was contingent and automatically convertible on the Merger, and 2,226,182 shares of Priveterra Class A common stock were issued on the Closing Date in settlement of their conversion. The proceeds from the interim convertible notes were used to fund Old AEON’s operations through the consummation of the Merger. Additionally, approximately $ 25 million was received on the Closing Date in exchange for an aggregate of 3,571,429 shares of Priveterra Class A common stock at $ 7.00 per share that were issued under the Original Committed Financing Agreements and Additional Committed Financing Agreements, and reflected “on the line” in the Successor’s opening accumulated deficit. On April 27, 2023, Priveterra and AEON amended the Business Combination Agreement. Concurrently with the amendment to the Business Combination Agreement, Priveterra amended the Sponsor Support Agreement to include restriction and forfeiture provisions related to the Founder Shares. See Note 6 Fair Value Measurements for additional information. The fair value of the contingent consideration at the Closing was valued to be $ 125.7 million, and is included in the purchase price. Additionally, the Successor assumed the Predecessor’s 2019 Incentive Award Plan, and as such, the fair value of the replacement awards of $ 13.3 million were included in purchase consideration, $ 11.5 million related to stock options and $ 1.8 million related to restricted stock units. See Note 9 Share-based Compensation for additional information. ​ Asset Acquisition Method of Accounting The Merger was accounted for using the asset acquisition method in accordance with U.S. GAAP. Under this method of accounting, Priveterra was considered to be the accounting acquirer based on the terms of the Merger. Upon consummation of the Merger, the cash on hand resulted in the equity at risk being considered insufficient for Old AEON to finance its activities without additional subordinated financial support. Therefore, Old AEON was considered a Variable Interest Entity (“VIE”) and the primary beneficiary of Old AEON was treated as the accounting acquirer. Priveterra held a variable interest in Old AEON and owned 100 % of Old AEON’s equity. Priveterra was considered the primary beneficiary as it has the decision-making rights that gives it the power to direct the most significant activities. Also, Priveterra retained the obligation to absorb the losses and/or receive the benefits of Old AEON that could have potentially been significant to Old AEON. The Merger was accounted for as an asset acquisition as substantially all of the fair value was concentrated in IPR&D, an intangible asset. Old AEON’s assets (except for cash) and liabilities 14 Table of Contents were measured at fair value as of the transaction date. Consistent with authoritative guidance on the consolidation of a VIE that is not considered a business, differences in the total purchase price and fair value of assets and liabilities are recorded as a gain or loss. The loss on the consolidation of the VIE is reflected “on the line” in the Successor’s opening accumulated deficit. Costs incurred in obtaining technology licenses are charged to research and development expense as IPR&D if the technology licensed has not reached technological feasibility and has no alternative future use. The acquired IPR&D of $ 348.0 million at the Closing was written off to the Successor’s consolidated statement of operations for the period ended September 30, 2023. To estimate the value of the acquired IPR&D, the Company used a Multi-Period Excess Earnings Method under the Income Approach. The determination of the fair value requires management to make significant estimates including, but not limited to, the discount rate used, the total addressable market for each potential drug, market penetration assumptions, and the estimated timing of commercialization of the drugs. Changes in these assumptions could have a significant impact on the fair value of the IPR&D. The significant assumptions used in determining IPR&D was the discount rate of 25 %, implied internal rate of return of 24.8 % and long-term growth rate of 4 %. The following is a summary of the purchase price calculation (in thousands except share and per share data) : ​ ​ ​ ​ Number of shares issued as consideration in the Merger ​ ​ 16,500,000 Shares issued for interim convertible notes related to Committed Financing ​ ​ 2,226,182 Total number of shares of common stock of the combined company ​ ​ 18,726,182 Multiplied by the Priveterra share price, as of the Closing ​ $ 10.84 Total ​ $ 202,992 Fair value of contingent consideration ​ ​ 125,699 Replacement of share-based payment awards ​ ​ 13,331 Assumed liabilities ​ ​ 125 Total purchase price ​ $ 342,147 ​ The allocation of the purchase price was as follows (in thousands): ​ ​ ​ ​ Cash and cash equivalents ​ $ 2,001 Net working capital (excluding cash and cash equivalents) ​ ​ ( 16,182 ) Other assets and liabilities ​ 775 Acquired in-process research and development ​ 348,000 Net assets acquired ​ ​ 334,594 Loss on consolidation of VIE ​ ​ 7,553 Total purchase price ​ $ 342,147 ​ ​ In connection with the Merger, the transactions that occurred concurrently with the closing date of the Merger were reflected “on the line”. “On the line” describes those transactions triggered by the consummation of the Merger that are not recognized in the consolidated financial statements of the Predecessor nor the Successor as they are not directly attributable to either period but instead were contingent on the Merger. The opening cash balance in the Successor’s condensed consolidated statement of cash flow of $ 31.2 million consists of cash and cash equivalents from Priveterra of $ 29.2 million and Old AEON $ 2.0 million. 15 Table of Contents The number of shares of common stock issued and amounts recorded on the line within stockholders’ deficit are reflected below to arrive at the opening consolidated balance sheet of the Successor. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares of common stock Common stock amount Subscription Receivable APIC Accumulated Deficit ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Priveterra closing equity as of July 21, 2023 ​ 557,160 $ — $ — $ 5,937 $ ( 12,897 ) Shares issued as Consideration in the Merger Note 1 16,500,000 ​ 2 ​ — ​ 192,189 ​ — Merger Consideration - Shares issued for Interim Convertible Notes related to Committed Financing Note 5 2,226,182 ​ — ​ — ​ 24,132 ​ — Stock-Compensation for Class B Founder Shares Note 3 6,900,000 ​ 1 ​ — ​ 68,972 ​ ( 68,972 ) Forward Purchase Agreements Note 6 6,275,000 ​ 1 ​ ( 60,710 ) ​ 66,714 ​ ( 38,255 ) Issuance of Make-Whole derivative Note 6 — ​ — ​ — ​ — ​ ( 427 ) Shares issued in New Money PIPE Subscription Agreements Note 6 1,001,000 ​ — ​ — ​ 10,844 ​ ( 6,433 ) Shares issued for Committed Financing Note 6 3,571,429 ​ — ​ — ​ 38,714 ​ ( 13,714 ) Contingent Founder Shares Note 6 — ​ — ​ — ​ ( 31,401 ) ​ — Loss on Consolidation of VIE Note 3 — ​ — ​ — ​ — ​ ( 7,553 ) Other Miscellaneous ​ 128,829 ​ — ​ — ​ 1,397 ​ ( 1,397 ) Total ​ 37,159,600 $ 4 $ ( 60,710 ) $ 377,498 $ ( 149,648 ) ​ The Sponsor, in connection with Priveterra’s initial public offering, purchased 6,900,000 shares of Class B common