Abeona Therapeutics Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Unaudited figures below are in millions of dollars unless otherwise stated.
Business context
Abeona is a clinical-stage cell and gene therapy company. Its lead candidate, EB-101, is an autologous cell therapy being developed for recessive dystrophic epidermolysis bullosa (RDEB). The company also has preclinical AAV gene therapy programs targeting ophthalmic diseases. It has not generated significant ongoing revenue from products and remains loss-making.
Key financial metrics
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $3.5 | $1.0 | $3.5 | $1.346 |
| Operating loss | $(10.6) | $(8.0) | $(22.6) | $(28.6) |
| Net loss | $(16.7) | $(4.1) | $(25.8) | $(26.1) |
| Loss per share | $(0.92) | $(1.36) | $(1.48) | $(5.16) |
| Operating cash used | Not provided separately | Not provided separately | $(22.0) | $(22.7) |
Revenue was primarily milestone income under the Taysha Gene Therapies sublicense for a Rett syndrome gene therapy; it is not evidence of product sales. The filing does not report gross margin. Q2 expenses included $1.6 million in royalties related to the Taysha milestones.
At June 30, 2023, cash and cash equivalents were $6.2 million, restricted cash was $0.3 million, and short-term investments were $30.5 million, totaling $37.1 million in cash resources. Current assets were $44.0 million and current liabilities were $9.4 million. Total liabilities were $44.2 million, including $26.0 million of warrant liabilities, $6.0 million of lease liabilities, and $4.4 million payable to a licensor. The filing does not report conventional borrowings as outstanding.
Stockholders’ equity was $9.3 million, down from $26.8 million at December 31, 2022. The company issued 1.99 million shares through its ATM program during the first half, raising $6.6 million net. Capital expenditures were $0.25 million.
Changes versus the prior comparable period
- Q2 revenue rose $2.5 million, while operating expenses increased 56% to $14.1 million. R&D rose 28% to $8.5 million, primarily reflecting EB-101 BLA preparation, personnel and other costs; G&A rose 45% to $5.0 million, mainly due to personnel costs.
- Q2 net loss increased to $16.7 million from $4.1 million, chiefly because the company recorded an $8.6 million loss from revaluing warrant liabilities, versus a $4.2 million gain in Q2 2022. The warrant revaluation is non-cash and depends partly on the share price and valuation assumptions.
- For the first half, net loss was slightly lower than the prior-year period. Lower overall expenses, including the absence of 2022 impairments related to discontinued programs and a $1.1 million lease-termination gain, were partly offset by the warrant revaluation loss.
- First-half operating cash use was $22.0 million, compared with $22.7 million. Cash resources declined from $52.5 million at year-end 2022 to $37.1 million at June 30, 2023.
Outlook, management commentary and risks
- Management planned to submit an EB-101 Biologics License Application in Q3 2023, following a pre-BLA meeting scheduled for late August. In July, the company submitted its briefing package. Timing and filing remained contingent on a successful FDA meeting.
- The company reported positive VIITAL study results, stating the trial met both co-primary efficacy endpoints for wound healing and pain reduction. It continued preparing its Cleveland facility for potential commercial manufacturing; approval and commercialization are not assured.
- Management expected cash resources, including the subsequent financing, to fund operations through at least the next 12 months from the report date. On July 6, 2023, the company raised $25.0 million gross, or $23.0 million net, through a registered direct offering involving common shares and pre-funded warrants. Additional funding may still be needed; further equity financing could dilute shareholders.
- The company planned to begin IND-enabling preclinical studies for ABO-504, ABO-503 and ABO-505 in the second half of 2023. It also stated it expects continued operating losses and significant development and commercialization funding needs.
- Other notable items: $2.1 million of other income related to employee retention credits claimed for 2020 and 2021; a $1.1 million gain from terminating an office lease; and a prior-period correction that reclassified certain warrants as liabilities. The filing states the correction did not affect cash flows, but revised comparative 2022 loss and per-share figures.
- Management reported disclosure controls were effective as of June 30, 2023, with no material changes in internal control over financial reporting. The filing reported no legal proceedings and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- FDA feedback from the pre-BLA meeting and whether the EB-101 BLA was submitted on the anticipated timetable.
- EB-101 regulatory, manufacturing and commercialization readiness, and the clinical evidence supporting the proposed application.
- Cash burn, remaining ATM capacity and the adequacy of financing beyond management’s stated 12-month runway.
- Potential dilution from outstanding warrants and pre-funded warrants, and the sensitivity of the $26.0 million warrant liability to share-price and valuation changes.
- Collection and accounting treatment of the $2.1 million employee retention credit receivable and the $3.5 million Taysha-related receivable.