What changed in this filing

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Item 1. Financial Statements

2025-11-03 compared with 2025-08-04 · 125 added, 89 removed, 445 unchanged (32% of the section changed)

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(in thousands, except par value)

September 30,

2025 December 31,

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37,632 26,508

Prepaid taxes

Prepaid expenses and other current assets 17,213 11,657

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Right-of-use assets 7,447 6,280

Deferred tax asset, net of valuation allowance

Other non-current assets 333 231

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$ 0.00001 par value;

80,000 shares authorized as of June 30, 2025 and December 31, 2024;

28,927 and 28,794 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.

80,000 shares authorized as of September 30, 2025 and December 31, 2024;

28,984 and 28,794 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively.

Additional paid-in capital 1,164,013 1,127,238

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Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended June 30, Six Months Ended June 30, 2025

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands, except per share data)

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47,967 29,769 138,340 46,746

Income tax expense

Income tax benefit (expense)

31,398 ( 2,589 ) 15,091 ( 3,066 )

Net income 79,365 27,180 153,431 43,680

Unrealized (loss) gain on available-for-sale securities

Unrealized gain on available-for-sale securities

657 1,840 843 713

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Balances as of June 30, 2025 28,927 $ — $ 1,146,092 $ 1,157 $ ( 106,602 ) $ 1,040,647

Issuance of common stock upon exercise of stock options 57 — 3,713 — — 3,713

Stock-based compensation — — 14,208 — — 14,208

Unrealized gain on investments

— — — 657 — 657

Foreign currency translation

— — — ( 714 ) — ( 714 )

— — — — 79,365 79,365

Balances as of September 30, 2025 28,984 $ — $ 1,164,013 $ 1,100 $ ( 27,237 ) $ 1,137,876

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity

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Balances as of June 30, 2024 28,709 $ — $ 1,092,854 $ ( 634 ) $ ( 253,327 ) $ 838,893

Issuance of common stock upon exercise of stock options 48 — 3,365 — — 3,365

Stock-based compensation — — 14,262 — — 14,262

Unrealized gain on investments

— — — 1,840 — 1,840

Foreign currency translation

— — — — 27,180 27,180

Balances as of September 30, 2024

28,757 $ — $ 1,110,481 $ 1,512 $ ( 226,147 ) $ 885,846

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2025 2024

Operating Activities

$ 74,067 $ 16,501

Net income $ 153,431 $ 43,680

Adjustments to reconcile net income to net cash provided by operating activities

Deferred income taxes

Depreciation 4,162 4,603

Amortization (accretion) on marketable securities 139 ( 1,535 )

464 ( 1,104 )

Amortization of operating lease right-of-use assets 627 556

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Inventory ( 5,228 ) ( 5,386 )

Prepaid taxes

( 10,103 ) ( 646 )

Prepaid expenses and other current assets ( 4,311 ) ( 1,979 )

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Accrued rebates 18,958 23,568

14,834 15,756

Accrued litigation settlement ( 31,250 ) 31,250

Net cash provided by operating activities 123,357 70,577

83,698 11,720

Investing Activities

1 unchanged sentence

Purchases of property and equipment ( 9,812 ) ( 3,437 )

Purchases of investments ( 251,705 ) ( 201,736 )

Maturities of investments

Purchases of available-for-sale securities

( 350,078 ) ( 314,268 )

Net cash (used in) investing activities

Maturities of available-for-sale securities

289,875 238,044

Net cash (used in) investing activities ( 69,580 ) ( 79,661 )

Financing Activities

1 unchanged sentence

Taxes paid for employee tax withholding related to restricted stock units ( 12,121 ) ( 4,181 )

( 12,116 ) ( 4,181 )

Taxes paid related to settlement of restricted stock awards ( 1,812 ) ( 1,205 )

( 1,812 ) ( 1,205 )

Net cash (used in) provided by financing activities ( 6,961 ) 24,586

( 10,670 ) 21,221

Effect of exchange rate changes on cash and cash equivalents 923 136

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

47,739 15,638

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Income taxes paid $ 13,876 $ 5,150

$ 13,858 $ 2,002

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(“Jeune Aesthetics”), a wholly-owned subsidiary, in Delaware, for the purpose of undertaking preclinical and clinical studies for aesthetic skin conditions.

