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

Good day, and welcome to the Abeona Therapeutics conference call to review the recent U.S. FDA approval of ZEVASKYN. [Operator Instructions] As a reminder, today's conference is being recorded. I will now introduce your host for today's conference, Greg Gin, Vice President of Investor Relations and Corporate Communications at Abeona. Please go ahead.

Thank you, Tom. Good morning, and welcome to our conference call to discuss the recent announcement regarding approval of ZEVASKYN by the U.S. FDA. During this call, we will refer to the press release announcing the FDA approval, which is available on our corporate website at www.abeonatherapeutics.com. We anticipate making projections and forward-looking statements during today's call, which 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. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those outlined in our Form 10-K and periodic reports filed with the SEC. These documents are available on our website at www.abeonatherapeutics.com. Joining me on the call today with prepared remarks are Dr. Vish Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer and Head of Business Development; and Dr. Brian Kevany, Chief Technical Officer. Joe Vazzano, our CFO, will join us for the Q&A session. Please note, we're also reviewing a slide presentation as part of our webcast today, which will be posted to the Abeona website after the call. And with that, I will now turn the call over to is Vish Seshadri to lead us off. Vish?

Thank you, Greg, and thank you, everyone, for joining the call this morning. We are extremely excited to tell you that our lead asset ZEVASKYN, gene-modified cellular sheets, also known as prademagene zamikeracel or pz-cel has received FDA approval as the first and only autologous cell-based gene therapy for the treatment of adult and pediatric patients with recessive dystrophic epidermolysis bullosa or RDEB. This is a momentous day for Abeona for the cell and gene therapy field, but most importantly, for the people and community impacted by RDEB. As we kick off today's call, I want to share this video from Noel, a patient who received ZEVASKYN as part of our clinical studies. She and her family shared with us the impact that ZEVASKYN has had on their lives. Here is Noel's journey in her own words. [Presentation]

Noel volunteered for one of the ZEVASKYN clinical studies and the treatment has been a part of her life now for the past 4 years. We had a chance recently to connect with Noel, and she told us that ZEVASKYN provided her the opportunity to unlock new possibilities in her everyday life, including simple things like updating her wardrobe and wearing more skin-bearing clothes that are trendy and age appropriate without feeling self-conscious. She is a thriving 24-year-old young woman working full time at a high school in Southern California, and she is in her first year of a masters program. The approval of ZEVASKYN represents a pivotal moment in the treatment of RDEB, answering the call of people living with the clinical, economic and human impact of this devastating disease. We have heard from the RDEB community that there is a persistent unmet need to meaningfully heal RDEB wounds, especially those that are chronic and prone to infection. Through a single application ZEVASKYN can provide people with RDEB the opportunity for significant wound closure and pain reduction in even the most severe wounds. The FDA approval of ZEVASKYN is based on the pivotal Phase III VIITAL study, a multicenter randomized intra-patient control study that met its 2 co-primary efficacy end points demonstrating statistically significant, clinically meaningful improvements in wound healing and pain reduction in large chronic RDEB wounds at 6 months. The clinical development experience with ZEVASKYN also includes the Phase I/IIa study, a single-center open-label study in 38 chronic wounds across 7 patients that showed a single surgical application of ZEVASKYN was associated with long-term improvement at treated sites over a median follow-up of 6.9 years, ranging 4 to 8 years. Across both clinical studies, ZEVASKYN was well tolerated with no treatment-related serious adverse events observed to date. We are grateful to the patients, their families and caregivers for their support of ZEVASKYN. We express our gratitude to Deborah of America for their unwavering support throughout the development journey, in particular, for their interactions with the FDA in support of ZEVASKYN and on behalf of the EB community that have helped make today's regulatory approval possible. We are also thankful for the clinical study investigators and the study site personnel. This approval is not just a win for the RDEB community, it's a major milestone for Abeona. It represents the culmination of tireless effort and dedication during a long and at times challenging journey of groundbreaking research and development spanning more than 10 years. I'm deeply grateful for the incredible team at Abeona. To our leadership team and employees simply thank you, your perseverance and execution have been instrumental in achieving this historic milestone during a period in which the biopharma industry has faced unprecedented challenges, you have successfully navigated regulatory hurdles, including an early clinical hold and a complete response letter, faced financial constraints and experienced leadership changes. Yet through it all, your commitment and determination in service of patients with RDEB and other serious diseases never wavered. We look forward to providing the RDEB community with access to now approved ZEVASKYN. Before closing, I want to note that together with the approval of ZEVASKYN, we have received a rare pediatric disease priority review voucher or PRV. The approval of ZEVASKYN marks the next phase of Abeona as a commercial stage company. And looking ahead, we anticipate ZEVASKYN becoming the primary driver of growth and profitability for our company for years to come. In the near term, we're focused on the planned launch of ZEVASKYN in the third quarter of 2025. We have a profound sense of hope for a future where Abeona continues to make a meaningful difference in the lives of patients, and we remain committed to bringing novel therapies to patients with serious diseases where significant unmet need exists. I'll now hand the call to our Chief Commercial Officer, Dr. Madhav Vasanthavada to share more about our on how we are going to make ZEVASKYN commercially available in the U.S. Madhav?

