Abeona Therapeutics Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. The interim financial statements are unaudited. Abeona is a clinical-stage gene and cell therapy company; it reported no revenue in the periods shown.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $7.4 million | $6.1 million | $14.6 million | $12.9 million |
| General and administrative | $5.5 million | $5.5 million | $12.0 million | $12.0 million |
| Net loss | $15.2 million | $13.0 million | $31.2 million | $61.2 million |
| Loss per share, basic and diluted | $0.16 | $0.14 | $0.33 | $0.66 |
| Cash used in operating activities | Not separately presented | Not separately presented | $25.1 million | $22.7 million |
Q2 net loss increased year over year, mainly from higher R&D costs and interest expense. The six-month net loss improved substantially versus 2020 because the prior-year period included a $32.9 million non-cash licensed-technology impairment charge; this does not indicate revenue growth. With no revenue, profit margins are not meaningful.
At June 30, cash and cash equivalents were $27.2 million and short-term investments were $50.4 million, totaling $77.6 million. Working capital was $38.0 million, down from $55.8 million at December 31, 2020. Total assets were $130.7 million and total liabilities were $46.6 million. Current liabilities included $34.4 million payable to licensor. The balance sheet also showed $1.8 million of current loan payable and $6.4 million of lease liabilities; the loan was subsequently forgiven, as noted below.
For the first six months, investing activities provided $31.3 million, primarily reflecting investment maturities net of purchases; financing activities provided $8.4 million, including $7.7 million from common-stock sales under the ATM agreement. Shares outstanding rose to 101.3 million at June 30 from 96.1 million at year-end. Management said existing resources and potential cost flexibility were expected to fund operations for at least 12 months from the filing date, while acknowledging that additional funding would be needed for all planned R&D.
Material changes, outlook, and risks
- R&D expense rose 22% in Q2 and 13% for the first half, primarily due to increased clinical and development work and personnel costs.
- Interest expense rose to $1.5 million in Q2 and $2.9 million for the first half, primarily from accrued interest invoices related to the REGENXBIO dispute.
- The REGENXBIO license for AAV9-vector rights terminated in May 2020. On July 13, 2021, after quarter-end, an arbitration tribunal ruled for REGENXBIO and awarded $28.0 million plus interest. Abeona stated it believed the parties had previously reached a binding settlement for $18.0 million payable over two years and intended to seek enforcement. The company recorded $34.4 million payable to licensor at June 30; the filing does not clearly reconcile that balance to the award, accrued interest, or asserted settlement.
- In July 2021, the SBA notified Abeona that its approximately $1.8 million PPP loan was forgiven; the company expected to record the extinguishment and other income in Q3.
- Management reported continued assessment of COVID-19 effects on operations and clinical trials. Key risks include clinical enrollment and outcomes, regulatory approval, manufacturing and supply, access to capital and potential dilution, and intellectual-property and licensing disputes. The filing provides no specific financial or clinical guidance beyond management’s stated liquidity runway.
- Management concluded disclosure controls were effective as of June 30, 2021 and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Current status and enforceability of the asserted $18.0 million REGENXBIO settlement versus the arbitration award of $28.0 million plus interest, and the resulting cash-payment timing.
- Whether Abeona can maintain the stated 12-month cash runway, given $25.1 million of operating cash use in the first half and its need for future financing.
- Progress, enrollment, safety, efficacy, and regulatory developments for EB-101, ABO-102, and ABO-101, including any effects from COVID-19.
- Impact of the terminated AAV9 license and any additional intellectual-property rights or licenses needed for development or commercialization.
- Completion and accounting treatment of PPP forgiveness, and further equity issuance or dilution under the ATM agreement.