Good morning, ladies and gentlemen, and welcome to the Abeona Therapeutics Inc., First Quarter 2019 Earnings and Business Update Conference Call. Today's call is being recorded. And 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 Sofia Warner, Senior Director, Investor Relations. Thank you. You may begin..

Thank you. Good morning, and welcome, everyone. Today's call will be led by João Siffert, our CEO. Following João, Tim Miller, our President and CSO will present preclinical highlights; and Christine Silverstein, our CFO, will review our financials.

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 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 may be found in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed by the Company with the Securities and Exchange Commission. These documents are available on our website, www.abeonatherapeutics.com.

With that said, it is now my pleasure to introduce to you Dr. João Siffert. João, you have the floor..

Thank you, Sofia. And thank you all for joining us today for our first quarter business highlights, which reflect the continued development of our clinical and preclinical programs as well as manufacturing and quality operations.

I would like to start with some key quarter events and then will turn the call over to Tim, who will take you through the exciting advancements within our next-generation AIM vector platform.

Earlier this year, we presented AIM data at several conferences, highlighting the potential of this technology to treat patients with a variety of disorders and to evade preexisting neutralizing antibodies to naturally occurring AAV that have grown this library now to over 100 novel capsids, some of which have specific tissue tropisms outside our current pipeline targets and thus open the possibility of collaborating with external partners that might help accelerate and expand our ability to develop them into new treatments.

Since our last earnings call, we also completed our CMC work for upcoming Phase III clinical trial in Recessive Dystrophic Epidermolysis Bullosa or RDEB. The FDA is completing the review of our work before we can proceed with the Phase III trial, which remains on track for mid-2019 start.

Our dedicated cGMP suites at our Cleveland facility are currently in operation by an experienced trained staff positioning as well to produce clinical product on time for a Phase III start. We also remain focused on our efforts to identify screen and enroll patients for our clinical trials in MPS.

As stated last quarter, we have stepped up our efforts to engage the broad network of healthcare professionals in communities involved in the care and support of children affected by lysosomal storage diseases and remain on track to activate additional study sites globally by the end of this year.

This concerted effort has begun to bear fruit as announced via press release this morning. We have now completed dosing cohort 1 and treated the first patient in cohort 2 in the ongoing Phase I global clinical trial evaluating ABO-101. Our gene therapy for patients with MPS IIIB also known as Sanfilippo Syndrome Type B.

MPS IIIB is a rare and fatal lysosomal storage disease with no approved treatment that is characterized primarily by rapid neurodevelopmental decline. The 2-year open-label study is currently designed to evaluate 2 doses of the ABO-101. Dose for the first cohort is [2 X 1013 vg/kg and the second cohort dose is 5 X 1013 vg/kg].

The main objectives of this study are to assess safety and neurodevelopmental milestones with multiple secondary endpoints including changes in CSF and urine heparan sulfate. Additional measurements include CSF and serum NAGLU enzyme activity in liver and brain volume by MRI.

We expect to report interim data for the trial in the second half of this year. Last month, the FDA granted fast track designation to ABO-101 recognizing the severity and importance of addressing this rare orphan disease.

Now I'd like to provide an update on our progress within our other 2 clinical programs and share with you the important milestones we are working toward in the balance of this year.

As last presented at WORLDSymposium in February, the ongoing Phase I/II clinical trials in MPS IIIA, also known as Sanfilippo Syndrome Type A has enrolled 14 patients to date. The data from this trial demonstrate that ABO-102 has been well tolerated with no serious drug related adverse events to date.

We have observed a substantial and durable improvement in biomarkers, including dose-related reductions in cerebral spinal fluid heparan sulfate levels as well as a reduction in liver volume in all treated patients.

These biochemical and biophysical improvements were observed within 4 weeks post dosing and have persisted to date with 2 plus years of follow-up. In addition, investigators observed encouraging neurocognitive signals in younger, higher functioning patients enrolled in the higher dose cohort 3.

We believe we're on track to assess the benefits of ABO-102 and plan to provide data updates from this trial in the second half of 2019. Our recruitment initiatives have also provided continuous screening activity for this study. Finally, as mentioned earlier, our lead clinical program in RDEB with EB-101 has planned to enter Phase III midyear.

