UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

 (Mark(Mark One)
  
þ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31,June 30, 2015

or

¨ 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Commission file number0-9314

0-9314ABEONA THERAPEUTICS INC.

PLASMATECH BIOPHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


Delaware83-0221517
(State or other jurisdiction of(I.R.S. Employer I.D. No.)
incorporation or organization)

  Delaware  3333 Lee Parkway, Suite 600, Dallas, TX 75219     83-0221517  

(State or other jurisdiction Address of (I.R.S. Employer I.D. No.)principal executive offices)

(214) 665-9495

 incorporation or organization)

(Registrant’s telephone number, including area code)

PLASMATECH BIOPHARMACEUTICALS, INC.

4848 Lemmon Avenue, Suite 517, Dallas, TX 75219

(Address of principal executive offices)

 (214) 905-5100
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ   No  o¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes þ   No  o¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o¨
 
Accelerated filer o¨
 
Non-accelerated filer o¨
 
Smaller reporting company þ
  (Do                             (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o¨ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


The number of shares outstanding of the registrant’s common stock as of MayAugust 14, 2015 was 24,268,08532,690,606 shares.


ABEONA THERAPEUTICS INC.

INDEX

Page No.
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements:3
Condensed Consolidated Balance Sheets at June 30, 2015 (unaudited) and December 31, 201419
Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended June 30, 2015 and June 30, 201420
Condensed Consolidated Statement of Stockholders’ Equity (unaudited) for the three and six months ended June 30, 201521
Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2015 and June 30, 201422
Notes to Unaudited Condensed Consolidated Financial Statements23
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations3
Item 3.Quantitative and Qualitative Disclosures About Market Risk13
Item 4.Controls and Procedures13
PART II - OTHER INFORMATION
Item 1.Legal Proceedings15
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds16
Item 3.Defaults Under Senior Securities16
Item 6.Exhibits16
SIGNATURES18




PLASMATECH BIOPHARMACEUTICALS, INC.

INDEX


 Page No.

PART I - FINANCIAL INFORMATION

      Item 1.                         Financial Statements:

Condensed Consolidated Balance Sheets at March 31, 2015

(unaudited) and December 31, 2014                                                                                           16

Condensed Consolidated Statements of Operations (unaudited) for the
three months ended March 31, 2015 and March 31, 2014                                                       17

Condensed Consolidated Statement of Stockholders’ Equity (unaudited)
for the three months ended March 31, 2015                                                                             18

Condensed Consolidated Statements of Cash Flows (unaudited) for the
three months ended March 31, 2015 and March 31, 2014                                                       19

Notes to Unaudited Condensed Consolidated Financial Statements20

Item 2.                Management's Discussion and Analysis of Financial Condition and
Results of Operations                                                                                                                    3

Item 3.                   Quantitative and Qualitative Disclosures About Market Risk                                            11

Item 4.                   Controls and Procedures                                                                                                           11



PART II - OTHER INFORMATION

Item 1.                   Legal Proceedings                                                                                                                      12

Item 2.                   Unregistered Sales of Equity Securities and Use of Proceeds                                            13

Item 3.                   Defaults Under Senior Securities                                                                                             14

Item 6.                   Exhibits                                                                                                                                         14

SIGNATURES                                                                                                                                                                    15







1


PART I –FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q (including the information incorporated by reference) contains ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and that involve risks and uncertainties. These statements and other risks described below as well as those discussed elsewhere in this Quarterly Report Form 10-Q, documents incorporated by reference and other documents and reports that we file periodically with the Securities and Exchange Commission (“SEC”) include, without limitation, statements relating to uncertainties associated with research and development activities, clinical trials, our ability to raise capital, the timing of and our ability to achieve regulatory approvals, dependence on others to market our licensed products, collaborations and our ability to attract licensing partners, future cash flow, the timing and receipt of licensing and milestone revenues, the future success of our marketed products and products in development, our belief that advances in biotechnology will provide significant opportunities to develop new treatments for rare diseases, our sales projections, and the sales projections of our licensing partners, our ability to achieve licensing milestones, without limitation, the size of the prospective markets in which we may offer products, anticipated product launches and our commercialization strategies, anticipated product approvals and timing thereof, product opportunities, clinical trials and U.S. Food and Drug Administration (‘‘FDA’’) applications, as well as our drug development strategy, our clinical development organization expectations regarding our rate of technological developments and competition, our plan not to establish an internal marketing organization, our expectations regarding minimizing development risk and developing and introducing technology, the terms of future licensing arrangements, our ability to secure additional financing for our operations, our ability to establish new relationships and maintain current relationships, our ability to successfully integrate companies that we have acquired or that we may acquire in the future, our ability to attract and retain key personnel, our belief that we will not pay any cash dividends in the foreseeable future, our belief that a failure to obtain necessary additional capital in the future will result in our operations being jeopardized, our expectation that we will continue to incur losses, our belief that we will expend substantial funds to conduct research and development programs, preclinical studies and clinical trials of potential products, our belief that the market for a mucositis product is in excess of $1 billion, our belief that we have a rich pipeline of products and product candidates, our belief that recently licensed technology will enable us to provide new therapeutic applications and expand market opportunities while enhancing margins, our belief that we will continue to evaluate the most cost-effective methods to advance our programs, our ability to achieve profitability on a sustained basis or at all, and our expected cash burn rate. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “could,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. We intend the forward-looking statements to be covered by the safe harbor for forward-looking statements in these sections. The forward-looking information is based on various factors and was derived using numerous assumptions.


Forward-looking statements necessarily involve risks and uncertainties, and our actual results could differ materially from those anticipated in the forward-looking statements due to a number of factors. The forward-looking statements contained in this Quarterly Report on Form 10-Q represent our judgment only as of the date of this report. We caution readers not to place undue reliance on such statements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.



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ITEM 1.              FINANCIAL STATEMENTS

ITEM 1.FINANCIAL STATEMENTS

The response to this Item is submitted as a separate section of this report.


See page 18.

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW


PlasmaTech Biopharmaceuticals,

Abeona Therapeutics Inc. (together with our subsidiaries, “we”, “our”, “PlasmaTech”(“Abeona” or the “Company”) is a Delaware corporation. We are an emerging biopharmaceutical company focused on developing and delivering gene therapy and plasma-based products for severe and life-threatening rare diseases. Abeona's lead programs are ABO-101 (AA9 NAGLU) and ABO-102 (scAAV9 SGHG), adeno-associated virus (AAV)-based gene therapies for Sanfilippo syndrome (MPS IIIA and IIIB) in collaboration with patient advocate groups, researchers and clinicians, anticipated to commence clinical trials in 2015. We are also developing ABO-201 (scAAV9 CLN3) gene therapy for juvenile Batten disease (JBD); and ABO-301 (AAV LK19 FANCC) for Fanconi anemia (FA) disorder using a rangenovel CRISPR/Cas9-based gene editing approach to gene therapy program for rare blood diseases. In addition, we are also developing rare plasma protein therapies including PTB-101 SDF Alpha™ (alpha-1 protease inhibitor) for inherited COPD using our proprietary SDF™ (Salt Diafiltration) ethanol-free process. Our principal executive office is located at 3333 Lee Parkway, Suite 600, Dallas, Texas 75219. Our website address iswww.abeonatherapeutics.com.

Recent Developments

On July 31, 2015 we closed an upsized $15.5 million direct placement of pharmaceutical products primarily based uponregistered common stock with institutional investors, including Soros Fund Management and Perceptive Life Science Fund, and two members of our nanopolymer chemistry technologiesBoard of Directors. The financing was comprised of 2.83 million shares of our common stock at a price of $5.50 per share.

During the second quarter we received additional financing of $4.6 million through warrant exercises of our $5.00 warrants.

On June 19, 2015 we announced we changed our name to Abeona Therapeutics Inc. from PlasmaTech Biopharmaceuticals, Inc.

On June 15, 2015 we licensed exclusive worldwide rights to an AAV gene therapy and salt diafiltration processintellectual property from the University of Minnesota to treat patients with Fanconi anemia (FA) disorder and other rare blood diseases using the CRISPR/cas9 technology platform for undisclosed terms.

On June 8, 2015 we licensed exclusive worldwide rights to an AAV gene therapy and intellectual property for the treatment of juvenile Batten disease (JBD) from UNeMed Corporation, the technology transfer and commercialization office for the University of Nebraska Medical Center in Omaha, Nebraska for undisclosed terms.

On May 11, 2015 we closed a $10 million private placement of common stock consisting of 1,250,000 shares of our common stock, at a price of $8.00 per share, and warrants to purchase 625,000 shares of our common stock with an exercise price of $10 per share.


On May 15, 2015 the Company completed its acquisition of Abeona Therapeutics LLC, an Ohio limited liability company (“SDF”Abeona Ohio”) technology recently licensed from Plasma Technologies LLC (“Licensor”pursuant to the terms of an Agreement and Plan of Merger dated May 5, 2015 (the “Merger”). We currently have one marketed product licensedIn connection with the Merger, the Company agreed to issue to Abeona Ohio members an aggregate of 3,979,761 of our common stock and, there may be up to an additional $9 million in performance milestones, in common stock or cash, at the Company’s option payable to Abeona Ohio members.

On April 23, 2015 we closed an upsized $7 million private placement of common stock consisting of 2,333,333 shares of our common stock, at a price of $3.00 per share.

On April 7, 2015 we announced we had appointed Charlie Strange, M.D. to our Scientific Advisory Board (SAB). Dr. Strange is a key opinion leader in the U.S., Europe, China, Australia, New ZealandAlpha-1 community, and Korea.has extensive clinical experience in designing and managing Alpha-1 clinical studies. We alsobelieve his advice and counsel will help accelerate development and approval of our proprietary SDF Alpha™ biologic drug.

Product Development Strategy

Abeona is focused on developing and delivering gene therapy and plasma-based products for severe and life-threatening rare diseases. A rare disease is one that affects fewer than 200,000 people in the United States. There are nearly 7,000 rare diseases, which may involve chronic illness, disability, and often, premature death. More than 25 million Americans and 30 million Europeans have additionalone. While rare diseases can affect any age group, about 50% of people affected are children (15 million); and rare diseases account for 35% of deaths in the first year of life. These rare diseases are often poorly diagnosed, very complex, and have no treatment or not very effective treatment—over 95% of rare diseases do not have a single FDA or EMA approved drug treatment. However, most rare diseases are often caused by changes in genes—80% are genetic in origin and can present at any stage of life. We believe emerging insights in genetics and advances in biotechnology, as well as new approaches and collaboration between researchers, industry, regulators and patient groups, provide significant opportunities to develop breakthrough treatments for rare diseases. Below is the status of our various products and platform technologiesproduct candidates.

