Participants

Greg Gin; Vice President, Investor Relations and Corporate Communications; Abeona Therapeutics Inc

Vishwas Seshadri; President, Chief Executive Officer, Director; Abeona Therapeutics Inc

Madhav Vasanthavada; Chief Commercial Officer, Head of Business Development; Abeona Therapeutics Inc

Joseph Vazzano; Chief Financial Officer; Abeona Therapeutics Inc

Maurice Raycroft; Analyst; Jefferies LLC

Kristen Kluska; Analyst; Cantor Fitzgerald & Co

Presentation

Operator

Good day and welcome to the Abeona Therapeutics first-quarter 2024 conference call. All participants are on a listen only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to your host, Greg Gin Vice President of Investor Relations and Corporate Communications at Abeona. Please go ahead.

Greg Gin

Thank you, Kelly. Good morning, and thank you for joining us on our first quarter 2024 conference call. During this call, we will refer to the press release issued this morning announcing the first quarter results, which is available on our corporate website at www.abeonatherapeutics.com.
I would like to note that remarks made during today's call may contain projections and forward looking statements. Forward looking statements are made pursuant to the Safe Harbor provisions of the federal securities laws. The forward-looking statements are based on current expectations and are subject to change and actual results may differ materially from those expressed or implied in the forward-looking statements.
Various factors that could cause actual results to differ include, but are not limited to those identified under the Risk Factors section in our Form 10-K and periodic reports filed with the SEC. These documents are available on our website at www.abeonatherapeutics.com.
On the call today with prepared remarks are Dr. Vish Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer and Head of Business Development; and Joe Vazzano, Chief Financial Officer. Joining us for the Q&A session as well will be Dr. Brian Kevany, our Chief Technical Officer.
And with that, I'll now turn the call over to Vish Seshadri, to leave the stops.

Vishwas Seshadri

Thank you, Greg. We appreciate everybody joining the call this morning. In order to continue to progress our Pz-cel program, well beyond anticipated regulatory milestones and through commercial launch, Abeona must be well capitalized. The leadership team has recently been focused on addressing our funding needs. In early May, we completed an underwritten offering with institutional investors and had raised $75 million in gross proceeds.
Participants in the offering included existing and new investors who are some of the most respected blue-chip institutional healthcare investors. This was a significant development for Abeona, and we're grateful to our investors who have demonstrated their support.
Importantly, financing not only has extended our cash runway into 2026, which is well beyond anticipated significant regulatory milestones and commercial launch of Pz-cel, but we believe it further validates the great potential for Pz-cels.
We now stay resolutely focused on working with the FDA to address the CMC deficiencies noted in the CRL and making the BLA resubmission toward bringing Pz-cel to order patients as soon as possible.
As a brief recap of our regulatory update call in late April, we received a CRL from the FDA based on the need for additional CMC information before the Pz-cel BLA can be approved. In general the information needed to satisfy the CMC requests pertains to validation requirements for certain manufacturing and release testing methods.
The CRL did not identify any deficiencies related to the clinical efficacy or clinical safety data in the BLA and the FDA did not request any new clinical trials of clinical data to support the approval of Pz-cel.
Since the update call, we have already made progress towards addressing the CMC deficiencies noted in the CRL, we have now completed the matrix in different study to validate the replication-competent retrovirus or RCR.
We believe the outcome of this study will satisfy the agency's ask for our RCR assay validation based on our discussion with the FDA in late March. We have also completed the container closure integrity testing for the RVV and the validation reports are in place. We continue to interact with the FDA through informal meetings to gain the agency's alignment on our approach, especially on topics where interpretation of existing guidance in the context of our therapy is required.
Looking ahead to the coming weeks and months, we're working on completing deliverables that would address all remaining deficiencies noted in the CRL to enable resubmission of the BLA. We anticipate completion of all these workstreams in the late Q2, early Q3 timeframe and anticipate completing the BLA resubmission in the second half of 2024.
We do plan to request a Type A meeting with the FDA in early Q3. The goal of this meeting would be to gain alignment with the agency on the sufficiency of our data to address the outstanding substantive and critical CMC items. As always, we will continue to be transparent with the outcomes of the meeting after completion.
I'll now turn the call over to our Chief Commercial Officer, Madhav Vasanthavada to provide an update on our commercialization readiness activities.

