Abeona Therapeutics Inc. (ABEO) Earnings Call Transcript & Summary

Greetings. Welcome to the Abeona Therapeutics Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Greg Gin, Vice President of Investor Relations and Corporate Communications. You may begin.

Thank you, Holly. Good morning, and thank you for joining us. During this call, we will refer to the press release issued yesterday afternoon, which is available on our corporate website at www.abeonatherapeutics.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. 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 SEC. These documents are available on our website at www.abeonatherapeutics.com. On the call today is Dr. Vish Seshadri, Chief Executive Officer, with prepared remarks; Dr. Madhav Vasanthavada, Chief Commercial Officer and Head of Business Development; Joe Vazzano, Chief Financial Officer; and Dr. Brian Kevany, Chief Technical Officer, will also join for the question-and-answer period. And I will now turn the call over to Vish.

Thank you, Greg. We appreciate everybody joining the call this morning. Yesterday afternoon, we provided a regulatory update for pz-cel in a press release announcing that the FDA has issued a complete response letter in response to our BLA based on the need for additional CMC information. While we are surprised and disappointed by this outcome, especially given the positive results from our 2 clinical studies. At the outset, I want to say that we believe the CRL provides a clear roadmap to bring this important product to patients as soon as possible, and that roadmap pertains purely to CMC information that the FDA has asked for. Having believed that we responded adequately to the vast majority of the CMC related information request already, we had expected that any outstanding CMC items would be addressed either as post-marketing requirements or post-marketing commitments. And I want to reiterate, as we stated in our press release that our CRL did not identify any deficiencies related to the clinical efficacy or clinical safety in the BLA, and the FDA did not request in CRL any new clinical trials or clinical data to support the approval of pz-cel, and that is huge. In a call with the FDA upon receipt of the CRL, they requested that we submit the requested information as red line updates to the appropriate sections of the BLA in our resubmission. I will now highlight what we currently know regarding the CRL, our anticipated submission timing for the requested information and the nature of the CMC deliverables, then we will take questions from the audience. To summarize, we completed our late cycle review meeting with the FDA on 21st March 2024. Prior to that meeting, we received the agenda of discussion topics from the FDA, which included 2 specific CMC-related requests for additional necessary information and the condition that these must be satisfactorily resolved before commercialization. The word commercialization is important to note because Abeona had previously guided that pz-cel treatment sites would be activated and ready for treating patients starting approximately 2 to 3 months after the May 25 PDUFA date, positioning our timing for commercialization in the third quarter of 2024. At the late cycle review meeting and in a subsequent information request, the FDA noted that additional information necessary to satisfy a CMC requirements for 3 specific topics, including the 2 discussed during the late cycle review meeting must be satisfactorily resolved with 4 BLA approval rather than before commercialization per se. In response, Abeona submitted plans with a commitment to provide preliminary data by mid-May prior to the BLA approval and full validation reports after approval in mid-2024. This approach was discussed with the FDA in an informal meeting held on March 29, and the agency in response requested that we provide the spending information as soon as we could. In the CRL that we received, the FDA indicated that the proposed timing of the data submission by Abeona would not have allowed sufficient time for the FDA to complete its review prior to the May 25 PDUFA date. So even prior to receiving the CRL, we were already working on deliverables and milestones that would address the deficiencies noted in the CRL in the coming weeks and months and had shared those deliverables with the agency. We expect to provide a complete response to the CRL with all the necessary information in quarter 3, 2024. The necessary CMC information requested in the CRL pertains to certain validation requirements for manufacturing and release testing and includes observations that arose in the pre-license inspection. Specifically, the main FDA asks from our perspective can be summarized as follows: one, validation of sterility related assays performed on drug product. While we have historically used validated USP Compendial, bioburden and sterility testing across both in process and final drug product stages, FDA asked us to adopt rapid sterility testing methods in addition to our validated methods, so as to accommodate the short shelf life of our drug product and in addition to conduct supporting spike recovery tests in our manufacturing matrix for bacteria microplasma and endotoxin. These types of tests are fairly routine and need adaptation to account for our specific matrices. Two, validation of the replication-competent retrovirus or RCR, detection assay in the matrix specific to our retroviral vector manufacturing. Because the positive controls used for the RCR [ flock ] formation assays have cell type and media that are different from our RBV manufacturing process, we are currently conducting through our CRO certain spike recovery tests in the appropriate matrix to demonstrate control validity. Three, to validate our media filter sterilization process, we will establish bioburden limits to media in addition to demonstrating microbial retention capacity of sterile filters as well as testing post-use integrity of the filters. This has been already validated for nonspecific matrices and we are simply adopting those practices for our specific metrics at this time. Four, an identity assay to confirm cell composition in the drug product requires determination of sensitivity and specificity as part of validation. This work is currently underway in-house and is expected to be completed in early quarter 3, of this year. In addition to these 4 main topics, the CRL outlined some other deficiencies related to wholesale DNA testing, container closure integrity test, visual examination and certain raw material testing reports, which will also be provided in our BLA resubmission. We anticipate completion of all these work streams in late quarter 2 and early quarter 3 time frame and feel confident that all of FDA's request. For additional CMC information are addressable in a reasonable time frame for a complete response to the CRL by quarter 3, 2024. I would like to recognize the resilience shown by the entire Abeona team right now and their grit and focus to deliver the CMC data to bring pz-cel to patients with RDEB as quickly as possible. I firmly believe we will get there. With that, operator, please open the Q&A session.