Developing Next Generation Gene Therapy

Gene therapy is the use of DNA as a potential therapy to treat a disease. In many disorders, particularly genetic diseases caused by a single genetic defect, gene therapy aims to treat a disease by delivering the correct copy of DNA into a patient's cells. The healthy, functional copy of the therapeutic gene then helps the cell function correctly. In gene therapy, DNA that encodes a therapeutic protein is packaged within a "vector", often a “naked” virus, which is used to transfer the DNA to the inside of cells within the body. Gene therapy can be delivered by a direct injection, either intravenously (IV) or directly into a specific tissue in various stagesthe body, where it is taken up by individual cells. Once inside cells, the correct DNA becomes expressed by the cell machinery, resulting in the production of developmenttherapeutic protein, which in turn treats the patient's disease and can provide long-term benefit.

Abeona is developing next generation adeno-associated virus (AAV) gene therapies. Viruses such as AAV are seeking partnersutilized because they have evolved a way of encapsulating and delivering one or more genes of the size needed for clinical application, and can be purified in large quantities at high concentration. Unlike AAV vectors found in nature, the AAV vectors used by Abeona have been genetically-modified such that they do not replicate. Although the preclinical studies in animal models of disease demonstrate the promising impact of AAV-mediated gene expression to continue development and/or to licenseaffected tissues such as the technology.

heart, liver and muscle, our programs use a specific virus that is capable of delivering therapeutic DNA across the blood brain barrier and into the central nervous system (CNS) and the somatic system (body), making them attractive for addressing lysosomal storage diseases which have severe CNS manifestations of the disease.


Marketed Product

MuGard®

Lysosomal storage diseases (LSD) are a group of rare inborn errors of metabolism resulting from deficiency in normal lysosomal function. These diseases are characterized by progressive accumulation of storage material within the lysosomes of affected cells, ultimately leading to cellular dysfunction. Multiple tissues ranging from musculoskeletal and visceral to tissues of the central nervous system are typically involved in disease pathology. Since the advent of enzyme replacement therapy (ERT) to manage some LSDs, general clinical outcomes have significantly improved; however, treatment with infused protein is our marketedlifelong and continued disease progression is still evident in patients. Thus, AAV-based gene therapy may provide a viable alternative or adjunctive therapy to current management strategies for LSDs.

Our initial programs are focused on LSDs such as Mucopolysaccharidosis (MPS) IIIA and IIIB. Also known as Sanfilippo syndromes type A and type B, MPS III is a progressive neuromuscular disease with profound CNS involvement. Our lead product candidates, ABO-101 and ABO-102, have been developed to replace the damaged, malfunctioning enzymes within target cells with the normal, functioning version. Delivered via a single injection, the drug is only given once.

ABO-101 for MPS III B and ABO-102 for MPS III A (Sanfilippo syndrome)

Mucopolysaccharidosis (MPS) type III (Sanfilippo syndrome) is a group of four inherited genetic diseases, described as type A, B, C or D, which cause enzyme deficiencies that result in the managementabnormal accumulation of oral mucositis,glycosaminoglycans (sugars) in body tissues. MPS III is a frequent side effectlysosomal storage disease, a group of cancer therapy for which there is no other established treatment.rare inborn errors of metabolism resulting from deficiency in normal lysosomal function. The market for mucositis treatmentincidence of MPS III (all four types combined) is estimated to be 1 in excess70,000 births.

Mucopolysaccharides are long chains of $1.0 billion worldwide. MuGard, a proprietary nanopolymer formulation, has received marketing clearancesugar molecule used in the U.S. from the FDA. We launched MuGardbuilding of connective tissues in the U.S.body. There is a continuous process in 2010.


On August 5, 2010, we entered intothe body of replacing used materials and breaking them down for disposal. Children with MPS III are missing an exclusive licenseenzyme which is essential in breaking down the used mucopolysaccharides called heparan sulfate. The partially broken down mucopolysaccharides remain stored in cells in the body causing progressive damage. Babies may show little sign of the disease, but as more and more cells become damaged, symptoms start to appear.

In MPS III, the predominant symptoms occur due to accumulation within the central nervous system (CNS), including the brain and spinal cord, resulting in cognitive decline, motor dysfunction, and eventual death. To date, there is no cure for MPS III and treatments are largely supportive.

Abeona is developing next generation adeno-associated viral (AAV)-based gene therapies for MPS III (Sanfilippo syndrome), which involves a one-time delivery of a normal copy of the defective gene to cells of the central nervous system with RHEI Pharmaceuticals, N.V. (“RHEI”) relatedthe aim of reversing the effects of the genetic errors that cause the disease.

After a single dose in Sanfilippo preclinical models, ABO-101 and ABO-102 induced cells in the CNS and peripheral organs to produce the missing enzymes which helped repair the damage caused to the commercializationcells. Preclinicalin vivo efficacy studies in Sanfilippo syndrome have demonstrated functional benefits that remain for months after treatment. A single dose of MuGardABO-101 or ABO-102 significantly restored normal cell and organ function, corrected cognitive defects that remained months after drug administration, increased neuromuscular control and increased the lifespan of animals with MPS III over 100% one year after treatment compared to untreated control animals. These results are consistent with studies from several laboratories suggesting AAV treatment could potentially benefit patients with Sanfilippo Syndrome Type A and B. In addition, safety studies conducted in China and other Southeast Asian countries. Our China partnersanimal models of Sanfilippo syndromes have receiveddemonstrated that delivery of AB0-101 or AB0-102 are well tolerated with minimal side effects.

ABO-201 for Juvenile Batten Disease (JBD)

ABO-201 (scAAV9 CLN3) is an acceptance letter from the State Food and Drug AdministrationAAV-based gene therapy which has shown promising preclinical efficacy in delivery of a normal copy of the People’s Republicdefective CLN3 gene to cells of China,the central nervous system with the aim of reversing the effects of the genetic errors that cause juvenile Batten disease. Juvenile Batten disease (JBD) is a rare, fatal, autosomal recessive (inherited) disorder of the nervous system that typically begins in children between 4 and 8 years of age. Often the first noticeable sign of JBD is vision impairment, which provides marketing approvaltends to progress rapidly and eventually result in China. MuGardblindness. As the disease progresses, children experience the loss of previously acquired skills (developmental regression). This progression usually begins with the loss of the ability to speak in complete sentences. Children then lose motor skills, such as the ability to walk or sit. They also develop movement abnormalities that include rigidity or stiffness, slow or diminished movements (hypokinesia), and stooped posture. Beginning in mid- to late childhood, affected children may have recurrent seizures (epilepsy), heart problems, behavioral problems, and difficulty sleeping. Life expectancy is greatly reduced. Most people with juvenile Batten disease live into their twenties or thirties. As yet, no specific treatment is known that can halt or reverse the symptoms of juvenile Batten disease.

Juvenile Batten disease is the most common form of a group of disorders known as neuronal ceroid lipofuscinoses (NCLs). Collectively, all forms of NCL affect an estimated 2 to 4 in 100,000 live births in the United States. NCLs are more common in Finland, where approximately 1 in 12,500 individuals are affected; as well as Sweden, other parts of northern Europe, and Newfoundland, Canada.

Most cases of juvenile Batten disease are caused by mutations in the CLN3 gene, which is the focus of our AAV-based gene therapy approach. These mutations disrupt the function of cellular structures called lysosomes. Lysosomes are compartments in the cell that normally digest and recycle different types of molecules. Lysosome malfunction leads to a buildup of fatty substances called lipopigments and proteins within these cell structures. These accumulations occur in cells throughout the body, but neurons in the brain seem to be particularly vulnerable to damage. The progressive death of cells, especially in the brain, leads to vision loss, seizures, and intellectual decline in children with juvenile Batten disease.

ABO-301 for Fanconi Anemia (FA)

ABO-301 (AAV LK19 FANCC) is an AAV-based gene therapy which has shown promising preclinical efficacy in delivery of a normal copy of the defective gene to cells of the hematopoietic or blood system with the aim of reversing the effects of the genetic errors that cause juvenile Batten disease. Fanconi anemia (FA) is a rare (1 in 160,000) pediatric, autosomal recessive (inherited) disease characterized by multiple physical abnormalities, organ defects, bone marrow failure, and a higher than normal risk of cancer. The average lifespan for people with FA is 20 to 30 years.


The major function of bone marrow is to produce new blood cells. In FA, a DNA mutation renders the FANCC gene nonfunctional. Loss of FANCC causes patient skeletal abnormalities and leads to bone marrow failure. Fanconi Anemia patients also have much higher rates of hematological diseases, such as acute myeloid leukemia (AML) or tumors of the head, neck, skin, gastrointestinal system, or genital tract. The likelihood of developing one of these cancers in people with Fanconi anemia is between 10 and 30 percent. Aside from bone marrow transplantation (BMT) there are no specific treatments known that can halt or reverse the symptoms of FA. Reparing fibroblast cells in FA patients with a functional FANCC gene is the focus of our AAV-based gene therapy approach.

Using a novel CRISPR (clustered, regularly interspaced short palindromic repeats)-Cas9 (CRISPR associated protein 9) system, researchers used a protein-RNA complex composed of an enzyme known as Cas9 bound to a guide RNA molecule that has been manufactureddesigned to recognize a particular DNA sequence. The RNA molecules guide the Cas9 complex to the location in the U.S. and shipped to China for sale. RHEI has rights to sub-license MuGard sales in some Southeast Asia countries.


On June 6, 2013 we entered into an exclusive license agreement with AMAG Pharmaceuticals, Inc. (“AMAG”), related to the commercializationgenome that requires repair. CRISPR-Cas9 uniquely enables surgically efficient knock-out, knock-down or selective editing of MuGarddefective genes in the U.S.context of their natural promoters, unlocking the potential to treat both recessive and its territories. Underdominant forms of genetic diseases. Most importantly, this approach has the terms ofpotential to allow more precise gene modification.

Plasma-based Therapeutics using the licensing agreement we received an upfront licensing fee of $3.3 million and a tiered, double-digit royaltySDF™ technology platform

Abeona’s proprietary Salt Diafiltration Process™ (SDF) focuses on net sales of MuGard in the licensed territory. We receive quarterly royalty payments from AMAG.


On March 11, 2014, we announced we had entered into an exclusive license agreement with Hanmi Pharmaceutical Co. Ltd. (“Hanmi”) related to MuGard commercialization in South Korea. Under the terms of the agreement, we received an upfront licensing fee and will receive double digit royalties on sales of MuGard in the licensed territory.

