Abeona Therapeutics Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; balance sheet compared with December 31, 2021. Abeona is a clinical-stage cell and gene therapy company. Its lead program, EB-101 for recessive dystrophic epidermolysis bullosa (RDEB), was in the pivotal Phase 3 VIITAL study.
Financial results and position
| Metric | Q1 2022 | Q1 2021 / prior balance date |
|---|---|---|
| Revenue | $0.346 million | $0 |
| Research and development expense | $10.545 million | $8.317 million |
| General and administrative expense | $4.224 million | $6.280 million |
| Total expenses | $20.937 million | $14.597 million |
| Operating loss | $20.591 million | $14.597 million |
| Net loss | $20.791 million; $0.14 per share | $16.002 million; $0.17 per share |
| Cash used in operating activities | $13.687 million | $13.585 million |
| Cash, cash equivalents, restricted cash and short-term investments | $37.206 million | $50.915 million at December 31, 2021 |
| Total assets | $55.172 million | $79.586 million at December 31, 2021 |
| Total liabilities | $23.729 million | $28.211 million at December 31, 2021 |
Amounts are reported in U.S. dollars; financial statement amounts above are converted from thousands. The filing reports no product sales or meaningful product revenue, so product margins are not presented. No separate conventional borrowing balance is identified; liabilities include lease obligations and amounts payable to a licensor.
Material changes and unusual items
- Net loss increased $4.789 million year over year. R&D rose $2.228 million, mainly from clinical/development work and personnel costs; lower G&A, principally professional fees, partly offset the increase.
- Q1 included $6.168 million of impairment charges: $1.355 million for licensed technology, $1.561 million for a lease, and $3.252 million for construction in progress. These related to facilities and licensed assets associated with the MPS IIIA/IIIB programs after the portfolio reprioritization.
- Interest expense fell to $0.201 million from $1.420 million, primarily following resolution of a disputed liability to former licensor REGENXBIO. The remaining discounted settlement payable was $8.627 million: $4.708 million current and $3.919 million long-term. Restricted cash of $5.0 million collateralized the November 2022 payment.
- Cash and cash equivalents declined to $20.326 million from $32.938 million at year-end; short-term investments were $10.989 million and restricted cash was $5.891 million. Investing activities provided $1.075 million; there were no Q1 financing proceeds.
Business outlook, risks and subsequent events
- Abeona achieved target enrollment in the Phase 3 VIITAL study in Q1 and anticipated topline data in Q3 2022. Management said it was pursuing a potential commercialization partner for EB-101 and believed FDA feedback provided alignment on CMC requirements; regulatory approval and trial outcomes remain uncertain.
- The company prioritized EB-101, discontinued development of ABO-101 for MPS IIIB, and intensified efforts to find a strategic partner to assume ABO-102 for MPS IIIA. It planned to continue selected ophthalmic and next-generation AAV research.
- Management believed available resources, operating plans and potential expense flexibility would fund operations for at least 12 months from the filing date, but said additional funding would be needed beyond that period to carry out all planned R&D. The company had no established profitability and warned that inability to raise capital or generate revenue could materially harm its prospects.
- On May 2, 2022, the company closed a private placement for approximately $25 million gross proceeds, before fees and expenses, through convertible redeemable preferred stock. The securities have a $0.45 conversion price, subject to adjustment, and could dilute common stockholders. The company also planned to seek stockholder approval for a reverse stock split; the ratio was not specified in the filing.
- The filing identifies risks including clinical and regulatory execution, manufacturing, financing and dilution, partnering, Nasdaq listing compliance, intellectual property, COVID-19 impacts, and market acceptance. Management reported disclosure controls were effective and no material change in internal control during the quarter; no legal proceedings were reported.
Investor verification priorities
- Check VIITAL topline results, subsequent regulatory interactions, and the status and terms of any EB-101 commercialization partnership.
- Verify cash runway against ongoing operating burn, restricted-cash availability, and future financing needs.
- Review the preferred-stock conversion, redemption and adjustment terms, resulting dilution, and the outcome and terms of any reverse stock split.
- Confirm whether a partner assumes ABO-102 development and whether any material costs or obligations remain for discontinued programs and impaired facilities.
- Track the REGENXBIO settlement payments and other lease and licensor obligations.