[Operator Instructions] Your first question for today is from Kristen Kluska with Cantor Fitzgerald.

Guys, sorry to hear about the CRL, but appreciate the level of transparency. We don't really see companies provide this level of detail. So thank you for doing that. So during the review process, can you talk about the level of confidence that you have that the focus is going to be on these new CMC-related updates versus looking into more issues are doing a very comprehensive review again. And in that case, do you think that 6-month review will be enough adequate time for the agency to respond to you to see if these items are satisfactory or if anything needs to be retested or a few extra steps, for example.

Thank you very much for that question, Kristen. So the focus on CMC update versus digging new worms is, I think, what your question pertains to. So in the call that we had with the FDA after we received the CRL, we discussed a little bit about the review process. They did indicate that they don't anticipate having -- taking the full 6 months that they're allowed for once the resubmission has happened, they did assure that they're going to expeditiously review our BLA resubmission. On the question of what is going to be the focus. It does sound like the focus of the review is going to be specifically those CMC topics that where they had asked questions. By definition, a complete response letter is a comprehensive ask of all the deficiencies that they note that are between now and approval that need to be bridged. So as we understand the process typically is when the agency has decided to put a CRL together, they pull all the different sections and departments for all the questions that they all have. This is like a wish list that everybody puts in their request, and that is set to the sponsor, which is why the significance of not seeing anything clinical or nonclinical or other modules of the BLA is very important. That, in our eyes, shows that from a clinical package perspective, we have proven the efficacy and safety of this product. And so we're really focused on the specific clinical items that are outlined in the CRL. And these are -- I'd like to say that with the exception of one particular assay, everything is standard routine practice that is applicable to most, if not all, biological products. And those assays need to be adapted to our matrix. That's really what we're trying to do. So in terms of complexity, we believe the review process itself should be rather relatively quicker than considering a completely whole new submission. I hope I answered that question, Kristen. But if not, please feel free to noodle in further.

Yes. No, that was very comprehensive. So essentially, once you complete all of these tasks, what are going to be the next steps for the company? Do you then submit the responses specifically to the CRL? Do you wait for them to indicate that you could file again? Or do you just go ahead and file and essentially, how do these scenarios from like a timing perspective with a potential approval?

Yes. So the short answer is yes. Once we are ready with our responses, we just go and submit. We don't technically need to have a meeting or check-in with the FDA to say, hey, this is what we're going to submit. So basically, they've said that once you have the answers to these questions, make the submission, and that starts the clock for them. So that is here. In terms of the work and the timing, most of the work that we have to do and generate reports will be completed by the end of Q2 or early quarter 3 of this year. So our anticipated time frame of submitting the redlined version of the BLA is within the third quarter of 2024. And so with all the data and knowledge in the work stream is already ongoing, we feel quite comfortable about that time frame.

