Abeona Therapeutics Inc. Q4 FY2020 Earnings Call

Good day, and welcome to the Abeona Therapeutics Fourth Quarter and Full Year 2020 Conference Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions and comments after the presentation. As a reminder, today's conference call is being recorded. I'll now introduce you to today's conference host, Greg Gin, Vice President of Investor Relations and Corporate Communications at Abeona. Please go ahead.

Thank you, Holly. Good morning everyone. I'd like to welcome you and thank you for joining us on our fourth quarter and full year 2020 conference call. Yesterday, after the close of financial market, we issued a press release announcing the fourth quarter and full year results and recent operational progress. The press release is posted on our website at www.abeonatherapeutics.com. On the call today with prepared remarks are Michael Amoroso, Chief Executive Officer of Abeona; and Ed Carr, Chief Accounting Officer. After the prepared remarks, we will host a Q&A session, and joining us for the Q&A today will be Jay Bircher, Chief Technical Officer and Dr. Juan Ruiz, Vice President of European Medical Affairs at Abeona, who also heads Clinical Development for our MPS programs. Before we start, I will review your 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 statements are based on current expectations and are subject to change, and the actual results may differ materially from those expressed or implied. 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 quarterly reports on Form 10-Q, filed by the Company with the SEC. These documents are available on our website at www.abeonatherapeutics.com. And with that, I will now turn the call over to Michael. Michael?

