Applying Our Three-Pillar Investment Framework to an Emerging Gene Therapy Leader

(October 15, 2025).

At Riverwater Partners our investment process centers on a disciplined three-pillar approach: our approach: exceptional management teams, superior business, and attractive valuation. While Abeona Therapeutics (ABEO) might initially appear to challenge this framework as a recently commercial-stage biotechnology company, we believe it represents a compelling illustration of how all three pillars can align in the rare disease space.

“Zevaskyn® is a one-time, potentially curative therapy—fundamentally different from lifelong management.”

Why Abeona Represents a Unique Investment Opportunity

Clinical breakthrough: Abeona has successfully launched Zevaskyn®, the first gene therapy offering potential cure for Recessive Dystrophic Epidermolysis Bullosa (RDEB), a devastating inherited skin condition affecting approximately 300-500 patients in the United States. Unlike existing treatments that require lifelong management, Zevaskyn represents a fundamentally different approach—a one-time, potentially curative intervention that addresses the genetic root cause of this debilitating disease.

Economic rationale: The commercial opportunity is both significant and time-sensitive. Forward-looking estimates suggest that ABEO could achieve $140 million in revenue during 2026, representing approximately 50 patient treatments at an estimated net price of $2.8 million per procedure. At current enterprise value of approximately $153 million, the company trades at a little more than 1x these projected 2026 sales—a meaningful discount to biotechnology peers with similar growth and gross margin profiles.

However, the true investment thesis extends beyond near-term financial metrics. We see ABEO as positioned to capture substantial value through a combination of proven management execution, differentiated therapeutic approach, and favorable market dynamics that create sustainable competitive advantages in an underserved patient population.

We believe this reflects a compelling mispricing for a first commercial asset with durable data.

Understanding the Disease and Market Context

ABEO is a clinical-stage biotechnology company focused on developing gene therapies to treat rare diseases. Founded in 2013, ABEO focused on gene therapy treatments for Sanfilippo Syndrome based on intellectual property licensed from Nationwide Children’s Hospital. After gaining Orphan Drug Designations for these treatments, they merged with public company PlasmaTech Biopharmaceuticals in 2015, maintaining the name Abeona and changing their symbol to ABEO. Since then, the company has released its first and currently flagship product, Zevaskyn®.

RDEB is an extremely challenging and rare disease. Patients suffer from extreme skin fragility caused by mutations in the COL7A1 gene, which prevents proper formation of collagen anchoring fibrils between skin layers. The result is devastating: skin that tears and blisters from the slightest contact, creating chronic wounds that require intensive daily care and frequent hospitalizations.

The human cost is profound, with 80% of patients dying by age 40 from aggressive skin cancers that develop in chronically wounded areas. Annual supportive care costs typically reach $300,000 to $500,000 per patient, representing millions in lifetime expenses for families and healthcare systems. Until recently, no treatments existed that could address the underlying genetic cause—only palliative care to manage symptoms and complications.

Annual supportive care costs reach $300,000-$500,000 per patient—millions in lifetime expenses without addressing the underlying cause.

Defining the Market Opportunity for Zevaskyn

The market context for Zevaskyn is defined by a small, well-identified patient population with a severe unmet medical need. While estimates vary by source, a granular analysis of epidemiological data provides a clear picture of the commercial opportunity.

RDEB is an ultra-rare disease, with incidence rates estimated between 0.2 to 3.05 per million births. Stanford University data suggests a U.S. prevalence of up to 3,850 patients for all of Dystrophic Epidermolysis Bullosa (DEB). The recessive subtype (RDEB) that Zevaskyn targets is the most severe and accounts for one-third to one-half of these cases. Abeona management, using claims data, has identified a target pool of 750 total DEB patients, of which they aim to treat 30% (225 patients), a figure that aligns with these independent estimates.