Thanks, Vish, and hello, everyone. I'll start by saying we have been preparing for this moment for nearly 2 years, and we are ready to go. In fact, shortly after this call, both ZEVASKYN.com and Abeona Assist, our comprehensive patient support program will go live, providing information on how to access ZEVASKYN. Today marks the beginning of a new chapter of hope in the lives of all adults and children living with recessive dystrophic EB, and we are committed to making ZEVASKYN available to them. Today also marks a momentous occasion as we proudly unveil our brand campaign for the now FDA-approved ZEVASKYN, strong bonds stand the test of time. Our tagline strong bonds stand the test of time reflects not only the enduring love within families facing recessive dystrophic EB, but also our unwavering commitment to this community. This campaign featuring the radiant joy of a young girl and ZEVASKYN patient, Giovanna, and her mother Jessica, beautifully captures the hope that ZEVASKYN offers. As Vish mentioned, since treating the very first patient with ZEVASKYN more than 10 years ago at Stanford University, it has taken an ecosystem of the brilliant minds of scientists and clinicians the unwavering support of patient organizations, commitment of our investors and most importantly, the dedication and sacrifice of patients and their loving caregivers. We've collectively have stood the test of time. And today, we celebrate the FDA approval of ZEVASKYN, strong bonds. ZEVASKYN is made from a patient's own skin cells to deliver remarkable wound healing even in the most burdensome large chronic RDEB wounds after a single surgical application. I want to share this video from Giovanna. The family travel all the way from Brazil to enroll their daughter in ZEVASKYN clinical studies. Her family shared with us how RDEB took the life of their oldest daughter, and so they were determined to find treatment options for their youngest child, then 6-year-old Giovanna. Here's a look at their journey with ZEVASKYN. [Presentation]