Thank you, Greg, and good morning to our investor community. It's a pleasure to be with you today for our Q4 and full year call. We're enthusiastic about Abeona's progress in developing our novel gene and cell therapies for underserved patient populations, and we remain committed to execution; 2021 is a year for delivery. Today, I'll briefly review our key accomplishments from 2020 and share our promising start in 2021. I'm incredibly proud of our team for advancing all three clinical programs amidst the challenges posed by the pandemic, bringing essential treatments to patients with recessive dystrophic epidermolysis bullosa, known as RDEB, and Sanfilippo syndrome types A and B, referred to as MPS IIIA and IIIB. Let's begin with our lead pivotal program, EB-101, and summarize 2020. Earlier this year, we initiated our pivotal Phase 3 VIITAL study for EB-101 at Stanford University, a leading EB treatment center. In July 2020, we presented our Phase 1/2 data at the Society for Pediatric Dermatology, which showed that EB-101 effectively treated large and chronic wounds, resulting in significant and lasting healing and long-term pain relief for up to five years. Large wounds in our trial are defined as 20 centimeters or greater, with some reaching over 100 centimeters; chronic wounds have been open for six months or longer and are unable to heal independently, like recurrent blistering wounds seen in EB or RDEB. These serious wounds lead to severe pain, increased opioid use, extensive daily dressing changes, and, tragically, the premature death of many patients by the age of 30 to 40. The Phase 1/2 data was validating and exciting for us, providing proof-of-concept for our pivotal VIITAL study. After treating two or three patients in VIITAL during late summer, we had a productive Type B meeting with the FDA in December 2020, which yielded strong alignment on co-primary endpoints for the VIITAL trial. The endpoints focus on the proportion of RDEB wound sites showing over 50% healing from baseline and pain reduction during wound dressing changes, both assessed at week 24. These endpoints are critical, and we are thankful for the FDA's collaboration as we move closer to bringing the Phase 3 pivotal VIITAL study to patients. Following our alignment with the FDA, we made a protocol amendment in January 2021. I'm thrilled to announce that the fourth patient was identified, biopsied, and treated in the VIITAL study in February. We are also pleased to report that patient five was biopsied earlier this week and is expected to undergo surgical transplantation at Stanford in mid-April. Regarding patient enrollment, which is our top priority for 2021, additional potential patients are being pre-screened for eligibility through various tests, including genetic screening to confirm two C7 mutations indicating RDEB. We are satisfied with our progress against key milestones for the EB program. The team's commitment to operational excellence, particularly at Stanford, has positioned us well to meet our accrual targets for 2021. For the VIITAL pivotal trial, our target enrollment is between 10 to 15 patients, focusing more on the treatment of approximately 35 large chronic wounds than purely the number of patients. We are optimistic that the recent momentum from our Type B meeting and the treatment of patient four and five positions us to achieve our accrual goals in 2021. Excitingly, due to heightened interest from our KOL community and patients as the pandemic appears to recede, we are onboarding a large academic EB medical center in the northeast as our second site. They are in the process of IRB approval, and we hope to have them operational by the latter half of the year. I won't disclose their name until the IRB approval is complete, but we look forward to updating you soon. As mentioned earlier, we are on track to complete VIITAL in 2021 at Stanford and establish a second site for two key reasons: to address travel barriers caused by COVID and to prepare for the potential commercialization of EB-101, ideally in 2022. Now, turning to our adeno-associated virus (AAV)-based gene therapy programs, our first program, ABO-102, known for MPS IIIA, has completed target enrollment in the Transpher A study as planned. To date, 19 patients have been dosed, including 13 in the higher dose cohort. We have decided to keep the Transpher A study open for enrollment through our Type B meeting with the FDA, largely due to the lack of treatment options for MPS IIIA patients and the positive results we've seen thus far. Last month, we presented interim data from Transpher A, highlighting that ABO-102 has the potential to be a transformative treatment for MPS IIIA children. The results showed that neurocognitive development remained within the normal range for non-afflicted children two-and-a-half to three years post-treatment in three youngest patients treated at ages 27 months, 19 months, and 12 months. This is a critical time since MPS IIIA typically declines significantly by age three without intervention. Our next steps include discussions with the FDA regarding the potential for our Transpher A dataset to support a BLA submission, and we are optimistic about these interactions. Additionally, we will refine our development plans in coordination with the European Medicines Agency after our discussions with the FDA in June. Regarding our third program, Transpher B in MPS IIIB, we have dosed 11 patients, including four in the higher dose cohort. New interim data shared at the world symposium indicated sustained improvements in biomarkers associated with treatment. We are currently working through product stability testing for the clinical product derived from Nationwide Children's Hospital and will determine the path forward for treating remaining patients once testing is complete. In 2020, we entered into two strategic partnerships that unlocked immediate value in non-core assets for Abeona. These agreements provided Taysha Gene Therapies rights to ABO-202 for CLN1 disease and potential AAV-based gene therapy for Rett syndrome, significantly enhancing patient development timelines. To strengthen our leadership as we continue into Abeona's operational excellence phase, we have appointed two new independent members to our Board of Directors. Their diverse experience will bolster our management team's efforts to achieve both near- and long-term goals. Looking ahead to our anticipated milestones for 2021, we aim to complete enrollment in the EB-101 Phase 3 pivotal VIITAL study, with top-line data expected by mid-2022, followed by a BLA filing contingent on positive trial outcomes. For our MPS IIIA program, we are preparing for our Type B meeting with the FDA in June and are excited about the release of our clinical-grade product in the second half of the year. Furthermore, we expect important neurocognitive data from treated patients later this year. Regarding our MPS IIIB program, we will proceed with product stability testing and update the investment community on timelines as they become clearer. The feedback from the FDA in June will provide critical insights for our overall development strategy in the MPS programs. Lastly, we are prioritizing ophthalmic indications from our preclinical pipeline and conducting research on several undetermined eye disorders, with the goal of entering proof-of-concept studies in 2022. Thank you for your time today. I'm looking forward to further discussions and now I’d like to turn it over to our Chief Accounting Officer, Ed Carr, to review the full-year financial results. Ed, please go ahead.

Thank you, Michael. I would like to remind everyone that we have recently filed the form 10-K, which is available on our website and where you can get the details on our financial results. In summary, our cash, cash equivalents and short-term investments as of December 31, 2020, totaled 95 million compared to 129.3 million as of December 31, 2019. We did not use our $150 million at-the-market or ATM program during the fourth quarter of 2020. We believe we have sufficient cash resources to build on our momentum and fund our current development and operating plan to achieve key anticipated milestones including multiple potential regulatory submissions. For the full year of 2020, net cash used in operating activities was $35 million compared to $62.8 million for the entire year of 2019. And with that, I will now turn it over to the operator for Q&A. Holly?