The commercial opportunity is twofold. The primary focus is the initial addressable pool of 200–300 existing (prevalent) patients who may be immediately eligible for treatment. This backlog represents the near-term revenue opportunity. Beyond this, a smaller, steady-state market exists, driven by an estimated 5–10 new (incident) RDEB cases diagnosed annually in the U.S. This creates a long-term, albeit smaller, sustainable revenue stream.

This well-defined market, combined with an established network of specialized treatment centers (like Lurie Children’s Hospital and Stanford Medicine) and strong support from advocacy groups like DEBRA of America, creates favorable conditions for a targeted and efficient commercial launch. The severity of the unmet medical need generates significant receptivity to premium pricing for therapies that deliver meaningful, curative benefits.

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Applying Riverwater’s Three-Pillar Investment Framework

Pillar One: Exceptional Management Team

Proven Leadership with Gene Therapy Expertise

The leadership team at Abeona brings precisely the experience needed to navigate complex gene therapy commercialization. CEO Vishwas Seshadri previously served as Executive Director and Worldwide Brand Leader for Breyanzi at Celgene, where he led the successful global launch of this CAR-T cell therapy for relapsed or refractory large B-cell lymphoma. His experience encompasses the full spectrum of challenges inherent in launching personalized, hospital-administered therapies with premium pricing—experience directly applicable to Zevaskyn’s commercial requirements.

Chief Commercial Officer Madhav Vasanthavada brings complementary expertise, having led marketing teams for two successful autologous cell therapy launches: Breyanzi and Abecma. His background spans the critical intersection of clinical excellence and commercial execution that defines success in the gene therapy space. The team’s collective experience at Celgene and Bristol Myers Squibb provides deep understanding of payer relations, key opinion leader engagement, and the operational complexities of specialized treatment center networks.

This management depth matters significantly in biotechnology investing, where execution risk often determines commercial success regardless of clinical efficacy. The transition from clinical development to sustainable commercial revenue requires navigating regulatory oversight, manufacturing scale-up, payer relations, and physician adoption—areas where this team’s track record provides meaningful risk mitigation.

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Pillar Two: Superior Business Model

A Transformative and Durable Business Model

Zevaskyn’s therapeutic approach represents a fundamental advancement over existing treatment paradigms. The therapy involves harvesting keratinocytes from patient skin biopsies, genetically modifying these cells to express functional COL7A1 protein, and cultivating them into living skin grafts over 25-26 days. These grafts are then surgically applied to chronic wounds, where they integrate and provide durable healing by addressing the underlying genetic deficiency.

Clinical trial results demonstrate the therapy’s differentiated profile: 81% of treated wounds achieved at least 50% healing at six months, with 65% achieving 75% or greater healing. More importantly, long-term follow-up data spanning over eight years shows that treated areas remained healed and free from the aggressive skin cancers that typically develop in RDEB patients. No treatment-related severe adverse events were reported, with only 9% of wounds experiencing minor treatment-emergent effects.

81% of treated wounds achieved at least 50% healing at six months, with durability lasting over eight years—no cancer development at treated sites.

Differentiated Strategy: Curative vs. Chronic Treatment

This clinical profile creates significant competitive advantages over alternative approaches. Krystal Biotech’s Vyjuvek represents the only other recently approved therapy for dystrophic epidermolysis bullosa, but the procedural and clinical distinctions between these treatments are substantial.

The economic implications of these therapeutic differences are profound. Forward-looking analysis based on current pricing suggests that Vyjuvek’s chronic dosing model, with a list price of $631,000 annually and a cap of $900,000 per year, could result in lifetime costs reaching $15-22 million, or higher for patients beginning treatment at young ages. This chronic treatment model creates ongoing cost accumulation over decades while providing incremental rather than transformative clinical benefits. The therapy’s value remains tied to continued application and re-treatment, creating perpetual healthcare system costs without addressing the underlying genetic cause.

