Abeona Therapeutics Q3 2026 Earnings Call Transcript

Quartr
Provided by Quartr
November 9, 2026

Key Takeaways

  • Positive Sentiment: ZEVASKYN revenue rose 18% sequentially to $13.5 million, with six patients treated during the quarter and 15 treated since launch. The network expanded to eight qualified treatment centers, four of which have treated patients.
  • Negative Sentiment: Patient treatment timing remains variable as patients and centers work through authorization, scheduling, and other steps; a planned manufacturing shutdown from mid-November to mid-January is expected to shift some treatments into 2027. The company reported one out-of-specification batch among 15 treated patients and is not providing patient-funnel numbers.
  • Positive Sentiment: Abeona acquired ABO-801, a phase III-stage EoE candidate, for $20 million in stock, with additional approval and commercial milestone payments and tiered royalties owed to Ellodi. Management sees potential for peak annual revenue above $750 million and plans a roughly 400-patient phase III trial, pending FDA feedback, with initiation expected in mid-2027.
  • Neutral Sentiment: ABO-801 showed histologic and endoscopic activity in prior trials, but neither study individually met its co-primary symptom endpoint; management attributes this in part to the symptom-assessment tool and plans to use the DSQ in the next trial. The company estimates $50 million–$60 million to develop the drug through approval and says its cash, private-placement proceeds, expected ZEVASKYN sales, and FAYUVI royalties provide funding support.
AI Generated. May Contain Errors.
Earnings Conference Call
Abeona Therapeutics Q3 2026
00:00 / 00:00

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Operator

Good morning, everyone, and welcome to Abeona Therapeutics 3Q 2026 conference call. At this time, all participants have been placed on a listen-only mode, and a question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Greg Gin, Vice President of Investor Relations and Corporate Communications. Greg, the floor is yours.

Greg Gin
Greg Gin
VP of Investor Relations and Corporate Communications at Abeona Therapeutics

Thank you, Tom. Good morning, and thank you for joining us on our third quarter 2026 results conference call. During this call, we will refer to the press release issued this morning announcing the acquisition of APT-1011 and our third quarter financial results. They are available on our corporate website at www.abeonatherapeutics.com. Joining me on today's call are Dr. Vish Seshadri, Chief Executive Officer, Dr. Madhav Vasanthavada, Chief Commercial Officer, Joe Vazzano, Chief Financial Officer, as well as Dr. Brian Kevany, Chief Technical Officer. We will be 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.

Greg Gin
Greg Gin
VP of Investor Relations and Corporate Communications at Abeona Therapeutics

Actual results may differ materially 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. With that, I will now turn the call over to Vish Seshadri to lead us off. Vish?

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Thank you, Greg, and good morning, everyone. This quarter represents an important point in Abeona's growth story as we continue to build the commercial foundation for ZEVASKYN while beginning to broaden and diversify opportunities that can unlock significant value for the company in the longer term. Toward that objective, today, we announced the acquisition of APT-1011, now ABO-801, from Ellodi Pharmaceuticals. ABO-801 is a phase III product candidate for eosinophilic esophagitis, or EoE, with both FDA Orphan Drug and Fast Track designations. Before elaborating further on the rationale and attractiveness of this opportunity, Madhav will first discuss the significant progress that we have made on the ZEVASKYN launch, which remains the foundation of our business and our immediate operating priority. Madhav?

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Thank you, Vish, and good morning, everyone. In the third quarter, we delivered ZEVASKYN growth with a net revenue of $13.5 million, an 18% increase compared with the prior quarter, while continuing to strengthen the foundation for ZEVASKYN launch. During the quarter, six patients were treated, bringing the total number of patients treated with ZEVASKYN since launch to 15. Revenue was recognized for five of the six treatments. As previously stated in August, revenue was not recognized for one treatment because the associated batch was out of specifications for the pan-CK identity assay. Also in the quarter, two of the activated QTCs, CHOP and UTMB, treated their first patients, bringing the total number of QTCs with ZEVASKYN treatment experience to four.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