First question for today is coming from Maury Raycroft. Please announce your affiliation and then ask your question.

Good morning everyone. Congrats on the progress. And thanks for taking my questions. This is Maury from Jefferies. First question is just on MPS IIIB. So, just wondering if you can elaborate on how long it will take to do the product stability testing and wondering if that was requested by the FDA? Was it something observed with a product or was it just the right time to do this stability test?

Yes, Maury, I'll take that one. I'll definitely turn it over to Jay after for the smart science talk. No, IIB is plan nationwide product expert on it. So, we have to ensure that we're doing our stability planning. This has not specifically been asked for by the regulators but of course, it is part of our plans, part of our stability protocols, and our IND. The nationwide product last lot, late last year hit its expiration point. So, what we're doing is testing stability to ensure our product still has the appropriate integrity while we look at some final patients for Transpher B. That is the impetus for that. As far as timing, that's more imminent than long-term. I didn't put timing out exactly today; I don't want to have to take it back anymore. Right now, we're considering some tests in-house versus out, and we should have timelines very, very soon as Jay is working quickly on that because we know we've got some patients waiting. I predict that will be more imminent than long term but as soon as we know, we'll update you.

And then second question is just checking for EB-101. If that second site comes on board in the second half, could adding that site accelerate the timeline? Would any patients or data from that site be included in the BLA submission? Or do you want all the data to come from Stanford? I guess, how are you guys thinking about that?

Yes, Maury, great questions. We are really excited; we're almost at a point where we have as many patients on board in the first quarter as we had all of 2020. To be fair to the team, we know that 2020 was tough due to the pandemic. We think we can finish out of Stanford, but we can be done as early as 10 patients, and we might leave it open a bit if there's someone waiting. We want to get all patients in the meeting. Right now, we project it depends on how many wounds we get per patient. I won’t project immediately, but we could finish with as few as 10 patients, which means five takes us halfway there. The second site, which I'll announce as soon as they pass IRB for disclosure purposes, will help expedite the time to fulfill accrual. Yes, those results will be part of the BLA filing, and any patient treated under VIITAL will be included in the BLA.

Your next question is coming from Ron Selvaraju. Please announce our affiliation then pose your question.

This is Ron Selvaraju from H.C. Wainwright. Can you hear me?

Yes, Ron. We got you.

Thank you very much for taking my question. Firstly, relating to the EB-101 program, I was wondering if you could confirm that you are effectively going to stop enrollment once you have 35 chronic wounds to affect. In other words, it's not specifically dependent on patient number. Once you have 35 acceptable chronic wounds, you would halt enrollment at that time? Or is there a possibility you could continue to enroll additional patients after getting that number of wounds?

Yes, I'll take that one, Ron. Great question. The answer is, we use the word approximate for a reason. 35 wounds are important for our statistical plan, right, as part of our pivotal. So yes, that's the target, give or take probably in a direction. We think we've got to hit 35, but we could go a little more. What we want to be mindful of is to ensure that if there's a patient in the queue, we're not going to refuse them. But it is you're exactly right, it is not a specific number of patients. The stats plan is based on number of wounds. So, that's why we have a range of patients, knowing what our range is we will be able to get there between 10 and 15. So, you're right, it is 35 wounds, it's approximate. I won't say we will definitively stop at 35. That depends on the other patient in the queue, but we will be close to that number.

Just to clarify, following up on Maury's earlier question, can you give us some more granularity on how many patients are in the screening or prescreening? Knowing they are just starting the process but not all the way through to being able to actually enter the study. Just give us a sense of how many patients we are looking at there?

Sure, Ron. I appreciate you bringing this up again. To address the teams fairly, Stanford has a pre-screening study that filters many patients into various studies based on genetic testing. In 2020, we had some patients on the bench due to pandemic-related issues who were not willing to travel, so we did lose a few. Currently, I hesitate to mention exact numbers, but we have a few patients who could potentially be the sixth patient. Right now, we're screening two to three candidates if we can get them to the site. We have reached out to them and are in communication. We have five biopsies, and I consider that a solid step towards treatment. For patient six, we are looking at three individuals at Stanford while we prepare to launch our second site. Every month, we are adding more patient seminars, and I have hired Jodie Gillon as our Chief Patient Officer. We are making a strong effort to keep this moving. Next week, we might find two or three more candidates, or it could go the other way. I can't predict how the pre-screening will turn out, but I hope this provides some clarity.

