Good morning, and welcome to the Abeona Therapeutics Incorporated Fourth Quarter and Full Year 2018 Earnings and Business Update Conference Call. Today's call is being recorded. 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 CSO, will present preclinical highlights; and Christine Silverstein, our CFO, will review our financials. Before I turn the call over to them, I need to remind our listeners that remarks made during the 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. Since this is my first quarterly update since joining Abeona, let me start by saying how honored I am to assume the role of CEO and thankful for the Board's confidence in me. I'm also excited to partner with Abeona's highly qualified and experienced leadership team, who is committed to our mission to deliver transformative cell and gene therapies for people impacted by serious diseases. After a year of intense foundational work, we're poised to deliver an important near term milestones for a lead clinical program, for our world-class cell and gene therapy manufacturing facility in Cleveland and for our next-generation AIM vector platform, which Tim will detail for you shortly. On…

Thank you, João. In the fourth quarter, we unveiled new data from the novel AIM AAV vector platform at our R&D Day, where we demonstrated the capability to target multiple tissues with enhanced tropisms, including the eye, muscle, lung and CMS. As examples, we showed data for 2 new programs that hold significant therapeutic potential as gene therapies for cystic fibrosis and a host of retinal diseases. Before I review the highlights from R&D Day, I first wanted to provide context for additional data from the AIM platform that we presented at the annual WORLDSymposium in February. There, we disclosed new data demonstrating that our novel AIM capsids showed efficacy in animal models of Pompe and Fabry diseases. While current enzyme replacement therapy significantly reduces the mortality of infantile Pompe patients, it fell to completely ameliorate all symptoms primarily due to the inability to efficiently enter the CNS and due to the immune responses to the actual GAA protein. Notably, in the Pompe study, we also identified multiple viable transgene cassettes that produced significant levels of active GAA protein in animals. In multiple disease models and animal species, our novel AIM AAV capsids have demonstrated broad tissue tropisms when compared to existing natural AAV capsids. The AIM capsid also performed as well as existing natural serotypes at targeting CNS disorders and transducing the brain in rodents and primates. Taken together, these data leave us strongly encouraged about the therapeutic potential of the AIM AAV vector platform in Pompe and Fabry diseases. They also set the stage for proof-of-concept studies to determine therapeutic efficacy in pulmonary toxicology. In December 2018, we also demonstrated how our novel AIM capsids can be used to target multiple eye disorders. 80% of eye diseases affect the photoreceptors in the retina, highlighting the importance of cellular…

Thank you, Tim. I'd like to remind everyone that we have recently filed a Form 10-K, where you can get all the specific details to our financial results. But in summary, our cash, cash equivalents and marketable securities as of December 31, 2018, were $85 million compared to $112.2 million as of September 30, 2018. The decrease in cash of $27.2 million was driven primarily by the net cash used for operating activities of $17 million and cash used for the acquisition of REGENX license of $10 million. Net cash used in operating activities in the 12 months ended December 31, 2018, was $39.1 million as compared to $22.7 million in the same period in 2017, an increase in cash outflows of $16.4 million. From a revenue perspective, revenues were $0.5 million for the fourth quarter of 2018 compared to $0.2 million for the fourth quarter of 2017. The increased quarterly revenues resulted from the recognition of Foundation grants that were announced during the fourth quarter 2017. Net loss was $0.36 per share for the fourth quarter of 2018 compared to $0.19 per share in the comparable period 2017. For the 12 months ended December 31, 2018, net loss was $1.19 per share compared to $0.66 per share in the same period of 2017. That's the summary financials. With respect to the upcoming IR and scientific conferences, I'd like to highlight we'd be participating in the following events. On April 2, we will be at the Guggenheim First Annual Rare Disease and Genomics Medicines Day and later in the month, on April 28, ARVO, the Association for Research in Vision and Ophthalmology. Concurrently that week, we will be participating at ASGCT, the American Society of Gene & Cell Therapy Annual Meeting. Additionally, we will be at Society of Investigative Dermatology on May 8 through 11. We will update you on those planned presentations as we get closer. And with that, I'd like to turn it over back to João. João Siffert: Thank you, Christine. In summary, we achieved interim milestones in the fourth quarter that have Abeona well positioned to bring long-term value to our shareholders and turn hope into reality for our patients. Thank you. I will now turn over to the operator to open up for questions. Operator?

Thank you. The floor is now open for questions. [Operator Instructions] Thank you. And our first question will go from Kennen MacKay with RBC Capital Markets.

