Abeona Therapeutics Inc (ABEO) 2017 Q4 法說會逐字稿

Greetings, and welcome to the Abeona Therapeutics Fourth Quarter Business Update Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christine Silverstein, Finance, Investor Relations. Thank you, Ms. Silverstein, you may begin.

Good morning, and welcome. On the call today are Dr. Timothy J. Miller, President and CEO; and Jeffrey Davis, COO of Abeona Therapeutics. Dr. Miller will begin the call with an overview of the fourth quarter highlights and more recent developments at Abeona. After that, Jeff will provide a commentary on the quarter, a brief overview of financials and provide a snapshot of our financial condition. Following that, we will open the floor up to a few questions.

Before I turn the call over to them, I need to remind our listeners that remarks made during this call may contain forward-looking statements. Forward-looking statements on this call are made pursuant to the safe harbor provisions in federal securities laws. Information contained in the forward-looking statements is based on current expectations and is subject to change, and actual results may differ materially from forward-looking statements. Some of the factors that could cause actual results to differ are discussed in our reports filed with the SEC. These documents are available on our website at www.abeonatherapeutics.com.

With that said, it is now my great pleasure to introduce Dr. Timothy J. Miller. Tim, you have the floor.

Good morning, everyone. I'd like to start with some overviews. The fourth quarter was marked by several notable achievements in our clinical programs. Significant progress was made in the IIB clinical programs, EB-101 for epidermolysis bullosa, and ABO-102 in MPS IIIA, and we initiated our third clinical program ABO-101 in MPS IIIB along with additional enrollments at our global clinical sites for MPS IIIA.

Data reported from these programs continue to underscore the durability and clinical benefits observed after administration of this gene therapy. The strong safety and biopotency data observed in the 3 active clinical trials and the strategic initiative of building an in-house commercial GMP manufacturing facility further strengthens our position in developing gene and cell therapies to treat these devastating and rare pediatric diseases.

Most recently, the FDA granted our epidermolysis bullosa program, EB-101, with the Regenerative Medicine Advance Therapy or RMAT designation. This program continues to advance as we finalize the clinical protocol before initiating the pivotal Phase III trial this year. Our MPS IIIA program now has 4 patients enrolled in Cohort 3 for the expanded Phase I/II clinical trial at a dose of 3E13 vg/kg, while our MPS IIIB program recorded initial safety and biopotency signals at 30 days post administration, demonstrating that the therapy is well tolerated and continuing to show very similar early biopotency signals as the MPS IIIA program, particularly with regards to significant reductions in the disease-specific heparan sulfate reductions in cerebral spinal fluid, urine and plasma and greater than a 300-fold increase in NAGLU enzyme activity.

In our preclinical work, we achieved additional regulatory designations for our Batten or infantile CLN1 program. And in addition, we continue to work on optimizing our AIM vector platform, which continues to demonstrate exciting progress, including enhanced tissue tropisms compared to naturally-occurring AAV capsids. And we have nonhuman primate studies that are going to be initiated in the second quarter with the lead CNS-targeted candidates.

For some corporate achievements in the quarter, we did have -- host our Research and Development Day. On October 11 is our inaugural day in New York City, for Abeona management together with key opinion leaders and clinical experts presented an update on our clinical programs to an over 80 person crowd of institutional investors and equity analysts. That same week, we announced a grant from over 9 Sanfilippo foundations from around the world, $13.85 million to further the clinical development of our MPS IIIA and IIIB gene therapies to help further our efforts in trying to find additional ways to treat patients with these unmet diseases.

We also announced the groundbreaking in our manufacturing facility. In early October, we broke ground on the manufacturing facility located at our Cleveland offices. The finished 24,000 square-foot facility will be built out and finished in the second quarter and validated over the following 6 months or so. This concept-to-commercial facility was named The Elisa Linton Center for Rare Diseases in honor of a young girl who passed from Sanfilippo syndrome, and whose family foundation in Canada has been instrumental in raising funds and awareness for this rare terminal disease.

