Abeona Therapeutics Inc (ABEO) 2021 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Abeona Fourth Quarter and Fiscal Year 2021 Earnings Call. (Operator Instructions) I would now like to turn the call over to your host, VP of Investor Relations and Corporate Communications at Abeona, Greg Gin. Greg, please go ahead.

Thank you, Kelly. Good morning, everyone. I would like to welcome and thank everyone for joining us on our fourth quarter and full year 2021 conference call. The press release announcing the results and update is available on our website at www.abeonatherapeutics.com. On the call today with prepared remarks are Vish Seshadri, Chief Executive Officer of Abeona; and Joe Vazzano, Chief Financial Officer. After the prepared remarks, we will host the Q&A session. We're also joined today by Dr. Brian Kevany, Chief Technical Officer.

Before we start, I will review our safe harbor statement. Remarks made during today's call may contain projections and forward-looking statements regarding future events. Forward-looking statements are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements are based on current expectations and are subject to change, and actual results may differ materially from those expressed or implied in the forward-looking statements.

Various factors that could cause actual results to differ include, but are not limited to, those identified under the section entitled Risk Factors in the company's annual report on Form 10-K and other periodic reports filed by the company with the Securities and Exchange Commission. These documents are available on our website at www.abeonatherapeutics.com.

And with that said, I will now turn the call over to Vish. Vish?

Thank you, Greg, and thank you, everyone, for joining us this morning. I'll start by discussing the implications of the announcements we made this morning related to the strategic focus on EB-101 and our preclinical eye programs as well as initiatives to extend our cash runway. Our management team and Board conducted an extensive review of our operations and pipeline. We believe this plan reflects the operating discipline needed to extend our cash runway beyond our near-term anticipated catalysts and has the potential to create long-term value for our shareholders.

Let me review the 3 key elements of the plan. First, we made the decision to focus on EB-101, our investigational autologous gene-corrected cell therapy following the achievement of target enrollment in the pivotal Phase III VITAL study of EB-101 for recessive dystrophic epidermolysis bullosa. This achievement marks an important milestone for Abeona, and we thank the patients, families and the clinical investigators at Stanford and UMass for participating in the study. We are also especially grateful to our EB-101 program team for their relentless efforts in operationalizing the in-house production of both retroviral vector and the autologous gene-corrected epidermal sheets and for ensuring that every patient biopsy in VITAL receive EB-101 drug product.

We expect top line results of the study in the third quarter of 2022 that could support a Biologics License Application, BLA, filing. And therefore, EB-101 deserves to be the highest priority for our experienced team. While focusing our R&D resources primarily on VITAL data readout, we will be actively pursuing a potential commercialization partner for EB-101.

During the first quarter of 2022, we received positive feedback from the FDA in the Type B meeting on the proposed CMC requirements of the EB-101 development program, and we gained alignment with the agency on characterization and validation plans that could support a potential BLA for EB-101 in our debt. Remember, in a Phase I/II study earlier, EB-101 had demonstrated a high rate of instantaneous wound healing and pain reduction for 6 years after treatment of large chronic wounds in our debt. In May, we will present at a medical meeting follow-up data up to 8 years, the latest follow-up time point for the first patient treated with EB-101 in the Phase I/II study.

Large chronic wounds typically do not heal spontaneously and inflict greatest pain and clinical burden on other patients. These wounds measure greater than 20-centimeter surface area and had remained open for at least 6 months, sometimes even for years, as we've previously shared.

With the primary focus on EB-101, the second part of the plan is to divest Abeona of the MPS IIIA and MPS IIIB program, and we have already begun to carry out some activities. Regarding the ABO-102 program for MPS IIIA, given the tremendous unmet need by patients and our positive data to date showing the potential of ABO-102, do not only increase brain volume but also preserve neurocognitive development in young patients, we have intensified our pursuit of a strategic partner to take over development activities. In addition, we have ceased the build-out of the AAV manufacturing space.

