ABEONA THERAPEUTICS INC. Q2 2025 earnings call

Thank you, Matt. Good morning, and thank you for joining us on our Second Quarter 2025 Results Conference Call. During this call, we will refer to the press release announcing the financial results, which is available on our corporate website at www.abeonatherapeutics.com. We anticipate making projections and forward-looking statements during today's call, which are made pursuant to the safe harbor provisions of the federal securities laws. These forward-looking statements are based on current expectations and are subject to change. Actual results may differ from those expressed or implied in the forward-looking statements due to various factors, including but not limited to those outlined in our Form 10-K and periodic reports filed with the SEC. These documents are available on our website at www.abeonatherapeutics.com. Joining me on today's call with prepared remarks are Dr. Vish Seshadri, Chief Executive Officer; Dr. Madhav Vasanthavada, Chief Commercial Officer; and Joe Vazzano, Chief Financial Officer.

Also, Dr. Brian Kevany, Chief Technical Officer, will join us for the Q&A session. I will now turn the call over to Vish Seshadri to lead us off. Vish.

Thank you, Greg, and good morning, everyone. The second quarter of 2025 marked the biggest milestone achievement in Abeona history so far, with the FDA approval of ZEVASKYN in April. ZEVASKYN is the first and only autologous cell-based gene therapy for the treatment of adult and pediatric patients with recessive dystrophic epidermolysis bullosa, or RDEB. There is a persistent unmet need to meaningfully heal RDEB wounds. Since ZEVASKYN's approval, the enthusiasm and positive feedback from the RDEB community has further increased our confidence that ZEVASKYN will become an important treatment option for people with RDEB. We're already seeing positive momentum in the early stage of our launch. We're now accepting patients and referrals from healthcare providers to initiate ZEVASKYN treatment at both our activated Qualified Treatment Centers, or QTCs, which are Lurie Children’s Hospital of Chicago and Lucile Packard Children’s Hospital at Stanford.

We are on track for the first ZEVASKYN patient treatment and thus anticipate first commercial revenues in the third quarter of 2025. With the commercial launch tracking to plan and with encouraging feedback from QTCs, physicians, and the patient community, we're very excited about ZEVASKYN's potential to improve the lives of people with RDEB. To dive deeper into our launch progress and the momentum in greater detail, I'll now hand the call to our Chief Commercial Officer, Dr. Madhav Vasanthavada. Madhav.

Thanks, Vish, and good morning, everyone. We are actively executing on our launch strategy, and I will provide specific updates on our initial progress, the near-term demand trends, the process for scheduling patients onto treatment, and our momentum with payers. In the first three months since ZEVASKYN's approval, we have seen strong interest from the EB community. The two Qualified Treatment Centers that have been onboarded have already identified more than a dozen patients as candidates for ZEVASKYN, and the process is underway to initiate their treatment. Moreover, we understand that referring physicians from other centers that are not QTCs have identified nearly three dozen additional immediate candidates. We expect patient referrals to further build as our promotional activities generate more ZEVASKYN awareness in the marketplace.

With a total of approximately 50 identified patients and that number growing, we are actively working with Lurie and Stanford Children's to initiate treatment of those patients in the coming quarters, and we remain optimistic about our ability to treat 10-14 patients in 2025, as previously mentioned. In parallel, we are on track to increase our manufacturing capacity to treat 10 patients per month in mid-2026. While the volume of identified patients at our two existing QTCs is encouraging from a demand perspective, we will continue to activate additional QTCs to ease the travel burden on patients by expanding ZEVASKYN's geographic footprint, which we expect to further grow patient demand. We will announce new centers when they are ready to see patients.

Before I discuss the process for scheduling patients onto treatment, let me preface that the administrative process associated with ZEVASKYN during this early launch phase requires a long lead time and involves significant logistical steps. Currently, we project that the journey from patient identification to ZEVASKYN treatment will take approximately three to four months, and we anticipate this timeframe will shorten and scheduling will become more predictable as our launch progresses, as we activate additional QTCs and as established QTCs gain experience. Let me provide an overview of the administrative steps involved in ZEVASKYN treatment. The patient journey begins with an initial consultation with the physician at the QTC, which is then followed by payer medical authorization that can take a week or more. The next step of securing payer financial agreement for that patient can take approximately four to six weeks.

