Christine Silverstein - SVP, Finance and IR Carsten Thiel - CEO Tim Miller - President and CSO.

Liav Abraham - Citi Maury Raycroft - Jeffries Difei Yang - Mizuho Securities.

Good morning, and welcome to the Abeona Therapeutics, Inc. Third Quarter 2018 Earnings Business and 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'll turn the call over to Christine Silverstein, Senior Vice President, Finance and Investor Relations. Thank you. You may begin..

Thank you. Good morning, and welcome, everyone. Today's call will be led by Carsten Thiel, our CEO. Following Carsten, Tim Miller, our President and CSO will present preclinical highlights.

Before I turn the call over to them, I need to remind our listeners that remarks made during the 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 these 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, www.abeonatherapeutics.com. With that said, it is now my pleasure to introduce to you Dr. Carsten Thiel. Carsten, you have the floor..

Thank you, Christine, and good morning everyone. For the third quarter our team has been working very hard to advance our lead program and to further strengthen our pipeline. In our effort to bring confirmative therapies to patients suffering from devastating diseases, we are focused on clinical, preclinical, regulatory and manufacturing initiatives.

I will touch on this in more detail but first I'd like to highlight how excited we are about the license agreements we signed with REGENEXBIO last week.

We have acquired four worldwide exclusive licenses to the NAV AAV9 Vector platform for the development and commercialization of treatment for MPS IIIA, MPS IIIB, CLN1, and CLN3 which are all Rare Lysosomal Storage Diseases.

As we build on our existing expertise and the success we have seen to-date with the use of the AAV9 Vector in our clinical and preclinical trials, we are now one step closer to bring these transformative therapies to the patient communities that need them so much.

We are committed to executing on our corporate strategy and our vision to becoming a leader in the treatment of these devastating and life threatening rare genetic diseases for which there are no adequate therapies.

In a moment, I'll provide further details on the quarter's events before turning the call over to my colleagues for additional updates on our programs, quarter financial and investor related events. We will then open the floor for questions.

But first I’d like to take a moment to acknowledge the recent important leadership changes taking place at our company. In preparing for the next phase of Abeona's growth, it is paramount to our future that we continue to establish strong world class expertise and leadership in all functions of our company.

The following changes are part of our transformation. I am very pleased that last month Dr. João Siffert joined the company as our new Chief Medical Officer and Head of Research and Development. João has successfully led multiple drug development programs from preclinical to regulatory approvals in the U.S.

and Europe with 30 years of combined experience in the biopharmaceutical industry, medicine and academia. He brings unique expertise in AAV came from the time setting as Chief Medical Officer for Ceregene where he was responsible for clinical development of AAV based gene therapies for Parkinson's and Alzheimer diseases.

João has also served on the Board of Directors of AveXis the AAV gene therapy developer acquired by Novartis. This comprehensive clinical, scientific and regulatory experience will be an asset for Abeona as we look to advance our clinical and preclinical candidate and to drive future pipeline growth.

We also welcomed Neena Patil, to the Abeona team as our General Counsel and Corporate Secretary. Neena brings extensive legal expertise from previous jobs as company such as Pfizer and Novo Nordisk. This is a new role that will aid us to evolve from a clinical to a commercial stage company.

Finally, we're announcing that at the end of the fourth quarter, Stephen Thompson is retiring from his position as Abeona's Chief Accounting Officer. I want to take a moment to recognize Stephen’s contributions to our company as one of the first employees of Abeona.

On behalf of the Board of Directors and the leadership team, I like to collectively extend our gratitude to Stephen for his many contributions to Abeona over the past several years. Serving as Stephen's replacement is Edward Carr who will join the company as Vice President and Controller, effective as of November 26, 2018. In this role Mr.

Carr will serve as the company’s Principal Accounting Officer. Let us now discuss the work completed in the third quarter and in recent weeks starting with our AAV programs. Our clinical program in MPS IIIA is ABO-102 and AAV gene therapy administered through a single intravenous infusion to treat the disease.

This is a single arm clinical trial for patients suffering from MPS IIIA which is the rare inherited, progressive and life-threatening metabolic disorder that affects children from very young age. There are currently no approved treatment options available for this disease, and 7 out of 10 children die before the age of 18.

MPS IIIA is caused by defect in the SGSH gene that leads to enzyme deficiency and the inability to metabolize toxic sugars called GAGs.

