What changed in this filing

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Item 1. Financial Statements

2025-05-14 compared with 2024-11-13 · 287 added, 427 removed, 304 unchanged (70% of the section changed)

3 unchanged sentences

(in thousands, except share data and par value amounts)

September 30,

Current assets:

11 unchanged sentences

Total current liabilities

Convertible notes at fair value, including related party amount of $ 15,170 and $ 0 , at September 30, 2024 and December 31, 2023, respectively

Convertible notes at fair value, including related party amount of $ 13,320 and $ 11,689 , at March 31, 2025 and December 31, 2024, respectively

Operating lease liability

1 unchanged sentence

Contingent consideration liability

Embedded forward purchase agreements and derivative liabilities

Total liabilities

2 unchanged sentences

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

1,040,000,000 and 500,000,000 shares authorized at March 31, 2025 and December 31, 2024, and 10,538,615 and 555,511 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital

Subscription receivables

Accumulated deficit

1 unchanged sentence

Total liabilities and stockholders' deficit

See accompanying notes to the consolidated financial statements

See accompanying notes to the condensed consolidated financial statements

AEON BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share data) (Unaudited)

Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

1 unchanged sentence

Research and development

Acquired in-process research and development

Change in fair value of contingent consideration

Total operating costs and expenses

(Loss) income from operations

Other (loss) income:

Loss from operations

Other income (loss):

Change in fair value of convertible notes

Change in fair value of warrants

Income (loss) on embedded forward purchase agreements and derivative liabilities, net

Loss on issuance of warrants

Loss on embedded forward purchase agreements and derivative liabilities, net

Other income, net

Total other loss, net

(Loss) income before taxes

Net (loss) income

Basic net (loss) income per share

Diluted net (loss) income per share

Weighted average shares of common stock outstanding used to compute basic net (loss) income per share

Weighted average shares of common stock outstanding used to compute diluted net (loss) income per share

See accompanying notes to the consolidated financial statements

Total other income (loss), net

Income (loss) before taxes

Net income (loss)

Basic and diluted net income (loss) per share

Weighted average shares of common stock outstanding used to compute basic and diluted net income (loss) per share

See accompanying notes to the condensed consolidated financial statements

AEON BIOPHARMA, INC.

1 unchanged sentence

(in thousands, except share data) (Unaudited)

Preferred Stock

Treasury Stock

Stockholders'

Balance as of July 1, 2024 (Successor)

Issuance of shares related to at-the-market offering, net

Issuance of common stock

Stock-based compensation expense

Balance as of September 30, 2024 (Successor)

Balance as of July 22, 2023 (Successor)

Stock-based compensation expense

Balance as of September 30, 2023 (Successor)

Balance as of July 1, 2023 (Predecessor)

Balance as of January 1, 2025

Issuance of shares and reclassification of liability related to cashless warrant exercises

Stock-based compensation expense

Balance as of July 21, 2023 (Predecessor)

AEON BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in thousands, except share data) (Unaudited) (Continued)

Preferred Stock

Treasury Stock

Stockholders'

Balance as of January 1, 2024 (Successor)

Balance as of March 31, 2025

Balance as of January 1, 2024

Termination of Forward Purchase Agreements

Issuance of shares related to cashless warrant exercises

Issuance of shares related to at-the-market offering, net

Issuance of common stock

Stock-based compensation expense

Balance as of September 30, 2024 (Successor)

Balance as of July 22, 2023 (Successor)

Stock-based compensation expense

Balance as of September 30, 2023 (Successor)

Balance as of January 1, 2023 (Predecessor)

Issuance of shares and reclassification of liability related to cashless warrant exercises

Stock-based compensation expense

Debt extinguishment due to warrant modification

Balance as of July 21, 2023 (Predecessor)

See accompanying notes to the consolidated financial statements

Balance as of March 31, 2024

See accompanying notes to the condensed consolidated financial statements

AEON BIOPHARMA, INC.

1 unchanged sentence

(in thousands, except per share data) (Unaudited)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

2 unchanged sentences

Stock-based compensation expense

Write-off of acquired in-process research and development

Loss on issuance of warrants

Change in fair value of convertible notes

8 unchanged sentences

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Net cash used in investing activities

1 unchanged sentence

Proceeds from issuance of convertible notes

Proceeds from issuance of at-the-market shares

Proceeds from issuance of public offering shares, net

Net cash provided by financing activities

Net decrease in cash

Net increase (decrease) in cash

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

See accompanying notes to the consolidated financial statements

Supplemental disclosure of cash flow information:

Non-cash financing activities:

Cashless warrant exercises

See accompanying notes to the condensed consolidated financial statements

AEON BIOPHARMA, INC.

