Abeona Therapeutics Q2 2024 Earnings Call Transcript

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August 12, 2024

There are 10 speakers on the call.

Operator

Good morning, everyone, and welcome to the Abeona Therapeutics Second Quarter 20 24 Please note this conference is being recorded. I will now turn the conference over to your host, Greg Jin, Vice President of Investor Relations and Corporate Communications. Greg, the floor is yours.

Speaker 1

Thank you, Jenny. Good morning and thank you for joining us on our Q2 2024 conference call. During this call, we will refer to the press release issued this morning announcing the Q2 results, which is available on our corporate website at www.abianatherapeutics.com. I would like to note that remarks made during today's call may contain projections and forward looking statements. Forward looking statements are made pursuant to the Safe Harbor provisions of the federal securities laws.

Speaker 1

These forward looking statements are based on current expectations and are subject to change, and actual results may differ materially from those expressed or implied in the forward looking statements. Various factors that could cause actual results to differ include, but are not limited to, those identified under the Risk Factors section in our Form 10 ks and periodic reports filed with the SEC. These documents are available on our website at www.abionatherapeutics.com. On the call today with prepared remarks are Doctor. Vish Seshadri, Chief Executive Officer Doctor.

Speaker 1

Madhavazantavada, Chief Commercial Officer and Head of Business Development and Joe Vizzano, Chief Financial Officer. Also joining us for the Q and A session will be Doctor. Brian Kemeny, Chief Technical Officer. And with that, I will now turn the call over to Vish Seshadri to lead us off. Vish?

Speaker 2

Thank you, Greg. Good morning, everyone. We appreciate everybody joining this call. We're excited to provide our Q2 update, and I'll start with status of the BLA resubmission process. As a reminder, the complete response letter highlighted the need for additional CMC information pertaining to, in general, validation requirements for certain manufacturing and release testing methods.

Speaker 2

The CRL that we received in April did not identify any deficiencies related to the clinical efficacy or clinical safety data in the BLA and the FDA did not request any new clinical trials or clinical data to support the approval of pzcell. Since our last quarterly call, we've continued to make tremendous progress and have now generated the necessary data and reports to address nearly all of the CRO items with work ongoing for 2 outstanding items. Specifically, we've completed the work necessary to address deficiencies pertaining to RCR or replication competent retrovirus assay, several filter validation, container closure integrated testing, wholesale DNA, visual contour testing validation and importantly, data that support the extension of product shelf life. For the 2 outstanding items, namely our rapid sterility assay and cell based identity assay, feasibility data that informed the design of our validation protocols have been generated, and we have finalized the validation protocols and initiated the validation runs. I'm pleased to say we successfully completed a Type A meeting with the FDA last week, wherein we gained preliminary alignment on the acceptability of the data that address several of the CMC's efficiencies noted in the CRL.

Speaker 2

In addition, we also gained the FDA input on validation protocols for the rapid sterility and cell based identity assays, and that has been incorporated into the validation procedures that are now ongoing. Based on the FDA's written responses to our questions in pre meeting materials and our minutes from this meeting, we believe we have clarity and alignment with the FDA on the content of our BLA resubmission for PC cell. We are therefore on track to resubmit the BLA for PC cell this year. If the BLA resubmission is accepted for review, we expect the FDA to set a PDUFA date 6 months from the date of resubmission. Beyond the progress on PDUFA, we announced in July a non exclusive agreement with BEACON Therapeutics, allowing BEACON to evaluate our patented AAV204 capsid for the development and commercialization of potential gene therapies in select ophthalmology indications with the option to evaluate up to 9 targets.

Speaker 2

We look forward to collaborating with Beacon and believe this agreement underscore AAV204's potential to enable efficient targeting in the eye of novel AAV based gene therapies for ophthalmic diseases with high unmet need. Finally, I mentioned that we completed $75,000,000 underwritten offering with institutional investors in May, strengthening our balance sheet and extending our cash runway well beyond anticipated significant regulatory milestone and commercial launch of pzcell. I'll now turn the call over to our Chief Commercial Officer, Doctor. Madhav Assantawada to provide an update on our commercialization readiness activities. Madhav?