RDEB is a rare genetic skin disorder caused by mutations, which result in lack of functional collagen 7. The main component of the anchoring fibrils that attached to the dermis to the epidermis. RDEB patients have extremely fragile skin that blisters and tears resulting in large open wounds, some of which remain open for years.

RDEB wounds are painfully debilitating and patients currently have no available effective treatment options relying only on palliative treatments such as wound care to prevent infection and pain management for relief.

EB-101 is an ex-vivo gene-corrected autologous cell therapy designed to enable normal type 7 collagen expression in wound healing and patients with RDEB. The gene-corrected keratinocytes sheets are transplanted onto open wounds and have been shown to produce durable healing.

The VITAL Phase III study will be a multi-center, randomized clinical trial assessing 10 to 15 RDEB patients treated with EB-101. The primary outcome measure of the study will be the proportion of patient's wounds with greater than 50% healing at 3 months compared with untreated wound sites on the same patients.

Additional endpoints that will include the patient's global assessment of the wound change from baseline as well as patient reported changes in pain and itch from baseline. The design of the Phase III study is similar to the completed Phase I/II trial.

Data from the Phase I/II trial recently presented at the Society of Investigative Dermatology Conference shows sustained wound healing for 3 years in addition to positive patient reported outcomes such as reduction in pain and itch.

Efficacy of EB-101 including collagen 7 expression and reconstitution of anchoring fibrils was observed as early as 1-month post engraftment of treated wounds and remain functional up to the observation period of 3 years. To date, EB-101 exhibited a favorable safety profile with no product-related SAEs.

In addition to the start of the Phase III development, the upcoming EB-101 clinical trial tends to validate a successful completion of an 18-month long effort that brought to life or in-house GMP-compliant facility in Cleveland.

Our investment in CMC preparations and diligence also positions as well towards an eventual BLA filing, commercialization and ultimately help us provide treatment to patients suffering from RDEB. R&D manufacturing, regulatory and quality teams have also worked diligently toward expanding our clinical stage pipeline.

R&D has been submitted for ABO-202 in CLN1 disease, also known as infantile Batten disease. IND-enabling data shared at WORLDSymposium in ASGCT showed a favorable safety profile for ABO-202 with no significant toxicity seen in preclinical dose escalation studies.

Other IND-enabling studies also demonstrated normalized survival and improvement of motor and cognitive function in affected mice treated with ABO-202. Data collected to date suggest that combining dosing with intravenous and intrathecal administration may enhance the therapeutic potential of ABO-202.

As with other neurodegenerative diseases, our preclinical studies also showed a dose-related increase in efficacy and importantly a substantially higher survival of animals treated during earlier stages of disease. Preclinical development of ABO-201 or AAV-based program that targets CLN3 or juvenile Batten disease continues to advance.

We will provide an update on the program later this year. I want to take a moment to thank all of our hard work Abeona employees as well as an expert collaborators and most of all thank the patients and their families who place their trust in us.

With that, I'll pass the call over to Tim, who will take you through the exciting advancements within our next-generation AIM vector platform.

Tim?.

Thank you, João. In the first quarter in the month thereafter, we invalid exciting progress at 3 separate events on programs utilizing our novel AIM vector platform.

This proprietary technology continues to demonstrate how novel AAV capsids that have been selected to target specific body tissues with high efficiency are being developed by Abeona to potentially address Pompe and Fabry diseases, cystic fibrosis, muscle diseases, as well as multiple eye disorders.

At the annual WORLDSymposium in February, we presented data demonstrating how AIM-based capsid delivered novel transgene and demonstrated proof-of-concept data in animals for Fabry and Pompe diseases.

While current enzyme replacement therapy significantly reduces the mortality of infantile Pompe patients, it fails to completely ameliorate all symptoms, primarily due to its inability to inefficiently enter the CNS and due to the immune responses to the GAA protein.

Notably, additional data have now demonstrated that AAV204 GAA delivered intravenously identified multiple viable transgene cassettes that produced significant levels of active GAA protein in cells and animals.

In multiple disease models and animal species, our novel AIM AAV capsids have demonstrated broad tissue tropisms when compared to existing natural AAV capsids. The AIM capsid also performed better than existing natural serotypes at transducing the brain, spinal cord, and eye in rodents and primates.

