Abeona Therapeutics Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Unaudited consolidated results; amounts below are in U.S. dollars. The company is a clinical-stage cell and gene therapy developer, with EB-101 as its lead program.
Key financial results
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $3.5 million | $1.35 million |
| Research and development | $7.15 million | $5.49 million | $23.71 million | $22.69 million |
| General and administrative | $4.16 million | $3.89 million | $13.17 million | $11.57 million |
| Operating loss | $11.33 million | $9.38 million | $33.93 million | $37.98 million |
| Net loss | $11.84 million | $6.43 million | $37.60 million | $32.58 million |
| Basic and diluted loss per share | $0.48 | $1.00 | $1.89 | $6.05 |
Revenue was entirely license and other revenue, principally milestone revenue under the Taysha Gene Therapies sublicense; the company reported no Q3 revenue. Product margins are not meaningful because Abeona has not generated significant product revenue.
At September 30, cash and cash equivalents were $4.7 million, restricted cash $0.3 million, and short-term investments $49.0 million, for total cash resources of $54.1 million. Current assets were $57.3 million versus current liabilities of $8.4 million. Stockholders’ equity was $22.0 million. The company reported no conventional borrowings in the provided balance sheet; other obligations included a $4.5 million payable to its former licensor, $5.7 million of operating lease liabilities, and $27.1 million of warrant liabilities.
For the first nine months, operating cash use was $27.8 million, investing cash use $11.3 million, and financing cash inflow $29.6 million. Financing included $23.0 million net proceeds from a July direct offering and $6.6 million from ATM share sales. Cash, cash equivalents and restricted cash declined $9.5 million. No dividends were reported.
Changes versus prior comparable periods
- Q3 operating expenses rose 21% to $11.3 million, primarily reflecting higher EB-101 development and BLA-related work and personnel costs. Net loss widened to $11.8 million, partly because the period included a $1.1 million warrant fair-value loss, compared with a $3.05 million gain in Q3 2022.
- Nine-month revenue increased to $3.5 million from $1.35 million, while operating expenses declined 5% to $37.4 million. Lower expenses reflected the absence of 2022 impairments and the 2023 gain on lease termination; nevertheless, net loss increased to $37.6 million from $32.6 million, including a $7.5 million warrant fair-value loss in 2023 versus a $6.0 million gain in 2022.
- R&D increased 4% and G&A increased 14% for the nine-month period. Royalty expense rose to $1.6 million from $0.35 million, largely due to amounts owed to licensors on Taysha-related milestones.
- The company issued 3.28 million common shares in its July offering and issued pre-funded warrants for another 2.92 million shares. Common shares outstanding increased to 24.7 million at September 30 from 17.7 million at year-end 2022. The reported 2022 comparative figures reflect correction of a prior-period warrant-accounting error; the filing says the correction did not change 2022 operating cash flow.
Outlook, risks and notable items
- Abeona submitted a Biologics License Application for EB-101 to the FDA on September 25, 2023, requesting Priority Review. The request was not stated as granted; if granted, the company said the review period would be six months from filing acceptance, versus ten months under standard review.
- Management reported positive VIITAL study results, stating the study met both co-primary efficacy endpoints for wound healing and pain reduction. The company was preparing its Cleveland facility for potential commercial manufacturing and conducting market-access and treatment-center planning.
- The company expects operating losses and negative operating cash flows to continue. Management said the $54.1 million of cash resources at September 30 should fund operations and capital requirements for at least 12 months from issuance of the financial statements, while warning that additional funding may be needed for planned development and potential commercialization.
- Material risks include FDA review and approval, manufacturing readiness and product supply, future financing needs and potential dilution, and the possibility of reducing or delaying programs if funding is insufficient. The warrants are Level 3 fair-value liabilities; changes in estimated value can materially affect reported earnings without representing operating cash flow.
- Unusual items included $2.1 million of employee retention credit-related other income for the nine months, a $1.1 million gain from terminating an office lease, and the $7.5 million non-cash warrant remeasurement loss. The filing reports no legal proceedings, no material change in previously disclosed risk factors, and effective disclosure controls as of September 30.
Investor facts to verify
- FDA acceptance of the EB-101 BLA, Priority Review decision, review timeline, and any subsequent regulatory requests.
- Cash burn and remaining runway, including the timing and terms of any further ATM or other financing and the resulting dilution.
- Commercial manufacturing readiness, capacity, and costs at the Cleveland facility, as well as reimbursement and market-access assumptions.
- EB-101 clinical and regulatory evidence supporting the application, and the status, costs, and funding priorities of the AAV ophthalmic pipeline.
- Warrant-liability valuation assumptions and potential share dilution from the outstanding warrants and pre-funded warrants.