Speaker 3

Thanks, Krish, and good morning, everyone. We are building a solid foundation to prepare for a successful launch of PGCEL following its potential approval and we are very excited by the feedback we've been hearing from multiple stakeholders. I'll start with our support for medical education activities at various conferences, where we have had great conversations with TB physicians and patients. At the Society For Investigative Dermatology, SID, Annual Meeting in May, we presented our new long term safety data of pzcell in 18 RDEK patients with the longest follow-up period of 11 years. As key takeaway, in addition to the generally well tolerated safety profile, no squamous cell carcinoma was reported in any of the 128 PC cell treated sites during the follow-up.

Speaker 3

Plamous cell carcinomas have been reported in non treated sites unrelated to PC cell. Then in July, at the Society of Pediatric Dermatology, SPD Annual Meeting, we presented data illustrating PC cells' ability to cover wounds of various sizes, including large areas and on different anatomical locations. Based on our interactions with healthcare professionals, whether they plan to treat with PC cell themselves or refer to a qualified treatment centers, they are very enthusiastic about PCcell's potential to make a difference in addressing the persistent unmet needs of RDEB patients. We recently attended the DEPRA Care Patient Conference in Atlanta, where we noticed so many RDEB patients, almost all of them having significant wounds on their bodies, trapped in bandages. EZ Cell has the potential to heal large body surface areas, including the toughest to treat wounds, while demonstrating meaningful pain and itch reduction based on clinical data from 2 trials, a Phase 1, 2a study with up to 8 years of follow-up and the inter patient randomized Phase 3 VITAL study.

Speaker 3

Pzcell is the only product in the RDEK space with more than a decade of clinical experience to show not only a clean long term safety profile, but also durable wound healing after only a single application. These aspects of Td cell make it a highly differentiated and clinically meaningful potential treatment for RDEB patients, caregivers and physicians. At the Deborah Care Conference, we also shared a clinical research update and data on wound healing following the TZ cell treatment process. The interest from patients, caregivers and providers was palpable when they saw the before and after TZ cell wound healing pictures for several large and chronic wounds. We also heard from patients who have received PD Cell, including a few who had recently completed their second PD Cell treatment.

Speaker 3

They shared they reached out to share with us the life changing impact that PCell

Speaker 4

has had on their lives

Speaker 3

and the lives of their loved ones. Such testimonials highlight the transformation potential of PCcell Therapy. Facing our efforts with the payer community, we are excited to announce that our ongoing discussions with major commercial payers are generating positive results. Payers are recognizing the clinical value of PTCL and its potential to address significant unmet needs in the current treatment landscape, enhancing our optimism for favorable coverage and broad and timely patient access post approval. Lastly, from a site onboarding standpoint, each interaction with targeted experienced EV centers is allowing us to deepen relationships and increase our readiness towards site activation.

Speaker 3

Master service agreement negotiations are ongoing and we remain on track for potential launch approximately 3 months after PV Cell approval. All of these sites remain highly engaged and we plan to accelerate our onboarding activities soon after BLA resubmission is complete. With that, I will now hand the call over to our Chief Financial Officer, Joe Bozzano to discuss our financial results. Joe?

Speaker 5

Thanks, Manav. I would like to remind everyone that you can find additional details on our financial results for the 3 6 months ended June 30, 2024, in our most recent Form 10 Q, which is available on our website. Starting with the financial resources on our balance sheet, we had cash, cash equivalents, short term investments and restricted cash of $123,000,000 as of June 30, 2024. This compares to $62,700,000 as of March 31, 2024. Net cash used in operating activities was $12,700,000 for the 3 months ended June 30, 2024.

Speaker 5

Based on our current operating plan and assumptions with our existing cash resources, also including the credit facility, we estimate we have sufficient financial resources to fund our operations into 2026. Our cash runway assumptions do not account for any potential revenue from commercial sales of pzcell or proceeds from the sale of a priority review voucher or PRV if awarded by the FDA. I'll remind you that pzcell has been granted rare pediatric disease designation by the FDA. So upon its potential approval, we believe that we are eligible to receive a PRV. Research and development expenses were $9,200,000 for the 3 months ended June 30, 2024, compared to $8,500,000 for the 3 months ended June 30, 2023.

