Abeona Therapeutics Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Filed November 14, 2022. Abeona is a clinical-stage biopharmaceutical company developing cell and gene therapies for rare diseases. Its lead program is EB-101 for recessive dystrophic epidermolysis bullosa (RDEB); its portfolio also includes AAV gene therapy programs.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $1.346 million | $0 |
| Research and development expense | $5.490 million | $9.056 million | $22.693 million | $25.923 million |
| General and administrative expense | $3.890 million | $5.816 million | $11.574 million | $17.261 million |
| Net loss | $9.484 million | $7.044 million | $38.570 million | $38.253 million |
| Net loss per common share | $1.48 | $1.80 | $7.05 | $9.93 |
| Operating cash used | Not presented quarterly | Not presented quarterly | $29.491 million | $35.408 million |
Figures are in U.S. dollars; per-share amounts reflect the 25-for-1 reverse stock split. Nine-month 2022 license and other revenue included a Taysha milestone and recognition of deferred grant revenue. The company reported no product revenue and remained unprofitable.
- At September 30, cash and cash equivalents were $5.733 million, restricted cash $5.338 million, and short-term investments $12.434 million: total cash resources of $23.505 million.
- Total assets were $38.761 million, total liabilities $23.348 million, and stockholders’ equity $15.413 million. Current assets were $25.497 million versus current liabilities of $12.600 million.
- Liabilities included $8.985 million payable to licensor REGENXBIO (current and long-term portions) and $8.294 million in operating lease liabilities. The filing does not identify conventional borrowings as a material balance-sheet item.
- Nine-month cash flows included $1.326 million provided by investing activities and $0.407 million provided by financing activities. Cash, cash equivalents and restricted cash decreased $27.758 million.
Changes and notable items
- Q3 operating expenses declined 37% year over year, mainly due to lower R&D and G&A spending. Nevertheless, quarterly net loss increased by $2.440 million, as Q3 2021 included a $6.743 million settlement gain and $1.758 million of PPP loan forgiveness income that did not recur.
- Nine-month operating expenses fell 9%, but net loss was broadly similar year over year. The 2022 period included $4.708 million of impairments related to licensed technology, a lease asset, and construction-in-progress after Abeona discontinued ABO-101 development and sought a partner for ABO-102.
- In May 2022, Abeona licensed ABO-102 worldwide to Ultragenyx, which assumed program responsibility. Abeona may receive tiered royalties of mid-single digits up to 10% of net sales and up to $30 million in commercial milestones after approval. Ultragenyx also reimburses certain development and transition costs.
- Abeona raised $22.5 million net from preferred stock in May, but holders required redemption in June for $26.3 million. The company also raised $4.2 million net through its ATM in the first nine months. Common shares outstanding were 7,671,351 at September 30, versus 5,888,217 at year-end 2021.
Outlook, risks and subsequent events
- On November 3, 2022, Abeona announced positive topline results from the Phase 3 VIITAL study of EB-101: the study met both co-primary endpoints for wound healing and pain reduction. The filing reports no serious treatment-related adverse events; it describes other observed adverse events and infections as unrelated or, in some cases, related procedural events.
- Management intended to submit an EB-101 Biologics License Application to the FDA in Q2 2023 and was preparing its Cleveland facility for commercial manufacturing. The filing states that the company believed its cash resources plus proceeds from the November financing would fund operations for at least 12 months from the report date; further funding may still be needed to complete planned R&D.
- The November 3 private placement was expected to generate approximately $35 million gross, before fees and expenses, through common shares and pre-funded warrants, together with warrants. After quarter-end, the company also sold 2,440,882 ATM shares for $8.6 million net. These financings provide liquidity but involve substantial potential dilution.
- Key risks include clinical and regulatory uncertainty, manufacturing readiness, reliance on additional financing and partnerships, ability to commercialize products, and potential delays or reductions to development programs. Management cited no material change to the risk factors in its 2021 Form 10-K. Legal proceedings: none reported. Disclosure controls were assessed as effective.
Important facts for investors to verify
- Review the complete VIITAL efficacy and safety data, and the FDA’s feedback and requirements for the planned EB-101 BLA.
- Confirm the closing proceeds, fees, warrant terms, and resulting fully diluted share count from the November financing and subsequent ATM sales.
- Track cash burn, restricted-cash availability, licensor settlement payments, and whether management’s stated 12-month funding runway remains adequate.
- Verify the terms, progress, and potential contingent economics of the Ultragenyx ABO-102 license, including royalties and milestones that are not yet recognized as revenue.
- Assess whether reduced spending and impairment charges reflect sustainable cost changes, and whether ongoing EB-101 manufacturing and development needs increase future capital requirements.