Andre'a Lucca - VP, Communications & Operations Timothy Miller - President & CEO Jeffrey Davis - COO.

George Zavoico - JonesTrading Justin Kim - Cantor Fitzgerald Jason McCarthy - Maxim Group.

Greetings and welcome to the Abeona Therapeutics Third Quarter 2016 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Andre'a Lucca, Vice President of Communications and Operations. Thank you Ms. Lucca, you may begin..

Good morning and welcome everyone. On the call today are Dr. Timothy J. Miller, President and CEO; and Jeffery Davis, COO of Abeona Therapeutics. Dr. Miller will begin the call with an overview of the third quarter and more recent highlights and developments at Abeona. After, Mr.

Davis will provide additional comments on the quarter, a brief overview of summary financials and the closing of the recent offering and review the upcoming investor conference calendar. Following those updates, we will open the floor to few questions. Before I turn the call over to Dr. Miller and Mr.

Davis, I need to remind our listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the Federal Securities laws.

Information contained in the forward-looking statements is based on current expectations and is subject to change and actual results may differ materially from forward-looking statements. Some of the factors that could cause actual results to differ are discussed in the reports filed with the SEC.

These documents are available on our website which is www.abeonatherapeutics.com. With that said, it is now my pleasure to introduce Dr. Timothy J. Miller. Tim, you have the floor..

Thanks, Andre'a. I wanted to welcome all the investors, analysts and other stakeholders of Abeona to our call. It's been a transformative year for the Company as we've grown more into clinical stage biopharmaceutical company and as we continue to develop our therapies for these rare and life-threatening rare genetic diseases.

We recently provided an update on the low dose patients that were enrolled in our MPS IIIA clinical trial and have certainly been able to stay at ABO-102 event, well tolerated with no safety or tolerability concerns through the 90-days post injection and that we've seen encouraging signs of early biopotency as observed in the urinary and CSF -- specifically the heparin sulfate reductions, as well as potential early signs of benefit in the liver and spleen volume reductions.

We've also commented that we have seen increased plasma leucocyte enzyme activity and that these are pure to continue through extended follow-up as these patients have continued to do their enrollment, or their follow-up phase.

And we've also recently announced that we've received the EMA, regulatory approval for the ABO-102 trail to be conducted at Cruse's hospital for MPS IIIA and we've received the fast-track designation for that program as well as the EMA or from product designation. So there are all significant milestone for Abeona, as we look to the future in 2017.

We've also recently announced a collaboration with the EB Research Partnership, between EBE and medical research foundation in Stanford University for the development of treatments for recessive dystrophic epidermolysis bullosa.

Clinical results for the lead program, EB-101, were recently presented at the opening Plenary Session of the Society for Investigative Dermatology, and Investigators at Stanford are currently recruiting additional patients for the Phase 2 portion of the clinical trial, and adolescence, 13 and older, to determine the effect of types VII collagen gene corrective grafts on wound healing efficacy.

Recently we announced that the fifth patient was enrolled from the Phase 1 portion there, and look forward to presenting those results in early 2017. We've announced the exclusive worldwide license of a Capsid [ph] portfolio as well from the University of North Caroline and Chappel Hill.

We believe that this help position us for additional programs, as well as for second generation products in the gene therapy space for both CNS disease, as well as other targets.

We did also announce that the data safety monitoring board has approved dose escalation for the Phase 1/2 clinical trial for Sanfilippo syndrome Type A and as was a recent highlight, there will be closed a financing of $42 million underwritten offering of common stock.

As we continue to focus on early program in MPS IIIA, starting with MPS IIIB as well as an open trial, that we again probably announced that we'll be enrolling patients in early 2017. I mean hope to see some more benefits.

And so with those -- with of course the orphan drug designations in Europe and the fast track designations in FDA, we believe that Abeona is well positioned to be a leader in certainly gene therapy but specifically for treatment for Sanfilippo syndromes Type A.

And so with that, I will turn it over to our COO, Jeff Davis, to talk about the third quarter financial results..

Thank you, Tim. We recently filed our Form 10-Q for the quarter ending September 30, 2016; at that time we had a cash balance of $31.2 million, that compared to $34.3 million as of the end of the second quarter on June 30.

Like the first couple of quarters of this year, the net cash used in operating activities was approximately $1 million a month, and so for the nine months ending September 30 of this year, our net cash used in operating activities was approximately $9.6 million, so we've been able to -- I think, if you look at clinical and the regulatory achievements, we've been able to achieve a lot and effectively keep a fairly tight control on our cash burned.

As mentioned briefly by Tim, we did on November 1, just a couple of weeks ago, we closed an underwritten public offering of 6 million shares of common stock priced at $7 per share. The gross proceeds to the Company were $42 million before underwriting discounts and commissions and offering expenses.

So together the net offering plus our net cash balance gives us approximately $70 million roughly on the balance sheet now.

Revenues in the quarter, not necessarily very meaningful but is accurately reflected in the Q, we had some -- $180,000 roughly, of revenues, that consist of royalty from some legacy marketed product including Mu Guard, as well as some recognition of deferred revenues related to upfront payments from early licensing agreements.

