Abeona Therapeutics Inc. (ABEO) November 11, 2026 Conference Transcript

All right, so we're going to go ahead and get started. I'm Stephen Willey, one of the senior biotech analysts here at Stifel. I'm glad to have with us in the next session, Aviona Therapeutics. We have CEO Vish Shashardi. Did I say that correctly?

Absolutely. Thanks for having us.

Madhav, I always...

I will get there.

All right. Madhav is the chief commercial officer, and then Joe Vazano, who's a much easier name to pronounce, on the end. Vish is going to go through a few slides. I think that's somewhat intended to provide a recap, but also to provide just a little bit of perspective on the asset acquisition that was just done. We'll have some time for Q&A. If anyone has a question, feel free to raise your hand. We'll get you acknowledged and hopefully your question answered. So, Vish, I'm going to turn it over to you. Thank you.

Thank you very much, Steve, and good morning, everybody. It's a pleasure to be here. And I have a few slides, which I'll try to cover in about 10, 15 minutes, and then we'll have ample time for Q&A after that. For those of you, before I get into the slide deck itself, I just want to remind everyone that there'll be forward-looking statements in my presentation today, as well as in the discussions, as always. And for those new to the story of Abiona, we are a commercial stage rare disease company. We launched ZivaSkin, which was FDA approved in 2025. We launched it in December with the first patient treated then. And we're building a very solid foundation for this launch, which I'll talk about in a little bit. But also, as part of bringing ZivaSkin to approval, as well as Fayuvie, which we licensed out to Ultragenix, those experiences have given us strong capabilities in the development side of things as well. And our goal as a company is really to build a diversified, long-term revenue-generating business and sustain that long-term growth and expand on margins. So just a quick recap of what we shared yesterday, quarter three results. Importantly, this is the fourth quarter since we treated the first patient. So we're seeing slow but steady growth in numbers. We've treated six patients in the third quarter. Also, that sums up to 15 patients since launch last year. And, you know, when we started commercialization and entered 2026, only two sites were actively taking on patient biopsies. And that's the case until quarter two. Quarter three, we also announced that the third and the fourth sites, which are CHOP and UTMB, have completed their first treatments. This is a very important milestone for a site because this is the validation of a site having been through the end-to-end process of taking a patient all the way to treatment. And that doesn't happen lightly. There's a lot of work that goes into that. And then it becomes easier and easier as they repeat this for the second, third patient, and so on. And now we have eight QTCs activated across the U.S., of which four have treated their patients. And if you look at this map here, you can really see how geographically these sites are positioned to give patients access to treatment centers without having to travel an inordinate amount of length of distance. And this is something that they do to get their care on a routine basis. These are centers of excellence that have cared for many, many years and decades for EB patients. And while the commercial foundation for this launch has been laid, and we are not stopping here, sites that are EV care centers that have the right capabilities to apply ZivaSkin to their patients, we are still continuing to engage with such sites and exploring possibilities that they could be QTC, so we're not stopping with this footprint that we are showing here right now. But as we scale the commercial launch, we don't want to forget the fact that we have strong capabilities in drug development. I gave you the example of Fayuvie. We dosed all the patients clinically, and we also had agreement with the FDA about the primary endpoint, the Bayley-3, before we licensed the drug to Ultragenix. That was approved in September this year. And we have also licensed our other assets to Tayshia for Rett Syndrome. So we have development experience as well. And one of our goals was to build our late-stage pipeline, which currently looks barren. And that's what brings us to this new chapter that we announced yesterday with the acquisition of ABO801, which was previously called as APT-1011. This is an orphan drug, and it has a very compelling differentiation in the market in the disease therapeutic area that it serves, which is eosinophilic esophagitis, EOE in short. And the important characteristics or properties of this asset that, you know, made us look at it seriously and get to the stage of bringing it on board are one is it's not just a late stage phase three ready asset. It has a robust established clinical foundation with the data that has been generated through two phase three studies. And the data look very encouraging, despite the fact that one of the co-primary endpoints was missed in those studies. I'll get into the weeds of that a little bit, because that's the crux of the argument that why a next phase three study is stacked better, right? So, and the compelling differentiation, if you look at the marketplace of EOE, there are oral corticosteroids, and then there are injectables, which are mostly biologics. And there's a lot of innovation happening on the biologics side, whether it's IL-4, IL-13, T-slips, various targets, and these are all systemic drugs. So that bucket has a lot of emerging therapies and innovation, and that market is going