2 unchanged sentences

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.

2 unchanged sentences

(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.

(“Priveterra”), Priveterra’s wholly-owned subsidiary, Priveterra Merger Sub, Inc., and Old AEON (the “Merger”).

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.”

The Company’s common stock is trading on NYSE American under the symbol “AEON.”

Reverse Stock Split

On February 24, 2025, following a Special Meeting of Shareholders, the board of directions of the Company (the “Board”) approved the filing of a Certificate of Amendment to the Certificate of Incorporation (the “Charter Amendment”) to effect a reverse stock split at a split ratio of 1 -for-72 (the “Reverse Stock Split”).

As a result of the Reverse Stock Split, each 72 pre-split shares of Common Stock outstanding was automatically combined into one new share of Common Stock without any action on the part of the holders.

The Reverse Stock Split affected all of the Company’s stockholders uniformly and did not affect any stockholder’s percentage ownership interests in the Company.

No fractional shares were issued in connection with the Reverse Stock Split.

In lieu of fractional shares, any person who would otherwise be entitled to a fractional share of Common Stock as a result of the reclassification and combination following the effective time of the Reverse Stock Split (after taking into account all fractional shares of Common Stock otherwise issuable to such holder) instead received a number of shares rounded up to the nearest whole share.

Proportional adjustments were made to the number of shares of Common Stock issuable upon exercise or conversion of the Company’s outstanding equity awards and warrants, as well as the applicable exercise price, except in cases where the applicable agreement provides otherwise.

All share and per share amounts in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.

Liquidity and Going Concern

1 unchanged sentence

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.

As of March 31, 2025, the Company reported cash and cash equivalents of $ 10.4 million and an accumulated deficit of $ 422.5 million.

The Company expects to incur losses and use cash in its operations for the foreseeable future.

3 unchanged sentences

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

$ 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 Company held an initial meeting with the Food and Drug Administration (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 commenced analytical studies in the fourth quarter of 2024 to prepare for a potential Biosimilar Biological Product Development (“BPD”) Type 2a meeting with the FDA to review the results from the studies in the second half of 2025.

Under the ATM, 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 March 31, 2025, the Company issued 2,241 shares under the ATM for net proceeds of approximately $ 0.2 million and approximately $ 49.8 million of common stock remains 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.

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.

17 unchanged sentences

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

(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.

The accompanying interim condensed consolidated balance sheets as of March 31, 2025, the condensed consolidated statements of operations and comprehensive income (loss), stockholders’ deficit and cash flows for the three months ended March 31, 2025 and March 31, 2024 and the related note disclosures are unaudited.

The balance sheet information as of December 31, 2024 is derived from the 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.

The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or any other interim period.

Use of Estimates

1 unchanged sentence

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.

The Company’s most significant estimates relate to the research and development accruals, valuation of stock-based compensation, and the fair values of contingent consideration, forward purchase agreements, warrant liabilities, convertible notes, among others.

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.

The Company determined that it operates and manages its business as one operating segment, focused on the research and development of ABP-450.

The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer, who reviews its consolidated operating results for the purpose of assessing liquidity needs, allocating resources and evaluating financial performance.

Asset information, including monitoring of its cash and cash equivalents, provided to the CODM is consistent with those reported on the condensed consolidated balance sheets.

The key measure of the Company’s single segment profit and loss that the CODM uses to allocate resources and assess performance is the Company’s operating income (loss) as reported on the condensed consolidated statement of operations and comprehensive income (loss).

The table below shows a reconciliation of the Company’s net income (loss), including the significant expense categories regularly provided to and reviewed by the CODM, as computed under U.S.

GAAP to the Company’s total consolidated net income (loss) as reported in the condensed consolidated statement of operations:

Three Months Ended

Segment operating expenses:

Compensation and benefits

Professional and legal fees

Office and travel

Research and development

Total selling, general and administrative, and research and development

Change in fair value of contingent consideration

Total operating costs and expenses

Loss from operations

Other segment items:

Change in fair value of convertible notes

Change in fair value of warrants

Loss on issuance of warrants

Loss on embedded forward purchase agreements and derivative liabilities, net

Other income, net

Total other segment items, net

Income (loss) before taxes

Segment net income (loss)

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.

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.

8 unchanged sentences

Leasehold improvements are amortized over the lesser of the estimated useful life of the asset or the related lease term.

