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Edited Transcript of ABEO earnings conference call or presentation 14-May-19 2:00pm GMT

Q1 2019 Abeona Therapeutics Inc Earnings Call

Dallas May 27, 2019 (Thomson StreetEvents) -- Edited Transcript of Abeona Therapeutics Inc earnings conference call or presentation Tuesday, May 14, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christine Berni-Silverstein

Abeona Therapeutics Inc. - CFO

* João Siffert

Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director

* Sofia Warner

Abeona Therapeutics Inc. - Director of IR

* Timothy J. Miller

Abeona Therapeutics Inc. - President & Chief Scientific Officer

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Conference Call Participants

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* Bikramjot Singh

RBC Capital Markets, LLC, Research Division - Senior Associate

* Edward D. Marks

H.C. Wainwright & Co, LLC, Research Division - Research Analyst

* Elemer Piros

Cantor Fitzgerald & Co., Research Division - Analyst

* Fang-Ke Huang

SunTrust Robinson Humphrey, Inc., Research Division - Associate

* Liav Abraham

Citigroup Inc, Research Division - Director

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Presentation

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Operator [1]

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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. (Operator Instructions) For opening remarks and introductions, I'll turn the call over to Sofia Warner, Senior Director, Investor Relations. Thank you. You may begin.

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Sofia Warner, Abeona Therapeutics Inc. - Director of IR [2]

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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 key clinical 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.

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [3]

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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'd like to start with some key quarter events and then we'll 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. We have grown this library now to over 100 novel capsids, some of which have specific tissue tropisms outside our current pipeline target 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 our 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 a mid-2019 start. Our dedicated cGMP suites at our Cleveland facility are currently in operation by an experienced trained staff, positioning us 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 health care professionals and 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, that 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 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 ABO-101. The dose for the first cohort is 2E13, and the second cohort dose is 5E13. The main objectives of the 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 and 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're working toward in the balance of this year. As last presented at WORLDSymposium in February, the ongoing Phase I/II clinical trial 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 also observed substantial and durable improvements in biomarkers, including dose-related reductions in cerebrospinal fluid heparan sulfate levels as well as 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 is planned to enter Phase III midyear. RDEB is a rare genetic skin disorder caused by mutations which result in lack of functional Collagen VII, the main component of the anchoring fibrils that attach 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 VII collagen expression and wound healing in patients with RDEB. The gene-corrected keratinocyte 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 this study will be the proportion of patients' wounds with greater than 50% healing at 3 months compared with untreated wound site from the same patients. Additional endpoints 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 show sustained wound healing for 3 years in addition to positive patient-reported outcomes such as reduction in pain and itch. Efficacy of the EB-101, including Collagen VII expression and the reconstitution of anchoring fibrils, was observed as early as 1 month post engraftment of treated wounds and remained 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 stands to validate a successful completion of an 18-month long effort that brought to life our in-house GMP-compliant facility in Cleveland. Our investment in CMC preparations and diligence also positions us well towards an eventual BLA filing, commercialization and will 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 and 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 combined dosing with intravenous and intrathecal administrations 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, our 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 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?

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Timothy J. Miller, Abeona Therapeutics Inc. - President & Chief Scientific Officer [4]

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Thank you, João. In the first quarter and the months thereafter, we unveiled exciting progress at 3 separate events on programs utilizing our novel AIM vector platform. This proprietary technology continues to demonstrate how we -- 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 capsids delivered novel transgene and demonstrated proof-of-concept data in animals with 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 immune responses to the GAA protein. Notably, additional data have now demonstrated that [AAV214] 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 tropism 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, our novel gene therapy for cystic fibrosis. Some key highlights from the data showed that our novel AIM AAV vector with the CFTR minigene 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 regulator in CF mice and in human CF patient cells. Importantly, ABO-401 can correct the defect of the most common CF mutation, delta-F508, which accounts for greater than 60% of the CF population. This is an important differentiator as this could enable treatment for CF patients that may be nonresponsive to current CF modulating drugs or those that have mutations that are 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. Immunostaining has demonstrated that ABO-401 is able to transduce and express CFTR in basal cells from the human airway epithelia, increasing our confidence in using AIM vectors as delivery tools for gene editing as well as gene replacement strategies.