Clarity [ph] on the manufacturing milestones and the disclosures around this in the 10-K. That's super helpful. João, you mentioned potential for treatment of around 120 patients per year with the current Cleveland manufacturing for EB-101. I was wondering if you could maybe elaborate a little bit on the scalability of this and capacity from, I guess, the current number of suites, how many suites or hoods that is and how high you could potentially go there? Thank you. João Siffert: So, hi, Ken. Thank you for your question. Yes, we're pretty excited about the ability to scale up the EB-101 manufacturing. As you know, we have 3 GMP suites currently operational in Cleveland, and we have room to expand this up to, what, 9, 10 suites in the coming years. In addition to that and what's important in terms of the scale-up is the - there's not a linear, one to one correlation because we can - in the new design suites, we'll be able to put multiple incubators in each suite, and that allows us to produce the more material with the same existing footprint. So that's what allows us to have an efficient scale-up, both at launch and, ultimately, post launch.

And, thank you. And maybe just to follow up on MPS IIIA. I was wondering if you could just remind us sort of where we are with current discussions with the FDA around the potential path to market for that agent and maybe when GMP commercial-grade material could be used to dose some of the additional younger, more functional patients? Thank you very much. João Siffert: Sure. So two separate questions. So the first one in terms of the regulatory discussions, these are - of course, we have an open line of communication with the agency given our certifications. We'll approach the FDA once we have sufficient data in the existing - from the existing patients. We have several young, high-functioning patients currently being followed in the 01 study. And as soon as we have sufficient data to be able to make a case to the agency, we'll engage them again. So this is an open dialogue and then will be data-driven, ultimately. We expect to have, obviously, more data throughout this year and provide an update later this year. With regard to the manufacturing of AAV material, we have currently ability to scale up in Cleveland for AAV manufacturing for clinical supplies. And we're working on the baculovirus material technology transfer, so we should be able to provide an update later in the year if that's what the material that will be used for the MPS IIIA program.

That's good. Thanks so much for taking the questions and looking forward to seeing the team at some of these conferences that are coming up. Thank you. João Siffert: Thanks.

Thank you. Our next question comes from Elemer Piros with Cantor Fitzgerald.

Yes, good morning, Christine, and gentlemen. What I'd like to understand a little bit better is what would be the downstream clinical impact of liver enlargement in Sanfilippo patients and, conversely, what would the measurable benefit be with the significant reduction of those enlargements by gene therapy?

So an interesting question, Elemer. Thanks. So the liver enlargement usually doesn't cause a lot of liver dysfunction. It is mostly something we can measure and, in fact, measure this prospectively in the clinical trials using MRI for measurement of liver volume. So the treatment that we are providing to these patients provide a very clear reduction in liver volume, which ultimately is something that I can imagine will be good for these patients in long term. But acutely, they're not - liver dysfunction is not a main feature of the pathology of MPS IIIA, at least not in the age group where we're treating. I suppose that on the long run, if they live longer following our treatment, obviously, all organs, including the heart, for that matter, could benefit from systemic delivery of the vector, ultimately improving their -- or precluding further accumulation of heparan sulfate in some dysfunction in these organs.

Thank you very much. Thank, João.

Thank you. Our next question comes from Maury Raycroft with Jefferies.

Hi, good morning, everyone, and welcome João as CEO and welcome Christine as CFO. Thanks for taking my questions. So to start, I was wondering about EB-101 in RDEB. So when considering the different types of RDEB wounds that EB-101 would address in the commercial setting, can you provide any comments on competitive disadvantages or advantages for addressing particular wound types?

Sure. Hi, Maurice. Thanks for your question. So for purposes of the clinical trial and as we've announced, we're targeting chronic wounds. So these are wounds that have been open for at least 6 months, and in reality, many of these wounds are open for several years as it turns out. And we're restricting the minimum size to 20 square centimeter per wound site. This gives us a good ability to, one, assess the healing of these wounds but also the understanding that the control wounds that are this large, at least 20 centimeters squared, and are chronic are unlikely to heal within the observation period of the clinical trial, which is 3 months plus 3 months of safety. So this will be very clear if, in fact, any of these wounds heal, which is the expectation for - with the treatment of EB-101. This will be a very drastic deviation from the natural history of these wounds in RDEB patients because they essentially won't heal spontaneously. So this is important in terms of the mechanics of the clinical trial to be able to show a difference between treated versus untreated control wounds. Now if you were to fast-forward to the commercial utility, there's no reason why the EB-101 couldn't be used in smaller wounds. Now certainly, smaller wounds are also disabling, obviously, incurring same risk of infection and, of course, the process of wound healing, which should serve an endless process because the wound can't heal. And even in recurring wounds that tend to heal but reopen within a few weeks. So ultimately, all these wounds could still be amenable to treating - or with EB-101. So we anticipate that, ultimately, utility of this product will be beyond the circumscribed constraints that we're using for the Phase III program specifically.