stock (the “Founder Shares”) for $ 25,000 (approximately $ 0.004 per share). These shares had no value until Priveterra effected the Merger. Upon the Merger, the Founder Shares automatically converted to shares of common stock. This conversion was solely contingent upon the completion of the Merger, a performance condition, and did not include any future service requirements. As such, the grant date fair value of the 6,900,000 shares was expensed in the amount of $ 69.0 million and is presented “on the line.” Pursuant to the terms of the Sponsor Support Agreement, as amended, effective at the Closing, 50 % of the Founder Shares (i.e., 3,450,000 Founder Shares) (the “Contingent Founder Shares”) were unvested and subject to the restrictions and forfeiture provisions set forth in the Sponsor Support Agreement. As such, the fair value at Closing of the remaining 3,450,000 shares with vesting conditions in the amount of $ 31.4 million was reclassified from additional paid-in capital to contingent consideration liability on the accompanying Successor’s consolidated balance sheet. ​ ​ ​ Note 4. Related Party Transactions (Predecessor) 2019 Debt Financings During the periods from July 1, 2023 to July 21, 2023 (Predecessor) and January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 0.9 million and $ 1.6 million, respectively, of expense related to the increase in the fair value of the 2019 Convertible Notes. The 2019 Convertible Notes were converted into shares of the Successor’s common stock at the Closing and were recorded “on the line” as part of the shares issued as consideration in the Merger (see Note 3 Forward Merger ). SCH Convertible Note During the periods from July 1, 2023 to July 21, 2023 (Predecessor) and January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 2.1 million and $ 4.2 million, respectively, of expense related to the increase in the fair value of the SCH Convertible Note. The SCH Convertible Note was converted into shares of the Successor’s common stock at the Closing and was recorded “on the line” as part of the shares issued as consideration in the Merger (see Note 3 Forward Merger ). A1 Convertible Notes During the periods from July 1, 2023 to July 21, 2023 (Predecessor) and January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 1.8 million and $ 3.0 million, respectively, of expense related to the increase in the fair value of the 2021 A1 Convertible Notes; $ 2.5 million and $ 4.2 million, respectively, of expense related to the increase in the fair value of the 2022 A1 Convertible Notes; $ 10.2 million and $ 10.1 million, respectively, of expense related to the increase in the fair value of the March 2023 A1 Convertible Notes. All of the A1 Convertible Notes were converted into shares of the Successor’s common stock and was recorded “on the line” at the Closing (see Note 3 Forward Merger ). 16 Table of Contents Note 5. Daewoong Convertible Notes During the periods from July 1, 2023 to July 21, 2023 (Predecessor) and January 1, 2023 to July 21, 2023 (Predecessor), the Predecessor recognized $ 1.4 million and $ 3.7 million, respectively, of income related to the decrease in the fair value of the Daewoong Convertible Notes. The Daewoong Convertible Notes were converted into shares of the Successor’s common stock at the Closing. Convertible Note Subscription and License Agreement Amendment On March 19, 2024, the Company entered into a subscription agreement with Daewoong (the “Subscription Agreement”) relating to the sale and issuance by the Company of senior secured convertible notes (each, a “2024 Convertible Note” and together, the “2024 Convertible Notes”) in the principal amount of up to $ 15.0 million, which are convertible into shares of the Company’s common stock, subject to certain conditions and limitations set forth in each Convertible Note. Each Convertible Note contains customary events of default, accrues interest at an annual rate of 15.79 % and has a maturity date that is three years from the funding date, unless earlier repurchased, converted or redeemed in accordance with its terms prior to such date. The Company will use the net proceeds from each Convertible Note to support the late-stage clinical development of its lead product candidate ABP-450 and for general working capital purposes. Pursuant to the terms of the Subscription Agreement, on March 24, 2024, the Company issued and sold to Daewoong one Convertible Note in the principal amount of $ 5.0 million, and on April 12, 2024, the Company issued and sold to Daewoong one Convertible Note in the principal amount of $ 10.0 million. ​ On March 19, 2024, the Company entered into a Fourth Amendment to the License Agreement (the “License Agreement Amendment”) with Daewoong, which amends that certain License and Supply Agreement, by and between the Company and Daewoong, dated December 20, 2019, as previously amended on July 29, 2022, January 8, 2023 and April 24, 2023 (the “License Agreement”). Pursuant to the terms of the License Agreement Amendment, the License Agreement will terminate if, over any six month period, (a) the Company ceases to commercialize ABP-450 in certain territories specified in the License Agreement and (b) the Company ceases to advance any clinical studies of ABP-450 in such territories. The License Agreement Amendment also provides that, in the event that the License Agreement is terminated for the foregoing reasons, Daewoong will have the right to purchase all Know-How (as defined in the License Agreement) related to ABP-450 for a price of $ 1.00 (the “Termination Purchase Right”). The Termination Purchase Right will terminate and expire upon Daewoong’s sale of 50 % of its common stock, including common stock held by its affiliates and common stock that would be issued upon an Automatic Conversion or Optional Conversion (as defined in the Convertible Notes). ​ During the three and nine months ended September 30, 2024 (Successor), the Company recognized $ 1.9 million and $ 0.2 million, respectively, of expense related to the increase in the fair value of the 2024 Daewoong Convertible Note. As of September 30, 2024, the principal amount outstanding under the 2024 Daewoong Convertible Note was $ 15.0 million, with an estimated fair value of $ 15.2 million. ​ Note 6. Fair Value Measurements The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying value of cash and cash equivalents, accounts payable, accrued liabilities and convertible notes approximate fair value because of the short-term nature of those instruments. The following are other financial assets and liabilities that are measured at fair value on a recurring basis. Convertible Notes at Fair Value Due to certain embedded features within the convertible notes, the Company elected the fair value option to account for its convertible notes, including any paid-in-kind principal and interest, and the embedded features. During the three and nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor), the Company recognized $ 1.9 million, $ 0.2 million, $ 19.4 million and $ 13.2 million, respectively, of expense related to the increase in the fair value of the convertible notes. As of September 30, 2024 (Successor) and December 31, 2023 (Successor), the principal amount outstanding