Just like Noel, who we featured at the start of today's call, and Giovanna, before they started their journey with ZEVASKYN, there are many patients in great need for therapeutic options that can reliably close multiple wounds, even the tough ones with one treatment application and provide relief from the perpetual burden of chronic wound care. I also want to share with you today the launch of Strong Together network. It consists of patients and caregivers who have received treatment with ZEVASKYN or have cared for someone who has received treatment. We are grateful to the patients and caregivers who have already enrolled in the Strong Together network and want to share their ZEVASKYN treatment experience with RDEB patients and caregivers. This community is amazing, strong bonds. It is clear to us that the opportunity to do good with ZEVASKYN is immense. And so is the commercial opportunity. As we have previously described, we anticipate about 1,500 treatment opportunities with ZEVASKYN in the U.S. based on our current estimates of approximately 750 RDEB patients with burdensome wounds who we believe are potential candidates for ZEVASKYN. Beyond the clinical burden, there is an enormous cost of caring for RDEB wounds lifelong. Based on a systematic literature review, RDEB patients have a considerable wound burden with 60% reporting that wounds cover more than 1/3 of their body. Patients and caregivers spend up to 4 hours daily in wound dressing changes. The estimated retail cost of specialized wound care for RDEB patients can be more than $80,000 per month as reported by Deborah of America or as high as $1 million on an annualized basis. Beyond the economic cost, the humanistic burden on families is immense. Divorce rates are high, reasons commonly cited by divorced parents are their child's disease and the associated financial burden. Furthermore, health economic studies have modeled that the expected lifetime cost per patient on other recently approved dystrophic EB therapy can amount to tens of millions of dollars. We believe ZEVASKYN brings tremendous value. We just heard Noel, Giovanna and their parents describe the impact they have experienced with ZEVASKYN, and there are many such stories where ZEVASKYN has been game changing. The wholesale acquisition cost of $3.1 million takes into consideration the holistic value ZEVASKYN brings not only to the patients and caregivers, but also to the entire health care system. Up to 12 ZEVASKYN sheets can treat not just small recurring wounds, but large regions of the body in a single application. Chronic wounds like those in the clinical trials that had never closed for multiple years can now be treated giving patients more possibilities in life. As a testament to our confidence that the long-term results from our clinical studies will extrapolate to the real world setting and to further expedite patient access, we are committed to working with payers on outcomes-based agreements that stand behind the promise of ZEVASKYN. Under our proposed outcomes-based agreement model, Abeona will reimburse to a participating payer a percentage of the product cost if a patient requires a retreatment of a previously treated wound within a 3-year period. In addition, for that subsequent treatment, a nominal rebate will be made to the payer if the patient returns for any reason within that 3-year period. We have done extensive market research on ZEVASKYN pricing and have pressure-tested our outcomes-based offering with major commercial payers as well as with the lead EB physicians at our qualified treatment centers and their feedback has been very encouraging. Beyond the long-term value, and the innovative risk-sharing approach, our list price accounts for the high cost of developing ZEVASKYN and running a GMP quality autologous manufacturing process catered to each individual patient and managing a complex supply chain and patient operation in the commercial setting. The beauty of our process is that we use patient's own skin cells as a starting material, gene modify them and in the end, give back ZEVASKYN sheets that now can express functional collagen and thereby address the root cause of the disease at the treated site. Once ZEVASKYN is selected as a treatment choice, an order form is submitted to Abeona and the payer authorization process begins. After securing payer approval, a biopsy is scheduled. Biopsy collection typically happens in an outpatient setting of the qualified treatment center, after which the patient returns home. The biopsy sample is then shipped to our Cleveland facility for a 25-day ZEVASKYN manufacturing process, following which it is hand delivered to the QTC by Abeona quality personnel. Patients returned to the QTC where the up to 12 collagen expressing ZEVASKYN sheets are applied to the debrided wounds under general or appropriate anesthesia. ZEVASKYN sheets may be applied to multiple individual wounds or be joined together to cover large areas of the body. Post application, the treated site is left undisturbed for 5 to 10 days before a patient is discharged. So this is a onetime process to get treatment with the product, and all clinical data generated has been based on a single treatment application. Regarding the patient experience, a patient survey conducted 2 years after the Phase I/IIa study of ZEVASKYN showed that all 7 participants, each of whom received up to 6 sheets in the clinical trial would undergo ZEVASKYN treatment again for their untreated wounds and recommend the procedure to other RDEB patients. In fact, in our ongoing Phase IIIb trial, a majority of our patients are repeat patients who chose to return for treatment of their previously non-treated wounds. One patient has even come back for a third round. The team at Abeona is fully committed to delivering a reliable ZEVASKYN treatment experience for all those involved. Together with RDEB patients and caregivers, we have designed a comprehensive patient support program, Abeona Assist, which will go live today. Our dedicated patient navigator will serve as a contact throughout the entire ZEVASKYN journey and will tailor support to meet patient specific needs. They will provide information on how to access ZEVASKYN as well as review coverage, provide financial assistance and travel support for all eligible patients and caregivers. These patient navigators are also available to meet with the patients and caregivers on site at the qualified treatment center to help with logistics and ensure a seamless experience. Abeona Assist can also connect interested patients with strong together network that we described earlier. I must add that all the patients and caregiver testimonials that we have received these patients and caregivers have not received any payment from Abeona and that individual results may vary. For more information on ZEVASKYN, physicians, patients and caregivers can talk to Abeona Assist patient navigators at 855-ABEONA-1 that is 855-223-6621 or e-mail at [email protected]. People can also visit www.ZEVASKYN.com for information on the product and how to access it. Now with FDA approval, we want to make ZEVASKYN available and accessible as soon as possible. With respect to our launch readiness and expectations, as indicated in our previous call, we are in dialogue with 5 well-recognized epidermolysis bullosa, our EB centers to onboard ZEVASKYN. These centers are geographically dispersed each with a large catchment area of patients and collectively they treat a sizable portion of RDEB patients. We expect the pace of site activation will vary from site to site and based on our experience with other cell and gene therapy launches, site activation goal is to activate the target centers during this launch year that is 2025, so that centers can begin treating patients with ZEVASKYN in the third quarter of this year. We plan to announce the names of our qualified treatment centers upon their activation. After activation, a site can begin to schedule patients for biopsy collection and treat patients approximately 25 days later. Due to the necessary site activation steps and to allow for sites to build their initial experience with ZEVASKYN, we expect to see a gradual ramp up in the initial number of patients treated with ZEVASKYN this year. We are anticipating 10 to 14 patients to be treated with ZEVASKYN in 2025. And as sites become more experienced, we believe there will be an acceleration in 2026. So from an overall demand standpoint, we are confident of ZEVASKYN's growth potential and longer term, we intend to modify additional treatment centers while also driving patient referrals into the QTCs from the community practices. With that, I would like to hand the call over to Dr. Brian Kevany, our Chief Technical Officer, to discuss commercial manufacturing readiness for ZEVASKYN.