The center will initially be used to produce ABO-101 and ABO-102 gene therapies for the treatment of Sanfilippo syndrome; and EB-101, our autologous cell therapy for the treatment of recessive dystrophic epidermolysis bullosa. And it will also house Abeona's expanded viral vector production facility, again, for the concept-to-commercial vision that we have of being able to take things like our AIM vectors, be able to put in new constructs, make those vectors in-house, continue to produce clinical trial material on reps to commercial for these unique and proprietary vectors that we use in the delivery of novel gene therapies.

In addition, the fourth quarter investment from high-quality investors and leading foundations is an achievement that demonstrates our internal capabilities and commitment to the advancement of our robust pipeline and next-generation vector platform, including MPS IIIA gene therapy products. We look forward to further strengthening our efforts with key hires, advancing clinical capabilities and commercial expansion in the coming quarters.

For some recent clinical progress for the EB-101 program, we did have some regulatory achievements. In January, we received the RMAT designation for EB-101, our autologous ex-vivo cell therapy for patients suffering from RDEB, which is the most severe form of the epidermolysis bullosa. The FDA granted this designation based on the data from the Phase I/II EB-101 clinical trial, which demonstrated significant wound healing in treated wounds for over 2 years. The designation is significant as it enables collaborative discussions with senior FDA personnel prior to review and expedited approval process to drug candidates where preliminary clinical trials have indicated that a therapy has offered substantial treatment advantages over existing options for patients with serious or life-threatening diseases.

Just as a reminder, there are no treatments for this particular disease, relying mainly on palliative care. The EB-101 program previously received the Breakthrough Therapy Designation, Rare Pediatric Disease Designation and Orphan Drug Designation. The latter was received by both the FDA and EMA. These designations are prerequisites for the FDA's priority review voucher or priority process. We continue to work closely with the FDA through the breakthrough and RMAT designations in preparation for the pivotal Phase III trial in RDEB patients and we expect to provide guidance later this year, especially as we initiate the trial in the upcoming months.

For the ABO-102 program for recent clinical achievements. During the quarter, we enrolled 3 patients in our global expansion of the Phase I/II clinical trial for MPS IIIA, 1 in Australia, 1 in Spain and 1 in the U.S. [Both] received the Cohort 3 dose of 3E13 vg/kg. One additional patient in the U.S. has also received the Cohort 3 dose for a total global number of 4 patients in the Cohort to date. In early February, we announced the top line data from our ABO-102 MPS IIIA trial at the WORLDSymposium for lysosomal storage diseases with the main takeaways being that the trial results presented showed significant time and dose-dependent reduction of the underlying disease pathology, including reductions in CSF and urinary heparan sulfate fragments, including total GAGs and diminished liver volumes.

Importantly, we also demonstrated evidence of cognitive benefit at 6 months posttreatment in Cohort 2, and in 1 year -- at 1 year in Cohort 1. Alongside those results, we announced that the FDA will allow Abeona to lower the enrollment age for the ABO-102 trial to include children as young as 6 months of age, allowing this to be the only clinical trial in development in the world that's going to be able to enroll patients with the MPS III diseases as young -- at this young age. ABO-102 continues to be well tolerated at all doses, at all follow-up time frames and has enabled an accelerated global enrollment schedule over the upcoming months. We look forward to providing clinical and preclinical updates at important clinical conferences in the coming months.

For the ABO-101 program for recent clinical achievements. In December, we announced that we had enrolled our first patients in the ABO-101 Phase I/II clinical trial for MPS IIIB. In February, we reported on the initial safety and biopotency signals of that clinical trial based on the results as observed in the first-treated patients at 30 days postinjection. These results demonstrated that the gene therapy -- very similar to our MPS IIIA program -- is well tolerated at a dose of 2E13 vg/kg with early biopotency signals and significant disease-specific reductions in heparan sulfate in the CSF, urine and plasma and have also demonstrated a 200-fold increase in NAGLU enzyme activity. ABO-101 has been granted Orphan Drug Designation in the United States and in Europe and also has the Rare Pediatric Disease Designation as part of the priority review voucher process.