ABO-401 was also shown to transduce human CF nasal and bronchial epithelial cells with CFTR-specific change in short circuit current that was comparable or superior to existing modulated 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 the 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 at Vancouver, demonstrating the AIM platform's broad therapeutic potential in potentially treating retinal diseases. The presented data showed that intravitreal administration of the AAV 204 capsid to nonhuman primate eyes 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 inpatient and outpatient 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 injections. The AIM capsid 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 may be 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 owing to existing anti-AAV antibodies. It also may enable retreatment of patients who've 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 to the call over to Christine who will review our financials. Christine?

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Christine Berni-Silverstein, Abeona Therapeutics Inc. - CFO [5]

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Thank you, Tim. I'd like to remind everyone that we have recently filed a 10-Q where you can find 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 costs 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 in 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 upcoming Investor Relations and scientific conferences, I'd like to highlight that we will be participating in the following events: on May 22, we'll be participating in the RBC Healthcare Conference; and on June 5, we will be at 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.

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [6]

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Thank you, Christine. In summary, we achieved important interim milestones in the first quarter that position Abeona well to deliver long-term growth and value for our shareholders and turn hope into reality for our patients.

Thank you. I'll now turn it over to the operator to open up for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we'll take our first question today from Maury Raycroft with Jefferies.

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Unidentified Analyst, [2]

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This is [David] for Maury. My first question is regarding ABO-101 program for MPS IIIB. Can you talk about the individual age of the patients you have treated so far? And are you aimed to recruit a certain quota of patients below age of 2?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [3]

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Sorry, can you ask the second -- this is João. Thanks for your question. So could you just repeat the last part of your question regarding the...

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Unidentified Analyst, [4]

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Yes. So you mentioned before that you're trying to enroll a certain age -- a certain number of patients below age of 2. So I was wondering, can you talk about sort of quota you're trying to aim for, for the number of patients below age of 2?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [5]

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Oh, okay. So just a clarification. So thanks for your question again. Clarification -- no, we're not restricting to below age of 2. We're allowed to enroll from 6 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 of approximately 3.5 years. So it's not restricted by age but rather by cognitive function. Of course, the patients that were enrolled are eligible for this criterion.

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Unidentified Analyst, [6]

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Okay. That's helpful. So just to clarify, are you saying that -- can you disclose the number of patients who are under -- in terms of the age for the update in second half for the type III patients?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [7]

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

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Unidentified Analyst, [8]

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

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [9]

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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.

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Operator [10]

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Our next question will come from Liav Abraham with Citi.

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Liav Abraham, Citigroup Inc, Research Division - Director [11]

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Two quick questions for me. Firstly, regarding ABO-102, my understanding is that you are meant to be 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, can you comment on progress that you're 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?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [12]

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Thanks, Liav. So 2 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 designations, including RMAT designation that allow us to have ongoing discussions with the agency. So as the data for follow up for the patients have 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 dataset. We have not planned a specific date or time for this. We do expect to update the Street and of course, internally and also advisers when we have sufficient data in the second half of this year. This much we have announced.

On the EB-101, the RDEB program, you had -- 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, Phase III starts, especially in the programs that we're hopeful will enroll in a reasonable time frame, and also given all the designations in the unmet needs, that the progress can actually accelerate as we move 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 payers at this point. But we will as soon as we are in Phase III.

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Operator [13]

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And we'll take our next question from Raghuram Selvaraju with H.C. Wainwright.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [14]

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This is Edward Marks on for Rag. You just mentioned enrollment for the EB-101 Phase III. I'm just wondering if you can provide a little more clarity on the time line that you're expecting for full enrollment. And then looking a 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?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [15]

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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 we estimate 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 we're allowed to. And we have not provided formal guidance as to the rate of enrollment, but we hope that given the fact that these patients are preidentified or most of them are preidentified, that we should be able to have an expedition enrollment rate, and of course, we'll provide updates as we make progress. So we -- but then -- of course, there's a range here, but we expect to complete enrollment in 2020 and hopefully having results also in 2020.

As for the second question on long term, as you -- as we announced, we just recently presented follow-up data for the initial cohort of patients treated in the Phase I/II trial at Stanford. This follow-up now is a median of 3 years. So we've got 2 patients actually out to 5 years with durable wound healing. So this is quite remarkable to be at this stage of [prudent] development and having such long-term follow-up. The commitment in terms of the Phase III trial is that we will have the primary endpoint assessed at 3 months and then there's an additional 3 months of follow-up up to a total of 6 months. That's to both examine wound healing durability as well of course as safety. And as you know, for gene therapy, we'll continue to follow these patients long term, although this is not necessarily gating toward for BLA submission.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [16]

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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 be done at the Cleveland facility, or will you be expanding that manufacturing elsewhere?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [17]

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We haven't made a final decision on the site, but we are prepared to move from -- so just to back track a little bit, we have, first of all, made a tremendous amount of investment and progress in the clinical manufacturing, and that is -- that has brought us very close to commercial readiness. Obviously, we're not ready yet until we get the drug approved. But it has really equipped Abeona as a company -- aside from the geographic localization of the manufacturing -- to progress into commercial manufacturing with just 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-like product being 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.

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [18]

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And then just considering the news that just came out this morning on Sanfilippo, just 2 more quick questions on cognitive function. Just wondering what the best outcome measure would be for the really young Sanfilippo syndrome patients. And how might cognitive function impact be achieved using some of the systemically administered gene therapy, similar to some of that using CNS-administered gene therapy such as the intracranial delivery?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [19]

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Okay. So these are 2 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 used 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 a normative data from the general population of infants and toddlers that get tested as part of the validation process. So I think we have a good grasp on that inasmuch as you can do a good evaluation 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 neuropsychologists and study centers that do this routinely. So in that sense, I think we're covered here, and I think that's pretty much the standard for these trials. As for the -- can you repeat your next question?

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Edward D. Marks, H.C. Wainwright & Co, LLC, Research Division - Research Analyst [20]

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Yes, just wondering -- I'm sorry?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [21]

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Yes, just -- I remembered it's just on the biodistribution, yes. So although it may appear intuitive to deliver intracranially or in the cerebrospinal 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, the 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 from AveXis where the SMA children receive intravenous AAV9-based vector therapy for what it is a CNS disorder. So whereas there's a lot 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 outcome is for CNS disorders through intravenous delivery. So...

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Operator [22]

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Our next question today comes from the line of Edward Nash with SunTrust Robinson Humphrey.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [23]

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This is Fang-Ke Huang for Edward. Congratulations on the progress. And first question is, so João, you mentioned earlier in the remark -- in the earlier remarks, saying that you're considering collaborating externally with your AIM platform. I just want to -- can you help us understand in terms of when you are deciding whether it's external or internal? And what other focus under your therapeutic area you want to decide to develop internally? And what are the considerations potentially in the future you're going to think about external collaborations?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [24]

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Thanks, Ed (sic) [Fang-Ke]. Yes, so the compounded question, so I'll try to answer as much as I can at this point. So as you know and was announced and Tim has nicely recapped, we are -- the team at 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 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've presented 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 are not prioritized or that could benefit from a 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.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [25]

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Great. That's very helpful. And 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're 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 the FDA have been saying, what they require, and why you decided on the 50%. Clearly, you have shown in your Phase I/II that there are a lot of patients actually have more than 70% wound healing as far as 5 years. So just want to understand your rationale for choosing 50%.

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [26]

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Yes. Thank you. So I can't necessarily comment on the competitors, but I'll talk a little bit about our endpoints and the rationale behind it. So the data presented on the long-term follow-up and in also a publication and draft that will come out basically shows that greater than 50% wound healing in the large RDEB wounds, right? Keep in mind that we're talking about wounds that are greater than 20 centimeters square, sometimes much larger than that, in fact, 40, sometimes 60 centimeters square. That wound healing of greater than 50% is 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 that's -- 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 a proportion of wounds that reach at least 50%. Obviously, we're not planning to lowball 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, that the skin surrounding the -- even of the product application, so the skin itself, the remaining skin around the wound is also not normal. So what -- 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 on the edges or small abrasion areas which -- because the skin is somewhat sensitive.

So that could throw the baby out with the bathwater. 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 in a large wound is meaningful to them.

Just to remind everyone, the wounds -- the selection of patients for the Phase III trial are such -- patients such that they have chronic wounds. These are greater than 6 months in duration. Sometimes they have those open wounds for several years as well as wounds tied to the greater than 20 centimeters in 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 at 50%. The experience too from the natural history studies is that smaller wounds, especially the very small wounds that some of the competitors are targeting, tend to heal spontaneously even without interventions. So in very small wounds, it may be plausible to aim at complete wound healing, which would be of the expectation if we were to use ABO-101 as well. But that's not what we're targeting in the clinical trial.

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Fang-Ke Huang, SunTrust Robinson Humphrey, Inc., Research Division - Associate [27]

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[The partial was really] -- that's really helpful. And then lastly, so the news you put out this morning regarding the Sanfilippo B and you mentioned you start dosing the first patient in Cohort 2, so is that to confirm right now you have 4 patients enrolled in the trial and 3 in Cohort 1 and then 1 in Cohort 2? Is that right?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [28]

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No, 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, of course, our Data and Safety Monitoring Board as well as the regulators, based on the excellent safety of the first patient who's now 1-plus year for post-dosing. So it is somewhat unusual that we have such long sort of follow-up for the first patient and also the excellent outcomes 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 on 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 benefit.

So we approached the DSMB who reviewed very carefully all the safety data and also approached the regulators who supported this transition. So I think this, in the end, is a testament to the safety of the program, both the IIIB program and the IIIA program.

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Operator [29]

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Our next question comes from Kennen MacKay with RBC Capital.

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Bikramjot Singh, RBC Capital Markets, LLC, Research Division - Senior Associate [30]

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This is Bikram on for Kennen. A couple for us. From the morning, your announcement on ABO-101 and MPS IIIB, could you remind us what type of data shall we expect in second half of '19 and what specific magnitude on the new developmental scales you're referring to, Mullen Scale, shall we expect? Or anything you can share around that would be really helpful.

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [31]

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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 by -- and for that, we can measure the biomarkers as we've done for 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 lower the accumulation of GAGs 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 a more variable outcome and the meaningful results will come at 6 months in a year. So we'll provide data that we have, but obviously the patients dosed just now won't have a very long-term follow-up for cognition.

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Bikramjot Singh, RBC Capital Markets, LLC, Research Division - Senior Associate [32]

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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 REGENXBIO? Where are -- where will the $10 million payment that is expected to go out this year, shall we think about -- how shall we be thinking about that?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [33]

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Yes, so that's basically at the anniversary of the agreement, so we'll pay 1 more $10 million in fourth quarter, end of this year.

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Operator [34]

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We'll take our next question from Difei Yang with Mizuho.

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Unidentified Analyst, [35]

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This is [Alex] on for Difei. Just on EB-101 and the FDA review, could you comment on what are the gating factors for the review to conclude?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [36]

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They're not specific gating factors. It's just because we've completed the work, internal manufacturing work, this is still being reviewed by the agency. This is just the totality of all the data. It's mostly quality assays.

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Unidentified Analyst, [37]

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Okay. And then you mentioned the data update for the MPS IIIA program second half '19. Maybe you could just comment on what we should be expecting there.

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [38]

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We're expecting -- so these patients who have already been enrolled come back approximately every 6 months for follow-up. So we'll provide similar types of datasets, including biomarkers and cognitive data from the patients already enrolled.

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Operator [39]

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

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Elemer Piros, Cantor Fitzgerald & Co., Research Division - Analyst [40]

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João, just following up on this last question. So if you plan to provide an update on the IIIA program in the second half, based on the enrollment pattern, we might have more than 1 year or more data for all 14 patients. Would that be a correct assumption?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [41]

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I'm trying to think on top of my mind. You're probably looking at the data, but I'm not sure of all the patients, but certainly for a large proportion of the patients. Clearly as -- Cohort 1 and 2 were well past 1 year for sure -- actually past 2 years for Cohort 1.

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Elemer Piros, Cantor Fitzgerald & Co., Research Division - Analyst [42]

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Yes. I mean just I'm basing this on your disclosure last November that you had 14 patients by then and -- now how many more patients in this trial do you expect to enroll?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [43]

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Well, it will depend on how many more we need to basically corroborate the findings we have now. So it would be a lot of the patients -- so first, sorry, I'll just pause here. The trial is still open for enrollment. We're still actively screening, have screened several more patients. And as mentioned earlier, part of the screening process, we are excluding patients -- we have 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. A lot of it will depend on next steps once we have analyzed the full dataset that we're discussing -- 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.

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Elemer Piros, Cantor Fitzgerald & Co., Research Division - Analyst [44]

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And I presume the same would be the answer to the IIIB program, which you said you plan to enroll up to 9. I don't know if that number has changed, or will it change based on what you see in this 8, 9 -- first 8, 9 patients, to the extent that's [in] the program?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [45]

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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 you know, we may adjust this. But for now we're -- that's what we're announcing the plans are. Of course, this is 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 the IIIB, although much fewer patients, but given the long-term follow-up, we're pretty confident that we have a fairly strong safety data set so far. So I think at least that aspect of the program is well served.

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Elemer Piros, Cantor Fitzgerald & Co., Research Division - Analyst [46]

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And I don't mean to ask you to comment on a competitor projection, but in IIIA, company X have enrolled 2 patients and project to enroll up to 20 during the next 12 months. Just -- and 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, not specific to the competitor, just in general, your experience?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [47]

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

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Elemer Piros, Cantor Fitzgerald & Co., Research Division - Analyst [48]

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I see. And turning on to the EB program, so the CNC package is complete. Now your interactions with the FDA, would it entail a facility inspection as well?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [49]

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No, not planned, no. They had a DMPQ assessment done a while back for the GMP qualification of the facility. But there's no inspection planned, although the agency of course has the right to inspect at any time.

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Elemer Piros, Cantor Fitzgerald & Co., Research Division - Analyst [50]

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And you feel that the protocol is actually locked down? Or do you need to have a final determination?

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [51]

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We will announce when we have all the final dotted Is and crossed Ts.

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Elemer Piros, Cantor Fitzgerald & Co., Research Division - Analyst [52]

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

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [53]

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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 other centers could come online and how fast. And we have a couple of candidate centers that we've been in discussions with in preparation, so we expect those would be announced later this year.

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Operator [54]

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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.

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João Siffert, Abeona Therapeutics Inc. - CEO, Head of Research & Development, Chief Medical Officer & Director [55]

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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, I want to take this opportunity to thank, especially in light of the announcement on the MPS IIIB trial but also progress across the board in 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, the PI, and also the hospital in Spain, Clinico -- Hospital Clinico Universitario de Santiago de Compostela, for Drs. Maria Couce and María López Castro. So we just want to acknowledge them. They've been key advisers to Abeona and put a lot of effort in this program so -- and we look forward to also announcing new sites [globally] for this program in the near future. And thank you, everyone.

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Operator [56]

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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.