Thanks, Madhav. In parallel with the gradual patient ramp-up as sites get activated and gain experience this year, we plan to ramp up our manufacturing capacity to increase launch supply. We have previously communicated that there will be a ramp-up period to get to maximum capacity of up to 10 patients or manufacturing runs per month. We estimate our initial manufacturing capacity during the early launch phase will be approximately 4 treatments per month. We plan to gradually ramp up that monthly capacity to 6 patients starting roughly at the end of 2025 to early 2026 as we work toward achieving a maximum capacity of 10 monthly treatments in the first half of 2026. We believe the planned manufacturing capacity ramp-up will sync up well with the ramp for QTCs treating our first patients during the early launch phase this year. It is important to note that we have a planned annual manufacturing shutdown for maintenance of equipment in the facility, which is standard for approved cell therapies. This planned shutdown is crucial to maintain operational integrity, regulatory compliance and product safety, and we had scheduled it during the December and January holiday time frame to minimize any temporary impact on our production capacity. We have already taken steps to enable capacity expansion beyond our current manufacturing footprint to increase production capacity for ZEVASKYN. In the coming months, we'll be assessing design plans, and we'll share more on our increased manufacturing capacity on a future call. Our long-term plan is to build manufacturing capacity to support 200-plus annual ZEVASKYN treatments by the second half of 2027. With that, I will open the call for Q&A. Operator, please open the Q&A session.

[Operator Instructions] And the first question this morning is coming from Kristen Kluska from Cantor.

Congratulations on this approval. You should feel extremely proud about getting it over the finish line. And it was clear from Noel and Giovanna stories, the great impact that this therapy is having for patients, so well done. I had 2 questions this morning. The first was just on the payer work side of things. We consistently hear from KOLs and I believe you showed the same view that this is intended to be a complementary therapy and not one versus the other. So I'm curious if payers have had any comments about supporting 2-plus therapies at the same time.

Thanks, Kristen. Let me take that. Definitely, payers do recognize the high unmet need in this area, especially for the ultra-rare disease nature of it. And we have been consistently hearing from various stakeholders, as you pointed out the need for all therapies that these patients can get just given the high burden. We've had numerous discussions with payers. We have not had any questions or pushback that one particular patient can only receive one type of therapy, especially for ZEVASKYN, when they have heard about the value proposition that it brings. We haven't seen any issues with regards to step or blocking one treatment versus the other. So far, it looks like a complementary treatment approach seems viable.

Okay. And then for the 5 QTCs, I understand that you'll provide the names once they're onboarded, but can you just give us like a big picture sense of the kind of QTCs they are? Are they higher volume centers? Are they specialized in EB in particular? And then have they been communicating that they potentially have patients within their practice that could be potential candidates for this treatment.

Yes. One -- I mean, our main strategy has been to leverage the infrastructure and the expertise these institutions have. So these are large academic medical centers, well-known EB centers that have cared for patients and geographically distributed across the U.S. These are centers that tend to see patients for a variety of procedures and routine care. And really, these are the centers where patients have trusted going to these institutions for various cares. So they tend to see patients collectively, we believe, of the 5 EB centers to have anywhere from high double-digit to low triple-digit number of patients already that these centers have communicated. So there are high volume centers. As we have mentioned in the past, about 30% -- this is really a setting where -- it's a highly concentrated patients at select centers of excellence, and we are really targeting these centers that have high organic pool of patients.

And also, if I can just add one more thing to what Madhav articulated. These centers have specialty in not just EB care, but also anesthesiologists as well as surgeons the overall team that understands care for such other patients as well as the resources like operating room and things like that. So it's really multiple different factors that went into selecting these qualified treatment sites.