Taken together, these data leave us strongly encouraged about the therapeutic potential of the AIM AAV vector platform in multiple disease targets. More recently in April, we presented data at the American Society for Gene & Cell Therapy Annual Meeting in Washington D.C. for ABO-401, a novel gene therapy for cystic fibrosis.

Some key highlights from the data showed that our novel AIM AAV vector with the CFTR mini-gene can address all CF mutations and that it efficiently targets lung cells.

There, we demonstrated that ABO-401 can correct the underlying CF chloride channel deficit regardless of underlying mutations of the CF transmembrane conductance regulators in CF mice and in human CF patient cells.

Importantly, ABO-401 can correct the defect of the most common CF mutation, delta-508, which accounts for greater than 60% of the CF population.

This is an important differentiator as this could enable treatment for CF patients that maybe non-responsive to current CF modulating drugs or those that have mutations or refractory to currently available CF drugs. ABO-401 has a regulatable human mini-CFTR gene that is efficiently packaged into AAV204, one of our next-generation AIM library capsids.

In this and other preclinical studies, ABO-401 restored CFTR expression and chloride conductance in airway epithelia, the main cells of the lung that contribute to CF pathology in humans.

[Abeona standing] has demonstrated that ABO-401 is able to transduction express CFTR in basal cells from human airway epithelia, increasing our confidence in using AIM vector as a delivery tools for gene editing as well as gene replacement strategies.

ABO-401 was also shown in transduced human CF nasal and bronchial epithelial cells, with CFTR-specific change in short-circuit current that was comparable or superior to existing modulator therapy in these same cells.

Robust expression of AAV204 in the lungs of CF mice was observed and demonstrated that the AAV204 capsid was equally or more efficient at delivering gene expression cassettes to the lung compared to other naturally-occurring AAV capsids.

Further, the data demonstrated that ABO-401 restored CFTR-specific nasal potential difference in CF mice, and that the ABO-401 gene expression cassette makes a fully-processed CFTR.

In May, we presented data at the Association for Research in Vision and Ophthalmology Annual Meeting in Vancouver, demonstrating the AIM platforms broad therapeutic potential in potentially treating retinal diseases.

The presented data showed that Intravitreal administration of the AAV204 capsid to non-human primates led to robust transgene expression in the inner and outer retina as well as intense expression in the fovea 25 days post-administration. AAV204 also transduced photoreceptor cells in retinal explants and transduced the outer retina.

These data support the potential use of intravitreal administration to deliver gene therapy and gene editing strategy in-patient and out-patient setting for a wide range of inherited and acquired retinal diseases.

80% of eye diseases affect the photoreceptors in the retina, highlighting the importance of cellular targeting and how AAV can be an efficient tool in gene delivery. An important consideration is route of administration.

And we've shown data in rodents and nonhuman primates that we can utilize different AIM capsids to target the photoreceptors and retinal pigmented epithelium using either subretinal or intravitreal injection.

The AIM capsids increased our potential for targeting multiple eye disorders through delivery of therapeutic genes or employing the machinery to enable gene editing. Lastly, we have now demonstrated in vitro that select AIM capsids can evade neutralizing antibodies against naturally occurring AAV capsids that maybe present in some patients.

This finding is significant as it may allow AIM-based AAV gene therapy for patients that may have previously been excluded going to existing anti-AAV antibodies and also may enable retreatment of patients who previously received AAV gene therapy with other serotypes. We look forward to discussing these and additional AIM programs in the future.

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

Christine?.

Thank you, Tim. I'd like to remind everyone that we have recently filed a 10-Q, where you can kind all the specific information on our financial results. But in summary, our cash, cash equivalents and marketable securities as of March 31, 2019, were $68.3 million compared to $85 million as of December 31, 2018.

Net cash used in operating activities for the 3 months ended March 31, 2019, was $15.1 million as compared to $4.1 million in the same period of 2018, an increase in cash outflows of $11 million. R&D expenses for the 3 months ended March 31, 2019, were $11.7 million compared to $8.2 million in the same period of 2018.

The increase in research and development expense was primarily attributable to increased R&D headcount related to facility cost and internal manufacturing costs. General and administrative expenses for the 3 months ended March 31, 2019 were $5.7 million compared to $2.9 million in the same period 2018.