On July 8, 2014, we announced we received notification from the Hong Kong Patent Office that a patent for MuGard had been granted.

On August 7, 2014, we entered into an exclusive license agreement with Norgine B.V. (“Norgine”), a leading independent European specialty pharmaceutical company, for the
3

commercialization of MuGard in Europe. Under the terms of the license agreement, we could receive up to $10 million in milestone payments and an escalating double digit royalty on the net sales of the oral mucositis product, MuGard, in the licensed territories. Norgine will develop, manufacture, and commercialize MuGard in the European Union, Switzerland, Norway, Iceland and Lichtenstein. Norgine anticipates launching MuGard in 2015.

On September 12, 2014, we announced we had received notification from the European Patent Office that an additional European patent for MuGard had been granted. The patent (EP1997478) protects a wide range of liquid formulations for the prevention and treatment of mucosal diseases and disorders.

On October 27, 2014, we entered into an exclusive license agreement with Norgine for the commercialization of MuGard in Australia and New Zealand. The terms of the agreement are congruent to our recent license with Norgine for MuGard in Europe. Norgine intends to develop, manufacture and commercialize MuGard in the new territories.

On March 31, 2015 we announced that Hanmi has received marketing approval in Korea from the country’s Ministry of Food and Drug Safety (“MFDS”) and the Korea Testing & Research Institute (KTR) for MuGard. Hanmi intends to market MuGard in Korea under the trade name Mucogard.

We are actively seeking partners to license MuGard in other territories.

Product Candidates

•  ProctiGard™ received 510(K) marketing clearance from the FDA on July 22, 2014 for the treatment of symptomatic management of rectal mucositis. ProctiGard is our product for the treatment of radiation proctitis, a frequent side effect of radiation treatment to the pelvic region. Radiation proctitis, or RP, is the inflammation and damage to the lower portion of the colon after exposure to x-rays or ionizing radiation as part of radiation therapy. RP is most common after treatments for cancer, such as cervical, colon and prostate cancer. RP can be acute, occurring within weeks of initiation of therapy, or can occur months or years after treatment. We intend to commercialize ProctiGard in a manner similar to the commercialization of MuGard, which may include confirmatory clinical trials, with the objective of commercialization in collaboration with marketing partners globally.

•  We are also developing additional products using our proprietary mucoadhesive hydrogel technology as a mucoprotectant and/or delivery vehicle, as well as our vitamin B-12 mediated delivery technology.


4



PlasmaTech Portfolio Summary

CompoundOriginator
Technology
Indication
Clinical
Stage (1)
MuGard®
PlasmaTech
Mucoadhesive
liquid
Mucositis
- Launched in U.S.
- Licensed to AMAG:
     U.S. rights
- Licensed to Norgine:
     European Union rights
- Licensed to RHEI:
      China rights and other
      SE Asian countries
- Licensed to Hanmi:
     South Korea rights
- Licensed to Norgine:
      Australia & New
      Zealand rights
Proctigard™PlasmaTech
Mucoadhesive
hydrogel
technology
Radiation proctitisFDA clearance 7/22/14
Alpha 1 Protease Inhibitor (A1PI)Licensor
Proprietary
biological
processing
VariousProcess validation
Intravenous immune globulin
   (IVIG)
Licensor
Proprietary
biological
processing
VariousProcess validation
(1)       For more information, see “Government Regulation” in our Annual Report on Form 10-K for description for description of clinical stages.

SDF Licensed Technology

Background
On September 22, 2014, we entered into an exclusive, worldwide, licensing agreement with Licensor to obtain rights to utilize and to sub-license to other pharmaceuticals firms, its patented methods for theethanol-free extraction of therapeutic biologics from human plasma.

Under the terms of the licensing agreement, as amended on January 23, 2015, we paid a license fee of $1 million in cash, will pay $4,000,000 in cash or 1,096,151 shares of our common stock in 2017, a regulatory approval milestone payment of 513,375 shares of our common shares upon the first FDA regulatory approval of a drug derived from the Licensor’s proprietary SDF process, and a tiered royalty on annual net sales of plasma fractions produced with Licensor’s proprietary SDF process.

Plasma biologics are bio-pharmaceuticalbiopharmaceutical proteins extracted, purified, and formulated from human blood plasma by the use of biotechnological processing techniques including precipitation, diafiltration, affinity chromatography, and ion-exchange chromatography. These products are rendered virus-safe by means of chemical treatment, nanofiltration, and pasteurization. FDA exercises rigorous control of plasma collection to assure its safety. Because plasma biologics are biosimilar, they are less likely than recombinant or transgenic proteins to cause toxic or other adverse reactions, or cause adverse immunological responses such as the stimulation of inhibitors in recipients.

Plasma biologics primarily address indications arising from genetic deficiencies, which are increasingly being identified by means of newly available rapid and low costlow-cost diagnostic genetic tests. Examples of plasma biologics include Alpha 1 Protease Inhibitor (“A1PI”)Alpha-1 Antitrypsin (also known as alpha-1 proteinase inhibitor, A1PI), Intravenous Immune Globulin (“IVIG”)(IVIG), Anti-Hemophilic Factor VIII (“AHF”)(AHF) and Albumin, to name a few.

5

Albumin.

Plasma biologics are currently obtained from human plasma by a fractionation process known as the Cohn Cold Ethanol Fractionation Process (“Cohn Process”)(Cohn Process), which was developed prior to World War II to provide a stable solution of human albumin for the rapid treatment of hemorrhagic shock on the battlefield. This process employs various concentrations of ethanol combined with adjustments of pH, ionic strength, and temperature to bring about the necessary separations by precipitation. ThisEthanol can inactivate many of the plasma proteins.

In contrast to the highly denaturing Cohn Process, Abeona’s patented SDF™ method involves a short two-step, ethanol-free salt precipitation process has been used for over 70 years and is still currently considered an industry standard.


Licensor
Licensor was founded to develop superior high-yield technologyoptimized to extract a wide range of therapeutically useful biologic proteins from human blood plasma. Its founder, Eugene J. Zurlo, saw the opportunity to utilize new technology to replace the now 74-year-old Cohn Process in order to fundamentally change the economics of plasma fractionation, improve the quality of existing plasma biologics, and enable the extraction of additional useful plasma proteins.

Due to technology limitations in 1940, E.J. Cohn and his team at Harvard University were compelled to use ethanol combined with changes in pH, ionic strength, and temperature in a lengthy multi-step process to bring about the separation of albumin. In addition to the denaturing effects on plasma proteins by  prolonged exposure to ethanol and pH changes from neutrality, commercial production facilities had to be explosion-proof and refrigerated, and were thus highly capital intensive.

Licensor’s SDF Process uses salt as the precipitant at neutral pH, followed by salt removal by diafiltration, followed by the use of state-of-the-art chromatography for final separations and purification. The efficacy of the process has been confirmed in pilot scale batches in two independent laboratories. While several salts were found to work, Sodium Citrate was selected because of its ‘‘friendliness’’ to biologics, having been long used as an FDA approved protectant and preservative of whole blood and blood plasma.

The Licensor ProcessSDF™ enables the production of unusually highhigher yields of A1PI and IVIGthese proteins compared with the Cohn processProcess.

PTB-101 SDF Alpha™ (alpha-1 protease inhibitor) for emphysema or chronic obstructive pulmonary disease (COPD)due to severe congenital deficiency of A1PI (alpha-1-antitrypsin deficiency)

Alpha-1 antitrypsin deficiency is a rare (1 in 1,500 to 3,500) genetic (inherited) autosomal disorder that may cause lung disease from an inability to neutralize the enzyme neutrophil elastase and comparable yieldsliver disease from retained misfolded protein. Alpha-1 antitrypsin deficiency occurs worldwide, but its prevalence varies by population. Alpha-1 antitrypsin is also known as alpha-1 proteinase inhibitor (A1PI).


About 10 percent of Anti-Hemophilic Factor VIII,infants with alpha-1 antitrypsin deficiency develop liver disease, which separation occurs before either the Cohn or Licensor Process. Because the Licensor Process optimizes the yieldsoften causes yellowing of the more valuable A1PIskin and IVIG, its yieldswhites of less valuable albumin are somewhat lower than for Cohn fractionation.


Licensor’s short, two-step salt precipitation process, in contrast to the highly denaturing Cohn process, may also enable the  extractioneyes (jaundice). Approximately 15 percent of several  additional plasma biologics  by means of  downstream affinity and/or ion-exchange chromatography, thus potentially further improving revenues and process economics derivable from the same starting plasma. Examples of these additional therapeutic proteins are C-1-Esterase Inhibitor, Protein C, Antithrombin III, Transferrin, and Haptoglobin, all of which are used as treatments for low-incidence genetic deficiencies which could qualify them as Orphan Drugs.

We believe that Licensor’s proprietary fractionation process is expected to significantly enhance yields of key value blood proteins, including A1PI, expanding market opportunities, while greatly enhancing margins. The Company obtained rights to utilize and sub-license to other pharmaceutical firms the recently patented improved methods for the extraction of therapeutic biologics from human plasma. We believe that Licensor’s lead product, A1PI, offers a low-risk, high revenue, short time-to-market respiratory product for treatment of inherited COPD (pulmonary emphysema), among other genetic A1PI deficiencies. Additionally, the ability to extract several additional therapeutically useful and important proteins,adults with alpha-1 antitrypsin deficiency develop liver damage (cirrhosis) due to the process being less destructive than historical fractionation processes, may enable us to seek new therapeutic applicationsformation of scar tissue in the liver. Signs of cirrhosis include a swollen abdomen, swollen feet or legs, and address high-value-added orphan indications.
6


Plasma Biologic Product Targets
A1PI
A1PIjaundice. Individuals with alpha-1 antitrypsin deficiency are also at risk of developing a type of liver cancer called hepatocellular carcinoma.

Alpha-1 antitrypsin deficiency is a protease inhibitorinherited with an autosomal codominant pattern, which means that protects tissues from enzymes produced by inflammatory cells, especially neutrophil elastase. Its normal concentration in human plasma is 1.8 to 3.5 grams per liter. The Licensor Process recovers at least 70%two different versions of the target A1PI, about 10 times that currently yielded fromgene may be active (expressed), and both versions contribute to the Cohn process.