Property and equipment, net, as of September 30, 2024 and December 31, 2023 (unaudited) are as follows (in thousands):

September 30,

Property and equipment, net, as of March 31, 2025 (unaudited) and December 31, 2024 are as follows (in thousands):

Furniture and fixtures

5 unchanged sentences

Other accrued expenses were as follows (in thousands):

September 30,

Legal expenses

5 unchanged sentences

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 elected to account for its convertible 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 or as a component of other comprehensive income (loss) 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 notes are expensed as incurred.

Contingent Consideration

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 5 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”).

Based on the appropriate guidance, the Company determined that the Contingent Consideration would be classified as a liability on the condensed consolidated balance sheets and remeasured at each reporting period with changes to fair value recorded to the condensed consolidated statements of operations and comprehensive income (loss).

Forward Purchase Agreements

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 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.

Warrants (Successor)

For more information, see Note 5 Fair Value Measurement .

Subsequent changes in the bifurcated derivatives were recorded in the condensed consolidated statements of operations and comprehensive income (loss).

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.

2 unchanged sentences

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.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial 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 condensed consolidated statements of operations and comprehensive income (loss).

Fair Value of Financial Instruments

10 unchanged sentences

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

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.

ROU assets and lease liabilities are recognized at lease commencement based upon the 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.

5 unchanged sentences

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.

1 unchanged sentence

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).

There have been no material adjustments to the Company’s estimates for clinical trial expenses through March 31, 2025.

Stock-Based Compensation

4 unchanged sentences

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.

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.

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.

Stock-based compensation expense is recognized net of actual forfeitures when they occur, as an increase to additional paid-in capital 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 income (loss).

All stock-based compensation costs are recorded in the condensed consolidated statements of operations and comprehensive income (loss) based upon the underlying employee’s role within the Company.

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)

Weighted average shares of common stock outstanding, basic and diluted

Net loss per share, basic and diluted

Period from July 1, 2023 to July 21, 2023 (Predecessor)

Weighted average shares of common stock outstanding, basic and diluted

Net loss per share, basic and diluted

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)

The Company only has one class of shares.

Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average shares of common stock and potentially dilutive securities outstanding during the period using the treasury stock and if-converted methods, unless their inclusion would have been anti-dilutive.

For purposes of the diluted net loss per share calculation, warrants, convertible notes and common stock options were considered as potentially dilutive securities.

For the three months ended March 31, 2025, there were no dilutive shares.

For the three months ended March 31, 2024, since the Company was in a loss position, 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.

Basic and diluted net income (loss) per share for three months ended March 31, 2025 and March 31, 2024 were calculated as follows (in thousands, except share and per share amounts) (unaudited):

Three months ended March 31, 2025

Weighted average shares of common stock outstanding, basic and diluted

Net loss per share, basic and diluted

Three months ended September 30, 2024 (Successor)

Net income per share, basic and diluted

Three months ended March 31, 2024

Weighted average shares of common stock outstanding, basic and diluted

Net loss per share, basic and diluted

Nine months ended September 30, 2024 (Successor)

Weighted average shares of common stock outstanding, basic

Net income per share, basic

Weighted average shares of common stock outstanding, diluted

Net income per share, diluted

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,

July 1 to July 21

Contingent consideration

Contingent founder shares

Common stock options and restricted stock units

Convertible notes

Contingencies

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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

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

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.

This update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income

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.

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.

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

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

Shares issued for interim convertible notes related to Committed Financing

Total number of shares of common stock of the combined company

Multiplied by the Priveterra share price, as of the Closing

Fair value of contingent consideration

Replacement of share-based payment awards

Assumed liabilities

Total purchase price

The allocation of the purchase price was as follows (in thousands):

Cash and cash equivalents

Net working capital (excluding cash and cash equivalents)

Other assets and liabilities

Acquired in-process research and development

Net assets acquired

Loss on consolidation of VIE

Total purchase price

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.

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

Accumulated Deficit

Priveterra closing equity as of July 21, 2023

Shares issued as Consideration in the Merger

Merger Consideration - Shares issued for Interim Convertible Notes related to Committed Financing

Stock-Compensation for Class B Founder Shares

Forward Purchase Agreements

Issuance of Make-Whole derivative

Shares issued in New Money PIPE Subscription Agreements

Shares issued for Committed Financing

Contingent Founder Shares

Loss on Consolidation of VIE

Other Miscellaneous

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.

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 ).

