Gene Therapy Adoption And Payer Coverage Will Drive Powerful Long Term Upside

Catalysts

About Abeona Therapeutics

Abeona Therapeutics is a biotechnology company focused on developing and commercializing cell and gene therapies for rare and serious diseases.

What are the underlying business or industry changes driving this perspective?

• Accelerating adoption of ZEVASKYN as the first and only autologous cell based gene therapy for RDEB, supported by growing patient demand and high conversion of identified patients into product orders, positions Abeona for rapid revenue ramp and a path to sustainable earnings growth.
• Strategic expansion of the Qualified Treatment Center network, including leading pediatric EB centers and additional sites in onboarding, should increase treatment capacity and geographic reach. This may enable higher procedure volumes and operating leverage that can improve net margins over time.
• Broad and rapid payer coverage across major commercial plans and all state Medicaid programs, combined with a permanent CMS J code effective early 2026, reduces reimbursement friction and supports predictable cash collections and improving operating cash flow.
• A robust balance sheet with over two years of cash runway, even before meaningful ZEVASKYN revenue contribution, allows the company to invest in commercialization and manufacturing optimization, which can support margin expansion and earlier profitability.
• Advancement of the broader gene therapy pipeline, highlighted by AB0503 participation in the FDA Rare Disease Endpoint Advancement pilot and leadership additions with deep gene therapy expertise, provides potential new high value indications that can diversify revenue and enhance long term earnings power.

Assumptions

This narrative explores a more optimistic perspective on Abeona Therapeutics compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Abeona Therapeutics's revenue will grow by 881.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 20587.5% today to 33.9% in 3 years time.
• The bullish analysts expect earnings to reach $128.2 million (and earnings per share of $1.98) by about December 2028, up from $82.3 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $23.2 million.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 17.8x on those 2028 earnings, up from 3.2x today. This future PE is lower than the current PE for the US Biotechs industry at 21.0x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.17%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Execution risk around ZEVASKYN manufacturing and quality controls, highlighted by the rejected commercial lot and the need to pause biopsies to fix a flawed sterility assay, could lead to further product release issues, delays in treatment, underutilized capacity and reputational damage, which would weigh on revenue ramp and delay the path to positive earnings.
• The highly concentrated dependence on a single ultra rare disease therapy in a small RDEB patient population, in a market where many patients are already on competing treatments such as other gene or topical therapies, raises the risk that long term demand plateaus below expectations, limiting procedure volumes, constraining operating leverage and capping both revenue growth and net margins.
• Structural complexity in the cell and gene therapy care pathway, including lengthy lead times from patient identification to biopsy and treatment, evolving payer prior authorization processes and site specific financial negotiations, may persist even as policies mature, creating friction that slows patient throughput and delays recognition of high priced treatment revenue, thereby restraining earnings growth.
• Reliance on a small network of specialized Qualified Treatment Centers, combined with mandated annual manufacturing shutdowns and potential site level financial or operational constraints, exposes the company to bottlenecks where any site interruption or slower than expected onboarding of new centers could materially limit treatment capacity and reduce both revenue and operating margin expansion over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Abeona Therapeutics is $28.0, which represents up to two standard deviations above the consensus price target of $20.64. This valuation is based on what can be assumed as the expectations of Abeona Therapeutics's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $28.0, and the most bearish reporting a price target of just $14.0.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be $377.8 million, earnings will come to $128.2 million, and it would be trading on a PE ratio of 17.8x, assuming you use a discount rate of 7.2%.
  
• Given the current share price of $4.92, the analyst price target of $28.0 is 82.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.