Yes. And just one add to that is beyond EB, they're also well positioned for cell and gene therapies. So these centers have the large infrastructure then and have multiple recently launched cell therapies and gene therapy. So they understand sort of the overall process just outside of EB even on how to procure such kind of treatments and deal with payers.

Your next question is coming from Maury Raycroft from Jefferies.

This is Amin on for Maury. And many congrats on the approval. Two questions from us. First on the commercialization process until 2Q. Can you walk us through the commercialization process from now until the 3Q that you're going to start enrolling patients. What part of the work have already been done regarding the training and onboarding and what still needs to be done until 3Q? And the second question is about the safety information. Can you provide more detail on the safety mentioned in your press release, specifically on the allergic reaction and the potential for cancer development. I recall none of the wounds treated with pz-cel developed any squamous for carcinoma?

Yes, I can take the first question and then Vish if you'd like to take the second one.

Okay.

So for the first aspect, in terms of the next steps with these treatment centers, I mean, we are in active discussions of going through the process of ZEVASKYN. Now that we have the approval, the next steps will be to obviously train them on the actual product and the product insert based on the label that we have. But in addition to that, the sites typically go through their internal approval process, a P&T review that happens at the site. And also, there is an aspect of a long-term follow-up or a registry protocol that needs to be instituted at these sites. It's a onetime process so that these centers have a clinical trial agreement in place for caring for these patients for long-term safety follow-up for up to 15 years as the FDA requires that. So that's going to be a part of the protocol that will be in place at these centers. And once those things are done, then the last part of it is contractual paperwork which are the agreements between Abeona and the institution with regards to the trade policy and procurement of the product and going through the product and logistics flow. These are the steps that are typical for any cell and gene therapy. And like I mentioned earlier from our experience, every site is different in terms of the speed with which they act, but we think usually it takes around 2 to 3 months of time to get sites activated.

Yes. And regarding your question about safety, let me start by saying that the safety profile of ZEVASKYN is very favorable in the RDEB community with respect to the -- both the Phase I/IIa study as well as the Phase III study with now multiple follow-ups for all these patients who have been treated. And for the earlier studies, a lot of years of accumulated experience, we have not had any treatment-related serious adverse events in all data points reported to date, which is great to see as a trend. And specifically to address, we -- because of the type of technology that we have, which is retro -- gamma retroviral transduction, we closely study things like [ ZERV ], replication-incompetent retrovirus, for example. And we haven't seen any occurrence of that in over 100 data points that we've collected. And we also look at is there any insertional oncogenesis that leads to cancers. And we've not seen any cancer occur at sites that have been treated with ZEVASKYN on the patient's body, which is great to start with in terms of our own clinical profile. Now what you're referring to is the potential for cancer, it's called insertional oncogenesis, which is a concept which all therapies that use integrating vectors, viral vectors that integrate into a host genome, which is actually the basis of our long-lasting effect of durability we have to be cautious that we didn't inadvertently insert the gene in any oncogenic low side, right? So that is something that we have studied extensively in terms of in vitro models as well as looking at our own patients during follow-up. And there is these types of technologies have been characterized as having the potential. But in our experience with ZEVASKYN, we haven't seen that. Also to add to that, we have very stringent controls on the proviral genome copy number, and there's an upper limit to that. And that is well below the accepted thresholds that have been set for autologous therapies that use integrating viral vectors. So if you look at the baseline level of cancer risk in these patients, the cumulative risk of developing squamous cell carcinomas for these patients with moderate to severe RDEB by the age of 55 is close to 95%. So that's almost like a given. These patients will have squamous cell carcinomas from disease, whereas if you look at the chances or what we observe from treating with ZEVASKYN, any oncogenic incidents is 0. And it's really a warning that such technologies have the potential and that's really what you see in the label there. So I hope I've outlined the benefit risk here. But we'll continue to monitor our patients and you're going to only see over time the body of evidence even further expand because we committed to a registry study for long-term follow-up of patients to continue to study our safety profile. I hope that answers your question.

Your next question is coming from Stephen Willey from Stifel.

Congratulations on the approval. Can you provide a little bit more granularity around the outcomes-based agreements that you talked about specifically, I guess, the percentage of costs that would be reimbursed to a payer if a patient required retreatment of a target wound within 3 years. And then, I guess, the nominal rebate that you would pay if a patient needs to come back to a center within a 3-year period. And I guess, are there any list of criteria or specifications that kind of characterize that "coming back process" for that patient within that 3-year window?