Let me briefly explain how we came to this decision. As part of the review of the Transfer A Statistical Analysis Plan in January 2022, the agency recommended that all participants be followed to an age of at least 60 months for the primary analysis of neurocognitive function. This would shift the anticipated timing of the neurocognitive outcomes data readout to late 2024, early 2025 as compared to our prior projection of the second quarter of 2023. As a result of the FDA feedback and our focus on preserving cash, we concluded that a strategic partnership would be the best opportunity to further advance ABO-102 toward bringing this novel therapy to patients.

As part of our portfolio prioritization, we also decided to discontinue development of ABO-101 for MPS IIIB. At this time, I want to take a moment to thank our dedicated team members who worked on ABO-102 and ABO-101 for their important contributions to Abeona and for their tireless efforts and expertise in advancing these programs for these patients.

The third element of the plan is continuing our preclinical research, investigating novel AAV capsid in 5 undisclosed ophthalmic conditions with estimated U.S. prevalence ranging from 5,000 to 15,000 patients. We will be presenting results from testing of novel AAV capsids in nonhuman primates at the upcoming ARVO 2022 Annual Meeting in May. In addition, we expect animal proof-of-concept data readout beginning in mid-2022 that could support pre-IND meetings with the FDA as early as second half of 2022. We believe these strategic changes will ensure that Abeona has a focused team, operating discipline and will extend the runway of our current cash resources to mid-2023.

In finishing up my remarks, I would like to thank our outgoing Chief Financial Officer, Ed Carr, and I want to introduce Joe Vazzano, who was recently appointed as our Chief Financial Officer and is joining us on the call today. Joe previously served as CFO of Avenue Therapeutics, where he secured multiple equity financings for the company. Welcome, Joe, and I'll now turn the call over to you.

Thank you, Vish. I would like to remind everyone that the Form 10-K is available on our website, which is where you can get additional details on our financial results for the full year ended December 31, 2021.

Starting with the financial resources on our balance sheet, we had cash, cash equivalents, restricted cash and short-term investments of $50.9 million as of December 31, 2021. In December 2021, we raised approximately $17.5 million in gross proceeds from an underwritten public offering of common stock. Our net cash used in operating activities was $65.7 million for the year, 2021, including the $20 million payment in November 2021 in accordance with the settlement agreement with REGENXBIO. Based on the new corporate strategic focus that this discussed and with the future cost savings, we believe that our estimate runway of current cash resources takes us into mid-2023.

License and other revenues for the full year of 2021 were $3 million compared to $10 million in 2020. The revenue in 2021 resulted from a clinical milestone achieved in December of 2021 under a sublicense agreement with Taysha Gene Therapies for AB-202 for CLN1 disease.

Turning to research and development activities. We spent $34.3 million for the full year of 2021 compared to $30.1 million in 2020. Our spend on general and administrative activities was $22.8 million for the full year of 2021, compared to $23.8 million in 2020. Net loss was $85 million for the full year 2021 or $0.86 per share, basic and diluted loss, as compared to a net loss of $84.2 million or $0.91 basic and diluted loss per common share in 2020. The net loss in 2021 included a onetime noncash goodwill impairment charge of $32.5 million. This impairment charge has no impact on the company's current cash position, cash flow from operating activities and does not have any impact on future operations.

With that, I'll turn the call back over to the operator for the Q&A session. Operator?

(Operator Instructions) Your first question is coming from Kristen Kluska with Cantor Fitzgerald.

The first one that I have is for both of these lead programs, could you talk a bit more about the types of partnerships you're open to looking at, at this point? Specifically, how are you thinking about different geographies as well as the upfront payment and other financial structures to support some of the next initiatives at the company, including a focus on ophthalmology? And then also considering the rare pediatric disease designation and some of the monetary deals that we've seen recently around priority review voucher sales.