to play out. But in the oral corticosteroid market, there's very little innovation happening. There's only one approved drug, Eohelia. So there is still a very high need for oral corticosteroids that can overcome some of the limitations of what current therapies have, which also I'll talk about. That brings us to the disease landscape. The reason we have orphan drug status here is because this is a recently discovered disease in the 90s, and so there's not a whole lot of history, but it's rapidly growing, and we're estimating that's about 360,000, and that number may even be obsolete. That may be a bigger number today, but this is a disease that is pretty much definitively diagnosed by a gastroenterologist, because the definitive diagnosis involves looking at the histology of biopsy samples of the esophagus, where you're looking at eosinophils, if it's more than 15 per high-power field, that is the test for a positive EOE diagnosis. And so the call points for this kind of a condition is going to be the GI specialists. And the properties of this drug, this drug was designed, fluticasone propionate is known through many, many years and experience as an anti-allergy drug. But in case of ABO 801, it was specifically designed to treat EOE. It maximizes, it's a pill that dissolves in your tongue in 30 seconds, it's taken bedtime, And it maximizes the deposition of fluticasone locally pretty much through the entire esophagus. So if you look at biopsies for histological markers in the proximal and distal ends, you see that control of disease across the length of the esophagus. So that's a very important property and very less systemic absorption, less than 1%. of systemic absorption. So that is the reason why in the phase three studies, if you haven't seen any systemic effects like adrenal suppression, which is important. And as I said, there is the safety profile of this drug is quite favorable because of a local acting formulation. And that if you look at the key features of, you know, there's a lot of clinical data. We have a clinical history deck and our corporate website, which I'll encourage people to go and take a look when you have time. It gives the history of how the dose was determined and what the two phase three studies looked at. And importantly, I will tell you about a couple of things. I spoke about the safety features already, but if you look at the efficacy highlights, right, there are two things that a regulator is going to look at. One is the histological marker. What is the proportion of patients that achieves less than or equal to six eosinophils in the high-power field? And that is something that every drug that has come to market has shown, and there's not so much differentiation. This is just table stakes. This is the bare minimum you have to do. And look at any trial, you're going to find numbers in the 50s and 60s of percentages of patients that are in that bucket, right? So if you look at Fluid 2 and Fluid 3, you will find answers in the 60s and 50s of percentage. That's quite common, what you find, but... That is only the beginning. What a physician wants to really see is when I look at the structure of your esophagus with an endoscope, Can I see the structural features of this disease resolving? And that's what you see on the right side of this slide. The rings, furrows, edema, and exudates, these are the characteristics of the disease, and very good resolution of those by week 12 and sustained at week 52. Two, this is a characteristic, this is a representative image that we're showing you here, but there is also quantitative analysis that I'll flash up in a moment. But the second endpoint that the FDA wants beyond the histological isnophils marker is to see a patient-reported symptoms outcome. And when we look at the complete responders, this is a very stringent, slightly different from what the FDA asks for in this kind of setting. But if you look at complete responders, absolutely no dysphagia in a 14-day window in the last window of the 12-week period. When we pull the data from flu 2 and flu 3, the two phase 3 studies, you can see that there is a statistically significant difference between test and control. But I'll talk to you about how patients report and why there is so much noise. The simple question of does histological data translate or correlate with patient-reported symptoms? In the history of all drug development that's happened in this disease area, the short answer is no, and we'll talk about that in a little bit. But I just wanted to give a big picture eye chart about every which way you look at EREFs. EREFs, as I said, is the endoscopic analysis of the structure of the esophagus. You can see a very strong trend of treatment effect with 801 here. The important figure here is the left bottom. When you look at what proportion of patients report improvement from grade 2 plus rings, this is something that KOLs tell us that they're very rarely seen in clinical trials. So these data taken together are very encouraging and tell us that this drug works. So talking about the symptoms, I think I share the 18% versus 6% is a complete symptom response, which is quite compelling here. But the question then arises, why then did the two trials miss individually on this co-primary endpoint, which is patient-reported? And that answer really lies in the type of patient-reported outcome tools that are being used in these studies. So the industry standard now, which is validated and the FDA is familiar with, is called the DSQ or Dysphagia Symptom Questionnaire. It's very simple and very specific. That tool was not available to LED at the time of developing 801. It was proprietary. But now it's