Good morning, ladies and gentlemen, and welcome to the Abeona Therapeutics Inc. Second Quarter 2019 Earnings and Business Update Conference Call. Today's call is being recorded. And at this time, all participants are in a listen-only mode. A brief Question-and-Answer Session will follow the formal presentation. For opening remarks and introductions, I'll turn the call over to Sofia Warner, Senior Director, Investor Relations. Thank you. You may begin.

Thank you. Good morning, and welcome everyone. Today's call will be led by João Siffert, our CEO. Following João, Tim Miller, our President and Chief Scientific Officer will present preclinical highlights; and Christine Silverstein, our Chief Financial Officer will review our financials. Before I turn the call over to them, I need to remind our listeners that remarks made during this call may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws. Information contained in these statements is based on current expectations and is subject to change and actual results may differ materially from forward-looking statements. Some of the factors that could cause actual results to differ may be found in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed by the Company with the Securities and Exchange Commission. These documents are available on our website, www.abeonatherapeutics.com. With that said, it is now my pleasure to introduce to you Dr. João Siffert. João, you have the floor. João Siffert: Thank you, Sofia. And thank you all for joining us today for our second quarter results and business highlights, which we believe reflects substantial progress in the continued development of our clinical and preclinical programs, as well as our manufacturing and quality operations. Today, I will review the key quarter accomplishments and recent events and then turn the call over to Tim, who will discuss the developments within our preclinical programs and updates from our next-generation AIM capsid platform. I would like to start off with an update on our Recessive Dystrophic Epidermolysis Bullosa program. As a reminder, RDEB is a rare and severely debilitating genetic skin disorder caused by mutations, which result in lack of functional Collagen VII,…

Thank you, João. During the second quarter, we reported new preclinical data developed from our AIM capsid platform, a next-generation of adeno-associated virus capsids for use in gene therapy. The AIM capsid library can utilize AV biology to selectively target delivery of genetic payloads to the central nervous system, lungs, eye, muscle, liver and other tissues. In April, we presented new data from the ABO-401 program, our novel gene therapy for cystic fibrosis at the American Society for Gene and Cell Therapy 22nd Annual Meeting in Washington D.C. ABO-401 has a regulatable human mini-CFTR gene that is efficiently packaged into AAV204 one of our next-generation library capsids. The data presented at ASGC demonstrates that ABO-401 efficiently delivered a highly expressed, functional copy of human mini-CFTR to the lung of CF mice and restored CFTR lung function in human CF patient nasal and bronchial epithelial cells. This adds to the growing body of evidence suggesting ABO-401 may address the challenges in lung delivery and transgenic expression that have limited the advancement in gene therapy for CF patients. In this and other preclinical studies, ABO-401 restored CFTR expression and chloride conductance in airway epithelia, the main cells of the lung that contribute the CF pathology in human. Robust expression of AAV204 in the lungs of CF mice was observed and demonstrated that the AAV204 capsid was equally or more efficient at delivering gene expression cassettes to the lung, compared to other naturally-occurring AAV capsids. Further, the data demonstrated that ABO-401 restored CFTR-specific nasal potential difference in the CF mice, and that the ABO-401 gene expression cassette makes a fully functional and processed CFTR. We believe that the recent data are encouraging and ABO-401 is a promising candidate when they ultimately change the landscape of CF treatment by introducing a one-time gene therapy.…

Thank you, Tim. We have recently filed the 10-Q, where you can kind all the specific information on our financial results. But in summary, our cash, cash equivalents and marketable securities as of June 30, 2019 were $62.5 million, compared to $68.3 million as of March 31, 2019. Net cash used in operating activities for the quarter was $15.2 million as compared to $9 million in the same period of 2018, an increase in cash outflows of $6.2 million. R&D expenses for the three months ended June 30, 2019 was $16.3 million, compared to $7.9 million in the same period of 2018. The increase in research and development expense is primarily attributed to increase in in-house manufacturing activities and related headcount costs. General and administrative expenses for the quarter were $5.6 million, compared to $4.6 million in the same period of 2018. The increase in G&A expenses was primarily due to the increased headcount and related facility costs. Net loss was $0.49 per share for the second quarter of 2019, compared to $0.26 per share in the same period of 2018. That's the summary financials. With respect to the upcoming Investor and Scientific Conferences, I'd like to highlight that on September 4h, we will be in Boston attending the Citi’s 14th Annual Biotech Conference and on September 5th, we will also be attending the Wells Fargo Securities Healthcare Conference also in Boston. We will update you on those planned presentations as we get closer to the events. And with that, I'd like to turn it back over to João. João Siffert: Thank you, Christine. In summary, we in the second quarter, we have made important progress that we believe position Abeona well to drive forward our mission of turning hope into reality for our patients. Thank you. I will now turn over to the operator to open up for questions. Operator?

