Abeona Therapeutics Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Abeona is a clinical-stage gene and cell therapy company developing treatments for rare genetic diseases. Its lead programs are EB-101 for recessive dystrophic epidermolysis bullosa (RDEB), ABO-102 for MPS IIIA, and ABO-101 for MPS IIIB. The financial statements are unaudited.
Key financial metrics
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0 | $7.0 million | $0 | $7.0 million |
| Research and development expense | $8.0 million | $8.0 million | $22.6 million | $20.9 million |
| General and administrative expense | $6.1 million | $4.4 million | $18.1 million | $16.4 million |
| Net loss | $7.0 million | $7.2 million | $38.3 million | $68.4 million |
| Loss per share, basic and diluted | $0.07 | $0.08 | $0.40 | $0.74 |
At September 30, 2021, cash and cash equivalents were $43.8 million and short-term investments were $23.2 million, totaling $67.0 million, versus $95.0 million at December 31, 2020. Working capital was $41.4 million, down from $55.8 million. Total assets were $119.0 million and stockholders’ equity was $79.7 million. No product revenue or meaningful operating margin was reported.
Operating cash outflow was $35.4 million for the first nine months, compared with $33.4 million in 2020. Investing activities provided $58.1 million, largely from investment maturities; financing activities provided $8.5 million, including $7.7 million of net proceeds from ATM stock sales. Total cash, cash equivalents and restricted cash increased by $31.2 million to $44.8 million. The company reported no cash interest or tax payments.
Total liabilities were $39.3 million, including $6.2 million of lease liabilities and $28.4 million payable to licensor. The $1.8 million Paycheck Protection Program loan was forgiven in 2021; no PPP loan remained on the September 30 balance sheet.
Material changes and unusual items
- Revenue fell to zero from $7.0 million in the comparable periods. The 2020 revenue arose from agreements with Taysha Gene Therapies relating to the CLN1 program.
- Nine-month net loss narrowed by $30.2 million, primarily because 2020 included a $32.9 million noncash impairment of licensed technology. The improvement does not reflect revenue growth.
- Q3 and nine-month 2021 results included a $6.7 million gain on settlement with REGENXBIO and $1.8 million of PPP loan-forgiveness income. Both were noncash income items.
- On November 12, 2021, after quarter-end, Abeona agreed to pay REGENXBIO $30 million to resolve disputes: $20 million promptly, $5 million on the first anniversary, and $5 million by the earlier of the third anniversary or a defined strategic transaction. The former license was not reinstated; any new license would require separate negotiation and consideration.
- Abeona issued 3.1 million shares under its ATM agreement during the first nine months for $7.7 million in net proceeds. Shares outstanding were 101.9 million as of November 8, 2021.
Outlook, risks and management commentary
Management stated that existing cash, cash equivalents and short-term investments, access to additional resources, and potential expense reductions were expected to fund operations for at least 12 months from the filing date. The company nevertheless expects to need additional funding to carry out all planned research and development and anticipates continued losses. It has not generated significant product revenue or achieved profitability.
Management cited continued monitoring of COVID-19 effects on operations, clinical trials, partners, suppliers and access to capital. Key risks include clinical and regulatory uncertainty, patient enrollment and trial execution, manufacturing and supply capability, future financing needs and potential dilution, competition, intellectual-property protection, and reliance on third-party licenses. Although the REGENXBIO dispute was settled, the license was not restored; the filing notes that future use of AAV9 in certain programs may require a separate license and that patent disputes could affect commercialization. Disclosure controls were concluded to be effective as of September 30, 2021, with no material change in internal control reported for the quarter.
Important facts for investors to verify
- Cash, investments and operating cash burn, particularly the effect of the $20 million settlement payment and remaining scheduled payments.
- Whether Abeona obtains additional financing or reduces spending, and the resulting dilution or impact on development plans.
- Clinical, enrollment, regulatory and manufacturing progress for EB-101, ABO-102 and ABO-101; the filing provides no clear quantified clinical guidance in this text.
- The availability and terms of any future AAV9 license, and any related intellectual-property or commercialization constraints.
- Potential revenue sources and the timing of future funding needs, given no 2021 revenue and continuing operating losses.