The increase in G&A expenses was primarily due to increased headcount and related facility costs. Net loss was $0.39 per share for the first quarter of 2019 compared to $0.22 per share in the same period of 2018. That's the summary financials.

With respect to the upcoming Investor Relations and Scientific Conferences, I'd like to highlight that we'd be participating in the following events. On May 22, we will be participating in RBC Healthcare Conference and on June 5, we will be at the Jefferies Healthcare Conference, both taking place in New York City.

Later this summer, on July 30, we will be participating in the Wells Fargo Biotech Corporate Access Day in Boston. We will update you on all those planned presentations as we get closer to the events. And with that, I'd like to turn it back over to João..

Thank you, Christine. In summary, we achieved important interim milestones in the first quarter that positioned Abeona well to deliver long-term growth and value for our shareholders and turn hope into reality for our patients. Thank you. I will now turn over to the operator to open up for questions.

Operator?.

Thank you, Doctor. [Operator Instructions] And we will take our first question today from Maury Raycroft with Jefferies. Please go ahead, sir. Your line is open..

Hi. This is David for Maury. Thank you for taking my questions. My first question is regarding ABO-101 program for MPS IIIB.

Can you talk about the individual age of the patients they've treated so far and are you aim to recruit quota patients below age of 2?.

Sorry, could you ask the second – this is João. Hi, thanks for your questions. So could you just repeat the last part of your question regarding the….

Yes. So you mentioned before that you're trying to enroll certain number of patients below the age of two.

So I'm just wondering, can you talk about the sort of quota you're trying to aim for the number of patients below age of 2?.

Okay. So just a clarification, so thanks for your question again. Clarification, no we're not restricting to below age of two. We're allowed to enroll from six months and up. And the enrollment criteria for the trial is based on cognitive functioning.

So the participants need to have at least 60% of the normalized cognitive function for the age, which if you back into the age, it will be up to patients approximately 3.5 years. So it's not restricted by age, but rather by cognitive function and of course, the patients that were enrolled or eligible for this criterion..

Okay. That's helpful.

So just to clarify, are you saying that – can you disclose the number of patients who are under [indiscernible] in the second half for the Type 3 patients?.

I don't have the age handy, but Dave actually all met enrollment criteria..

Okay. Good.

So then just kind of follow-up with the ABO-102, can you comment on the screening and the enrollment rates at this time? And where are you finding these mutations? And are you doing anything different with finding these patients at this time?.

So we continue to screen actively and we have in fact screened several additional patients, but some of the patients had no mutations which make such that there's a risk for developing antibodies against the transgene protein so these are not eligible for the trial..

Okay. Thank you. Thank you for your time..

Thank you..

Our next question will come from Liav Abraham with Citi. Go ahead, sir. Your line is open..

Good morning. Two quick questions for me. Firstly, regarding ABO-102. My understanding is that you are – monthly meeting with FDA regarding this clinical program in the second half of this year.

Please correct me if I'm wrong and if I'm not, what can we – what do you hope to get from this meeting and what can we expect to hear from you? And then secondly, on your EB-101 program.

Given that this – the pivotal trial is about to commence pretty soon, could you comment on progress that you are making on the commercial front if any at this stage to prepare for the launch of the product and any early discussions with payers that you've had so far? Thank you..

Thank you, Liav. So two answers, so the first one, we have not disclosed plans to meet with the agency and generally speaking, we don't provide guidance on this. This is obviously a program where we have designation, including RMAT designation that allows to have ongoing discussions with the agency.

So as the data for follow-up for the patients become known to us as patients come back for their scheduled follow-up. We'll obviously be analyzing these data points and at some point, reengage the agency when we have some more critical mass in terms of the data set. We have not planned a specific date or time for this.

We do expect to update the Street and of course, internally and also our advisors when we have a sufficient data in the second half of this year and this much we have announced. On the EB-101, the RDEB program, you asked whether – so first of all, obviously we have not yet started Phase III, we continue to be on track for a midyear 2019 start.

And as you can imagine, the Phase III starts especially in a program that we’re hopeful, we'll enroll in a reasonable timeframe and also given all the designations in the unmet need that the progress can actually accelerate as we moved from Phase III in terms of commercial launch preparations.

So we have been very active in preparatory work, but we have not yet in terms of the commercial landscape assessment of the addressable patient population and on some assumptions of the commercial opportunity. We have not yet engaged formally with payors at this point, but we will as soon as we are in Phase III..