available for licensing. It's available publicly. So that is one point to take note of. The tool that LED developed was their own proprietary tool called PROS, and it's prone to a little bit more data noise when patients report outcome. The most important thing here is that the DSQ tool asks the first question, did you have solid food today? And if the answer is no, the question doesn't progress to the questionnaire. You stop the survey right there for that day, whereas the pros does not ask what type of food you take. This is very important because patients tend to modify their diets through the course of their participation in the clinical trials, and so on a given day, if a patient did not eat solid food, they had liquid or yogurt or some soft food, it's a very different way in which they're going to report about their dysphagia, and we have not control for that confounding factor here. And the prose tool also asks them to rate their difficulty swallowing on a 0 to 10 numerical scale with very limited guidance of how you would choose a 0 versus how you would choose a 10. So this is, again, bringing in that subjectivity, whereas the DSQ is very specific on, did you have dysphagia if you did? Did it resolve, or did you have to do something? So what did you do instead of how you felt? And that makes it more specific, and I'll talk about that in a little bit. But what we did was, as part of the data analysis, was had we used the DSQ instead of a pros, Would we have seen a positive study? And that is, you cannot do a perfect science because you have to map the pros to the DSQ, and you're going to have certain assumptions that go into that. And when you have assumptions, you need to do sensitivity analysis. If the assumption was this, would it be great? Or if it was that, would it still behave the same way? And that's what I'm trying to show you here in a couple minutes, which is on the left, you have the DSQ tool, which, as I mentioned, did you eat solid food? That's the first question. Only if the answer is yes, you go to the next question. That was not asked in prose. And the second question asks, did you have dysphagic events? In other words, has food gone down slowly or been stuck in your throat? And if the answer is no, you get a zero score. Zero means you're a responder. It's a good thing. And if your answer is yes, you go to the next question, and it asks you what did you have to do. If it cleared up on its own without any intervention or anything that you had to do for that, then you got a zero as well. So that's how the FDA looked at the responders in the Eohelia study, that the second question, if you did not have to do anything and it resolved by itself, you got a zero, and that was deemed as clinically meaningful by the agency. These are all well described in publicly available documents in their review notes for the approval of Eohelia. So now the question comes up as to what kind of... The NRS Pro's tool score would map to a zero in the DSQ. Is it less than one? Is it two? Or is it three? And when we do that analysis, we look at the placebo arm. If you put it as one, you see about 10%. And if you put it as three, you see about 36%. And in between NRS less than or equal to two, if you assume that to be the zero in the DSQ, you get a 20%. That 20% is very close to the 18% result that was in the placebo arm of the DSQ result for Eohelia, based on which the FDA approved that drug. So we selected that cutoff and asked the question, what would have been the answer for the test arm, which is APT-1011 or 801 here? And the answer was about 34%. So you're looking at a 13% improvement over placebo, which if you look at whether it's robust, whether you assume NRS1, 2, or 3, the separation between the test and the control stays. And, of course, this study was not as powered as what we plan to do for the next study. These results, of course, post hoc analysis only helps you to understand the data. You cannot take that and submit the results to the agency, but it tells us that when we make four modifications for how you would run the next phase three, we feel pretty good about, you know, optimization of the study. One is using the DSQ tool, because even in this analysis, we haven't gotten the benefit of weeding out people that did not eat solid food, right, that we have to live with, because we haven't captured that data. But... Using the DSQ versus the PROS tool, the second is powering the study to detect this 13% difference in a complete response rate, and thirdly, we're going to look at the 12-week endpoint as a co-primary time point with a 24-week confirmation of durability, and finally, the mix of patients. The mix of patients, meaning limiting the mild phenotypes to a lower proportion and having a good representation of moderate and severe disease patients. So those are some of the design elements that have been informed from what we've learned from Flu 2 and Flu 3, and that's really going to drive our next study. And it's a very robust set of data that we have that we're relying on. So the risk profile for a phase three ready asset is not, I think, when you say two studies had failed, it probably puts a lot more skepticism than is warranted for a drug that has so much of clinical data. And you have to look at it in totality and how the structure of the esophagus, because ultimately, when you get approval and you go to the market, and when you're going to sell this to GI specialists, they're going to look at those EREF scores. That's what is important to them, because that's structural evidence for them for how this drug works. I'll pause here. I said a mouthful, but Steve, we can happy to get on with Q&A.