Yes, Stephen, thanks for that question. So in terms of the percentages, we are not disclosing fully, I mean, in terms of what the actual numbers are, because this is the discussion that we will have. But what I can say is that the percentages are not like systemically administered gene therapies for a binary outcome because here, you are dealing with a disease where there is severe wounding that happens in these patients, and you have large areas of bodies that you're treating. So proportionately, the rebate that we would offer to the payers is going to be substantially lower compared to what you typically see of 50% or 60%, sometimes with systemic therapies. This is going to be more in the lower single digit -- sorry, lower single-digit phenomenal rebate, but more in the range of 10% plus/minus in the -- for the rebate agreements that we would be paying if an outcome were to be triggered within the 3-year period. Did I answer your questions for the rebate for the outcome as well as for the nominal?

Yes. Yes. That's helpful color. And then just curious if this kind of 3-year surveillance window that's established under the outcome agreement, if you think that will it all impact the kinetics of patients seeking a second treatment for a different wound?

We don't think so. We don't think so. In our clinical trials, let me again say, as we've discussed also in the past that all of our clinical data that we have so far is from a single treatment, right? And we have followed these patients for a median of 6.9 years. Even though patients have come back for a second treatment, they were for non-treated wound areas. So in the real world, though, I mean, that's exactly why we want to be more responsible and extend this kind of a risk-sharing model because we are confident of the outcomes that we will see. But in the event that it doesn't happen and the outcome were to be triggered that we want to stand behind. We don't think that because of that, we will see more patients coming within a 3-year versus fewer. So that's something that we will only see over a period of time. But we do anticipate that as patients will recover, we don't think that within 1 year period that patients will come back for a second treatment from -- at least from our clinical trial experience.

Yes. And just to clarify, just so there's no doubt about this, Stephen, if a patient comes back for treatment of newer wounds within the 3-year window, a second time, that is a separate billing unit in itself. And what Madhav mentioned is based on the timing of their return, if it's within 3 years, there may be a nominal -- the second bullet that he explained, maybe a nominal rebate. But just to be clear, the second visit for newer wound is a new billing cycle in itself.

Yes. Understood. And then maybe just lastly, I think you have previously given kind of soft guidance around a steady-state gross margin in the 85%, 90% range. And I think the gross to net obviously dependent upon patient mix, but kind of in the mid- to upper teens. And just kind of curious if given the clarification now on pricing and the reimbursement protocol if those things have kind of changed at all in a meaningful way?

Yes, Stephen, it's Joe here. No, they have not changed.

And Stephen, also in the previous discussions, we have guided that 3 to 5 patients a month is the breakeven. With the pricing story now, you are closer to 3 in terms of what's the breakeven for the business as a whole. And of course, when we hit our max operating capacity with the current GMV space, which is 10 patients a month kind of run rate, you're going to see, obviously, the COGS percentage shrink significantly.

Your next question is coming from François Brisebois.

Congrats on the progress here. This is great news. I just wanted to clarify a little bit on the last question. So on the gross to net kind of mid to high teens that was mentioned there. Is that something -- like how do you expect that to ramp up? Or is this something with reimbursement that should be pretty steady right off the get-go here? And then I'll have a follow-up.

Yes, Frank, it really depends on the mix of patients as the initial patients mostly will be commercial payers. And then as we slowly get into the states, that's when the higher gross net will ramp up a little bit, but it should be pretty steady in that range that we provided.

Okay. Great. And then in terms of the 10 to 14 kind of patients, you talked about supply and demand here, the 10 to 14 patients by end of '25, is that 10 to 14 patients totally with revenue completely recognized kind of soft guidance? Or -- and just on that note, what are the gating factors? Obviously, you -- it seems to be more of a manufacturing thing and the patients are there, but is there anything else that you would consider kind of a gating factor to get to the numbers that you hope to get to?

So the 10 to 14 patient, François, is treated patients not necessarily revenue sort of cash flow coming in...

Just to chime in, the 10 to 14 is revenue recognized. The cash flows coming in will be later just due to the payment terms, but we do anticipate recognizing 10 to 14 patients worth of revenue in 2025.