Thank you for the question, Kristen, and great to hear from you. Just wanted to make sure that's a multipart question. So I just wanted to articulate and just make sure that I have everything down correctly. So the first is, you're asking about the nature of partnerships both for EB-101 as well as ABO-102. And let me start there. And then you had a couple of questions about eye programs and the rare pediatric voucher. Did I miss anything there?

No, please, not at all.

Great. So starting with EB-101, our goal is to find a commercialization partner where all the launch and the commercialization activities would be the responsibility of a partner. However, recognizing the value that we've built so far getting us to the launch. And we envision continuing to be the supplier as one scenario. And if such partnerships had opportunity for taking on supply and transfer of technology, we're open to that as well. So that's a very broad multi-scenario answer that I've provided you. But at this point in time, all possibilities exist.

Now with the second question about the ABO-102 program, the speed is what is going to be very important for us. We will choose any day a speed of landing a partnership over optimizing deal value. So that's pretty much all we have at this point in time, not able to tell you exactly what's going to be the nature of the deal structure because that's a little bit of a work in progress at this point in time. But of course, it will all come out in public when we have a definitive agreement of sorts.

Because it's related to this topic, I'll cover the rare pediatric question. Both our first programs do have rare pediatric designations. And as you are aware, that's the requirement to be able to -- for eligibility for a priority review voucher when your BLA is approved. And we are on track for that for both the programs. And the second requirement for rare pediatric -- for the PRV is that we should secure a priority review for the BLA adjudication. So that's something that we're also anticipating. So we should have the -- we are on track for eligibility for a priority review voucher for EB-101 approval.

But of course, the BLA approval is what marks the trigger for such a coupon. And what we have seen in the latest trends that you've seen, such vouchers trade in the vicinity of $100 million, depending on the timing ,you have variations on that, but give or take, that's about the kind of value that we put to a PRV in general. So those are what I would characterize as the opportunities for PRV. And you had a question about our preclinical eye programs, Kristen. Can you just remind me exactly what your question is about?

Yes. So that one was really just based off of the different types of deals you're potentially looking to explore for these lead programs considering capital needs to really support that next initiative at the company, which may include a focus on ophthalmology. So, like, are you looking for partnerships with like a good capital upfront to really support moving that pipeline along?

Absolutely. And as you know, the ophthalmology pipeline is not as capital intensive as are our pivotal clinical programs, right? So we are able to move these programs to a good place with proof-of-concept experiments conducted through the year. And that would be a good value inflection point for us to secure potential partnerships as we move them into the clinic. And it could have multiple different structures that could work, and depending on the ownership of various geographic commercialization opportunities and things like that. Of course, some ophthalmology programs have specific interest outside of the U.S. as well. And we are going to be open to such types of structures as well.

Okay. Appreciate that. And for MPS IIIA, could you help us understand the 60-month age time point for follow-up based off of the agency feedback? Is this based on the cognitive age equivalent, natural history data where you see that slope start to -- the downward slope, excuse me, start to become more apparent at 60 months of age. And then despite the fact that you're looking for a partnership here, is this still a program that you anticipate having some further durability data from at future conferences?

Absolutely, Kristen. Thank you for the question. The 60-month age requirement or strong recommendation from the agency to follow up is for the chronological age of patients. So what it really means is, all the children that we've dosed are young children, right? Many of them less than 2 years of age and the wording really means that, follow these patients until they reach their fifth birthday, right? That's the 60-month chronological age. And the reason, as you rightly articulated, is because at that age, you see that the neurological decline has fully set and even acquired skills for these children start to decline and they are also lost.

And the opportunity to see a difference between the treated patients and what you've seen in natural history is probably most elevated at that kind of age time point. So that's exactly correct, so the chronological age of 60 months that the agency had expected.

In terms of partnerships, of course, because the shifts, the timing of a neurocognitive data readout is why it became important for us to focus on partnerships because obviously, the cash runway, given our situation and everything, and we need such a partnership to take it all the way to the end point.