Thank you [Operator Instructions] We will take our first question from Maury Raycroft of Jefferies. Please state your question.

Hi, good morning everyone and thanks for taking my question. First question is on ABO-101. It seems like you expanded the 5E13 cohort from 3 to 6 to 4 to 7 in July, added an efficacy-based primary endpoint to look at neurocog and then added some secondary endpoints as shown on clinicaltrials.gov. And so, I am just wondering if there are any specific reasons why some of these changes were made and if FDA or KOLs encourage the changes? And then, just bigger picture, what else is – what is needed in IIIB to eventually seek approval for this indication? João Siffert: Hi, Marty, it’s João here. I’ll take those questions. So, you are referring to the MPS IIIB program. Is that correct, as I understood?

That’s correct. João Siffert: Since the beginning of this. Yes, so, these are essentially changes to harmonize the IIIB program with the IIIA program. So, what we are trying to do is again focus the enrollment of patients who we believe are not – that have not undergone much advancement in their disease and therefore could stand to benefit to the most from the therapy. But not to say that children who have more advanced disease couldn’t benefit, it’s just that the effect size will likely be larger in children who are still functioning at a higher level, and thus codified by setting up the inclusion criteria with the developmental quotient of 60% or greater. So, is that your question? And then, we will continue to take the same approach on the IIIB program as we have on the IIIA program and that we continue to collect both biomarkers and their developmental data from this program and once we have sufficient data to identify a clinical benefit beyond just the biological benefit of markers, which we expect to see and have seen in the first patient, expect to seeing in these ensuing patients. We will again engage the agency in discussions for further development of the program.

Got it. That’s helpful. And then, for the IIIB patients, can you talk about some of their baseline characteristics at this point, maybe anything on age, and baseline neurocog function? And then it seems like, some … yes, I’ll let you answer that and then do a follow-up. João Siffert: Yes, so, these patients meet the eligibility criteria. So, we’ll not disclose the specific age at this point. We’ll provide an update on the study overall, including some early data readouts later this year. As you know, this is an update from the past quarter that these patients were enrolled relatively recently all but one in 2019. So, it’s relatively early follow-up. But they meet criteria for the developmental quotient. That is in general, looking at the – just as a framework and then not necessarily citing specific ages which I don’t know by heart for all the patients, but the child with the developmental quotient of 60% or greater who has either MPS IIIA or IIIB with rapid progressive phenotype tend to be usually younger than 40 months or so give or take than they tend to be younger.

Got it. Okay. And for IIIB also, it seems like some other companies enrolling IIIB studies have had a difficult time enrolling those studies. It seems like your enrollment has picked up recently. Is there anything that you can say about enrollment and potentially investigator enthusiasm for your particular approach in IIIB? João Siffert: Yes, I think that there is good momentum on both programs, actually although IIIA we have not enrolled anyone this year yet. We have continued to screen patients who unfortunately were not eligible for the trial, and we continue to screen patients as we speak. We hope to enroll patients later this year. IIIB, and I think IIIA both are benefiting from an effort that was started sometime last year to really expand our footprint in terms of clinical trial sites. The sites continue to be very engaged. We have also a pretty concerted international outreach. And that's the question of whether IIIB, which tends to be viewed is less common than IIIA at least in the United States. It may not be as uncommon as we thought at least in some European countries and other places such as South America. So, we are having success identifying these patients. I also believe that with the continued positive data in IIIA from the standpoint of maintenance of improvements in biomarkers now up to two years in CSF heparan sulfate as well as the recent data we announced in the youngest patients showing some neurocognitive preservation, I think that also creates the momentum in terms of interest that we are showing that this is not only a biologically active intervention, but also seems at this point that we can also demonstrate some preservation of actual clinical data which is important.

