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

Yes, yes, yes. No, great. Very thoughtful.

I have some updates I want to talk to you about. We'll chat later about other stuff. Okay. Yep, yep. Great. Thank you all for coming to the annual Morgan Stanley Global Healthcare Conference. My name is [ Rak Bian ]. I am the head of West Coast healthcare investment banking for Morgan Stanley. It's a pleasure of hosting the Abeona Therapeutics management team today. We'll go through a few questions recognizing that this is the first time Abeona's at our conference, would love to maybe start with a round of introductions.

Thank you so much for having us, [ Rak ]. I'm Vish Seshadri. I'm the President and CEO of Abeona, and it's a pleasure to attend the Morgan Stanley Conference. This is a very important year for us, the first full year of launch since we got our first approval. So very excited to be here.

Thank you, [ Rak ]. Madhav Vasanthavada, I'm the Chief Commercial Officer at Abeona.

Great. So maybe just to start with some high-level questions about Abeona, just so that the audience here and those listening in can get a better sense and hear from you. Abeona has made the transition from being a development stage biotech now to a commercial stage company, and congratulations. What has been the most different or most surprising about...

operating a company on the other side of approval? Yes, thank you for that question. In fact, just to level set, our approval happened last year and we really launched this product in December when we treated the first patient with ZEVASKYN, which is an autologous cell-sheet based gene therapy for patients with recessive dystrophic EB, a connective tissue genetic disorder. If you look at, I think that the launch itself, a lot of the transition that you see from being an R&D company to a commercial stage is what we would expect in the natural course. Madhav and myself, we have a lot of launch experiences in our past, including cell therapies such as these. And what you would normally expect is we've grown the company from being an 80, 90 people R&D stage company two, three years ago to now we're about 250 people with GMP manufacturing and supply. As you can imagine, that in itself is a little bit of a cultural shift because our day-to-day is focused on launch performance and such indicators, moving from a data generation kind of a remit, right? But that comes with a little bit of a cultural shift, but what has been the constant is with our teams and our culture is the focus on the patient. And now that we have an approval, we feel that responsibility, making sure that the benefit from this drug is going to be, and every time there's a patient at our site or in a conference, all our employees watch with the same spellbound attention as we always do, and that's really of the most motivating events for us. So that hasn't changed. I think what is different, when you talk about an ultra-rare disease plus an autologous cell therapy with an 84-hour shelf life with a qualified treatment center requirement of a new team, that multidisciplinary team that you need which did not pre-exist. I think it brings with that some unique features of launch that you may not have seen, I think that's really what's unique, and there's a lot of learnings, and we're very excited to talk about it. But given where we are with the third quarter really from launch, I think we're laying some important elements of foundation right now. And things are looking good. We're very happy where we are. We are and that is important.

Great. Can you just tell us about a little bit around the indication and what...

the current treatment paradigm and the patient journey? The indication really is, you know, this is a cell sheet-based gene therapy. This is a connective tissue genetic disorder where patients are missing a functional gene for collagen 7. Collagen 7 is that glue that basically keeps skin intact, and the skin is two layers, right, and it's tethered, the two layers are tethered in normal skin, and you lose that integrity in patients that have the deficiency of collagen 7. So what happens over their lifetime is they have blistering and wounding of skin, so the integrity of the skin is lost, and that leads to a lot of complications. They have large wounds that become chronic over lifetime, infections, sepsis, nothing is normal in their lives and it is there 24/7. They have to live, this is not episodic, they have to live with these wounds all through their lives and three, four times in a week they have to undergo wound dressing changes that take six, seven hours and they have to put bleach in the bathtub and there is so much procedural burden for patients and their families caring for these patients. And over their lifetime, they develop complications such as squamous cell carcinomas or sepsis. And for these reasons, you do not see these patients often live beyond their 30s and 40s. So that is the kind of, you know, morbidity and mortality that the disease inflicts on these patients. Right. And how, what treatment options are currently available for these patients? For the longest time, these patients have had to rely on antibiotics, bandage changes, really nothing that addressed the root cause of genetic deficiency. In the last few years you're seeing genetic medicine make an impact in this disease area, replenishing collagen. Ours, um, is the, you've had topical applications where the gene is supplied as a temporary basis where, you know, as an episomal vector, uh, which is, has to be reapplied, and that such therapies have existed. ZEVASKYN is the first autologous, uh, cell-based. We have a new treatment sheet therapy where we're actually converting a patient's own cells into collagen manufacturing factories and putting it back on the patient as a one-time application for these wounds that provide multi-year wound healing and pain reduction that was presented at the SID conference from a single application. So this is really game changing for these patients because once you've grafted and they take, it's a multi-year effect. So that's really the value proposition that's unique with ZEVASKYN. Great. And the other product on market is marketed by...

