Ram Selvaraju — Analyst, H.C. Wainwright
Thanks so much for taking our questions and congratulations on all the recent progress. I was wondering if you could comment on the cadence with which qualified treatment centers are likely to be stood up in the coming months and any specific factors that might influence the speed with which that occurs, if you expect that pace to increase, and if so, you know, what might be the specific contributing factors to that. Secondly, I was wondering if you could comment on the specific drivers of R&D spending over the course of 2026 and beyond, and if we should expect R&D spend to modulate somewhat over the course of the coming quarters, or if in fact you expect any noteworthy increases over the remainder of 2026. Thank you.
Vish Seshadri — CEO, Abeona Therapeutics
Good morning, Ram, and thank you for the questions. Regarding the cadence with the QTCs, and the speed of ramp up, right? I think there are a lot of factors that go in. We have some preliminary viewpoint just beginning this quarter. I'll turn it over to Madhav to articulate. Knowing that our projections are based on the first two sites just about ramping up, right? Madhav, why don't you take that one?
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Yeah. Thanks, Ram, for the question. With regard to QTCs, as I mentioned, we are working with five centers, one of whom is imminent, and we expect that to hopefully announce it in this coming quarter. Centers are in varying stages of their onboarding process. Our goal is to have seven in total active by the end of the year. In terms of the aspects that drive the speed with which the centers come on board, there are various ones. Some centers wanted to obviously wait for ZEVASKYN approval to take place before they invested additional resources.
Some started looking at their payer mix, like of the individual sort of patients that are in their, treatment, you know, sort of pool to see what kind of payer mix exists, how many are, commercially insured patients, and if Medicaid, you know, what sort of is the out-of-state Medicaid, nuances there. They essentially were also waiting to see coverage, established. Now we have covered significant ground with regard to market access, having established coverage and these payer policies also in place. That has given great confidence for these sites to initiate that process and speed that up. Then there are other factors with regard to institutional, you know, bureaucracies that exist with every institution.
People getting to understand the cell and gene therapy units, because in the dermatology space, this is the first engineered cell therapy that we are moving to a treatment space. That requires greater cross-functional interaction. We have learned a lot in onboarding the previous four centers, and our teams are doing a tremendous job in helping the upcoming centers to navigate that pathway and bring them to speed. We think we are confident about having seven total, and if additional centers move faster, then yes, of course, we will be able to help them stand up sooner. I hope that gives some flavor.
Vish Seshadri — CEO, Abeona Therapeutics
Yeah. Just to add to that, right, Ram, you said at steady state, what we anticipate is sites have communicated to us that one patient a month is a kind of cadence that we can definitely do. Some sites are saying perhaps two patients a month. I think it's just a matter of we're projecting based on what we are hearing from the sites in terms of their plans and their patient visibility. We need to see that come through, right? I think we'll be able to give more evidence-based cadence and the speed of getting there once we start seeing that steady state. We need to see three consecutive months of, you know, delivering that consistently. I think that's really what we're looking to get to by midyear.
As we also articulated, two of our four sites are yet to reach the point where they start layering their patients because the upfront setup time is what they're taking right now. Hopefully, that comes through in the second quarter, and we're able to show with data that, okay, sites are reaching their kind of cruise control level of speed, and therefore this is more predictable. Hope that helps there. Regarding your second question about R&D spending, right? Let me open it up to Joe first to just give a little bit because we're so focused on ZEVASKYN launch right now that our R&D spend is almost insignificant. Joe, why don't you go ahead.
Joe Vazzano — CFO, Abeona Therapeutics
Sure. Thanks, Vish. Yes, Ram, I believe the question was just drivers of R&D spend for 2026 and going forward. You know, as you may recall, we have to do the registry study that was part of the FDA approval so that they, you know, the registry study costs go into R&D, and then also the pipeline development costs will go into R&D. Again, there's, you know, as I mentioned on the prepared remarks, there's a shift from R&D to SG&A just with the evolution of transitioning to a commercial company. Those two items that I mentioned are going to be the main drivers of spend, R&D spend for 2026 and outer years.
Vish Seshadri — CEO, Abeona Therapeutics
Right. Also to add.
Ram Selvaraju — Analyst, H.C. Wainwright
Just very quickly.
Vish Seshadri — CEO, Abeona Therapeutics
Sorry. Go ahead, Ram.
Ram Selvaraju — Analyst, H.C. Wainwright
Go ahead. No, go ahead, please.