For a QTC, treating a patient for the first time, as you'll appreciate, is an important milestone because it validates their ability to execute the multi-step process end-to-end across different stakeholders and speeds up their learning curve for future treatments. During the quarter, we activated two additional qualified treatment centers, Cincinnati Children's and University of Florida Health, bringing the ZEVASKYN network to eight sites and further expanding geographic access for eligible patients. Both centers are already advancing their first patients through prior authorization and financial clearance, and they initiated those processes more quickly than our initial QTCs. We believe this reflects a maturing launch infrastructure and the benefit of sharing learnings and best practices across the QTC network. More broadly, patients across all eight centers are actively moving through the process.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Although QTCs are working to advance their patients toward ZEVASKYN, as mentioned in prior calls, treatment timing can vary based on QTC and patient-related factors. These steps often include ensuring patients are clinically ready, securing payer authorizations, negotiating single-case agreements, and coordinating patient travel and surgery schedules. Given the time required to schedule these steps for treatment, together with our planned annual manufacturing shutdown, we expect treatment timing to remain variable through year-end, with some patients currently progressing through the pathway in the advanced stages of the funnel, potentially moving into early 2027 for biopsy swabs. Speaking of 2027, we will have entered the year from a fundamentally different position than we did at the start of this year. In looking at this map, RDEB patients will have access to eight well-recognized qualified treatment centers, four of them having gained firsthand experience treating with ZEVASKYN.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Payer coverage available for more than 95% of commercial lives, baseline Medicaid coverage across all 50 states, a New Technology Add-on Payment, NTAP, status for Medicare beneficiaries, and with necessary billing, coding, and reimbursement infrastructure in place. As more centers gain firsthand experience with ZEVASKYN and patient wound healing outcomes continue to accrue, we expect real-world experience to support broader patient activity and uptake across the QTC network. We are confident in the important role ZEVASKYN can play for patients with RDEB, and we remain focused on the execution to realize that opportunity. With that, let me turn the call back over to Vish. Vish?

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Thanks, Madhav. With ZEVASKYN providing our commercial foundation, we have also been considering how to build on our capabilities and broaden our opportunities for value inflection. Through ZEVASKYN and our prior advancement of the program, which resulted in the approval of FAYUVI, we have built experience in late-stage clinical development, regulatory execution, and commercialization. Our goal is to create a diversified revenue-generating company with multiple opportunities for durable growth. ABO-801 is well aligned with that strategy. It is a phase III-ready Orphan Drug with robust clinical data and a uniquely differentiated profile that can translate into a substantial peak annual revenue potential of greater than $750 million in the disease of growing prevalence. Just as importantly, we believe that our prior experiences in late-stage development position us to move the phase III program forward without distracting our commercialization and manufacturing teams from the ZEVASKYN launch focus.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Eosinophilic esophagitis, or EoE, is a growing disease with increasing unmet need, with approximately 350,000 diagnosed patients in the U.S. today. It is a chronic, lifelong inflammatory disease of the esophagus that can significantly affect swallowing and food intake. Over time, persistent inflammation can also lead to structural damage to the esophagus and exacerbate the condition. Because of that, EoE requires lifelong disease management. The goal is not simply to manage symptoms, but also to control the underlying inflammation, restore and maintain normal structure of the esophagus, while limiting adverse events of therapy. ABO-801 is a once-daily oral disintegrating tablet, or ODT, formulation of fluticasone propionate taken at bedtime. It is designed to deliver topical corticosteroid therapy directly across the esophagus. The tablet dissolves in the mouth in less than 30 seconds without water and acts both in proximal and distal esophagus with little to no systemic absorption.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

We think that this profile is important in a chronically managed disease like EoE. The treatment landscape of FDA-approved therapies comprises an oral corticosteroid, EOHILIA, and an injectable biologic, DUPIXENT. While there are several injectable biologics in development, there is dearth of effective, safe, and convenient oral therapies. We believe that a combination of targeted topical delivery, limited systemic exposure, and convenient once-daily bedtime orally disintegrating tablet, or ODT, could offer a uniquely differentiated treatment option for patients with EoE. Importantly, ABO-801 has already been evaluated in two phase III studies, giving us a substantial body of clinical experience to build on. Let me walk through those results, which are important not only in characterizing the activity and differentiated profile of the drug, but also in optimizing the design of the subsequent phase III study. The two completed phase III studies evaluated more than 350 patients combined.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Due to low systemic absorption of less than 1% for ABO-801, corticosteroid-associated AEs like adrenal suppression have not been observed. The efficacy data showed strong activity across physician-reported measures like histology, which is an FDA-required co-primary endpoint, and endoscopic measurements of esophageal structure. On the right, you can see a representative example where rings and furrows, which are characteristic of EoE seen at baseline, were corrected by week 12 and sustained at week 52. In addition, the studies also showed improvements in patient-reported symptoms. We believe the totality of these findings provides important evidence that ABO-801 is active in EoE. Gastroenterologists place particular emphasis on endoscopic findings in EoE, including features such as edema, rings, exudates, and furrows, known as EREFS. ABO-801 showed significant improvements in overall EREFS response at week 12 in FLUTE-2 and week 24 in FLUTE-3 studies.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