The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which is intended to improve financial reporting by requiring disaggregated disclosure of certain costs and expenses.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied on either a prospective or retrospective basis.

The Company is currently evaluating the impact of this guidance on its condensed consolidated financial statements.

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.

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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.

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.

For more information on fair value of convertible notes, see Note 5 Fair Value Measurements .

During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $ 1.6 million and $ 0.1 million, respectively, of expense related to the increase in the fair value of the 2024 Daewoong Convertible Notes.

As of March 31, 2025 and December 31, 2024, the principal amount outstanding under the 2024 Daewoong Convertible Note was $ 15.0 million, with an estimated fair value inclusive of accrued interest of $ 13.3 million and $ 11.7 million, respectively.

Public Offering

On January 6, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Aegis Capital Corp.

(“Aegis” or the “Underwriter”) pursuant to which the Company agreed to sell and issue, in an underwritten public offering (the “Offering”) 555,571 Common Units, each consisting of (i) one (1) share of Common Stock, (ii) one (1) Series A Registered Common Warrant to purchase one (1) share of Common Stock per warrant (the “Series A Warrants”) at an exercise price of $ 45.00 (the “Exercise Price”) and (iii) one (1) Series B Registered Common Warrant to purchase one (1) share of Common Stock per warrant (the “Series B Warrants” and together with the Series A Warrants, the “Warrants”) at an Exercise Price of $ 45.00 .

The Offering was made pursuant to that certain Registration Statement on Form S-3, as amended (File No.

333-281562), which was originally filed on August 15, 2024, and declared effective by the Securities and Exchange Commission on August 21, 2024, including

the Prospectus contained therein and a prospectus supplement dated January 6, 2025, filed with the Securities and Exchange Commission on January 7, 2025.

The closing of the Offering occurred on January 7, 2025.

The Company received net proceeds of approximately $ 18.3 million from the Offering, after deducting the offering expenses payable by the Company, including the Underwriter’s fees and expenses.

The Company intends to use the net proceeds from the Offering for general corporate purposes, including working capital.

The Series A Warrants will be exercisable beginning on the date of approval by stockholders of the Company (the “Stockholder Approval Date” or the “Initial Exercise Date”), and will expire on the sixty (60) month anniversary of the Initial Exercise Date (the “Series A Warrants Termination Date”).

The Series B Warrants will be exercisable beginning on the Initial Exercise Date and will expire on the thirty (30) month anniversary of the Initial Exercise Date.

Upon issuance, the Warrants have an initial exercise price of $ 45.00 , which will be reset on the eleventh trading date after the Stockholder Approval Date (the “Reset Date”).

Prior to the Stockholder Approval Date, the Warrants had a floor price of $ 20.23 , and following stockholder approval, the Warrants will have a floor price of $ 8.06 .

The reset price would be the greater of (i) the lowest single trading day volume-weighted average price (“VWAP”) of the Company’s common stock during the reset period and (ii) the floor price, as defined in the agreement.

Additionally, the Company granted Aegis a 45 -day option to purchase additional shares of Common Stock and/or Warrants of (i) up to 15.0 % of the number of shares of Common Stock sold in the offering, (ii) up to 15.0 % of the number of Series A Warrants sold in the offering and (iii) up to 15.0 % of the number of Series B Warrants sold in the offering.

The purchase price per additional share of Common Stock is equal to the public offering price of one Common Unit (less $0.01 allocated to each full Warrant), less the underwriting discount.

The purchase price per additional Warrant is $ 0.01 .

On January 7, 2025, Aegis exercised its over-allotment option with respect to 83,334 Series A Warrants and 83,334 Series B Warrants.

The holders of Series A Warrants can effect a cashless exercise if there is no effective registration statement at the time of exercise.

The number of common shares to be issued would be calculated as VWAP minus exercise price of the Series A Warrants multiplied by the number Series A Warrants to be cashlessly exercised.

The holders of Series B Warrants may effect an alternative cashless exercise whether or not an effective registration statement is available for the issuance of shares.

In such event, the number of shares to be issued would be calculated as the number of Series B Warrants to be cashlessly exercised multiplied by a factor of 3.0 .

On February 24, 2025, the Company held a special stockholder meeting, at which stockholders voted, among other matters, to authorize Stockholder Approval of the Warrants within the context of the agreements for such Warrants.

As such, as of February 24, 2025, the Warrants became exercisable.

The stock price on the Reset Date was below the floor price following the Stockholder Approval Date, and as such, the exercise price was reset to $ 8.06 .

