Zacks Small Cap Research – ABEO: Receives CRL Based on Need for More CMC Information… – Technologist

By David Bautz, PhD

NASDAQ:ABEO

READ THE FULL ABEO RESEARCH REPORT

Business Update

CRL Issued for Pz-cel BLA

On April 22, 2024, Abeona Therapeutics, Inc. (NASDAQ:ABEO) announced that the U.S. Food and Drug Administration (FDA) issued a Complete Response Letter (CRL) in response to the Biologics License Application (BLA) for pz-cel (prademagene zamikeracel). The agency did not identify any deficiencies with the clinical safety or efficacy data, however there were requests for additional information concerning Chemistry, Manufacturing and Controls (CMC) issues and that those issues would need to be satisfactorily resolved before approval. While the company had offered a plan to submit CMC data prior to BLA approval and then provide full validation reports after approval in mid-2024, the agency did not believe there would be sufficient time to review all the requested information prior to the May 25, 2024 PDUFA date.

To satisfy the issues raised in the CRL, the FDA is requesting validation data for certain manufacturing and release testing methods, which includes some items that were identified in the observations on Form 483 that was issued following the pre-license inspection of the manufacturing facility. While the CRL was not expected, it also does not appear to be anything insurmountable for the company, and the fact that no additional clinical data was requested is encouraging as it likely means the agency has enough information regarding efficacy to assess pz-cel. It is also not surprising that the agency would request additional CMC information, which is typical for products with complex manufacturing processes like pz-cel.

Abeona is planning to have all the information requested by the FDA in time to resubmit the BLA in the third quarter of 2024, which would likely lead to a PDUFA date in the first quarter of 2025.

Financial Update

On March 18, 2024, Abeona announced financial results for 2024. License and other revenues for the year ended December 31, 2023 were $3.5 million, compared to $1.4 million for the same period in 2022. The revenues in both years primarily represented clinical milestone payments under a licensing agreement with Taysha Gene Therapies for investigational AAV-based gene therapy for Rett syndrome.

R&D expenses for full-year 2023 were $31.1 million, compared to $29.0 million for the full-year 2022. The increase was primarily due to an increased headcount related to BLA activities. G&A expenses were $19.0 million in 2023 compared to $17.3 million in 2022. The increase was primarily due to increased headcount for the potential launch of pz-cel.

As of December 31, 2023, Abeona had approximately $52.6 million in cash, cash equivalents, restricted cash, and short-term investments. In January 2024, the company received a first tranche of $20 million as part of the credit facility with Avenue Venture Opportunities Fund. We estimate that the company has sufficient capital to fund operations into the first quarter of 2025. As of March 6, 2024, Abeona had approximately 27.4 million shares outstanding and, when factoring in stock options and warrants, a fully diluted share count of 39.4 million.

Conclusion

We’re disappointed by the CRL issued by the FDA, however Abeona’s management was very forthcoming about the CMC data that the agency requested and it appears as though the company is well on its way to having all the information necessary in order to resubmit the BLA in the third quarter of 2024. This will likely lead to a PDUFA date in the first quarter of 2025. While we are confident that pz-cel will be approved, the delay in approval means that the company will need to raise cash prior to approval. After pushing back expected first revenues for pz-cel and accounting for an increased number of shares to be sold at the next financing we have lowered our valuation to $8.00 per share.

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