Abeona Therapeutics Inc (NASDAQ: ABEO)
Okay, so I’m jumping on the bandwagon of a scathing rebuttal that was posted on a blog site by “World’s Greatest.” It refutes, point by point, the hit piece that was recently done on ABEO by an admitted and masked short seller.
But, even though my headline may appear boisterous, ABEO actually is in a position to provide stunning shareholder value to investors that are willing to cut through all of the garbage and maintain a longer-term investment horizon. Promising stocks like ABEO are always vulnerable to vicious and unfounded short seller attacks, and the fact that ABEO has the taste to avoid publicly confronting them is a testament to the class of management at ABEO.
ABEO Is Entirely Different From The Nonsense Published
First off, lets be clear on the reality of Abeona.
ABEO has three late-stage clinical programs that have been producing remarkable and unprecedented results.
ABEO has an ample war chest that is flush with cash – approximately $70 million dollars at last publication; this is a far cry from the going-concern nonsense that was spewed into investor faces.
ABEO is expected to release clinical updates to investors during the first quarter of 2017, and if it confirms the data already presented, ABEO shareholders may be in store for a happy new year.
While those are just a few of the absolute bullet points that should make any investor be treated for seller’s remorse if they sold stock based on the potentially libelous claims published, investors may still be able to pick up shares at post-hit prices, and should consider themselves lucky in that respect. While ABEO may still be considered a small cap, the ABEO plate is full of opportunity.
Following The Smartest Guys In The Room
Investors like Soros Fund, Perceptive Life Sciences, and Knoll Capital Management don’t take substantial positions into small cap names without hours of deep-seated due diligence. Many investors on the street do nothing but follow the lead of the revered investment gurus and trust that their opinion is based on sound research and a belief in company fundamentals. For an author to question the merit of having a wealth of heavy hitting investors interested in ABEO is almost laughable. And, when it’s shown that several of these heavy hitters took positions at prices higher than current market value, it can become even more embarrassing for the author. I know, the share price is beaten down to levels lower than where these guys invested, so, doesn’t that make them wrong? Certainly not; especially when the decline is based on a fabricated and coordinated effort to spew myth and legend about ABEO.
These investors must see something that they like, and if you asked them they would probably not squawk at a future price many multiples higher from where the share price is sitting today. ABEO is looking to accomplish this creation of value by concentrating on treatments for rare pediatric diseases, where the rewards can be both humanitarian and lucrative.
ABEO has already demonstrated significant and unprecedented results in their Sanfilippo trial and are expected to provide equally impressive results from their RDEB studies.
ABEO Treats Sanfilippo
I have covered it before in prior ABEO articles, but the topic of the two most promising and near-term catalysts need to be addressed again, especially to refute the bogus claims made by a masked short seller.
ABEO is advancing two studies, one intended to treat Sanfilippo type A and B, and a second to treat Juvenile Batten Disease and Infantile Batten Disease for recessive RDEB.
ABO 102, to treat Sanfilippo Type A, is demonstrating the ability to deliver a normal and fully functioning gene duplicate to allow that replacement to take the initiative and provide normal gene and protein expression and waste within the brain. Sanfilippo is a rare genetic disorder that unfortunately results in death in many cases, but ABEO has been showing some promising results. In fact, there is a human interest story following one of the Sanfilippo patients in a Facebook dialogue. The blog is certainly worth a read if any of you doubt the efficacy being demonstrated.
The market for Sanfilippo A is substantial, with revenue estimates running into the hundreds of millions of dollars. ABEO has treated three patients during the phase I/II trial thus far. Contrary to faulty claims made by Mr. Short, data has demonstrated that each patient has responded quite well, perhaps even better than expected, as the phase I/II trials mainly focus on safety and tolerability. To see efficacy was a welcome addition to the data. While some argue that the small patient population of roughly 2000 people inhibits the likelihood that ABEO can generate substantial revenue, they are incorrect. Modeling Biomarins $1.5 million dollar gene therapy treatment, the revenue potential can be staggering. I am not saying that ABEO will charge that much per treatment, I am just pointing out that similar therapies are being sold for that amount of money.