Madhav Vasanthavada

Thank you, Vish. We remain confident in the potential of Pz-cel as a game-changing therapy for our patients. And our momentum towards commercial readiness continues. Because the FDA did not identify any clinical efficacy or clinical safety related issues with our BLA, our confidence in our clinical value story remains strong and so does our positioning and messaging with various stakeholders, whether they are the payers or providers, and that is huge for us.
In speaking with physicians at our targeted treatment sites as well as with patient groups like DEBRA and EBRP that has continued enthusiasm for the value of Pz-cel. We hear from physicians, including prominent physicians in the EB space about the need for using complementary treatment modalities for DEB patients.
Pz-cel, if approved, would be the only therapy, which in clinical trials has addressed large body surface areas, including toughest to treat wounds and demonstrated wound healing and pain reduction with years of durability after a single application. These aspects of Pz-cel would make it a highly differentiated and clinically meaningful for RDEB patients.
In light of the updated BLA time line, our launch strategy now is to focus on prioritizing activities that we can front load with payers through the payer discussions with the goal of having better access and faster access upon approval.
We will also focus on exchanging scientific data with ED physician community through various forums to strengthen Pz-cel medical awareness. In that regard of scientific exchange, our abstract discussing 11 years of safety profile from long-term follow up of Pz-cel has been accepted as a late-breaker for presentation at this week's Society for Investigative Dermatology SID annual meeting in Dallas.
With more than 11 years of safety in the earliest treated patient Pz-cel would have upon its potential approval, one of the longest durations of safety follow-up available for gene therapies. Besides disseminating scientific data, as we wait for regulatory approval, we will also be generating new clinical data that could also benefit payer discussions.
You may recall we have an active Phase 3b study that is currently enrolling new and previously treated RDEB patients where we have treated four patients to date, all of whom have elected to come back as a repeat Pz-cel patients for their previously untreated wounds.
This study also allowed treating patients that have received or are currently receiving the recently approved treatments for Dystrophic EB and generating such data will help us shape better access policies for Pz-cel post-approval.
Speaking of payer discussions, we have had nearly a dozen one-on-one engagements with commercial payers through preapproval information exchange since the last time we spoke and payers continue to be impressed with the clinical value story of Pz-cel and the unmet need it can address, which is encouraging from coverage and access perspective.
Lastly, from site onboarding standpoint, we are continuing to work with our initial network of 5 to 7 high-volume EB centers and are taking advantage of the regulatory time to refine and strengthen launch readiness and building a high-touch patient services program. We want to make sure that sites will be ready to treat as soon as possible for PD cell approval. And we'll keep you updated on progress.
With that, I'll now hand the call over to our Chief Financial Officer, Joe Vazzano, to discuss our financial results.

Joseph Vazzano

Thanks, Madhav. I would like to remind everyone that you can find additional details on our financial results for the three months ended March 31 2024, and our most recent Form 10-Q, which is available on our website.
Starting with the financial resources on our balance sheet, we had cash, cash equivalents, restricted cash and short-term investments of $62.7 million as of March 31 2024, as compared to $52.6 million as of December 31 2023.
Net cash used in operating activities was $14.5 million for the three months ended March 31, 2024. Based on our current operating plan and assumptions with our existing cash resources also including the credit facility and combined with the gross proceeds from our recent $75 million equity offering, we estimate we have sufficient financial resources to fund operations into 2026.
Our cash runway assumptions do not account for any potential revenue from commercial sales of Pz-cel or proceeds from the sale of a priority review voucher or PRV, if awarded by the FDA. I'll remind you that Pz-cel has been granted rare pediatric disease designation by the FDA. So upon its potential approval, we believe that we are eligible to receive a PRV.
Research and development expenses were $7.2 million for the three months ended March 312024, compared to $8 million for the three months ended March 31 2023. Our spend on general and administrative activities was $7.1 million for the three months ended March 31, 2024, compared to $4 million for the three months ended March 31 2023.
Net loss was $31.6 million for the first quarter of 2024 or $1.16 loss per common share is important to note that the net loss in the first quarter of 2024 included a noncash loss of $17.3 million related to the change in fair value of warrant liabilities. These warrants are required to be classified as liability and remeasured at fair market value each reporting period.
Net loss in the first quarter of 2023 was $9.1 million or $0.54 loss per common share.
With that, operator, please open the Q&A session.

Question and Answer Session

Operator

(Operator Instructions)
Maury Raycroft, Jefferies.

