Abeona Therapeutics Inc. Q2 FY2023 Earnings Call

Good day, and welcome to the Abeona Therapeutics Second Quarter 2023 Update Conference Call. As a reminder, today's conference is being recorded. I'll now introduce your host for today's conference, Greg Gin, Vice President of Investor Relations and Corporate Communications at Abeona. Sir, please go ahead.

Thank you, operator, and good morning, everyone. I would like to welcome and thank everyone for joining us on our second quarter 2023 update conference call. The press release announcing the results is available on our website at www.abeonatherapeutics.com. Before we start, I would like to note that remarks made during today's call may contain projections and forward-looking statements. 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 Risk Factors section in our Form 10-K and periodic reports filed with the SEC. These documents are available on our website at www.abeonatherapeutics.com. On the call today with prepared remarks are Dr. Vish Seshadri, Chief Executive Officer; and Joe Vazzano, Chief Financial Officer. Joining us for the Q&A session will be Dr. Madhav Vasanthavada, Vice President, Business Development; and Dr. Brian Kevany, Chief Technical Officer. With that, I will now turn the call over to Vish Seshadri to lead us off. Vish?

Thank you, Greg. Hello, everybody, and thank you for joining us this morning. We are happy to update you on our continued progress, in particular with our lead program, EB-101, our investigational autologous engineered cell therapy that aims to deliver years of sustained clinical benefit in patients with recessive dystrophic epidermolysis bullosa, or RDEB, in short. Remember that all our clinical data pertain to the treatment of large chronic wounds, which are the hardest to treat and have remained open for years because they cannot heal, inflicting great pain and burden on these patients. The durability of both investigator-assessed healing and patient-reported pain following a single administration for treating the toughest RDEB wounds paints a very compelling and unique value proposition for EB-101 for patients. We have made significant progress during the last quarter towards our planned EB-101 BLA submission. We have completed process performance qualification, or PPQ manufacturing runs for both the retroviral vector and EB-101 drug product to demonstrate our validated process and readiness for commercial production. In June, we announced that we had gained alignment with the FDA on the data required to establish retroviral vector or RVV comparability, which is a critical CMC component for the BLA. The FDA has requested additional assay data to establish comparability between the RVV sourced from Indiana University and RVV manufactured in-house at Abeona, both of which have been used in the EB-101 clinical study. We have since generated the additional data that we believe establishes comparability between the two vector sources and included it in the briefing package that we submitted to the FDA in July for a pre-BLA meeting later this month. In that meeting, we will align with the agency on the format, content, and overall acceptability of the anticipated BLA for EB-101 based on a discussion of critical components of the BLA package. Following the conclusion of the meeting and subject to supportive FDA feedback, we anticipate submitting the EB-101 BLA in the third quarter of 2023. As we expect a priority review based on the anticipated timing of the BLA submission, we anticipate potential BLA approval in the second quarter of 2024. If the BLA is approved, we anticipate being granted a priority review voucher, which is worth approximately $100 million based on recent PRV transactions. In parallel with our BLA-related activities, we're looking ahead to EB-101's potential FDA approval and launch next year. In anticipation of approval, we raised $25 million in a registered direct offering priced at market with select existing investors in July. With the proceeds from the offering, we're ready to invest in pre-commercialization activities and the planned launch of EB-101 in the U.S., being thoughtful about what we need to spend now versus later after approval. We have already initiated dialogue with top EB treatment centers in the U.S. about onboarding EB-101 as a treatment option, and we're encouraged by the level of interest. Physicians indicate there is a high unmet need in depth, particularly for a treatment like EB-101 that has a compelling value proposition. The positive feedback we hear from KOLs is consistent with what you've heard from payers, hospital administrators, and patient advocacy groups. We plan to continue to engage with payers, both commercial and Medicaid to ensure broad market access after launch. In addition to preparing the market for EB-101, we are also preparing our organization for commercialization. We have mapped out key commercial and medical roles that we plan to fill in the second half of this year and the capabilities we will build to support a successful launch. During the second quarter, additional efficacy and safety data from the EB-101 pivotal Phase III VIITAL study was reported at the International Society for Investigative Dermatology, or ISID, and Society for Pediatric Dermatology SPD meetings. The results presented at ISID and SPD showed that EB-101 improved wound healing and pain reduction at six, twelve, and twenty-four weeks compared to control wounds following a one-time application of EB-101. Furthermore, EB-101 demonstrated improvement in patient-reported outcomes and caregiver-reported outcomes for itch and blistering severity. Let's turn briefly to our preclinical ophthalmology programs. We're excited by the broad potential for treating serious eye diseases with new AAV-based therapies using novel AAV capsids from our in-licensed AIM capsid library and internal research. At ASGCT, we presented three posters highlighting encouraging findings from animal proof-of-concept experiments for investigative AAV-based gene therapies for Stargardt disease, X-linked retinitis, and autosomal dominant optic atrophy. The preclinical proof-of-concept data provides early evidence of the potential of our proprietary AAV capsid and gene constructs to express the recombinant protein and target tissues and rescue mutant phenotypes in mouse disease models. We completed pre-IND meetings with the FDA regarding preclinical development plans and regulatory requirements to support first-in-human trials for two preclinical gene therapy product candidates from our AAV ophthalmology program. We're gathering additional proof-of-concept data before committing to IND-enabling toxicology studies, which we anticipate initiating in the second half of 2023. I'd now like to turn the call over to our Chief Financial Officer, Joe Vazzano, who will review the second quarter financial results and recent capital raises. Joe?

