Abeona Therapeutics (ABEO)

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Abeona: Preparing For Liftoff - The Next AveXis?
SeekingAlpha.com
Feb 14, 2017

Summary

- On Thursday, February 16, Abeona will present initial data from its clinical trial investigating ABO-102 in Sanfilippo Type A at the WORLDSymposium.

- Clinical validation of a biotechnology company's technology is usually a defining moment in the company's evolution and a highly value-enhancing event for shareholders.

- Clinically validated gene therapy companies trade at around 7-11x the valuation of companies with technologies yet to be validated with human data.

- If successful, I don't see why Abeona won't trade at similar market caps to companies like AVXS and ONCE. Near-term price target is $30/share.

- Sophisticated biotech hedge funds have recently appeared on the shareholder register, insiders have been buying the stock, and a considerable number of call options traded last week.

Executive Summary and Investment Thesis

Abeona Therapeutics (NASDAQ:ABEO) is a biotechnology company with a number of early- and late-stage assets. This week the company will present initial data on its lead compound, ABO-102 for Sanfilippo syndrome at the WORLDSymposium (We're Organizing Research on Lysosomal Diseases) in San Diego (Feb. 13-17).

The validation of a biotechnology company's key technology is usually a defining moment in the evolution of that company and usually creates significant value for the company's shareholders. Like other gene therapy companies with unproven technology, Abeona trades at a substantial discount to those companies with validated technology, and I believe that validation of Abeona's lead technology could drive the company's share price toward $30/share, which would put its valuation in line with those companies that have validated technology - e.g., AveXis (NASDAQ:AVXS), Spark Therapeutics (NASDAQ:ONCE), and Ultragenyx Pharmaceutical (NASDAQ:RARE).

Longer term, I believe ABEO has the technologies that could be worth more than $100 per share, but the purpose of this report is to preview the imminent clinical catalyst, and readers should refer to previous work for the full company background and the longer-term investment thesis.

I note that a number of highly sophisticated biotech hedge funds have recently appeared on the shareholder register, there has been considerable insider buying over the past 18 months, and in recent weeks, a substantial number of March call options have traded.

As with all biotech investments, the outcome of an investment is very dependent on clinical trial outcomes, which is speculative, and the key company specific risk in Abeona is the failure to commercialize any of its clinical programs. Cash on balance sheet of $72m will provide support for the shares at $1.75 if clinical trials fail. That said, this company is investigating drugs for ultra-rare terminal diseases where there is currently no approved agent, and this means the hurdle for approval at the FDA is very low, and the clinical trial data to date is highly encouraging. With cash burn of about $1m per month, the company has over three years of cash burn on balance sheet, so there is no need for near-term funding.

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https://seekingalpha.com/article/4045696-abeona-preparing-liftoff-next-avexis