ABEO (Update)

Please note, this is an update to: Abeona Therapeutics Inc (ABEO) - Long, which was originally presented 9/20/2016 ($6.75).

Publicly traded companies mentioned herein: Abeona Therapeutics Inc (ABEO), AveXis Inc (AVXS), Regenxbio Inc (RGNX)

Highlights

The presenter remains long shares of Abeona Therapeutics (ABEO) at $9, and continues to see substantial upside potential for patient shareholders. ABEO’s ~$65mm cash balance “should see them through to profits”. He provided a brief overview of the setup - three clinical programs in Phase I/II human trials today, growing to 4-5 clinical-stage programs over the next year - and Abeona’s focus on rare diseases, including: Sanfilippo syndrome Type A - MPS IIIA, and Type    B - MPS IIIB; Recessive dystrophic epidermolysis bullosa (RDEB); and both Juvenile and Infantile Batten disease (CLN3 and CLN1, respectively). If the company can continue to progress through its clinical programs successfully and pricing of the therapies falls within the realm of the presenter’s expectations, the stock could reach the $40-60 range.

• Abeona uses a non-replicating adeno-associated virus (AAV) capsid to deliver a functional copy of a human SMN gene to the patient's own cells without modifying the existing DNA of the patient. The AAV9 vector, which Abeona uses, is similar to AveXis’ and is self-complementary. This is important because it is more efficient than traditional ssAAV vectors.

  • When asked if Abeona also needs to license the vector from Regenxbio, and if that’s been an overhang on the stock, the presenter said, “Probably, yes. And it should be a pretty straightforward process because they are non-exclusive and Regenx should be willing to write a license [to ABEO]”.

• ABO-102 and ABO-101 for Sanfilippo syndrome (Type A and B, respectively):

  • If approved, ABO-102, which is slightly ahead of ABO-101, could generate revenue of $300mm per year. This is not huge, but is meaningful for a company with a $360mm market cap. The data continue to be encouraging (reductions in CSF and urinary GAGs/HS, reduction of liver volumes, evidence of neurological benefit, etc.), and every other company that has tried to attack MPS IIIA has discontinued their programs.

    • ABEO has just started recruiting patients in Australia and Spain, and will dose more patients in the U.S., with a goal of 15 patients treated by October 2017. This would allow management to go to the FDA with 12-month data for 3 patients, 6-month data for 3 patients, and 1-month data for nine patients and start the discussion about what needs to be done to gain approval.

  • For manufacturing, Abeona is using Florida-based Brammer, which the presenter views as one of the better contract development and manufacturing organizations for gene therapy. ABEO has 12-18 months to optimize manufacturing.

  • ABO-101 data is expected later in 2017. The clinical trial data thus far looks clean, and the animal data is almost identical to ABO-102’s. The market for MPS IIIB is half the size of MPS IIIA.

• Also using AAV9, Abeona has ABO-201 and 202 for Juvenile and Infantile Batten Disease, respectively. The presenter sees Juvenile Batten as a bigger market opportunity than Sanfilippo syndrome Type A (Infantile Batten is a smaller market).

• Lastly, the data* for ABEO’s skin patch - EB-101 - for RDEB continues to look “spectacular”, and EB-201 is in preclinical development for all forms of EB (not just RDEB, which is more severe). A participant noted that the prevalence of EB may be higher than reported, as a variety of factors influence patients’ willingness and ability to seek care (which allows them to be counted).

  • A concern is what the price will be, but the presenter said EB patients go through $120,000 of bandages in one year, plus the cost of supportive care. EB-101 requires one biopsy to create six patches and then patches can be created in batches of six to offer a disease management program of sorts (i.e., for ~$250,000 per year, per patient; there are lots of options and it’s hard to know how this will play out, if approved).

*Source: Company Presentation

Adding up all of the parts and assuming 100% success - “a rare feat in biotechnology” - equates to $145 per share of value looking out ~36 months. The presenter acknowledged the complexity of getting there, but broke down the contributions to that target as follows (based on his model): MPS IIIA $40/ share (200 patients per year); MPS IIIB $20/ share (100 patients per year); Juvenile Batten $60/ share and Infantile Batten $10/ share; and EB $25/ share.

• He concluded, “ABEO just needs to take one step at a time, and going to the FDA with the first 15 patients for MPS IIIA should be a compelling first step toward showing that ABO-102 works”. Despite many outstanding questions (timing, approval, pricing, etc.), there appears to be a reasonably straightforward path to $40 over the next 12 months.