All of the patients had GAG reductions in the right places. GAG reduction was demonstrated in urine, cerebral spinal fluid, liver, and spleen volume, each clinically significant, and each reinforces the promise already being shown in enzyme replacement therapy.
ABEO expects to submit regulatory filings during the latter part of 2017 and is targeting approval in early 2018.
While ABEO has been compared to others that have either given up trying or simply have a process that is almost unbearable to describe, the fact is that ABEO will not face much competition, if any, for the next ten years.
ABEO’s closest competitor treats patients by drilling multiple holes into the skull in an effort to deliver the drugs it believes will address the disease. ABEO, on the other hand, offers a single injection, breaks through the blood-brain barrier and begins to work without the substantially invasive procedure of its closest competitor.
ABEO Priority Review And Revenue
The revenue potential in treating Sanfilippo alone is enormous, but ABEO may also benefit from priority review vouchers, which have been sold on the open market for over $300 million dollars. Further. low cost of goods for the treatment will lead to super high margins that will generate tremendous trickle down benefit to the bottom line.
ABEO And RDEB
ABEO is also targeting RDEB with the company’s second late-stage product. RDEB is a destructive disease that limits the production of certain collagens in the body to act as a “glue” between layers of the skin. In most cases, the skin on patients can usually be peeled right off and, in extreme cases, lead to total loss of skin coverage on bones, painful blisters, and open wounds.
Like Sanfilippo, RDEB is a genetic disorder that affects the production of collagen in the skin. Initial phase I results indicated that collagen expression was present after the ABEO treatment for 90% of patients at three months, 66% of patients at six months and 42% after twelve months. Investors can expect ABEO to provide additional data in early 2017, with the intent to approach regulators for an expedited pathway for approval.
Clearly, with over $1.65 dollars per share in cash, almost none of the potential from either trial is properly reflected in the share price. However, as I stated earlier, with coverage emerging on the stock and with increased liquidity down the road, ABEO should begin to grow into its skin and reflect a value far higher than current levels.
How To Get To $120 A Share
Now, the big question… How can I say that ABEO can reach $120 dollars per share? Well, based on the potential enterprise value of $3 billion dollars to treat the captive Sanfilippo market and the projected $5 billion dollar market to treat RDEB, and providing a 25X multiple, ABEO can climb in excess of $120 dollars per share. I’m not predicting that number, but to rule it out is just as unfathomable. To remain consistent, I’ll follow the market data provided by market sources familiar with the space.
ABEO For The Future
The on-line rebuttal to Mako that refutes, point by point, the hit piece sent out against ABEO, should relieve any investor anxiety about the future. If not, read it twice, because it is filled with factual data that is easily fact checked through reading published reviews and publicly available patient data.
It’s a shame though, that while some blog sites permit totally unmerited claims to be published, trying to get a rebuttal published can take weeks. All in all, for ABEO investors, a buying opportunity has been created – one that should be taken advantage of, in this writers humblest of opinions.
Disclosure: This article was written by Kenny Soulstring, and it reflects my own opinions and unique articulation. This article is not intended to offer investing advice, guarantee 100% accurate predictions or to be interpreted as providing a personal recommendation. What I can guarantee, though, is accurate research, thoughtful analysis and an enthusiasm about any stock that I cover.
While I seek to uncover emerging companies that I feel have true value and potential, it’s important that investors assign an appropriate time horizon to each of their investments, understanding that emerging companies need time to mature.
I wrote this article myself and it includes my own research and expresses my own opinions. I am not receiving compensation for it (other than from CNA Finance). I have no business relationship with any company whose stock is mentioned in this article.
Additional Disclosure: I am long ABEO and may purchase additional shares within the next 72 hours.
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