Thanks, Vish. I would like to remind everyone that the Form 10-Q is available on our website, which is where you can get additional details on our financial results for the three and six months ended June 30, 2023. Starting with the financial resources on our balance sheet, we had cash, cash equivalents, restricted cash, and short-term investments of $37.1 million as of June 30, 2023, prior to the $25 million registered direct offering in July 2023, compared to $40.7 million as of March 31, 2023. Based on our current operating plan and assumptions, our estimated current financial resources, including the proceeds from the $25 million registered direct offering in July 2023, are sufficient to fund our commercial launch preparations for EB-101 and our business operations into the fourth quarter of 2024. In other words, our cash runway extends beyond the potential commercial launch of EB-101 and receipt of a priority review voucher. License and other revenues for the second quarter of 2023 were $3.5 million compared to $1 million in the second quarter of 2022. The revenue in the second quarter of 2023 resulted from a clinical milestone achieved under a sub-license agreement with Taysha Gene Therapies related to an investigational AAV-based gene therapy for Rett syndrome. Turning to research and development activities, we spent $8.5 million for the three months ended June 30, 2023, compared to $6.7 million in the three months ended June 30, 2022. Our spend on general and administrative activities was $5.0 million for the three months ended June 30, 2023, compared to $3.5 million in the same period of 2022. Net loss attributable to common shareholders was $16.7 million for the second quarter of 2023 or $0.92 loss per common share, compared to a net loss attributable to common shareholders of $7.9 million or $1.36 loss per common share in the second quarter of 2022. With that, I'll turn the call back over to the operator for the Q&A session.

Thank you. Our first question is from Maury Raycroft with Jefferies.

Congrats on the progress. Just wondering, based on the briefing package and additional RVV data that you submitted to the FDA. Have you gotten any recent feedback based on that submission? And also as a follow-up, are you providing any more granularity on the pre-BLA meeting agenda topics where you need to align and also just on the timing of the meeting?

I'll start with your first question, which is have we had any further discussion about the briefing package for the pre-BLA meeting itself? And our focus so far, just as a reminder, we've been having a lot of collaborative interactions with the FDA since December of last year after we had our pivotal data out there. And over those six to seven months, we've had a lot of communication, made a lot of progress on various aspects of the BLA submission. And to remind you, the two big items on the CMC side were the PPQ run completion as well as establishing the RVV comparability. What we had agreed an informal meeting before even making our pre-BLA briefing book submission was the outstanding work that had to be done with assays to establish the RVV comparability. We believe we've done that to the satisfaction of the agency because we had agreed on what exactly needed to be done and what the data outcome needed to be. Based on the results that we have seen, we're fairly confident that the comparability of RVV from the two vector sources is adequately supportive. So the big focus areas of discussion between the FDA and Abeona has been covered with that data that we submitted in the pre-BLA. As we speak, they are still reviewing. We haven't had any interactions since the submission itself. Now the second part of the question, Maury, in terms of the specifics of the pre-BLA meeting itself, our goals are twofold. One is to confirm the format content and overall acceptability of the BLA package and the second is to receive a confirmatory answer that the CMC data that we've put together as well as the clinical data that we've assembled are sufficient to submit a BLA. Those are the two answers that we need to hear from the FDA formally. We're fairly confident we're on the right track based on all the discussions we've had over the last seven months regarding various topics that relate to both CMC and clinical. The only piece on the clinical side that I would add is that the FDA has seen the top line data already and has given us preliminary feedback on how we would pool the data from the two different studies. We have done that, and this is the first time they are reviewing the combined consolidated data as part of the briefing book. So we haven't had interactions since we submitted the briefing book. I hope that answered your question.

