Christine Silverstein – Senior Vice President, Finance and Investor Relations Carsten Thiel – Chief Executive Officer Tim Miller – President and Chief Scientific Officer Juan Ruiz – Chief Medical Officer.

Maury Raycroft – Jefferies Liav Abraham – Citi Kennen MacKay – RBC Elemer Piros – Cantor Fitzgerald.

Good morning, and welcome to the Abeona Therapeutics, Inc. First Quarter 2018 Earnings and Business Update Conference Call. Today’s call is being recorded. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

For opening remarks and introductions, I would like to now turn the call over to Christine Silverstein, Senior Vice President, Finance and Investor Relations..

Thank you. Good morning, and welcome, everyone. Today's call will be led by our Carsten Thiel, our Chief Executive Officer. Carsten will be joined by Tim Miller, our President and Chief Scientific Officer; Juan Ruiz, our Chief Medical Officer; and Jeff Davis, our Chief Operating Officer.

Before I turn the call over to them 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 at www.abeonatherapeutics.com. With that said, it is now my great pleasure to introduce to you Dr. Carsten Thiel. Carsten, you have the floor..

Thank you, Christine, and good morning, everyone. I'm delighted to be on Board and very excited about the opportunities that lie ahead. I would start this morning by sharing a few thoughts about Abeona and some initial impressions from my first month.

Then I would like to highlight our clinical programs and business development as these programs are critical to our continued success and mission to patients, and they align well with our strategic intent to deliver long-term growth and increase value for shareholders.

I will then turn the call over to my colleagues for more details on our programs, quarter financials and investor-related events before we open the floor for questions. Before I begin, as announced this morning, it is with great pleasure to welcome our newly appointed Directors of our Board, Stefano Buono and Richard Van Duyne.

We believe their insights and expertise will play an important role in guiding and helping us advance our business strategy in the years ahead.

I’ve been here for about a month now, having joined on April 2, and I’ve spent much of my time with our teams getting a direct view of the strengths of our existing science and capabilities and assessing potential new value drivers.

I've been deeply impressed with the talent, experience and accomplishments of our employees contribute to our company and want to commend them for a remarkable quarter and thank them for their warm welcome, unwavering focus and performance through this transition.

Frankly, I could not have imagined a better start in the company and would like to thank Tim Miller, specifically, for our good collaborations and his vision and leadership without which we would not be the company we are today. We are fortunate to have him transition to Chief Scientific Officer.

I believe we have the right people and assets to create greater value for our shareholders. Looking to the future, we have a critical next 12 months and continued momentum to build upon.

With Abeona's commitment to make patients, leadership in gene therapies for rare diseases and innovative technologies and manufacturing platform, I am confident that we can achieve this objective.

Our clinical pipeline is led by three transformative, gene and cell therapy programs, and we're well positioned to continue to deliver on our mission to give hope, relief and an extended life and better quality of life to patients, many of whom are children suffering from diseases for which there are currently no treatment options.

Furthermore, we have opportunities to extend our leadership with additional indications for programs that are not yet in the clinic, including our next-generation AIM vector platform. Let us now discuss the work completed in the first quarter and in recent weeks. There were two important regulatory designations that we have received from the FDA.

Our lead clinical program, EB-101, in recessive dystrophic epidermolysis bullosa or RDEB received Regenerative Medicine Advance Therapy designation or RMAT in January, and ABO-102 and MPS IIIA received this designation in April.

These decisions underline that FDA views the data from our programs to be promising and to have the potential to address the unmet medical need for the RDEB and MPS IIIA patient populations. With RMAT, we will also be granted frequent meetings with the FDA as well as become eligible for priority review and accelerated approval programs.

These additional benefits will ensure that our dialogue with the FDA remains focused and on track to support our overall efforts on our path to regulatory approval.

In addition to RMAT, we received three other regulatory designations throughout the quarter, all for CLN1 disease, which we are treating with one of our preclinical programs, a gene therapy using AAV as a route of delivery. These designations are Orphan Drug Designations in the U.S. and in the EU and Rare Pediatric Disease Designations in the U.S.

We announced clinical updates starting the year off with preliminary 30-day results from our ABO-101 gene therapy trial for patients with MPS IIIB. This is a rare, inherited, progressive and life-threatening metabolic disorder that affects children already from young age. There are currently no approved treatment options available.