Maurice Raycroft

Hi, good morning and congrats on the progress, and thanks for taking my question. I was going to ask just a clarification one for the BLA submission time line change to second versus third quarter. Is there anything anymore behind that? Or is it just a softening of timeline just to make sure that you get everything in on time or any more prospective there that you can add?

Vishwas Seshadri

Hi, Maury. Good morning. Thanks for the question. Clearly really the latter, we're still on track. And so the resubmission in quarter three is very much our plan. Just the softening of the language is second half of 2024 is to accommodate external uncertainties like when the FDA grant us a meeting because we do want to be doubly terribly sure that we have squared off all the questions that they've asked us during the CRL and that we've satisfied those.
As I said, our plan is to actually validate them with the FDA before we make the resubmission. So there's no surprise. So just to give, if it's on the borderline of a last day of Q3 versus beginning of Q4, we want to keep that broadly as second half. But there is no material change in our thinking of how and rigorously we're looking to complete the work that we need to do as discussed in the previous conference call after we announced the CRL. Hope that addresses your questions.

Maurice Raycroft

Yes, that's helpful. In some for the cell-based identity assay, and can you talk a little bit more about just alignment on that assay with FDA due to the novel nature of that assay and maybe talk about the progress that's made there and the plan to make sure that there is alignment with FDA going into the BLA?

Vishwas Seshadri

Sure. Thanks for that question. So the cell-based identity assay really looks at what's the cell composition of our product. And we are continuing to gain alignment with the FDA through our informal meetings with the agency. We have a fairly good understanding on what is required to be done to address the sensitivity and specificity.
So we have made those proposals and the agency has indicated that our approach seems fairly straightforward and that this will be a review issue with the data that we generate. So we are confident that we'll be able to provide the necessary data based on the feasibility runs that we've done so far in identifying markers that are specific to keratinocytes.
Just as a reminder, our product is primarily keratinocytes. So you need to have an antibody that can detect keratinocytes and is not binding to other site types of cells that you may find in this environment, and we're able to deliver that kind of specificity and sensitivity. So we're fairly confident that we'll be we'll have the identity assay in place by the time we do the resubmission.

Maurice Raycroft

Got it. Okay. And then maybe last question for you said a late-breaking abstract, given there seems to be at least a numerical difference in SEC where there is no SEC treated sites, but SEC non-treated sites and where you don't see this with [vajuvec]. Have you discussed with KOLs and potentially FDA whether prevention of SESCC. could be included in the label? And how should we think about this in respect to demographics for patients who may be at higher risk of SEC.

Vishwas Seshadri

Thanks for that question, Maury, wonderful question. Naturally, we've been giving a lot of thought to this. What we do know is in order to get a label claim that Pz-cel would it will be a preventative measure to you know, to avoid SEC's happening is it's a little too premature to have that level of data to date. But the early indications of our data that are definitely encouraging. It is probably going to be a longer term effort on our part to demonstrate that clinically.
However, what we do know from published literature is that large chronic wounds are the originating areas where you typically see squamous cell carcinomas. And so to treat those types of wounds is high priority from a patient risk perspective, and that is well known aligned and agreed upon by the medical community. So we will still prioritize treating those patients at high-risk. But whether our label can include a claim like that, it's a TBD, but it may require additional data generation for the future, but we're definitely looking into that.

Maurice Raycroft

Got it. Okay. Thanks. I'll hop back in the queue.

Operator

Kristen Kluska, Cantor Fitzgerald.

Kristen Kluska

Hi, good morning, everybody. Thanks for taking the question. Great to see that a lot of new investors are taking a look at the company and I wanted to ask two key questions that we've been getting from a lot of some of these newer investors. I guess, first, can you remind us about the importance of understanding the endpoints that you looked at in the Phase 3 trial relative to the size of the wounds that you treated? And then also looking at, at least 15% will really only 75% wound healing. How do we understand that? And these data are very important relative to just understanding the complete healing. Thank you.