Speaker 5

Our spend in general and administrative activities was $8,600,000 for the 3 months ended June 30, 2024 compared to $5,000,000 for the 3 months ended June 30, 2023. The increase in general and administrative expenses is primarily due to commercial and launch preparation costs. Net income was $7,400,000 for the Q2 of 2024. It's important to note that the net income in the Q2 of 2024 included a $24,900,000 gain resulting from the quarterly remeasurement of the fair value of warrant liability. These warrants are required to be classified as a liability and remeasured at fair market value each reporting period.

Speaker 5

Net loss in the Q2 of 2023 was $16,700,000 including an $8,600,000 loss resulting from the quarterly remeasurement of the fair value of warrant liabilities. And with that, I'll hand the call back over to Vish for brief closing remarks before opening the call for Q and A.

Speaker 2

Thanks, Joe. In closing, we have made significant progress in less than 4 months since receiving the complete response letter. We are in a much better position than we could have hoped for, and we are on track for the BLA resubmission in the second half of twenty twenty four. We remain committed to bringing pzcell to patients with RDEB as quickly as possible. I firmly believe we will get there.

Speaker 2

Operator, please open the Q and A session.

Operator

Thank you very much. At this time, we'll be conducting our question and answer session. Thank you. Your first question is coming from Maury Raycroft of Jefferies. Maury, your line is live.

Speaker 6

Hi, good morning. This is Farzin on for Maury. For the two remaining outstanding items related to study the assets and identity assets, can you say more about what the FDA feedback was? I mean, are they asking for you to replicate something for a new iteration? Or are they asking for a new experiment?

Speaker 3

Good morning, and thank you

Speaker 2

for that question. So let me take the first outstanding item, which is the rapid sterility test. As a reminder, this is a method that was suggested by the FDA themselves because of prior experience with this approach. The suggestions were primarily to the statistical approach that we're using to establish the comparability between the current gold standard USV71 method of looking at sterility and what we have developed. And it is not a development of a new experimental method per se.

Speaker 2

So I just wanted to clarify what that input was to the validation procedure. We don't see this as even a major amendment to how we were validating. This was out of abundance of caution, we wanted the FDA to take a look at our validation protocol and approach and suggest if they had a preference for one statistical method versus others. So that's really what we had, and that's why we wanted to hold off starting the validation experiment until we got that feedback. So that's regarding the sterility assay.

Speaker 2

Regarding the identity assay, we've actually started the validation work and we have pretty good alignment from the FDA on our approach in how we look at the cell composition of our sheet. The discussion was more around what kind of characterization data to be included and how we put justifications in place that the way we've developed these identity assays. So I hope that addresses the two questions. Happy to talk further about it if you're interested.

Speaker 6

Got it. And then did the FDA provide feedback on the retroviral replication assay? Is that one good to go? Or there is no more feedback from the FDA?

Speaker 2

Yes, that one is good to go. Even before we had the Type A meeting, we had written back and forth with the FDA and shared the data that we've generated and wanted the confirmation that this really addresses the need for the RCR assay and we have that behind us now.

Speaker 6

Got it. And then one quick one is that will you need to have another formal meeting with the FDA? Or is there any more granularity on the when in second half can you submit?

Speaker 2

So we do not plan to have any more formal meetings with the FDA like a Type A or Type B meeting per se, but we are not guiding exactly when the second half of this year. We are planning the resubmission purely because the validation runs are ongoing as we speak and it's just a matter of when they get completed. So it's tricky to predict when exactly these types of experiments will be completed. There are reports generated, all the I's dotted and T's crossed. So we will guide as previously we had done.

Speaker 2

We remain on track for a second half of the year submission.

Speaker 6

Thank you so much.

Operator

Thank you very much. Your next question is coming from Dae Gon of Stifel. Dae Gon, your line is live.