In contrast, Zevaskyn’s one-time treatment approach at $3.1 million list price offers compelling economic value despite the substantial upfront cost. As the first and only genetically modified skin graft treatment specifically designed for RDEB, Zevaskyn can address large wounds in a single surgical procedure, potentially providing comprehensive treatment coverage that Vyjuvek cannot match. The therapy’s curative potential, supported by eight-year durability data showing no reopening of treatment sites or development of squamous cell carcinoma, represents a fundamentally different value proposition focused on long-term disease modification rather than symptom management.

Value Proposition and Commercial Precedents

Abeona has implemented a three-year refund guarantee that demonstrates confidence in Zevaskyn’s durability while addressing payer concerns. This value-based strategy aligns with key lessons from both successful and challenged launches in the high-priced gene therapy market.

Abeona’s three-year refund guarantee demonstrates confidence in durability while addressing payer concerns—a risk-sharing model proven successful in high-value gene therapies.

• Successful Precedents: Novartis’s Zolgensma, priced at $2.1 million, achieved over $1 billion in sales by its second year, driven by outcomes-based contracts and leveraging newborn screening programs for patient identification. Similarly, Krystal Biotech’s Vyjuvek saw strong initial uptake by utilizing a pre-existing network of treatment centers and strong patient advocacy support. These cases prove that transformative therapies can win reimbursement with effective risk-sharing mechanisms and by leveraging existing infrastructure.
• Cautionary Tales: Conversely, the commercial failure of therapies like Glybera and the European withdrawal of Zynteglo highlight the risks of payer pushback in cost-constrained markets. Other launches, like Luxturna, faced initial challenges due to slow patient identification and the need for specialized infrastructure, underscoring that operational readiness is as critical as clinical efficacy.

Abeona’s strategy appears to have integrated these lessons. The company’s three-year refund guarantee directly addresses the need for outcomes-based, risk-sharing models. Furthermore, by partnering with established EB centers and the patient advocacy group DEBRA of America, Abeona is actively addressing the infrastructure and patient identification challenges that have slowed other launches.

Go-to-Market Strategy and Commercial Positioning

Abeona’s commercial plan is built on a foundation of deep engagement with the RDEB community, leveraging key relationships and support systems to ensure successful patient access and adoption. This is not just a theoretical plan; it is an active strategy with measurable early traction.

The partnership with DEBRA of America has been central to Abeona’s regulatory and commercial strategy. This dedicated nonprofit provides comprehensive support to the EB community and is a critical partner for patient education, identification, and building trust in the treatment. The company has launched the Abeona Assist Program, a personalized support service to guide patients, caregivers, and healthcare professionals through the entire Zevaskyn journey. The fact that this program already has 30 individuals enrolled indicates strong early interest and a proactive approach to overcoming logistical hurdles.

Abeona is actively leveraging its relationships with world-renowned trial investigators, including Dr. Tang (Stanford), Dr. Gorell (Colorado), and Dr. Paller (Lurie Children’s). These KOLs are essential for building credibility within the medical community and driving patient referrals to the Qualified Treatment Centers (QTCs).

This multi-faceted strategy—combining strong advocacy partnerships, robust patient support, and KOL engagement—is designed to create a favorable ecosystem for Zevaskyn’s launch, mitigating the adoption challenges that have hindered other novel therapies.

Building Scalable Manufacturing and Treatment Infrastructure

The manufacturing and delivery model creates additional competitive moats. Abeona operates a dedicated cGMP facility in Cleveland specifically designed for patient-specific gene therapy production. The 25-day manufacturing cycle, while complex, provides natural barriers to competition and allows for quality control that would be difficult to replicate quickly. Current capacity supports six patients per month, with planned expansion to ten patients monthly in 2026.

The company is building a network of Qualified Treatment Centers, leveraging relationships with leading EB specialists to ensure proper patient selection and treatment administration. As of mid-2025, two major centers are operational at Lurie Children’s Hospital and Stanford Medicine Children’s Health, with management targeting five centers by year-end 2025 and up to ten centers longer-term. This controlled expansion approach prioritizes quality and safety while building institutional expertise and physician confidence in the therapy.