Results from the ongoing Phase 1/2 trial highlights continued efficacy and safety data, which demonstrates time and dose dependent improvements in underlying disease pathology, including decreased GAGs and CSF in urine, improvement of volumes, and stabilize the urocognitive scores compared to natural history. In addition, as Dr.

Kevin Flanigan, the Principal Investigator of this trial shared earlier this year parents and caregivers reported back behavioral progress post-treatment, such as improved muscle function, attention, social interaction, speech and sleep. On our last earnings call we announced that a total of 13 patients had been treated in the trial.

These patients have been enrolled in three dose escalating separate cohorts. Since that announcement, I'm pleased to report that one additional patient has been treated in cohorts, free, bringing the total number of treated patients in the trials to 14 for greater than 6,100 days cumulative follow-up.

This is important, as our trial enrollment have moved towards younger patients. The trial is being 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.

These sites continue to screen, recruit, and follow-up patients for the ongoing safety, biometric, biophysical and neurocognitive assessment.

Earlier this year, the FDA agreed to lower the minimum enrollment age in our trial down to six months from the initial two year cut-off, an important amendment to investigate safety and efficacy across a broad range of patients and importantly at the onset of the disease.

As part of our continued effort to treat and assess younger patients and strengthen the comparative data, we decided to aggregate two natural history studies. In the existing study we referenced from Nationwide Children's Hospital and an extensive study from the University of Pittsburgh.

Our safety profile remains consistent and promising with no serious drug related adverse event over 6,100 days of cumulative follow-up. We look forward to reporting additional updates from cohorts of this trial as data are collected.

Remember, the ABO-102 program has been granted regenerative medicine advanced therapy, rare pediatric disease, and Fast Track Designations in the U.S., and Orphan Drug Designation in both the U.S. and the E.U.

These regulatory designations allow for a dialogue with the FDA that remains focused and on-track to support our overall efforts on our path to regulatory review. In parallel to our ongoing discussions with FDA, we continue the EMA scientific advice process in order to identify the regulatory review pathway in Europe.

We've recently completed the important interactions with the FDA and the EMA, and are currently consolidating this feedback to determine the best path forward for our MPS IIIA program. We'll be able to update on the outcome of these regulatory discussions prior to the end of the year.

Moving on to ABO-101, our clinical program for patient suffering from MPS IIIB. Notably this quarter we received approval from the Spanish regulatory bodies to proceed with the Phase 1/2 clinical trial for this program in Spain. This is our second clinical trial conducted in Europe alongside the ongoing Phase 1/2 trial for patients with MPS IIIA.

In addition to Spain, we have plans to open clinical sites for the trial in three European countries, including France, Germany, and the United Kingdom.

This is a significant milestone for children suffering from MPS IIIB, in autosomal recessive lysosomal storage disease with a devastating effect such as neurocognitive decline, speech and mobility loss, and premature death.

MPS IIIB is caused by a generic defect that leads to the deficiency of the NAGLU enzyme needed to break down complex sugar molecules.

The ABO-101 gene therapy delivers a potentially transformative effect through the body with a single intravenous infusion, which uses an AAV9 vector to introduce the functional NAGLU gene to the target tissue in MPS IIIB patients. In this trial, patients will be evaluated at multiple time points post infusion for safety and efficacy assessments.

Like all our clinical programs, this is supported by a natural history study which include biochemical and clinical assessments consisting of neurocognitive evaluations, bio-chemical assays, and MRI data generated over one year follow-up. We're encouraged by the preliminary results observed in our U.S.

trial to date, both in terms of clinically relevant biomarker response, as well as regarding the ongoing safety profile. Importantly, ABO-101 in MPS IIIB has been granted rare pediatric disease designation in the U.S. and Orphan Drug Designation in both U.S. and the E.U.

With respect to our regulatory progress, our multiple designations across all our programs provides us with the opportunity for more frequent interactions with the FDA, as well as becoming eligible for priority review and accelerated approval timelines.

In addition to MPS IIIB, we have two other lead clinical programs that have been acknowledge by the U.S. and European regulatory bodies.

Lastly I'd like to discuss EB-101, our clinical program in epidermolysis bullosa or EB, and autologous gene corrected skin graft cell therapy for patients suffering from the most severe form of EB, recessive dystrophic epidermolysis bullosa or RDEB.

It 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 a functional collagen COL7A1 protein, which is the main component of the anchoring fibrils that attach the dermis to the epidermis.