Got it. That's great. Very helpful. And the other question was just for ABO-102 and 101. I may have missed this in the prepared remarks, but do you anticipate opening new sites for those trials? And if so, what are those plans? And then now with CLN1 and CLN3 heading into the clinic, do you anticipate synergies with screening that could expedite enrollment rates for all these trials? João Siffert: Yes. So it's a good question, and yes, perhaps, we could have been a bit more clear in the prepared remarks. So we are taking a very broad approach to patient recruitment and, ultimately, enrollment. And there are commonalities across sites who are very qualified for both running gene therapy programs, and these are the sites that are already underway with our programs, but also an expertise in lysosomal storage diseases. So we are - to the extent that it's possible, we are harmonizing the sites where they will open for both MPS programs and also looking ahead for the CLN1 program probably to use these sites as much as possible the same ones. As you know, we have sites open in Australia, U.S. and Spain, and we're close to having sites in U.K., France and potentially in other country open in the near future. So, yes. So we're trying to rationalize both the sort of footprint and taking advantage of the fact that these sites already - first of all, very - highly selective sites and highly qualified sites but also have the capabilities to run more than one of the clinical trials at a time.

Got it. That's great. And then last question is a quick one just on the AIM capsids. I'm just wondering if you're talking about potential next steps with strategy with those capsids and if you're trying to identify one area to move into the clinic on your own. Or are you primarily aiming to partner?

So we're keeping options open. Of course, it will depend - of course, we will consider partnerships that are advantageous, ultimately, for Abeona and for the programs, both in terms of resources and the expediency of the development and, obviously, ultimately, success bringing this to the clinic. We do have the ability to move forward with some of these AIM capsids in some of the programs internally, and we have initiated these programs already, as we've announced late last year, both for CF and also for retinal disorders, which we have not yet disclosed publicly, the actual indication within retinal disorder. So we have the ability to move those in the preclinical. It would be helpful for Abeona, of course, to have greater reach and resource to support these indications, which can be quite large, including CF. We also - I think in addition to the fact - the data we've already shown in terms of the AIM ability to target different organs, and we find it very exciting, both the CNS, we showed data targeting the lung and also the retina. We continue to assess the ability of these novel capsids to evade existing immunity to AAV, which we feel, is also an important differentiating aspect to this whole portfolio. So we continue to accumulate data, and so far, this has been confirmed in preclinical and in vitro assays.

Got it. Thank you very much. João Siffert: Okay. Thank you.

Our next question comes from Edward Nash with SunTrust.

This is Fang-Ke Huang for Edward. And first question, I want to talk about EB-101 programs. Can you talk about the differences of targeting keratinocytes versus fibroblasts? We see some reports saying that fibroblasts and the turnover of fibroblasts is longer than keratinocytes. And maybe have something on the durability of the graft, but Abeona has the longest durability data so far. So can you just comment mechanistically the differences between talking different cell type?

Yes. So as you know, we target keratinocytes in our product. I think others who are doing fibroblast can comment on their programs, but we'll comment on ours. So two things. So starting back from the clinic, which ultimately is the goal, I think, from the patient perspective, we have patients now who are 5 years out from the original treatment in the Phase I/II trial who have wounds that are healed. So this is - for me, we could stop the conversation right here because that's the reality. And ultimately, that's the goal. But we did, of course, go further, and the team at Stanford continue to investigate what happens to these wounds over time. And we have been able to demonstrate that there's collagen 7 expression past 2 years after grafting. So we know that there's - persistence of collagens have an expression, even though, as you mentioned, keratinocytes tend to recycle and, ultimately, shed off. But there are cells that have been corrected and probably remain in the epidermis that are still producing collagen 7 sufficiently to maintain wound healing.

Got it. That's very helpful. And a second question. I may have missed - you probably mentioned before. Are you planning to file the IND for - when is the time you're going to file an IND for ABO-202?

The CLN1 - so for CLN1, for infantile Batten, we are on track, and we're on track to hopefully start the clinical trial later this year.

Got it. Thank you. Thank you very much.

Thank you. Our next question will come from Liav Abraham with Citi.

Good morning. Just a follow-up question on ABO-102. Can you just update us on patient enrollment in the trial? I'm not sure if I missed this in your remarks, but have any additional patients been enrolled over the past few months since December? And what data can we expect to see at ASGCT that's coming up pretty soon? Thank you. João Siffert: So as I mentioned, we are actually going - putting extra emphasis and enhanced emphasis in clinical trial screening and enrollment. We have no updates on enrollment in the IIIa program. We do - we did enroll an additional patient in the IIIB program recently, but we do have a fair amount of interest and actually processing a lot of patients who come in for screenings, so both the U.S. and abroad. So I guess we'll have to stay tuned in terms of the enrollment, and we'll provide updates as patients actually enroll and get treated. But there are several patients at different stages of screening across the clinical trial, so we're very excited that there's more momentum going in.

Thank you. This concludes our question-and-answer session and conference. Thank you for your participation. You may now disconnect. Thank you, and have a great day.