MPS IIIB is caused by gene defect created by a missing enzyme named NAGLU caused by the deficiency of the NAGLU enzyme needed to break down complex sugar molecules called mucopolysaccharides, a.k.a., heparan sulfate. ABO-101 AAV gene therapy product delivers a transformative effect throughout the body with a single intravenous injection.

The 30-day results from the first patient enrolled reported in February were very encouraging in demonstrating that ABO-101 is well tolerated. Early potency data were in line with early ABO-102 data demonstrated in our MPS IIIA program.

ABO-101 shows early biopotency signals with significant disease-specific heparan sulfate reductions in cerebrospinal fluid, urine and plasma. The first subject experienced a 300-fold increase in NAGLU enzyme activity observed at 30 days postinjection.

The ongoing Phase 1/2 trial is enrolled in patients at Nationwide Children's Hospital in Columbus, Ohio. We plan to enroll a total of three patients in Cohort 1 at a dose of 2 each of the 13 before dose escalating to the Cohort 2 dose of 5 each of the 13 following a review by our independent Data Safety Monitoring Board.

Plans for potential clinical trial expansions are being assessed and integrated into the development plan for ABO-101. Further in February, we announced results from our ABO-102 gene therapy trial for patients with MPS IIIA.

Like MPS IIIB, this is an autosomal recessive lysosomal storage disease with similar devastating effects such as neurocognitive decline, speech and mobility loss and premature death, also with no available treatment opportunities.

MPS IIIA is caused by a gene defect created by the missing enzyme SGSH, which the ABO-102 AAV gene therapy product corrects through a single intravenous injection. This trial has thus far enrolled 11 patients in three separate cohorts with dose escalation in each cohort.

The data presented in February covered patients over all three cohorts showing significant time and dose-dependent reduction of the underlying disease pathology, including decreased CSF and urine GAGs and diminished liver volumes.

In addition, we observed evidence of cognitive benefit at six months posttreatment in Cohort 2 and at one year in Cohort 1. The trial which is in the Phase 1/2 stage has been conducted at three sites; Nationwide Children's Hospital in the U.S.; Clinico de Santiago in Spain; and Adelaide Women and Children's Hospital in Australia.

Besides a very actively screening patients with continued enrollment in the Cohort 3 dose, which we believe will be the therapeutic dose, and we plan to complete the enrollment of this trial by the end of this year.

Also in February, we announced the FDA allows us to lower the enrollment age down to six months from the initial two-year parameter, a very positive signal and one that highlights the evident safety of the product. Safety remains consistent and promising in our view with no drug-related side effects.

We look forward to reporting additional updates from this trial as the data are collected throughout the year. I'd like to close the clinical developments with our epidermolysis bullosa or EB programs, and our gene therapy product EB-101, a treatment for patients suffering from RDEB, the most severe form of EB.

RDEB is a life-threatening genetic skin disorder characterized by devastating and painful consequences, including chronic skin blistering, open and painful wounds, esophageal strictures, corneal abrasions and a shorter life expectancy.

Due to gene mutations, patients with RDEB lack the collagen VII protein, which is the main component of the anchoring fibrils that attach the dermis to the epidermis. These patients suffer from intense pain throughout their lives and life-threatening complications with no effective treatments available to reduce the severity of their symptoms.

EB-101 is our gene-corrected autologous cell therapy product for patients with RDEB and works as a skin patch using the patient's own cells and genetically reengineers them to produce the missing collagen VII protein.

This reduces the number of painful blisters caused by injury and has demonstrated improved wound healing in our Phase 1/2 clinical trial for over three years.

The advancements made through this trial, which is conducted by Stanford University are significant and clinically meaningful, showing durability and ultimately relief and improved quality of life for these patients.

Together with the FDA and armed with the Breakthrough Therapy and RMAT designations, we are working to finalize the design of our Phase 3 trial for this program and are defining the pathway forward for the trial to begin later this year.

The data reported from our lead clinical programs continue to underscore the safety, durability and clinical benefit of our gene therapies, and our regulatory achievement reflects this as well. The last thing I'd like to touch upon is our internal manufacturing facility in Cleveland.