Okay. And I know you've said there's a potential for this to be more expeditious than a typical review, but do you expect it's going to be like a fluid process where the FDA is going to review this document, and kind of give you feedback as you go? Or is it one of those things, where towards the end of the review cycle is when they would make their comments?

That's a good question. And I just want to reiterate, this is not a rolling submission. All of our deliverables go in at once. So it's not going to be a piecemeal review. So they're going to look at everything together. And we may receive clarifying questions or further IRs during that process. But the main aspects of post submission are not only the checking the boxes of have we adequately addressed all the questions in the CRL, but clearly, we'll have to have labeling discussions closer to the approval time frame. So that's what we anticipate. And of course, not all the items noted in the CRL are of the same order of importance. There are 2 or 3 that are especially important that will likely be the focus of the discussions because there are some that are purely check the boxes kind of a thing. So that's -- our anticipation is that we're going to have all done in one time frame rather than a piecemeal approach. And if you take the quarter 3 submission time frame, the worst-case scenario, you're looking at a quarter 1, 2025 approval time frame. And the best case scenario would be end of 2024, but we always prepare for the worst case.

Your next question is from Maury Raycroft with Jefferies.

I just wanted to check for the CMC work already underway, have you reached full agreement or alignment with FDA on what needs to be done for those issues? Or do you still need to meet with FDA again for more clarity? And are you able to do exactly what FDA is asking for? Or is there some degree of expected compromise based on what you're going to resubmit?

That's a terrific question, Maury. Thank you for bringing it up. For the vast majority of the topics that are outlined in the CRL, the FDA has provided very clear instructions on what their expectations are. And especially, as I mentioned that these are not -- while we're surprised with the CRL outcome, we're not surprised by the topics that are there because we've been discussing these with the FDA over the many months. And we have reached a fair degree of alignment on all, if not most of these items. There are 1 or 2 where the FDA does not know exactly what they are expecting. But there's going to be a check-in, and we feel confident that our proposal to how to address the goal or need of the FDA are quite robust. So we will have an opportunity to check-in and I'm specifically talking about the cellular identity assay that's scientifically the one that is idiosyncratic to us. For everything else, there's pharmacopia guidance and things like that, which like bacterial endotoxin mycoplasma, these are all things that have been well documented and every company has done this before, whereas the identity of our drug product with Keratinocytes, that is something that is unique to us, and this is the one that we have been discussing. It's not completely new. We've already proposed in our informal meeting that this is the path we are taking. And we haven't received any feedback per se from the agency whether this is appropriate or not appropriate, but we feel that this is a robust plan, and we will have an opportunity to check-in with the agency through a type A meeting that they have offered as a post CRL, and we have -- they can offer it within 30 days of our request. So our plan is to have that touch point before we make the submission, so we have one iteration of alignment with the agency.

Got it. And so that's probably not scheduled yet. And do you have any estimate on when that meeting could take place?

Right. I can't give a very accurate estimate. It's going to be somewhere into the late-June to early July time frame because we want to balance how much data we can generate and already put it in front of them if they say this is good, then we're done versus have some buffer time if we had to tweak anything that's the post having the meeting. So we believe about late-June to early-July is a very good timing for that meeting.

Got it. Understood. And for the sterility assay, can you talk about how rapid that test needs to be? And how does the timing impact your other testing and release work?

Sure. The rapid testing, just to give a little bit of context of how this evolved. We currently have 2 time points in our manufacturing process. One is the day of harvest when we release drug product, we have a check-in of sterility and that's a US Pharmacopeia test, which is bonafide, but takes longer than the time that you take to release the product. So we had an in-process sampling of the product for sterility, 5 days prior to the final sample point, the final harvest date. And 5 days, the agency was not comfortable because they said, in order to have this as a sterility assay, you need to have it within 3 days. I mean 5 days to 3 days is not a big difference per se in terms of whether our sterility is intact or not. But from an assay time, readout time perspective that makes a difference because most assay methods that we had would take 5 days to readout. So we had to develop a rapid sterility test, so we could incorporate the last 72 hours sampling in this test, and we already discussed with the FDA, which systems would be appropriate. In fact, they suggested to us. They've been working very collaboratively with us on the specifics there. They suggested to us the potential systems that could help us achieve that target. We have commissioned, they're installed qualified and everything. So we will have the data generated with this rapid sterility system in the particular matrix that we're looking at, which is both the last 72 hours as well as the final drug product. And we also have reached an agreement with the FDA that in the last 72 hours, if you sample that can be called a sterility assay as long as we are including anaerobic microbes in that, and that is part of our plan that is ongoing. So I hope that addresses the sterility question. But if you have follow-up questions on that, I'm happy to further get into details.