Vish Seshadri — CEO, Abeona Therapeutics
I was just going to say, as you know, we do have some preclinical programs that we're not spending a lot of, energy and, resources on those. It's kinda running in the background. We do not see preclinical programs to stack up, R&D expenses in a significant way, at least in 2026. 2027 is a different story, and I think, a lot of it is gonna depend on, you know, the ramp-up speed of ZEVASKYN and what we can bite into, right? I think that's gonna be a story that'll evolve through the rest of the year.
Ram Selvaraju — Analyst, H.C. Wainwright
Just with respect to the qualified treatment centers, I was wondering if you could comment on the relative coalescing or concentration of patients around those centers, and if you expect on a go-forward basis the bulk of new patients coming in to go through the first two treatment centers to be stood up, or if you expect some of the other treatment centers to be just as significant contributors to the overall number of patients coming on to ZEVASKYN.
Vish Seshadri — CEO, Abeona Therapeutics
Yeah, that's a great question.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Yeah, I can.
Vish Seshadri — CEO, Abeona Therapeutics
Go ahead, Madhav.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Yeah. We expect them to have a decent pool of patients similar to the currently stood up centers, Ram. Our strategy right now, just to expand on that, on your question is very clear. It's a three-pronged approach that we are taking. One is to have patients that are in these qualified treatment centers. We want to place them on ZEVASKYN therapy as soon as possible. The second is to focus on the community physicians who already have indicated they have patients that are motivated and would be eligible for ZEVASKYN treatment. We want those referrals to be the second tranche. In parallel, as we look to stand up these additional centers, that is going to pancake on top of the first two-pronged approach to have their own pool of patients.
Our approach is to make sure that these centers are as geographically, you know, spread as possible because that also obviously will help with the travel, etc., for the patients and their families. Let alone payer, you know, barriers that we will be easier to overcome once you have more centers that are geographically spread. So we do anticipate some of these centers who have the infrastructure, who have the, you know, the EB centers of excellence, etc., to bring their own set of patients as they get activated.
Ram Selvaraju — Analyst, H.C. Wainwright
Thank you.
Maury Raycroft — Analyst, Jefferies
Hi. Thank you. Congrats on the progress, and thanks for taking my questions. I had a question on the QTCs as well. It sounds like currently the QTCs are able to manage about one or two patients per month. Just wanted to clarify that. What do you expect the cruise control state to look like? I guess how many patients per QTC do you think you're gonna be able to get at a sort of a maximum capacity at these initial sites? I'll start with that one.
Vish Seshadri — CEO, Abeona Therapeutics
Go ahead, Madhav.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
That's correct, Maury. One or two patients a month. We think that their ability to ramp up, it's really dependent on the sites. Certain institutions have, you know, done their pro formas to be able to have a greater number, even go up to three patients a month, which, you know, will really depends on what their experience has been like with regard to their resource allocation and the nursing staff that have to care for the patient post operating procedures. For the most part, we expect one or two patients a month in the foreseeable future. We'll have to see, you know, how that ramps up as the experience, what their overall process experience looks like.
Maury Raycroft — Analyst, Jefferies
Got it. Okay.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Even with pilot centers, one or two patients a month, we are looking at a really good rate.
Maury Raycroft — Analyst, Jefferies
Can you also just comment on the current timeline from receipt of start form to treatment initiation? Just what does that timeline look like? Could that become more efficient over time as well?
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Right. The current timelines are very variable. It depends on various factors. If I were to, you know, just kind of average ballpark, it's more like four to five month process, of which 25 days is manufacturing time. That's very much a hard fix there. Four to five months, that includes one month, roughly one month of manufacturing. We expect that to improve over time.
Vish Seshadri — CEO, Abeona Therapeutics
Yeah, I'm glad you asked this question, Maury, because another factor here is you mentioned start form. I would say from the point of identifying a patient to when they receive treatment, because the start form is something that we are seeing has a lot of variation in when a site puts that form to us. Some sites do it soon after an identified patient is either referred or they have had a consult, and some sites wait until the entire payer process takes place and then puts a start form. So it's a very variable input as to what point in the patient's journey we receive that. So I think it adds one more layer of confounding variables to calculate that time.
What Madhav is describing here as this approximate five months is when there is a consult that happens and patient intends to get ZEVASKYN and that conversation's happened, then the first few patients took about five months all the way to get to the treatment, whereas we are seeing that process is gonna shorten over time because the administrative part of this is getting more efficient as you know a given site has been through two or three patients. I hope that makes sense.