Once these steps are complete, the patient's biopsy is scheduled based on availability of both the patient and the care team. Our 25-day manufacturing process begins immediately after biopsy is received at our manufacturing facility and culminates in the patient's return to the QTC for treatment, which is when we recognize revenue. Throughout this journey, our Abeona Assist Patient Navigators are ready and committed to supporting patients and the centers dealing with the logistics of biopsy and return to the QTC for treatment. Despite all these logistical steps, we are happy to report the successful completion of our first commercial patient biopsy at Lurie Children’s Hospital. Manufacturing is underway, and we expect this patient to receive treatment soon. Now turning to payers, we have made significant progress in securing widespread insurance coverage for ZEVASKYN.

It's important to remember that 60% of RDEB lives are covered by commercial plans, 30% by Medicaid, and the rest by Medicare. To date, we have achieved positive coverage with multiple national and regional payers. Importantly, even in the absence of formal coverage policies, ZEVASKYN is being accessed through the medical exception process. The prior authorization process has been highly successful, with 100% of requests approved to date, including for Medicaid patients, with some approvals received as soon as within 48 hours. This demonstrates strong clinical acceptance of ZEVASKYN among payers. The most notable milestone with regards to commercial payers is the recent decision by UnitedHealthcare, the largest commercial payer in the U.S., to cover ZEVASKYN in line with its FDA-approved label and with no additional restrictions.

We hope that this sets a critical precedent for other payers and that it will be a major step towards ensuring broad access, and we are optimistic that this positive momentum with payers will continue. On the Medicaid front, we reached a key milestone by entering into a National Drug Rebate Agreement, NDRA, with CMS and taking the steps necessary to ensure coverage across all 51 state Medicaid programs and Puerto Rico. In parallel, we are driving productive discussions to expedite coverage and reimbursement with the majority of state Medicaid programs, and this is already yielding results as states implement favorable Medicaid coverage criteria for ZEVASKYN. Overall, we are encouraged by these early market access trends. Finally, turning to our engagement with the RDEB community, the patient and community response continues to be exceptionally positive.

We recently partnered with debra of America for a nationally broadcast webinar where a clinical trial patient shared her individual experience of durable wound healing following a single application. This patient received ZEVASKYN twice during our clinical trials to cover different wound areas. We are encouraged that so far she has been experiencing durable healing even three and a half years after treatment. We also engaged directly with RDEB families at three regional meetups at Columbia Presbyterian in New York City, Cincinnati Children's, and the University of South Carolina in Los Angeles, where three unique patients from our Strong Together Network shared their ZEVASKYN stories and showed their present-day images of their still intact treated wounds. All three have so far experienced durable wound healing from their single treatment in clinical trials, two received treatment nearly four years ago, and one patient who received treatment seven years ago.

In summary, we are encouraged by our initial launch progress, with nearly 50 ZEVASKYN patients having been identified between our two estimated QTCs and a growing number of referrals. We remain optimistic about our ability to treat 10-14 patients this year. We are also actively onboarding new QTCs this year to further expand patient access. Reimbursement trends are strong, and the clinical interest from patients and physicians highlights ZEVASKYN's value proposition of providing significant wound healing from a single surgical application. As QTCs gain experience, we expect the centers to identify and treat more patients. With that, I will now pass the call over to our Chief Financial Officer, Joe Vazzano, to discuss our financial results. Joe?

