ABEO - NASDAQ

Good Day everyone, and welcome to the Abeona Therapeutics Second Quarter 2025 Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Greg Gin, VP of Investor Relations and Corporate Communications. Sir, the floor is yours.

Thank you, Matt. Good morning, and thank you for joining us on our second quarter 2025 results conference call. During this call, we will refer to the press release issued this morning announcing the financial results, which is available on our corporate website at www.abeonatherapeutics.com. We anticipate making projections and forward-looking statements during today's call, which are made pursuant to the safe harbor revisions of the federal securities laws. These forward-looking statements are based on current expectations and are subject to change. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those outlined in our Form 10-K and periodic reports filed with the SEC. These documents are available on our website at www.abeonatherapeutics.com. Joining me on today's call with prepared remarks are Dr. Vish Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer; and Joe Vazzano, Chief Financial Officer. Also, Dr. Brian Kevany, Chief Technology Officer, will join us for the Q&A session. And with that, I will now turn the call over to Vish Seshadri to lead us off. Vish?

Thank you, Greg, and good morning, everyone. The second quarter of 2025 marked the biggest milestone achievement in Abeona history so far with the FDA approval of

Thanks, Vish, and good morning, everyone. We are actively executing on our launch strategy, and I will provide specific updates on our initial progress, the near-term demand trends, the process for scheduling patients onto treatment and our momentum with payers. In the first 3 months since

Thanks, Madhav. I would like to remind everyone that you can find additional details on our financial results for the 3- and 6 months ended June 30, 2025, in our most recent Form 10-Q, which is available on our website. Starting with the financial resources on our balance sheet. We had unaudited cash, cash equivalents, short-term investments and restricted cash of $225.9 million as of June 30, 2025, which includes the net proceeds of the sale of the Priority Review Voucher that we received with

Thank you, Joe. Turning to our pipeline. Beacon Therapeutics has exercised its option for a nonexclusive license to the patented AAV204 capsid for use in retinal diseases and genetic targets that are nonredundant with our AAV ophthalmology pipeline. As a reminder, AAV204 has been shown to achieve high macular and optic nerve transduction levels after para-retinal administration and has also been shown to facilitate transaction of both the inner and outer retina after intravitreal administration in mice and nonhuman primates. Now I want to turn to another partner pipeline program, AAV gene therapy UX111, which is being developed by Ultragenyx for Sanfilippo syndrome type A or MPS IIIA. In July, Ultragenyx reported that the FDA issued a CRL in its review of the UX111 BLA, requesting additional information and improvements on CMC procedures and validation. The FDA also provided observations from the manufacturing facility inspections. Ultragenyx believes the observations are readily addressable and many have already been addressed on its 2Q '25 call last week, Ultragenyx noted that it aims to reach agreement on its plan to resolve the CRL observations through a Type A meeting with the FDA. And upon BLA resubmission, expect a priority review period of up to 6 months. Next, I turn to another partner pipeline program, AAV gene therapy TSHA-102, which is being developed by Taysha Gene Therapies for the treatment of Rett Syndrome. In May, Taysha reported that it secured FDA alignment of both key elements of its pivotal trial design for TSHA-102 and the next steps to enable the initiation of the pivotal trials that could support a potential BLA submitted. Taysha has subsequently commenced pivotal trial site activation and expect to begin patient enrollment in the fourth quarter of 2025. In June, clinical data highlighting the therapeutic potential of TSHA-102 were presented at the 2025 International Rett Syndrome Foundation, Rett Syndrome Scientific Meeting. With that, I will open the call for Q&A. Operator, please open the Q&A session.

[Operator Instructions] Your first question is coming from Kristen Kluska from Cantor.

Nice to see there's so much momentum out of the gate. First, I wanted to just ask about how you're specifically defining identified patients? Are these patients that wound profiles that might make them good candidates for

Sure. Kristen, Madhav, can you please take that one?