under the convertible notes was $ 15.0 million and 17 Table of Contents $ 0 , respectively, with an estimated fair value of $ 15.2 million and $ 0 , respectively. The convertible notes outstanding prior to the Closing were converted into shares of the Successor’s common stock at the Closing. For more information on convertible notes, see Note 4 Related Party Transactions (Predecessor) and Note 5 Daewoong Convertible Notes . The fair value of the convertible notes was determined based on Level 3 inputs using a scenario-based analysis that estimated the fair value of the convertible notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various qualified financings, corporate transaction and dissolution scenarios. The significant unobservable input assumptions that can significantly change the fair value included (i) the weighted average cost of capital, (ii) the timing of payments, (iii) the discount for lack of marketability, and (iv) the probability of certain corporate scenarios. During the three and nine months ended September 30, 2024 (Successor), and the periods from January 1, 2023 to July 21, 2023 (Predecessor) and July 1, 2023 to July 21, 2023 (Predecessor), the Company utilized discount rates ranging from 15 % to 60 %, respectively, reflecting changes in the Successor’s and Predecessor’s risk profile, time-to-maturity probability, and key terms when modified to the convertible notes. As of the Closing, the fair value of the Predecessor convertible notes immediately prior to their conversion was based on the fair value of the Company’s shares to be received by the holders using the market price of the shares at Closing. Forward Purchase Agreements (Successor) On June 29, 2023, Priveterra and Old AEON entered into the Forward Purchase Agreements with each of (i) ACM ARRT J LLC (“ACM”) and (ii) Polar Multi-Strategy Fund (“Polar”) (each of ACM and Polar, individually, a “Seller”, and together, the “Sellers”) for OTC Equity Prepaid Forward Transactions. For purposes of each Forward Purchase Agreement, Priveterra is referred to as the “Company” prior to the consummation of the Merger, while AEON is referred to as the “Company” after the consummation of the Merger. As described below, the Forward Purchase Agreements were terminated on March 18, 2024. Pursuant to the terms of the Forward Purchase Agreements, the Sellers intended, but were not obligated, to purchase up to 7,500,000 shares of Priveterra Class A Common Stock in the aggregate concurrently with the Closing pursuant to each Seller’s respective FPA Funding Amount PIPE Subscription Agreement. No Seller would be required to purchase an amount of shares of Priveterra Class A Common Stock that would result in that Seller owning more than 9.9 % of the total shares of Priveterra Class A Common Stock outstanding immediately after giving effect to such purchase, unless such Seller, at its sole discretion, waived such 9.9 % ownership limitation. The Number of Shares subject to a Forward Purchase Agreement was subject to reduction following a termination of the Forward Purchase Agreements with respect to such shares as described under “Optional Early Termination” (“OET”) in the respective Forward Purchase Agreements. Each Forward Purchase Agreement provided that a Seller would be paid directly the Prepayment Amount which was equal to an aggregate of $ 66.7 million based on the product of (i) 6,275,000 shares of Priveterra Class A Common Stock (the “Additional Shares”) and (ii) the redemption price per share of $ 10.63 . On July 21, 2023, the Company was obligated to pay each Seller separately the Prepayment Amount required under its respective Forward Purchase Agreement, except that since the Prepayment Amount payable to a Seller was to be paid from the purchase of the Additional Shares by such Seller pursuant to the terms of its respective FPA Funding Amount PIPE Subscription Agreement, such amount was netted against such proceeds, with such Seller being able to reduce the purchase price for the Additional Shares by the Prepayment Amount. For the avoidance of doubt, any Additional Shares purchased by a Seller were to be included in the Number of Shares for its respective Forward Purchase Agreement for all purposes, including for determining the Prepayment Amount. Therefore, the aggregate Prepayment Amount of $ 66.7 million was netted against the proceeds paid from the purchase of the Additional Shares in the aggregate by the Sellers pursuant to the FPA Funding Amount PIPE Subscription Agreements. The Company did not have access to the Prepayment Amount immediately following the Closing and, pursuant to the termination of the Forward Purchase Agreements as described below related to the FPA termination, the Sellers will retain the Prepayment Amount in full, which may adversely affect our liquidity and capital needs. The Prepayment Amount of $ 66.7 million was recorded at its present value of $ 60.7 million as Subscription Receivables, which reduced stockholders’ deficit on the Successor’s condensed consolidated balance sheet at September 30, 2023. The $ 6 million difference between the subscription receivables and the present value of the subscription receivables at Closing was recorded as a loss “on the line” in the Successor’s opening accumulated deficit (see Note 3 Forward Merger ). For the period from July 22, 2023 to September 30, 2023 (Successor), the Company recorded expense of $ 15.5 million related to the increase in fair value of the derivatives to the Successor’s condensed consolidated statement of operations and comprehensive (loss) income. 18 Table of Contents The Company utilized the Monte-Carlo valuation model using expected volatility of 67.0 % and risk-free rate of 5.11 % and expected life of 1.81 years. As of December 31, 2023 (Successor), the fair value of the FPA was $ 40.3 million, which was included within embedded forward purchase agreements and derivative liabilities on the condensed consolidated balance sheet. Termination of Forward Purchase Agreements On March 18, 2024, the Company and ACM ARRT J LLC (“ACM”) entered into a termination agreement (the “ACM Termination Agreement”) terminating that certain Forward Purchase Agreement, dated June 29, 2023, by and among the Company and ACM (the “ACM FPA”). The ACM Termination Agreement provides that (i) ACM will retain 3,100,000 previously issued shares of common stock held by ACM pursuant to the ACM FPA and its respective subscription agreement (the “ACM Retained Shares”) and (ii) the Company will be subject to up to $ 1,500,000 in liquidated damages if it fails to meet certain registration requirements for the ACM Retained Shares, subject to certain conditions set forth in the ACM Termination Agreement. In the first quarter of 2024, the Company recorded the potential $ 1.5 million as a liability to the condensed consolidated balance sheet. However, since ACM elected to remove its respective shares from the registration statement, the Company released the liability from the condensed consolidated balance sheet in the second quarter of 2024. ACM did not pay any cash to the Company for the ACM Retained Shares and retained all portions of the Prepayment Amount associated with the ACM Retained Shares. ​ On March 18, 2024, the Company and