Maury Raycroft — Analyst, Jefferies
Yep. Yeah, that makes sense, and that's helpful. Maybe last quick question, then I'll hop back in the queue. Just if you can comment on, based on the demand ramp that you're seeing, how confident are you in achieving profitability first half this year?
Vish Seshadri — CEO, Abeona Therapeutics
We believe that we have a pretty good chance of achieving profitability. I think profitability, if you define it as an entire company level, you know, profitability, I think there's numerous factors, as you already know. We've mentioned that anything north of three patients a month takes us to the profitable zone, which is, you know, $100 million, give or take, is about the company burn in a given year, right? If you use your gross and net calculations, $3.5 million or more per month is taking us to the profitable zone. I think this is a very achievable target.
It's more there are some uncertain factors as to how the third and the fourth sites are gonna achieve their speed and reach that cruise control and also you know how quickly we're bringing additional sites even on board and then up and running. I think these are a couple of variables, but we feel this is a pretty reasonable goal.
Maury Raycroft — Analyst, Jefferies
Got it. Okay. Thanks for taking my questions.
Vish Seshadri — CEO, Abeona Therapeutics
Thank you.
Stephen Willey — Analyst, Stifel
Yeah, good morning. Thanks for taking the questions and congrats on the progress. Has the target number of QTCs that you wanna bring online over the longer term, has that increased at all? I know you have some early experience on the referral front. I'm just curious if you're finding that it might be logistically easier to activate more of these centers as opposed to trying to increase the band of referrals.
Vish Seshadri — CEO, Abeona Therapeutics
Go ahead, Madhav.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Five. Right. Our target QTC number, Stephen, has been five to seven, and we do think that seven this year is a realistic goal that does help with certainly the bandwidth within the qualified treatment centers, as well as just increasing the footprint overall. We think we'll have more outlets for patients to get treated. You know, we're gonna be working towards bringing these centers on board. In the meantime, also, of course, as the various community physicians have patients, we want that healthy, you know, awareness and healthy enthusiasm from all of the other physicians also, that in the longer term, that's really where we will rely on these community physicians to funnel their patients into the qualified centers. That's really our approach. Our target centers right now, you know, is seven.
As I said, we have more centers that are working with us and would like to, you know, be activated. If we have more treatment centers, then certainly that only adds more to the process and eases the logistics.
Vish Seshadri — CEO, Abeona Therapeutics
Yeah. Also,
Stephen Willey — Analyst, Stifel
Oh, go ahead. Sorry.
Vish Seshadri — CEO, Abeona Therapeutics
Just one clarification is also, as Madhav explained, the QTC onboarding process itself can take several months. While we talked about five additional centers beyond the four that we're working with, which are already activated, gives you a bigger number. We anticipate that, you know, some of those may spill over to even next year, right? Because it's a lengthy process. We are definitely looking to have seven activated sites this year.
Stephen Willey — Analyst, Stifel
Okay. When you say you're actively onboarding five additional centers, that does not include the two that have recently signed up, Children's Hospital Colorado and University of Texas Medical Branch.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Right.
Vish Seshadri — CEO, Abeona Therapeutics
Correct.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Correct.
Vish Seshadri — CEO, Abeona Therapeutics
Correct.
Stephen Willey — Analyst, Stifel
Okay. Understood. Is there just anything you can talk about on the reimbursement side, specifically as it pertains to pre-authorization? I'm just curious if payers are kind of pegging themselves to inclusion, exclusion criteria from the phase III. Is it pegged to the label? Just any color there would be helpful.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Yeah. We are seeing a mix definitely to inclusion, exclusion criteria, given the, you know, high cost nature of the product. They want to make sure that their initial set of patients are guided to the inclusion, exclusion. We also have major plan like UnitedHealthcare and many of the Medicaid states also looking to have coverage that are favorable to, you know, the label criteria. It really depends on the plans, but regardless of the criteria, what we are seeing is with letters of medical necessity, physicians have been able to overturn, you know, sort of the requirements. For instance, if there is an age is one major aspect that we're seeing in the sense six years and above was our inclusion criteria.