The strategic initiative was taken prior to my signing on, and I'm pleased and impressed with the team's progress and the precise build-out of this GMP-grade facility, which will have the capability to manufacture clinical and commercial grade products over Abeona's multiple programs.

With that, I'll turn the call over to Tim Miller, who will update you on our preclinical programs. Thank you..

Thank you, Carsten. It's been an exciting quarter for a lot of our preclinical studies. In our preclinical work in the first quarter, we achieved two regulatory designations from the FDA for our program in CLN1 disease, also known as infantile-onset Batten disease, an inherited genetic disease in newborns that progresses very rapidly.

The Orphan Drug Disease Designation was received in February and the Rare Pediatric Disease Designation was received in March. After quarter-end, this program also received its third regulatory designation, EMA – the Orphan Drug Designation by the EMA, European – or Europe's regulatory body.

In preclinical studies, ABO-202, which is the CLN1 program has demonstrated increased survival in CLN1 mice treated with the combination of intrathecal or intravenous delivery compared to intrathecal or intravenous delivery alone.

Similar to other lysosomal storage diseases like MPS IIIA and IIIB, the early presentation and rapid decline of patients with infantile Batten disease may see similar results from earlier intervention with gene therapy and at higher doses.

Our IND-enabling studies continue to support the CLN3 gene therapy program, and our CLN1 IND-enabling studies will start very soon.

Both programs have been recognized with Orphan Drug Designation by the FDA and EMA, highlighting the stage of development and how the amount of preclinical data to date have supported the translation of the programs into the clinic.

In addition, we continue to work on optimizing and expanding our worldwide exclusive AIM vector platform, which has AAV capsids that have demonstrated enhanced selectivity of specific tissues compared to naturally occurring AAV capsids.

Studies are ongoing and utilize different levels of administration relative to first-generation vectors with direct CNS, intravenous or intramuscular approaches which may be used to enhance gene delivery.

This platform provides alternatives for next-generation treatment opportunities in patients that may have neutralizing antibodies to natural AAV serotypes as well as a potential option for additional AAV treatment strategies in patients that were first treated with a natural-occurring AAV.

We continue to develop and expand the AIM chimeric AAV vectors, both internally and through the strategic partnering efforts. I'll now turn the call back over to Christine, who will review our first quarter financials.

Christine?.

Thanks, Tim. I remind listeners that we have recently filed a Form 10-Q where you can get all the specific details on our financial results. But in summary, our cash, cash equivalents as of March 31, 2018, were $132 million compared to $137.8 million as of the end of the fourth quarter of last year, December 31, 2017.

Net cash used in operations for capital expenditures for three months ending March 31, 2018, was $7.6 million compared to $5.9 million in the same period of 2017, an increase of $1.7 million. Cash outflows were offset by inflows of approximately $1.8 million from proceeds of the exercising of outstanding options and warrants.

Total net cash outflow was $5.8 million for the quarter. From a revenue perspective, our revenues were $2.6 million for the first quarter of 2018 compared to $186,000 for the similar quarter the year prior.

A large portion of the increased quarterly revenues consisted of the recognition of foundation grants that were announced during the fourth quarter of 2017. A portion of those grants were received in the fourth quarter of 2017 and in the first quarter of 2018.

And the amount recognized is matched against corresponding expenditures for drug manufacturing and clinical readiness. Additional revenues consisted of royalties from the marketed products, specifically MuGard.

In the quarter, Abeona adopted the ASC 606 pertaining to revenue recognition, and therefore there will no longer be any recognition of deferred revenues related to upfront payments from earlier license agreements Loss per share was $0.18 per share for the first quarter of compared to $0.13 per share in the comparable period in 2017.

Total number of common shares outstanding as of the day that we filed the 10-Q on May 10 is roughly 47.3 million shares. That's the summary of financials.

In respect to the upcoming investor relations and scientific events conferences, I would like to highlight the upcoming 21st Annual American Society for Cell and Gene Therapy Conference, or ASGCT, taking place May 16 through the 19th in Chicago.

We've several oral presentations and posters at that conference presented from our company's clinicians and KOLs, including a breakfast symposium on May 17 at 7:00 a.m. We hope you can join us. We're hosting a fireside chat with Dr. Maria Escolar and Dr. Barry Byrne at the symposium.