Yes, absolutely. Thanks, Kristen, for that question. So these patients that have been identified are really coming from the physicians and physicians criteria at this moment are for severe RDEB patients, and severe defined as patients with large wounds that have never healed in their lifetime so far. So we are really talking about really the most clinically burdened patients and physicians are very confident that these patients will get -- will want to get

And then given that there's about 36 plus of these that are not specifically within the 2 QTCs, how should we be thinking about when they'll get treated? Is it that it's -- I know you still have a few more that you're planning to open. So is it possible that they might wait for 1 of those? Or is there just going to be more travel involved for these Patients?

Yes. So these patients have -- we have already started the process of referrals of those [indiscernible] 36 some that we've discussed, and those patients are coming to QTCs going through the initial consult already. And for us, the way we are looking at it is with nearly 50 patients identified, pretty much initial demand, the work is cut out in that regard to get these patients onto treatment as soon as possible while in the process of activating additional treatment centers, and as I mentioned, those additional treatment centers will certainly make it easier in terms of travel for these patients, but also there are more patients in these QTCs that will be identified.

Okay. And then a last question from me. We had heard from the advocacy group that essentially all of the patients that participated in the trial said that if they had the option, they would do it again, because of the benefits. So I know you have this Abeona Assist program that's been instrumental to help the whole patient journey, but how critical has been the face time or the conversations between patients that have already had

It's been really helpful for the patients from our strong together network who, again, as a reminder, are clinical trial patients who have seen the type of benefits durable, long-lasting wound healing, for them to talk with -- directly with RDEB family, especially in these regional meet-ups that I mentioned, we've had these patients talking one-on-one and answering and addressing the questions. And when the rest of the community are seeing the type of healing and their patient experience, it's definitely motivating for the other patients.

Yes. And also, Kristen, to your question, yes, we believe this -- these disease trial patients were pretty much treated in Stanford. Some of them have expressed interest in getting other areas treated as well. So there will be in that pool, not necessarily the Abeona Assist because these are already patients that have the relationship with the QTC. So they will -- they are directly in touch with Stanford.

Your next question is coming from Maury Raycroft from Jefferies.

This is [ Amit ] on for Maury. Congrats On the progress. 2 from us. First, Basically, in your view, how many cases does a center of excellence typically need to treat before adopting Pz-cel as a like a routine therapy? And is there a max capacity for number of surgeries per month that these centers can handle? And I have a follow-up. .

It sounds like your question is more about the site's own capacity and whether we have criteria for site selection based on what volume of patients makes it a QTC qualifiable site. Is that correct?

Yes. Partly that and partly, I wanted to know if there is a number that you think each of these centers need to do the surgery, to become comfortable with the entire process and start to adopt the sort of treatments routinely.

Sure. Sure. I can take -- I can give you a short answer and Madhav will elaborate if needed. In terms of the number of pretreatments, right, I mean there are sites that will have their very first

Yes. I'll just say that early on physicians at the QTC, so at Chicago, for example, wanted to first treat 1 or 2 patients before even identifying additional patients. But now we are seeing that even though our first patient has not been treated yet, the -- as they are talking to more patients and the conviction, they've already started identifying more patients even without treating the very first patient. And these additional patients are currently going through the payer approval process. So that just speaks to the volume of conviction that these centers have just given the

Yes. Yes, absolutely. And for the other 3 centers you're planning to open, do you have a sense of what the -- our deputation numbers might look like there? Would those be similar to what we are seeing from the first 2?

It's about a couple of dozen patients based on our initial discussions we had with these centers bottom up. We also were able to triangulate that with a claims analysis. So these patients are disproportionately located in these centers. And so even the dozen patients that we have said so far, that at these 2 [indiscernible] basis. So there's just a snapshot in time. And with the new QTCs that we identify, certainly, there are more patients and these centers, they have EB clinics that typically tend to meet on like on a monthly basis, patients come in for their consulting. so as these EB clinic meetings and monthly consults happen, that gives an opportunity for these physicians to actually talk to their patients that are coming in and offering

Your next question is coming from Stephen Willey from Stifel.