Patients with RDEB suffer from intense pain throughout their life and life-threatening complications with no effective treatments available to reduce the severity of their symptoms.

The results from the Phase 1/2 clinical trial thus far demonstrate that the therapy is safe and well tolerated with durable efficacy throughout various time points post administration.

Collagen VII expression and reconstitution of anchoring fibrose were observed as early as one month post-engraftment on EB-101 treated wounds and remain functional up to the full observation period of three years thus far.

The clinical results observed in this trial, which was conducted at Stanford University, are significant because they demonstrate clinically meaningful wound-healing improvement, durability, and improved quality of life for these patients. We're preparing diligently for the start of our Phase 3 trial.

Specifically, the team is completing the full scale of detailed CMC work streams, which we know from our discussions with the FDA, are necessary to get read not only for the Phase 3 trial but also for BLA filing and commercialization.

The preparation and planning include the ability to create and use commercial grade product in the Phase 3 trial internally at our Cleveland facility, and in parallel we are performing comparability studies to the product being developed at Stanford.

We continue making progress from required asset development, SOPs and training personnel to engineering one.

In preparation for the trial and competing with CMC work, we're finding that the increased investment on the frontend will inevitably position us for a smoother more expeditious transition towards the BLA filing and our goal of bringing a treatment to other patients.

I want to remind that our EB-101 program in RDEB has been granted Regenerative Medicine Advanced Therapy, Breakthrough Therapy, Orphan Drug and Rare Pediatrics Disease Designations from the U.S. Food and Drug Administration, and Orphan Drug Designation from the European Medicines Agency.

Similar to MPS IIIA, these regulatory designations ensure that our dialogue with the FDA remains focused and on track to support our overall efforts on our pass-through regulatory review. We will be able to update on the outcome of these discussions prior to the end of the year. I've said this before and it is becoming more real.

Our collective efforts together with our investigators bring us closer to delivering on our mission to give hope, relief, and extended life and better quality of life to these young patients who suffer from diseases for which there are no current treatment options. Working together to find a cure, this is our mission.

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

Tim?.

Thank you, Carsten. In the third quarter, we continued to make progress on our preclinical programs. We are developing two AAV19 therapies for batten disease; ABO-202 in CLN1 disease, also known as infantile Batten disease; and ABO-201 in CLN3 disease, also known as juvenile Batten disease.

Both are inherited genetic diseases diagnosed in infants and young children that progress very rapidly. Infantile neuronal ceroid lipofuscinosis caused by autosomal recessive mutations in the CLN1 gene is fatal lysosomal storage disease that primarily affects the nervous system starting in new born.

Our AAV19 therapy program has received Rare Pediatric Disease Designation by the FDA and Orphan Drug Designation by the FDA and EMA, and is advanced to IND-enabling studies which is evaluated at a combination of intravenous and intrathecal gene therapy administrations of ABO-202.

To date the combination approach has demonstrated enhanced efficacy as measured by survival, motor, and behavioral assessment in the mouse model of the disease and no safety issues have been observed in the rat toxicology study. We believe that this data will support the IND, which will be filed in the first quarter of 2019.

Our IND-enabling studies continue for our CLN3 program. This program which is an intravenous delivery of AAV9 to adjust the systemic and neurologic manifestations of the disease has also received Urban Drug Disease Designation by the FDA and EMA.

As we near the clinical stage, we are enthusiastic to work with leading Batten medical centers in the world in the University of Rochester and the University of Humber.

These clinical phase have devoted years of work in evaluating the natural history of patients with CLN1 or CLN3 and these data will be critical to evaluating efficacy in the upcoming clinical trials. We anticipate the work supporting the IND for the CLN3 program will be completed in the first half of 2019.

Finally, we continue to expand and advance our AIM vector platform with now over 100 second and third generation AAV Capsids that have demonstrated enhanced selectivity for tissues specifically to compare them against naturally occurring AAV Capsids. And these are viable through multiple routes of administration.

Through internal development, the AIM platform is able to target diseases of the eye, lung, CNS, liver, and muscle, and has enabled our in-house pipeline development to expand.

Importantly, initial non-human primate data in the eye and central nervous system is supportive of additional therapeutic targets and we look forward to releasing more details on these data before year end as we evaluate potential treatment approaches for patients that may antibodies to natural AAV stereotypes or importantly have previously received an AAV injection.

Our AIM vector platform is a powerful asset that may present potentially clinically superior as well as next generation gene therapy approaches plus delivering gene editing and gene replacement strategies for rare diseases.