A1PI Deficiency is a genetic condition resultingtrait. The most common version (allele) of the SERPINA1 gene, called M, produces normal levels of alpha-1 antitrypsin. Most people in damagethe general population have two copies of the M allele (MM) in each cell. Other versions of the SERPINA1 gene lead to lung,reduced levels of alpha-1 antitrypsin. For example, the S allele produces moderately low levels of this protein, and the Z allele produces very little alpha-1 antitrypsin. Individuals with two copies of the Z allele (ZZ) in each cell are likely to have alpha-1 antitrypsin deficiency. Those with the SZ combination have an increased risk of developing liver and pancreatic tissues, withlung diseases such as chronic obstructive pulmonary emphysema being the most common indication. Approximately 1 in 3,000 Caucasians suffer from the genetic deficiency, with over 150,000 people in North America and Europe living with the deficiency. Treatment involves lifelong weekly injections of A1PI of at least 60 mg/Kg of body weight, or about 200 grams per year. Less than 5% of the treatable worldwide population receive A1PI therapy.

A1PI also exerts immunomodulatory as well as anti-viral and anti-bacterial effects independent of protease inhibition. Administration of A1PI in non-deficient individuals may interfere with disease progression in the following conditions: Diabetes (Type 1 and 2), acute myocardial infarction, inflammatory bowel disease, cystic fibrosis, graft vs. host disease, stroke, Alzheimer’s disease, vasculitis, organ transplantation, and multiple sclerosis. The number of new potential therapeutic indications for A1PI could create supply problems due to the challenge of producing sufficient quantities using current plasma extraction methods to meet the demand created by the growing number of clinical indications. (COPD).

It is the view within the industryestimated that the supply of A1PI (without new indications) is currently nearing capacity. The increaseabout 200,000 individuals in demand, coupled with the limitations of plasma supply and the shortcomings of the Cohn Fractionation Process, combine to underscore the need for a high-yield process such as the Licensor Process.


IVIG
IVIG is extracted from human plasma and contains a broad spectrum of Immunoglobulin G (IgG) antibodies. On-label indications of IVIG include Primary immune deficiencies of genetic origin (estimated 10 million potential patients worldwide; 60,000 currently treated with IVIG), Chronic lymphocytic leukemia, Idiopathic thrombocytopenia, Pediatric HIV, Allogeneic bone marrow transplantation, Kidney transplantation, and Kawasaki syndrome.

IVIG is currently the main driver for manufacturers utilizing the Cohn Process. Approximately 25 million liters of plasma are processed to produce approximately $7 Billion of revenue. Licensor Process improves yields by at least 10% and is expected to extend half-life in circulation due to reduced denaturation. It also may eliminate thromboembolic events and other adverse events attributed to Cohn process.

AHF
AHF is used to treat Hemophilia A, a genetic disease occurring in 1:6,000 male births. Because dose weight is miniscule, a recombinant form can be produced in cell culture to augment production from human plasma. Plasma-derived AHF is extracted from the cryoprecipitate formed during the thawing of Source Plasma before salt or ethanol precipitation. Its use is
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growing in developing markets; however an estimated 300,000 potential patients worldwide, or ~70%, of potential patients remain untreated.

Other Potential Products
Because Licensor’s patented sodium citrate extraction process does not have the destructive effects associated with the Cohn Cold Ethanol Process, it becomes possible to extract additional valuable low-dosage biotherapeutic agents for genetic deficiencies through the use of state-of-the-art affinity chromatography now widely available. The following examples include, but not limited to, other biotherapeutics, potentially available through the use of the SDF process:

·C-1-esterase inhibitor treats hereditary angioma (HAE). Its genetic incidence: 1:10,000 − 1:50,000.
·Protein C is used to treat venous thromboembolic events. Prevalence of Protein C deficiency is 0.2 − 0.5%.
·Antithrombin III inactivates thrombin and is used to treat thrombotic disorders. Its deficiency occurs in 1:2000 − 1:5000 in a normal population, but can also be acquired as a result of various diseases.

Recent Developments

On May 11, 2015, we closed a $10 million private placement of common stock consisting of 1,250,000 shares of our common stock, at a price of $8.00 per share and warrants to purchase 625,000 shares of common stock. The warrants have an exercise price of $10.00 per share and are exercisable for 30 months from the closing date. A total net of $9.2 million was received.

Also in connection with the financing, the placement agent received warrants to purchase 50,000 shares of common stock at $11.00 per share and which are exercisable for five years from the closing date.

On May 5, 2015, PlasmaTech Biopharmaceuticals, Inc., a Delaware corporation (“PlasmaTech”), Plasmatech Merger Sub Inc. (“Merger Sub”), a wholly owned subsidiary of PlasmaTech and a Delaware corporation, Abeona Therapeutics LLC, an Ohio limited liability company (“Abeona”) and Paul A. Hawkins, an individual, solely in his capacity as Member Representative (“Member Representative”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Abeona, with Abeona continuing as the surviving corporation and becoming a wholly owned subsidiary of PlasmaTech (the “Merger”). The Board of Directors of PlasmaTech and Managers of Abeona have unanimously approved the transaction.

In connection with the Merger, the PlasmaTech will issue to Abeona members a total of 3,979,761 common shares upon closing of the transaction, and up to an additional $9 million in performance milestones, in common stock or cash, at the Company’s option.

The completion of the Merger is subject to customary closing conditions.

On April 23, 2015 we closed a $7 million private placement of common stock consisting of 2,333,334 shares of common stock, at a price of $3.00 per share.

On April 7, 2015 we announced we had appointed Charlie Strange, M.D. to our Scientific Advisory Board (SAB). Dr. Strange is a highly regarded thought leader in the Alpha-1
8

community, and has extensive clinical experience in designing and managing Alpha-1 clinical studies. We believe his advice and counsel will help accelerate development and approval of our proprietary SDF Alpha™ biologic drug.

On March 31, 2015 we announced today that Hanmi has received marketing approval in Korea from the country’s Ministry of Food and Drug Safety (“MFDS”) and the Korea Testing & Research Institute (KTR) for MuGard. Under the terms of the previously announced marketing agreement, Hanmi will import MuGard from the United States and Europe have severe alpha-1 antitrypsin deficiency. However, only about 5% of this number have been diagnosed as symptoms caused by this deficiency are very similar to asthma and chronic obstructive pulmonary disease (COPD) from non-genetic causes. Only about 1–2% of COPD patients have severe alpha-1 antitrypsin deficiency. The Global Initiative for Chronic Obstructive Lung Disease (GOLD) defines COPD as group of airflow-limited diseases including emphysema and chronic bronchitis. While severe alpha-1 antitrypsin deficiency can lead to or exacerbate all forms of COPD, it is considered to be the dominant cause of Panacinar Emphysema, a form of emphysema which causes gradual destruction of all lung aveolii.

PTB-101 SDF Alpha™ (alpha1-proteinase inhibitor) for Alpha-1 Antitrypsin Deficiency (Alpha-1)

Abeona is developing PTB-101 SDF Alpha™ (alpha-1-proteinase inhibitor) for chronic augmentation and maintenance therapy in adults with clinically evident panacinar emphysema and other forms of COPD due to severe deficiency of alpha-1-proteinase inhibitor.

Polymer Hydrogel Technology (PHT™)

MuGard®(mucoadhesive oral wound rinse) approved for mucositis, stomatitis, aphthous ulcers, and traumatic ulcers

MuGard®is our marketed product for the management of oral mucositis, a frequent side-effect of cancer therapy for which there is no other established treatment. MuGard, a proprietary nanopolymer formulation, has received marketing will commence. Hanmi intends to market MuGardclearance from the FDA in Korea under the trade name Mucogard.


On March 5, 2015 we announced that enrollment has begun in a clinical trial at UCLA’s Jonsson Comprehensive Cancer Center that is evaluatingUS as well as Europe, China, Australia, New Zealand and Korea. We launched MuGard in the preventionU.S. in 2010 and licensed MuGard for commercialization in the U.S. to AMAG Pharmaceuticals, Inc. (‘AMAG”) in 2013. We licensed MuGard to RHEI Pharmaceuticals, N.V. (“RHEI”) for China and other Southeast Asian countries in 2010; Hanmi Pharmaceutical Co. Ltd. (“Hanmi”) for South Korea in 2014; and Norgine B.V. (“Norgine”) for the European Union, Switzerland, Norway, Iceland, Lichtenstein, Australia and New Zealand in 2014.


ProctiGard™ (mucoadhesive oral wound rinse) approved for rectal mucositis and radiation proctitis

ProctiGard™ received 510(K) marketing clearance from the FDA on July 22, 2014 for the treatment of stomatitis in breast cancer patients using Everolimus (marketed by Novartis Oncology undersymptomatic management of rectal mucositis. ProctiGard is our product for the tradename Afinitor®). The titletreatment of radiation proctitis, a frequent side effect of radiation treatment to the pelvic region. Radiation proctitis, or RP, is the inflammation and damage to the lower portion of the trialcolon after exposure to x-rays or ionizing radiation as part of radiation therapy. RP is “Phase II Randomized Trialmost common after treatments for cancer, such as cervical, colon and prostate cancer. RP can be acute, occurring within weeks of initiation of therapy, or can occur months or years after treatment. We intend to commercialize ProctiGard in a manner similar to the commercialization of MuGard, Compared With Best Supportive Care for Prevention and Treatmentwhich may include confirmatory clinical trials, with the objective of Stomatitiscommercialization in Women With Hormone Receptor Positive Breast Cancer Initiating Treatment With Everolimus-based Endocrine Therapy” and details on the trial design and enrollment can be found on its website, clinicaltrials.gov, under the identifier NCT02015559.


collaboration with marketing partners globally.

LIQUIDITY AND CAPITAL RESOURCES


We have historically funded our operations primarily through public and private sales of common stock, preferred stock, convertible notes and through licensing agreements. Our principal source of liquidity is cash and cash equivalents. Licensing payments and royalty revenues provided limited funding for operations during the period ended March 31,June 30, 2015. As of March 31,June 30, 2015, our cash and cash equivalents were $7,948,000.


$30,410,000.

As of March 31,June 30, 2015, our working capital was $6,950,000.$29,042,000. Our working capital at March 31,June 30, 2015 represented a decreasean increase of $1,707,000$20,385,000 as compared to our working capital deficit as of December 31, 2014 of $8,657,000. The decreasenet increase in the working capital at March 31,June 30, 2015 reflects paymentsfinancings, warrant exercises and the acquisition of $1,000,000 to the Licensor, $400,000 repayment for the Grid Notes (see below) and by threeAbeona Ohio less six months of net operating costs and changes in current assets and liabilities.