Thanks for the feedback..

Thank you, Ms. Abraham. And we'll take our next question from Raghuram Selvaraju with H.C. Wainwright. Your line is open. Please go ahead..

Good morning. This is Edward Marks on for Ram. Thanks for taking the questions. You just mentioned enrollment for the EB-101 Phase III, I'm just wondering if you could provide a little more clarity on the timeline that you're expecting for full enrollment.

And then looking at little bit into the future, what long-term clinical follow-ups might be necessary to support that regulatory approval for EB-101 following the Phase III?.

Okay. Thank you for your question. So the plan for enrollment in the Phase III trial is anywhere from 10 to 15 patients and this is based on the number of wounds that patients have in general.

So the estimate is that we'll need about 35 wounds to be assessed as part of the clinical trial, so divided into 10 to 15 patients depending on the area involved in these patients. Many of these patients have already been prescreened at Stanford, so we're poised to start enrolling as soon as we're allowed to.

And we have not provided a formal guidance as to the rate of enrollment, but we hope that given the fact that these patients are pre-identified or most of them are pre-identified that we should be able to have an expedition enrollment rate and of course, we'll provide updates as we make progress.

Of course there's a range here, but we expect to complete enrollment in 2020 and hopefully having results also in 2020. As for as second question, in long-term as we announced, we just recently presented follow-up data for the initial cohort of patients treated under the Phase I/II trials at Stanford.

This follow-up now is a median of 3 years so would that two patients actually out to five years with durables wound healing. So this is quite remarkable to be at this stage of development and having that such long-term follow-up.

The commitment in terms of the Phase III trial is that we will have the primary endpoint assessed to 3 months and then there's an additional 3 months of follow-up up to a total of 6 months. And that's to both examined wound healing durability as well as of course is safety.

But as you know for gene therapy, we continue to follow these patients long-term, although this is not necessarily gating forward BLA submission..

Okay. Thank you.

And following up on that commercial question previously, just wondering what additional work might need to be done to produce manufacturing readiness for commercial stage process? And will all that'd be done at the Cleveland facility or will you be expanding that manufacturing elsewhere?.

We haven't made a final decision in the sites, but we are prepared to move from – so just back track a little bit, we have – first of all made a tremendous amount of investment and progress in the clinical manufacturing.

And that has brought us very close to commercial readiness, obviously we're not ready yet until we get a drug approved, but it has really equipped Abeona as a company aside from the geographic localization of the manufacturing.

Two, to progress into commercial manufacturing with just a few additions, the actual manufacturing process itself will not change substantially from Phase III to commercial as you know, because we need to be the commercial light product have been tested in Phase III.

We’ll announce – in terms of the plans, we do have – currently we have facility under lease in Cleveland that would allow us to expand the manufacturing footprint for EB-101. Whether or not this will include commercial in Cleveland or not, we haven't disclosed yet..

Okay. Thank you. And then just considering the news that just came out this morning on Sanfilippo, just two more quick questions on cognitive function.

Just wondering what the best outcome measure would be for the really young Sanfilippo syndrome patients? And how many cognitive function impact be achieved using some of the systemically administered gene therapy similar to some that using CNS administered gene therapy such as the intracranial delivery?.

Okay. Yes. So these are two separate questions. First the neurodevelopmental scales that are used for these trials include scales that have been widely validated. One is the Mullen scale and the other one is the Bayley developmental scale.

Both of these are used in this trial and we have normative data based on the natural history studies that were previously conducted that use both scales.

Ultimately, these also can be converted into, we'll call age equivalent cognition, which essentially is comparing the raw results of these scales with the normative data from the general population of infants and toddlers, they get tested as part of the validation process.

So I think we have a good grasp on that and as much as you can do a good devaluation of a toddler and for those of you who are parents know it's not so easy to do that. But these are obviously experienced under psychologist and study centers that do this routinely.

So in that sense, I think we recovered here and I think that's pretty much the standard for these trials. As for the – can you repeat your next question..

Yes.

Just wondering how…?.

Yes. I remember just on the biodistribution. Yes. So although it may appear intuitive to deliver intracranially or in the cerebral spinal fluid as a means to deliver to the brain parenchyma.