These findings indicate that ABO-801 had an effect not only on inflammation, but also on structural features of the disease in these trials. We also saw encouraging evidence of symptomatic improvement in both trials. While neither study individually met the co-primary patient-reported symptom endpoint, a post-hoc exploratory analysis pooling week 12 data from both trials showed a significant improvement in complete symptom response with ABO-801 compared with placebo, with a P-value of 0.004. Complete response was defined as patients reporting no episode of dysphagia in the final 14-day window of the 12 weeks. Importantly, the completed studies also gave us insight into why, despite the strong histologic and EREFS results, the individual studies missed the symptom endpoint.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

The DSQ, or Dysphagia Symptom Questionnaire, the industry standard patient-reported outcome tool that has been validated and used in the studies of FDA-approved EoE therapies, was not available to Ellodi at the time of the studies. Ellodi developed a proprietary PRO tool called PROS, which was used in FLUTE-2 and FLUTE-3. PROS did not distinguish between solid, soft, or liquid foods. Instead, patients rated their swallowing difficulty on a zero to 10 scale with limited guidance on how to assign a score. This may have introduced variability in how patients reported their symptoms, making it more difficult to distinguish treatment effect from background noise. In contrast, the DSQ first asks whether patients consume solid food. If the answer is no, the assessment does not proceed for that session.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

The DSQ then asks more objective questions about what patients did in response to swallowing difficulties using a defined numerical scale tied to those actions. A post-hoc analysis mapping the DSQ to the FLUTE-3 study data showed that had the DSQ been used in the study, there would have been a high probability of meeting the symptom endpoint. We have described these data in greater detail in a clinical deck included on our 8-K filing and available on our corporate website, www.abeonatherapeutics.com. Importantly, the DSQ is now available to us, and we plan to use it as a symptom assessment tool in our next phase III study. These learnings are informing our plans for the phase III study.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

We currently envision enrolling approximately 400 patients to evaluate 3 mg of ABO-801 once daily versus placebo, with co-primary endpoints assessing symptoms using the DSQ and histologic response at week 12, and secondary endpoints at week 24 to assess durability of activity. We plan to discuss the study design with the FDA at a Type C meeting and currently anticipate initiating the study in mid-2027. While the timing of top-line results will depend on study initiation and enrollment, we currently anticipate results around end of 2028. With that, I turn the call over to Joe to review our third quarter financial results and provide additional detail on the transaction and financing. Joe?

Joe Vazzano
Joe Vazzano
CFO at Abeona Therapeutics

Thank you, Vish. For the third quarter, Abeona reported net ZEVASKYN revenue of $13.5 million, an 18% increase from $11.4 million in the second quarter. As Madhav noted, revenue was recognized for five ZEVASKYN treatments completed during the quarter. For the third quarter, cost of sales was $5.7 million, compared with $4.2 million in the second quarter. R&D expenses were $3.7 million in the third quarter, compared with $5 million in the second quarter, while SG&A expenses in the third quarter were $17.1 million, compared with $15.8 million in the second quarter. For the third quarter, we reported a net loss of $4.8 million, or $0.08 per basic and diluted share, compared with a net loss of $20.2 million, or $0.35 per basic and diluted share, in the second quarter.

Joe Vazzano
Joe Vazzano
CFO at Abeona Therapeutics

We ended the third quarter with $134.9 million in cash equivalents, and short-term investments, compared with $146.8 million at June 30th. Turning to the transaction, at closing, Abeona issued to Ellodi $20 million of Abeona common stock, with no upfront cash payment. Ellodi will also be eligible for a $30 million payment upon FDA approval of ABO-801, and up to an additional $30 million tied to specified commercial milestones. In addition, Ellodi is eligible to receive tiered royalties on net sales ranging from the low to mid-teens. Alongside the transaction, $30 million private placement is intended to support our pipeline and commercialization efforts for ZEVASKYN. Importantly, our September 30th cash balance does not include the proceeds from the private placement. With that, I'll turn the call back to Vish before opening the call for Q&A. Vish?