On September 10, 2014, we entered into an Unsecured Grid Note, for up to $250,000 with SCO Capital Partners (“SCO”) (“Grid Note I”). As of December 31, 2014 we had drawn a total of $250,000. The interest rate was 8% per annum and the maturity date was AugustJuly 31, 2015 unless a financingwe closed an upsized $15.5 million direct placement of at least $5,000,000 occurred.registered common stock with institutional investors, including Soros Fund Management and Perceptive Life Science Fund, and two members of our Board of Directors. The financing occurred December 24, 2014 and the Grid Note I was paid in full on January 5, 2015.


On December 1, 2014, we entered intocomprised of 2.83 million shares of our common stock at a second Unsecured Grid Note (“Grid Note II”), for up to $250,000 with SCO. Asprice of December 31, 2014 we had drawn a total of $150,000. The interest rate was 8%$5.50 per annum and the maturity date was November 30, 2015 unless a financing of at least $5,000,000 occurred. The financing occurred December 24, 2014 and the Grid Note II was paid in full on January 5, 2015.

share.

If we raise additional funds by selling equity securities, the relative equity ownership of our existing investors will be diluted and the new investors could obtain terms more favorable than previous investors.

9


We have incurred negative cash flows from operations since inception, and have expended, and expect to continue to expend in the future, substantial funds to complete our planned product development efforts. Since inception, our expenses have significantly exceeded revenues, resulting in an accumulated deficit as of March 31,June 30, 2015 of $298,074,000. We expect that our capital resources, April 2015 private placement, royalties from MuGard and expected receipts due under our license agreements will be adequate to fund our current level of operations through the end of 2016. However, our ability to fund operations over this time could change significantly depending upon changes to future operational funding obligations or capital expenditures. As a result, we may be required to seek additional financing sources within the next twelve months.$302,187,000. We cannot provide assurance that we will ever be able to generate sufficient product sales or royalty revenue to achieve profitability on a sustained basis, or at all.


Since our inception, we have devoted our resources primarily to fund our research and development programs. We have been unprofitable since inception and to date have received limited revenues from the sale of products. We expect to incur losses for the next several years as we continue to invest in product research and development, preclinical studies, clinical trials and regulatory compliance.


FIRST

SECOND QUARTER 2015 COMPARED TO FIRSTSECOND QUARTER 2014


Our licensing revenue for the firstsecond quarter of 2015 and 2014 was $151,000 as compared to $146,000$150,000 for the same period of 2014, an increase of $5,000.each period. We recognize licensing revenue over the period of the performance obligation under our licensing agreements.


We recorded royalty revenue for MuGard of $107,000$132,000 for firstsecond quarter of 2015 and $62,000$97,000 for the same period of 2014, an increase of 45,000.$35,000. We licensed MuGard to AMAG on June 6, 2013 and currently receive quarterly royalties from AMAG under our agreement.


Total research and development spending for the firstsecond quarter of 2015 was $453,000,$610,000, as compared to $144,000$81,000 for the same period of 2014, an increase of $309,000.$529,000. The increase in expenses was primarily due to:


·increased development work on our new product A1PI ($279,000)352,000);
·increased salary and related costs ($99,000)76,000) from the rehiring of scientific staff;
·offset by decreasedincreased stock based compensation expense ($59,000)56,000); and
·other net decreases in research spending ($10,000)45,000).

Total general and administrative expenses were $1,689,000$3,667,000 for the firstsecond quarter of 2015, as compared to $1,392,000$868,000 for the same period of 2014, an increase of $297,000.$2,799,000. The increase in expenses was due primarily to the following:


·increase stock based compensation expense for granted restricted stock ($1,038,000) and granted stock options ($534,000);
·increased salary and related costs ($343,000)296,000) from hiring additional general and administrative staff;
·increased legal fees ($249,000)447,000);
·increased expense for new licenses ($152,000);
·increased investor relations feesexpenses ($235,000);
·offset by decreased stock based compensation expense ($562,000)150,000); and
·
other net increases in general and administrative expenses ($32,000)182,000).
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Depreciation and amortization was $118,000$132,000 for the firstsecond quarter of 2015 as compared to less than $1,000 for the same period in 2014, an increase of $117,000.$131,000. We are amortizing the license over the life of the patents.


Total operating expenses for the firstsecond quarter of 2015 were $2,260,000$4,409,000 as compared to total operating expenses of $1,536,000$950,000 for the same period of 2014, an increase of $724,000$3,459,000 for the reasons listed above.


Interest and miscellaneous income was $3,000$16,000 for the firstsecond quarter of 2015 as compared to $8,000$26,000 for the same period of 2014, a decrease of $5,000.


$10,000.

Interest and other expense was $1,000$2,000 for the firstsecond quarter of 2015 as compared to $122,000$137,000 in the same period of 2014, a decrease of $121,000.$135,000. The interest in 2014 represents interest accrued on unpaid dividends. All dividends and interest on dividends due were paid in December 2014. There are no more dividends accruing.


We recorded a gainloss for the derivative liability related to preferred stock of $583,000$11,693,000 for the firstsecond quarter of 2014. The preferred stock related to the dividends was converted into common stock in December 2014.


Preferred stock dividends of $725,000$726,000 were accrued for the firstsecond quarter of 2014. The preferred stock related to the dividends was converted into common stock in December 2014.


Net loss allocable to common stockholders for the firstsecond quarter of 2015 was $2,000,000,$4,113,000, or a $0.10$0.16 basic and diluted loss per common share as compared to a net loss of $1,584,000,$13,233,000, or a $3.06$25.26 basic and diluted loss per common share, for the same period in 2014, an increaseddecreased loss of $416,000.

$9,120,000.

SIX MONTHS ENDED JUNE 30, 2015 COMPARED TO SIX MONTHS ENDED JUNE 30, 2014

Our licensing revenue for the first six months of 2015 was $301,000 and $296,000 for the same period of 2014. We recognize licensing revenue over the period of the performance obligation under our licensing agreements.

We recorded royalty revenue for MuGard of $239,000 for first six months of 2015 as compared to $159,000 for the same period of 2014, an increase of $80,000. We licensed MuGard to AMAG on June 6, 2013 and currently receive quarterly royalties from AMAG under our agreement.

Total research and development spending for the first six months of 2015 was $1,063,000, as compared to $225,000 for the same period of 2014, an increase of $838,000. The increase in research and development expenses was primarily due to:

·increased development work on our new product A1PI ($620,000);
·increased salary and related costs ($175,000) from increased scientific staff; and
·increased scientific consulting expense ($43,000).

Total general and administrative expenses were $5,356,000 for the first six months of 2015, as compared to $2,260,000 for the same period of 2014, an increase of $3,096,000. The increase in expenses was due primarily to the following:

·increase stock based compensation expense for granted restricted stock ($1,038,000);
·increased legal fees ($695,000);
·increased salary and related costs ($640,000) from hiring additional general and administrative staff;
·increased investor relations expenses ($385,000);
·increased director fees ($190,000); and
·net increase other general and administrative expenses ($148,000).

Depreciation and amortization was $250,000 for the first six months of 2015 as compared to $1,000 for the same period in 2014. We have acquired new licenses and fixed assets in 2015.


Total operating expenses for the first six months of 2015 were $6,669,000 as compared to total operating expenses of $2,486,000 for the same period of 2014, an increase of $4,183,000 for the reasons listed above.

Interest and miscellaneous income was $19,000 for the first six months of 2015 as compared to $34,000 for the same period of 2014, a decrease of $15,000.

Interest and other expense was $3,000 for the first six months of 2015 as compared to $259,000 in the same period of 2014, a decrease of $256,000. The interest in 2014 represents interest accrued on unpaid dividends. All dividends and interest on dividends due were paid in December 2014. There are no more dividends accruing.

We recorded a loss for the derivative liability related to preferred stock of $11,110,000 for the first six months of 2014. The preferred stock related to the dividends was converted into common stock in December 2014.

Preferred stock dividends of $1,451,000 were accrued for the first six months of 2014. The preferred stock related to the dividends was converted into common stock in December 2014.

Net loss allocable to common stockholders for the first six months of 2015 was $6,113,000, or a $0.27 basic and diluted loss per common share as compared to a net loss of $14,817,000, or a $28.46 basic and diluted loss per common share, for the same period in 2014, a decreased loss of $8,704,000.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.


ITEM 4.                  CONTROLS AND PROCEDURES

ITEM 4.CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management and consultants, including the Executive Chairman (our principal executive officer) and Chief Accounting OfficerVice President Finance (our principal accounting officer), we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this report.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles. Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Our management, including our principal executive officer and principal accounting officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.


Based on our evaluation, our management concluded in our Annual Report on Form 10-K for the year ended December 31, 2014 that there is a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified in our Annual Report on Form 10-K for the year ended December 31, 2014 relates to the monitoring and review of work performed by our Chief Accounting Officer and our then accounting consultant in the preparation of audit and financial statements, footnotes and financial data provided to the Company’s registered public accounting firm in connection with the annual audit. All of our financial reporting is now carried out by our Chief Accounting Officer. This lack of accounting staff results in a lack of segregation of duties.

As of the date of this Quarterly Report on Form 10-Q, we have not remediated such material weakness and, as a result, our Executive Chairman and Chief Accounting Officer,Vice President Finance, have concluded that a material weakness continues to exist as of the end of the period covered by this Quarterly Report on Form 10-Q and, as such, our disclosure controls and procedures were not effective based on the criteria established in Internal ControlIntegrated Framework issued by COSO. The material weakness identified did not result in the restatement of any previously reported financial statements or any related financial disclosure, nor does management believe that it had any effect on the accuracy of the Company’s financial statements for the current reporting period.


In order to mitigate this material weakness to the fullest extent possible, all financial reports are reviewed for reasonableness by the Executive Chairman as well as the Chairman of the Audit Committee. All unexpected results are investigated. At any time, if it appears that any control can be implemented to continue to mitigate such weaknesses, it is immediately implemented. As soon as our finances allow, we will hire sufficient accounting staff and implement appropriate procedures for monitoring and review of work performed by our Chief Accounting Officer.

Changes In Internal Control Over Financial Reporting


There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31,June 30, 2015 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.



PART II -- OTHER INFORMATION


ITEM 1.          LEGAL PROCEEDINGS.