Right, because revenue recognition happens after we have released sort of the sheets for application in the operating room. In terms of the gating factors, certainly on the one hand is supplied, but also for the sites to get ready, get activated, treat the patient, given through the patient journey and then we believe that they will have this kind of an experience. And then as a learning curve picks up at the site is when they'll begin to treat more patients. So if the patients are treating -- if the sites are treating 1 or 2 patients a month, we are already sort of saturating our manufacturing capacity, right? So that's why we think that it's going to take some initial learning curve at these centers given the sort of the patient journey and the experience before they begin to treat more.

And also -- and then -- sorry, go ahead.

One quick clarification also is that we have previously guided that hasn't changed, that we'll be starting at 4 a month kind of cadence in manufacturing supply availability and ramp it up to 10 a month by first half of 2026. And in between that, there is the shutdown that starts in December, right? That's the one month shutdown that Brian talked about. So those factors play a role in how we calculated that 10 to 14. But we're quite confident that our own monthly capacity will be hitting our max operating capacity early in 2026.

Understood. And then just the last one here for me is the 5 centers that you talked about, they seem like they've got serious numbers, you talked about high double digit, low triple digits of patients. But at peak, how many centers do you hope to have?

At peak, in the -- something around the range of 7 to 10 centers is how we anticipate this to scale and look like and we'll continue to, of course, monitor as to how these 5 centers are doing, get the right learning curve and then essentially get more centers onboarded.

Your next question is coming from Ram Selvaraju from H.C. Wainright.

Congratulations once again on this landmark milestone for the company, very important. Firstly, I was wondering if you could maybe walk us through some of the kinetics of reimbursement and payment under different scenarios. So for example, a situation in which patient is covered by private insurance, what would the negotiation process look like? And what would the kinetics of payment be? Secondly, in the context of patient retreatment. And also if you could give us some sense of at steady state, what you anticipate rebating to look like, not within the context of the 3-year monitoring period?

Sure. So for the private payers, right, we believe that this is going to be the majority of our patients that will be insured here. Private payers, we've already been discussing with them prior to approval or just about the clinical data and information. And once a patient is identified, the -- we will continue their insurance benefits and get prior authorization in parallel the institution because this is either going to be a buy-and-bill product where the institution will procure the product and then later on bill the insurance company on the back end or the qualified treatment center can procure the product through a specialty pharmacy and specialty pharmacy that we have identified as CVS specialty. So the center has the option to procure the product from CVS. And if that is the case, then the QTC is essentially doesn't have to deal with the insurance company. It will be CVS who will purchase the product, deal with insurance company and then we'll reimburse Abeona on the back end. If in the scenario of buy-and-bill, the qualified treatment center will also negotiate with the insurance company whatever their payment methodology is. And there are various schemes that the QTCs will follow for that. We expect the policies to be get published from insurance companies and every insurance company takes relating amount of times as early as 30 days to a couple of months for insurance companies to have policies in place for coverage. But in the meantime, when a policy is not published, if a patient comes through, there is a manual review process that can happen starting today, if a patient comes, then that particular insurance company, we will do a manual review process to get coverage for that patient. In terms of reimbursement, essentially, that is between the payer and the qualified treatment center. And then to your other question that you were asking around sort of the retreatment, if that particular patient comes back for another repeat treatment as we mentioned earlier, that will have its own billing unit, right, and a billing a price. If that particular patient has come back to a -- for a repeat treatment and has the same insurance provider that covered for the first product, then that payer would get a nominal rebate for the second treatment. And essentially, that's essentially how we envision this particular reimbursement methodology looks like over a period of time. Does that -- did I answer your questions or any additional...

Just to add to that, Madhav, I think the question that you asked from has components of what are our assumptions on the frequency of repeats happening as well as how strong we stand behind our product that certain outcomes-based events are limited, right? Joe can give you a little bit of -- when we reach steady state in our models, what is likely to be the gross-to-net ballpark, right? I mean, of course, we are going to learn from the launch in terms of frequencies of various events, but Joe, go ahead.

Yes. And even with these outcome rebates, even at steady state, we anticipate our gross to net margins to be in that mid- to upper teen range, including the 2 various rebates, the outcome and the additional treatment rebate. And again, as we start out with the launch, it will be on the lower end with the commercial private payers and then flipping decreasing gross net margins as we get the state Medicaid sites on board and with these additional potential rebates.

