Greetings and welcome to the Abeona Therapeutics Second Quarter 2016 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Ms. Andre’a Lucca. Thank you. You may begin.

Thank you. Good morning and welcome everyone. On the call today are Dr. Timothy J. Miller, President and CEO; and Jeff Davis, COO of Abeona Therapeutics. Dr. Miller will begin the call with an overview of the second quarter and more recent highlights and developments at Abeona. After, Jeff will provide additional comments on the quarter, a brief overview of summary financials and provide a snapshot of our financial position and review the upcoming investor conference calendar. Following that, we will open the floor to few questions. 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 the forward-looking 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 are discussed in the reports filed with the SEC. These documents are available on our website at www.abeonatherapeutics.com. With that said, it is now my pleasure to introduce Dr. Timothy J. Miller. Tim, you have the floor.

Thanks, Andre’a, and thanks for everyone for joining us for our second quarter earnings call. Just to help remind some of the new folks on the call today, Abeona is developing rare disease gene therapies and plasma protein treatments for patients with rare diseases. We previously reported we have a focus in diseases that affect the central nervous system, particularly lysosomal storage diseases such as Sanfilippo syndromes and Batten disease. These programs were initially licensed at Nationwide Children's, Hospital which has a long history in AAV, particularly gene therapy and a history of other successful biotechnology gene therapy company. And our Batten disease program also comes out of the University of Nebraska Medical Center. Both of these use very similar strategy, using adeno-associated virus that’s delivered by intravenous injections that treats the whole body of the disease, just to refresh. We’re working on these lysosomal storage diseases. The lysosome is essentially the garbage factory of the cell. It’s responsible for chewing up a lot of the different sugars and proteins to make metabolize for the cell, children that are born with these inherited autosomal recessive genetic disorders have a deficit in the enzymes and specific sugar metabolism pathways and unfortunately can’t break down these sugars. So our therapeutic strategy is to give these AAV – the genetically modified AAV viruses to basically replace the enzyme that’s been deficient so that these sugars can then be broken down. Pre-clinical data in these programs have demonstrated complete correction of the survival deficits. Keeping in mind that 70% of these children are not – do not reach the age of 18 particularly in Sanfilippo syndrome and there are no approved therapies on the market currently. So when we looked at the original pre-clinical data that demonstrated complete correction of the survival deficits, normalization…

Thanks, Tim. Before I get into the financials, I’ll just provide a little bit of an update on our plasma protein activities. For those on the call that are unfamiliar with our plasma program, Abeona in-licensed a new patented process by which therapeutic proteins are extracted and purified from human blood plasma. This is a very specialized segment of the drug business, but it's large and growing. Estimates for the global market for human blood protein drugs is roughly $18 billion annually and growing at rates estimated to be greater than 8% to 10%. So it's a significant market opportunity and it's growing significantly as well. The market for these human-derived plasma protein drugs has developed over the past 75 years using a system developed in the 1940s by a doctor named Edwin Cohn and the process is known by the Cohn cold fractionation process name. And it's a process that uses alcohol to precipitate out these various proteins and in that market there's only been sort of modest improvements over time to increase the yield from that process. But in late 2014, Abeona licensed a process we call Salt Diafiltration or SDF, which eliminates the use of alcohol and instead uses salt, in our case sodium citrate, to precipitate out the proteins and because we focus on the high-value high-margin proteins first namely IVIG or intravenous immunoglobulins and Alpha-1 protease inhibitor, A1PI, we’re able to increase manufacturing yield significantly on these two products. And in the past 18 months we've worked with two separate contract manufacturing organizations. We've been able to confirm that our manufacturing yields on A1PI are in the order of a 100% or a 10X improvement, while producing one of the most pure A1PIs relative to those that are commercially marketed today. Additionally, we believe we…

[Operator Instructions] Our first question comes from Jason McCarthy from Maxim Group.