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Thank you, Joe. Before closing, I also want to highlight another important development that reflects Abeona's history in advancing rare disease programs. In September, Ultragenyx received FDA approval of FAYUVI for Sanfilippo syndrome type A. Abeona previously advanced the program before out-licensing it to Ultragenyx in 2022. Under the agreement, we are eligible for certain commercial milestone payments and tiered royalties on product sales. We're pleased to see the program advance to commercialization and congratulate the Ultragenyx team on this important milestone. To close, our immediate priority remains executing the ZEVASKYN launch and realizing its potential for patients with RDEB. At the same time, we plan to advance ABO-801 with a disciplined approach to resourcing and capital allocation, and we will build a more diversified and durable company. I want to thank our employees, our QTC partners, the patients and families we serve, and our shareholders for their continued support. With that, I'll turn the call back to the operator to open the line for questions. Thank you.

Operator

Thank you. The floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask if listening on speakerphone this morning that you pick up your handset while asking your question to provide optimal sound quality. Once again, to join the queue to ask a question at this time, you may press star one on your telephone keypad. Please hold a moment while we poll for questions. The first question this morning is coming from Maury Raycroft from Jefferies. Maury, your line is live. Please go ahead.

Analyst at Jefferies

Hi, thank you for taking our questions. This is Amin on for Maury. Couple of questions from us. First, can you maybe quantify the current patient funnel by number of patient identified, approved for a reimbursement biopsy, they're waiting for treatment? Also, it would be great if you can comment on the process maturing. Where do you expect the commercial manufacturing success rate to settle? Should we view occasional batch failures as an inherent part of the manufacturing process?

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Thank you for that question, Amin. With regard to the first aspect of the quantifying patient numbers, we are not, as mentioned on the previous call, guiding in terms of how the patients and the mid-quarter performances are. We can say that there are patients in each of the eight QTCs, some QTCs having more than one patient that are currently actively going through the process. We have visibility to sort of that level of patients that are in the prior auth process. Some of them have cleared their financial single case agreement and are looking to get scheduled for biopsies. But overall, from both QTCs as well as out in the community physicians, there are patients that have been identified and coming into the process and into the QTCs.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

With regard to the manufacturing process itself, the number of out-of-specs that we have indicated so far is one lot, out of the 15 that we have treated. So that has been sort of the success rate. It is rather high if you generally look compared to general autologous cell therapy process. At this point, it is tough to say what exactly the percentage of out-of-spec will look like for future upcoming batches.

Analyst at Jefferies

Helpful, thank you. If I can ask one follow-up. With the planned site maintenance, when will you stop collecting biopsies in 4Q, and when will you restart in Q1?

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Yeah. We will be stopping collecting biopsies starting around mid-November, and we will resume again in mid-January. So first quarter also is going to get impacted, because you will have a truncated quarter in first quarter of next year, about six weeks of performance to collect biopsies and have those treatments realized in 1Q. So really, half of January and the month of Feb, biopsies will convert into treatments, potentially convert into treatments in first quarter.

Analyst at Jefferies

Okay, helpful. Thank you.

Operator

Thank you. Your next question is coming from Ram Selvaraju from H.C. Wainwright. Ram, your line is live. Please go ahead.

Ram Selvaraju
Ram Selvaraju
Analyst at H.C. Wainwright

Thanks very much for taking our questions. I just wanted to see if there had been any noteworthy process development or manufacturing improvements in the process for ZEVASKYN over the last couple of months that you expect to, in the long run, meaningfully improve efficiency or reduce processing time? If so, if you could give us a sense of granularly what kind of impact those process development improvements are likely to have. I also wanted to see if you could give us an updated sense of when you anticipate it would be appropriate to consider the possibility of expanding manufacturing bandwidth for ZEVASKYN based on what you expect in terms of the kinetics of underlying market demand. Also, just very quickly, one question on ABO-801. Can you comment on how this candidate might potentially be positioned in the market relative to, for example, the approach being pursued by Eupraxia? Thank you.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Thank you, Ram. Your first question about process improvements, we are making several process improvements to make our manufacturing robust, right? I will give you a couple of granular examples. I do not want to get into everything, but the first thing is having a consistent yield, right? We discussed there was one low-yield batch. We have a special team that has been put together to make those types of improvements. One is, how can we maximize cell yield from biopsies, and how can we get more number of sheets, as many as possible to the patients, right? This is one of the big questions, and there are several process steps that have been put to test whether we can improve that. As you may be aware, these types of changes to manufacturing require close work with the FDA, and that is already happening.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