Speaker 7

Hey, good morning guys. Thanks for taking our questions. I'll now turn the second half question a little bit more. Was there any direct feedback on additional data or additional assay? I mean, it seems like the last time we spoke, everything was on track to be sort of at the end of the Type A meeting, that seemed almost like the rate limiting step before you I guess dotting of the I's and crossing the

Speaker 4

T's, if you will. And

Speaker 7

I guess dotting of the I's and crossing the T's, if you will? And then one question for Madhav. In your prepared remarks, you were talking about on track for launching about 3 months after PDCL approval. Did I hear that correct? And if so, just wondering what additional work needs to get done to get the sites on board?

Speaker 7

It seems like 6 months is quite a bit of time, but now you're estimating about 3 more months beyond that. So any update on that would be great. Thanks so much.

Speaker 2

Great. Thank you, Dae Gon. Let me address your first question regarding any additional data. We have generated a lot of feasibility data for those 2 outstanding topics that I spoke about. And if you really look at the laundry list of the number of things that we had to do, you're looking at the tip of the iceberg here, right?

Speaker 2

I mean, these are just the 2 aspects, but they are also the more relatively more complex assays. And before conducting validation, we have generated the feasibility data that inform the design. And having done that, we wanted to make sure that we put the protocols in front of the FDA and make sure that they're aligned with how we've approached it, right? So it's really input on that. It is not additional work that they've suggested.

Speaker 2

It's essentially a statistical approach as to how you establish comparability. In fact, I'm only talking about what is that little piece within the complex question of sterility that we needed, to tweak based on the FDA's feedback, but there are many, many different aspects of it that we've already aligned on. So we're good to go on that. So even having just that piece in the validation protocol that they advise to follow a slightly different approach is a pretty big win for us because it could have gone multiple different ways. And having known this clarity, we feel pretty confident based on all the data we've generated using the system in house.

Speaker 2

As a reminder, both these assays are done in house. We're not getting this done through a vendor. So that's something that's assuring, it's in our control. So it's just a matter of generating that data. And I know that previously, we had not guided exactly when in the second half.

Speaker 2

And we leave it at that because all the pins fall in place exactly the way we want it, maybe end of September, early October. We don't want to go into the guessing, speculating game right now. Is it quarter 3 or is it quarter 4? But we do feel quite confident that it will get done this year. And to your other question on what kind of site onboarding activities would be completed by the time we get approval and what has to be triggered after I let Matov answer that.

Speaker 2

Yes.

Speaker 3

Thanks, Egon, for that question. So we are very much engaged with the sites in training them, but there are certain aspects that can only be done after a product insert or describing information is given, which is beyond past approval. So training the sites on the actual product information, once we have the price point, we have to load that as part of the chargemaster in the hospital institutions, the P and T committee and the agenda item that is placed on there in certain institutions. So things of that nature that can only be done after we have the label very similar to autologous CAR T cell therapies as a model. And having launched those therapies, we typically guide 2 to 3 months is usually the timeframe that's needed for post approval activations.

Speaker 3

We'll of course be working as soon as we can in getting the centers ready so that first patient can be treated because that's really our intent there. Hopefully that gives some context, yes.

Speaker 6

Yes. No, that's very helpful.

Speaker 7

I guess on that point on the pricing and reimbursement, you also talked about some payer discussions being fruitful. I was wondering if you could comment on sort of the poly, I guess, combo therapy type of discussions. Have you had that? What are the sort of feedback on payer side about funding both ZYJUVEC as well as PD cells?

Speaker 3

Generally, when you look at the PDCELL's profile, it's resonating extremely well. I think payers understand why duvek is on the market, TELZUS is on the market and the profile for PV Cell is distinct and differentiated in that for large and chronic wounds, especially where there's very heavy wear burden. We haven't heard any major direct objections of blocking 1 versus the other because the modalities are distinct. So, so far so good. And we are of course also working with payers to make me sure that the access policies that we eventually come out with are favorable because these patients require multiple treatment options.

Speaker 3

And the fact that PDCELL is a one single application for durable years of wound coverage versus the Juveq where or Filzuvaz where there is an you can pause, continue and that kind of thing. It also works favorably from that perspective.

Speaker 7

Great. Thanks for taking our questions.

Operator

Yes. Thank you very much. Your next question is coming from Ram Selvaraju of H. C. Wainwright.