In January 2022, August 2022, December 2022, August 2023, March 2024, November 2024, and December 2024 we incorporated wholly-owned subsidiaries in Switzerland, Netherlands, France, Germany, Japan, Italy, and Spain, respectively, for the purpose of establishing initial operations in Europe and Japan for the commercialization of VYJUVEK ® and our product pipeline.

In January 2022, August 2022, December 2022, August 2023, March 2024, November 2024, December 2024 and July 2025 we incorporated wholly-owned subsidiaries in Switzerland, Netherlands, France, Germany, Japan, Italy, Spain, and the UK, respectively, for the purpose of establishing operations in Europe and Japan for the commercialization of VYJUVEK ® and our product pipeline.

We are a fully integrated, commercial-stage, global biotechnology company focused on the discovery, development, manufacturing, and commercialization of genetic medicines to treat diseases with high unmet medical needs.

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Our innovative technology platform is supported by two in-house, commercial scale Current Good Manufacturing Practice (“CGMP”) manufacturing facilities.

As of June 30, 2025, the Company had an accumulated deficit of $ 106.6 million.

As of September 30, 2025, the Company had an accumulated deficit of $ 27.2 million.

Our operating profitability is dependent upon the continued successful commercialization of VYJUVEK, our U.S.

Food and Drug Administration (“FDA”), European Medicines Agency (“EMA”), and Japan’s Ministry of Health, Labour, and Welfare (“MHLW”) approved product, as well as successful development, approval and commercialization of our product candidates.

Food and Drug Administration (“FDA”), European Commission (“EC”), and Japan’s Ministry of Health, Labour, and Welfare (“MHLW”) approved product, as well as successful development, approval and commercialization of our product candidates.

Management intends to fund future operations through its on hand cash and cash equivalents and revenue generated from the sale of VYJUVEK, and may also seek additional capital through arrangements with strategic partners, the sale of equity, debt financings or other sources.

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to the failure of product candidates in clinical and preclinical studies, the development of competing product candidates or other technological innovations by competitors, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to commercialize product candidates.

The Company expects to incur significant costs to further its pipeline and to expand its commercialization capabilities in advance of further potential global regulatory approvals of VYJUVEK.

The Company believes that its cash, cash equivalents and short-term investments of approximately $ 682.0 million as of June 30, 2025 will be sufficient to allow the Company to fund its planned operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q.

The Company expects to incur significant costs to further its pipeline and to expand its commercialization capabilities in advance of further potential global regulatory and reimbursement approvals of VYJUVEK.

The Company believes that its cash, cash equivalents and short-term investments of approximately $ 731.1 million as of September 30, 2025 will be sufficient to allow the Company to fund its planned operations for at least the next 12 months from the date of this Quarterly Report on Form 10-Q.

Summary of Significant Accounting Policies

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The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (“2024 10-K”), as filed with the U.S.

Securities and Exchange Commission (“SEC”) on February 19, 2025.

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Summary of Significant Accounting Policies

See Note 2 to our consolidated financial statements included in our 2024 10-K.

There were no material changes to the Company’s significant accounting policies during the six months ended June 30, 2025.

See Note 2 to our consolidated financial statements included in the 2024 10-K.

There were no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2025.

Recently Issued Accounting Pronouncements, Not Yet Adopted

There were no accounting pronouncements issued or adopted during the six months ended June 30, 2025 that are expected to have a material impact on the Company’s condensed consolidated financial statements.

There were no accounting pronouncements issued or adopted during the nine months ended September 30, 2025 that had or are expected to have a material impact on the Company’s condensed consolidated financial statements.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09 Income Taxes (Topic 740):

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and foreign jurisdictions.

This new standard will be effective for fiscal years starting after December 15, 2024, with the option to apply it retrospectively.