Our recent preclinical progress, we have -- IND-enabling studies continue for both the ABO-201 and ABO-202 gene therapy programs for the treatment of CLN3 also known as juvenile Batten disease, and CLN1 disease also known as infantile or -- and late onset infantile Batten disease, respectively. The ABO-202 program for the treatment of CLN1 disease has received 2 FDA designations. In March, we received the Rare Pediatric Disease Designation. And in February, we received the Orphan Drug Designation. Again, demonstrating the importance of these programs and how the amount of preclinical data to date has supported their translational progress into the clinic.

For the AIM vector platform, initial studies have indicated that the AIM vector can efficiently target multiple tissues with vector-selected tissue specificity, also with different routes of administration relative to the first generation vectors, whether intrathecal or intravenous or intramuscular. This helps provide second-generation treatment approaches for patients in their re-dosing strategy or for patients that have neutralizing antibodies to natural AAV serotypes.

We continue to develop the AIM chimeric AAV vectors both internally and through strategic partnering efforts. And again, as we enter nonhuman primate studies with our lead candidates for a number of different targets, particularly the CNS, we look forward to reporting out those results in the second half.

And with that, I'll turn it over to Jeff Davis for our fourth quarter summary financial results.

Thanks, Tim. I remind the listeners that we've recently filed the Form 10-K, where you can get all the specific details on our financial results. But in summary, our cash, cash equivalents and marketable securities as of December 31, 2017 were $137.8 million compared to $56.5 million as of the end of the third quarter of last year, September 30, 2017. Net cash used in operations for the 12 months ending December 31, 2017 was $22.9 million compared with $13 million in the same period in 2016, an increase of $9.9 million. There were a number of things that impacted our cash balance in the fourth quarter, and obviously, for the aggregated annual results. Those included an equity financing that was completed on October 19, where we announced the closing of a $92 million underwritten public offering and the full exercise of the underwriter's option to purchase additional shares.

Again, that closed on October 19, it was 5.75 common shares at a public offering price of $16 per share. The gross proceeds to the company were $92 million before deducting underwriting discounts and commissions and offering expenses paid by the company. We want to thank our bankers and our underwriters, and most importantly, syndicated leading investment funds for participating in that financing.

As Tim mentioned earlier, we also announced in October, a $13.85 million grant from a global network of 9 Sanfilippo syndrome foundations for additional clinical development of our MPS IIIA and B gene therapies.

From a revenue perspective, our revenues were $215,000 for the fourth quarter of 2017 compared with $256,000 for the similar quarter the year previously. 12 months ending December 31, 2017, the revenues were $837,000 compared to $889,000 in the same period in 2016. Revenues consisted of the combination of royalties from marketed products, primarily MuGard, and the recognition of deferred revenues related to upfront payments from early license agreements.

Loss per share was $0.19 per share for the fourth quarter of 2017 compared to $0.18 in the comparable period in 2016. Loss per share was $0.66 per share for the 12 months ended December 31, 2017 compared with $0.64 per -- loss per share in the same period of 2016. Total number of common shares outstanding as of the day that we filed the 10-Q on March 15th, which would include the shares from the recently-mentioned public offering as well as shares issued last year in the exercise of warrants, is 47,226,000 shares. And that's the summary financials.

With respect to upcoming Investor Relations and scientific events and conferences, I would highlight on April 9th, Abeona will be participating in a Biotech Innovations Conference put on by Bloomberg. During April 10th to the 14th, there is the American College of Medical Genetics and Genomics. May 16 through 19 is ASGCT, The American Society of Gene and Cell Therapy Annual Meeting, this year in Chicago as I believe it. And also, during the same period, May 15th to the 19th, the International Investigative Dermatology Meeting, where we expect presentations from our company's clinicians and KOLs, and we will update people on those planned presentations as we get closer to the scientific conferences.

So I believe that wraps up the prepared sort of comments. I think we will turn it back to the moderator to take some Q&A.

(Operator Instructions) Our first question comes from the line of Liav Abraham from Citi.