Polar entered into a termination agreement (the “Polar Termination Agreement”) terminating that certain Forward Purchase Agreement, dated June 29, 2023, by and among the Company and Polar (the “Polar FPA”). The Polar Termination Agreement provides that (i) Polar will retain 3,175,000 previously issued shares of common stock held by Polar pursuant to the Polar FPA and its respective subscription agreement (the “Polar Retained Shares”) and (ii) the Company will be subject to up to $ 1,500,000 in liquidated damages if it fails to meet certain registration requirements for the Polar Retained Shares, subject to certain conditions set forth in the Polar Termination Agreement. In the first quarter of 2024, the Company recorded the potential $ 1.5 million as a liability to the condensed consolidated balance sheet. However, since Polar elected to remove its respective shares from the registration statement, the Company released the liability from the condensed consolidated balance sheet in the second quarter of 2024. Polar did not pay any cash to the Company for the Polar Retained Shares and retained all portions of the Prepayment Amount associated with the Polar Retained Shares. ​ As a result of the ACM Termination Agreement and Polar Termination Agreement, the Company recorded a charge to the condensed consolidated statement of operations of $ 0 and $ 20.3 million during the three and nine months ended September 30, 2024, respectively, to reverse the related subscription receivable and derivative liability on the accompanying condensed consolidated balance sheet. ​ In connection with the negotiation of the Forward Purchase Agreements (and FPA Termination Agreements) and related subscription agreements, J.V.B. Financial Group, LLC, acting through its Cohen & Company Capital Markets division (“CCM”), provided certain consulting services, initially to Priveterra and subsequently to AEON, pursuant to an engagement letter, by and between the Company and CCM, dated July 27, 2023 and amended July 1, 2024 (the “CCM Engagement Letter”). On July 5, 2024, pursuant to the CCM Engagement Letter, the Company issued 400,000 shares of the Company’s common stock to CCM. New Money PIPE Subscription Agreements and Letter Agreements As of September 30, 2024 (Successor) and December 31, 2023 (Successor), the make-whole provision derivative liability was $ 0.3 million and $ 0.7 million, respectively, included in the embedded forward purchase agreements and derivative liabilities on the Successor’s condensed consolidated balance sheets. For the three and nine months ended September 30, 2024 (Successor), and for the period from July 22, 2023 to September 30, 2023 (Successor), the Company recorded income (expense) related to the change in fair value of the make-whole provision derivative liability of $ 0.1 million, $ 0.4 million and $( 0.3 ) million, respectively. ​ Contingent Consideration and Contingent Founder Shares (Successor) As part of the Merger, certain Founder Shares and Participating Stockholders shares (together, “Contingent Consideration Shares”), as further discussed below, contain certain contingent provisions. On April 27, 2023, Priveterra and Old AEON amended the Business Combination Agreement. Concurrently with the amendment to the Business Combination Agreement, Priveterra amended the Sponsor Support Agreement to include restriction and forfeiture 19 Table of Contents provisions related to the Founder Shares. In addition following the Closing, certain AEON Stockholders will be issued up to 16,000,000 additional shares of common stock. Pursuant to the terms of the Sponsor Support Agreement, as amended, effective immediately after the Closing, 50 % of the Founder Shares (i.e., 3,450,000 Founder Shares) (the “Contingent Founder Shares”) were unvested and subject to the restrictions and forfeiture provisions set forth in this Sponsor Support Agreement. The remaining 50 % of the Founder Shares and 100 % of the Private Placement Warrants are not subject to such restrictions and forfeiture provisions. The Contingent Founder Shares shall vest, and shall become free of the provisions as follows: ● 1,000,000 of the Contingent Founder Shares (the “Migraine Phase 3 Contingent Founder Shares”) shall vest upon the achievement of the conditions for the issuance of the Migraine Phase 3 Contingent Consideration Shares on or prior to the Migraine Phase 3 Outside Date; ● 1,000,000 of the Contingent Founder Shares (the “CD BLA Contingent Founder Shares”) shall vest upon the achievement of the conditions for the issuance of the CD BLA Contingent Consideration Shares on or prior to the CD BLA Outside Date; and ● 1,450,000 of the Contingent Founder Shares (the “Episodic/Chronic Migraine Contingent Founder Shares”) shall vest upon the earlier of (x) the achievement of the conditions for the issuance of the Episodic Migraine Contingent Consideration Shares on or before the Episodic Migraine Outside Date and (y) the achievement of the conditions for the issuance of the Chronic Migraine Contingent Consideration Shares on or before the Chronic Migraine Outside Date. The Sponsor has agreed not to vote the Contingent Founder Shares during any period of time that such Contingent Founder Shares are subject to vesting. Following the Closing, in addition to the consideration received at the Closing and as part of the overall consideration paid in connection with the Merger, certain holders of common stock in Old AEON (the “Participating AEON Stockholders”) will be issued a portion of up to 16,000,000 additional shares of common stock, as follows: ● 1,000,000 shares of common stock, in the aggregate, if, on or before June 30, 2025 (as it may be extended, the “Migraine Phase 3 Outside Date”), the Company shall have commenced a Phase 3 clinical study for the treatment of chronic migraine or episodic migraine, which Phase 3 clinical study will have been deemed to commence upon the first subject having received a dose of any product candidate that is being researched, tested, developed or manufactured by or on behalf of the Company or any of its subsidiaries (any such product candidate, a “Company Product”) in connection with such Phase 3 clinical study (such 1,000,000 shares of common stock, the “Migraine Phase 3 Contingent Consideration Shares”); and ● 4,000,000 shares of common stock, in the aggregate, if, on or before November 30, 2026 (as it may be extended, the “CD BLA Outside Date”), the Company shall have received from the FDA acceptance for review of the BLA submitted by the Company for the treatment of cervical dystonia (such 4,000,000 shares of common stock, the “CD BLA Contingent Consideration Shares”); ● 4,000,000 shares of common stock, in the aggregate, if, on or before June 30, 2029 (as it may be extended, the “Episodic Migraine Outside Date”), the Company shall have received from the FDA acceptance for review of the BLA submitted by the Company for the treatment of episodic migraine (such 4,000,000 shares of common stock, the “Episodic Migraine Contingent Consideration Shares”); provided that in the event the satisfaction of the conditions for the issuance of the Episodic Migraine Contingent Consideration Shares occurs prior to the satisfaction of the conditions for the issuance of the Chronic