For 102, can you just walk us through what the timeline to the next data point is? You have two patients treated, I believe the third entry that is soon to be treated, when can we see more data from those patients? That's the first question. And when do you expect to enroll the first patient in Spain and then in Australia?

So as this is as with most gene therapy trials either serial enrollments and with early stage, if you’re looking at safety first, so the principal investigator, there's – we had a safety time point in between patients for review and so the next time – to answer your first question, the next time I think we'll be reporting some of the data will probably be early in the fourth quarter. We would see data from the low dose cohort through a certain time point, 30, 60 days, something around that end. For the first patient in Spain and in Australia, with the approval in Spain, we’re trying to finish on some of the – really most of the paperwork that goes with that and getting ready for chemical site prep in Bilbao. In Australia, we are still on the regulatory process there and looking forward to – again working with our site in Adelaide, we probably anticipate that again would be very similar to the Spanish site in time, Q4, early Q1.

And for 101, I would assume you're going to run a similar sized study, maybe you can give us an update on when do you expect that study to start? Would you be using the same trial sites that you're using now and would you also be in Spain and Australia as well?

So for 101, it's very similar, almost the exact same design, six to nine patients in the US, six to nine patients in Spain at the same site and six to nine patients in Australia also at the same site. So many of those processes are going in parallel with 102 from the perspective of again working with the regulatory agencies in the clinical sites. So again one of the benefits of having gone through the process with 102 with both the clinical site in the US and the clinical site in Spain and Australia, there's a certain level of acceleration that you can do simply because IRBs and regulatory bodies are more familiar with the programs, specifically with the safety data as well as the efficacy data and manufacturing. So we’re certainly able to leverage both of those as we look to our global enrollment plan.

And just the last question, one of the – in the RDEB study, they did show great data, you’re moving to Phase 2, how many patients would be in the Phase 2? And what is going to be the cost to Abeona to participate or co-develop this gene therapy? And if you can just answer a question about the gene therapy itself, is it the same SC AAV IX vector or you’re going to use a different vector that they'd been using previously?

For EB-101, you were saying?

Right.

That’s a retrovirus correction into the [indiscernible] so it's a permanent correction into the skin grafts. So you don't see that type of potential trend in expression which would be something more relevant because the skin is a rapidly dividing organ. So we’re looking for a permanent cure or permanent correction in those skin cells, it’s an autologous graft, right. So very similar to us, for example, I mean that’s probably the most direct comparable for this type of therapy. And that’s looking at six patients, 10 patients in the Phase 2, and again as we look to – Stanford is already recruiting. We did have five patients in the Phase 1 and six adolescents in the Phase 2, looking for a total package of around 10, 11, 12 patients for a potential going for BLA. So again, with very few if any therapies for EB in development, we’re certainly familiar with some of the ones in other space. As again as a wound healing sheet that’s been retrovirally corrected certainly has a lot of a promise. There are over 2,500 RDEB or recessive dystrophic EB patients in the United States. So it's certainly a very viable patient population as well from a market standpoint in the rare disease space. And there is a reset mania in the EU and so we’re looking very much forward to moving this for the Phase 2 as best as we can.

Our next question comes from George Zavoico from JonesTrading.

Following up on the RDEB question, could you describe a little bit the logistics? I understand it’s an autologous skin graft, but these are patients that have very fragile skin, so you're basically creating an injury on the patient to get the skin and then treating with skin and then putting it back on to the patient not necessarily in the same place where you harvested the skin, but where the blister is, so I mean – and are you doing as like one patch at a time or multiple patches? What are some of the logistics that you’re including in the trial?