For patients that are less than six, physicians have been able to overturn that. Also, you know, with regard to squamous cell carcinoma, and their presence in the body, location, that is also one of the factor that physicians have been able to overturn and, you know, get the patients onto the product. As more, you know, patients go through the process in terms of the overall timing, that's also improving because letters of medical necessities and the templates that are required, those templates are getting populated, right? For future and subsequent patients, for processes that are unique to ZEVASKYN, we are seeing that time also to improve, you know, improving at the QTCs that are already treating patients. That's really the-
Vish Seshadri — CEO, Abeona Therapeutics
Yeah. The bottom line, though, is, Madhav,
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
reimbursement process.
Vish Seshadri — CEO, Abeona Therapeutics
The bottom line, though, is that these inclusion, exclusion criteria do not prevent a patient from getting reimbursed eventually with all these additional steps that we're taking. Even if the plan has that kind of a restriction, we're able to work through that and get patients reimbursed.
Stephen Willey — Analyst, Stifel
Okay. Then just lastly, I think you mentioned that there's, I believe, another 10 patients or so that are targeting biopsies for next quarter. Can you just speak to how those patients are distributed against the two QTCs that are already treating patients versus Colorado and UTMB that you'll be activating here shortly? Thank you.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
It's from across all of the four QTCs.
Stephen Willey — Analyst, Stifel
All right. Thanks for taking the questions.
Kristen Kluska — Analyst, Cantor Fitzgerald
Hi. Good morning, everybody, and thanks for all of this specific color this morning. I wanted to ask about the dialogue or the relationship between the QTCs themselves. It sounds like Stanford and Chicago being the first two are kind of paving the way here, having a little bit of additional time to get things on board. Are they working with the additional two QTCs just to kind of be a sounding board help as everybody familiarizes themselves with this process?
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Not that we are directly aware of. We certainly, you know, it's a tight-knit physician community, so they do talk to each other in terms of the sharing of the best practice as well as administrative steps. Plus, our teams are also actively working with them in helping them cross-pollinate the best practices.
Kristen Kluska — Analyst, Cantor Fitzgerald
Okay. Thank you for that. Just as we think about the fact that some additional biopsies are already scheduled and we have two weeks left in 1Q, should we be conservatively modeling that these are more likely to come in in 2Q versus the current quarter?
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
We expect this for this month, Kristen. Of course, you know, until the biopsy is done, it's not, you know, we don't know. We don't see a reason why there should be any, you know, attrition or a drop off, but it is for this month that we expect additional biopsy.
Kristen Kluska — Analyst, Cantor Fitzgerald
Okay. Sounds like we'll get one more QTC pretty quickly and another two maybe before the end of the year. How are you thinking just about dispersing throughout the geography in the country, and how has that played an impact so far about getting patients on board, ability to travel to these sites, et cetera?
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Our goal is to have a geographically dispersed. I mean, clearly you can see that, eastern seaboard is an important area for us. If we have a center in that region, I think that will certainly help with patient access. You know, these patients, for other reasons, with their other comorbidities, they do travel significant distances to get therapies. You know, we don't really think that even five or seven is going to impede their ability to travel really for ZEVASKYN. Of course, as more centers come on board, that's definitely going to be a positive thing.
Vish Seshadri — CEO, Abeona Therapeutics
Also the flexibility that it offers. You know, right now, certain patients, I'm not saying this is true for every patient. Some patients, crossing state borders, have extra paperwork to go through Medicaid, right? There's more bureaucratic steps. Those things will also be streamlined a little bit by offering more choice and flexibility on where they can get treated. That's really what we are also excited about.
Kristen Kluska — Analyst, Cantor Fitzgerald
Okay, thank you very much.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Thank you.
Jeff Jones — Analyst, Oppenheimer
Good morning, guys, and thanks for taking the question. Maybe the first one on manufacturing. How comfortable are you at this point that the sterility testing is well behind you now? And just a reminder, if you would, on current production capacity and the expansion plan of that capacity through the year. And then the second one, maybe on, you know, patient and physician feedback now that you've treated patients out in the commercial setting. What is the feedback you've been getting from physicians and patients on the overall experience?
Vish Seshadri — CEO, Abeona Therapeutics
Thank you, Jeff. Your first question is about manufacturing the sterility test, is that behind us and how we're ramping up capacity. We do have our CTO, Dr. Brian Kevany, on the call. Brian, can you take that one, please?
Brian Kevany — CTO, Abeona Therapeutics
Yeah. Thanks, Vish. Yeah, we as a reminder had a very healthy dialogue with the agency around the sterility assay issue, and that was a very productive conversation with the agency. We do feel very confident that the resolution that came out of that is a solution going forward. We'll continue to you know always look to ways to improve our manufacturing and testing process, but we do feel very confident that the resolution that came out of those discussions is gonna support us going forward.