This new standard is effective for fiscal years beginning after December 15, 2024, with the option to apply it retrospectively.

Currently, the Company is assessing the potential impact of this guidance on its consolidated financial statement disclosures.

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Product Revenue, Accounts Receivable and Reserves for Product Sales

The Company’s product revenue, net of sales discounts and allowances totaled $ 96.0 million and $ 70.3 million for the three months ended June 30, 2025 and June 30, 2024, respectively, and $ 184.2 million and $ 115.5 million for the six months ended June 30, 2025 and June 30, 2024 respectively.

The Company’s accounts receivable, net balance relating to VYJUVEK sales was $ 111.4 million as of June 30, 2025 and $ 104.7 million as of December 31, 2024.

As of June 30, 2025 and December 31, 2024, approximately 78 % and 97 %, respectively, of the Company’s accounts receivable, net was outstanding from a single customer.

All other single customers represent less than 10% of outstanding in the applicable period.

The following table summarizes changes in allowances and discounts for the six months ended June 30, 2025:

The Company’s product revenue, net of sales discounts and allowances totaled $ 97.8 million and $ 83.8 million for the three months ended September 30, 2025 and September 30, 2024, respectively, and $ 282.0 million and $ 199.4 million for the nine months ended September 30, 2025 and September 30, 2024, respectively.

The Company’s accounts receivable, net balance relating to VYJUVEK sales was $ 129.6 million as of September 30, 2025 and $ 104.7 million as of December 31, 2024.

Accounts receivable, net from the Company’s customers who individually accounted for 10% or more of accounts receivable, net consisted of the following:

Percent of Accounts Receivable, Net

September 30,

2025 December 31,

All other single customers represent less than 10% of outstanding accounts receivable, net in the applicable period.

The following table summarizes changes in allowances and discounts for the nine months ended September 30, 2025:

(in thousands) Rebates Prompt Pay Other Accruals Total

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Payments/Credits ( 27,677 ) ( 8,610 ) ( 371 ) ( 36,658 )

Balance as of June 30, 2025

Balance as of September 30, 2025

$ 58,906 $ 3,843 $ 341 $ 63,090

Rebates are included in accrued rebates and other long-term liabilities on the condensed consolidated balance sheets.

Other long-term liabilities are comprised of $ 2.8 million and $ 1.4 million of long-term accrued rebates as of June 30, 2025 and December 31, 2024, respectively.

Prompt pay is recorded as an allowance against accounts receivable, net on the condensed consolidated balance sheets.

Other long-term liabilities are comprised of $ 3.1 million and $ 1.4 million of long-term accrued rebates as of September 30, 2025 and December 31, 2024, respectively.

Prompt pay is recorded as an allowance against accounts receivable, net on the

condensed consolidated balance sheets.

Other accruals are included in accrued expenses and other current liabilities on the condensed consolidated balance sheets.

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Common stock equivalents consist of common stock issuable upon (1) exercise of stock options and (2) vesting of restricted stock awards, restricted stock units and performance-based restricted stock units (collectively, “restricted stock”).

For the three months ended June 30, 2025 and 2024, respectively, there were 604 thousand and 215 thousand common stock equivalents outstanding in the form of stock options and 275 thousand and 2 thousand in unvested restricted stock, that have been excluded from the calculation of diluted net income per common share as their effect would be anti-dilutive.

For the six months ended June 30, 2025 and 2024, respectively, there were 520 thousand and 169 thousand common stock equivalents outstanding in the form of stock options and 89 thousand and 1 thousand in unvested restricted stock, that have each been excluded from the calculation of diluted net income per common share as their effect would be anti-dilutive.

Three Months Ended June 30, Six Months Ended

For the three months ended September 30, 2025 and 2024, respectively, there were 664 thousand and 229 thousand common stock equivalents outstanding in the form of stock options and 125 thousand and zero in unvested restricted stock, that have been excluded from the calculation of diluted net income per common share as their effect would be anti-dilutive.