Yes, that's very helpful. And lastly, on EB-101, I was wondering if you could provide some commentary regarding the correlation between wound closure, degree of wound healing, and the extent of pain relief that you anticipate seeing. How tight is that correlation? Is complete wound closure accompanied by, like, a 50% reduction in pain relief, or significantly greater than a 50% reduction in pain relief? Just give us a sense of what you're expecting to see with regard to the correlation between wound closure, wound healing, and pain relief?

Yes, another good question, Ron. I think they're highly correlative. Can I give you a perfect number? The answer is no, but I'll use data to tell you what was the backbone of why we drove such endpoints with the FDA. First and foremost, commend the FDA on recognizing that Abeona, you're not treating the same wounds as maybe non-EB diseases or even other EB diseases. You're treating the most problematic wounds: large and chronic wounds that can no longer heal themselves which lead to significant opioid use, quality of life issues, and ultimately mortality. If you look at our Phase 1/2 all the evidence base in my decision to look at our Phase 1/2 data, I think the percentage was in the 50s off the top of my head; about 59% of patients had pain at baseline. But that was a global impression of pain, not specific to just one wound being treated. In the Phase 3 trial, we are measuring it in a much more specific and objective way. Remember, the Phase 1/2 study was an academic study. In the Phase 3, we're testing an actual wound we treat versus the control wound in VIITAL. During the Phase 1/2 study, 50% to 75% wound closure was achieved in many patients, and we were over 90% and achieving 50% wound closure. It was highly correlated. I can't give you a perfect number; we think it's the most important morbidity condition today. Ultimately, we want to diminish mortality from this disease and we think we've got to cover large chronic wounds as much as possible for extended periods to accomplish that, but again, that won't be demonstrated in the initial VIITAL results. We will likely be seeing that years down the road of coverage of new wounds through hopefully registries once we're approved. But I can say they are highly correlative; when these wounds close, almost all patients are approaching ten years without suffering from excruciating pain during dressing changes with these types of wounds. I hope that gives you some color.

That's very, very helpful. Just two other quick ones for me. With respect to the Transpher A study, can you comment on what you expect the average age of patients to be at the time of enrollment in cohort 3? Lastly, do you have any updates on the situation with REGENXBIO?

Yes, what I'll do is I'll take the second question first on REGENXBIO and then I'm going to turn it over to some of the team I have on the phone because I’m super proud of this management team. I will turn the MPS question over to Juan as well, he could tell you about the age for the enrollment. From a REGENXBIO standpoint, guys, not a tremendous amount more I can give you. We will continue to update you, but the arbitration is ongoing. Obviously, it's an ongoing legal proceeding, and the status is included in our 10-K. We had an arbitration hearing held earlier this month. The tribunal has not yet issued its opinion. For overall guidance on the proceeding and the extent to comment, please refer to the 10-K. Juan, why don't I turn the age question for MPS IIIA over to you, please?

Thank you, Michael. Yes, in cohort 3, we have enrolled so far 13 children. Since we modified our amended protocol for enrollment of younger children, ages younger than two years or with an EQ higher than 60, we have eight patients that meet these criteria, and the ages range from 8 months to 33 months in that particular group. We expect that in the future, the children that we are still enrolling and treating in the trial will be within this age range.

Your next question is from Mani Foroohar. Please state your affiliation before asking your question.

This is Mani Foroohar from SVB Leerink. I missed the detail, would you circle back on track on the Transpher B question? Can you give us a little sense? Is this an asset development challenge? Is it like a question of data management or product development? Could you give us exactly sort of what needs to happen to put your foot back on the accelerator there?

