Abeona Therapeutics Inc. (NASDAQ:ABEO) Q3 2023 Earnings Call Transcript

Abeona Therapeutics Inc. (NASDAQ:ABEO) Q3 2023 Earnings Call Transcript November 16, 2023

Operator: Greetings, and welcome to the Abeona Therapeutics Third Quarter 2023 Conference Call. [Operator Instructions]. Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Greg Gin. Sir, you may begin.

Greg Gin: Thank you, Ali. Good morning, everyone. I would like to welcome and thank everyone for joining us on our third quarter 2023 update conference call. The press release announcing the third quarter ’23 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 Securities and Exchange Commission.

These documents are available on our website at www.abeonatherapeutics.com. On today’s call with prepared remarks are Dr. Vish Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer and Head of Business Development; and Joe Vazzano, Chief Financial Officer. Also joining us for the Q&A session will be Dr. Brian Kevany, Chief Technical Officer. With that, I will now turn the call over to Vish Seshadri. Go ahead, Vish.

Vishwas Seshadri: Thank you, Greg. Hello, everybody, and thank you for joining us this morning. I’m pleased to update you on our continued progress evolving from a clinical-stage company to one with a significant commercial opportunity. Let me start with the highlight that everyone at Abeona is thrilled about. We achieved perhaps the most meaningful milestone yet in Abeona’s history at the end of September with submission to the FDA of our biologics license application, or BLA, for prademagene zamikeracel or pz-cel, which was formerly known as EB-101. Pz-cel is our investigational autologous COL7A1 gene-corrected epidermal sheet or recessive dystrophic epidermolysis bullosa or RDEB. As a reminder, in clinical trials, a onetime application of pz-cel had demonstrated wound healing and being reduction for the toughest to treat large chronic wounds, some wounds that were treated in our Phase I/IIa clinical trial remained healed after 8 years.

The sustained treatment effect we have seen is due to the integration of COL7A1 transgene into the host genome during retroviral transduction of patient keratinocytes, ex vivo. Our BLA submission represents a critical step towards the potential approval of pz-cel as a first therapy to provide instantaneous wound coverage and multiyear healing in RDEB wounds with a onetime application. I want to take a moment to thank many stakeholders who contributed to this milestone achievement, not just for Abeona but for the whole RDEB community from the patients, caregivers and physicians who participated in the vital clinical trial, the patient advocacy community and to the FDA for their level of engagement and constructive guidance in the months leading up to the pre-BLA meeting that occurred in late August.

I also would like to acknowledge our entire submission team for their tremendous determination over many months to prepare the BLA. We recently completed our Application Orientation Meeting with the FDA where we overviewed our BLA and walked them through our clinical data. Our understanding is that this meeting is one of the last steps before the FDA decides on acceptance of the application for formal review. Regarding what we can expect next, the FDA’s decision on whether BLA review process can start is typically made during the 60-day window following submission, which in our case, goes out to late November. With the BLA submission, we requested the FDA to grant a 6-month priority review. Under a priority review scenario, pz-cel could be approved in the second quarter of 2024.

I’d remind you that pz-cel has been granted rare pediatric disease designation by the FDA. So upon its potential approval, we continue to believe that we’re eligible to receive a priority review voucher or PRV, it’s permissible to sell PRVs and other PRVs has been worth approximately $100 million based on recent PRV transactions. Planning for the potential success of our BLA, our manufacturing team is focusing on supporting the BLA review process, preparing for preapproval site inspection and scaling up our internal capabilities and staffing for commercial launch. In the first full year of launch, we currently plan to supply pz-cel for up to 120 patient treatments for manufacturing cycles per year. Following launch, we will assess our longer-term plan to further build up that capacity.

We are excited about the prospects of transitioning to a commercial-stage organisation with Abeona’s first product launch. However, it is important to note that pz-cel will not be the first autologous therapy launch for the leadership team as Madhav and I will draw upon our previous launch experiences with Breyanzi and Abecma. As Chief Commercial Officer, Madhav will oversee all aspects of commercial strategy, planning and operations. His extensive and diverse leadership experience across sales, marketing and market access, coupled with a strong track record, launching autologous cell therapies with a heavy focus on customer experience makes Madhav the ideal candidate to lead the stage build-out of our highly focused, nimble commercial organization to maximize the potential commercial opportunity for pz-cel.

I’ll now ask Madhav to talk about our near-term commercialization focus and launch preparations. Madhav?