Just a couple from our end. So for you, Tim, can you update us on where you stand with respect to EB-101 as it relates to a dialogue with FDA? When do you anticipate being able to communicate a final trial design? And I am assuming this trial design will be very similar to your first trial. If you can make any comments on that, that would be helpful.

Sure. Liav, so as part of the breakthrough and RMAT designations you get 6 scheduled meetings with the FDA. These usually get broken up between clinical, CMC, talking about the TTP. So we've had the first couple of these, and again, you continue to go back and forth. We're very close to finalizing the trial design. We anticipate that the trial will start in the next couple of months. We'll certainly provide guidance towards that, but again as I think we've guided previously, the design is very similar to the Phase I/II with similar endpoints and similar number of patients. So I think that we'll be well positioned for accelerating the enrollment in that as well.

And then secondly, on your ABO-102 program, any comments on -- I guess, you probably do have a desire for breakthrough or RMAT designation. Any comments around timing there and whether you've filed for that would be helpful.

Yes. The -- certainly, with the number of treated patients that we have to date and guided towards, it certainly would be -- and especially with the amount of data that we've shown breakthrough or RMAT certain designations that we'll be looking at and look forward to guiding in the future that result when we might have those submissions in and some of those designations.

And then lastly, on that same program. Can you provide an update on number of patients enrolled in your ABO-102 program thus far? And particularly, given FDA allowing you to reduce the age of patients to be enrolled, whether you've identified younger patients, what the willingness is of parents to enroll very young patients -- 6 months that -- in that age range in that trial?

Sure. We have -- in addition to the FDA, we have received regulatory approvals to treat down to 6 months of age in both Europe and in Australia now. And certainly have been working with the clinicians and really the global community on finding and enrolling patients in that age bracket from 6 months up to 2 years. So we look forward to presenting more of the enrollments, and we haven't guided to the amount of patients that we are looking to enroll at this point. But we do go through prescreening for many of these patients and look forward to updating again at some point in the near future.

Our next question comes from the line of Maury Raycroft with Jefferies.

This is Vesna on for Maury. I have a couple as well. So -- you said something about status update for MPS IIIA patients. How about the MPS IIIB enrollment, can you provide an update on that?

On the MPS IIIB, we announced that we have treated 1 patient to date. I think we have guided previously that as we enroll additional patients, we'll be reporting more data out primarily at the Cohort level, and especially as we move through some of the prespecified endpoints, whether it is 30 days or 6 months. So we look forward to providing, again, more guidance on that in the second half on the enrollments in MPS IIIB.

Sounds good. Back to MPS IIIA, can you provide any status update on the patient queue from Cohort 2? And would you expect that the patients' results would improve in a 12-month analysis?

We don't have any updates at this time. I believe that the patients are due for an upcoming follow-up visit in the next few months, and we will guide based on what the clinicians provide us the data at that time.

Sounds good. And I have 1 final question on your preclinical program, just a clarification. Are you planning on using any of the new AIM vectors for CLN1 and 3? Or will they be going with AV9 as you presented in the preclinical data?

Yes, it's a great question. So the AIM vectors and certainly as we're moving into nonhuman primates now, we've identified a number of lead candidates both for intravenous administration for CNS-based diseases as well as intrathecal or other direct injection. We've identified some targets for intramuscular. So certainly, we're looking at how we layer the AIM vectors into our existing pipeline as well as building out for some of our undisclosed target diseases.

Any specific on CLN1 and 3? Since you're in IND studies, I would assume that you have a vector picked out, but if you can provide any clarity on that? And that's it for me.

We look forward to providing some more guidance on that as preclinical studies move to completion.

Our next question comes from the line of Kennen MacKay with RBC Capital Markets.

This is Slanix on for Kennen. Congrats on all the progress. A -- 2 questions on the MPS IIIA program. I was wondering if you could provide any color regarding how many additional patients worth of data we might see at ASGCT, particularly in Cohort 3. And I guess, more broadly, what biomarker and neurocog updates we might -- we could expect at the conference? And then I have a follow-up question as well.