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Pillar Three: Attractive Valuation

A Discounted Valuation with Strong Upside

Forward-looking financial analysis based on current assumptions suggests that ABEO trades at a significant discount to its commercial potential. The company’s combination of a strong balance sheet, a clear path to profitability, and a discounted valuation multiple creates an asymmetric risk-reward profile.

Assessing Abeona’s Financial Strength and Balance Sheet

Abeona’s enterprise value (EV) is backed by a robust cash position following the recent sale of its Priority Review Voucher (PRV). A transparent breakdown reveals:

Balance Sheet Snapshot (Q2 2025)

The enterprise value stands at approximately $153 million. This strong balance sheet provides a significant cash runway of over two years, even without sales, de-risking the commercial launch and funding the necessary manufacturing expansion.

Projected Growth and Path to Profitability

Management has provided a clear launch trajectory, allowing for a detailed forecast of near-term financials.

Guidance is for 10–14 patient treatments in 2025, translating to $25 million to $35 million in revenue. As manufacturing capacity scales to 10 patients per month and the QTC network matures, we project approximately 50 treatments in 2026. This would generate roughly $140 million in revenue, assuming an estimated net price of $2.8 million per treatment. This net price reflects an initial gross-to-net discount of around 10%, which is expected to widen toward 18% over the long term as the payer mix includes more Medicaid patients.

The business model demonstrates powerful operating leverage. With manufacturing costs yielding gross margins in the low-to-mid 80s, profitability is within sight. Based on these projections, we estimate a potential 2026 EPS in the range of $0.20 to $0.50. This aligns with management’s guidance of achieving cash-flow breakeven in the first half of 2026.

Valuation Discount and Peer Comparison

At its current enterprise value, ABEO trades at approximately 1.0x our 2026 sales estimate. This represents a significant discount to peers with similar mid-80s gross margin profiles, which typically trade at 3-8x sales multiples.

This discount can be attributed to two main factors:

1. Execution Risk: As a first-time commercial launch, Abeona must prove it can successfully scale its complex manufacturing and hospital logistics.
2. Curative Therapy Model: Unlike chronic treatments, a cure reduces the addressable patient pool over time, leading to a different long-term revenue profile.

However, we believe the current 1x multiple more than compensates for these risks, especially given the high visibility into 2026 sales and the management team’s proven execution capabilities.

Understanding the Long-Term Revenue Model

It is critical to understand that Zevaskyn’s commercial trajectory will differ from that of a chronic therapy. As a potential cure, revenue will likely plateau after the initial backlog of prevalent patients is treated over the first several years.

Following this peak, U.S. sales are expected to settle into a steady-state run rate based on the annual incidence of just 5–10 new patients. This would generate a sustainable, long-term annual revenue base of approximately $20 million in the U.S. This analysis does not include the significant upside potential from international expansion or the maturation of the company’s pipeline assets, which could backfill revenue and drive future growth.

Pipeline Optionality and Future Value Drivers

Beyond the immediate commercial opportunity with Zevaskyn, the investment thesis is enhanced by significant pipeline optionality that is not reflected in the current valuation. These programs represent valuable “call options” on the company’s underlying scientific platform and its ability to forge strategic partnerships.

AIM™ Vector Platform: The Engine Behind Abeona’s Innovation

The proprietary AIM™ Vector platform is the core technology that enables the targeted delivery of Zevaskyn’s genetic therapy. This same platform has broad potential for application across other rare diseases by targeting specific tissues like the liver, lungs, and eyes. Abeona is actively developing this platform for its internal pipeline, which includes:

Strategic Partnerships and Milestones

Abeona has also leveraged its expertise to secure strategic collaborations that could generate non-dilutive funding and future royalty streams, further diversifying its value proposition.