Madhav Vasanthavada: Thanks, Vish. We are, of course, excited for the potential commercial launch of pz-cel, pending FDA approval. In terms of our commercialization approach, our near-term product focus is simply on two main areas. One is to onboard and prepare 5 to 7 high-volume EB treatment centers so that they can treat with pz-cel upon approval. These centers already have the expertise in caring for EB patients and are geographically dispersed across the U.S., which would help make pz-cel treatment accessible for these patients. And two, working with commercial and government health insurance systems to ensure broad access for all eligible patients at a price point that captures the value at a transformative therapy like pz-cel might bring.

We are happy with our progress so far on both these fronts. To elaborate further in terms of site onboarding, shortly after our BLA submission, we conducted an advisory board meeting that was attended by 8 well-respected physicians, EB physicians from across the US. We discussed not only the clinical data and the care coordination needed for surgical application of pz-cel but also for the first time, we shared some of the before and after images from several large wounds across multiple anatomical areas treated with pz-cel as well as patients and caregiver testimonials about data experience with pz-cel and clinical trials. We’re very encouraged by the physician’s feedback, which included their suggestions on ways to operationalize pz-cel at treatment centers.

We have received interest from these physicians to initiate pz-cel site onboarding discussions at their institutions, and we are very excited by it. With respect to the second focus area of payer engagement, we will continue to engage payers over the coming months to educate them about pz-cel and further access the price potential. Early feedback from payers and hospital administrators supports positive coverage for pz-cel and pricing in line with the value of a cell and gene therapy that provides instantaneous coverage for large wound areas and that demonstrate years of wound healing and pain reduction even in the toughest to treat RDEB wounds following a onetime application. Furthermore, we hope that the sustained effect we see in our clinical trials on wound areas with a onetime application of pz-cel could minimize the treatment burden incurred by patients and caregivers and continuously caring for their wounds day after day and week after week with current standards of care.

Additionally, in speaking with our clinical trial patients and the advocacy community, we continue to hear enthusiasm for pz-cel. And in fact, in our ongoing Phase IIIb trial, all 3 patients are repeat patients who fully appreciate the involved nature of the procedure and have elected to receive pz-cel again for their previously untreated wound areas. We will continue to work with patient groups and make sure that the voices of the patients, the families and the caregivers are well represented as we engage with the FDA and payers. Lastly, since our BLA submission, we have leveraged our network and have moved quickly to fill crucial commercial roles, including key account management, market access and marketing with proven biopharma veterans who bring additional launch and commercialization experience with autologous cell therapies.

Their contributions will be an important piece of our launch planning. We intend to further build out our commercial organization and infrastructure in a stage-gated manner aligned to BLA acceptance. Now I’ll hand the call over to Joe to discuss our third quarter financial results. Joe?

Joseph Vazzano: Thanks, Madhav. I would like to remind everyone that the Form 10Q is available on our website. which is where you can get additional details on our financial results for the 3 and 9 months ended September 30, 2023. Starting with the financial resources on our balance sheet. We had cash, cash equivalents, restricted cash and short-term investments of $54.1 million as of September 30, 2023, including $25 million in gross proceeds from the registered direct offering in July 2023 as compared to $37.1 million as of June 30, 2023. Based on our current operating plan and assumptions, our financial resources remain sufficient to fund our commercial launch preparations for pz-cel and our business operations into the fourth quarter of 2024.

In other words, our cash runway extends beyond the potential commercial launch of pz-cel and receipt of a priority review voucher. Research and development expenses were $7.1 million for the 3 months ended September 30, 2023, compared to $5.5 million in the 3 months ended September 30, 2022. Our spend on general and administrative activities was $4.2 million for the 3 months ended September 30, 2023, compared to $3.9 million in the same period of 2022. Net loss attributable to common shareholders was $11.8 million for the third quarter of 2023 or $0.48 loss per common share as compared to a net loss attributable to common shareholders of $6.4 million or $1 loss per common share in the third quarter of 2022. With that, I’ll turn the call back to Vish for brief closing remarks before kicking off the Q&A session.

Vish?

Vishwas Seshadri: Thank you, Joe. I would like to close by reiterating what an exciting time this is for Abeona, for pz-cel and for the RDEB community. Based on our strong clinical data and enthusiasm from the medical community, we believe that pz-cel could be an important potential treatment option for patients. With our BLA submission, we’ve demonstrated our ability to take a cell therapy product from research through clinical development. We are well positioned for potential market entry with extensive and diverse commercial and launch experience with autologous cell therapies. We’re looking forward to the anticipated momentum in the coming months as we both advance pz-cel through the regulatory process toward potential approval and continue executing on our commercial readiness plan and ultimately to a potential U.S. launch of pz-cel. With that, operator, please open Q&A session.