Yes, Mani. I'll remind you of a couple of things. Transpher B, we are four patients shy of our cohort 3 targets. So, we have patients in the queue, and the most important thing for us is to get those patients treated. That being said, no, not an assay development issue. The product in use is the Nationwide product for both Transpher B and Transpher A. Jay and the team will be making our own Abeona-produced product for MPS IIIA later this year. This current lot has a patient expiry date, and our last lot expired later into Q4. So, we are conducting a stability test to look at our options to move forward. It's not an assay development issue; we're just examining the stability of a lot of product that expired at Nationwide, and we'll assess options for treating the final few patients.

Your next question is coming from Kristen Kluska. Please announce your affiliation then pose your question.

This is Kristen from Cantor Fitzgerald. Thanks for taking my question. The first is I know that data is hot off the press from the world symposium, but wondering if you could share any feedback that you heard from physicians or the different patient advocacy groups in your presentations, particularly from the youngest patients in the high-dose cohort in MPS IIIA?

Kristen, good to hear your voice, and there's no one better on this phone to do it than maybe the most knowledgeable person I know in MPS and neurocognitive programs. Juan, why don't you please provide some feedback regarding the KOLs around the world and the reactions to the IIIA and even IIIB data, please?

Yes, thank you Michael. Thank you, Kristen. The feedback has been very positive. The data regarding the younger children, some of them were treated from ages 30 months to 36 months, reached the point at which children in natural history are significantly declining, and getting these children to maintain their skills has been received very positively by the experts and key opinion leaders in the patient community. We have been reviewing this data with some physicians all around the world, and we are very happy and looking forward to remaining data coming this year to confirm that this positive development continues in these children and the others that were recently treated.

And Kristen, I would be remiss if I didn't mention that my Chief Patient Officer, who is not on the phone with us today, Jodie Gillon, just texted me saying that patient groups are thrilled and encouraged. Those are her exact words, so I'd be in a lot of trouble if I didn't share that with you.

Glad you won’t be getting in trouble then. So as you think about the next potential chapter in ophthalmology and I know you haven't disclosed these indications. Maybe could you speak and remind us about the differentiated aspects of your AAV platform versus sort of the evidence and results we've seen across the field so far? I know you shared some initial data, I think at some conference a couple of years ago back when we had in-person conferences. So if you could remind us about some of the initial findings, and I know more work is ongoing here.

Yes, Kristen, I appreciate your enthusiasm for the question. I'm excited about it too. My preclinical team, Brian and Linas, is constantly educating me on this topic. In short, I wish I could provide more details; however, we are still in the early stages and I want to be cautious, which is why we haven't shared the specific indications yet. We will have non-human primate data available in the second quarter, and my scientists have indicated it is a significant indicator when evaluating eye disorders. I assure you, we will discuss that NHP data as soon as we have it, but it might be too early to share any results at this point. What I can say is that we are utilizing some of our capsules from our partnerships and are also examining various methods of administration, such as intravitreal and subretinal. We are determining which capsules effectively reach the cells. However, I think it's best to wait for the non-human primate data before making any bold statements.

There are no more questions in queue.

Well, with that said, I want to take a moment here and first thank the investor community for their support and interest. It's always nice to spend some time with you, and I appreciate the questions, which are very thoughtful and appropriate. So thank you very much. I'll continue to ask you to hold us accountable; that's important. It's an important aspect that we all take very seriously here at Abeona, as we are accountable for delivering to these patients. I want to take a moment to say how excited I am to have the privilege to serve as the Chief Executive Officer here at Abeona. I also want to extend my gratitude to our stakeholders, especially our patients and the courage they have to participate in these trials. I want to specifically thank my management team, who have been steadfast despite the many changes you all know occurred in 2020 at Abeona. They remained mission-focused. We had our most productive quarter yet in Q4; we had an incredibly successful Type B meeting; we have worked with the agency; brought increased talent in; and we've got our Type B meeting on the books for MPS IIIA. We continue to make milestones every day, and I am impressed by a group of people and their commitment during a time when a pandemic slowed many down. So, again, please hold us accountable. It's a year of operational excellence. We need to bring this science to fruition for patients. I'll close with a sincere thank you to my team, my employees, our board, our patients, stakeholders, our KOLs, and investigators, and to you, the investor community for your continued support and open, honest dialogue. Thank you.

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.