Migraine Contingent Consideration Shares, then the number of Episodic Migraine Contingent Consideration Shares shall be increased to 11,000,000 shares of common stock; and ● 7,000,000 shares of common stock, in the aggregate, if, on or before June 30, 2028 (as it may be extended, the “Chronic Migraine Outside Date”, and together with the Migraine Phase 3 Outside Date, the CD BLA Outside Date and the Episodic Migraine Outside Date, the “Outside Dates”), the Company shall have received from the 20 Table of Contents FDA acceptance for review of the BLA submitted by AEON for the treatment of chronic migraine (such 7,000,000 shares of common stock, the “Chronic Migraine Contingent Consideration Shares”); provided that in the event that the number of Episodic Migraine Contingent Consideration Shares is increased to 11,000,000 , then the number of Chronic Migraine Contingent Consideration Shares shall be decreased to zero and no Contingent Consideration Shares will be issued in connection with the satisfaction of the conditions to the issuance of the Chronic Migraine Contingent Consideration Shares. ● In the event that the Company licenses any of its products (except in connection with migraine or cervical dystonia indications) to a third-party licensor for distribution in the U.S. market (a “Qualifying License”) prior to the satisfaction of (x) the conditions for the issuance of the Episodic Migraine Contingent Consideration Shares and (y) the conditions for the issuance of the Chronic Migraine Contingent Consideration Shares, then upon the entry of AEON into such Qualifying License, 2,000,000 shares of common stock shall become due and payable to Participating Stockholders and the number of Episodic Migraine Contingent Consideration Shares and (A) the number of Episodic Migraine Contingent Consideration Shares shall be reduced by 1,000,000 or by 2,000,000 and (B) the number of Chronic Migraine Contingent Consideration Shares shall be reduced by 1,000,000 , but not below zero . The Company classifies the Contingent Consideration Shares as a liability on the Successor’s condensed consolidated balance sheets and remeasures at each reporting period with changes to fair value recorded to the Successor’s condensed consolidated statements of operations and comprehensive (loss) income. The Company utilized the Probability-Weighted Expected Return Method (PWERM) model to value the contingent consideration based on earnout milestones, probability of forfeiture and success scenarios. As of September 30, 2024 (Successor) and December 31, 2023 (Successor), the contingent consideration liability was $ 6.9 million and $ 104.4 million, respectively. For the three and nine months ended September 30, 2024 (Successor), and the period from July 22, 2023 to September 30, 2023 (Successor), the Company recognized income related to the change in fair value of contingent consideration of $ 0 , $ 97.5 million and $ 75.9 million, respectively, on the Successor’s condensed consolidated statements of operations and comprehensive (loss) income, and relates to the change in probabilities of achieving certain scenarios following the clinical results released in the second quarter of 2024 and changes in the Company’s stock price during the period. Warrants (Successor) Upon the Closing, 14,479,999 warrants were outstanding, which were initially issued by Priveterra in February 2021, consisting of 9,200,000 public warrants sold in Priveterra’s initial public offering and 5,279,999 warrants issued in a concurrent private placement. The terms of the warrants are governed by a Warrant Agreement dated February 8, 2021 between the Company (then known as Priveterra Acquisition Corp.) and Continental Stock Transfer & Trust Company (the “Warrant Agreement”). ​ Warrant exercises On March 29, 2024, the Company delivered notice of redemptions to warrant holders with a redemption date of April 29, 2024 for a cashless redemption of the Company’s outstanding public warrants. The number of shares of common stock that each exercising warrant holder received by virtue of the cashless exercise (instead of paying the $ 11.50 per Public Warrant cash exercise price) was calculated in accordance with the terms of the Warrant Agreement. Any remaining unexercised public warrants on the redemption date were cancelled and the public warrant holders received the redemption price of $ 0.10 for each public warrant. During the three and nine months ended September 30, 2024 (Successor), an aggregate of 0 warrants and 10,283,637 warrants, respectively, were exercised on a cashless basis for 0 shares and 1,962,638 shares of common stock, respectively, with an impact to additional paid in capital of $ 0 and $ 15.0 million, respectively. Additionally, the Company paid $ 21 thousand in April 2024 related to the cancellation of the remaining 207,410 public warrants on the redemption date. 21 Table of Contents A summary of activity of the Company’s issued and outstanding public warrants for the nine months ended September 30, 2024 (Successor) is as follows (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Public ​ Private ​ Total ​ ​ ​ ​ ​ ​ ​ Issued and Outstanding, January 1, 2024 ​ 9,200,000 ​ 5,279,999 ​ 14,479,999 Number of warrants exercised ​ ( 8,992,590 ) ​ ( 1,291,047 ) ​ ( 10,283,637 ) Number of warrants cancelled ​ ( 207,410 ) ​ - ​ ( 207,410 ) Issued and Outstanding, September 30, 2024 ​ - ​ 3,988,952 ​ 3,988,952 ​ The warrants are accounted for as a liability at the Closing with changes in the fair value recorded to the Successor’s condensed consolidated statement of operations. The Company utilized the Black-Scholes option pricing model, which requires the input of subjective assumptions, including the Company’s stock price, expected volatility of the Company’s common stock, expected risk-free interest rate, and the option’s expected remaining life. The fair value of the warrant liability was $ 1.8 million and $ 1.4 million as of September 30, 2024 (Successor) and December 31, 2023 (Successor), respectively. For the three and nine months ended September 30, 2024 (Successor) and the period from July 22, 2023 to September 30, 2023 (Successor), the expense (income) from the change in fair value of warrants was $ 0.4 million, $ 15.4 million and $( 1.6 ) million, respectively. Medytox Top-off Right The Predecessor entered into a settlement agreement with Medytox, Inc. (“Medytox”) (the “Settlement Agreement”), effective as of June 21, 2021, as amended on May 5, 2022. Pursuant to the Settlement Agreement, among other things, the Predecessor agreed to enter into a share issuance agreement with Medytox pursuant to which the Predecessor issued 26,680,511 shares of Old AEON common stock, par value $ 0.0001 per share, to Medytox. The Settlement Agreement stated that in the event the shares of Old AEON common stock the Predecessor issued to Medytox represent less than 10 % of the Predecessor’s total outstanding shares immediately prior to the consummation of the Merger (the “Target Ownership”), the Company will issue additional shares of Old AEON common stock to Medytox sufficient to cause Medytox to achieve the Target Ownership (the “Top-off Right”). ​ Because the shares of Old AEON common stock due to be issued to Medytox