Alan Schmidt (“Schmidt”), a former shareholder of Genaera Corporation (“Genaera”), and a former unitholder of the Genaera Liquidating Trust (the ‘‘Trust’’), filed a purported class action in the United States District Court for the Eastern District of Pennsylvania in June 2012. The

12

lawsuit named thirty defendants, including PlasmaTech,Abeona, MacroChem Corporation, which was acquired by us in February 2009, Jeffrey Davis, the then-CEO and currently a director of PlasmaTech,Abeona, and Steven H. Rouhandeh and Mark Alvino, both of whom are our directors (the ‘‘PlasmaTechAbeona Defendants’’). With respect to the PlasmaTechAbeona Defendants, the complaint alleged direct and derivative claims asserting that directors of Genaera and the Trustee of the Trust breached their fiduciary duties to Genaera, Genaera’s shareholders and the Trust’s unitholders in connection with the licensing and disposition of certain assets, aided and abetted by numerous defendants including the PlasmaTechAbeona Defendants. Schmidt seeks monetary damages, disgorgement of any distributions received from the Trust, rescission of sales made by the Trust, attorneys’ and expert fees, and costs. On December 19, 2012, Schmidt filed an amended complaint (the “Amended Complaint”) which asserted substantially the same allegations with respect to the PlasmaTechAbeona Defendants. On February 4, 2013, the PlasmaTechAbeona Defendants moved to dismiss all claims asserted against them. On August 12, 2013 the court granted the PlasmaTechAbeona Defendants’ motions to dismiss and entered judgment in favor of the PlasmaTechAbeona Defendants on all claims. On August 26, 2013, Schmidt filed a motion for reconsideration. On September 10, 2013 Schmidt filed a Notice of Appeal with the District Court. On September 17, 2013, Schmidt filed his appeal with the U.S. Third Circuit Court of Appeals (the “Third Circuit”). On September 25, 2013, the District Court denied Schmidt’s motion for reconsideration. On October 17, 2013, Schmidt amended his appeal to include the District Court’s denial of his motion for reconsideration. On March 20, 2014, Schmidt filed his Brief and Joint Appendix. On May 22, 2014, the PlasmaTechAbeona Defendants filed their Oppositions to Schmidt’s Brief. On May 29, 2014, Schmidt was granted an extension of time until June 23, 2014 to file his Reply Brief and filed his Reply Brief on that date. The Third Circuit held oral argument on September 12, 2014. On October 17, 2014, in a split decision, the Third Circuit reversed the District Court’s decision holding, among other things, that the District Court’s determination that the Amended Complaint was time-barred on statute of limitations grounds was premature. The Third Circuit did not rule upon any of the other grounds for dismissal advanced in the District Court and on appeal. The Third Circuit remanded the case to the District Court for further proceedings. On January 6, 2015, the District Court ordered the parties to file supplemental briefs on all remaining arguments for dismissal, and further ordered that a hearing on the motions to dismiss would be held on February 3, 2015. On January 23, 2015, the PlasmaTechAbeona Defendants filed their Supplemental Brief. At the February 3, 2015 hearing, Schmidt sought and was granted leave to amend his complaint for a second time. Schmidt filed his Second Amended Complaint on February 3, 2015. The Second Amended Complaint asserts substantially the same factual allegations with respect to the PlasmaTechAbeona Defendants, but eliminates all causes of action against the PlasmaTechAbeona Defendants except for aiding and abetting the Genaera directors’ and officers’ purported breaches of fiduciary duties, a claim for “punitive damages” and a claim for rescission of a settlement agreement between the Trust and the PlasmaTechAbeona Defendants. On March 20, 2015, the PlasmaTechAbeona Defendants filed a motion to dismiss the Second Amended Complaint. The Abeona Defendants’ motion to dismiss is fully briefed, and oral argument on the motion is scheduled for September 30, 2015. We intend to continue contesting the claims vigorously.

We are not currently subject to any other material pending legal proceedings.



ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.
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ITEM 2.          UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On April 23, 2015 we closed a $7 million private placement of common stock consisting of 2,333,333 shares of common stock, at a price of $3.00 per share. The issuance of shares of our common stock was made pursuant to Section 4(2) and Rule 506 of the Securities Act of 1933, as amended.

On May 11, 2015, we closed a $10 million private placement of common stock consisting of 1,250,000 shares of common stock, at a price of $8.00 per share, and warrants to purchase 625,000 shares of common stock. The warrants have an exercise price of $10.00 per share and are exercisable for 30 months following the closing date. In connection with the private placement, the placement agent received warrants to purchase 50,000 shares of common stock at $11.00 per share and which are exercisable for five years from the closing date. The issuance of shares of our common stock and warrants to purchase shares of our common stock was made pursuant to Section 4(2) and Rule 506 of the Securities Act of 1933, as amended.

On May 15, 2015, we closed our acquisition of Abeona Ohio. In connection with the closing, we issued a total of 3,979,761 shares of common stock to Abeona Ohio members.

ITEM 3.          DEFAULTS UPON SENIOR SECURITIES.


None.


ITEM 6.          EXHIBITS.

ITEM 6.Exhibits:EXHIBITS.

3.1Certificate of Amendment of Certificate of Incorporation filed June 19, 2015 (Incorporated by Reference to Exhibit 3.1 to our Form 8-K filed June 22, 2015)
 Exhibits:

3.14.1***Amendment to Bylaws2015 Equity Incentive Plan (Incorporated by reference to Exhibit 3.1 of4.1 to our Form 8-KS-8 filed JanuaryMay 11, 2015)
10.1Agreement and Plan of Merger, dated May 5, 2015)2015, by and among the Company, Plasmatech Merger Sub Inc., Abeona Therapeutics LLC and Paul A. Hawkins, in his capacity as Member Representative

3.2Amendment to Bylaws
10.2Letter Agreement, dated July 31, 2015, by and among the Company, Sabby Healthcare Master Fund Ltd. and Sabby Volatility Warrant Master Fund, Ltd. (Incorporated by reference to Exhibit 3.1 of10.1 to our Form 8-K filed March 5,July 31, 2015)
10.3Form of Purchase Agreement, dated July 27, 2015 (Incorporated by reference to Exhibit 10.1 to our Form 8-K filed August 3, 2015)
10.4Form of Common Stock Purchase Agreement, dated April 1, 2015.

10.5Form of Securities Purchase Agreement dated May 6, 2015.
31.1Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101**The following materials formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31,June 30, 2015 and December 31, 2014, (ii) Consolidated Statements of Operations for the three and six months ended March 31,June 30, 2015 and March 31,June 30, 2014, (iii) Consolidated Statements of Stockholders’ Equity for the three and six months ended March 31,June 30, 2015, (iv) Consolidated Statements of Cash Flows for the threesix months ended March 31,June 30, 2015 and March 31,June 30, 2014, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

______________

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filings under the Securities Act of 1933 or the Securities and Exchange Act of 1934, whether made before or after the date

hereof and irrespective of any general incorporation language in any filing.

** This exhibit is deemed to be furnished and not filed.


14


*** Management contract or compensatory plan.



SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


PLASMATECH BIOPHARMACEUTICALS, INC.


ABEONA THERAPEUTICS INC.
Date:  MayAugust 14, 2015By:/s/ Steven H. Rouhandeh
  Steven H. Rouhandeh
  Executive Chairman
  (Principal Executive Officer)
   
 
Date:  MayAugust 14, 2015
By:/s/ Stephen B. Thompson
  Stephen B Thompson
  Vice President Finance
  (Principal Accounting Officer)



15


PlasmaTech Biopharmaceuticals,

Abeona Therapeutics Inc. and Subsidiaries


Condensed Consolidated Balance Sheets

 
 
                         ASSETS
 
 March 31, 2015
(unaudited)
  
December 31,
2014 
 
Current assets
Cash and cash equivalents
   Receivables
Prepaid expenses and other current assets
 
$
 
 
7,948,000
144,000 98,000
  
$
 
 
11,520,000 35,000  - 
        Total current assets  8,190,000   11,555,000 
 
Property and equipment, net
  11,000   4,000 
Licensed technology, net  4,875,000   4,991,000 
Other assets  41,000   32,000 
            Total assets $13,117,000  $16,582,000 
 
    LIABILITIES AND STOCKHOLDERS' EQUITY
        
Current liabilities
  Accounts payable
  Short-term notes payable
  Current portion of deferred revenue
 
$
 
 
638,000
- 602,000
  
$
 
 
1,896,000 400,000 602,000 
    Total current liabilities  1,240,000   2,898,000 
 
Payable due Licensor
Long-term deferred revenue
  4,000,000 4,718,000   4,000,000 4,868,000 
 Total liabilities
  9,958,000   11,766,000 
 
Commitments and contingencies
        
 
Stockholders' equity
  Common stock - $.01 par value; authorized 200,000,000 shares;
     issued, 19,998,801 at March 31, 2015 and 19,960,801 at December 31, 2014
  Additional paid-in capital
  Accumulated deficit
  
200,000 301,033,000
(298,074,000)
   
200,000 300,690,000
(296,074,000
)
                Total stockholder's equity  3,159,000    4,186,000 
 
            Total liabilities and stockholders' equity
 $13,117,000  $16,582,000 

  June 30, 2015  December 31, 2014 
  (unaudited)    
ASSETS        
Current assets        
Cash and cash equivalents $30,410,000  $11,520,000 
Receivables  330,000   35,000 
Prepaid expenses and other current assets  222,000   - 
Total current assets  30,962,000   11,555,000 
Property and equipment, net  66,000   4,000 
Licensed technology, net  6,900,000   4,991,000 
Goodwill  38,955,000   - 
Other assets  42,000   32,000 
Total assets $76,925,000  $16,582,000 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities        
Accounts payable $1,318,000  $1,896,000 
Short-term notes payable  -   400,000 
Current portion of deferred revenue  602,000   602,000 
Total current liabilities  1,920,000   2,898,000 
Contingent consideration liability  6,489,000   - 
Payable due Licensor  4,000,000   4,000,000 
Long-term deferred revenue  4,567,000   4,868,000 
Total liabilities  16,976,000   11,766,000 
Commitments and contingencies        
Stockholders' equity        
Common stock - $.01 par value; authorized 200,000,000 shares; issued, 29,861,515 at June 30, 2015 and 19,960,801 at December 31, 2014  299,000   200,000 
Additional paid-in capital  361,837,000   300,690,000 
Accumulated deficit  (302,187,000)  (296,074,000)
Total stockholders' equity  59,949,000   4,816,000 
Total liabilities and stockholders' equity $76,925,000  $16,582,000 

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


 19

16




PlasmaTech Biopharmaceuticals,

Abeona Therapeutics Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(unaudited)


  
Three Months ended March 31,
 
  
2015
  
2014
 
Revenues      
License revenues
 $151,000  $146,000 
Royalties
  107,000   62,000 
Total revenues
  258,000   208,000 
         