During the three months ended March 31, 2025, certain holders of the Series B Warrants exercised 3,142,511 Series B Warrants in accordance with the alternative cashless exercise provision in the Series B Warrants, resulting in the issuance of 9,427,533 shares of Common Stock of the Company.

The fair value of the warrants exercised on the respective exercise dates for the three months ended March 31, 2025 was $ 6.4 million.

There were no Series A Warrants exercised during the three months ended March 31, 2025.

As of March 31, 2025, there were 3,565,245 and 422,734 units of Series A and Series B warrants outstanding, respectively.

On the date of issuance, the Company recognized a loss on issuance of Warrants of $ 75.6 million, which reflects the fair value of the warrants in excess of the proceeds received.

For the three months ended March 31, 2025, the Company recognized $ 19.4 million and $ 7.9 million of income related to the change in fair value of the remaining outstanding Series A and Series Warrants, respectively.

Refer to Note 5 Fair Value Measurements for additional information.

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 carrying value of cash and cash equivalents, accounts payable and accrued liabilities 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.

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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

$ 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 .

For more information on convertible notes, see Note 3 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.

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.

During the three months ended March 31, 2025 and March 31, 2024, the Company utilized discount rates ranging from 15 % to 60 %, reflecting changes in the Company’s risk profile, time-to-maturity probability, and key terms when modified to the convertible notes.

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.

The ACM Termination Agreement provides that ACM will retain 43,056 previously issued shares of common stock held by ACM pursuant to the ACM FPA and its respective subscription agreement (the “ACM Retained Shares”).

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.

On March 18, 2024, the Company and Polar Multi-Strategy Fund (“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 Polar will retain 44,098 previously issued shares of common stock held by Polar pursuant to the Polar FPA and its respective subscription agreement (the “Polar Retained Shares”).

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.

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 $ 20.3 million during the three months ended March 31, 2024 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.

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On July 5, 2024, pursuant to the CCM Engagement Letter, the Company issued 5,556 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

provisions related to the Founder Shares.

Contingent Consideration and Contingent Founder Shares

As part of the Business Combination Agreement, certain Founder Shares and Participating Stockholders shares (together, “Contingent Consideration Shares”), as further discussed below, contain certain contingent provisions.

On April 27, 2023, concurrently with the amendment of the Business Combination Agreement, Priveterra amended the Sponsor Support Agreement to include restriction and forfeiture provisions related to the Founder Shares.

In addition, following the Closing, certain AEON stockholders will be issued up to 222,653 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.

Pursuant to the terms of the amended Sponsor Support Agreement, effective immediately after the Closing, 50 % of the Founder Shares (i.e., 47,921 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 are not subject to such restrictions and forfeiture provisions.

The Contingent Founder Shares shall vest, and shall become free of the provisions as follows:

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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, 27,992 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 13,996 or by 27,992 and (B) the number of Chronic Migraine Contingent Consideration Shares shall be reduced by 13,996 , 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 classifies the Contingent Consideration as a liability on the condensed consolidated balance sheets and remeasures at each reporting period with changes to fair value recorded to the condensed consolidated statements of operations and comprehensive income (loss).

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.

For the three months ended March 31, 2025 and March 31, 2024, the Company recognized a gain of $ 3.5 million and a loss of $ 63.8 million, respectively, related to the change in fair value of contingent consideration on the condensed consolidated statements of operations and comprehensive income (loss), and relates to the change in probabilities of achieving certain scenarios prior to and following the clinical results released in the second quarter of 2024 and changes in the Company’s stock price during the period.

As of March 31, 2025 and December 31, 2024, the contingent consideration liability was $ 0.1 million and $ 3.5 million, respectively.

Public and Private Placement Warrants related to the Closing

Upon the Closing, 201,112 warrants, consisting of 127,788 public warrants sold in Priveterra’s initial public offering and 73,334 warrants issued in a concurrent private placement, were outstanding.

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

Public warrants related to the Closing

Each whole public warrant entitles the holder to purchase one share of the Company’s common stock at a price of $ 828.00 per share.

The public warrants became exercisable 30 days after the completion of the Merger, and will expire at 5:00 p.m., New York City time, on July 21, 2028, the five-year anniversary of the completion of the Merger, or earlier upon redemption or liquidation.

Warrant holders may, until such time as there is an effective registration statement and during any period when the Company has failed to maintain an effective registration statement covering the shares of the Company’s common stock issuable upon exercise of the warrants, exercise warrants on a “cashless” basis” in accordance with Section 3(a)(9) of the Securities Act or another exception.