Operator

Ram, your line is live.

Speaker 4

Thank you so much for taking my questions and congratulations on all the progress. I just wanted to ask one quick clarificatory point regarding the process via which the FDA will consider the resubmission. What is the statutory timing with which the FDA would need to respond to the BLA resubmission once it is filed and the sign of PDUFA date. Can you just remind us what that time frame is,

Speaker 3

please?

Speaker 2

Yes. It's our understanding, Ram. Great to hear from you. Thank you for the question. Our understanding is that upon resubmission in a 2 week time frame, the FDA indicates their acceptance of the resubmission and determines also at that point in time whether it's a Type 1 or a Type 2 variation of the resubmission.

Speaker 2

We anticipate this may be a Type 2 kind of variation, but that's to be determined. In terms of timing, if it is a Type 2, then it is 6 months from the time of resubmission that the FDA would likely set up a PDUFA date. I hope that answers the question.

Speaker 4

Yes, very much so. And just a quick other follow-up is, if we just for a moment think about the hypothetical scenario in which you receive a PRV and elect to monetize it. In such a context, can you give us a sense of whether strategically you would look to broaden your product offering specifically in the dermatology space or if you would think strategically about potentially broadening your reach into other rare diseases as you think about the optimal commercial strategy for the company?

Speaker 2

Great question, Ram. So you're talking about pipeline and other assets here, not just the PCcell lifecycle management. So PCcell lifecycle management itself is one avenue we haven't really discussed very much, whether it's ex U. S. Expansion or whether we're talking about other types of applications because we're hearing from a lot of patients that they want PV cells to be applied for hand surgeries and things like that, which we haven't evaluated clinically, right?

Speaker 2

So that's one aspect of it. The other aspect of it is we have core competencies in engineered cell therapy with the PC cell experience. So that is very applicable as you can see in multiple engineered cell therapy avenues in a disease agnostic way. And when I say disease agnostic way, the entire commercial infrastructure that we set up for autologous cell therapy itself is can have a translational effect in multiple other therapeutic areas just by the nature of how whether it's skin to skin or vein to vein process and the patient experience that is involved here, right. So and do not forget, we also have our ophthalmology platform where we have AAV novel AAV capsids with tropism and transduction efficiencies in select eye compartments and we haven't forgotten those.

Speaker 2

In the background, there's work that is going on with especially our retinolkeis program. And so in what all different directions, I think it's going to be sowing the seeds in a few different multiple avenues and then letting those saplings grow and see where we can actually bet marry both the R and D and commercial infrastructure rebuilding with the PC cell launch and which where the areas of promise are showing up. So I think it's really going to be a discovery process. We'll talk more and more about it as we get closer to PC cell launch. But just to avoid being schizophrenic right now, we're so focused on the PV cell launch itself because that is really the most critical deliverable for the company.

Speaker 4

Thank you so much for that thoughtful response and congrats again on all the progress.

Speaker 2

Thank you, Ron.

Operator

Thank you very much. Next question is coming from Kristen Kluska of Cantor Fitzgerald. Kristen, your line is live.

Speaker 8

Hi, this is Rick Miller on for Kristen. Thanks for taking our questions. On the SaaS approach the FDA suggested, are you able to characterize whether this is a more stringent approach? Or what was the motivation do you think for suggesting this specific approach?

Speaker 2

Yes. Thank you, Rick. Can you repeat that question? I just want to make sure I understand it correctly for us to respond.

Speaker 6

Yes. So I believe you mentioned

Speaker 8

a statistical approach that the FDA suggested related to one of the 2 remaining outstanding items. So just kind of if you're able to characterize whether this approach is a more stringent approach or what do you think the motivation there was for suggesting this specific approach?

Speaker 2

Yes, the motivation is purely precedence, right? The FDA has preference for certain type of approach. Guidances do not always exactly specify how to interpret when it comes to actual experimentation. For the given context of how we conduct the experiment. We have a very sensitive rapid detection assay that we've developed for sterility, which is actually not the first time.

Speaker 2

I think this is bioluminescence methods exist for other companies and therapeutic products. And historically, we've used USP-seventy one approaches to how we look at sterility. And I think when we show that method A and method B are equivalent, there are multiple different approaches of showing that. And here what the FDA has given clear instructions to us is that when you're looking at either a non inferiority or comparability in terms of how you quantitate any microorganisms you spike in our matrix and show that you're able to detect with equal level of sensitivity that required a certain way of statistical handling. So that's really what the feedback was about.

Speaker 2

So hope that gives a little bit more color.

Speaker 8

Yes, that helps a lot. Thank you. That's all for us. Thanks.

Operator

Thank you very much. Your next question is coming from James Molloy of Alliance Global Partners. James, your line is live.

Speaker 9

Guys. Good morning. Thank you very much for taking my questions. I had a quick question on in the PRV market, I know that Biogen recently reported they sold their last one for $89,000,000 down a little from $100,000,000 that sort of had been going. You guys seen any softening in the PRV market or anything or anything going on there that you guys are noting assuming again you get the approval and get a PRV and look to monetize it?

Speaker 2

Thank you for that question, Jim. I'll let Joe address the question here.

Speaker 5

Yes. Thanks for that, Jim. Yes, other than that example that you mentioned, I have not seen any softening. I've still seen deals north of 100,000,000 dollars 103 or so. I think the going rate is normally about 100,000,000

Speaker 2

Yes. Actually, it's an optimization between speed and pricing, right? And in our case, the advantage of being funded so well beyond the approval timeframe allows us to optimize for pricing rather than for speed. I think that's what is important. But overall, if you look at the last several months or years even, the price of a PRV has been rather steady at around that $100,000,000 mark.

Speaker 2

So I would leave it at that, but we're confident that we're not doing a fire sale here.

Speaker 9

Excellent. Absolutely not, no. And then maybe given the competitive VYJUVIC is selling pretty well, getting off to a nice jump. Has that impacted or has there any change to potential looking at potential partnership rather than a self launch or some sort of combination thereof on your end, should again, should you get approval?

Speaker 3

Jim, we are very much committed for self launch, actually even more so now that BIJU X performance. I mean, I think BIJUEX performance, the first gene therapy, what it clearly shows is the willingness for patients and the community to try gene therapies for a genetic disorder like this, right. So that's I think is as a class, this is a good sign. And the fact that PD cell, all things that you are aware of in terms of clinical differentiation and everything what we communicated is a very strong value proposition. These patients for their large surface areas require a solution which PD Cell can offer and the willingness to pay from payer communities is so high for an ultra rare disease.

Speaker 3

So it's a profitable business model from that perspective. And so I think this is the right step for Aviona at this time, launching it ourselves and with a finite centers of excellence model and we have a great team in place. All the people here from our commercial team with prior cell therapy and launches and experience and even from market access having launched Zolgensma and gene therapy experience. So I think we have put together a really good team focused on the launch And then of course, we can scale it to other opportunities as Ram was asking earlier.

Speaker 9

Okay. And then maybe last question here. Any updates on sort of the earlier stage pipeline? Obviously, you guys have got your hands full getting this through, but any thoughts on your earlier stage and sort of the next key catalyst we should keep an eye on for?

Speaker 2

Yes. Thanks, Jim. Earlier stage assets, the AAV based ophthalmology assets that we have, we've continued to generate further numbers in our preclinical data, which are encouraging, especially with our RS1 program. And hopefully in a future scientific conference, we will be able to provide an R and D update with more data there. But in terms of any committed development into clinical trials, it's something that the TBD will communicate more about these programs as we get closer to the PD cell launch.

Speaker 2

And as I mentioned, just so our organization, which is thin and lean is very focused on successful PV cell launch. That's really the reason why we haven't spoken so much about our ophthalmology program.

Speaker 9

Great. Thank you for taking the questions. Thank you, Tim.

Operator

Thank you very much. Well, that appears to be the end of our question and answer session. I will now turn the call back over to Vish for closing remarks.

Speaker 2

Thank you, Jenny. Thank you, everyone, for joining us for today's business update. With that, we'll talk to you again soon.

Operator

Thank you very much. This does conclude today's conference call. You may now disconnect your phone lines, and have a wonderful day. Thank you for your participation.

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