It turns out and I think there's accumulating evidence including our own – from our own studies both in MPS as well as in CLN Batten disease, that intravenous delivery actually provides a substantially higher biodistribution to the brain, to the CNS, to actual brain parenchyma.

So if you look at the actual empirical evidence that is available to us to-date, the most compelling one is the data that from AveXis where the SMA children receive intravenous AAV9-based vector therapy for what it is a CNS disorder.

So there's a lot of sort of recent publications on this and the fact of the matter is that to date the most advanced and validated outcome with actual demonstrable clinical outcomes is for CNS disorders through intravenous delivery..

Okay. Excellent. Well thank you for all those details and I appreciate you taking the questions..

Our next question today comes from the line of Edward Nash with SunTrust Robinson Humphrey. Please go ahead. Your line is open..

Hey, good morning. This is Fang-Ke on for Edward. Congratulations on the progress. And first question is, so João you mentioned in the earlier remarks, saying that you are considering collaborating externally with your AIM platform.

I just want to – can you help us understand in terms of when you’re deciding whether it's external or internal? What other focus are going to be your therapeutic area you want decide to develop internally and what other considerations potentially in the future you're going to think about external collaborations?.

Thanks, Ed. Yes, so it’s a compounded question. So I'll try to answer as much as I can at this point. So as you know and we've announced and Tim has nicely recapped.

The team Abeona and Tim's team have been quite prolific in advancing the AIM platform across therapeutic areas because essentially these capsids have shown the potential for targeting different tissues from brain to the retina, to the lungs and other areas, including the liver as well and kidney potentially.

So that opens up to a lot of possibilities. We have announced our core pipeline. As you know, this is public information, but we have many other projects that we have for which we present a scientific data that are not currently formal development projects.

So we view partnerships as a tremendous opportunity for Abeona to both add resources to programs that either not prioritize or that could benefit from particular expertise and also accelerate both existing programs and programs that are currently not on the fast track in terms of developmental efforts.

So I think we're looking for partnerships that are win-win for both parties and I think ultimately could add a tremendous amount of value to this very promising platform..

Great. That's really helpful. Just follow-up on the EB-101 program. So you mentioned your primary endpoint going to be at 3 months and measuring the 50% wound healing, and I think a competitor proposing that they are going to measure the complete wound closure at 3 months as well.

So I just want to understand that when you're thinking about your primary endpoint versus one of your competitors endpoint, what FDA have been saying, what they require, and then why have you decided on the 50%? Clearly you have show in your Phase I/II trial that a lot of patients actually have more than 70% wound healing and like as far as 5 years.

So just want to understand your rationale for choosing 50%. Thanks..

Yes. Thank you. So I can necessarily comment on the competitors, but I'll talk a little bit about our endpoint and the rational behind it. So the data presented on the long-term follow-up and then also a publication and draft that will come out basically shows that greater than 50% wound healing in the large or DEB wounds right.

Keep in mind that we're talking about wounds that are greater than 20 centimeters squared, sometimes much larger than that. In fact, 40, sometimes 60 centimeter square.

The wound healing greater than 50% is a very clearly associated with improvement in patient reported outcomes, namely pain reduction and reduction in itch as well as their global impression of improvement. So we know that this 50% threshold is clinically meaningful based on our own data.

Obviously, we will measure wound healing as a percentage of the original wound. So it's a continuous measurement even though the endpoint itself, the mechanics of the endpoint is the proportion of wounds that reach at least 50%, obviously would not planning to low ball it.

And of course, to the extent that we replicate the data from the Phase I/II, this percentage will be much higher. But keep in mind that these are large wounds, the skin surrounding – even the product application, so the skin itself, the remaining skin around the wound is also not normal.

So the concern here especially for larger wounds is that you may have near full healing, which we did actually report in several of these patients.

But we don't want to be penalized if there's a small area that might not heal in the edges where small abrasion areas which cause the skin somewhat sensitive so that could throw the baby out with the bath water. So we want to make sure that any substantial healing, which we believe to be greater than 50 is a clinically demonstrable threshold.

And actually by the patients themselves, they've been very clearly articulating that any healing and a large wound is meaningful to them. Just to remind everyone the wounds, the selection of patients for the Phase III trials are patients such that they have chronic wounds and these are greater than 6 months in duration.