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Q&A Session

Operator: [Operator Instructions] Our first question is coming from Kristen Kluska with Cantor Fitzgerald.

Kristen Kluska: I was hoping you could elaborate or speak to some of the work you’re doing now for patient identification early on. And given that some of these patients may need 2 of the procedures, any chance of the prior trial participants including Phase I/II being involved?

Vishwas Seshadri: Thank you for that question, Kristen. Before I turn it over to Madhav, I’ll just provide my thoughts and Madhav will elaborate. Just to reiterate, your question is around prior identification of patients before potential launch and how — I think the Phase I/II as well as I would say, in the vital patients would benefit from a potential launch, we can even provide some anecdotes from our current experience. And it’s not just in the Phase I/II study and vital, but we’re also having a Phase IIIb study that is going on for the 302 study where patients from both the previous 2 studies are coming for repeat treatment. So all of this augurs well as we prepare for launch. But for the specific question of patient identification, Madhav, will take that.

Madhav Vasanthavada: Thanks Kristen for the question. I think the ad board that we conducted recently was very assuring in that physicians continue to believe that these patients will require more than one therapy. So as we have patients being identified and the awareness increasing with the topical gel right now with Vyjuvek, but that is certainly one bolus of patients that we can look to bring on. We do know that there are patients in the centers of excellence who visit these centers for ongoing wound care management, whether it is infections or whether it is squamous cell carcinoma and the longer the wounds are chronic in nature, the greater the risk for these infections to happen. So in speaking with physicians, we already know that certain physicians are thinking about their patients who would benefit from pz-cel and are thinking of identifying in their own minds.

But as we get closer to launch, we will continue to formalize with analysis and gather more tangible based on claims analysis and where the patients are to concretely find out, okay, what is the volume here we are talking about so that we can queue up in anticipation of approval.

Kristen Kluska: Okay. And then — sorry, go ahead.

Madhav Vasanthavada: So I wanted to check if that helps answer your question.

Kristen Kluska: Yes, yes. Very helpful. And assuming your timelines that you’ve laid out or go — how quickly do you think you’ll be able to have this in the commercial field?

Madhav Vasanthavada: So post approval, similar to autologous therapies, right after approval, we visit to do PMC approvals at the EBE [ph] treatment centers and then very quickly have medical policies in place from the payers’ standpoint. So our estimation is we’re talking about maybe a month to 2 months ballpark to have these processes in place. So that would be our sort of a launch, if you will. And from then on, we have the physician’s ability to place an order for pz-cel. But our goal will be to have it as soon as we can post FDA approval.

Operator: Our next question is coming from Maury Raycroft with Jefferies.

Unidentified Analyst: This is Yao Ung [ph] for Maury. Our first question is on the commercial opportunity. We think you recently said at the conference that your estimate of peak sales to be about $500 million. What kind of assumptions went into that estimate? And what do you need to build in terms of infrastructure to reach that target?

Madhav Vasanthavada: Yes, thanks for that question. In terms of the assumptions that [indiscernible] as we have indicated, for us, our ability to supply at the time of launch is around 120 patients in a given year. And we look to ramp that scale over time as soon as we have a few initial treatment centers, have the experience to provide pz-cel, and then we estimate what the demand looks like so that we can increase the CapEx. For the peak sales, we have a projection of 500 patients in a year over, I think, around 5-year time frame. So the peak sale we have projected there is with the 500 capacity over a period of 5 years. And the pricing estimate we have also baked in is a 7-digit price point. So these are the initial key assumptions and we expect these patients to come in both de novo patients the first time as well as an average assumption that each recessive that patient given the large amounts of wounded area that they have will require 2 such rounds of EB-101 treatment side.

Vishwas Seshadri: Yes. And if I can just add, one of the reasons we will be triggering any capacity expansion after launch and the initial experience with the first centers of excellence that we onboard is that we get a good sense of to what level we will need to expand that capacity. We’re starting at 120 a year and, let’s say, in a 2-year post-launch scenario, should we ramp it up to 500 or 350 or is it 700. I think some of those assumptions will be validated once we start seeing that initial demand and trends. And for that reason, so what you’re seeing as a peak opportunity of greater than $500 million is dependent on the capacity expansion in our assumptions. I hope that has given you some perspective there.