Yes, I think that makes sense. And maybe last specific question for the in-house assays. Once you get those finalized, is any of the future commercial stage CMC work going to be performed by a CRO? And in that case, would the FDA also want to see transfer data?

We are not planning to outsource any manufacturing. So manufacturing of retroviral vector, which is the drug substance as well as the drug product, which is our pz-cel sheets, will continue to be manufactured at Abeona. So that is very clear. What -- there are assays that, like, for example, the RCR assay that have always been performed by a CRO. So there's nothing new there. They've continued to perform those assays. And just to be clear, an RCR assay for retroviral vector is not something that we will be doing for every manufacturing run. This is something that happens after a lot of retroviral vector is manufactured. And 1 lot of retroviral vector can supply for 2 or 3 years of supply. So it's not a very frequently conducted assay, but a CRO will continue to do that. And just to give you context, we've been using this assay to release retroviral vector, since December 2021. That was the first lot -- 2021, that was the first lot that was manufactured and qualified there. And we've treated patients in VIITAL as well as the Phase 3b study that is ongoing right now. And post treatment, there is no occurrence of any RCR inhibitions because we also test the patients for presence of RCR. So that's something to be noted in. There are publications from the national vector [ BioConsortium ] that have collated from more than 60 clinical trials and more than 1,500 patients treated. Not a single case of RCR has ever been reported with technologies such as ours or even lentiviral vectors that are used for CAR-T transaction. So this is a safe system. And RCR testing has been done for many, many years, if not decades. This is an adaptation of the RCR testing to show that our matrix does not inhibit the testing process itself. So that is a little bolt-on spike recovery test that we need to do. So I hope that part is clear. But CROs that have been conducting these tests will continue to do that for us.

Got it. That's helpful. So it seems like the in-house versus CRO that part of the plan is remaining consistent and no changes there.

Correct.

Your next question for today is coming from Ram Selvaraju with H.C. Wainwright.

Just wanted to echo my peers in saying that I definitely commend and applaud your level of transparency here. This level of granularity is something we rarely see. So thank you for that. 2 technical items, first of all. Vish, you mentioned earlier, visual inspection and container closure. Can you just maybe elaborate on that for us and tell us a little bit about what that means and how simple or not simple those issues may be to address?

Yes. Great to hear from you, Ram. So first one is the visual testing. So when we make our drug product sheets, right, we have -- we check these sheets for intactness. So there's no tears or holes, and there are QC operators that are trained to look for those types of blemishes on the drug product and have to pass these sheets as intact. And it happens at 2 stages. One is at the manufacturing site itself as we package them. And the second is after it reaches the operating room where it's going to be applied on patients. And QC operators are trained to look for these types of abnormalities. And that part of training them has to be validated. So this will entail deliberately creating those holes or tears and ensuring that they catch it. So it's a matter of conducting those validation tests under protocol. It's relatively a more straightforward thing than what I described as the 4 main themes or buckets of work that we need to do. The other part, which is the container closure integrity testing, I'm going to ask my Chief Technical Officer, Brian Kevany to answer. Brian.

Again, this is another one on this list that is typical for any pharmaceutical product. So we conduct container closure integrity testing for both the retroviral vector that we produce here as well as the drug product. And so the request here is to validate those container closure integrity testing methods for both of those type model and container closure types. That work is already ongoing. Again, this is another one that we had discussed briefly with during the inspection and then already initiated this work. So the -- both of those are already running at different CROs and anticipate that data well in advance of when we anticipate submitting this back to the agency.

Great. Just based on your previous timeline comments, I just wanted to clarify that you already know our priority that the resubmission is going to be a Class II. Is that correct?