represented less than 10 % of the Predecessor’s total outstanding shares immediately prior to consummation of the Merger, the Predecessor issued additional shares of Old AEON common stock (the “Top-off Shares”) to Medytox sufficient to cause Medytox to achieve the Target Ownership immediately prior to the Merger to the Top-off Right. ​ Based on the terms of the Settlement Agreement, the Top-off Right is a freestanding financial instrument, and is accounted for as a derivative liability pursuant to ASC 815. Accordingly, the Company recognized a loss of $ 11.8 million in the Predecessor period, reflecting the change in fair value through the Closing Date. At the Closing, the derivative liability was derecognized, and the issuance of the Top-off Shares was recognized as purchase consideration in the Successor’s opening additional paid-in capital (see Note 3 Forward Merger ). ​ 22 Table of Contents Summary of Recurring Fair Value Measurements The following details the Company’s recurring measurements for assets and liabilities at fair value (in thousands, unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convertible Notes ​ ​ Warrant Liabilities ​ ​ Contingent Consideration ​ ​ Embedded Forward Purchase Agreement and Make Whole Derivative ​ ​ ​ (Level 3) ​ ​ (Level 3) ​ ​ (Level 3) ​ ​ (Level 3) Successor ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, January 1, 2024 ​ $ - ​ $ 1,447 ​ $ 104,350 ​ $ 41,043 Issuance of convertible notes ​ ​ 15,000 ​ ​ - ​ ​ - ​ ​ - Change in fair value ​ ​ 170 ​ ​ 15,376 ​ ​ ( 97,464 ) ​ ​ ( 399 ) Warrant cashless exercise ​ ​ - ​ ​ ( 14,979 ) ​ ​ - ​ ​ - Termination of forward purchase agreements ​ ​ - ​ ​ - ​ ​ - ​ ​ ( 40,380 ) Balance, September 30, 2024 ​ $ 15,170 ​ $ 1,844 ​ $ 6,886 ​ $ 264 ​ ​ ​ Note 7. Commitments and Contingencies Operating Leases In December 2021, the Predecessor entered into a three-year non-cancellable lease for office space. The lease does not include variable or contingent lease payments. On March 29, 2024, the Company entered into an amendment to extend the lease for an additional five years . An operating lease asset and liability are recognized based on the present value of the remaining lease payments discounted using the Company’s incremental borrowing rate. Lease expense is recognized on a straight-line basis over the lease term. 23 Table of Contents The following table summarizes supplemental balance sheet information related to the operating lease as of September 30, 2024 (in thousands, unaudited): ​ ​ ​ ​ ​ Minimum lease payments by fiscal year ​ ​ 2024 (remaining) ​ $ 80 ​ 2025 ​ 175 ​ 2026 ​ ​ 297 ​ 2027 ​ ​ 307 ​ 2028 ​ ​ 318 ​ Thereafter ​ ​ 328 ​ Total future minimum lease payments ​ 1,505 ​ Less: Imputed interest ​ ( 173 ) ​ Present value of lease payments ​ 1,332 ​ Less: Current portion (included in other accrued expenses) ​ ( 128 ) ​ Noncurrent operating lease liability ​ $ 1,204 ​ Operating lease right-of-use asset ​ $ 1,346 ​ Remaining lease term in years ​ 5.3 ​ Discount rate ​ 4.3 % ​ The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases for the three and nine months ended September 30, 2024 (Successor) and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor) (in thousands) (unaudited). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended Nine Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 ​ ​ Successor ​ Successor July 22 to September 30 ​ ​ Predecessor July 1 to July 21 ​ Successor ​ Successor July 22 to September 30 ​ ​ Predecessor January 1 to July 22 ​ Cost of operating leases $ 72 ​ $ 53 ​ ​ $ 16 ​ $ 188 ​ $ 53 ​ ​ $ 153 ​ Cash paid for operating leases 80 ​ 51 ​ ​ 26 ​ ​ 239 ​ 51 ​ ​ ​ 180 ​ ​ ​ Legal Proceedings The Company, from time to time, is involved in various litigation matters or regulatory encounters arising in the ordinary course of business that could result in unasserted or asserted claims or litigation. Other than as described below, the Company is not subject to any currently pending legal matters or claims that would have a material adverse effect on its accompanying financial position, results of operations or cash flows. On September 18, 2023, Odeon Capital Group LLC (“Odeon”) filed a lawsuit against the Company in the Supreme Court of the State of New York, alleging that the Company failed to pay Odeon’s deferred underwriting fee of $ 1.25 million. Odeon claims that it served as the underwriter for Priveterra Acquisition Corp., the special purpose acquisition company with which Old AEON merged with and into in July 2023. Odeon seeks monetary damages for the full amount of its claimed underwriting fee, punitive damages, attorneys’ fees and other amounts. On November 16, 2023, the Company filed a successful motion to dismiss certain claims included in Odeon’s complaint. 24 Table of Contents In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. See Note 2 Summary of Significant Accounting Policies for additional information. Note 8. Common Stock The Successor’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 500,000,000 shares of common stock at a par value of $ 0.0001 per share. As of September 30, 2024 (Successor), 39,587,630 shares were issued and outstanding . The holders of common stock are entitled to receive dividends whenever funds are legally available, when and if declared by the Company’s Board of Directors. As of September 30, 2024 (Successor), no cash dividend has been declared to date. Each share of common stock is entitled to one vote. Refer to Note 3 Forward Merger for more information on the number of shares of common stock outstanding immediately following the Merger. Common Stock Reserved The table below summarizes the Company’s reserved common stock for further issuance as of September 30, 2024 (Successor) and December 31, 2023 (Successor): ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ (unaudited) ​ ​ ​ Stock options issued and outstanding 7,123,687 3,846,972 ​ Restricted stock units (unvested) 1,843,275 1,012,994 ​ Shares available for future issuance under the stock incentive plan ​ 1,858,774 3,536,710 ​ Warrants ​ 3,988,952 14,479,999 ​ Contingent consideration ​ 16,000,000 16,000,000 ​ Total common stock reserved 30,814,688 38,876,675 ​ ​ ATM Offering of Common Stock On August 14, 2024, the Company entered into an “at-the-market” sales agreement with Leerink Partners LLC (“Leerink Partners”) relating to an at-the-market offering program (the “ATM”), pursuant to which the Company may offer and sell, from time to time at its sole discretion, shares of common stock, registered pursuant to a shelf registration statement on Form S-3 that the Securities and Exchange Commission (the “SEC”) declared effective on August 21, 2024, having aggregate gross proceeds of up to $ 50.0 million through Leerink Partners as sales agent. Under the ATM, the Leerink Partners is entitled to commission at a rate equal to 3.0 % of the gross proceeds from sales of shares of common stock under the ATM. As of September 30, 2024, the Company issued 65,392 shares under the ATM for net proceeds of $ 50 thousand and approximately $ 49.9 million of common stock remained available to be sold under the ATM. The Company may cancel its at-the-market program at any time upon prior notice, pursuant to its terms. 