Abeona Therapeutics Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; filed May 17, 2021. Abeona is a clinical-stage gene and cell therapy company developing treatments for rare genetic diseases. Its lead clinical programs are EB-101 for RDEB and ABO-102 and ABO-101 for MPS IIIA and MPS IIIB.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development | $7.2 million | $6.8 million |
| General and administrative | $6.6 million | $6.4 million |
| Operating loss | $14.6 million | $48.2 million |
| Net loss | $16.0 million; $0.17 per share | $48.2 million; $0.52 per share |
| Cash used in operating activities | $13.6 million | $13.2 million |
- There was no revenue, so a revenue margin is not meaningful. The lower net loss mainly reflects the absence of the $32.9 million non-cash licensed-technology impairment recorded in Q1 2020, not improved revenue generation.
- At March 31, cash and cash equivalents were $14.3 million and short-term investments were $72.5 million, totaling $86.8 million. Working capital was $47.8 million, down from $55.8 million at December 31, 2020.
- Total liabilities were $47.0 million. Loan payable was about $1.8 million, and operating lease liabilities totaled $6.7 million. Current liabilities included $32.9 million payable to licensor, which Abeona disputes in arbitration.
- Q1 financing provided $5.9 million, including $5.2 million from sales of 1.58 million shares under the at-the-market agreement. Shares outstanding rose to 99.0 million from 96.1 million at year-end.
Material changes, outlook and risks
- R&D expense increased $0.4 million, primarily from clinical and development work and personnel costs. G&A increased $0.2 million; higher professional fees were largely offset by lower salary-related and other costs.
- Depreciation and amortization declined $1.3 million because the REGENXBIO licensed technology had been written off in Q1 2020. Interest expense increased to $1.4 million, primarily from accrued interest on the disputed REGENXBIO amounts.
- Management stated that existing cash, cash equivalents and short-term investments were expected to fund operations for at least 12 months from the filing date. Abeona also said it would need additional funding to carry out all planned R&D; no specific operating or revenue guidance was provided.
- The REGENXBIO license terminated in May 2020. Abeona disputes $28 million of payments plus accrued interest of $4.9 million as of March 31, 2021; REGENXBIO counterclaims for payment. The arbitration hearing occurred in March 2021, with an opinion expected in early Q3 2021.
- Management continued to monitor COVID-19 effects on operations, clinical trials, collaborators, suppliers and capital-market access. Other key risks include clinical and regulatory outcomes, trial enrollment, manufacturing readiness, intellectual-property rights, and the need for future financing. The filing reported no material change to risk factors from the 2020 Form 10-K.
Important facts for investors to verify
- Whether the REGENXBIO arbitration resolves the disputed payable and accrued interest, and the resulting financial impact.
- Cash use and available liquidity relative to management’s stated 12-month funding expectation and future financing needs.
- Clinical-trial progress, enrollment, regulatory interactions and manufacturing capacity for EB-101, ABO-102 and ABO-101.
- Future share issuance under the at-the-market agreement and its potential dilution.
- Potential forgiveness of the approximately $1.8 million PPP loan; the filing says forgiveness is not assured.