For the nine months ended September 30, 2025 and 2024, respectively, there were 568 thousand and 207 thousand common stock equivalents outstanding in the form of stock options and 98 thousand and 134 in unvested restricted stock, that have each been excluded from the calculation of diluted net income per common share as their effect would be anti-dilutive.

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands, except per share data)

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Net income per common share—diluted $ 2.66 $ 0.91 $ 5.14 $ 1.47

$ 1.29 $ 0.53 $ 2.48 $ 0.56

Fair Value Instruments

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category as of June 30, 2025 and December 31, 2024:

June 30, 2025

The following tables show the Company’s cash, cash equivalents and available-for-sale securities by significant investment category as of September 30, 2025 and December 31, 2024:

September 30, 2025

(in thousands)

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(in thousands)

September 30,

2025 December 31,

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(in thousands)

September 30,

2025 December 31,

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Property and equipment, net $ 148,871 $ 155,168

Depreciation expense was $ 1.3 million and $ 1.8 million for the three months ended June 30, 2025 and 2024, respectively, and $ 2.8 million and $ 3.3 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

Depreciation expense capitalized into inventory was $ 1.1 million and $ 559 thousand for the three months ended June 30, 2025 and 2024, respectively, and $ 2.0 million and $ 1.4 million for the six months ended June 30, 2025 and June 30, 2024, respectively.

Depreciation expense was $ 1.4 million and $ 1.3 million for the three months ended September 30, 2025 and 2024, respectively, and $ 4.2 million and $ 4.6 million for the nine months ended September 30, 2025 and September 30, 2024, respectively.

Depreciation expense capitalized into inventory was $ 1.1 million and $ 1.0 million for the three months ended September 30, 2025 and 2024, respectively, and $ 3.1 million and $ 2.4 million for the nine months ended September 30, 2025 and September 30, 2024, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of June 30, 2025 and December 31, 2024:

Accrued expenses and other current liabilities consisted of the following as of September 30, 2025 and December 31, 2024:

(in thousands)

September 30,

2025 December 31,

Accrued taxes 9,539 4,288

Accrued professional fees 5,293 2,659

Accrued payroll and benefits 7,542 9,558

Accrued professional fees 6,354 2,659

Accrued preclinical and clinical expenses 3,423 2,537

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In accordance with the settlement agreement, the Company paid PeriphaGen total consideration of $ 75.0 million to settle the dispute, acquire certain assets and receive an exclusive license from PeriphaGen to certain intellectual property assets and biological materials which was paid over time upon completion of certain milestones, with the final payment occurring during the three months ended March 31, 2025.

Refer to Note 7 of our consolidated financial statements in our 2024 10-K for additional information.

The Company recorded litigation settlement expense of zero and $ 12.5 million for the three months ended June 30, 2025 and 2024, respectively, and zero and $ 25.0 million for the six months ended June 30, 2025 and 2024, respectively on the condensed consolidated statements of operations and comprehensive income.

Refer to Note 7 of our consolidated financial statements in the 2024 10-K for additional information.

The Company recorded litigation settlement expense of zero and $ 12.5 million for the three months ended September 30, 2025 and 2024, respectively, and zero and $ 37.5 million for the nine months ended September 30, 2025 and 2024, respectively, on the condensed consolidated statements of operations and comprehensive income.

As of March 31, 2025, the Company has fully paid the $ 75.0 million of total consideration discussed above.

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The Company is obligated to make milestone payments under certain of these contracts.

The Company may also be responsible for the payment of a monthly service fee for project management services for the duration of any agreements.

The estimated remaining commitments as of June 30, 2025 under these agreements was approximately $ 507 thousand.

The Company has incurred research and development expenses related to commitments under these agreements of $ 2.2 million and $ 4.3 million for the three and six months ended June 30, 2025, respectively, and $ 1.0 million and $ 2.5 million for the three and six months ended June 30, 2024, respectively.