Expenses        
Research and development
  453,000   144,000 
General and administrative
  1,689,000   1,392,000 
Depreciation and amortization
  118,000   - 
            Total expenses  2,260,000   1,536,000 
         
Loss from operations  (2,002,000)  (1,328,000)
         
Interest and miscellaneous income  3,000   8,000 
Interest and other expense  (1,000)  (122,000)
Gain on change in fair value of derivative – preferred stock  -   583,000 
   2,000   469,000 
Net loss  (2,000,000)  (859,000)
 
Less preferred stock dividends
  -   725,000 
Net loss allocable to common stockholders $(2,000,000) $(1,584,000)
         
Basic and diluted loss per common share $(0.10) $(3.06)
         
Weighted average number of common shares outstanding  19,983,751   517,539 
         
         


  Three months ended  Six months ended 
  June 30,  June 30, 
  2015  2014  2015  2014 
Revenues                
License revenues $150,000  $150,000  $301,000  $296,000 
Royalties  132,000   97,000   239,000   159,000 
Total revenues  282,000   247,000   540,000   455,000 
                 
Expenses                
Research and development  610,000   81,000   1,063,000   225,000 
General and administrative  3,667,000   868,000   5,356,000   2,260,000 
Depreciation and amortization  132,000   1,000   250,000   1,000 
Total expenses  4,409,000   950,000   6,669,000   2,486,000 
                 
Loss from operations  (4,127,000)  (703,000)  (6,129,000)  (2,031,000)
                 
Interest and miscellaneous income  16,000   26,000   19,000   34,000 
Interest and other expense  (2,000)  (137,000)  (3,000)  (259,000)
Loss on change in fair value of derivative - preferred stock  -   (11,693,000)  -   (11,110,000)
   14,000   (11,804,000)  16,000   (11,335,000)
Net loss  (4,113,000)  (12,507,000)  (6,113,000)  (13,366,000)
                 
Less preferred stock dividends  -   726,000   -   1,451,000 
Net loss allocable to common stockholders $(4,113,000) $(13,233,000) $(6,113,000) $(14,817,000)
                 
Basic and diluted loss per common share $(0.16) $(25.26) $(0.27) $(28.46)
                 
Weighted average number of common shares outstanding  25,695,973   523,826   22,855,642   520,700 

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






17


PlasmaTech Biopharmaceuticals,

Abeona Therapeutics Inc. and Subsidiaries


Condensed Consolidated Statements of Stockholders' Equity

(unaudited)



  Common Stock          
  Shares  Amount  
Additional
paid-in
capital
  
Accumulated deficit
  
Total stockholders’
equity
 
Balance December 31, 2014  19,960,801  $200,000  $300,690,000  $(296,074,000) $$4,816,000 
Common stock issued
   to employees
  10,000   -   32,000   -   32,000 
Common stock issued for
   services
  28,000   -   87,000   -   87,000 
Stock option compensation
   expense
  -   -   224,000   -   224,000 
Net loss  -   -   -   (2,000,000)  (2,000,000)
Balance March 31, 2015  19,998,801  $200,000  $301,033,000  $(298,074,000) $3,159,000 
                     


  Common Stock          
  Shares  Amount  

Additional

paid-in

capital

  

Accumulated

deficit

  

Total
stockholders’

equity

 
Balance December 31, 2014  19,960,801  $200,000  $300,690,000  $(296,074,000) $4,816,000 
                     
Common stock issued to employees  10,000   -   32,000   -   32,000 
Common stock issued for services  28,000   -   87,000   -   87,000 
Stock option compensation expense  -   -   224,000   -   224,000 
Net loss  -   -   -   (2,000,000)  (2,000,000)
Balance March 31, 2015  19,998,801  $200,000  $301,033,000  $(298,074,000) $3,159,000 
                     
Restricted common stock issued to employees  1,350,000   13,000   1,023,000   -   1,036,000 
Common stock issued for services  22,500   -   75,000   -   75,000 
Exercise of $5.00 warrants  927,119   9,000   4,626,000   -   4,635,000 
Common stock issued for $5.00 share net of costs  2,333,334   24,000   6,977,000   -   7,001,000 
Common stock issued for $8.00 share net of costs  1,250,000   13,000   8,992,000   -   9,005,000 
Common stock issued to Abeona Ohio holders  3,979,761   40,000   38,207,000   -   38,247,000 
Stock option compensation expense  -   -   904,000   -   904,000 
Net loss  -   -   -   (4,113,000)  (4,113,000)
Balance June 30, 2015  29,861,515  $299,000  $361,837,000  $(302,187,000) $59,949,000 

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


 21

18



PlasmaTech Biopharmaceuticals,

Abeona Therapeutics Inc. and Subsidiaries


Condensed Consolidated Statements of Cash Flows

(unaudited)


  
Three Months ended March 31,
 
  
2015
  
2014
 
Cash flows from operating activities:      
     Net loss $(2,000,000) $(859,000)
  Adjustments to reconcile net loss to cash used
              in operating activities:
        
(Gain) on change in fair value of derivative –
preferred stock
  -   (583,000)
Depreciation and amortization
  118,000   - 
Stock option compensation expense
Stock issued to directors, employees and consultants
  224,000 32,000   795,000 - 
Stock issued for services
  87,000   75,000 
Change in operating assets and liabilities:
        
    Receivables
  (109,000)  15,000 
Prepaid expenses and other current assets
  (98,000)  (5,000)
              Other assets  (9,000)  - 
    Accounts payable and accrued expenses
  (1,258,000)  212,000 
Interest payable on dividends
  -   122,000 
Deferred revenue
  (150,000)  103,000 
Net cash used in operating activities
  (3,163,000)  (125,000)
         
Cash flows from financing activities:        
Capital expenditures
  (9,000)  - 
Net cash used in investing activities
  (9,000)  - 
         
Cash flows from financing activities:        
Payment of short-term debt
  (400,000)  - 
Net cash used in financing activities
  (400,000)  - 
         
         
Net decrease in cash and cash equivalents  (3,572,000)  (125,000)
Cash and cash equivalents at beginning of period  11,520,000   424,000 
Cash and cash equivalents at end of period $7,948,000  $299,000 
         
Supplemental cash flow information:        
   Cash paid for interest $-  $- 
         
Supplemental disclosure of noncash transactions:        
  Preferred stock dividends in dividends payable $-  $725,000 
         

  Six Months ended June 30, 
  2015  2014 
Cash flows from operating activities:        
Net loss $(6,113,000) $(13,366,000)
Adjustments to reconcile net loss to cash used in operating activities:        
Loss on change in fair value of derivative – preferred stock  -   11,110,000 
Depreciation and amortization  250,000   1,000 
Stock option compensation expense  1,128,000   987,000 
Stock issued to directors, employees and consultants  1,068,000   - 
Stock issued for services  162,000   207,000 
Change in operating assets and liabilities:        
Receivables  (294,000)  16,000 
Prepaid expenses and other current assets  (194,000)  (13,000)
Other assets  (9,000)  - 
Accounts payable and accrued expenses  (731,000)  477,000 
Interest payable on dividends  -   259,000 
Deferred revenue  (301,000)  (47,000)
Net cash used in operating activities  (5,034,000)  (369,000)
         
Cash flows from financing activities:        
Capital expenditures  (14,000)  - 
Net cash used in investing activities  (14,000)  - 
         
Cash flows from financing activities:        
Proceeds from $3.00 common stock issuances net of costs  7,001,000   - 
Proceeds from $8.00 common stock issuances net of costs  9,005,000   - 
Proceeds from exercise of $5.00 warrants  4,635,000   - 
Cash from Abeona Ohio  3,697,000     
Payment of short-term debt  (400,000)  - 
Net cash provided by financing activities  23,938,000   - 
         
         
Net increase (decrease)  in cash and cash equivalents  18,890,000   (369,000)
Cash and cash equivalents at beginning of period  11,520,000   424,000 
Cash and cash equivalents at end of period $30,410,000  $55,000 
         
Supplemental cash flow information:        
Cash paid for interest $-  $- 
         
Supplemental disclosure of noncash transactions:        
Shares issued to holders of Abeona Ohio for acquisition $31,758,000  $- 
Contingent milestones to Abeona Ohio members  6,489,000     
Licensed technology from Abeona Ohio  2,156,000     
Preferred stock dividends in dividends payable  -   1,451,000 

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

 22



19


PlasmaTech Biopharmaceuticals,

Abeona Therapeutics Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Three and Six Months Ended March 31,June 30, 2015 and 2014

(unaudited)


PlasmaTech Biopharmaceuticals,

Abeona Therapeutics Inc. (together with our subsidiaries, “we”, “our”, “PlasmaTech”“Abeona” or the “Company”) is a Delaware corporation. We are an emerging biopharmaceutical company focused on developing and delivering gene therapy and plasma-based products for severe and life-threatening rare diseases. Abeona's lead programs are ABO-101 (AA9 NAGLU) and ABO-102 (scAAV9 SGHG), adeno-associated virus (AAV)-based gene therapies for Sanfilippo syndrome (MPS IIIA and IIIB) in collaboration with patient advocate groups, researchers and clinicians, anticipated to commence clinical trials in 2015. We are also developing ABO-201 (scAAV9 CLN3) gene therapy for juvenile Batten disease (JBD); and ABO-301 (AAV LK19 FANCC) for Fanconi anemia (FA) disorder using a range of pharmaceutical products primarily based uponnovel CRISPR/Cas9-based gene editing approach to gene therapy program for rare blood diseases. In addition, we are also developing rare plasma protein therapies including PTB-101 SDF Alpha™ (alpha-1 protease inhibitor) for inherited COPD using our nanopolymer chemistry technologies, and salt diafiltration process (“SDF”) technology recently licensed from Plasma Technologies LLC (“Licensor”). We currently have one marketed product licensed in the U.S., Europe, China, Australia, New Zealand and Korea. We also have additional products and platform technologies in various stages of development and are seeking partners to continue development and/or to license the technology.proprietary SDF™ (Salt Diafiltration) ethanol-free process. Our efforts have been principally devoted to research and development, resulting in significant losses.


(1)Interim Financial Statements

The condensed consolidated balance sheet as of March 31,June 30, 2015, the condensed consolidated statements of operations for the three and six months ended March 31,June 30, 2015 and 2014, the condensed consolidated statements of stockholders’ equity for the three and six months ended March 31,June 30, 2015, and the condensed consolidated statements of cash flows for the threesix months ended March 31,June 30, 2015 and 2014, were prepared by management without audit. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, except as otherwise disclosed, necessary for the fair presentation of the financial position, results of operations, and changes in financial position for such periods, have been made.


Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these interim financial statements be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations for the period ended March 31,June 30, 2015 are not necessarily indicative of the operating results which may be expected for a full year. The condensed consolidated balance sheet as of December 31, 2014 contains financial information taken from the audited PlasmaTechAbeona financial statements as of that date.


Certain reclassifications to the consolidated financial statements for all periods presented have been made to conform to the March 31,June 30, 2015 presentation.

On June 19, 2015 we changed our name from PlasmaTech Biopharmaceuticals, Inc. to Abeona Therapeutics Inc.

 23





20



(2)         Intangible Assets


Intangible assets consist of the following (in thousands):


  March 31, 2015  December 31, 2014 
  
Gross
carrying
value
  
Accumulated
amortization
  
Gross
carrying
value
  
Accumulated
Amortization
 
Amortizable intangible assets
 
Licensed technology
 $ 5,000  $ 125  $ 5,000  $ 9 
                 

  June 30, 2015  December 31, 2014 
  Gross
carrying
value
  Accumulated
amortization
  Gross
carrying
value
  Accumulated
Amortization
 
Amortizable intangible assets                
                 
Licensed technology $7,156  $256  $5,000  $9 

Amortization expense related to intangible assets totaled $116,000 and $232,000 for the three and six months ended March 31,June 30, 2015, respectively, and totaled $0 for the three and six months ended March 31,June 30, 2014. The aggregate estimated amortization expense for intangible assets remaining as of March 31,June 30, 2015 is as follows (in thousands):


  2015                               $         349
2016                                          465
2017                                          465
2018                                          465
2019                                          465
over 5 years                         2,666

Total                              $      4,875


2015 $291 
2016  582 
2017  582 
2018  582 
2019  582 
over 5 years  4,281 
     
Total $6,900 

(3)         Stock Based Compensation


For the three and six months ended March 31,June 30, 2015, we recognized stock-based compensation expense of $224,000.$904,000 and $1,128,000, respectively. For the three and six months ended March 31, 2014 we recognized stock-based compensation expense of $795,000.


$192,000 and $987,000, respectively.

The following table summarizes stock-based compensation for the three and six months ended March 31,June 30, 2015 and 2014:

  
Three months ended
March 31,
 
  
2015
  
2014
 
Research and development $18,000  $77,000 
General and administrative  206,000   718,000 
            Stock-based compensation expense included in operating expense $224,000  $795,000 

  

Three months ended

June 30,

  

Six months ended

June 30,

 
  2015  2014  2015  2014 
Research and development $86,000  $18,000  $104,000  $95,000 
Selling, general and administrative  818,000   174,000   1,024,000   892,000 
Stock-based compensation expense included in operating expense $904,000  $192,000  $1,128,000  $987,000 

For the three and six months ended March 31,June 30, 2015 we granted 120,0001,695,000 and 1,815,000 stock options, respectively, and for the three and six months ended March 31,June 30, 2014 we granted 210,000no stock options.


For the three and six months ended March 31,June 30, 2015 we granted 1,350,000 and 2014 there was no1,360,000 shares of our common stock granted to directors and officers.


21

employees. For the three and six months ended June 30, 2014 we granted no shares of our common stock to directors and employees.


(4)           Litigation

(4)Litigation

Alan Schmidt (“Schmidt”), a former shareholder of Genaera Corporation (“Genaera”), and a former unitholder of the Genaera Liquidating Trust (the ‘‘Trust’’), filed a purported class action in the United States District Court for the Eastern District of Pennsylvania in June 2012. The lawsuit named thirty defendants, including PlasmaTech,Abeona, MacroChem Corporation, which was acquired by us in February 2009, Jeffrey Davis, the then-CEO and currently a director of PlasmaTech,Abeona, and Steven H. Rouhandeh and Mark Alvino, both of whom are our directors (the ‘‘PlasmaTechAbeona Defendants’’). With respect to the PlasmaTechAbeona Defendants, the complaint alleged direct and derivative claims asserting that directors of Genaera and the Trustee of the Trust breached their fiduciary duties to Genaera, Genaera’s shareholders and the Trust’s unitholders in connection with the licensing and disposition of certain assets, aided and abetted by numerous defendants including the PlasmaTechAbeona Defendants. Schmidt seeks monetary damages, disgorgement of any distributions received from the Trust, rescission of sales made by the Trust, attorneys’ and expert fees, and costs. On December 19, 2012, Schmidt filed an amended complaint (the “Amended Complaint”) which asserted substantially the same allegations with respect to the PlasmaTechAbeona Defendants. On February 4, 2013, the PlasmaTechAbeona Defendants moved to dismiss all claims asserted against them. On August 12, 2013 the court granted the PlasmaTechAbeona Defendants’ motions to dismiss and entered judgment in favor of the PlasmaTechAbeona Defendants on all claims. On August 26, 2013, Schmidt filed a motion for reconsideration. On September 10, 2013 Schmidt filed a Notice of Appeal with the District Court. On September 17, 2013, Schmidt filed his appeal with the U.S. Third Circuit Court of Appeals (the “Third Circuit”). On September 25, 2013, the District Court denied Schmidt’s motion for reconsideration. On October 17, 2013, Schmidt amended his appeal to include the District Court’s denial of his motion for reconsideration. On March 20, 2014, Schmidt filed his Brief and Joint Appendix. On May 22, 2014, the PlasmaTechAbeona Defendants filed their Oppositions to Schmidt’s Brief. On May 29, 2014, Schmidt was granted an extension of time until June 23, 2014 to file his Reply Brief and filed his Reply Brief on that date. The Third Circuit held oral argument on September 12, 2014. On October 17, 2014, in a split decision, the Third Circuit reversed the District Court’s decision holding, among other things, that the District Court’s determination that the Amended Complaint was time-barred on statute of limitations grounds was premature. The Third Circuit did not rule upon any of the other grounds for dismissal advanced in the District Court and on appeal. The Third Circuit remanded the case to the District Court for further proceedings. On January 6, 2015, the District Court ordered the parties to file supplemental briefs on all remaining arguments for dismissal, and further ordered that a hearing on the motions to dismiss would be held on February 3, 2015. On January 23, 2015, the PlasmaTechAbeona Defendants filed their Supplemental Brief. At the February 3, 2015 hearing, Schmidt sought and was granted leave to amend his complaint for a second time. Schmidt filed his Second Amended Complaint on February 3, 2015. The Second Amended Complaint asserts substantially the same factual allegations with respect to the PlasmaTechAbeona Defendants, but eliminates all causes of action against the PlasmaTechAbeona Defendants except for aiding and abetting the Genaera directors’ and officers’ purported breaches of fiduciary duties, a claim for “punitive damages” and a claim for rescission of a settlement agreement between the Trust and the PlasmaTechAbeona Defendants. On March 20, 2015, the PlasmaTechAbeona Defendants filed a motion to dismiss the Second Amended Complaint. The Abeona Defendants’ motion to dismiss is fully briefed, and oral argument on the motion is scheduled for September 30, 2015. We intend to continue contesting the claims vigorously.

22


We are not currently subject to any other material pending legal proceedings.

(5)Abeona Therapeutics LLC Acquisition

On May 15, 2015, we agreed to issue an aggregate of 3,979,761 unregistered shares of our common stock to the members of Abeona Therapeutics LLC (Abeona Ohio). Abeona Ohio’s principal activities were focused on developing and delivering gene therapy products for severe and life-threatening rare diseases. Abeona Ohio's lead program is ABO-101 (AA9 NAGLU) and ABO-102 (scAAV9 SGHG), adeno-associated virus (AAV)-based gene therapies for Sanfilippo syndrome (MPS IIIA and IIIB) in collaboration with patient advocate groups, researchers and clinicians, anticipated to commence clinical trials in 2015.

The initial consideration of $31,758,000 was calculated using the Company’s stock price on date of the closing, May 15, 2015 of $7.98 times the number of the Company shares (3,979,761) issued to Abeona Ohio members.

There is a contingent valuation on three milestones. Per the merger agreement with Abeona Ohio each milestone would consist of either cash, our stock or a combination of both, at the Company’s election, equivalent to a stated dollar amount. The fair value of the probability of achieving all three milestones is estimated at $6,489,000.

The following preliminary purchase price allocation is based on information we have to date and is unaudited.

Total purchase price    
Initial consideration $31,758,000 
Contingent consideration  6,489,000 
Total purchase price $38,247,000 
     
Allocation of the purchase price    
Cash $3,697,000 
Accounts receivable  1,000 
Prepaid expenses  28,000 
Property and equipment  51,000 
Other assets  1,000 
Accounts payable  (153,000)
Total tangible assets  3,625,000 
     
Licensing agreement  2,156,000 
Goodwill  38,955,000 
Contingent consideration liability  (6,489,000)
     
Total net asset value $38,247,000 

(5)           Subsequent Events

In connection with the acquisition $375,000 in merger costs were expensed.

(6)Subsequent Events

On April 23,July 31, 2015 we closed a $7an upsized $15.5 million privatedirect placement of registered common stock consistingwith institutional investors, including Soros Fund Management and Perceptive Life Science Fund, and two members of 2,333,333the Board of Directors. The financing is comprised of 2.83 million shares of common stock at a price of $3.00$5.50 per share.


On May 5, 2015, PlasmaTech Biopharmaceuticals, Inc., a Delaware corporation (“PlasmaTech”), Plasmatech Merger Sub Inc. (“Merger Sub”), a wholly owned subsidiary of PlasmaTech and a Delaware corporation, Abeona Therapeutics LLC, an Ohio limited liability company (“Abeona”) and Paul A. Hawkins, an individual, solely in his capacity as Member Representative (“Member Representative”) entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Abeona, with Abeona continuing as the surviving corporation and becoming a wholly owned subsidiary of PlasmaTech (the “Merger”). The Board of Directors of PlasmaTech and Managers of Abeona have unanimously approved the transaction.

In connection with the Merger, the PlasmaTech will issue to Abeona members a total of 3,979,761 common shares upon closing of the transaction, and up to an additional $9 million in performance milestones, in common stock or cash, at the Company’s option.

The completion of the Merger is subject to customary closing conditions.

On May 11, 2015, we closed a $10 million private placement of common stock consisting of 1,250,000 shares of our common stock, at a price of $8.00 per share and warrants to purchase 625,000 shares of common stock. The warrants have an exercise price of $10.00 per share and are exercisable for 30 months from the closing date. A total net of $9.2 million was received.

Also in connection with the financing, the placement agent received warrants to purchase 50,000 shares of common stock at $11.00 per share and which are exercisable for five years from the closing date.

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