Yes, that's definitely a helpful perspective. And maybe one other question, if I may. You said that you will be commercializing EB-101 by yourself in the United States. Can you just talk a little bit more about where you're at with the commercial launch rollout and where you're at with CMC scale-up for the launch? And if that's something that you can do before getting approved, or would you wait for that approval to scale up?

So your two-part question. One was about our general commercial launch preparation itself. I'm going to let Dr. Madhav Vasanthavada comment on that because he's been spearheading a lot of that planning. But I'll first address your second question, which is the CMC manufacturing buildup. As we have previously communicated, we are currently set up to manufacture up to about 120 cycles a year, which translates to 120 patients, as we only consider a one-time treatment for each patient. We will be very careful and thoughtful about when we trigger any capacity expansion because we have the PRV proceeds that we anticipate upon approval to further fund our capacity expansion. We believe that our current capacity is sufficient, and we will ensure appropriate hiring for operational scaling. But in terms of how we are preparing for the commercial launch itself, I'll let Madhav add some comments there.

As Vish mentioned, we've initiated pre-commercial activities with the goal of prioritizing the sequence of events we will trigger as we approach BLA approval. Just to give you a flavor, we are looking to understand and prepare the market for the EB-101 launch in the U.S. as well as to prepare the organization. The recent approval of VYJUVEK and the identification of patients is great for us because it helps raise awareness and identify these patients, which will serve as a positive indicator for us. While we're waiting for approval, we are engaging with top EB centers to discuss EB-101 as a potential treatment option, and we are seeing a lot of interest from them. These centers treat both pediatric and adult patients and are expressing a high unmet need. The clinical profile of EB-101 is compelling given its one-time treatment nature and long-term durability. Feedback from providers is very encouraging. Additionally, we are engaging with payer groups, which has been beneficial, and we want to continue this engagement to ensure broad and rapid market access immediately after approval in the U.S. We've also initiated activities with CMS to secure new technology add-on payments (NTAP) since this is a hospital procedure, which will greatly help us. These activities and more are ongoing and planned to prepare the market for EB-101. From an organizational standpoint, we have mapped out key commercial and medical roles that we plan to fill this year and next year to support a successful launch.

Our next question is coming from Kristen Kluska with Cantor Fitzgerald.

First question, just given that the RDEB community is pretty tight-knit and aware of the clinical landscape. What's your expectation on how much awareness there will be as we move closer to an approval decision? I understand that you're going to be building a sales force and getting the word out there, but do you also anticipate that people will be coming inbound to you?

Again, I think Madhav is the appropriate person to address this matter.

At the time of launch, we do expect there will be self-referrals and the awareness that we have generated. As you mentioned, patient advocacy groups are powerful in this setting, and they've been doing a lot of reports. Debra and PeDRA, in particular, have been excellent partners. We are engaging with them, and as we approach launch, we expect greater awareness, particularly in these centers of excellence. Patients often travel distances to get treatments, and our approach in the months following launch will leverage our sales team to raise awareness with community-based physicians, ensuring patients are informed about the availability of these treatments.

I wanted to ask you about epidemiology. I know that this is a rare disease, but not so rare that we don't have a good sense of how many patients there are. How do you think the landscape with two potential commercial therapies could help impact or drive awareness around epidemiology? Additionally, given your impressive data set recently in Japan, have you had interest from markets beyond the typical U.S. and Europe that we would expect?

The way we are looking at this opportunity is based on wounds. That's what we are hearing from physicians; it's about the different types of wounds each patient has. We estimate that there are reported numbers of up to 350 patients, but as we know about 1,100 have been identified by Crystal, who have already gone to centers of excellence. At the time of launch, given our manufacturing capacity, we believe we will be well-positioned to serve the patient needs. As more therapies and awareness emerge, we expect diagnosis rates to increase. Also, many patients are misdiagnosed or classified under various ICD codes, so increasing awareness will help identify RDEB patients. Regarding markets beyond the U.S., we absolutely have interest from pharma companies in Europe and the Japanese market, and those discussions are ongoing to find the right timing for expansion.