The Company has incurred research and development expenses related to commitments under these agreements of $ 2.3 million and $ 6.6 million for the three and nine months ended September 30, 2025, respectively, and $ 2.7 million and $ 5.8 million for the three and nine months ended September 30, 2024, respectively.

Contingencies

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It is not possible to estimate the amount of any loss or range of possible loss that might result from this inquiry, and because the final outcome cannot be predicted with certainty, unfavorable or unexpected developments or outcomes could result in a material impact to the Company’s results of operations.

As of June 30, 2025, future minimum commitments under the Company’s operating leases with lease terms in excess of 12 months were as follows:

On September 18, 2025, a purported stockholder filed a derivative complaint in the Court of Chancery of the state of Delaware naming the Company’s directors as defendants and the Company as a nominal defendant.

The complaint alleges claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets based on allegedly excessive non-

employee director compensation in each of 2021 through 2024.

The complaint seeks unspecified damages in favor of the Company, restitution of compensation and other benefits from the individual defendants, reforms and improvements to the Company’s corporate governance and internal procedures, and the award of costs and disbursements of the complaint, including reasonable attorneys’ fees.

At this time, the Company cannot reasonably estimate the likelihood of an unfavorable outcome or estimate the potential loss, if any.

As of September 30, 2025, future minimum commitments under the Company’s operating leases with lease terms in excess of 12 months were as follows:

(in thousands)

Operating Leases

2025 (remaining six months) $ 783

2025 (remaining three months)

Thereafter 9,295

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Present value of lease liability $ 9,511

As of June 30, 2025 and December 31, 2024, the Company’s weighted-average remaining lease term for operating leases was 10.4 years and 12.2 years, respectively, and the Company’s weighted-average discount rate for operating leases was 9.7 % and 9.5 % as of June 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the Company’s weighted-average remaining lease term for operating leases was 10.2 years and 12.2 years, respectively, and the Company’s weighted-average discount rate for operating leases was 9.7 % and 9.5 % as of September 30, 2025 and December 31, 2024, respectively.

The components of the Company’s lease expense are as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2025 2024 2025 2024

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The Company has historically granted stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs” and with RSUs commonly referred to collectively as “restricted stock units”) to certain employees.

Shares remaining available for grant under the Plan were 2.0 million as of June 30, 2025.

Shares remaining available for grant under the Plan were 2.0 million as of September 30, 2025.

Stock Options

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2025:

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2025:

Stock Options Outstanding Weighted-Average Exercise Price

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Cancelled or forfeited ( 95,851 ) $ 107.43

Outstanding as of June 30, 2025

Outstanding as of September 30, 2025

2,236,147 $ 96.80 7.0 $ 180,418

Exercisable as of June 30, 2025

Exercisable as of September 30, 2025

1,307,004 $ 72.71 6.1 $ 136,219

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2024 and June 30, 2025 and the exercise price of outstanding in-the-money options.

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2024:

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2024 and September 30, 2025 and the exercise price of outstanding in-the-money options.

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2024:

Stock Options Outstanding Weighted-Average Exercise Price

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Cancelled or forfeited ( 335,449 ) $ 70.52

Outstanding as of June 30, 2024

Outstanding as of September 30, 2024

2,079,193 $ 81.53 7.5 $ 209,854

Exercisable as of June 30, 2024

Exercisable as of September 30, 2024

867,025 $ 63.68 6.7 $ 102,627

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2023 and June 30, 2024 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceeds the exercise price) of stock options exercised was $ 2.0 million and $ 19.8 million during the three months ended June 30, 2025 and 2024, respectively, and $ 3.4 million and $ 44.3 million for the six months ended June 30, 2025 and 2024, respectively.

The weighted-average grant-date fair value per share of options granted to employees and directors was $ 87.69 and $ 112.05 during the three months ended June 30, 2025 and 2024, respectively, and $ 109.93 and $ 109.18 for the six months ended June 30, 2025 and 2024, respectively.

There was $ 71.4 million of unrecognized stock-based compensation expense related to employees’ and directors’ options that is expected to be recognized over a weighted-average period of 2.8 years as of June 30, 2025.