by a company called Krystal Biotech. They're about an $11 billion company. Now, in terms of kind of their application and the therapy, what are some of the, I guess to say, what is your, ZEVASKYN's differentiation? Yeah, we, as well as the KOL community and patients, right, everybody that's in this disease space, pretty much unanimously will agree that the two therapies serve different types of purposes. It's not ZEVASKYN or VYJUVEK. We need these two as well as even more therapies to come into space because you have wounds that are of different nature. So once you have, this is a weekly application, what you have with VYJUVEK, right? You have to, week after week, you have to apply. Over time, you may be able to heal wounds, but then after you heal a wound, you can go to the next wound and treat that. And so it's a different way of looking at the problem where you have large chronic wound areas, you cannot cover, you need a lot of coverage, then you need to go for something like ours where we can, you know, every round of manufacturing, each sheet of ZEVASKYN gives you about 40 centimeter squared area and our batch size is up to 12 sheets. So you can imagine that you can cover a vast area in a and one-time treatment, and it's not a weekly application. After you're done, you're looking at all the data we've generated from our clinical studies are from a one-time application for any given particular wound. So that's a very different type of treatment. So you can imagine that you're going to need both types of therapies for different types of wounds, but a lot of patients who have recessive dystrophic EB have contiguous and large areas of wound to be healed. So it's not going to be one versus another, you need both therapies.

Yes, based on the intuitively, what the different applications would imagine that you have at the edge, as you mentioned, on the durability side of the equation.

Absolutely. And if you look at even our commercially treated patients, they're all pretty much prior treated with VYJUVEK. I don't even know if we have a VYJUVEK naive patient in our commercial setting. So that unmet need basically is underscored by just that fact.

Yes, great. I think that's a point that people probably don't fully appreciate. Thank you for walking us through that. Now heading in, shifting gears a little bit into the commercialization. Now what have you learned from the launch? What will it take to really commercialize an individualized cell-based gene therapy, not just scientifically but operationally?

Yes, I think this is a very important question because we are learning from the launch. I think the unique features that I mentioned, the qualified treatment centers that we need for a therapy like this. It's not only an autologous cell therapy in an ultra-rare disease, but it's also something that has an 84-hour shelf life. And qualified treatment centers, it's a finite universe of centers where multidisciplinary talents come together to form a team which did not preexist. So we have had to create that team that has the surgeons, the anesthesiologists, the EB physicians, all knowing how to care for EB patients. When you put those two requirements together, basically what it necessitates is a very coordinated, ultra-coordinated patient treatment journey where before even you undertake a patient and take a manufacturing slot, you need all these different actors to commit their times at certain time points and lock that in before you can take, you know, it's almost like a solar eclipse needs to be aligned before we can take a manufacturing slot and everybody understands. So that's the one unique aspect of this launch that we all have to understand. The second aspect of it is, our phase 3 study of 11 patients in one site, great results, Stanford. Every qualified treatment site that we activate basically wants to replicate that success in their site. So it's almost like the clinical evidence or burden thereof is only partially addressed by a phase 3 study. You have to replicate it in a different scale here. And that is part of laying the foundations, which is what we're going through right now. And the third aspect is the patient-to-patient communication, because these patients have a very strong network. And patients rely on patient testimonials to see if this is the right therapy. So I think that is also another unique aspect of our launch, where we have a strong, tight-knit network of patient ambassadors who've been through our therapy, either in the clinical studies commercial setting and they're sharing their experiences with other patients, when you look at all these types of factors, what it means is this launch is going to be atypical in that you need a pretty good timeframe for foundation setting. It's not like an off the shelf therapy where you open the flood gates and everything is going to flow gushing out. It's going to be set the right foundation, activate as many sites as we need to, let every site accrue that experience, and let that be shared across. When you do that, you're really launching at that time, right? So that has to be appreciated.