Congrats on the progress, and this is [ Tuli ] on for Steve. So I have 2 questions, and I have a follow-up for Joe. My first question is related to activation of other QTCs. So when it comes to activating other QTCs in the future, how do you think about it? Should we think that Lurie Children Hospital as a reliable proxy for these upcoming QTCs? And also another 1 related to more future commercial guidance. So with these 2 activate -- already activated QTCs, do you think you will be able to achieve the lower end of your patient guidance range? And then I'll have a follow-up for Joe.

Yes. I'll let Madhav answer that question, but I just wanted to have a clarifying question back, which is when you say Louis proxy, do you mean in terms of patient numbers or experience. Can you just clarify that point?

Yes. More like a patient number, yes.

Got it. Got it. The short answer is that with just the 2 QTCs we have, as Madhav gave numbers, we have enough patients to treat in the near term, which is 2025 treatments that we've communicated. We're really -- when we're talking about the funnel and the 50 patients that are being identified, it's really building the momentum for 2026, right, because of our manufacturing capacity is also ramping up as we speak. But go ahead, Madhav, you have more granular everyday look into this.

No, nothing more to add. Vish, you captured it well. We have the demand. It's really a matter of how quickly we can put these patients on treatment in this particular year. But as Vish reiterated, again, we have -- in terms of patient volume, sufficient work cut out for us, and that's really going to be in the coming quarters. So that's going to be our focus, while at the same time, of course, trying to ramp additional sites as well.

Your next question is coming from Ram Selvaraju from H.C Wainwright.

I was wondering if you could just comment on 2 aspects regarding the mechanics of payment and reimbursement for

Great questions, Ram. Madhav, here is the right person for those. If I just have to recap, just to be clear, whilst the first 1 was more about the reimbursement mechanics of what triggers payment and if there's certain ways in which dollars are paid. And the second 1 is more about the prior authorization process, looking at what other treatments these are the patients and using that as a gating factor. Go ahead, Madhav.

Thanks, Ram, for those questions, and Vish. So the payment is not gated through the process, the payment is -- or the revenue is recognized after a patient has been treated with

Yes. No, that's very clear.

Okay. Great. And then with regards to your second question, so far, we have not received any pushback from payers or any kind of resistance about that the patient should not have or should have received other approved treatments before getting

Your next question is coming from Jeff Jones from Oppenheimer.

Really appreciate the degree of granularity you're providing here. You mentioned 100% success rate on submitted prior authorizations. As we think about the time line leading into the biopsies and eventual treatment, can you comment on how many prior authorizations have been submitted at this point. And as we think about time lines for the 1 biopsy done so far, if you're anticipating additional biopsies this quarter that would lead to treatments this quarter? And then I have a follow-up.

Yes. Thank you, Jeff, for that question. we can definitely share the numbers, but the thing is the prior auths that are in process are more than the ones that are approved, right? So the first 4 or 5 or something like that, we have seen that we've been able to get to the prior auths approvals. But it's a dynamic number. As we speak, these numbers keep changing so I don't want to throw out any numbers prematurely. But in regards to the time aspect that you asked, right, I mean, how long would it take for these prior auths. I think that process is getting shorter and shorter. We are right now at a phase where not all calls have been put in place and prior auths are happening as medical exceptions. So even with that scenario to see the patients going through the prior auths process coming out the other end eventually with an approval is very encouraging. It's more qualitatively the nature of no blockage per se is what we want to communicate at this point in time. It's premature to give reimbursement success metrics otherwise because we have to look at trends over 1 or 2 quarters. But what we do have confidence is that the number of patients that are going through the funnel, I don't want to give specific biopsy numbers for Q3 versus Q4 and things like that. But just from the number of patients, and the demand and have been in the funnel so far, we feel optimistic that the 10 to 14 estimate that we've provided still remains very achievable, and we're looking forward to attaining that goal.