That I cannot confirm on the call because this was -- this is something that will be determined technically at the time of resubmission as we've heard from the FDA, but it's likely to be a Class II is what I can tell you which is the 6 months you're talking about.

Okay. And then lastly, just in terms of sort of commercial preparations and commercial readiness, can you give us a sense based on, let's call it, the conservative case scenario that you laid out earlier, which is pre submission before the end of the third quarter of this year and potential approval in the first quarter of 2025. How does that impact your commercial readiness plans? What commercial, pre-commercial, pre-launch activities might you still be able to undertake during that time frame? And how -- what position is that going to put you in assuming a potential approval in the first quarter of 2025?

Thank you, Ram. Again, a terrific question. I'll let Madhav Vasanthavada who is our Chief Commercial Officer, address that. But before I let him speak, I'll just reiterate that with the centers of excellence, where pz-cel would administered to patients. We've already started a volume of work, working with multidisciplinary teams in those centers just to make sure because there's a lot of contracting and agreement work that takes place. They have to develop their SOPs. Of course, there are certain things that can only be triggered upon the label being available because the label will have some specific instructions as well, and that has to be incorporated into their systems. So Madhav, go ahead and outline what work can -- is already happening and can continue to happen prior to even the approval -- new approval timing.

Yes. Thanks, Vish and thanks Ram for the question. Yes, as you outlined, in some of these activities that we have already initiated vis-a-vis site onboarding, they take several months. And on our previous call, we mentioned we have started the contract review process. So this only positions us to be able to be fully prepared as much as we can ahead of getting the prescribing information, potentially be ready and train the centers as well as potentially increase the number of centers that have expressed interest in having pz-cel onboarded at their facility. So I think the timeline for the -- this positions us better versus where we were prior as well as on the payer side, it also gives us the opportunity to get in front of more payers and raise the awareness, which we have been making a lot of really good progress over the last several weeks. So that sets us up positively. And just one last thing with regards to the opportunity itself, we had a few phone calls between last night and today. And there is a clear unmet need that we continue to hear about options, especially an option that can give a durable long-term healing. And that's what we are seeing with pz-cel with one application just to be able to reduce the pain as well as years of healing. So we are -- we continue to remain confident with regards to an unmet need here for pz-cel, and it only positions us better coming forward.

[Operator Instructions] Your next question for today is from James Molloy with Alliance Global Partners.

Thank you for all the transparency on what's going on. On the review, at what point will you guys know -- I know that you suggested that potentially third quarter should be able to get all the answers back to the FDA. At what point will you know that if you're on track to hit that or not? And then I guess maybe out of -- [indiscernible] ask for an AdCom to come in again with this -- with the CMC, is that most likely still off the table?

Thank you for that question, Jim. So the first question, which is the confidence on what's -- when do we know that we're hitting the third quarter deliverables, right? As I mentioned as well as what Brian mentioned, a lot of these work streams are already ongoing, and we're tracking those deliverables closely. A lot of them are actually reading out by May, June, some getting into July. And we will closely monitor them. As I said, there's a hierarchy of deliverables, some that are check the boxes and some that are more scientifically intricate. So our laser focus and keen follow-up is on those, the second latter bucket that I just mentioned. And we're making sure that things are all going as per plan. The advantage or what favors us is the fact that nothing is new in the sense we have had a system of releasing drug product through all these years. And we still continue to treat patients in our Phase 3b study. So a lot of what we need to deliver are tweaks rather than new developments. And therefore, we feel fairly confident that these tests will come into place. Of course, there are a couple that -- like I mentioned, the identity assay, which is idiosyncratic to our product, and there's some development that we've already done and started talking to the agency. So it's a continuous process. We're going to be monitoring every week and there are deliverables in May, there are deliverables in June. If something happens such that there's any one particular work stream that will spill over in time. And if that questions our third quarter submission, obviously, we will communicate that as soon as we learn that. But we currently don't see any such examples. So I'll put it right there. Your second question was about an AdCom. So here is something that we clearly know. The FDA did not plan for any AdCom as they had communicated both in the mid-cycle review meeting as well as the late-cycle review meeting. So there is no AdCom, there's no REMS. And some of the other positives that we missed is there is no potency assay questions in the list that we've received. And as you may remember, the pre-BLA meeting, the biggest topic of discussion was our potency assay. So we have done a lot of work already checked off. And so that is all invisible because we're just looking at the tip of the iceberg of those few items that are in the CRL deficiencies. So we feel pretty confident. And I'll take that opportunity when I say CMC only, I'll take the opportunity, our -- Kate Imhoff, our VP of Regulatory, did a quick analysis of CRLs that came out of BLA submissions in 2020 and 2021. And there have been a total of 17 CRLs, 5 were clinical in nature and 12 were CMC in nature. The 5 clinical ones, they still haven't been approved, whereas of the 12 CMC-related CRLs, 11 have been approved, that's more than 90%. And anybody can go into those records in the pink sheet or even FDA records and find out these metrics. I'm not talking about biosimilar submissions. These are NBEs. So if you look at those statistics, that also gives you some sense for those of you that are doing models and everything and want to know a probability of success plug, these are the data sets that inform that. I hope that helps put some perspective, Jim.

