Abeona Therapeutics Inc. (ABEO) Earnings

Management highlights

### Commercial Launch & Network Expansion - 12 total patients have been treated with ZivaSkin since launch, including five in 2Q2026 and three additional patients in the first weeks of 3Q2026 to date. The company hit its target of activating seven qualified treatment centers (QTCs) by the end of 2026, with new additions including New York Presbyterian Columbia University Irving Medical Center, Children's Hospital of Philadelphia (CHOP), and Cincinnati Children's Hospital. CHOP completed its first treatment in July 2026, two months after activation, and UTMB completed its first patient biopsy. - Approximately 40% of the addressable U.S. RDEB patient market now has in-state access to a ZivaSkin QTC, and QTCs already treat a large share of out-of-state traveling patients. The company will continue expanding the QTC network in response to requests from additional leading EB centers. ### Key Launch Learnings & Operational Bottlenecks - As the first surgically applied autologous cell therapy in dermatology, ZivaSkin has unique operational complexities that create a steep learning curve for QTCs, leading to variable timelines from patient identification to treatment. Three key bottlenecks were identified: 1) Coordination across multiple stakeholders (dermatologists, surgeons, anesthesiologists, hospital staff) is required for scheduling, and limited availability around holidays and seasonal events has led to scheduling disruptions; 2) Unexpected RDEB patient health changes can cause last-minute biopsy cancellations, and unfillable open slots due to pre-coordination requirements; 3) Biopsy material variability can lead to low-yield or out-of-specification manufacturing batches, which do not generate revenue. - The company has updated its reporting to align with standard commercial-stage practices, and will only report completed treatments and recognized revenue per quarter, discontinuing reporting on non-definitive leading indicators (scheduled biopsies, biopsies in manufacturing) that are prone to uncertainty. ### Community Engagement & Reimbursement Milestone - The company recently engaged the RDEB community at two major medical and patient conferences, with clinical trial patient ambassadors sharing real-world treatment experiences to build awareness and confidence. The company reports that ZivaSkin's unique value proposition is resonating strongly with patients and caregivers. - ZivaSkin was granted New Technology Add-On Payment (NTAP) status by CMS, effective October 1, 2026 for FY2027. It was one of only three therapies approved for NTAP out of 15 total applicants. NTAP provides supplemental reimbursement to hospitals for high-cost innovative therapies, opening access for Medicare patients (who make up ~10% of the RDEB payer mix) and creating regulatory validation that will support future reimbursement discussions with other payers.

Guidance

Management did not issue formal updated full-year financial guidance, but provided the following forward-looking statements: - Management expects the one patient per month per QTC average treatment cadence to hold once existing activated QTCs reach steady operational state, but did not provide a specific timeline for when this steady state will be achieved. - Management expects long-term gross margins to normalize to 85-90% once the business reaches full operating capacity, as most manufacturing costs are fixed and margins improve with higher treatment volumes. - The company expects growing clinical conviction among QTC physicians as they share positive real-world treatment outcomes with peers, which will lead to a tipping point for broad clinical adoption across the QTC network. - Management expects that expanding the top of the patient funnel and growing the QTC network will offset unavoidable patient and scheduling attrition, leading to more consistent quarterly treatment volumes over time.

Segment performance

Abiona Therapeutics is a commercial-stage biotech with one lead commercial product, ZivaSkin, for the treatment of RDEB. For the second quarter of 2026, net ZivaSkin revenue was $11.4 million, representing a 31% quarter-over-quarter increase from $8.7 million in 1Q2026. Five patients were treated in 2Q2026, but revenue was only recognized for four treatments due to an unbillable low-yield batch. Research and development expenses were $5.0 million in 2Q2026, down from $9.6 million in 1Q2026 (the prior quarter included $7 million in one-time in-licensing upfront costs for ABO 701). Selling, general and administrative expenses were $15.8 million in 2Q2026, down from $19.5 million in 1Q2026 due to lower engineering run and manufacturing training costs. The firm reported a net loss of $20.2 million ($0.35 per basic/diluted share) in 2Q2026, compared to a net loss of $17.1 million ($0.30 per share) in 1Q2026. As of June 30, 2026, total cash, cash equivalents, and short-term investments stood at $146.8 million. ZivaSkin revenue accounted for 100% of the firm's total revenue in the quarter.

Risks & headwinds

- Variability in incoming patient biopsy material can lead to low-yield or out-of-specification manufacturing batches that do not generate revenue, and the long-term frequency of these events is difficult to predict with the current small commercial dataset. - The out-of-specification event experienced to date was tied to a PAM-CK marker identity test specification that was set during BLA review based on limited clinical development data; revisions to this specification require FDA review, which has an unpredictable timeline. - There is high variability in how long it takes newly activated QTCs to begin treating patients, ranging from 2 months to over 12 months, driven by payer paperwork, state payer mix rules, and internal QTC processes, which creates uncertainty near-term treatment volume projections. - Scheduling disruptions and unexpected patient health deterioration can lead to last-minute biopsy cancellations that leave pre-allocated manufacturing slots unfilled, reducing quarterly revenue and treatment volumes. - ZivaSkin's complex logistical and surgical delivery model creates a steep learning curve for QTCs, which could slow adoption if operational best practices spread more slowly than expected.

Analyst Q&A

• Q: When will leading existing QTCs reach the previously cited 1 patient per month steady-state cadence, and how common will low-yield/out-of-spec manufacturing batches be long-term? /

  A: Management states that the 1 patient per month average cadence is expected to hold once all activated centers reach steady operational state, but cannot provide a timeline until more centers begin treating patients. Low-yield and out-of-spec batches are currently considered rare, low-probability events, with only two such incidents in the small current commercial dataset. Most such issues stem from natural variability in patient biopsy material, and the company is gathering process data to improve yields over time. The out-of-spec PAM-CK test failure was not a safety or potency issue, but a specification set during BLA with limited data, and the company is working with the FDA to revise the threshold. It is still too early to predict a long-term failure rate.

• Q: What is the average ZivaSkin manufacturing yield in commercial use, and what is the threshold for revenue recognition? /

  A: The average yield in commercial operations is 9 sheets per patient, which is substantially higher than the 5-sheet average from the Phase 3 clinical trial. The maximum capacity per patient is 12 sheets. Any batch with fewer than 4 sheets is considered low-yield and does not generate revenue, though the patient is still treated with the available sheets. The company continues to refine processes to improve average yields from commercial batches.

• Q: How often do last-minute patient cancellations unrelated to manufacturing occur, and how many QTCs are needed to reach 80% in-state patient access? /

  A: To date, there have been only two last-minute cancellations, both due to unexpected patient health deterioration rather than voluntary patient withdrawal. All cancelled patients have rescheduled for future dates, not permanently dropped treatment. It is not necessary to have a QTC in every U.S. state to reach 80% of addressable patients, as ~40% of current QTC patient volume is already out-of-state patients traveling for care at leading EB centers. In-state access primarily speeds up Medicaid reimbursement processing, which is the main benefit of expanding in-state QTC coverage.

• Q: How does expanding the top of the patient funnel mitigate launch bottlenecks, and can pre-treatment screening reduce cancellation rates? /

  A: Expanding the top of the funnel offsets disruptions from events outside the company's control (last-minute cancellations, scheduling delays, low-yield batches) by creating more candidates to fill open finite manufacturing slots when gaps arise. Most last-minute cancellations happen within 1-2 days of the scheduled biopsy, making pre-screening ineffective at preventing these disruptions. More patients at the top of the funnel allows the company to fill open slots much faster when cancellations occur.