We have been in continuous conversations to see how this can be implemented and get the FDA's endorsement for such changes. That is one area of process improvement. When you say process improvement, it is process as well as assay and quality control testing improvement, which also includes the specification setting and things like that. There, again, we are working closely with the FDA. Any change that you make, whether it is to process or release assays, it involves regulatory agency there. We are working on those aspects and hope to see those improvements show up in our numbers as quickly as we can get these implemented. Your question about capacity expansion. We are already at a capacity of six patients per month.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

We have had a lot of interaction with the agency on getting that up because we have a certain manufacturing suite for retroviral vector manufacturing that can be converted and used also to add suites for drug product. That is already a conversation we have had with the FDA. We had a meeting and endorsement on what data we need for that, and the work to generate such data are already ongoing. We are on track. I think we had indicated sometime in 2027, by mid-2027, we will be ready to turn that switch on. The only thing we have not done is hire FTEs to man those additional suites, which we will very soon, as soon as the data have been generated and submitted to the agency.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

That is on the topic of capacity expansion, and we can get up to 10 manufacturing slots a month within the clean room space we have right now. Anything more than that will require additional construction work for more clean room space. That is something we have not actively invested on at this point in time, but we have designs ready for that, and we can go as soon as we trigger that. That is on capacity expansion. You asked about how we position ABO-801 versus Eupraxia. As you are aware, Eupraxia is also fluticasone that is injected endoscopically at various points in the esophagus. One is, it is very hard to comment on Eupraxia specifically because their data are maturing. We have a small cohort at a certain specific dose that we have seen.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

We do not have large body of clinical data yet, so we will be closely watching what data we see. But if you look at the treatment landscape for EoE broadly, there are injectables and there are oral drugs. I think the oral drug market has very little innovation going on at this point in time. After EOHILIA, there has not been any oral drug approved. All innovation right now is in the injectable biologic space, whether you are intercepting IL-4, IL-13 pathways, or TSLP, and all of that. We consider all that in one bucket because this kind of chronic management of disease requires lifelong therapy, and there is dearth for oral drugs in this market space.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

This is really where this ABO-801 design is so elegant, because it's something that you don't have to put it in a suspension and drink a slurry with so many packets of Splenda or anything like that. It's tasteless, and it's taken once at bedtime, and it takes less than 30 seconds to dissolve. It is going to be a very different game-changing kind of therapeutic option in the space where a lot of innovation is coming in the injectables market. I'll leave it there. Of course, as more data come out from Eupraxia, which has some innovation on how infrequently you will be taking it and for a longer slow-release mechanism, but we need more data to come out of that trial to comment further.

Operator

Thank you. Your next question is coming from Stephen Willey from Stifel. Steven, your line is live. Please go ahead.

Analyst at Stifel

Hey, good morning, team. This is Josh on for Steve. Thanks for taking the question, and congrats on the progress here. Maybe just quickly on the base business, just wondering about gross margin and maybe where or when we can expect to see some additional leverage here. Then a quick one on some of the patient dynamics now. Could you just maybe contextualize how significant or meaningful it is now that you have four experienced centers, and maybe the experience from those two previous centers that have treated more patients, what the kinetics are from gaining that experience translating into additional patients screened and on treatment? Then I just have a follow-up.

Joe Vazzano
Joe Vazzano
CFO at Abeona Therapeutics

Sure, Josh. I can handle the gross margin. As we've stated before, most of our costs are fixed in Cleveland. Right now, once manufacturing, excuse me, once the supply becomes greater, then we expect our gross margins to improve significantly. Because right now, you have all these allocated fixed costs that have to get allocated to the number of batches produced in a given time period. As more patients get treated, those costs per batch come down significantly. Like we previously stated, we anticipate gross margins being in about the 85%-90% range once we get to full manufacturing capacity utilization.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Josh, with regard to the treatment experience at these initial QTCs. Yeah, there are patients, I think. Some of these patients treated at Stanford, we've had repeat patients, even at Lurie Children's, and the newer ones, CHOP and UTMB also have identified patients, and they're lining those patients for treatments. I think one of the phenomenons that we are seeing is that some of the physicians also want to see what the wound healing experience looks like, right, from these patients, because this is, of course, a surgical procedure. They want to have a better handle on not just the end-to-end process, the surgical nature, the post-op care, and the coordination of the treatment, but also seeing what the wound healing outcomes look like. As the healing matures and accrues, physicians are looking to just have greater conviction, right, and reaching out to their additional patients and assessing them for ZEVASKYN.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