Got it. Yes. And for IIIA, for those young and higher functioning patients that you treated and you are showing their preservation of neurocog function, can you just comment on their underlying IIIA mutation, and also the strength of the natural history data over a similar 12 to 18 month timeframe for those particular patients? João Siffert: Yes, so the patients by protocol eligibility, all patients need to have mutations that are associated with a rapid progress or phenotype. So, in general, if you look at the various natural history studies including the one we’ve worked most closely with the National Veterans hospital, but can look at the Pittsburgh data and also data from University of Minnesota, albeit it was a different scale, but certainly something that we should look at because it is a pretty comprehensive data set as well. Most children with the rapid progressive forms of MPS IIIA or IIIB for that matter tend to plateau in their neurodevelopment before they reach age of three, almost viral legacy [ph], this is biology, not sort of mathematics. But by and large, and if you look at all these studies, most of these children accelerate in their development during their second year of life and before reach the age of three, they tend to plateau in their neuro development and start declining. So, anything that sort of deviates from that in terms of the neuro cognitive development and in this case, following the intervention with ABO-102, we believe to be already an indication that this treatment is having a biological effect and also diverging in terms of the neuro cognitive course. Does that answer your question?

Got it. Yes. That does. And just a last question on EB-101. So, for the CMC protocol item particularly the one related to their retrovirus batch, just to be clear, you don’t need to accumulate any new data for this until after the trial has started, right? And then, I am wondering, - yes, and then, I am wondering how much of parameters involved with helping with the protocol design and finalizing the protocol for that? João Siffert: Well, two separate questions. So, what we are submitting to the agency, their request is the actual protocol. We are not submitting any data going ahead of the Phase 3. So, the transfer from the original retrovirus to the Brammer retrovirus which has been planned all along in agreement with the agency will take place during Phase 3. So we will be conducting the comparability studies which are no different than the release – generally speaking, no different than the release of studies that we do quality assurance. We do for any kind of GMP product. So in this case, for EB-101. So, we will be testing those for the Indiana University retrovirus material and testing those for the Brammer retrovirus material as if we would do anyway to – the only thing we are doing is to set up a protocol prospectively to show what the acceptance criteria are, which are generally – and already agreed upon with the agency. So it’s literally having the protocol written. Data will be generated as we release these batches for clinical use as we would do normally. Now, we have used the Brammer material to manufacture a sheet throughout the task, say six months. These are obviously not for clinical use, but certainly using the same retrovirus that we are impending to use in the Phase 3. So, we have experience using the retrovirus and have performed well as expected. So, we don’t anticipate any surprise here.

Okay. And then, how involved is Brammer in the process for you with helping finalize these protocols? João Siffert: They have been a very good partner of Abeona for a while now and we work very closely with them. And we have already, so it’s forward-looking, this have taken place just part of the whole manufacturing the readiness for the EB program has included manufacturing EB-101 using the retro – Brammer retrovirus. So we’ve done this before. This is not the first time we are going to do this. This is just going to be officially for – during the Phase 3.

Got it. Okay. Thank you very much for taking my questions and I’ll hop back in the queue. João Siffert: Sure. Thank you.

Our next question comes from Kennen MacKay of RBC Capital. Please state your question.

Hi guys. Thanks for taking all the questions. This is Vikram on for Kennen. So, we have one on the patient-related outcome that actually has to be included in the Phase 3 study for EB-101. Could you please elaborate what those outcomes are? And how would those further validate, maybe the wound healing that you will show in the patients? João Siffert: Yes, thank you for your question. The patient reported outcomes, there are several – the main one being pain, especially for the larger wounds that we are addressing in our Phase 3 trial, pain is among the most disabling patient experience. Obviously, it’s – obviously, having a – wound has also sorts of other medical implications including risk of infection and need for and need for repeat wound dressing and an extensive wound care and whatnot. But the pain is really the main cause of discomfort suffering for these patients. So the FDA is obviously interested in understanding how wound healing and pain intersect. If you ask a patient, will tell you that their impact skin that is a healed wound doesn't hurt. And if you ask then which wound hurt the most is they firmly will tell you that there are larger wounds, smaller wounds that are not. They can still be uncomfortable that the larger wounds tend to be ones mostly associated with a higher intensity of pain. This has been shown not only anecdotally by asking the patients but also in natural history studies that’s been presented. So, the FDA wanted to just agree with us and exactly the timing and then how to collect those using scales that are pretty well known and it’s been validated in pain trials before. So, it was not much about the scales themselves, it is just about the collection timing in relation to some of the wound care. Basically, wound care, as we remove the bandages, they can cause pain, because sometimes the bandages especially in the larger wounds get stuck also as you tender to the wounds and cleanse the wounds it can cause also acute pain. So, the patients have both chronic pain from just having these open wounds chronically, but then, acute exacerbations of pain during procedures. So it was just a matter of getting coordinated and making sure we get as much information as possible. So those – while patients are at home, but also recalling the experience when they come to the clinic visits.