To add to that, we will be looking for partnerships to expand beyond U.S. borders because right now, our focus is on getting the U.S. launch to BLA and preparing for the U.S. launch. Given our finite resources, we will rely on creative partnerships to help bring this therapy to more patients. We are already seeing interest and demand; we believe that important catalysts, such as BLA acceptance or approval, will trigger more conversations regarding international expansion.

Our next question is coming from David Bautz with Zacks Small Capital Research.

Crystal Biotech recently announced that they had received 121 patient start forms since launching BYJUVEC about six weeks ago. I'm curious if you could just comment on what your thoughts are on that number, maybe in regards to potential market size and patient access? And then how we should think about that in terms of the launch of EB-101.

It's very early for us to speculate translating 120 patient forms into what the full market opportunity is. It's still early in their launch, and we're also learning. But I'll turn it over to Madhav to speak about his experience leading our launch preparations.

That number is certainly encouraging. Crystal has both the dominant and recessive form of the disease, and the split was roughly thirty patients having the dominant version, which aligns with our expectations. From what I've seen in the public domain as insurance companies provide broader access and more centers gain understanding of this product, adoption is likely to increase. This is encouraging for us since we have several more months before EB-101 launches. We believe the feedback from patients is crucial as we continue to showcase EB-101 as a one-time therapy able to provide multiple years of durable benefit for larger wounds. Does that help, David?

You mentioned that you completed the process performance qualification manufacturing run as part of the CMC package. Were there a certain number of runs that you needed to complete as per the FDA requirements, and are there any additional CMC activities that need to occur prior to filing the BLA?

There is an agreement on the number of process performance qualification runs that have to be completed, which is ten manufacturing runs, but three of those runs had to be done prior to BLA approval in a consecutive three-run fashion. We have completed four PPQ runs, thus meeting the requirement for a BLA submission. The remaining runs to make up to the ten can continue post-approval or between now and approval. We have multiple time points to complete that obligation. Regarding your other question about additional CMC activities, we have completed the last set of CMC activities that we agreed with the agency, particularly around the retroviral vector comparability package. That and the PPQ runs were the biggest items on the list. We've had discussions on many other topics, including transportation and stability. We are pleased with the stability of the drug product, which is being documented as part of the BLA package in Module 3. We feel confident that things are coming together for a Q3 submission.

Our next question is coming from James Molloy with Alliance Global Partners.

This is filling in for James Molloy. For EB-101, are you planning to publish the additional RVV compatibility data that the FDA requested, or will it be included solely in the briefing package along with the upcoming BLA submission?

We are not planning to publish this data piece-meal, but it will definitely be part of our Module 3, which goes into the BLA. Without getting too technical about it, I would like to mention that we have preset goals with the FDA on what comparability means. We believe we are in a good position to establish that comparability based on the results generated. However, in terms of scientific advancement, there are many other components that pertain to retroviral vectors, including potency, identity, stability, and drug product level potency. Holistically, this data could potentially become public eventually, but we haven't made a decision on that yet.

What protocols are you looking at regarding initiating studies by the end of the year for your AAV gene therapy program, and what ophthalmology indications are you targeting?

The preclinical data we have is for Stargardt disease, X-linked retinitis, and autosomal dominant optic atrophy. For all three of these areas, we have shown proof of expression of the transgene in the right compartment. The first step we need to take is to conduct larger sampling of animals to confirm these results. We're being judicious about how we are allocating our resources, as our focus is laser-focused on EB-101. We aim to have our first in-human patients in the second half of next year, so approximately a year from now. The recent feedback from the FDA regarding IND approval has provided us with an operational plan moving forward. We will conduct additional proof-of-concept experiments in animals before we trigger IND-enabling toxicology studies. We're prepared to talk more about this in the last quarter of this year.

As there are no further questions, I will now turn it over to Mr. Seshadri for any closing remarks he may have.

Thank you, Ali. In closing, I want to thank our shareholders and all our other stakeholders who listened to this call, and we'll talk to you again soon.

This does conclude today's conference, and you may disconnect your lines at this time, and we thank you for your participation.