We are seeing that experience and the real-world outcome accruing. Some of the patients, actually one patient in our commercial setting, had seen healing at that day of interest, shown expressed interest in joining our Strong Together Network. As you know, we mentioned in previous calls, Strong Together Network is a group of patients that have gone through clinical trial experience and want to share their positive experience with the rest of the patient community, as well as what it is like going through the ZEVASKYN process. So, it's a good sign that at least one of our commercial patients has shown interest in joining this group. As these treatments continue to mature, that's exactly what we believe is how things are panning out. It is taking time.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

It's taking time because physicians view this as a complex process, time-taking, especially for patients and caregivers, and coordinating the schedules is not as straightforward, right, versus other treatment modalities. As we have these access to more treatment centers and patients with these treatment centers go through their first experience, we think that this is going to catalyze even more patient uptake. So, more to come on that. Hopefully, it gives a little bit of a context with regard to where we are.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

One of the things our team has done well is creating enough peer-to-peer dialogue across QTCs where if they encounter a similar situation, that experience that a QTC has been through, they are readily able to share that. You do not reinvent the wheel for similar situations in the future. This is also helping newer QTCs going through their first experiences catch up on the learning curve more quickly.

Analyst at Stifel

Okay. That is very helpful. Thank you. Then maybe just a quick one on ABO-801. Could you just talk about maybe some of the synergies within your infrastructure now and some of the appetite for building out the commercial infrastructure to support commercialization for this asset?

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Sure. I think, right now, our focus is on the clinical development of ABO-801. I have to be credible here. If you look at the therapeutic area as well as the treatment modality, it is not a cell and gene therapy, right? It is a pill. It is a different type of modality, but much simpler, of course. Then if you take, we are a rare derm approved product with ZEVASKYN. This is going to be a different set of physicians, the gastroenterologists. Still specialized enough that you can cover with a finite field force. But, at this point in time, we are putting together a project team that will look like a new compartment. One of the things about synergies is a double-edged sword, right? We want to do this without distracting anybody from our commercial team or the manufacturing teams for ZEVASKYN, because that is our fundamental priority.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

That team is going to be focused on ZEVASKYN commercialization. We do have development people with clinical and regulatory, with basic infrastructure and knowledge, having been through late-stage drug development and working with the FDA, and we leverage that part right now. Then we will be recruiting a few FTEs that have subject matter expertise in the EoE space. With that, operating as a completely different team, we will be able to do this advancement without much of a distraction. Now, talking about commercialization for ABO-801, we have some time. I think the basic commercial framework that we have for marketing, market access, and medical, those leaders will be bringing in FTEs with the therapeutic area knowledge at the right point in time as we get closer and closer to approval.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Typically, T-minus 24 or T-minus 18, these are those time points where we will be looking to build some subject matter experts in those teams. As you get closer, six months to eight months before launch, is when we really need to build field force and field-based market access people, which is going to be an important play here because we do see contracting with payers as a very important aspect of this launch, because getting a favorable formulary status is really what's going to get us market share in this space. All of that will come more towards the last year leading us to the launch. There's going to be a very phased build-out, but rest assured, that is not going to disturb anything with ZEVASKYN. That's the advantage of having not too much synergy in some ways.

Analyst at Stifel

Okay. Thanks again for taking the questions. Appreciate it.

Operator

Thank you. Your next question is coming from Jeff Jones from Oppenheimer. Jeff, your line is live. Please go ahead.

Jeff Jones
Jeff Jones
Analyst at Oppenheimer

Thank you, and good morning, guys. Thanks for taking the question. Two from us. On ABO-801, can you speak to your confidence in this being a single phase III trial, and then the estimated cost of that trial? Any chance you can comment for ZEVASKYN on the number of biopsies collected for 4Q, given you're close to closing out biopsy collection for the quarter? Thank you.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Yeah. I'll first let Madhav address the ZEVASKYN question. We always want to start with ZEVASKYN, and then we'll discuss ABO-801. Madhav, about the ZEVASKYN.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Yeah. Jeff, this will be a short one. As mentioned on prior calls, we are not providing any biopsy numbers, collections, or those that are in the funnel for the mid-quarter. All I can reiterate is that there are patients at each of the eight QTCs. It's just that they are going through the process, and we are not able to have a handle on exactly when they'll clear the process and how that will overlap with our upcoming shutdown, right? Therefore, some of the patients are going to move into the first quarter, which is also going to be a truncated quarter for us. We will keep you posted as we get there.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