Yeah, maybe you can just talk a little bit about the genesis of the acquisition. Was this something that you guys were out actively looking at? Was this something that was brought to you? Just be curious as to... As to how this came about.

Yeah, as you can imagine, our BD team has been at work over the summer months. The way we define that is what an attractive asset would look like. It's almost asking for a unicorn. We were looking for a phase three ready or late stage clinical asset with a lot of robust clinical data already in the bag. But also that we would not be willing to spend a lot of cash up front. It's got to be backloaded. And so any milestone payments would happen when there is an approval, right? And then, of course, within those parameters, we would always look for, you know, cell and gene or biologics, oncology field. So any description about a therapeutic area focus and technology platform focus was coming as the next step. But the first one was the most practical one is, can we get a well, you know, clinically defined asset in the late stage of development for that? So when they did that, we looked at about 50, 60 different assets. And, you know, very few, as you can see, it's very difficult to find late stage assets that can be acquired for no cash up front. So this stood out in that respect. But also, we did a lot of diligence. Once this bubbled up, among all those we've been actively looking through our search and eval team, when we spotted 801, we determined that, okay, at the outset, people are not looking at this because of two failed studies, but let's get deeper into that. And when the clinical thesis checked out, we said, let's talk to the KOLs. And also from a pair, our teams have been discussing this with top KOLs who are GI specialists, and we got pretty good feedback that an oral drug that has good activity like this and does not have the complications that you'd have to make a slurry and have it two times in a day, it's bitter, you have to have it with so many packets of Splenda, this is going to be important for the marketplace. They want it. One thing I did not mention is there was an expanded access program that this LOD ran. 265 patients were on this drug for 52 weeks, almost, and everybody was unhappy that that drug is no longer available. So there's so much interest in when can we get back this drug, right? So I think those things also mattered, and we spent a lot of time with – our team spoke directly with Dr. Jessica Lee. She was the GI director at CEDAR who was reviewing the approvals of both Eohelia and Depixent, and that is how we learned about this endpoint and how the FDA looks at symptom endpoint and things like that. And she was, you know, an important input into how the next study would be designed. So we have an ex-FDA person really looking at optimizing the next study design. And all these things in our diligence came together. Our head of our chief commercial officer can talk more about it. They did a lot of diligence with this is going to be a market access play. We need to get formulary status, which is something that Eohelia is limited on. And we want to be definitely contracting and get on formulary. This is positioned in the market as a step in to the injectable biologics class, right? So that's where we want it to be. So I think there, again, when we spoke to pharmacists on the payer side, very favorable.

