ABEONA THERAPEUTICS INC. quarterly report, Q1 FY2021

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

MetricQ1 2021Q1 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.