Sometimes they have those open wounds for several years as well as wound sizes that are greater than 20 centimeters in an area – square centimeters in area. So these wounds based on all the natural history data that's been published, tend not to heal, certainly not in 3 months and in most cases, not even in years.

So in fact, one could argue that any healing of these wounds will be clinically meaningful and we're setting it up 50%. The experience too from the natural history studies is that smaller wounds, especially the very small wounds as some of the competitors are targeting, tend to heal spontaneously even without intervention.

So in very small wounds it maybe plausible to AIM at complete wound healing, which would be an expectation if we were to use EB-101 as well. But that's not what we're targeting in the clinical trial..

Yes, that’s really helpful. And then lastly, so in the news you put out this morning regarding the Sanfilippo B and you mentioned you started dosing the first patient in cohort 2.

So is that just to confirm whether right now you have 4 patients enrolled in the trail and 3 in cohort 1 and down one in cohort 2, is that right?.

No, we have not announced that, but we do actually have only 2 patients in cohort 1. We've been – this is a joint decision between Abeona – data safety monitoring board as well as the regulators based on the excellent safety of the first patient who is now one plus year for post dosing.

So there's somewhat unusual that we have such long sort of follow-up for the first patient and also the excellent outcome so far in terms of safety of the second patient enrolled earlier this year.

So with these 2 patients, we felt that the safety of this program also combined with the safety on the MPS IIIA program which uses the same capsid as well as the increasing data, safety data collectively on use of AAV9-based vectors that we have.

We're in good grounds to propose a faster dose escalation, which I think ultimately stands to benefit progress of this trial, but ultimately provide these children with their best chance for a clinical benefits. So we approached the DSMB who reviewed very carefully all that safety data and also approach the regulators who supported this transition.

So I think this is the end of the testament to the safety of the program of both the IIIB program and the IIIA program..

Great. Thank you so much for taking my question..

Thank you..

Our next question comes from Kennen Mackay with RBC Capital Markets. Your line is open. Please go ahead..

Hi guys. This is Vikram on for Kennan. Thanks for taking our question.

Couple for us, from the morning, your announcement on ABO-101 in MPS IIIB, could you reminder us what type of data shall be expect ten second half of 2019 And what specific magnitude on the new developer cell scale if you are referring to Mullen scale, shall we be expect or anything you can share on that would be really helpful?.

We haven't provided any guidance in terms of the magnitude of cognitive. Obviously the goal here is both to treat the underlying pathology that is the enzyme that is defective. And for that, we can measure the biomarkers as we've done from MPS IIIA. So we look at CSF and urine heparan sulfate, which is the substrate of the enzyme.

So the expectation is that we'll continue to bore the accumulation of GAGs in systemically including the CSF. And that was the case for the first patient treated in this trial. We will continue to measure cognition. Obviously cognition is somewhat more variable, outcome and more meaningful results will come at 6 months in a year.

So we'll provide data that we have, but obviously patients, those just now won't have a very long-term follow-up for cognition..

Thanks for the color. That's really helpful.

If I can squeeze in one follow-up on your licensing agreement, how should we be modeling that in our model with REGENX bio? Where would the $10 million payment that is expected to go out this year? Shall we think about how shall we be thinking about that?.

Yes. So basically the anniversary of the agreements and so we'll pay one more $10 million in fourth quarter, I think of this year..

Thank you so much, really helpful..

We'll take our next question from Difei Yang with Mizuho Securities. Please go ahead. Your line is open..

Hey, good morning guys. This is Alex on for Difei. Thank you for taking the questions.

Just on EB-101 and the FDA review, could you comment on what are the gating factors for the reviews to conclude?.

There are not specific gating factors, is just because we completed the work internal – manufacturing work. This is still being reviewed by the agency is just the totality of all the data is mostly quality assays..

Okay. Thank you. And then you mentioned the data update for the MPS IIIA program, second half 2019, maybe you could just come in and what we should be expecting there? Thank you..

We'll respecting so these patients who are at already been enrolled, come back approximately every 6 months for follow-ups. So we'll provide the similar types of datasets including biomarkers in cognitive data from the patient's already enrolled..

Okay. Thank you. Sure..

Our next question will come from Elemer Piros with Cantor Fitzgerald..