Can you talk about the IP of the asset? So, I know you have an orphan drug designation, but what's the foundational IP?

Yeah. So, orphan drug designation, of course, as you know, US FDA approval gives you seven years. The foundational IP is a formulation, patents, and method of use for those formulations, and that goes up to 2042.

Okay. And so, maybe you can just talk a little bit about, you know, as you were considering kind of pulling the trigger on this. On this acquisition, I know this is kind of feedback that we've received like in the last 24 hours, right? There's, okay, these guys are in the early stages of a ZivaSkin launch. Something like this is going to be a distraction. I know, Joe, there's been some talk about you get to kind of three patients a month on a steady state basis. You guys flip the profitability. Now you're kind of introducing another 50, $60 million development cost for phase three. So how did those considerations and maybe just the optics of it weighed against actually doing the deal?

Yeah, maybe I'll ask Joe to answer this question because he's looked at the financial burn versus and we're in a good position in terms of how we can manage the expenses. And I'll talk after that about the team distraction because we will compartmentalize. ZivaSkin infrastructure is not going to be disturbed or distracted by this because we're going to have a separate development team that's not focused on the commercialization or supply for that matter. But, you know, Joe, about the financial plan for how this can be run out, you know.

Yeah, so at the end of June, or excuse me, at the end of September 30th, we had, you know, $135 million of cash, plus, you know, which does not include the pipe proceeds of $30 million. So when you add those two, you know, with the ZivaSkin revenues coming in, plus Fayube royalties as well, too, which a lot of people. I don't underappreciate that. You know, the $50 to $60 million over the two-and-a-half-year timeline, we have more than sufficient cash to get that through the runway. I mean, that was one of the reasons of looking at this deal and structuring it the way we did, where there was no money up front. You know, it was just $20 million of ABO in a stock given to Elody. And then the first, what Vish had mentioned earlier, the first milestone payout to LED doesn't happen until AB801 approval. So we have more than sufficient capital to get. 801, up through approval, Luca.

And then just on the team side. We have personnel. So who is involved in ZivaSkin commercialization, right? We have a commercial team that's doing this, and we have a CMC team that is based in Cleveland that is supplying a drug product, right? These are the critical ZivaSkin commercial launch teams, and they will be undisturbed by the new asset development at this time. I think it's going to be a lot of clinical development at this point in time. There are some subject matter experts that we will bolt on to the team. It's not a large number of people. It's a handful of people. But the basic infrastructure of running clinical trials, clinical operations, project management, and all those types of things, they don't have a big role in ZivaSkin now because clinical development is pretty much completed. So we have those people that are operators, not subject matter experts. So bolting on a few subject matter experts and using that machine will be running this program for development aspects. The commercialization activities, which is pre-launch, preparing the market and preparing the physicians and market access controllers and all that will start. Eventually, you don't have to do a lot today. As we get to T-24, T-18, we will bring in some subject matter experts in the medical marketing market access functions and build that out, and those preparations will start. The field-based team is really not required until six months before approval. So that's something that comes much later. So it's a stepwise build of people that are involved. So it's not that we have to outlay that now. By that time, ZivaSkin is going to have matured its path, right? So that's how it's planned.

Maybe we can talk a little bit about ZivaSkin in the time we have left here. It was good to see CHOP and UTMB come online. You now have four of these QTCs that have. Treated patients. There's still four that have not, right? So I know Florida Health and Cincy's Children, I think, just came online relatively recently. But I guess if you look at, like, New York Presbyterian, for instance, right, they were activated six months ago. Colorado Children's was activated 12-plus months ago. What's driving the variability in this kind of time-to-patient treatment that we're seeing across these sites that you've activated?