(1) Aggregate intrinsic value represents the difference between the closing stock price of our Common Stock on December 31, 2023 and September 30, 2024 and the exercise price of outstanding in-the-money options.

The total intrinsic value (the amount by which the fair market value exceeds the exercise price) of stock options exercised was $ 4.8 million and $ 5.9 million during the three months ended September 30, 2025 and 2024, respectively, and $ 8.1 million and $ 50.2 million for the nine months ended September 30, 2025 and 2024, respectively.

The weighted-average grant-date fair value per share of options granted to employees and directors was $ 108.46 and $ 130.85 during the three months ended September 30, 2025 and 2024, respectively, and $ 109.74 and $ 114.29 for the nine months ended September 30, 2025 and 2024, respectively.

There was $ 66.3 million of unrecognized stock-based compensation expense related to employees’ and directors’ options that is expected to be recognized over a weighted-average period of 2.8 years as of September 30, 2025.

Restricted Stock Awards

The following table summarizes the Company’s RSA activity:

Six Months Ended June 30,

Nine Months Ended September 30,

Number of Shares Weighted-Average Grant Date Fair Value

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22,200 $ 78.89 44,400 $ 78.89

Granted — $ — — $ —

Vested ( 11,925 ) $ 78.89 ( 14,523 ) $ 78.89

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The following table summarizes the Company’s RSU activity:

Six Months Ended June 30,

Nine Months Ended September 30,

Number of Shares Weighted-Average Grant Date Fair Value

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330,092 $ 152.61 309,553 $ 135.14

There was $ 46.4 million of unrecognized stock-based compensation expense related to employees’ RSU awards that is expected to be recognized over a weighted-average period of 3.0 years as of June 30, 2025.

There was $ 41.2 million of unrecognized stock-based compensation expense related to employees’ RSU awards that is expected to be recognized over a weighted-average period of 2.8 years as of September 30, 2025.

Performance-Based Restricted Stock Units

The following table summarizes the Company’s PSU activity:

Six Months Ended June 30,

Nine Months Ended September 30,

Number of Shares Weighted-Average Grant Date Fair Value

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PSUs vest ratably over two years based upon continued service through the vesting date and the achievement of specific regulatory and commercial performance criteria as determined by the Compensation Committee of the Company’s Board of Directors which were met by the end of the year in which the PSU awards were granted.

There was $ 6.0 million of unrecognized stock-based compensation expense related to employees’ PSU awards that is expected to be recognized over a weighted-average period of eight months as of June 30, 2025.

There was $ 3.7 million of unrecognized stock-based compensation expense related to employees’ PSU awards that is expected to be recognized over a weighted-average period of five months as of September 30, 2025.

Stock-Based Compensation Expense, Net

The Company recorded stock-based compensation expense, net related to its stock options and restricted stock in the condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2025 and 2024 as follows:

Three Months Ended June 30, Six Months Ended

The Company recorded stock-based compensation expense, net related to its stock options and restricted stock in the condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2025 and 2024 as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2025 2024 2025 2024

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Total stock-based compensation $ 13,153 $ 13,316 $ 40,750 $ 35,771

The Company capitalized stock-based compensation associated with the allocation of labor costs related to work performed to manufacture VYJUVEK of $ 958 thousand and $ 625 thousand for the three months ended June 30, 2025 and 2024, respectively, and $ 1.9 million and $ 1.3 million for the six months ended June 30, 2025 and 2024, respectively.

The Company recorded an income tax provision of $ 8.4 million and $ 16.3 million for the three and six months ended June 30, 2025.

The tax provision for interim periods is calculated using an estimate of the annual effective tax rate, adjusted for discrete items.

If there are any changes to the estimated annual tax rate, the Company will make a cumulative adjustment to the income tax provision in the period the change becomes known.

The Company recorded an income tax provision of $ 477 thousand for the three and six months ended June 30, 2024.

At June 30, 2025, the Company maintains a full valuation allowance against its net deferred tax assets.