Great. Really appreciate it. And 1 follow-up question. As we talk about that ramp for patient dosing and the issue of production capacity. And I know you're looking at production capacity of 10 per month by mid '26. Can you speak to any hurdles or risk there to that capacity coming online? Any concerns regarding FDA inspections, for example, given all of the events we've seen at the agency of late.

Yes. I think our -- the current CGMP facility that we already have has the space capacity to get up to 10. And as previously communicated, we -- it goes in steps of building 2 patients every increment, and we have done all the hiring and base adjustments that we needed to do in order to have that 10 by mid next year for more details around what are the processes, I wouldn't say risks in terms of catastrophic, but is there an FDA action involved? Yes, to go beyond 6 to 10, we do need to have some disease approved by the FDA. But I'll have our Chief Clinical Officer, Dr. Brian Kevany, comment on our plans so far and why we feel good about this is on track. Brian, can you add some color?

Yes. Thanks, Vish. So I would say our previous communications around this topic, we are exactly in line with where we anticipated being at this point. The ramp to -- from clinical to commercial manufacturing has gone extremely well, hiring, training, having the facility ready for that production has gone just how we hoped it would go, and we are still on track to meet that goal in the middle of next year. As Vish mentioned, we do have some discussions with the agency. We do not anticipate -- there's no anticipation of any kind of inspection. It's just additional conversations around the other parts of our facility being used for

Your next question is coming from James Molloy from Alliance Partners.

I was wondering, it's certainly been a great launch. I know it's a different manufacturing process than the other competitor in this space. But how should we think about the sort of the remarkable launch and the expectations of how this should guide? What should we expect for you guys over the next year or so, next 2 years for your initial stage of launch?

Yes, I think -- thanks for the question, Jim. We have been quite bold in how we articulated our launch in the sense that the patient demand is really what drive our strength here. And just within 3 months of approval to have the number of patients that Madhav communicated that are already identified as

Absolutely. I know you got your hands full of the launch. But looking over the horizon or even over the pond, any thoughts on the EU filing, EU partners, potential EU launch?

We are -- we have started some process of looking at EU as well as the Japan market. The thing is do we -- the big question is, do we supply from the Cleveland facility? Or do we have to build manufacturing footprint. The manufacturing footprint in a different geography is going to be a very long lead time, as you can imagine, because between the tech transfer and engineering runs and providing the data necessary for regulators to take action, you are looking at a 3-, 4-year time project. So we are actually looking at are there ways in which the Cleveland light can supply to other markets as well. And as you know, we are building capacity beyond the [ 10 months ] and that project is already ongoing. We are hoping that this is something that can be -- at least not for all markets, but some select markets could be potentially supplied. And we'll give you a little bit more of an update more towards the end of the year because we're all so focused on the U.S. launch first.

[Operator Instructions] Your next question is coming from Stephen Willey from Stifel.

Just 1 for Joe. How should we think about 2Q SG&A spend? Is that number a good surrogate for the next couple of quarters? Or should we expect that number to scale with an onboarding of additional QTCs?

Yes, that's a good question. I mean what I was alluding to on the call earlier is that as we're doing the engineering run, those costs are SG&A. So the mix between R&D, COGS and SG&A will really vary depending on production output. So it's kind of tough to forecast that. But as we've stated previously, 3 patients a month is our breakeven point. So if you do the math on that, you can kind of see what our operating burn will be in a given year. It's just that the mix between those 3 different expense items might fluctuate quarter-by- quarter.

Yes. It's more of an accounting mix that shifts a little because of how the engineering runs were considered in the SG&A, but overall operating costs is a good trend, what we've seen in the Q2 this year.

Thank you. That concludes our Q&A session. I will now hand the conference back to Vish Seshadri for closing remarks. Please go ahead.

Thank you, everyone, for joining us in today's business update. We'll talk to you again soon.