Abeona Therapeutics Inc. — Q1 2017 Form 10-Q
Reporting period: Three months ended March 31, 2017; balance-sheet comparisons are with December 31, 2016. Abeona is a clinical-stage biopharmaceutical company developing gene therapies for rare genetic diseases. MuGard is its marketed product, commercialized through licensing partners.
Financial results and liquidity
| Metric | Q1 2017 | Q1 2016 or prior balance date |
|---|---|---|
| Total revenue | $186,000 | $235,000 |
| Operating expenses | $5.470 million | $6.395 million |
| Operating loss | $5.284 million | $6.160 million |
| Net loss | $5.247 million | $5.544 million |
| Basic and diluted loss per share | $0.13 | $0.17 |
| Cash used in operating activities | $5.857 million | $2.516 million |
| Cash and cash equivalents | $63.212 million | $69.142 million at Dec. 31, 2016 |
| Working capital | $57.758 million | $61.125 million at Dec. 31, 2016 |
| Total liabilities | $9.578 million | $11.960 million at Dec. 31, 2016 |
Licensing revenue was $151,000 in both periods; royalties fell to $35,000 from $84,000. Research and development expense rose 18% to $2.198 million, while general and administrative expense fell 31% to $3.022 million. The filing does not present a gross margin measure. No separate debt balance is reported; liabilities included a $4.0 million payable to Plasma Technologies, LLC and deferred revenue.
Changes and drivers
- Net loss narrowed by $297,000 year over year, mainly as lower general and administrative expense more than offset lower other income and higher R&D expense. The prior-year period included $591,000 of miscellaneous income related to a change in the fair value of contingent consideration.
- Operating cash use increased by $3.341 million, which management attributed primarily to increased clinical-trial spending and planned additional trial centers. The decrease in cash also reflected investing outflows of $74,000 and a $2.231 million reduction in accounts payable.
- Cash declined $5.930 million during the quarter. Accumulated deficit was $337.720 million at March 31, 2017.
- Weighted-average shares outstanding increased to 40.255 million from 32.743 million a year earlier; the filing reports 40,255,082 shares outstanding as of May 15, 2017.
Programs, outlook, and risks
- Lead programs include ABO-102 for Sanfilippo syndrome type A and EB-101 for recessive dystrophic epidermolysis bullosa. The company is also advancing other gene-therapy candidates, including ABO-101, ABO-201, ABO-202, ABO-301, and ABO-302.
- Management reported that four ABO-102 trial subjects (three low dose, one high dose) were followed for up to 650 days with no serious adverse events. In two subjects assessed at six months, reported findings included a 63% reduction in central nervous system heparan sulfate GAG and indications of stabilization or improvement in some developmental measures. These are early clinical observations, not evidence of established efficacy.
- During the quarter, the EMA granted orphan-drug designation to EB-101 and ABO-201. Designation does not establish approval or commercial success.
- The company expects continued losses for several years and substantial spending on research, development, preclinical work, clinical trials, and regulatory compliance. It cannot assure sustained profitability and may need additional financing; equity issuance could dilute existing shareholders. The filing provides no specific financial guidance or cash-runway estimate.
- Nasdaq notified the company that it did not meet the majority-independent-director requirement after a director’s resignation. The stated cure deadline was July 10, 2017; management said it was seeking an independent director.
- The company reported no material pending legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls as of March 31, 2017. Forward-looking results remain subject to clinical, regulatory, financing, commercialization, and partnership risks.
Important facts for investors to verify
- Subsequent clinical-trial enrollment, safety, efficacy, and regulatory updates for ABO-102 and other pipeline candidates.
- Cash burn, working-capital needs, and whether additional financing is required as clinical programs advance.
- Progress toward restoring Nasdaq board-independence compliance by the stated deadline.
- Future licensing and MuGard royalty receipts, given the small revenue base and year-over-year royalty decline.
- Share-count changes and potential dilution from future equity financing, options, and warrants.