As it relates to production capacity, currently we're running at a cadence of six patients per month within the facility and continue to develop the space to be capable of reaching that 10-patient-per-month capacity that we have previously discussed throughout the rest of this year. All of those activities are on track to meet that goal. It's actually lining up very well with the onboarding the additional QTCs to maintain a steady level of supply for those sites as they come on board.
Vish Seshadri — CEO, Abeona Therapeutics
Yeah. I just wanted to also add on the sterility thing, right, Jeff, which is we've done a lot of work trying to minimize the probability that that problem occurs again. You know, whether we can go, say, 40 runs or 50 runs and never saw this problem happen again, that's only gonna be empirically proven. But all our feasibility studies point out that the probability is significantly reduced by at least a log order, or more. So, that's what gives us the strength. But, you know, we're not stopping at that. Whatever we've implemented as an improvement to reduce those false positives, we're not stopping at that. We're also doing the next generation, rapid sterility development alongside this so that we can, you know, get to an even better level.
This is part of when you say R&D, we're always thinking about pipeline. There's a lot of lifecycle management R&D that goes into optimizing ZEVASKYN. That's really where some of our teams in the quality function are focused on. As Brian said, we're already operating at six manufacturing runs a month cadence. This is right now with the current demand, it's keeping up, and that's gonna be ramped up to about 10 a month by second half of the year. That's also coming. The second question-
Jeff Jones — Analyst, Oppenheimer
Great. Thank you.
Vish Seshadri — CEO, Abeona Therapeutics
That you asked was about the patient and HCP feedback on the current treatment. I'll just preface this by saying that there's only two patients that have been treated, and there's not enough time that has passed along because if you remember even our endpoint and assessments and things like that happen six months. This is a therapy with a durability play, right? I don't know if we have enough feedback, but I'll just open it up to Madhav to see what he has on that.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Nothing more to add, Vish, to what you have said.
Vish Seshadri — CEO, Abeona Therapeutics
Yeah.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
At this point. Yeah.
Vish Seshadri — CEO, Abeona Therapeutics
Yeah, because when we talk to doctors, they say, "Oh, that patient is doing well." What does that really mean? I mean, are you talking about wound healing or are you talking about-
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Exactly.
Vish Seshadri — CEO, Abeona Therapeutics
General health of the patient? These are things that we don't really know, so it's too premature to comment on that.
Jeff Jones — Analyst, Oppenheimer
All right. Appreciate it, guys. Thank you.
David Bautz — Analyst, Zacks Small-Cap Research
Hey, good morning, everyone. Thanks for the update this morning. I got a couple questions about the patients that you've already treated. First off, are you aware if they were also simultaneously being treated with VYJUVEK say, maybe for their smaller wounds, if they had any? Do you anticipate the need to retreat either of those patients later in 2026? And then are you aware if there are any exclusions for retreatment, say if any of the payers have restrictions on the ability to get retreated?
Vish Seshadri — CEO, Abeona Therapeutics
Go ahead, Madhav.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
We don't know the VYJUVEK related question. What we do know is that these patients were not simultaneously on VYJUVEK. That's the information we have. With regard to their prior history of VYJUVEK, we think that most of these patients have received VYJUVEK at some point in their journey. Your second question with regard to retreatment. Based on the physician feedback, these patients have significantly large wound areas and that they have said that, yes, these patients would require a second round of ZEVASKYN treatment.
We don't know if that is going to be this year or if this is going to be next year or some other point, 'cause these initial set of patients and to the foreseeable future, these patients have large, you know, areas of their body that require, you know, several areas to be treated. The third one with regard to exclusion. No, we don't see exclusion criteria with regard to a retreatment of a patient, which is really, you know, something we are very pleased to see that payers are not blocking, like ZEVASKYN for once in their lifetime. So that is encouraging. If we do have a patient that requires a retreatment of a previously treated ZEVASKYN area, then it really depends on what the payer policy there will look like.
We are not seeing any kind of a blockade or anything of that. That's all based on the policies that have been published.
David Bautz — Analyst, Zacks Small-Cap Research
Okay, great. Appreciate taking the questions.
Madhav Vasanthavada — Chief Commercial Officer, Abeona Therapeutics
Yeah.
Vish Seshadri — CEO, Abeona Therapeutics
Thank you, Jenny. Thank you everyone for joining us today for the earnings call. We'll talk to you again soon.