Now that we have internal AAV core capabilities with concept to commercial GMP manufacturing in-house to provide enhanced quality control and economies of scale for preclinical to late clinical stage products, we look forward to continuing our product development at our facility in Cleveland. We have an exciting few months ahead of us.

I'll now turn the call back to Christine, who will review our third quarter financials.

Christine?.

Thank you, Tim. I'll remind listeners that we have recently filed the Form 10-Q where you can get all the specific details on our financial results. But in summary, our cash, cash equivalents and marketable securities as of September 30, 2018 were $112.2 million compared to $120 million as of the end of the second quarter June 30, 2018.

Net cash used in operations in nine months ended September 30, 2018 was $22.1 million compared to $17.6 million in the same period of 2017, an increase of $4.5 million. Cash outflows were offset by inflows of approximately $5.5 million from proceeds of the exercise of outstanding options and warrants.

From a revenue perspective, our revenues were $1.7 million for the third quarter of 2018 compared with $219,000 for the similar quarter the year prior. Our portion of the increase quarterly revenue is consisted of the recognition of foundation grants that were announced during the fourth quarter of 2017.

A portion of the grants were received in the third quarter of 2018 and the amount recognizes matched against corresponding expenditures. Additional revenue consisted of royalties from marketed products, primarily MuGard. Loss per share was $0.34 per share for the third quarter of 2018 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 November 9th is about 47.9 million shares. That completes the summary of financials. Also this week we will be participating in the Jefferies 2018 London Healthcare Conference, presenting on Thursday, November 15.

That presentation takes place at 10:40 local time and can also be accessed through our website at www.abeonatherapeutics.com. Finally, we are very excited to announce our second Research and Development Day, which will take place in New York City on Thursday, December 6.

Presentation's by senior management, clinical investigators, and key opinion leaders will span a myriad of gene therapy topics and will also provide updates on our clinical and preclinical programs. Interested parties are welcome to file the live webcast throughout our website. And with that, I turn it back over to Carsten.

Thank you, Christine. In summary, I'm excited about the progress we have made across our pipeline over the recent quarter and even more excited about the upcoming work ahead of us that includes important milestones for our Company.

After decades of research and development, gene therapy is rapidly emerging as one of the most exciting areas of medicine and generating new hope for patients with rare and fatal genetic diseases.

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 to the operator to open up for questions. Thank you..

[Operator Instructions] Our first question comes from the line of Liav Abraham with Citi. Please proceed with your question..

Perhaps just a few clarifications on the EB-101 program, Carsten. Last quarter you said you're still - you're on track to start the trial in the second-half of this year.

Apologies if I misunderstood from your comments but is this still the case? And then following on from that, based on your comments, will the trial be enrolling both at Stanford as well as from your own facility from the outset? And then lastly on this program, it seems as though the gating factor to this trial starting is the manufacturing runs that you're doing.

Can you confirm that the trial design itself has been agreed upon with FDA and are there any comments you can provide on the pivotal trial design as it relates to perhaps as it compares to the Phase 1/2 trial?.

Thank you for joining and your many questions about the EB program. Let me start with just emphasizing how important the EB-101 program is for us. Our investigators as well as the entire Abeona team is extremely motivated to progress with this trial as those patients have no other therapy that is approved.

As we have said earlier, we had regulatory interactions during the summer and following these interactions we have put more emphasis on hiring staff especially in the quality team and the CMC team to meet the requirements on the CMC side with respect to assays and the quality release criteria.

Now this is important for us because while it is more work right now, it will position us for a smoother and more expeditious transition towards a BLA filing and ultimately bringing the treatment to RDEP patients through commercialization.

In terms of timing what that means for us is that the initiation of this trial is moving into 2019 and pointing to your question about the supply, we have parallel passports at Stanford with the LTGM facility that has been preparing for this trial, as well as Cleveland that can both supply this clinical trial, as well as ultimately commercial.

And I think your third question was about the clinical trial design, we've been very pleased with the interactions with FDA, in terms of the trial it's very consistent with the Phase 1 trial that we have pursued, as well as consistent with the EB draft guidance that FDA released earlier during the year.

So we feel confident that there are - at this stage no more comments or questions regarding the protocol..

Just a follow-on question, given the progress that you're making with your own facility as it relates to this program, will this actually accelerate enrollment once the trial does commence?.