When exercised on a cashless basis, the number of shares received per warrant is capped at 1 .0.

The Company may call the public warrants for redemption for cash:

● in whole and not in part;

● at a price of $ 0.72 per warrant;

● upon not less than 30 days ’ prior written notice of redemption to each warrant holder (the “ 30-day redemption period”);

● if, and only if, there is an effective registration statement under the Securities Act of 1933 covering the issuance of the shares of common stock issuable upon exercise of the warrants, and a current prospectus relating thereto, available through the 30-day redemption period;

● if, and only if, the closing price of the Company's common stock equals or exceeds $ 1,296.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending three business days before the Company sends to the notice of redemption to the warrant holders.

The Company may also call the public warrants for redemption:

● in whole and not in part;

● at $ 7.20 per warrant upon a minimum of 30 days ’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares to be determined by reference to a table in the Warrant Agreement, based on the redemption date and the “fair market value” (as defined in the Warrant Agreement) of common stock except as otherwise described below;

● if, and only if, the closing price of the Company’s common stock equals or exceeds $ 720.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending three business days before the Company sends to the notice of redemption to the warrant holders.

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.

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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.

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):

The Company paid $ 21 thousand in April 2024 related to the cancellation of the remaining 2,881 public warrants on the redemption date.

Private placement warrants related to the Closing

Each private placement warrant was identical to the public warrants initially sold by Priveterra in the IPO, except that the private placement warrants, so long as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company and (ii) may be exercised by the holders on a cashless basis.

Warrant exercises for Warrants related to the Closing

There were no warrants related to the Closing exercised during the three months ended March 31, 2025.

During the three months ended March 31, 2024, there were 86,164 warrants exercised on a cashless basis for 13,374 shares of common stock, with an impact to additional paid in capital of $ 10.4 million.

A summary of activity for the Company’s issued and outstanding public and private warrants related to the Closing for the three months ended March 31, 2025 and March 31, 2024 is as follows (unaudited):

Issued and Outstanding, January 1, 2025

Number of warrants issued

Number of warrants exercised

( 8,992,590 )

( 1,291,047 )

( 10,283,637 )

Number of warrants cancelled

Issued and Outstanding, September 30, 2024

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 ).

Issued and Outstanding, March 31, 2025

Issued and Outstanding, January 1, 2024

Number of warrants exercised

Number of warrants cancelled

Issued and Outstanding, March 31, 2024

The private warrants are accounted for as a liability with changes in the fair value recorded to the condensed consolidated statement of operations.

The Company utilized the Black-Scholes option pricing model (Level 3), 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 warrants at March 31, 2025 and December 31, 2024 were

de minimus and $ 1.2 million, respectively.

For the three months ended March 31, 2025 and March 31, 2024, the Company recorded $ 1.2 million and $( 20.9 ) million, respectively, related to the income (expense) from the change in fair value of warrants.

Series A and Series B Warrants

The measurement of fair value of the Series A and Series B warrants were determined utilizing a Monte-Carlo simulation considering all relevant assumptions at the date of issuance of January 7, 2025 and at March 31, 2025.

The fair value on grant date will be recorded as a liability on the condensed consolidated balance sheets and changes in fair value will be recognized at each reporting period on the condensed consolidated statement of operations.

The table below summarizes the significant assumptions (unaudited):

Exercise Price

Expected volatility

Risk-free interest rate

Expected life (in years)

Expected dividend yield

The grant date fair values for these warrants were $ 94.0 million, comprised of $ 20.7 million and $ 73.3 million for Series A and Series B Warrants, respectively, on January 7, 2025 and was recorded as a liability as of the grant date due to certain exercise price adjustment provisions occurring in connection with future events.

Proceeds were allocated to the warrant liability based on the fair value as of grant date of the warrants of $ 94.0 million.

As the fair value of the warrants issued were greater than the proceeds received, the Company recognized a loss on issuance of common shares and the warrants of $ 75.6 million.

For the three months ended March 31, 2025, there were $ 6.4 million of Series B Warrants cashlessly exercised for 9,427,533 shares of common stock, representing 3,142,511 Series B warrants.