Thanks, Madhav. I would like to remind everyone that you can find additional details on our financial results for the three and six months ended June 30th, 2025, in our most recent Form 10-Q, which is available on our website. Starting with the financial resources on our balance sheet, we had unaudited cash, cash equivalents, short-term investment, and restricted cash of $225.9 million as of June 30th, 2025, which includes the net proceeds of the sale of the Priority Review Voucher that we received with ZEVASKYN approval. This compares to $98.1 million as of December 31st, 2024. Our existing cash resources provide Abeona with robust financial flexibility, providing over two years of operating capital based on our forecast without the need for further capital infusion and prior to accounting for ZEVASKYN sales.

We anticipate that the first ZEVASKYN patient treatment will occur in the third quarter of 2025, which will initiate revenue generation, leading to our projected company-wide profitability in early 2026. As a reminder, revenue recognition occurs when the patient receives ZEVASKYN, that is, upon surgical application. At this early stage in our launch, it is premature to provide revenue guidance. A quick note on our financial reporting going forward. As we transition into a revenue-generating commercial company, we will move away from providing cash runway guidance given the complexities of estimating future revenues in the early launch phase. In lieu of runway guidance, we plan to provide high-level forward cost guidance alongside regular updates on the commercialization in progress.

Now, turning to the statements of operations, research and development expenses were $5.9 million for the quarter ended June 30th, 2025, compared to $9.2 million for the quarter ended June 30th, 2024. The reduction in R&D expense was primarily due to costs capitalized into inventory and select costs, such as engineering runs and other production costs reclassified as selling, general and administrative, or SG&A expense, following the approval of ZEVASKYN. Our spend on SG&A activities was $17.1 million for the quarter ended June 30th, 2025, compared to $8.6 million for the quarter ended June 30th, 2024. In addition to the reclassification of select R&D expense to SG&A, the increase in SG&A reflects increased headcount and professional costs associated with the commercial launch of ZEVASKYN.

Net income was $108.8 million for the second quarter of 2025, or $2.07 per basic and $1.71 per diluted common share, including the gain from the sale of the PRV. Net income in the second quarter of 2024 was $7.4 million, or $0.19 per basic, and a net loss of $0.26 per diluted common share. In terms of upcoming Investor Relations activity, we plan to participate in two investor conferences in September: the Cantor Global Healthcare Conference and the H.C. Wainwright Annual Global Investment Conference. With that, I'll pass the call back to Vish for additional remarks before opening the call for Q&A.

Thank you, Joe. Turning to our pipeline, Beacon Therapeutics has exercised its option for a non-exclusive license to the patented AAV204 capsid for use in retinal diseases and genetic targets that are non-redundant with our AAV ophthalmology pipeline. As a reminder, AAV204 has been shown to achieve high macular and optic nerve transduction levels after pararetinal administration and has also been shown to facilitate transduction of both the inner and outer retina after intravitreal administration in mice and non-human primates. Now, I want to turn to another partner pipeline program, AAV gene therapy UX111, which is being developed by Ultragenyx for Sanfilippo Syndrome Type A, or MPS3A. In July, Ultragenyx reported that they issued a CRL in its review of the UX111 BLA, requesting additional information and improvements on CMC procedures and validation. The FDA also provided observations from the manufacturing facility inspections.

Ultragenyx believes the observations are readily addressable, and many have already been addressed. On its Q2 2025 call last week, Ultragenyx noted that it aims to reach agreement on its plan to resolve the CRL observations through a Type A meeting with the FDA, and upon BLA resubmission, expects a priority review period of up to six months. Next, I turn to another partner pipeline program, AAV gene therapy TSHA-102, which is being developed by Taysha Gene Therapies for the treatment of Rett syndrome. In May, Taysha reported that it secured FDA alignment on both key elements of its pivotal trial design for TSHA-102 and the next steps to enable the initiation of the pivotal trials that could support a potential BLA submittal. Taysha has subsequently commenced pivotal trial site activation and expects to begin patient enrollment in the fourth quarter of 2025.

In June, clinical data highlighting the therapeutic potential of TSHA-102 were presented at the 2025 International Rett Syndrome Foundation Rett Syndrome Scientific Meeting. With that, I will open the call for Q&A. Operator, please open the Q&A session.