That's a very good question. We clearly see the potential because of the capacity that Cleveland has to advance the study, it's in our interest to do the study as rapidly as possible. But it's ultimately the investigators that have the patients lined up they are well identified to pursue the trial..

Our next question comes from the line of Maury Raycroft with Jeffries. Please proceed with your question..

Congrats on the recent updates including the REGENEX agreement.

I was wondering if the REGENEX license had any caveats to it or is it transferable? And then if you could provide any more specifics on the royalty rate?.

So, let me give you a bit more context about the license agreement. It's been something that I recognized very early on when I joined the Company that the license situation is something that needed to be addressed and I've been very pleased with the interaction with REGENEXBIO on that.

I think this agreement reflects the appreciation of the work that we have done not only in MPS IIIA and MPS III B, but also the advances we have made so far on CLN1 and CLN3, and the fact that we have received exclusive licenses I think points to the fact that we are very strong player here.

The details of the agreement will be disclosed later but so far for us I think the most important detail of the license agreement as we have disclosed earlier is the scales, payments over time with $10 million - immediately $10 million after 12 months and then the first annual payment of $20 million. So those $40 million are guaranteed.

And then a total of another $80 million spread over the next four years, so which adds up to a total of seven years. And I think this fits very well with our development time lines and also with the overall capitalization we have..

And then you mentioned the combination of the nationwide in the University of Pittsburgh natural history studies, can you remind me if the Pittsburgh study is published? And if you could provide any more specifics on how the two data sets will be combined? Are you primarily trying to increase the number of patients for specific ages?.

Yes, so maybe a bit more context around these national history studies why they are important and what's the power of aggregating two studies. You may remember in the natural history study from Nationwide, we had 15 patients for MPS IIIA, and those 15 patients distributed over a pretty wide age range.

As we moved on to Cohort 2 and we're now well into Cohort 3, we were able to agree with the FDA to reduce the age of screened patients down from two years to six months. This has been a very important change because our investigators and key opinion leaders were very clear that the earlier we treat the better.

With that came the recognition that we want to have a natural history study comparison that mirrors this age range well. The Pittsburgh study is a study that has been going on since many, many years and Maria Escolar has published on that over time.

The benefit of aggregating these two studies is that we have more patients in particular in the younger age range. And this will serve us well as we look at our ABO-102 trial that is a single-arm study versus this aggregated database..

And will these two natural history studies being combined, will that influence the regulatory update that we get by the end of the year? I guess is this something that the FDA wants to see in order to make a decision on how that - the end point would look for regulatory approval?.

Well, actually Maury, we are right now looking into these data. The important benefit of these two studies is that they are using the same measures in terms of biochemical, biophysical changes but also neurocognitive changes. So these two studies fit very well together which is important for us in the aggregation and the use as a control..

Our next question comes from the line of Difei Yang with Mizuho Securities. Please proceed with your question..

Maybe on the very high level for the manufacturing side in Ohio. Carsten, would you be able to provide some key milestones to help us keep in track of the progress made at that facility on the ongoing basis what we should be - what milestone should we be paying attention to for the next 12 to 24 months? Thank you..

So we have already a couple of very important accomplishments under our belt, namely that in a very short period of time we have finished that facility and opened this on the 31st of May this year. Over the summer periods the next milestone was to hire the staff working in the facility, we have completed that.

In the last few months we've also trained those people on CMC requirements. And the one important milestone was for us the actual production of skin grafts which has initiated during the summer.

The next milestone is the completion of those methods and assays for the CMC amendment, and then as we look to the final milestone that in my view is important is providing actual RDEP products derived from patients that provide the biopsies.

So it's a gradual process and I've been very pleased with the talent that we were able to recruit, the work that those people are doing and how well they work together with our principal investigator and the LTGM side in Stanford..

Thank you for the additional color.

And then on the MPS IIIAA program, when would you expect us to get another update on how well those patients I think now is 14 patients will do you?.

So we look at that study as now being in a very important phase. I mentioned this before that we were pursuing a path to recruit younger patients and those younger patients were successfully recruited in the third cohort and we expect the effect of our therapy will be the most meaningful in that patient population.

We were still not at patient 15 yet and as you know the trial has a two-year follow-up so at this time we continue to analyze the data and we'll provide an update before the end of the year..

Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to Mr. Thiel for any closing remarks..

Well thank you everyone for joining this morning it's been a pleasure. Thank you for the questions. I look forward to share with you more exciting data about Abeona as we move forward. Have a good day..

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day..