Sure. I'm not sure that we'll comment much on the number of patients that we will present additional data on at ASGCT. We -- look, a part of that's always a function of amount of drug and weight of patients, so certainly looking for -- as you enroll younger patients, they weigh less, so you can also enroll more of them. And so we're certainly looking forward to discussing additional enrollments in the MPS IIIA program.

And with specific regard to biomarkers, we previously reported out on plasma, heparan sulfate, for example, some enzyme activity. We're looking at other markers of reductions of neuroma loss such as GM2 and GM3. We talked about that at our recent R&D Day, as something that has been tracking very explicitly with reductions in CSF heparan sulfate. So we believe that those are also part of the totality of the data package demonstrating efficacy after a single intravenous administration of these AV gene therapies.

Great. And regarding a potential registrational program -- trial for this program, have you had any discussions with the FDA or is this scheduled or is there something in the current Phase I data set that they are looking towards prior to initiating that process?

I think we'll provide guidance in the second half about how we are looking and working with both the EMA and the FDA on our regulatory strategy for registration.

Our next question comes from the line of Elemer Piros with Cantor Fitzgerald.

So the question is then coming back to the enrollment. And so in the first quarter, have you enrolled any IIIA or IIIB patients?

Yes, it seems to be a very active topic of discussion, Elemer. We'll probably provide some -- we'll provide some guidance on our additional enrollment at some of the upcoming investor and clinical conferences.

Okay, okay. And also with the EB-101 program, do you anticipate that you'll start the Phase III trial in coming months? So where would the product be produced, at the Stanford facility or in Cleveland? Or maybe a different source?

So actually it's going to be produced at the Stanford facility, which produced the material for the Phase I/II trial. Stanford has really been a great partner in both the clinical and the CMC process. As we continue to build out the Cleveland facility and go through validation, we'll certainly be looking to do a lot of product comparability studies going forward, and we'll provide some more information on that as the facility moves to validation.

Okay, okay. And has the thought crossed your mind that now with the RMAT designation in place, that you would discuss with the FDA on filing on the existing database for EB-101?

It's a very interesting question, Elemer. We -- with both the RMAT and the breakthrough status, that's certainly been an active part of our discussions with the FDA. They have been very, very supportive of the program, and trying to find additional ways to work with us for the success of the program for a registration filing. Again, as we move that program into the -- into the Phase III, certainly looking at ways to accelerate any path towards registration.

Okay. And my last question is on the cognitive and behavioral instruments that you plan to use for IIIB patients? If you could talk about those. Because in the Leiter and the Vineland scores, there appears to be a gap between the ages of 2 and 6 on the historical data?

We'll be using the same neuro-cognitive and developmental instruments, Elemer. The Vineland and the Mullen in particular are valid from birth through 98 years of age. And with the -- I think, the wealth of the natural history study data that compare out there, certainly looking forward to seeing very -- I would expect very similar results compared to the MPS IIIA program. I think it's important to know too, we're looking at volumetric changes by MRI in the IIIB program as well as the IIIA program. We reported out on that late last year, showing improvements in different areas of the deep brain architecture, which again supports the clinical hypothesis of treating earlier and treating younger with, again, these fair doses of AAV gene therapies.

Our next question comes from the line of Ram Selvaraju with H.C. Wainwright.

This is [Julian] on for Ram. Regarding EB-101, now that you've received RMAT in addition to Orphan and Pediatric Rare Disease designations for the drug, do you have any updates at this time regarding how long you would expect the FDA to turn around an NDA for the drug, if you were to submit one?

Well, I mean, these pathways enable instead of a 10-month turnaround, a 6 month turnaround. So certainly looking forward to utilizing an expedited review path.

There are no further questions in queue. I'd like to hand the call back to management for closing comments.

Thank you, everyone. I can tell that there's a lot of excitement around our MPS IIIA and EB-101 programs. And as we get additional patients enrolled and some more regulatory guidance, we look forward to updating everyone at additional conferences in the second half. Until then, best wishes and talk to you all soon.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.