Absolutely. It's never good to get a CRL, of course, but a CRL just on CMC is certainly very manageable and a delay of 6 months. I don't think anyone's valuing this company on the first 6 months of launch of the process -- perhaps compound. One question actually. How is the early launch of VYJUVEK? How has that helped inform your guys' plans for the launch? Now you've got a little more time to sort of bake in what they've been doing over there.

Yes, great question. Madhav, can you please answer that one?

Yes. I mean I think, Jim, early launch of VYJUVEK, certainly, we are tracking, right, that there are patients who have been placed on this therapy. And that yet again, positions us well, at least from a payer standpoint because all the insurance-related and copies of genetic report, all of that is being produced and patients are being identified. With regards to the enthusiasm, there is -- there are patients getting on this therapy, but we are also hearing from physicians that there is a need for durable options and the durability that is seen with VYJUVEK, it really depends on patients to patients with some definitely responding better than the others. But for pz-cel, our ability to cover vast surface areas in a single application and have years of durable option is something that each and every physician that we have spoken with as well as the patients we have talked to, they are impressed with the clinical outcome data, and many of them have access to how soon they can get pz-cel option. So I think VYJUVEK clearly has a place, and we think pz-cel has a much stronger place just because of the nature of this disease where there is constant wounding that happens, you need a durable option, which is what pz-cel can deliver.

Your next question is from David Bautz with Zacks Small-Cap.

Just a couple for me. The first one is, I'm curious what the overlap was between the issues identified in the CRL versus the issues that were identified on the Form 483 during the FDA's inspection? And do you have any insight on to why the FDA couldn't just extend the PDUFA date as opposed to issuing a CRL?

Yes. Thank you for that question, David. So your first question is what's in the CRL versus what's in the 483 is an overlap. There were 5 observations in the 483, and there are 2 that are primarily outstanding and were ported on to the CRL list through the IR process itself. So the CRL items covers those that came out of the 483. So it's comprehensive. That's a super set. I hope that addresses the first question. The second question was, why not a PDUFA delay via CRL, right? I think it's purely a timing question because if you look at our therapy, this is almost like reviewing 2 BLAs at once because the drug substance retroviral vector in itself is a drug, and then you have the drug product, which is the patient's skin sheets that we engineer. So the vastness or monumental nature of the review brought up some of these information requests a little late in the process, I believe. And we agreed to provide the data, not the full validation reports, but something to the FDA even before the PDUFA date, but it was really a timing issue. If -- this is our speculation, of course, if instead of mid-May that we propose we'll provide some data in response to the IRs, if we had provided in April, this may have been either a PDUFA extension or even an approval by PDUFA date with considering those as post-marketing commitments even. So that's our understanding on why this wasn't a PDUFA delay because the PDUFA delay typically it seems like it happens in response to receiving data and the agency making a determination that time is not enough. But we're fairly confident that in the next 3 months, we will be able to review it. So take a 3-month extension. So in the absence of this data already in their hands, I believe, might have made the difference between a delay versus a CRL, I hope that helps.

We have reached the end of the question-and-answer session, and I will now turn the call over to management for closing remarks.

Thank you so much. Thank you, everyone, for joining us for today's call. We'll talk to you again soon. Thank you.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.