The net loss per share for the third quarter was $0.08 a share compared to a loss I think in the previous third quarter of last year of $0.19 per share, and the weighted average common shares out in the third quarter was roughly 33.3 million and again, that would be prior to the aforementioned public offering of 6 million shares.

So that was fairly simple summary of the quarter and I do refer people to the Form 10-Q recently filed and available on sec.gov. Upcoming events and conferences, we will be presenting at the Piper Jaffrey Conference.

Some of the management team will be present in early January, out and around the JP Morgan Annual Healthcare Conference at San Francisco, where we'll be meeting with investors and potential partners; and obviously we have some very meaningful gene therapy and like some more disease conferences coming up including the WORLDSymposium for Lysosomal Storage Diseases in San Diego in early February, and obviously the ASGCT Meeting down at Washington DC in May where we hope either a combination of our self as well as some of our clinical investigators will be providing some more updates of data on our ongoing -- both, clinical stages, as well as preclinical programs.

And so that would wrap it up. I think, I'll turn it back to the moderator and we have some time for Q&A..

Thank you. [Operator Instructions] Our first question is from the line of George Zavoico with JonesTrading. Please go ahead with your question..

Hi, good morning. Thanks for making the call.

A couple of quick questions, I think -- Mu Guard, is there differentiating certain meaningful revenues from that coming forward, as any effort being made whatsoever by you or any distributors to grow the business?.

Thanks for the question George, thanks for participating. A little update on Mu Guard, it is a legacy product, it will contribute royalties, I don't necessarily characterize on as financially meaningful.

I will tell you that in addition to our North American partnerships, we have three other partnerships around the globe and number of different regions.

For example, it was recently relaunched, the product was recently relaunched in Europe in September of this year to our plans through our partners to read -- to introduce it in Australia, New Zealand; also before the end of this year and there is some manufacturing going on for our partners in Korea, and in China.

So there is activity George, and we do expect royalties to increase modestly, I don't -- I don't think it's what I would characterize as financial meaningful to the business necessarily, although we don't -- we don't spend a lot of money cash burn on it and there is -- we believe the product to be important, efficacious, etcetera in the oncology supportive care space.

But we've -- as you could tell by our financial filings or SEC filings, it's de-emphasized in terms of our overall mix of business..

Yes, I was just trying to get some guidance as to where to put it going forward in our model.

On the other hand, you're protein replacement has tremendous amount of potential; and could you update us on where you stand with that?.

So we continue to progress the plasma program, we're working with outside contract manufacturers, obviously to produce -- to be in a position to initiate clinical trial work and we remain in discussion with regulatory bodies together with the patients efficacy groups in the area to help define the clinical pathway forward and on our lead asset in the plasma program..

Are you willing to provide a guidance as to when the next key milestone might be in those programs?.

Well, you and I George have talked about this for some time, it's kind of hard to gauge, historically I've been -- not great at predicting when some of these things can be defined, so….

Okay, I understand. No problem. I was just asking if you had any additional clarity and I understand how this -- the manufacturing regulatory and how this can take -- extraordinarily like some time.

And getting to the gene therapy products, you mentioned the Cruces Hospital in Spain, any -- I'll tell you on what's happening in Australia because we're going to open some sites there?.

We proceed along the regulatory path in Australia, certainly there is a very similar path to the FDA from ethical committee submissions to -- since it will considered elsewhere rack type of submission and certainly working with the governing body for Australia as well.

We look forward to announcing, what we hope to be our regulatory approval there, sometime in the first quarter, and getting patients starting to enroll there as well..

Okay, terrific progress. And on that front and with EB as well, I would like -- but that's in those trials and the patient accrual continues on them, on a good pace. Thanks very much..

Our next question is from the line of Justin Kim with Cantor Fitzgerald. Please go ahead with your questions..

Good morning, congrats on the recent progress and thanks for taking the questions.

So my first question pertains to manufacturing; could you comment on how many patients worth of drug do you have available for Sanfilippo; and Sanfilippo A and B patients?.

So we've provided guidance, that -- our goals have been to enroll 69 patients in nation-wide, 69 patients in Spain and 69 patients in Australia. So currently you know we are on-track to continue our enrollment and really accelerate our enrollment, both -- primarily overseas, as well as at our hospital care in the United States.

So drug manufacturing go in-hand and certainly it's keeping up or accelerating for our patient enrollment..

Okay, great.

And then in terms of -- I guess the manufacturing process, overall, is that able to support commercial scales? And what, would you -- sort of -- could you provide I guess some details on whether the steps that would be required from a regulatory process, the transition?.

Yes, it's a great question Justin. So our current manufacturing methods for both, our 3A and 3B and really our EB program are in-line with a typical scale up and scale out program.

We're very interested in gauging the regulatory agencies both here and broad [ph] -- we think what we envisioned to be our commercial manufacturing plant, I'm appreciating the limitations on certain programs. The Company is evaluating multiple methods for what would essentially be the commercial roll out plan.