A summary of activity for the Company’s issued and outstanding Series A and Series B warrants for the three months ended March 31, 2025 is as follows (unaudited):

Issued and Outstanding, January 1, 2025

Number of warrants issued

Number of warrants exercised

( 3,142,511 )

Issued and Outstanding, March 31, 2025

Summary of Recurring Fair Value Measurements

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Issuance of convertible notes

Issuance of warrants

Change in fair value

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Termination of forward purchase agreements

Balance, September 30, 2024

Balance, March 31, 2025

Balance, January 1, 2024

Issuance of convertible notes

Change in fair value

Warrant cashless exercise

Termination of forward purchase agreements

Balance, March 31, 2024

Commitments and Contingencies

Operating Leases

In December 2021, the Predecessor entered into a three-year non-cancellable lease for office space.

In December 2021, the Company entered into a three-year non-cancellable lease for office space.

The lease was extended for an additional five years in March 2024.

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.

The following table summarizes supplemental balance sheet information related to the operating lease as of September 30, 2024 (in thousands, unaudited):

The following table summarizes supplemental balance sheet information related to the operating lease as of March 31, 2025 (in thousands, unaudited):

Minimum lease payments by fiscal year

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Discount rate

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).

The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases for the three months ended March 31, 2025 and March 31, 2024 (in thousands) (unaudited).

Three Months Ended

Nine Months Ended

September 30,

July 1 to July 21

Cost of operating leases

Cash paid for operating leases

Daewoong License and Supply Agreement

On December 20, 2019, the Company entered into the Daewoong Agreement, pursuant to which Daewoong agreed to manufacture and supply ABP-450 and grant the Company an exclusive license for therapeutic indications to import, distribute, promote, market, develop, offer for sale and otherwise commercialize and exploit ABP-450 in the United States, the European Union, the United Kingdom, Canada, Australia, Russia, the Commonwealth of Independent States and South Africa (collectively the “covered territories”).

Daewoong supplies the Company with ABP-450 at an agreed-upon transfer price, with no milestone or royalty payments and no minimum purchase requirements.

Daewoong is responsible for all costs related to the manufacturing of ABP-450, including costs related to the operation and upkeep of its manufacturing facility, and the Company is responsible for all costs related to obtaining regulatory approval, including clinical expenses, and commercialization of ABP-450.

The Company’s exclusivity is subject to its exercise of commercially reasonable efforts to:

(i) achieve all regulatory approvals necessary for ABP-450 to be marketed in the territory for therapeutic indications and (ii) commercialize ABP-450 in the territory for therapeutic indications.

During the term of the Daewoong Agreement, the Company cannot purchase, sell or distribute any competing products in a covered territory or sell ABP-450 outside a covered territory.

The initial term of the Daewoong Agreement is from December 20, 2019 to the later of (i) the fifth anniversary of approval from the relevant governmental authority necessary to market and sell ABP-450 or (ii) December 20, 2029, and automatically renews for unlimited additional three-year terms, provided the Daewoong Agreement is not earlier terminated.

The Daewoong Agreement will terminate upon written notice by either the Company or Daewoong upon a continuing default that remains uncured within 90 days (or 30 days for a payment default) by the other party, or without notice upon the bankruptcy or insolvency of the Company.

The Company has recorded $ 0.2 million as a liability in accrued expenses on the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024 for ABP-450 supplies.

Legal Proceedings

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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.

In November 2023, the Company filed a motion to dismiss certain claims included in Odeon’s complaint.

In April 2024, the Company successfully obtained a dismissal of Odeon’s non-breach of contract claims, including the tort claims, breach of covenant claim and associated punitive damages claim.

Odeon’s breach of contract claim is proceeding, with each party filing a summary judgment motion in March 2025, which the court is expected to decide upon in the coming months.

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.

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See Note 2 Summary of Significant Accounting Policies for additional information.

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 .

On February 24, 2025, the Company held a special stockholder meeting, at which stockholders voted, among other matters, to amend the Company’s Certificate of Incorporation, as amended and restated, to increase the number of authorized common stock from 500,000,000 to 1,040,000,000 shares of common stock at par value of $ 0.0001 per share.

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.

As of March 31, 2025, there have been no cash dividend 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,

The table below summarizes the Company’s reserved common stock for further issuance as of March 31, 2025 and December 31, 2024:

Stock options issued and outstanding

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Contingent consideration

Convertible notes

Total common stock reserved

ATM Offering of Common Stock

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.

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”)

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There were 6,780 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.

As of March 31, 2025, there were 19,419 shares available for issuance.

There have been no shares issued under the 2023 ESPP.

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):

The following table summarizes stock option activity under 2019 Award Plan (unaudited):

Outstanding, January 1, 2025

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Options forfeited

Outstanding, September 30, 2024

Exercisable, September 30, 2024

There were no options granted in the 2019 Incentive Plan during 2023, and no options will be granted from this plan after the Closing.