Got it. Just a follow-up that is there any specific percentage of pain improvement you are looking in these patients? Or will it just depend from wound to wound depending on the size of wound? How are you thinking about that on the paid side? João Siffert: I am sorry. I have missed the – if you could the repeat the first part of your question, I just couldn’t hear well.

Absolutely. So, just a follow-up on that, I was thinking, what percentage of improvement on the pain scales that you said are pretty standardized wound you will be looking to, will it be something similar to, as you said 50% wound healing? How shall we be thinking about that? João Siffert: Yes, so, this is a difficult question about EB, because there are much data for EB specifically. There is obviously a ton of data in pain, both chronic and acute pain trials within variety of conditions from cancer to neuropathic pain, and then even in migraine. But as you can imagine, there is not a lot of this for EB. The sense that we get from talking to patients is that wound healing will essentially large relief with pain, but the pain also can be quite variable and if it's undisturbed under wraps, meaning that the wound is well-dressed and they are not touching it or cleaning it. There is some base pain that is not that severe, of course, as we remove the wound dressing that pains by itself . So there isn't a set threshold to success. Ultimately, in the end, being sent here to heal the wound and of course, having an open large wound in of itself is clinically very meaningful. So if you could heal a large area of wound, this in of itself will cause much benefit to the patients and all the ramifications of EB wounds. That we would expect that it will also provide different pain reliefs. So we will measure as the continuous variable, as well as the categorical variable.

Got it. Got it. That is super helpful. Thanks for the color.

Any further questions sir?

That would be all.

Thank you. Our next question comes from Joon Lee of SunTrust. Please state your question.

Hey. Thank you for taking our question. This is Fang-Ke Huang for Joon. Just wondering on, if you can tell us a bit more about the timing of initiating the EB-101 trial? Is it going to be a early 4Q event or you can anticipate going to be a late 4Q event or is it too difficult to tell at this moment? João Siffert: So, we can provide any more guidance as we have already have provided publicly in our 8-K filing. Much of what remains there or the question is about quality and there was a particular question about PROs that we’ve been discussing. The timing now for initiation is entirely predicated on resolving these questions. So, it’s largely driven by the timing of how efficiently we can communicate with the agency. On our end, we are working diligently to get all the answers submitted soon. So, it’s just a matter of ensuring that the FDA will satisfied with the answers and that if there are any remaining questions that we can address those ASAP. From the actual trial readiness, in terms of the clinical operations and the ability to manufacture the product, we feel that we were ready as soon as the FDA is ready. Stanford does obviously been a very close partner with Abeona for three years now and they are ready and willing and eager to start so long as we get the final go ahead.

Got it. That’s helpful. And then, secondly, you mentioned that that beyond Stanford, you are potentially can open other treatment sites for the EB patients. I am just wondering what other potential logistic of opening a site and how long you need to train their employee just starting treating patients? João Siffert: Sure. These are sites I have been working with already for several months now. So, this is a long lead time in terms of just getting all the trials and just to set up. But there are also sites that are very familiar with the care of the patients with EB. And also have very good standard well-qualified plastic surgery staff. So, they would be equipped in terms of all the moving parts. So they will be fully equipped to participate in the trial and of course the team at Stanford has offered – that has had conversations with some of these sites and we would offer to help train them on the – more minutia of the actual study protocol itself. But in terms of the capability of the caring for the EB population and in terms of the after procedure of applying the product EB-101, these will be fully qualified sites.