Got it. Thank you. Now, you had a great announcement today. It looks like you have added a new treatment center, so congratulations on that. And can you talk about how many qualified treatment centers now you have on boarded? And now, as the network expands, where's the principal bottleneck shifting? Is it patient identification? Is it referrals, onboarding, hospital onboarding, scheduling, reimbursement, or manufacturing?

Yes, definitely it's great news for these patients, especially in the Florida area and the entire Southeastern United States, to have another center, University of Florida. It's a good institution, you know, they have an EB clinic and well-coordinated. It's important to get these centers on board because these patients, as we talked earlier, they are living with so many comorbidities, they are looking for centers that they can trust to get a surgical application. And so that's really been on our ramp. And in terms of sort of the bottlenecks, as you mentioned, we're looking at a lot of. It's not a bottleneck. We wanted to get seven centers onboarded this year. Now we have more centers that are coming onboard. And to us, we look at that as a long-term sort of a leading indicator. The more centers you have, naturally, you'll have a greater access to treatment. But for us right now, we are focused on getting the existing centers that are already activated to start treating more patients. It's always a little bit of a learning curve, institutional learning curve, to treat the very first patient in a setting. Once you have treated a first patient and once you've gone through the motions of who's doing what, what kind of contracts do you need with insurance companies and the payer and process work, you're going to get better better at it. In the first quarter we talked predominantly most of our patients, you know, we have reported so far three quarters of revenue growth, right? And bulk of those patients came from Chicago Lurie Children's and from Stanford. In the second quarter we said we have Texas that has biopsied a patient and CHOP has biopsied and treated a patient. So that's exactly what we are focused on is getting more centers, you know, to understand where the bottlenecks lie. And the bottlenecks lie in different places with different institutions due to just different payer mix that they have. And our role is we are trying to help cross-pollinate them and share the learnings so that, you know, we can do things differently and better. And let's see, our goal is to have some of these treatment centers that haven't treated yet treat as soon as feasible.

Okay, great. Thank you. So, as you mentioned, it's an iterative process. You're constantly learning. What have you learned from the first commercially treated patients and their caregivers that has caused you to change or refine the launch strategy, if at all?

What we have learned, what we have reinforced really is the type of that this therapy has made, you know, not to repeat what we have said consistently, but sometimes it's important to remember the impact that this therapy has had. Recently we've had patients from our clinical trials come to our company and share at the town hall multiple years later as to how the wounds have healed. So we are arranging multiple sessions with these patient communities so that they can learn from each other, especially the initial set of patients that have gone through the process, having them talk to additional patients who may be wanting to learn more about what the process entails, who may be anxious about what does biopsy really mean and what does the procedural So that is one part of the learning. The other part of learning where we are realizing as, you know, that this is certainly a cellular therapy makeup. It's not a prescription and a pharmacy product that you can go and take the product. I think we realize that very well. But where, what is new here is that it's an ultra-rare disease condition. So there are only a finite number of treatment centers, and you're trying to bring an EB medical dermatologist together with a surgical dermatologist, along with a cell and gene therapy expertise within an institution. You're trying to mobilize three different parties along with the patients and the families. So that particular learning curve as we talked more in detail at the previous earnings call, it requires time, especially since the expiration is only 84 hours. So as the centers start reading more and more, then, you know, know as to, okay, what can we do differently and better? We've also learned that some of these patients are fragile in nature, and so we just need to have more patients actively identified on top of the funnel so that even if there is any attrition that happens in the in the weeks due to factors beyond our control, we are able to, you know, keep the patient flow and the cadence going. So those are really the more important ones and, you know, we but we are pretty confident that this is just getting better, especially as more centers come on board, that patients will begin to flow through.

Great, thank you. How should we think about what the potential best leading indicators of launch momentum may be?