• Ultragenyx (RARE): Abeona has a partnership with Ultragenyx for UX-111, a gene therapy for Sanfilippo Syndrome Type A. While the original August 18, 2025, PDUFA date has been delayed by at least six months due to an FDA request for more manufacturing information from RARE, a future approval could still yield $30 million milestone payments over time to Abeona, plus ongoing royalties.
• Taysha Gene Therapies (TSHA): The company is also partnered with Taysha on programs TSHA-102 and TSHA-118, which could generate a combination of clinical, regulatory, and sales-based milestones and royalties.

These partnerships provide external validation of Abeona’s science and offer multiple shots on goal for value creation, providing a crucial upside to the core Zevaskyn commercial launch.

Valuation Sensitivity Analysis

Forward-Looking Estimates Based on Current Assumptions

Key Variable	Base Case	Sensitivity Range	Revenue Impact
Net Price per Treatment	$2.8M	$2.3M – $3.0M	±15
2026 Patient Volume	50	30 – 70	±40%
Gross-to-Net Discount	10-18%	8-25%	±7%
International Expansion	Not included	2x-3x addressable market	+100-200%

The valuation appears most sensitive to patient volume assumptions and international expansion potential. Conservative patient penetration scenarios still support current valuation levels, while successful execution of base case projections suggests meaningful upside potential. International market development represents the most significant long-term value driver, potentially justifying premium multiples if European or other major market access can be achieved with acceptable pricing.

At current enterprise value of $153 million, ABEO requires only modest commercial success to justify current levels, while providing substantial upside participation in successful rare disease gene therapy commercialization. The combination of proven management execution capability, limited competition, and favorable market dynamics creates an asymmetric risk-reward profile appropriate for investors comfortable with biotechnology execution risk and small-cap volatility.

Commercial Execution and Risk Assessment

The path to realizing ABEO’s valuation potential requires successful execution across multiple dimensions. The company must scale manufacturing capacity while maintaining stringent quality standards for patient-specific production. Treatment center network development requires ongoing medical education and operational support to ensure proper patient selection and treatment administration.

Payer relations represent perhaps the most critical success factor. While early indicators suggest receptivity to Zevaskyn’s value proposition, systematic coverage decisions across commercial insurers and Medicaid programs remain to be established. The company’s outcomes-based pricing approach and clinical differentiation provide strong negotiating positions, but reimbursement for $3.1 million therapies requires sustained evidence generation and stakeholder management.

Patient identification and referral patterns present additional operational challenges. The 3-4 month cycle from patient identification to treatment completion requires coordinated workflows across multiple healthcare providers and institutions. As treatment volumes increase, maintaining quality and safety standards while managing complex logistics will test the organization’s operational capabilities.

Competition from Krystal Biotech’s Vyjuvek, while differentiated in mechanism and dosing approach, could influence market dynamics and pricing expectations. Future competitive threats from other gene therapy approaches or novel treatment modalities represent longer-term risks that require ongoing monitoring and strategic planning.

Responsible Investing and Societal Impact

Beyond financial metrics, Abeona’s mission aligns strongly with responsible investing principles through its focus on addressing profound unmet medical needs in underserved patient populations. The company’s work represents a meaningful contribution to healthcare equity, targeting a rare disease community that has historically lacked effective treatment options.

The societal impact of Zevaskyn extends well beyond individual patient outcomes. Families affected by RDEB typically face devastating emotional and financial burdens, often requiring one parent to provide full-time care while managing complex medical needs and frequent hospitalizations. The therapy’s curative potential offers the possibility of restored quality of life, reduced caregiver burden, and meaningful participation in educational, social, and professional activities previously limited by chronic illness.

Beyond financial returns, Zevaskyn offers families restored quality of life and the possibility of participation in activities previously limited by chronic illness.