Yeah, Steve, we realize that it's taken longer for these two centers to treat. And there is no one reason, as we have said, I mean, but we know that there are patients. It's just that they have not yet treated. It's not to say that there is lack of motivation, or if there is a fundamental disconnect. In one particular case, it's been really out-of-state Medicaid payer enrollment, and they want to, one of the centers want to prioritize this particular patient that they have identified because they believe this is the best candidate, and they want to get the best experience. So that's really what has held one of the centers, and the other centers also, a couple of patients that they wanted to prioritize, ended up having some clinical issues, so they had to, you know, find sort of the next patient. But rest assured, they are motivated, they want to treat, and as soon as they treat, we will announce just like how we did for, you know, UTMB and CHOP. Okay. One of the things we are, our sort of goal, if you may, is we would like to see all of the eight centers having treated a patient, first patient, by around middle of next year.

Okay.

And we know that that's an important, it's a seminal event, like, you know, we mentioned, because once a center has treated a first patient, going from zero to one is extremely difficult because it's like, you need project management on steroids, you need the end-to-end process, and once that is done, then it becomes easier. Just like how we saw for the first two centers, Stanford and Lurie, as well as UTMB and CHOP, have had more than one patient's already treated. So, you know, we are seeing the pace picking up on centers that have gained some experience.

Once these patients get that first patient experience, what do you think the – The steady state volumes that each of the QTCs will look like. Would you expect to see a big level of variability between someone, say, like Stanford and Colorado's children? Is there going to be a lot of variability in terms of the throughput there?

Yeah, we expect variability. Like Cincinnati Children's is one of the largest centers, and we know that there are patients that they are queuing, you know, they're working through that system. So we should expect, we expect to see greater throughput from Cincinnati Children's, Stanford, whereas other centers, UTMB has actually taken a little bit in a positive way, a little bit by surprise because they are historically were not an EB center. They rely on patient referrals. But Texas is a big state as well as the whole catchment area. So we are seeing patients coming in from out-of-state into UTMB. And UTMB is working to get enrolled in out-of-state programs, you know, at a different cadence and a different pace. So we are yet to see, but we do expect, you know, certain variability. Just like with any other rare disease or any other therapy out there, there's going to be disproportionate usage across centers.

Okay. And is there still a plan to bring more QTCs online here over the course of the next 6 to 12 months?

We are talking to additional centers. We expect to see, you know, a few more centers coming up on 27. But at this point, our focus is more shifting in how do we ensure the best practices are shared? How do we ensure that there's an expedited learning curve so that, you know, we want to see repeat patients coming from these QTCs.

And maybe this last question is a number of time here, but I know you made some comments on the call. I think it was Monday that suggested that some of the QTCs are monitoring wound healing outcomes. Do you have any sense of just how much follow-up time these centers want to see on these patients in order to inform subsequent treatment decisions? And then do you know if patient outcome data in terms of wound healing and outcomes, is that being shared across these centers?

Yeah, it is being shared across centers, but right now more in a confidential ad board, advisory board, physician ad board kind of setting where images are being shared. We also know physicians talk to each other, et cetera. We are looking to have a more formalized way, and some physicians have also expressed interest in forming a coalition together to share these kinds of data in a more scientific conference setting. To your earlier part of the question, it really depends. I mean, some physicians are happy with like a three-month and couple that not with just images, but also what the patients are saying, how they are feeling. You know, already you can see, yeah, I'm taking a shower. I don't feel that stinginess, or my time to bandage dressing changes is getting better. Whereas in other patients where you have treated large areas of the body, they want to see a little bit extra recovery time, which could be six months, right? And that, like anything, you have early adopters, you have like, I want to wait and watch before I jump. And that sort of is the spectrum. And once they see that benefit, which it is accruing, then they want to go back. To be able to be more receptive to bringing patients on.

That six month is also FDA approved endpoint, right? So some of them may be fixated on this is what I've seen from the data in the vital study. But others, if they see it earlier, hey, I'm happy already. Okay.

Any other questions? Guys, thank you very much. Really appreciate it.