During that same week, our EB program will be presented by the team at Stanford University at both ASGCT and IID, International Investigative Dermatology Conference in Orlando, Florida. You can find all this information and more in the recent press release and in the Investor Relations section of our website.

In addition, we are very excited to be planning the ribbon cutting ceremony of our GMP manufacturing facility for gene and cell therapies in Cleveland.

We will also be participating in a number of conferences throughout the remainder of this year, particularly the upcoming Jefferies Global Health Care Conference in New York City, June 5 through the 8th. And with that, I will turn it back to Carsten..

Thank you, Christine. In summary, I am excited about the progress we have made across our pipeline over the recent quarter. And you've heard from Christine that we have a promising future ahead of us that includes important milestones for our company.

I want to thank our hardworking staff, our investors, our clinical investigators and, most of all, our patients for working with us to develop potentially curative therapies for their devastating diseases. I will now turn over the – to the operator to open up for questions. Thank you..

Thank you. We will now conduct a question-and-answer session. [Operator Instructions] Our first question comes from the line of Maury Raycroft with Jefferies. Please proceed with your question..

Hi, good morning, and congrats on the progress.

To start, for EB-101, I'm wondering what we should expect at ASGCT and the SID meeting? If you can contextualize the data we'll see at both meetings? And if you can also remind us where you are at with the final details with the FDA for the Phase 3 trial design?.

Yes, thank you Maury. Good morning, I am glad you’re on the call. So the two questions, what to expect this week at the conferences, obviously, we ask everyone for a few days more – more patients for the data readouts. I'll let Tim give you a bit more detail on the presentations this week, what's happening.

To your second question, we are in the finalization stage of the protocol for the Phase 3 study. This is an important milestone for us. In parallel, good progress is happening so that the Phase 3 study can be at a good place.

So, Tim, with respect to the presentations this week?.

Hi, Maury, nice to speak with you again. As Carsten mentioned, these will be mostly incremental updates for the EB-101 program. As you know, we've enrolled seven patients, the first patient of which is actually through almost four years of follow-up.

So the investigators will be providing an update on really just wound healing through additional time points..

Okay, great. And then, next question is based on the fireside chat discussion planned at ASGCT.

If you can provide any previews to what topics will be included and whether there'll be any focus on the evolving thinking around neurocog subdomain measures in MPS IIIA and IIIB, specifically? And I don't know if – I wonder I realize your CMO is available, but if he can provide any perspective on this, that would be great?.

Yes. So with respect to MPS IIIA, I guess, that's what you're asking. We feel very confident and good about the work that has been done in the Natural History Study and the scales on the neurocognitive med performance and function assessed and the consistency with our clinical trials.

So again, this week will just be update, and I'll let Juan give a bit more detail on the neurocognitive scales that we're using.

Juan?.

Yes. Thank you, Carsten. Thank you, Maury. Let me emphasize, as Carsten has pointed out, that the selection of the cognitive scales is one of the most relevant decisions or the measuring of the outcomes of our clinical trial.

And we are fortunate that we are – we have counted with collaboration of Nationwide Children's Hospital on the Natural History Study they conducted that has helped us to inform of the most adequate parameters on the scales to use in the assessment of the patients treated in our trial.

We have selected those that were identified in this Natural History Study, and we are confident that this scale will provide us the data in order to evaluate the efficacy of our treatment..

Thanks, Juan..

Our next comes from the line of Liav Abraham with Citi. Please proceed with your question..

Good morning. My first question relates to ABO-102 and data that are expected at ASGCT later this week.

Can we expect biomarker data from the most recent two patients that were enrolled in the trial and the highest-dose cohorts later this week?.

Good morning Liav, and thanks for joining. I can understand the curiosity in what's happening over the next couple of days, we haven't disclosed any more detail per patient, and so I think the ASGCT conference is important to see any updates..

Got it.

And can you confirm whether any additional patients have been enrolled in the trial since your recent announcement that a total of 11 patients have been enrolled in the ABO-102 trial?.

Yes, actually up to date 11 is the number that we have disclosed so far..

Okay.