Okay. And then, thirdly, I think, just in terms of the timing of the data we are going to report for – in the ABO-101, ABO-102 in the second half, are you going to present them at medical conference or standard conference or are you going to press release or are you going to host an R&D Day to present the data? João Siffert: All these are possibilities. We haven’t disclosed that. There is still is some of these presentations that were submitted and get approved and we’ll get confirm the presentation date and then we may – if there are updates that emerge outside of conference schedule, then we may either call a call or press release it.

Perfect. And last question, if I may. So, you mentioned about AIM platform and then there is a number of capsids potentially can be used and you also mentioned that on the last earnings call you are – and you may discuss the potential to leverage the value of the AIM platform through external collaborations? Maybe, can you give us some updates there as you see, is there any discussions going on currently in terms of – for external collaboration? And how you think about the AIM program? And how are you going to capture that value? João Siffert: Yes, so, that’s good question and one that we didn’t in fact announced that we would seek partnerships. As you know, we have a very broad pipeline, both clinical pipeline and preclinical pipeline. And so, it’s a good problem to have, but we have, obviously, been careful of prioritizing our efforts on our lead products. So, while also trying to continue to develop the AIM platform, we’ve been in discussions actually for months now with several interested parties. And these have been fruitful. We will announce in due course when we have anything that is concrete in terms of something to disclose. But there is, obviously, interest in this platform, interest in the data that Tim and his team have generated and presented as you heard earlier and we are looking forward to continue this process. Obviously, it takes time, but we are – we’ve been active at it for quite a while now. So, of course, some of these relationships are now maturing and we hope to have something to report in the coming months.

Perfect. Thanks so much. And thanks again for taking our questions. João Siffert: Sure. Thank you.

Our next question comes from Liav Abraham of Citi. Please state your question.

Good morning. Many of my questions have been asked. Maybe just one on EB-101. João, could you just remind us how quickly you will be able to enroll the trial? And when we could see data on the primary endpoints? João Siffert: Thanks, Liav. So, have in Stanford through a protocol we’ve had underway for a while now have identified and screened, formally screened I think ten patients now or eleven patients. We expect we have to enroll somewhere between ten and fifteen patients who have the number of wounds and give the power for the study. As soon as we are ready to go, obviously, we will start carefully in the patient or two to make sure everything goes well in terms of the logistics. But after that, we could accelerate enrollment. So, it’s just a matter of scheduling patients for treatment. They are all waiting for the study. So, we could envision enrollment first will provide updates on that, but could envision enrollment, say, six months, up to six months. We will try to do it faster, well it could be a little longer, it depends on ability to schedule. And then, the trial itself has a six months follow-up built-in. So we – the primary endpoint of three months and we call up for an additional three months to look both at ongoing safety and healing and durability. So, that could bring us to the end of next year depending how quickly you can get this up and running.

Great. Thank you. And then, on your RMAT meeting with FDA in the second half of the year, can you just remind us, what are the objectives of this meeting? And do you anticipate communicating the outcome of the meeting to investors? João Siffert: Yes, so, you are referring now to MPS IIIA, right?

Yes, yes, yes. João Siffert: ABO-102. Okay, yes. So, we have now data of two plus years on safety for half of the patients, at least others are getting closer, obviously, Cohort 3 is a bit more recent. The biomarkers have been very consistently showing that this product can improve the disease – to the underlying disease pathology that is the activity of the enzyme and clear the accumulation of heparan sulfate. And now we are having more data 12 to 18 months data in cognition for the younger children. So, the question now is, what’s next? Right, so, that’s exactly what we are going to ask the agency for what’s the path between now and sort of moving this towards a path that can lead to - to a BLA and approval. So this is, broadly speaking the overarching question here. This of course will cover multiple aspects of the development program including CMC, of course, clinical safety and whatnot. So, that’s what we are looking to engage the agency with. We will provide updates as they materialize. Obviously, regulatory feedback is not something we will provide in details because, obviously, there is a whole context and once that's not often not sort of ready for press, but we do – we will provide guidance to the extent that the guidance is material and something that is actionable or not.

Thank you.

Any further questions, Ms. Abraham?

No, I am good. Thank you.

Thank you. João Siffert: Thanks, Liav.

Ladies and gentlemen, this will conclude today's Question-and-Answer Session. And this does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.