2023 Employee Stock Purchase Plan (“ESPP”) The 2023 Employee Stock Purchase Plan assists eligible employees in acquiring a stock ownership interest of the Company’s common stock in consideration of the participating employees’ continued services. Eligible employers will be entitled to purchase, by means of payroll deductions, limited amounts of the Company’s common stock at a discount during periodic offering periods. There were 488,146 shares initially reserved for issuance under the 2023 ESPP, which shall automatically increase on January 1 of each calendar year beginning and including January 1, 2024 and ending on and including January 1, 2033, by an amount equal to the lesser of (i) 1.0 % of the total number of shares of common stock issued and outstanding on January 1 of the year in which such increase is to occur, or (ii) such smaller number of shares of common stock as may be established by the Board of Directors. As of September 30, 2024, there were 908,342 shares available for issuance. There have been no shares issued under the 2023 ESPP. ​ ​ 25 Table of Contents Note 9. Share-based Compensation Stock Incentive Plans 2019 Incentive Award Plan In June 2019, ABP Sub Inc., the Predecessor’s wholly-owned subsidiary, established its 2019 Incentive Award Plan (the “2019 Incentive Award Plan”), as amended from time to time, that provides for the granting of incentive and nonqualified stock options, restricted stock units (“RSU”), restricted stock and stock appreciation rights to its employees, members of the Board of Directors and non-employee consultants. The 2019 Incentive Award Plan provides for stock options to be granted with exercise prices not less than the estimated fair value of the Predecessor’s common stock, and incentive options to be granted to individuals owning more than 10 % of the total combined voting power of all classes of stock of the Predecessor with exercise prices not less than 110 % of the estimated fair value of the Predecessor’s common stock on the date of grant. Stock options granted generally expire ten years after their original date of grant and generally vest between three years to four years with 25 % vesting on the first anniversary of the date of grant and then monthly vesting after that. Stock options granted to a 10 % stockholder are exercisable up to five years from the date of grant. Restricted stock awards granted generally become fully vested between one to three years . In connection with the Merger, the Successor assumed the 2019 Incentive Award Plan and all options and RSU awards that were outstanding immediately prior to the Merger were converted into substantially similar awards covering shares of the Successor’s common stock based on a conversion ratio of approximately 77.65 to 1 share. Additionally, the exercise price for the awards were repriced to $ 10.00 for all options. The fair value of the replacement awards that were vested, based on the value immediately prior to the Merger, of $ 13.3 million were included as purchase consideration (see Note 3 Forward Merger for additional information). The remaining value of the replacement awards will be recognized in the Successor period as compensation expense over the remaining vesting period, which included stock-based compensation expense of $ 1.0 million recorded in the third quarter of fiscal year 2023 of the successor period for the impact of the stock option repricing. Prior to the consummation of the Merger, a total of 237,500 shares of ABP Sub Inc. common stock were available for issuance under the 2019 Incentive Award Plan. Following the effective date of the 2023 Plan, in the event that an outstanding award expires or is cancelled for any reason, the shares allocable to the unexercised or cancelled portion of such award from the 2019 Incentive Award Plan will be added back to the shares of common stock available for issuance under the 2023 Incentive Award Plan. At the Closing, ABP granted options to purchase a total of 45,130 ABP Sub options which converted into options to purchase 3,515,219 shares of the Company’s common stock, and a total of 15,059 RSU awards, which converted into RSU awards covering 1,169,366 shares of the Company’s common stock. Of such RSU awards, 127,801 RSUs had accelerated vesting concurrently with the Merger. As such, the Company included an additional $ 1.8 million in purchase consideration (see Note 3 Forward Merger for additional information). Additionally, of such RSU awards, 466,468 RSUs contained performance-based vesting criteria based on the achievement of the same milestones as the contingent consideration (see Note 6 Fair Value Measurements for additional information). As of September 30, 2023, milestones 1 and 2 were determined to be probable, and the Company began expensing the proportionate RSUs over the vesting term, calculated as the period from the date the milestone was determined to be probable and the expected achievement date of the milestone. For the three and nine months ended September 30, 2024 (Successor), and the period from July 22, 2023 to September 30, 2023 (Successor), the Company recognized $ 0.1 million, $ 0.5 million and $ 0.2 million, respectively, of such RSU with earnout vesting criteria, $ 0.1 million, $ 0.5 million and $ 0.2 million, respectively, in selling, general and administrative expenses and a de minimus amount in research and development expenses associated with such performance-based RSUs in the Successor’s condensed consolidated statement of operations. The following table summarizes stock option activity under 2019 Incentive Award Plan (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Average ​ ​ ​ Number of ​ Exercise ​ ​ ​ Shares ​ Price ​ Successor ​ ​ ​ ​ ​ Outstanding, January 1, 2024 ​ 3,515,219 ​ $ 10.00 ​ Options granted — ​ ​ — ​ Options forfeited ( 63,748 ) ​ $ 10.00 ​ Outstanding, September 30, 2024 3,451,471 ​ $ 10.00 ​ Exercisable, September 30, 2024 2,815,063 ​ $ 10.00 ​ ​ There were no options granted in the 2019 Incentive Plan during 2023, and no options will be granted from this plan after the Closing. 26 Table of Contents As of September 30, 2024 (Successor) and December 31, 2023 (Successor), the weighted average remaining contractual life of options outstanding and options exercisable was 6.3 years and 7.1 years, respectively. During the three and nine months ended September 30, 2024 (Successor), and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), the Company recognized $ 0.7 million, $ 2.3 million, $ 2.7 million, $ 0.2 million and $ 1.6 million, respectively, of share-based compensation expense related to stock options granted. As of September 30, 2024 (Successor) and December 31, 2023 (Successor), total unrecognized compensation expense related to nonvested stock options was $ 2.5 million and $ 4.9 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 5 months and 10 months , respectively. The following table summarizes restricted stock units activity under the 2019 Incentive Award Plan (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Average ​ ​ ​ Number of ​ Grant Date ​ ​ ​ Shares ​ Fair Value ​ Successor ​ ​ ​ ​ ​ ​ Outstanding, January 1, 2024 1,012,994 ​ $ 10.84 ​ Granted — ​ — ​ Vested ( 160,063 ) ​ $ 10.84 ​ Forfeited ​ ( 32,679 ) ​ $ 10.84 ​ Outstanding, September 30, 2024 820,252 ​ $ 10.84 ​ ​ During the three and nine months ended September 30, 2024 (Successor), and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), the Company recognized $ 0.5 million, $ 1.6 million, $ 0.5 million, $ 0.1 million and $ 0.4 million, respectively, of share-based compensation expense related to restricted stock units granted. As of September 30, 2024 (Successor), total unrecognized compensation expense related to nonvested restricted stock units was $ 7.4 million, of which $ 4.1 million was related to the earnout vesting criteria, and the remaining $ 3.3 million is expected to be recognized over the weighted-average remaining requisite service period of 24 months . The unrecognized compensation expense with the earnout criteria will be recognized when the milestones are determined to be probable over the RSU’s vesting term, calculated as the period from the date the milestone was determined to be probable and the expected achievement date of the milestone. AEON Biopharma Inc 2023 Incentive Award Plan In connection with the Merger, the Company’s Board adopted, and its stockholders approved, the 2023 Plan, which became effective upon the consummation of the Merger, that provides for the granting of nonqualified stock options, restricted stock and stock appreciation rights to employees, members of the Board of Directors and non-employee consultants. The 2023 Plan will remain in effect until July 3, 2033, the tenth anniversary of the date the Company’s stockholders approved the 2023 Plan, unless earlier terminated. Stock options granted generally expire ten years after their original date of grant and generally vest between three years to four years with equal installments vesting on each anniversary of the grant date, subject to continued service through the applicable vesting date. The initial aggregate number of shares of the Company’s common stock available for issuance under the 2023 Plan is equal to (a) 3,839,892 shares of common stock and (b) any shares which, as of the effective date of the 2023 Plan, are subject to an award outstanding under the ABP 2019 Plan (each, a “Prior Plan Award”), and which, on or following the effective date of the 2023 Plan, become available for issuance under the 2023 Plan as provided in the 2023 Plan. In addition, the number of shares of common stock available for issuance under the 2023 Plan will be annually increased on January 1 of each calendar year beginning in 2024 and ending in 2033 by an amount equal to the lesser of (i) 4 % of the number of fully-diluted number of shares outstanding on the final day of the immediately preceding calendar year or (ii) such other number of shares as is determined by the Board. Any shares issued pursuant to the 2023 Plan may consist, in whole or in part, of authorized and unissued common stock, treasury common stock or common stock 27 Table of Contents purchased on the open market. As of September 30, 2024, there were 950,433 shares of common stock available for issuance under the 2023 Plan. The following table summarizes stock options activity under the 2023 Incentive Award Plan (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ Average ​ ​ ​ Number of ​ Exercise ​ ​ ​ Shares ​ Price ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, January 1, 2024 331,753 ​ $ 5.47 ​ Options granted 3,428,692 ​ 3.36 ​ Options forfeited ( 88,229 ) ​ 11.26 ​ Outstanding, September 30, 2024 3,672,216 ​ $ 3.36 ​ Exercisable, September 30, 2024 254,238 ​ $ 2.70 ​ ​ The weighted average fair value of options granted as of September 30, 2024 (Successor) and December 31, 2023 (Successor) was $ 2.00 and $ 3.18 , respectively. The weighted average remaining contractual life of options outstanding and options exercisable as of September 30, 2024 (Successor) and December 31, 2023 (Successor) was 9.7 years and 9.6 years, respectively. During the three and nine months ended September 30, 2024 (Successor), and the period from July 22, 2023 to September 30, 2023 (Successor), the Company recognized $ 0.5 million, $ 1.0 million and $ 0.1 million, respectively, of share-based compensation expense related to stock options granted. As of September 30, 2024 (Successor) and December 31, 2023 (Successor), total unrecognized compensation expense related to nonvested stock options was $ 5.9 million and $ 0.9 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 22 months and 35 months , respectively. The following table summarizes restricted stock units activity under the 2023 Incentive Award Plan (unaudited): ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number of ​ Grant Date ​ ​ Shares ​ Fair Value ​ ​ ​ ​ ​ ​ Outstanding, January 1, 2024 — ​ ​ — Granted 1,023,023 ​ $ 0.83 Vested — ​ — Forfeited — ​ ​ — Outstanding, September 30, 2024 1,023,023 ​ $ 0.83 ​ During the three and nine months ended September 30, 2024 (Successor), the Company recognized $ 36 thousand of share-based compensation expense related to restricted stock units granted. As of September 30, 2024 (Successor), total unrecognized compensation expense related to nonvested restricted stock units was $ 0.8 million, which is expected to be recognized over the weighted-average remaining requisite service period of 23 months . Share-based Compensation Expense and Valuation Information The Company accounts for the measurement and recognition of compensation expense for all share-based awards based on the estimated fair value of the awards. The fair value of share-based awards is amortized on a straight-line basis over the requisite service period. The Company records share-based compensation expense net of actual forfeitures. During the three and nine months ended September 30, 2024 (Successor), and the periods from January 1, 2023 to July 21, 2023 (Predecessor), July 1, 2023 to July 21, 2023 (Predecessor) and July 22, 2023 to September 30, 2023 (Successor), the Company recognized $ 1.6 million, $ 4.9 million, $ 3.2 million, $ 0.7 million, and $ 2.2 million, respectively, of share-based compensation expense, 28 Table of Contents of which $ 1.2 million, $ 3.7 million, $ 2.8 million, $ 0.6 million, and $ 1.8 million, respectively, were in selling, general and administrative expenses, and $ 0.4 million, $ 1.3 million, $ 0.4 million, $ 0.1 million and $ 0.4 million, respectively, were in research and development expenses in the accompanying condensed consolidated statements of operations and comprehensive (loss) income. The fair value of stock options under the 2019 and 2023 Stock Incentive Award Plan was estimated using the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ ​ September 30, ​ ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Expected volatility ​ 47 % – 87 % 39 % – 58 % ​ Risk-free interest rate ​ 3.7 % – 4.3 % 4.1 % – 4.4 % ​ Expected life (in years) ​ 5.27 – 6.25 3.00 – 6.25 ​ Expected dividend yield ​ — — ​ ​ ​ Note 10. Subsequent Events The Company has further evaluated subsequent events for recognition and remeasurement purposes as of and for the three and nine months ended September 30, 2024. After review and evaluation, management has concluded that there were no material subsequent events as of the date that the financial statements were available to be issued. ​ ​ 29 Table of Contents