On the ABO-801 question, is a single trial sufficient, and what will be the approximate cost of such studies? I will tell you this, right? Starting with, there are already two phase III trials that have been conducted, and there's a very robust body of clinical data that we have from there. In the previous conversations that Ellodi have had with the FDA, and also our own discussions during the diligence process with the previous head of the GI division, who was one of the key reviewers for both approved FDA drugs, our understanding is that a phase III trial that addresses some of the gaps and misses from the previous two studies should get us ready for an NDA submission.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

However, we don't have that in writing, which is why we have the first thing that we plan to do is have a Type C meeting, and that is where we can get the confirmation, because the FDA is never going to put that in writing that one trial is enough, because they're going to say it's going to be a review issue. But we feel, based on the data we have in our hand, and the precedents set with other approvals, that this should be a sufficient study requirement. In terms of the cost, I'll let Joe speak to that.

Joe Vazzano
Joe Vazzano
CFO at Abeona Therapeutics

Yeah. Thanks, Vish. The clinical development cost to get ABO-801 to FDA approval is about $50 million-$60 million. Together with our cash balance of $135 million, the PIPE proceeds, and future ZEVASKYN sales and FAYUVI royalties, we have more than sufficient capital to get ABO-801 to approval.

Jeff Jones
Jeff Jones
Analyst at Oppenheimer

Greatly appreciated. Thank you, guys.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Thank you.

Operator

Thank you. Your next question is coming from Jim Molloy from Alliance Global. Jim, your line is live. Please go ahead.

Analyst at Alliance Global

Hello. This is Laura on for Jim Molloy. Thank you for taking our questions. Just two from us. With the next phase III trial for ABO-801 planned to be initiated next year, when will the Type C meeting with the FDA take place, and what might you do differently in this upcoming phase III trial in comparison to the two previous phase III FLUTE trials that were already completed? Also, on ZEVASKYN, the $30 million PIPE funding, you mentioned that that will be used to help support the commercialization. Can you just talk a bit more about your plan here and the next phase of commercialization that you have planned for this program? Thank you.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

The $30 million.

Joe Vazzano
Joe Vazzano
CFO at Abeona Therapeutics

Yeah. I can start with the $30 million. The $30 million is separate from the asset acquisition. It was brought on to help support our product pipeline candidates, and also with the commercialization of ZEVASKYN. As we talk about getting from six to 10 on that will have additional costs once we get there. So it is for the overall launch of ZEVASKYN as well.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

It covers various corporate expenses, including our pipeline and commercialization. So, that is the PIPE question. To address your question on the phase III ABO-801 study, what will be different, right? I think one aspect of it is. If you look at the past FLUTE-2 and FLUTE-3 studies, the ABO-801 study, the reason why the studies missed a co-primary endpoint, if you look at the data, every aspect of the studies shows that the drug works. The physician-assessed endpoints met with statistical significance. The symptom endpoint, which is patient-reported, is where those studies missed reaching statistical significance. We have looked at the data very carefully and tried to hypothesize what are all the various factors that led to such a result, and some of the point is what we see. I described the DSQ tool versus the PROS tool.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

The PROS tool was general to any type of food that patients take when they are reporting on their symptoms. A patient on a placebo arm who may have had only a liquid diet on a given day will answer the tool in the same way as a patient who had steak, which is solid food, on a given day. The tool does not correct for these types of confounding variables. The DSQ tool asks first, "Did you consume solid food?" That was the very first question. If you did not consume solid food, you're already not going to proceed on that questionnaire. These are small little details that have informed why the symptom endpoint is not reaching statistical significance, because there's so much subjectivity and background noise that the signal doesn't stand out.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

What are we planning to change in the next study that would give a better chance is really the DSQ tool instead of the PROS tool that was used on a zero to 10 scale. We believe that is one improvement that we will definitely implement, and this is very familiar to the FDA because the two drugs that they have approved have used this tool. The second aspect of it is powering the study. When we did the data analysis for the FLUTE-3 study and mapped the answers of the patients to a DSQ tool, we see about a roughly 13% increase in the responder rate compared to placebo. If you have that kind of delta in our next study design, 400 patients that we plan to accrue gives about 90% power to detect that.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

That's really a second factor in how we are optimizing the future study. Finally, we're going to look at it at a 12-week time point. The reason for that is, as time progresses on studies, patients start to modify their diets. That is a huge confounding factor as well. Even though we recommend that patients don't modify diets, it's going to happen. You cannot control that, and that only diverges more and more as time progresses. A 12-week endpoint is an optimal endpoint for a co-primary. We will also do a 24-week endpoint to confirm the durability of the results that we see. That'll be a secondary endpoint. That is a third factor that'll further optimize the study.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Last but not the least, while we will have patients with a wide spectrum of disease severity, we're going to have more representation of moderate and severe patients as well, because that's where the signal to noise can be best addressed. Not that we will completely exclude milder patient types, but the proportions are going to be important there. I just outlined four different variations that we're going to be implementing to optimize the upcoming phase III study.