But in terms of durability, we are -- all patients are still in follow-up. The data flow from these studies will still continue, and we will have well beyond that declined phase of patients that you've seen in natural history. We are going to see the data mature. So that's all rest assured.

Okay. And if I may sneak in one last question here. I understand MPS IIIB is earlier in development, but is there any particular reason for discontinuing this program versus perhaps looking at partnering both as a package deal given some of the synergies in MPS IIIA and the programs here?

Yes. From our intent perspective, both programs are open for partnering given the maturity -- or data maturity that we have with MPS IIIA, naturally, interest is higher for MPS IIIA, but if there is -- if there are potential partners that would take both programs, we're open to that as well. We just see that the prospects of IIIA partnering are higher at this point in time.

Your next question is coming from Mani Foroohar with SVB Securities.

Two quick ones. I'll start with a financial question. For the updated guidance runway into mid-2023, can you give us a little clarity on what assumptions around, sort of, option warrants exercise, any cash coming in from derivatives are baked into that? And then I have a follow-up. It's more of an operational question.

Great. Thank you for the question. I'll turn it over to Joe, but I'll just start with saying that the -- extending the cash run rate to mid-2023 is with the -- with no assumption of extra cash flowing in beyond what we already have today. But Joe can talk about other potential opportunities as well. Joe?

Sure. Thanks, Vish. And yes, we do -- in that current assumption with our current cash resources on hand right now, we believe we will get to mid-2023. That does not include any exercise of any warrants or any other cash really infusion from an equity raise. We anticipate the cost savings associated with the strategic decision announced with regards to the MPS programs is going to reduce our cash burn by approximately a couple of million per quarter. Also, in addition with the cost savings from ceasing the AAV build-out of about $13 million, all of that kind of bring us to our assumptions of mid-2023.

Okay. That's helpful. So I want to position operational -- I guess, regulatory question. We were surprised, as I think others were, by the CRL received by Amarin especially after the PDUFA delay. Can you give us where you are for their AAV products? I mean, where you guys are in your discussions with regulators? How you view that potential tightening or on tightening of FDA treatment or more uncertainty in FDA treatment around pediatric dermatological diseases in EB in particular? And what your interpretation of the dynamic is for what it means for EB-101?

Sure. I can take that question. The first point to note here is we don't have all the data details for the Amarin data package, but what we understand is that the FDA is very particular about a 6-month time point and durability up to a 6-month time point, and they also look at various secondary end points in the case of the Amarin data, right? We have a pretty solid understanding with the FDA on what our 2 co-primary end points are and the time point of 6 months. And the 2 co-primary end points that we have in the agreement are: one is 50% wound healing by global investigator assessment; and the second one is pain reduction using the Wong-Baker Scale.

And we even have more recent -- although the meeting where these 2 end points were agreed upon happened end of 2020, we have had subsequent recent communications with the FDA and confirm that this is what they're looking for.

The second point I would make is that the CMC is the other big aspect of a BLA filing. We had, on March 18, a successful Type B meeting with the FDA on the proposed CMC requirements for the development program and gained alignment with the agency on the characterization and validation plans that could support a BLA. And in the most conservative scenario even, we have agreed that 3 PPQ runs is what is the expectation, and we're already prepared.

So the road map is very clear for our CMP plans. And upon a -- even if we go about that in a sequentially triggered way, first, to see if the trial is positive and then put capital-intensive resources towards the CMC BLA package, we're still confident that quarter 2 2023 is the time frame we will be able to file a BLA. Of course, those activities can be further accelerated if we're able to raise additional money or land a partnership sooner, and that's something that we're going to be pursuing as well.

There appears to be no further questions in queue at this time. I would now like to turn the floor back over to Vishwas Seshadri for any closing remarks.

Thank you so much. We, at Abeona, are committed to developing novel cell and gene therapies for patients with rare diseases. And I want to thank our shareholders and other stakeholders who have listened to this call and for joining us today. We'll talk to you on our next quarterly call. Thank you very much.

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