That's all very helpful. I wanted to ask a couple of other things very quickly. Firstly, in the wake of the FDA approval, can you give us some insights into how you expect to proceed with pursuit of regulatory approvals for pz-cel in territories outside of the United States as well as how the kinetics and logistics might work if there are patients located internationally who have RDEB who would prefer to be treated at a QTC in the United States. Give us a sense of maybe how might that work? And what sort of patient flows might you see from ex-U.S. demand? And lastly, if you could comment on the current situation with priority review vouchers, generally, latest sale prices as well as the degree to which you expect to see demand, what kind of demand for the PRV that you anticipate receiving and selling, especially in the context of recent FDA upheaval, does that impact demand for these vouchers?

Thanks, Ram. So I just noted 3 questions, ex-U.S. strategy and then patients willing to come to the U.S. for treatment and then the PRV sale. For the ex-U.S. plans, right? We have been getting a lot of interest. We know that there is a huge patient base with unmet need out there. And we've just been so spread thin and laser-focused on the U.S. launch, but we haven't fully vetted. I think there a lot of activities are just about starting in terms of understanding market access. And I think when you look at Japan as well as European markets, we have been approached by a lot of potential partners to -- with interest in our product as well as regulators. I presented at a conference in the PMDA representatives there came up to me and talk and said, we would really like to see a product like this in the Japanese market. So there is definitely that demand. The 2 important components to understand for us are the manufacturing model because it has to be local manufacturing. It's very -- given the shelf life of the product of 84 hours, it's going to be challenging to manufacture in the U.S. and then supply it in other geographies. So we'll have to either follow a CDMO model or set up ourselves. Canada has also expressed a lot of interest. So this is a TBD, but this is work that we're going to intensify in the coming weeks, not even months, to understand how and where we go first. There's also the option of country specific. You probably have heard that Austria is a big center for EB patients and from neighboring European countries, a lot of patients come there for care already. And so we've been -- we've had conversations there as well. So whether a certain specific country level regulatory approval, we make better sense than going all in here. I think that's part of our strategy as a beachhead. And of course, our long-term goal is to provide the drug wherever there is unmet need. On the related question of patients who want to get care by coming to the U.S., we're open. I think these will be self-paying patients. We're hearing anecdotally that such patients exist from some of the treatment sites even. And we've shown you one example in our clinical study, there was a Brazilian patient who's story you heard today. So we know that model exists. There are a lot of patients coming to the U.S. centers for care. And these will likely be either self-financing patients or in some cases, their governments actually finance the cost of care. So that is something that we're open to. And the last question that you had was about the PRV sale. I think we all recognize that the trend of PRV pricing in the last 4 sales have been $150 million or more. And we anticipate the interest in PRVs to stay strong. The only question is, do we optimize for speed or for pricing? I think we can have within certain boundaries. Our goal is to monetize within a reasonable time frame because we would like -- we want to extend our cash runway as well. And so we are confident that there is that demand, and we will prioritize speed over any other further price optimization given the future uncertainty of PRV program itself, I think that's something that's in a very uncertain space right now. But we're not going to wait for that to play out. We're definitely looking to monetize as long as we get the fair market value, which is $150 million, which is the going price now.

And this does conclude today's Q&A session. At this time, I would like to hand the floor back to Vish Seshadri for closing comments.

Thank you, Tom. The FDA approval of ZEVASKYN is the culmination of more than a decade of R&D. But today, we discuss details on how we plan to launch ZEVASKYN in the U.S. as a new treatment for RDEB patients. We believe that we are well positioned for the significant opportunity ahead at Abeona. And I'd like to thank everyone for joining us for today's business update, and we look forward to talking to you again soon. Bye-bye.

Brett, your line is live.

Vish, it's Brett Kopelan from debra of America and father to Rafi, 17-year-old with severe RDEB. I just wanted to say congratulations and thank you for from a very grateful patient community for your dedication and commitment to bringing this product to market through sometimes choppy waters. So I just want to say thank you to your incredible team. And for your willingness to embrace bringing the patient voice into the drug development pathway. So thank you. It's been a pleasure working with you. We look forward to deepening our relationship going forward. And I actually don't have a question.

Thank you so much, Brett. And congratulations to you and the entire RDEB community as well. And as you know, this would not have been possible without your support and with every step, including having those discussions with the FDA and even helping them understand what the nature of the unmet need is and what endpoints should look like. I think we couldn't ever understate your contribution. So thank you, Brett, and we look forward to bringing, delivering ZEVASKYN to all patients who need it. Thank you so much.

Good data always wins out.

Agree.

Thank you. This does conclude today's conference call and webcast. We do appreciate your participation today, and have a wonderful day. Thank you once again for you participation.