Analyst at Alliance Global

Great. Thank you for taking the questions.

Operator

Thank you. Your next question is coming from Boobalan Pachaiyappan from Roth Capital. Boobalan, your line is live. Please go ahead.

Analyst at Roth Capital

Good morning, guys. Thanks for taking the questions. This is Aaron on for Boobalan. First on ZEVASKYN, when a patient receives treatment but the batch doesn't qualify for revenue recognition, we just want to know how that affected the patient, hospital reimbursement, and Abeona's economics, and how we might distinguish a revenue recognition issue from a manufacturing or clinical performance issue.

Joe Vazzano
Joe Vazzano
CFO at Abeona Therapeutics

Yeah, so I can just touch a little bit on the revenue recognition, Aaron. Our agreements with the QTCs have a set quantity of sheets, so anything four or more is able to be billed to the QTC. If it's less than four, like this one case that we had back in Q2 where only three sheets got delivered, we're not able to recognize revenue on that. Likewise, when the out-of-spec issue arose earlier this quarter in Q3, it was not able to be billed to the QTC because it didn't pass our quality release. Again, part of the agreements with each QTC is a quality agreement, so we're not able to bill on that. Then Madhav can go a little bit more into.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

Yeah, I'll take the clinical part of the question, which is when we release a product that has an out-of-specification result, especially the pan-CK is what we're talking about because that's the one that happened, this assay does not affect safety or efficacy. We have all our safety tests the way we do every batch. Only if they pass, we release an out-of-spec batch, and all the efficacy parameters also passing. So, this product is equivalent in every other way except that the pan-CK identity test is what really failed. So there's no safety or efficacy question here. We've taken a lot of effort in educating the sites, as well as providing them, arming them with the right information to have the dialogue with the patient that, should this happen, it does not impact the clinical profile of the drug in a meaningful way.

Madhav Vasanthavada
Madhav Vasanthavada
Chief Commercial Officer at Abeona Therapeutics

And we're seeing that their willingness to be treated, even if an out-of-spec happens, is the same because the science is pretty well understood here. From a regulatory standpoint, every case is currently going through a single-patient IND because the moment you miss specification, it's an investigational drug, and that's why we cannot bill for that. But at the 11th hour, we have to get an FDA approval for the single-patient IND, and the processes for that are now well-learned with one experience that we had. Our teams have been very proactive in working with other sites that should this kind of an event happen, then you don't reinvent the wheel at the last moment. So, we've taken a lot of efforts that if this ever repeats that the processes are smooth, so a product that has a good benefit-to-risk profile is available for the patient. I hope that answered your question.

Analyst at Roth Capital

Yeah, that's great. Thank you. One more real quick on ABO-801. Could you talk about where in the patient journey ABO-801 would fit? Would this be post-injectables or people that failed injectables or DUPIXENT?

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Yeah. Given that this is an ODT, we are going to position this as a step-in before biologic. That is how we are positioning it. Of course, in our trial, the phase III trial, we will include patients who have had prior DUPIXENT, but there will be a washout period. It does not preclude using this drug after biologic, but as a standard algorithm, it is going to be positioned as a step-in before biologic. Also, given the pricing and the convenience and all those factors there.

Analyst at Roth Capital

Thank you.

Operator

Thank you. This does conclude today's question-and-answer session. I would now like to pass the floor back to Vish Seshadri for closing remarks. Vish, back to you.

Vish Seshadri
Vish Seshadri
CEO at Abeona Therapeutics

Thank you. Thank you, everyone, for joining us in today's business update. We will talk to you again soon.

Operator

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

Executives
    • Greg Gin
      Greg Gin
      VP of Investor Relations and Corporate Communications
    • Vish Seshadri
      Vish Seshadri
      CEO
    • Madhav Vasanthavada
      Madhav Vasanthavada
      Chief Commercial Officer
    • Joe Vazzano
      Joe Vazzano
      CFO
Analysts
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