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):

Outstanding, March 31, 2025

Exercisable, March 31, 2025

As of March 31, 2025 and December 31, 2024, the weighted average remaining contractual life of options outstanding and options exercisable was 5.8 years and 6.0 years, respectively.

During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $ 0.6 million and $ 0.8 million, respectively, of share-based compensation expense related to stock options granted.

As of March 31, 2025 and December 31, 2024, total unrecognized compensation expense related to nonvested stock options was $ 1.3 million and $ 1.8 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 3 months and 4 months , respectively.

The following table summarizes restricted stock units activity under the 2019 Award Plan (unaudited):

Outstanding, January 1, 2025

Outstanding, September 30, 2024

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

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):

Outstanding, March 31, 2025

During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $ 0.3 million and $ 0.4 million, respectively, of share-based compensation expense related to restricted stock units granted.

As of March 31, 2025 and December 31, 2024, total unrecognized compensation expense related to nonvested restricted stock units was $ 2.6 million and $ 3.0 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 19 months and 21 months , respectively.

The unrecognized compensation expense with the earnout criteria as of March 31, 2025 and December 31, 2024 of $ 4.2 million and $ 4.3 million, respectively, will be recognized when the milestones are determined to be probable over the RSUs vesting term, calculated as the period from the date the milestone was determined to be probable and the expected achievement date of the milestone.

2023 Incentive Award Plan

As of March 31, 2025, there were 40,398 shares of common stock available for issuance under the 2023 Award Plan.

The following table summarizes stock options activity under the 2023 Award Plan (unaudited):

Outstanding, January 1, 2025

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Options forfeited

Outstanding, September 30, 2024

Exercisable, September 30, 2024

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):

Outstanding, March 31, 2025

Exercisable, March 31, 2025

The weighted average fair value of options granted as of December 31, 2024 was $ 135.50 .

The weighted average remaining contractual life of options outstanding and options exercisable as of March 31, 2025 and December 31, 2024 was 9.2 years and 9.5 years, respectively.

During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $ 0.6 million and $ 0.1 million, respectively, of share-based compensation expense related to stock options granted.

As of March 31, 2025 and December 31, 2024, total unrecognized compensation expense related to nonvested stock options was $ 4.7 million and $ 5.3 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 16 months and 19 months , respectively.

The following table summarizes restricted stock units activity under the 2023 Award Plan (unaudited):

Outstanding, January 1, 2025

Outstanding, September 30, 2024

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 .

Outstanding, March 31, 2025

During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $ 0.1 million and zero of share-based compensation expense related to restricted stock units granted.

As of March 31, 2025 and December 31, 2024, total unrecognized compensation expense related to nonvested restricted stock units was $ 0.6 million and $ 0.7 million, respectively, which is expected to be recognized over the weighted-average remaining requisite service period of 17 and 20 months , respectively.

Share-based Compensation Expense and Valuation Information

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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,

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,

During the three months ended March 31, 2025 and March 31, 2024, the Company recognized $ 1.7 million and $ 1.6 million, respectively, of share-based compensation expense, of which $ 1.3 million and $ 1.2 million, respectively, were in selling, general and administrative expenses, and $ 0.4 million and $ 0.4 million, respectively, were in research and development expenses in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

The fair value of stock options granted under the Award Plan was estimated using the following assumptions:

Three Months Ended

Expected volatility

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4.1 % – 4.3 %

4.1 % – 4.4 %

Expected life (in years)

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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.

The Company has further evaluated subsequent events for recognition and remeasurement purposes as of and for the three months ended March 31, 2025.

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, except as described below.

Effective April 19, 2025, the Board adopted the 2025 Employment Inducement Incentive Award Plan (the “Inducement Plan”) and, subject to the adjustment provisions of the Inducement Plan, reserved 1,000,000 shares of the Company’s Class A common stock for issuance pursuant to equity awards granted under the Inducement Plan.

The Inducement Plan provides for the grant of equity-based awards, including non-statutory stock options, restricted stock units, restricted stock, stock appreciation rights, performance shares and performance stock units, and its terms are substantially similar to the Company’s 2023 Plan.

In accordance with the NYSE American Company Guide, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company or being rehired following a bona fide period of interruption of employment by the Company.

The Inducement Plan was adopted without stockholder approval pursuant to the applicable provisions of the NYSE American Company Guide.

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

What changed 10-Q

Item 1. Financial Statements