Yes. Good morning, everyone. As you are just following-up on this last question. So if you plan to provide an update on the IIIA program in the second half, but based on the enrollment patterns they might have more than 1-year or more data for all 14 patients.

Would that be a correct assumption?.

I'm trying to think of top of my mind.

If you probably look into the data, I'm not sure if all the patients, but certainly for the large proportion of the patients clearly phase us a cohort 1 and 2 are well past 1-year for sure, at your past 2 years for cohort 1?.

Yes. I mean it just – on basing this on your disclosure last November, I think you had 14 patients by then.

Now how many more patients in this trial do they expect to enroll?.

We’ll depend on how many more we need to basically cooperated the findings we have now. So would be a lot of the patients, so first, sorry missed pause here. The trial is still open for enrollment. It was still actively screening, have screened several more patients and as mentioned earlier part of the screening process of we are excluding patients.

We have been historically excluded patients who have no mutations or mutations that will lead to no protein production. So the enrollment is open. So we haven't made a final determination and a lot of it will depend on next steps once we have analyze the full data set that we're disclosing later this year.

I don't know if that makes sense, but it's largely data driven how much many more patients will enroll..

And I'm presuming the same would be the answer to the IIIB program, which you set your plan to roll up to 9. I didn't know that number has changed or will it changed based on what you’ll see in this 8, 9 – first 8, 9 patients to extend that – program..

Yes. We may adjust if we need to for now 9 seems a good estimate, but obviously as the program progresses and we get additional data and as we made adjust this, but for now that's what we're announcing the plans are. Of course this was a combination of safety data, which is critical obviously for patients as well as efficacy data.

In terms of safety, the IIIA and also to some extent to IIIB although have much fewer patients, but given the long-term follow-up, we're pretty confident that we have a fairly thus strong safety data set so far. So I think at least that that aspect of the program is well served..

And I don't mean to ask you to comment on a competitor as projection. But in IIIA on company X, have enrolled 2 patients and project to enroll up to 20 during the next 12 months. Just I mean you have probably the most experience in the field in terms of finding eligible patients.

How ambitious in general to enroll 20 IIIA patients in 12 months time? Again, specific to the competitive or just in general you’re experience?.

Yes. It's not easy, but these are above, although it depends there I think the competitor but has similar into criteria. So especially by limiting number of the subset of the population with the higher cognitive functioning, it will require a very broad concerted effort globally not just U.S. here..

I see. And turning onto the EB program, I've sowed the CMC packages complete.

Now your interactions with the FDA, would it entail a facility inspection as well?.

No, not planed no, they had DMPQ assessment on the well back for the GMP qualification of the facility. But there was no inspection planned although the agency of course has the right to inspect at any time..

And do you feel that the protocol is actually locked down? What do you need to have final on determination?.

We'll announce when we have all the final dot the i's and cross the t's..

Okay. Thank you.

And one last question, do you plan to engage additional centers besides Stanford for the Phase III?.

Yes. So we have actually announced this previously that this is a multi-center trial. So Stanford obviously will continue to be the lead center because they have the most experience and they're fully prepared to enroll the first patient.

The question is what are the centers could come on online and how fast? And we have a couple of candidates’ centers that we've been in discussions with in preparation. So we expect those will be announced later this year..

Okay. Thank you so much João..

And that was the final question from our audience today. Dr. Siffert, I would like to turn the conference back over to you for any additional or closing remarks, sir..

Yes. Thank you very much. And thank you all for joining in for our call today. We're very excited about the prospects for Abeona later this year. We hope to provide new announcements in the coming months.

Also wanted to take this opportunity to thank and especially in light of the announcement on the MPS IIIB trial, but also progress across the board and our clinical programs to specifically acknowledge the 2 centers that have been working very hard to get this trial moving both Nationwide Children's Hospital led by Kevin Flanigan as the PI and also the hospital in Spain, Hospital Clínico Universitario of Santiago de Compostela for Doctors Maria Couce and Maria Lopez Castro, so just want to acknowledge them.

They've been key advisors to Abeona and put a lot of efforts in this program. And we look forward to also now seeing new sites [globally] for this program in the near future. And thank you very everyone..

Ladies and gentlemen, this does conclude today's teleconference and we do thank you all for your participation. You may now disconnect your lines and we hope that you enjoy the rest of your day..