And now that you have RMAT designation for ABO-102, do you guys have a better sense of what data you feel that you need to have to hand in order to engage with FDA and agree on a pivotal trial design? And any update on your timeline for engaging with FDA on this program?.

Yes, this is actually a very important question. The RMAT designation allows us to engage with FDA and that's something that's now a priority for us. We don't want to get ahead of ourselves. And I see this dialogue with FDA as an important milestone that is ahead of us.

And then, we will know what that means for our regulatory process and what needs to be included in the package. Thank you..

And one final question for you, Carsten.

Just given your background, can you talk a little bit about the preparations that you're making on the commercial front for some of your lead compounds, the time to market is not that far away, hopefully, and maybe you can just talk about whether you started laying the groundwork for – on the commercial front and for commercial activities? And where you are in this process?.

Yes. Actually, this is very close to my heart, and I thank you for asking the question. Access, reimbursement and commercial has been somewhat, I would say, behind the outstanding work that the company has done on science and on the clinical side. So one of our priorities now is to recruit the leadership in the commercial organization.

I think we have great potential both in the U.S. as well as in Europe. I see these opportunities across these two major regions. And the focus is clearly on commercialization. These are rare diseases and require a very particular and specific approach.

And as with all gene therapy companies, access and reimbursement is going to be a key question to address, and we will have the capabilities for that..

Our next question comes from the line of Kennen MacKay with RBC. Please proceed with your question..

Hi, thank you for taking my questions. And looking forward to the update coming at ASGCT. So I won't ask on what's coming at ASGCT since it's couple days away here.

But again, maybe just wondering if there was any additional color you could help us with on the potential registrational trial designs for EB-101 and ABO-102? I guess for, specifically, EB-101 after the RMAT designation, wondering if we could still be thinking about a potential registrational trial here that involves enrollment of a dozen or so patients with seven to eight wounds per patient and a control wound in those.

Is that still sort of the right way to be thinking about this after your interactions with the FDA so far? Or should we be maybe thinking about a larger trial more in line with some of the historical trials that have been run in RDEB?.

Yes. Thank you, Kennen, for the question. As you know, we are in the finalization process. The conversation so far has been very positive. And the endpoints that we had in our Phase 1/2 study with more than 50% wound healing are indicative of success.

And we anticipate the Phase 3 trial to recruit roughly 10 to 12 patients with more than 50% wound healing. So as you rightfully said, the controls will be intra-patient with at least one chronic wound at the same patient for control, untreated..

Okay. Thank you very much..

Our next question comes from the line of Elemer Piros with Cantor Fitzgerald. Please proceed with your question..

Yes, good morning. A question. I was wondering if you could tell us a little bit about the enrollment patent in the IIIA trial. When you look at the historical pattern, obviously there were some higher enrollment rates last year.

Could you discuss, maybe, the screened failure rate in the study and what is your plan to increase or enhance enrollment in the study?.

Sure. Thanks very much for the question. And I will refer to Juan, who can give a bit more detail on the specifics of the screening process and how many screening success and failures we have in the IIIA trial. All I just want to say upfront is we're delighted with the progress of that trial.

As you know, we're working very closely with the investigators, and we see a strong collaboration with the families of those affected patients.

So with that, Juan, do want to talk about the screening so far?.

Yes. Thank you, Carsten. Well, the screening failures that we have observed in our trial are mostly related to the presence of antibodies for the AAV9 that we are using. And they have been in the same rate that you can find antibodies in the normal population. So we haven't seen anything different from that.

And as Carsten has emphasized, we are very pleased with the enrollment progress of our trial, currently having enrolled 11 patients and targeting 15. We are confident that we will provide information later this year about the completion of enrollment..

Okay. Thank you very much. And maybe, just one more from me, Carsten.

If in a Phase 3 trial for the RDEB population, would you be utilizing material made in Cleveland or at the original source at Stanford University?.

So regarding the RDEB program, this trial is going to start with Stanford material and University of Stanford is preparing for this now with GMP-conform material in parallel.

And I think we have disclosed this also before, we're voting off Cleveland, the site, it's going to be finished by the end of this month in May, and this site is going to be able to provide both commercial supply for EB-101 as well as Phase 3 clinical trial supply..

Thank you. We have reached the end of the question-and-answer session, and we set the conclusion of today's call. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day..