Healthcare Economics and Value Creation

From a healthcare economics perspective, Zevaskyn’s one-time treatment model addresses systemic cost inefficiencies in rare disease care. Forward-looking analysis suggests that preventing decades of chronic wound management, antibiotic treatments, pain medications, and hospitalizations could generate substantial healthcare system savings while improving patient outcomes. The therapy’s approach to addressing root genetic causes rather than managing symptoms represents a paradigm shift toward more effective and efficient healthcare resource allocation.

Abeona’s commitment to manufacturing excellence and regulatory compliance demonstrates responsible corporate governance in the highly regulated gene therapy space. The company operates under current Good Manufacturing Practice guidelines at its Cleveland facility, maintaining rigorous quality standards for cell therapy and AAV-based gene therapy production. These practices reflect not only regulatory compliance but genuine commitment to patient safety and product integrity in an area where manufacturing quality directly impacts patient outcomes.

The company’s outcomes-based pricing model, including its three-year refund guarantee, illustrates alignment between corporate interests and patient welfare. This approach demonstrates confidence in clinical outcomes while sharing risk with healthcare payers—a model that could influence broader industry practices toward value-based healthcare delivery.

Environmental considerations, while not central to the investment thesis, reflect responsible operational practices. The company’s focused manufacturing approach and specialized treatment center network minimize unnecessary resource consumption while maintaining high-quality patient care. The personalized medicine model, despite its complexity, represents efficient healthcare resource utilization by targeting treatments precisely to patients most likely to benefit.

Investment Conclusion: Balancing Risk and Reward

Abeona Therapeutics exemplifies our three-pillar investment approach applied to the rare disease space. The combination of proven management execution capability, differentiated therapeutic approach with sustainable competitive advantages, and attractive valuation relative to commercial potential creates a compelling risk-adjusted opportunity for appropriate investors.

The investment thesis rests on the company’s ability to execute commercial scale-up while maintaining the clinical excellence and operational quality that defines success in personalized medicine. Early indicators including payer acceptance, patient demand, and treatment center adoption support optimism about near-term commercial trajectory.

At 1x 2026 projected sales, ABEO offers asymmetric risk-reward for investors comfortable with rare disease execution risk—led by proven management with directly relevant gene therapy launch experience.

Forward-looking projections suggest meaningful value realization potential over the next 12-24 months as 2026 financial performance demonstrates the sustainability and scalability of Zevaskyn’s commercial model. However, investors must carefully consider the execution risks, market limitations, and competitive dynamics inherent in rare disease biotechnology investing.

For risk-tolerant investors comfortable with small-cap biotechnology volatility and binary commercial outcomes, ABEO represents an opportunity to participate in the transformation of treatment paradigms for one of medicine’s most challenging rare diseases, led by a management team with directly relevant experience and supported by differentiated clinical data in an underserved market.

Key Financial Forecasts and Takeaways

Forward-Looking Estimates – Actual Results May Differ Materially

Metric	2025E	2026E	2027E
Patients Treated	10-14	~50	~120
Revenue	$25-35M	$140M	$305M
Gross Margin	80-85%	80-85%	80-85%
Path to Profitability	Operating losses	Breakeven potential	Cash generation

The information provided herein reflects the opinions of Riverwater Partners, LLC as of the date of publication and is subject to change without notice. It is provided for informational and educational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Indices cannot be invested in directly and are unmanaged. Riverwater Partners does not guarantee the accuracy or completeness of this information and is not responsible for any errors or omissions. All projections and estimates are based on current assumptions that may not occur. Biotechnology commercialization involves substantial uncertainty regarding market acceptance, competitive response, regulatory oversight, and operational execution. This analysis does not constitute investment advice and may not be suitable for all investors. Biotechnology investments can result in total loss of capital.
Analysis based on public information, company guidance, and industry research. Independent verification of all claims not completed. For complete methodology and source attribution, please contact Riverwater Partners. Clients or prospective clients should consult their financial advisor before making any investment decisions. Riverwater Partners is a Registered Investment Advisor with the U.S. Securities and Exchange Commission (SEC).