A good question George on the logistics. So what happens is the patients come in and they have a lot of open wounds, so what we do is we take a punch biopsy to collect and grow their keratinocyte. So rather than provide some form of injection or multiple levels of injection under the skin, what we do is we take a punch biopsy, we separate out the keratinocytes and then grow them into multiple large sheets. And then those are – so those are retrovirally corrected with again a retrovirus for the whole 71 and then as those sheets are essentially applied to the wounded areas, so we're not creating any wound, George, we're actually putting a – or be considered a divided area of an already existing wound and then putting the skin graft, this retrovirally corrected skin graft on top of the wound. So the graft, really they're not debris, but the wounds are divided and then the grafts are put on top of these already existing wounds. And then the patients are – they're basically mobilized for a short period of time while the graft takes and then they're removed out. When you're looking at these wounds that – again these wounds haven't been healing for, some of them have had wounds for years, it's really amazing that a lot of these skin grafts take and then heal.

So the punch biopsy is really like what less than a centimeter?

I can’t remember the exact size of it, but it is what would be considered a rather standard punch biopsy and it’s only to the dermis, you don't need to go into the muscle for something like that. So it’s not very invasive.

So from one punch biopsy, how many square centimeters can you grow out a graft, I’m just wondering how much coverage you can get out of one skin biopsy?

I believe we – so they grow up a bunch and they freeze them down. So they're actually able to keep continuing graft. We grow up eight sheets at a time, we grow eight sheets and they're about 4X6 inches. And then six of those sheets are applied in the clinical trial, two is a backup plan. So when you think of a 4X6 sheet, I mean, that’s how big some of these wounds are.

I mean, just growing them and it results from a punch biopsy, that's a lot of cell divisions. And so I guess the retroviral vector – the gene therapies are applied very early into the punched biopsy, so that when it goes into the sheet you don't have to use as much vector. So you save with your product that way, right?

That’s correct. The retroviral correction happens early in the expansion process and so again you see unified clowns moving forward. And one of the things – you know we wanted to see was how stable that is and then again what type of expression that continued and these were – the edges of the sheets were punched biopsied at six months and still seeing robust VII expression at the thermal epidermal junction by antibodies. So again seeing robust expression through the missing protein for months after the sheet abide.

So in the trial, is each patient going to undergo like a single graft replacement, because I’m wondering, like you said, these patients are pretty fragile and you need to do is bump up against something or even a square edge or even maybe – even depending on their clothes sometimes, they rub it the wrong way, you get a blister, are these patients going to be multiply treated especially since you just said that some of these cells are frozen, so you can grow out as many sheets as you want, basically setting up a cell bank for each patient?

The nice thing about this, George, is that the sheets themselves – those areas that have been corrected with these grafts, they’re tougher because [indiscernible]. And to your point, these patients could receive multiple skin grafts over their lifetime again because we have their cells, they are autologous and so you’d essentially think of these almost like big band aid once there is a wound, so yes.

But within the trial follow up period, treatment follow up, they're only going to be one graft, is that right?

They're going to get six grafts at the time that they're treated.

Oh, each patient gets six grafts, okay. And what's the follow up period?

I believe it’s two years.

So would you able to go to the regulatory agency before that follow up period is over or do you have to wait at least through to follow up of all patients in the trial?

That’s going to depend on the data, as with all of them, George. You’d imagine that after – and all of these gene therapy trials, it’s strong positive data throughout a chronic time period of six to 12 months, certainly if the data is strong, that’s what we'd evaluate.

One question for Jeff about the plasma proteins, it sounds like you're making progress, can you provide any guidance on when you might be able to go to the regulatory agencies for approval?

Well, I think it's tough to say right now. We are in a dialogue with them now about what is going to be required for both the clinical pathway and potential Phase 4 requirements. We continue to work with the contract manufacturer on scale up. Obviously we're not going to start a trial until we have agreement on an acceptable clinical pathway. So it's a little bit squishy right now, but obviously we're pushing ahead with all of it with speed.

Thank you. I would now like to turn the floor back over to management for any closing comments.

I just wanted to thank everyone for joining our call today. It's a really exciting time for Abeona. We’ve been building value for our shareholders as well as our patients. Now as a clinical stage company, we look forward to reporting more progress as the third quarter comes so close to. Thank you.

This concludes today’s teleconference. Thank you for your participation. You may disconnect your lines at this time.