Vishwas Seshadri

Good morning, Christian, and thanks so much for that question. We often tend to forget those nuances, right? So it's important to remind ourselves the endpoints of the study as well as the types of wounds that we have treated in our pivotal study as well as the Phase 1/2a with Pz-cel, we treated the toughest to treat wounds.
And when I say that there are two dimensions to that. One is the wound size, but the minimum loan size required was 20 centimeters squared. but there are some loans that run into hundreds of centimeters squared where you needed to quilt like apply multiple graft, multiple pz-cel sheets in that area. And that is something that we often forget. So that is a size aspect of our rules.
The second is the chronicity of chronic wounds are definitely different from what we are hearing from these experts. They're different type of wounds and compared to the recurrent wounds and they cannot self-heal themselves. You will -- if you look at our complete wound healing rate, zero, zero chronic wounds ever completely healed in our study. So that tells you that the wound type of cells that we're treating is very different here. And so that's one thing.
The second is, of course, the other primary endpoint that we're looking at is a pain reduction but I'll come to that later. Why do we have 50% wound healing and not 100% wound healing infact. In VITAL we've looked at all three levels of wound healing, 50%, 75% and complete, which is 100% wound healing.
And in all those three aspects, we have shown that there is a highly statistically significant difference in the healing rates, what we see with Pz-cel versus the control. It's important to note that for these types of sizes of wounds, even at 50% wound healing leads to a very significant outcome for the patient when you look at their quality of life and their pain reductions.
But I would say I would emphasize that two thirds of the wound, 67% showed even greater than 75% wound healing. And the way we score for 100% wound healing is extremely stringent in the case of the VITAL study, which is if there is even a small patch of crusted area, you cannot you cannot obviously pick on that crust and see the wound healed underneath that so when you have that element of doubt, it was not scored as a completely healed wound, even though the rest of the wound was completely healed.
And therefore, when you cannot verify that under the crust on the or even if there is a microscopic dot a red dot on the wound, we wouldn't score that that as a completely healed room. So these are some of the nuances that you asked is when you look at numbers there.
But regardless when you look at our, you know, the one pictures speak volumes of how the differences between heat treated, heal wound versus, on the control rooms. So that is also further corroborated by our second clinical endpoint, which is pain reduction, where we found that there is significant patient-reported outcome.
That is ultimately what is important, and when we use when we look at wounds that started with a high pain score of 6 or worse on a 10 point scale. The mean reduction in pain was 5.7. So that basically underscores how much of a alleviation of pain therapy is able to offer to these patients in addition to purely the wound healing aspect of it. I hope I addressed your question. If not, please do ask me further details. I'm happy to address that in person.

Kristen Kluska

You did. Certainly.

Madhav Vasanthavada

I just wanted to add --

Kristen Kluska

Go ahead.

Madhav Vasanthavada

I just wanted to add to what Vish said in terms of our baseline characteristics besides numbers the average duration of loans that are opening are widely to remind was five years with some of the ones that had never closed for up to 21 years.
So these are the types of loans that had hardened and especially in adult patients, when you have these chronic wounds that have not healed with other treatment modalities, we have been able to show, most of our patients invited were adult patients, and we have been able to show these kinds of data with them.
So I think that is pretty profound knowing that these loans have until the next six months, we are able to show this kind of wound closures.

Kristen Kluska

Okay. Thank you. And then an often for rare diseases, I know you've done things like genetic modeling to understand what the actual patient pool sizes, but also with rare diseases, new therapies come online, others enter late-stage development. We start to increase in some of the patients that are identified. So as you guys are doing a lot of diligence with KOL preparing for potential approval, I'm curious if you've heard any commentary about the market size and if there's been any change in the last few years with all the development in the space?

Vishwas Seshadri

Go ahead, Madhav.

Madhav Vasanthavada

I think what we are definitely hearing is an increase in genetic testing panel and collecting more biopsies, especially with, as you said, similar to other rare diseases as more therapies come on market. A, the misclassification that has been happening in the EB space. We heard one of the reports from DEBRA that as high as 75% of EB patients were misclassified.
We hope that that kind of misclassification, that there is an accurate diagnosis that happens, but definitely on the on the right track with major genetic testing. And it is that certainly advocacy from physicians to be able to test no sooner and earlier on.

Kristen Kluska

Okay. Thanks very much.

Operator

There appear to be no further questions in queue. I would now like to turn the call back over to Vish Seshadri for any closing remarks.

Vishwas Seshadri

Thank you, Kelly, and thank you all for joining us today. In closing, we remain committed to bringing Pz-cel to patients with our RDEB as quickly as possible. I firmly believe we will get there.
Thank you, everyone, for joining us today for today's business update. With that, we'll talk to you again soon. Thank you.

Operator

Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.