So again, you know with enough drug in hand and the process currently established, really we're waiting on some discussions that -- both internally and with regulatory agencies, truly a lock-in the final commercialization plan. But the PD work -- but the PD work has also been done and currently ongoing for that scale out of purchase.

So we're very much aware that those gram, a key questions for our gene therapy company with multiple AAVP programs..

Thanks.

And so I guess with the regulators in the EU programs, would they be comfortable with the safety experience already generated? Do you think that you had to start a low dose at these sites? How do you think about further dosing in the EU?.

Yes, so the general mantra and I know you're aware in gene therapy, particularly in the lysosomal storage diseases, which is treat earlier and treat with more if you can particularly because of the benefits of cross-cohesion.

And so our approach currently, we've seen significant amount of benefit for our low dose treated patients, and it's certainly been demonstrated, tolerable and safe, as we know from other clinical trials at even a higher dose, so we be comfortable if we needed to go higher, we're already seeing such wonderful clinical benefits that we anticipate for each findings coming up through 2017.

As it gets into enrolling overseas and as already been approved by, for example, European agencies. The plan there is to do us predominantly at the higher dose..

Great. And then, I guess I just had one last question.

In terms of sort of the data flow and -- so given that the first patient is sort of reaching -- I think we expect about the six months timeframe currently; are there any meetings that -- medical meetings in the first quarter such as the WORLDSymposium that was mentioned previously, that we could see an update in terms of the behavioral types of effects of the drug?.

Yes, so as the low dose cohort continues to roll through their follow-up appointments, now approaching the six months' time point -- now we certainly look forward to presenting the data as things become more evident, I think it's our position to maintain a level of clinical acropolis [ph], going through and trying to present cohort based data where appropriate, really to eliminate the potential for any particular patient to be identified; and really just to maintain Abeona separation -- I mean, as best as possible from how certain individual patients may be -- identified as having benefit or not.

So again with the early biochemical assays and the clinical manifestations already seen very early, and we -- again, we've seen a lot of Greek [ph] data even as we continue through the 1990 and six months visit so far; I mean with the conferences coming up and as Jeff mentioned early in spring, certainly the world and ASGCTR are likely targets where we present something, probably with our partnering hospital..

Okay, great. Thanks for the color and congrats on the progress. I'll jump back in the queue now..

Thanks, Justin..

Our next question is from the line of Jason McCarthy with Maxim Group. Please go ahead with your question..

Hi guys, thanks for taking the questions.

I just kind of want to build on the last questions, a neurocog data, the first patient is approaching six months; I wonder if you could compare what we've seen in the ERT space, even from Alexion in Sanfilippo and other LSDs, at what point where they seeing neurocognitive changes in children across the LSD or different LSDs? And what you might expect? What I'm really asking is, Tim like, where would you expect to see the proof-of-concept because your biomarker and your physiological data so far -- looks like it's in the range of the ERT, even that's just 30 days..

Hey Jason, nice to hear from you again, and thanks for asking such a great, great question. We point back to the Natural History study, really nation-wide and one of the advantages that Abeona MPS III and IIIB programs really comes back to -- our 25 patient Natural History study.

We're the only ones in the world that have this type of data available as a competitor arm and which as you've seen from some other more recent announcements from other clinical trials in this space -- the availability of having a large natural history study patients dataset is certainly going to be critical going forward for potential filing.

And so the Natural History study really showed us that there is -- it's multifaceted one looking at what we're going to see from really blunt instruments for neurocognitive assessment.

And we are fortunate enough that the Natural History study showed both, biochemically, by MRI and by neurocognitive exams that we believe to have the appropriate instruments or something similar, close enough, that we can assess these.

So as we go through the -- low dose of six months neurocognitive assessments, looking at things like [indiscernible], we believe that those are something that -- again, based on the patients that have been selected and what was initially shown that these may have some form of information that adds on to the biochemical assessment.

And we'd also pointed out at that point that many of the patients in the Natural History study have crossed over into the clinical trial, so we have additional longitudinal data that we're going to be look back on. So we're hopeful that we're going to see something at six months and as predefined endpoint that both six months and twelve months.

So looking forward to being able to share that data in 2017..

I figured, this one won't follow-up and Type B, we're expecting a similar enrollment, I guess a similar trial size and just remind us of the timing of enrolling the first patient for that study..

Yes, so as we have learned a lot from our MPS IIIA studies and how we've operationalized things, both here and abroad; we look forward to enrolling what we anticipate to be the first patient sometime in the first quarter. And that will probably lead to accelerated enrollments, both here and abroad.

And I think we've -- it's very similar to the IIIA trial, six to nine patients here, six to nine patients that are clinical [ph]..

Great. Thanks for taking the questions guys..

Thanks, Jason..

Thank you. I will now turn the call back to Tim Miller for closing remarks..

Well, thank you everyone. It's been a really exciting year for Abeona, and we -- as we continue to build Abeona's position as a leader in gene therapy with four programs in the lysosomal storage disease space, programs in epidermolysis bullosa, as well as some of our hematological programs. Certainly looking forward to great things in 2017.

So thank you everyone, hope you have a great holiday coming up and look forward to speaking with you all soon..

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation..