Q3 2023 Abeona Therapeutics Inc Earnings Call
Participants
Greg Gin; VP, IR & Corporate Communications; Abeona Therapeutics Inc.
Vish Seshadri; CEO; Abeona Therapeutics Inc.
Madhav Vasanthavada; Chief Commercial Officer, Head of Business Development; Abeona Therapeutics Inc.
Joe Vazzano; CFO; Abeona Therapeutics Inc.
Kristen Kluska; Analyst; Cantor Fitzgerald & Co.
Presentation
Operator
Greetings, and welcome to the Abeona Therapeutics third-quarter 2023 conference call. (Operator Instructions) Please note this conference is being recorded.
I will now turn the conference over to your host, Mr. Greg Gin. Sir, you may begin.
Greg Gin
Thank you, Ali, and good morning, everyone. I would like to welcome and thank everyone for joining us on our third-quarter 2023 update conference call. The press release announcing the third-quarter '23 results is available on our website at www.abeonatherapeutics.com.
Before we start, 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. 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-K and periodic reports filed with the Securities and Exchange Commission. These documents are available on our website at www.abeonatherapeutics.com.
On today's call with prepared remarks are Dr. Vish Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer and Head of Business Development; and Joe Vazzano, Chief Financial Officer. Also joining us for the Q&A session will be Dr. Brian Kevany, Chief Technical Officer.
With that, I will now turn the call over to Vish Seshadri. Go ahead, Vish.
Vish Seshadri
Thank you, Greg. Hello, everybody, and thank you for joining us this morning. I'm pleased to update you on our continued progress, evolving from a clinical stage company to one with a significant commercial opportunity.
Let me start with the highlights that everyone at Abeona is thrilled about. We achieved that has the most meaningful milestone yet in at Abeona's history at the end of September with submission to the FDA of our biologics license application or BLA for prademagene zamikeracel or pz-cel, which was formerly known as EB-101.
Pz-cel is our investigational autologous, COL7A1 gene-corrected epidermal sheet for recessive dystrophic epidermolysis bullosa or RDEB. As a reminder, in clinical trials, a one-time application of pz-cel had demonstrated wound healing and pain reduction for the toughest-to-treat large chronic wounds, some wounds that were treated in our Phase 1/2a clinical trial remained healed after eight years.
The sustained treatment effect we have seen is due to the integration of COL7A1 transgene into the host genome during retroviral transduction of patient keratinocytes ex-vivo. Our BLA submission represents a critical step toward the potential approval of pz-cel as first therapy to provide instantaneous wound coverage and multi-year healing in RDEB wound with a one-time application.
I want to take a moment to thank the many stakeholders who contributed to this milestone achievement, not just for Abeona, but for the whole RDEB community from the patients, caregivers, and physicians who participated in the vital clinical trials; the patient advocacy community; and the FDA for their level of engagement and constructive guidance in the months, leading up to the pre-BLA meeting that occurred in late August. I also would like to acknowledge our entire submission team for their tremendous determination over many months to prepare the BLA.
We recently completed our application orientation meeting with the FDA where we overviewed our BLA and walked them through our clinical data. Our understanding is that this meeting is one of the last steps before the FDA decides on acceptance of the application for formal view.
Regarding what we can expect next, the FDA's decision on whether BLA review process can start is typically made during the 60-day window following submission, which in our case goes out to late November. With the BLA submission, we requested the FDA grant a six-month priority review. Under a priority review scenario, pz-cel could be approved in the second quarter of 2024.
I'd remind you that pz-cel has been granted rare pediatric disease designation by the FDA. So upon its potential approval, we continue to believe that we're eligible to receive a priority review voucher or PRV. It's permissible to sell PRVs and other PRVs have been worth approximately $100 million based on recent PRV transaction.
Planning for the potential success of our BLA, our manufacturing team is focusing on supporting BLA review process, preparing for preapproval site inspection and scaling up our internal capabilities and staffing for commercial launch.
In the first full year of launch, we currently plan to supply pz-cel for up to 120 patient treatments or manufacturing cycles per year. Following launch, we will assess our longer-term plan to further build up that capacity. We are excited about the prospects of transitioning to a commercial stage organization with Abeona's first product launch.
[Whatever] it is important to note that pz-cel will not be the first autologous therapy launch for this leadership team as Madhav and I will draw upon our previous launch experiences with BREYANZI and ABECMA.
As Chief Commercial Officer, Madhav will oversee all aspects of Commercial Strategy, Planning, and Operations. His extensive and diverse leadership experience across sales, marketing, and market access, coupled with a strong track record, launching autologous cell therapies with a heavy focus on customer experience makes Madhav the ideal candidate to lead the stage build out of our highly focused, nimble commercial organization to maximize the potential commercial opportunity for pz-cel. I now Madhav to talk about our near-term commercialization focus and launch preparations.
Madhav?
Madhav Vasanthavada
Thanks, Vish. We are, of course, excited for the potential commercial launch of pz-cel pending FDA approval.
In terms of our commercialization approach, our near-term focus is simply on two main areas. One, is to onboard and prepare five to seven high-volume EB treatment centers so that they can treat with pz-cel upon approval. These centers already have the expertise in caring for EB patients and are geographically dispersed across the US, which would help make pz-cel treatment accessible for these patients.
And two, working with commercial and government health insurance systems to ensure broad access for all eligible patients at a price point that captures the value at a transformative therapy like pz-cel might bring. We are happy with our progress so far on both these fronts.
To elaborate further, in terms of site onboarding, shortly after our BLA submission, we conducted an Advisory Board meeting that was attended by eight well respected physicians, EB physicians from across the US. We discussed not only the clinical data and the care coordination needed for surgical application of pz-cel, but also for the first time, we shared some of the before and after images from several large wounds across multiple anatomical areas treated with pz-cel as well as patients and caregiver testimonials about their experience with pz-cel and clinical trials.
We are very encouraged by the physicians' feedback which included their suggestions on ways to operationalize pz-cel at treatment centers. We have received interest from these physicians to initiate pz-cel site onboarding discussions at their [end stations], and we are very excited by it.
With respect to the second focus area of payer engagement, we will continue to engage payers over the coming months to educate them about pz-cel and further assess the price potential. Early feedback from payers and hospital administrators support positive coverage for pz-cel and pricing in line with the value of a cell and gene therapy that provides instantaneous coverage for large wound areas and that demonstrates years of wound healing and pain reduction even in the toughest-to-treat RDEB wounds following a one-time application.
Furthermore, we hope that the sustained effects we see in our clinical trials on wound areas with a one-time application of pz-cel could minimize the treatment burden incurred by patients and caregivers and continuously caring for their wounds day after day and week after week with current standards of care.
Additionally, in speaking with our clinical trial patients and the advocacy community, we continue to hear enthusiasm for pz-cel and in fact, in our ongoing Phase 3b trial, all three patients are repeat patients, who fully appreciate the involved nature of the procedure and have elected to receive pz-cel again for their previously untreated wound areas. We will continue to work with patient groups and make sure that the voices of the patients, the families, and the caregivers are well represented as we engage with the FDA and payers.
Lastly, since our BLA submission, we have leveraged our network and have moved quickly to fill crucial commercial roles, including key account management, market access, and marketing with proven biopharma veterans who bring additional launch and commercialization expertise with autologous cell therapies. Their contributions will be an important piece of our launch planning. We intend to further build out our commercial organization and infrastructure in a stage gated manner aligned to BLA acceptance.
Now I'll hand the call over to Joe to discuss our third-quarter financial results. Joe?
Joe Vazzano
Thanks, Madhav. I would like to remind everyone that the Form 10-Q is available on our website, which is where you can get additional details on our financial results for the three and nine months ended September 30, 2023.
Starting with the financial resources on our balance sheet, we had cash, cash equivalents, restricted cash, and short-term investments of $54.1 million as of September 30, 2023, including $25 million in gross proceeds from the registered direct offering in July of 2023, as compared to $37.1 million as of June 30, 2023.
Based on our current operating plan and assumptions, our financial resources remain sufficient to fund our commercial launch preparations for pz-cel and our business operations into the fourth quarter of 2024. In other words, our cash runway extends beyond the potential commercial launch of pz-cel and receipt of a priority review voucher.
Research and development expenses were $7.1 million for the three months ended September 30, 2023, compared to $5.5 million in the three months ended September 30, 2022.
Our spend on general and administrative activities was $4.2 million for the three months ended September 30, 2023, compared to $3.9 million in the same period of 2022.
Net loss attributable to common shareholders was $11.8 million for the third quarter of 2023 or $0.48 loss per common share as compared to a net loss attributable to common shareholders of $6.4 million or $1 loss per common share in the third quarter of 2022.
With that, I'll turn the call back to Vish for brief closing remarks before kicking off the Q&A session.
Vish?
Vish Seshadri
Thank you, Joe. I would like to close by reiterating what an exciting time this is for Abeona for pz-cel and for the RDEB community. Based on our strong clinical data and enthusiasm from the medical community, we believe that pz-cel could be an important potential treatment option for patients.
With our BLA submission, we've demonstrated our ability to take cell therapy product from research through clinical development. We are well positioned for potential market entry with extensive and diverse commercial and launch experience with the autologous cell therapies, we're looking forward to the anticipated momentum in the coming months as we build advanced pz-cels through the regulatory process toward potential approval and continue executing on our commercial readiness plan and ultimately to a potential US launch of pz-cel.
With that, operator, please open the Q&A session.
Question and Answer Session
Operator
(Operator Instructions) Kristen Kluska, Cantor Fitzgerald.
Kristen Kluska
Hi, everyone. Good morning. Thank you for taking the questions. I was hoping you could elaborate or speak to some of the work you're doing now for patient identification early on. And given that some of these patients may need few of the procedures, any chance of the prior trial participants, including Phase 1/2 being involved?
Vish Seshadri
Thank you for that question, Kristen. And before I turn it over to Madhav, I'll just provide my thoughts and Madhav will elaborate. Just to reiterate your question is around prior identification of patients before potential launch and how, I think, the Phase 1/2 as well as I would say even the viable patients would benefit from a potential launch, we can even provide some anecdotes from our current experience. And it's not just the Phase 1/2 study and vital, but we're also having a Phase 3b study that's going on for the 302 study where patients from both the previous two studies are coming for repeat treatments. So all of this augurs well as we prepare for launch, but for the specific question of patient identification, Madhav will take that.
Madhav Vasanthavada
Yeah. Thanks, Kristen, for the question. I think the Ad Board that we conducted recently was very assuring in that physicians continue to believe that these patients will require more than one therapy. So as we have patients being identified and the awareness increasing with the topical gel right now with VYJUVEK, that is certainly one bolus of patients that we can look to bring on. So we do know that there are patients in the centers of excellence, who -- that the centers for ongoing wound care management, whether it is infections or whether it is squamous cell carcinoma and the longer the wounds are chronic in nature, the greater the risk for these infections to happen.
So in speaking with physicians, we already know that certain physicians are thinking about their patients who would benefit from pz-cel and are thinking of identifying in their own minds. But as we get closer to launch, we will continue to formalize this analysis and gather more tangible based on claims analysis and where the patients are to concretely find out, okay, what is the volume here we are talking about, so that we can queue them up in anticipation of approval.
Kristen Kluska
Okay. Thanks. And then -- sorry, go ahead.
Madhav Vasanthavada
No, I just wanted to check if that helps answer your question.
Kristen Kluska
Yes, yes, very helpful. Thanks. And assuming your timelines that you've laid out [our gov], how quickly do you think you'll be able to have this in the commercial field?
Madhav Vasanthavada
So post approval, similar to autologous therapies, right after the approval, we will have to do [T&T] approvals at these [DBE] treatment centers and then very quickly have medical policies in place from the payer's standpoint. So our estimation is we are talking about maybe a month to two months ballpark to have these processes in place, so that would be our launch, if you will. And from then on, we have the physician's ability to place an order for pz-cel. But our goal will be to have it as soon as we can post FDA approval.
Kristen Kluska
Thank you so much.
Operator
Maury Raycroft, Jefferies.
Hi. This is [Yao Ung] for Maury. Good morning. Thank you for taking our questions. Our first question is on the commercial opportunity. We think you recently said at conference that you estimate the peak sales to be about $500 million. What kind of assumptions went into that estimate? And what do you need to bill in terms infrastructure to reach that target?
Madhav Vasanthavada
Yeah, Yao. Thanks for that question. In terms of the assumptions that maintain as we've indicated for us the ability to supply at the time of launch is around 120 patients in a given year. And we look to ramp that scale over time as soon as we have a few initial treatment centers, have the experience to provide pz-cel and then we estimate what the demand looks like, so that we can increase the CapEx.
For the peak sale, we have a projection of 500 patients in a year to over, I think, around five-year timeframe. So the peak sale we have projected there is with a 500 capacity over a period of five years. And the pricing estimate we have also baked in that is a seven-digit price point. So these are the initial key assumptions, and we expect these patients to come in for de novo patients, the first time as well as an average assumption that each recessive that patient given the large amounts of wounded area that they have will require two such rounds of EB-101 treatment cycle.
Vish Seshadri
Yeah, and if I can just add one of the reasons we will be triggering any capacity expansion after launch and the initial experience with the first centers of excellence that we onboard is that we get a good sense of what level we will need to expand that capacity. We're starting at 120 a year and let's say in a two-year post launch scenario, should we ramp it up to [500 or 350 or 700]. I think some of those assumptions will be validated once we start seeing that initial demand and trends. And for that reason, so what you're seeing as a peak opportunity of greater than $500 million is dependent on a capacity expansion in our assumption. I hope that helps give you some perspective there.
Got it. That makes sense. Thanks for the answer. Another one on commercial, we heard recently that Crystal reported about half of their scripts are actually from community doctors, versus centers of excellence. Are you thinking about reaching maybe to some community doctors and get the initial steps done before patients are treated at centers of excellence? Or how does that report or surprising update change how you're thinking about your launch?
Madhav Vasanthavada
Yeah, so there are centers of excellence as well as community centers where these patients are present. For us, at the time of launch, we believe that patients who are at the centers of excellence will be ideal candidates to get this therapy. And over a period of time, we will look to expand outwards some centers of excellence, which are pz-cel trained centers. So the centers of excellence that don't necessarily have the ability to surgically apply for pz-cel and then finally to the community centers.
There are some 23 centers of excellence that we know that see a lot of EB RDEB patients and so clearly, we will look to educate these centers so that they are aware of the therapy and we could have that referral in place. So that's our approach and we continue to work with patient advocacy group. We have a strong partnership with multiple advocacy groups, debra, in particular. And given the nature of this patient community, we also anticipate a vast majority of these patients be self-referral if they understand where these centers are, that apply pz-cel procedures.
So that's going to be our approach, and so even though the patients are in the community setting for a treatment like this, which is a one-time procedure for those wounds that they are suffering from, there is a strong appetite and there is a strong pull versus if this were to be a chronically applied treatment, then yes. I think we would have to think hard, and here is where we feel the value proposition is very strong.
Okay, got it. Just one last quick question. The Phase 3 trial enrolled patients 6 year old or older, do you think the label is going to have a minimum age of six? Or how do you think about unmet needs in patients under 6 year olds?
Vish Seshadri
Yeah, that's a fantastic question, Yao. Thanks for that. It's going to be a dialogue that we will have to have with the FDA. So if you look at body surface area, so this is a topically applied epidermal sheet. So dose is something that is differently viewed here as a percentage of body surface area that we are applying these sheets. So if you look at a small statured patient, let's say, close to the 50-year-old mark, and we've applied six to eight sheets. In fact, we've applied 14 sheets across the two studies on the same patient that's a 7 year old.
And so as a proportion of that body surface area, that's a huge percentage of coverage. So how the agency is going to view dosage is going to impact how they view a minimum age because the reason why the 6-year age was selected as a minimum in our study was primarily the ability to report pain endpoints, understanding the Wong-Baker scale which is validated for ages six and above.
So because we had an endpoint, we had that restriction. Now, does that mean you couldn't apply this therapy on a patient that is 4 years or 3 years old, that is up to the negotiation and we believe that with the currently ongoing Phase 3b study, dropping that age limit below that 6 years is also going to help build that experience. So by the time we get approval, this is something that's going to be locked in the late stages of review with the FDA.
Our anticipation is that it's going to be beneficial for patients even younger than 6 years of age. But this is where the dialogue that's currently happening among various types of physicians, plastic surgeons as well as the EB specialists that what is the age of a patient where we can safely have them follow best practices after application in order to immobilize these sheets because if patients move too much, the graft needs to take optimally and how do we manage those patients that are younger than, let's say, 12 months. I think these are all the types of questions we're currently answering to say what is that age, but we believe that it's definitely applicable to much lower than 6 years of age., so more to come on in the coming months on that topic.
Got it. Thank you so much for taking our questions. Again, I'll hop back in the queue.
Operator
(Operator Instructions) James Molloy, Alliance Global Partners.
Hello, this is Laura on for Jim. Thank you for taking my questions. So with the working on building out a commercial organization for pz-cel, have you also started the sales team hiring process yet? And have there been any challenges on getting members to join?
Vish Seshadri
Thanks, Laura. To address your second question, actually, we have had no issues at all in bringing on talent so far. We have gotten the leadership team in place from a commercial side. We have been marketing the medical operations person, market access, and key account management. So we look to continue to scale the organization.
We don't need a whole lot of team, right, because what we have been saying early on is that this is a therapy where a limited commercial infrastructure is what we require given the full. So that leads me to your first part of the question with regards to sales per se. We don't anticipate having a sales team or a major sales team at launch because of the initial level of interest that exists in these centers.
But over time, perhaps after the approval is when we may look to bring on sales teams to continue to educate the outdoor community that is our best. We will have a medical team in place, whether it's medical science liaison and continue to educate and also have a key account managers who are going to be the point of contact at these treatment centers where pz-cels will be placed. So that's our model that we will have, which is to focus on key account managers and medical teams.
Got it. And then also going back for Crystal Biotech, and now they launch VYJUVEK for DEB, comparing this to pz-cel, what are your overall thoughts? And what takeaways do you see for pz-cel from this particular launch?
Vish Seshadri
Our takeaway is that this is great to see the uptick of these products, right? I mean, for far too long, these patients have had no really therapeutic options have been subjected to standard of care, the burden that they have had on treating their wounds has been just devastating for everyone. So we are happy to see the awareness picking up. We are happy to see that patients are getting motivated. The insurance companies are beginning to cover these patients. And that was our major takeaway from -- following what's happening in the space is that payers are beginning to clear up the access.
And I think what that means for pz-cel is a fantastic positioning because we are coming fast followers, which only helps A, number one, help raise the awareness for these patients and these physicians that there are therapeutic options coming into the space. And number two, for the paperwork and the access clearance and genetic copy of genetic testing, so on so forth, which is taking several weeks by the time that pz-cel comes to market, we will be in a better position. So these are really the positive takeaways for us, and we continue to learn as we approach our approval timelines.
Madhav Vasanthavada
And also just not to forget differentiation, right? We've heard very clearly from the physicians that all these therapies are going to be needed by almost all the patients because the approach is very different, the value proposition is very different, and patients do have different types of wounds in their body. And for the large wounds where there's a lot of pain and need instantaneous closure, with willingness to go for the big guns, if you may, like pz-cel, is going to be there. That's what we're learning and which is why a pent-up bolus of patients in centers of excellence is already sufficient to take our [loss] infrastructure over. And which is why we're not investing on a big sales force because we know these patients (inaudible).
Understood. So just one last question from us. You mentioned in the past the potential for pz-cels to be formulated either as a sprayer, to have different skin graft sizes used for the patients. So when might you look into trying to get these additional indications or administration methods onto the label?
Vish Seshadri
Yeah. I think from a perspective of lifecycle management, this is really -- we will have to think hard, whether it's even pz-cel that comes as a spray. That is probably going to be a whole new biological product. Clearly, there's some learning -- I mean, we have been very disciplined in how to focus our finite resources. Our job with the pz-cel launch is not yet done as much as we're getting closer every day, so we have these ideas. I think some of the common unmet needs that we hear is, can you make glove shaped grafts for mitten deformities?
Because hand surgeries are a big part of these patients. Can you do that? I think there's a lot of that unmet need and ask from the patient community for these products. We're being careful that let's -- get pz-cel launched, let's get the uptake and we will be on our way for what improvements we can build. But clearly, that's going to be not EB-101, but EB-102. It's going to be a different product, but we are keeping our eyes and ears out to further understand the unmet need and design these products appropriately.
Got it. Thank you for taking the question.
Operator
Thank you. As we have no further questions in queue at this time, I would like to hand it back over to Mr. Seshadri for any closing comment.
Vish Seshadri
Thank you. In closing, I want to thank our shareholders and other stakeholders who have listened to this call, and we'll talk to you again soon. Have a nice day.
Operator
Thank you. Ladies and gentlemen, this concludes today's conference and you may disconnect your lines at this time, and we thank you for your participation.