The Company capitalized stock-based compensation associated with the allocation of labor costs related to work performed to manufacture VYJUVEK of $ 1.1 million and $ 946 thousand for the three months ended September 30, 2025 and 2024, respectively, and $ 3.0 million and $ 2.3 million for the nine months ended September 30, 2025 and 2024, respectively.

The Company recorded an income tax benefit of $ 31.4 million and $ 15.1 million for the three and nine months ended September 30, 2025, respectively.

The tax benefit for interim periods is calculated using an estimate of the annual effective tax rate, adjusted for discrete items.

If there are any changes to the estimated annual effective tax rate, the Company will make a cumulative adjustment to the income tax provision in the period the change becomes known.

The Company recorded an income tax provision of $ 2.6 million and $ 3.1 million for the three and nine months ended September 30, 2024, respectively.

We monitor the realizability of our deferred tax assets taking into consideration all relevant factors at each reporting period.

As of September 30, 2025, based on the relevant weight of positive and negative evidence, including the amount of our income in recent years and the impacts of legislation enacted during the quarter which had material impacts to our deferred tax profile, which are objective and verifiable, as well as consideration of our expected future taxable earnings, we concluded that it is more likely than not that our U.S.

federal and certain state deferred tax assets are realizable.

As such, we released $ 48.4 million of our valuation allowance associated with the U.S.

federal and state deferred tax assets, except for those related to certain state net operating loss carryforwards and tax credit carryforwards.

We continue to maintain a full valuation allowance against certain state attributes as of September 30, 2025, because we concluded they are not more likely than not to be realized as we expect certain state attribute generation in future years to exceed our ability to use these deferred tax assets.

We are subject to income taxes in the U.S.

and in many foreign jurisdictions.

Significant judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets that are not more likely than not to be realized.

The determination of the realizability of deferred tax assets requires significant judgment in assessing the likelihood of future tax consequences.

We also rely on our assessment of the Company’s projected future results of business operations, including uncertainty in future operating results relative to historical results being less prevalent, variable conditions impacting our ability to forecast future taxable income such as projected spend for research and development, and changes in business that may affect the existence and magnitude of future taxable income.

Our valuation allowance assessment is based on our best estimate of future results considering all available information.

The Company previously maintained a full valuation allowance against its U.S.

federal and state deferred tax assets due to historical cumulative losses and uncertainty regarding the realization of such assets.

The Company will continue to evaluate all available evidence each reporting period and may adjust the valuation allowance in future periods if estimates of future taxable income or other relevant factors change.

Segment Information

2 unchanged sentences

The CODM uses consolidated gross margin, operating margin, net income and total research and development expenses by product candidate or program to assess performance, forecast future financial results and to allocate resources.

The following table presents selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30, 2025, and 2024:

The following table presents selected financial information with respect to the Company’s single operating segment for the three and nine months ended September 30, 2025, and 2024:

Three Months Ended

Six Months Ended

(in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Nine Months Ended

(in thousands) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Product revenue, net

3 unchanged sentences

B-VEC 1,810 1,255 6,144 7,068

568 — 1,309 —

KB301 120 138 185 521

23 unchanged sentences

$ 47,967 $ 29,769 $ 138,340 $ 46,746

Income tax expense

Income tax benefit (expense)

$ 31,398 $ ( 2,589 ) $ 15,091 $ ( 3,066 )

2 unchanged sentences

Subsequent Events

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States.

This legislation includes changes to U.S.

federal tax law, which may be subject to further clarification and the issuance of interpretive guidance.

The Company is currently in the process of assessing the legislation and its effect on our consolidated financial statements, which we expect to account for in the applicable period.

The Company evaluates events or transactions that occur after the balance sheet date, but prior to the issuance of the financial statements, to identify matters that require recognition or disclosure.

The Company concluded that no additional subsequent events have occurred, that would require recognition or disclosure in the condensed consolidated financial statements except as discussed above.

The Company concluded that no subsequent events have occurred, that would require recognition or disclosure in the condensed consolidated financial statements except as discussed above.

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