Small-cap biotech Abeona soars on approval of ‘butterfly disease’ therapy

Shares of biotech Abeona Therapeutics jumped more than 23% yesterday, April 30, after U.S. health regulators approved its treatment for a rare genetic skin disorder known as “butterfly disease,” where even the slightest touch can cause severe skin damage.

Abeona Therapeutics surged 23.7% during the regular trading session yesterday to close at $6.56 per share, before adding nearly another 2.0% after the closing bell. A day earlier, the company announced that the U.S. FDA had approved its therapy Zevaskyn.

The treatment is a genetically modified form of artificial skin, surgically grafted onto wounds of patients suffering from recessive dystrophic epidermolysis bullosa (RDEB) — a rare inherited disorder that leaves the skin weak and prone to blistering and open wounds. Patients are often referred to as “butterfly children” because their skin is as delicate as a butterfly’s wings.

Zevaskyn is made from the patient’s own skin cells, which are genetically modified to produce collagen, a key protein lacking in RDEB patients. Sheets of Zevaskyn, each about the size of a credit card, are grafted onto wounds during surgery, with up to 12 sheets used in a single procedure. According to Abeona, only one grafting treatment is needed: Clinical trials showed that 81% of treated areas healed by at least 50%.

As of now, Zevaskyn is the only therapy that can achieve significant results with just a single application. The company expects to commercialize Zevaskyn in the third quarter.

The target market for Zevaskyn includes approximately 750 patients in the U.S., each of whom may require two procedures to cover most affected areas. That translates into a market exceeding $4 billion, according to a report by Zacks Small Cap Research released yesterday. Following the FDA green light, Zacks SCR raised its target price for Abeona from $9.50 per share to $11.00 per share.

Meanwhile, an HC Wainwright analyst raised his target price from $15 per share to $20 per share and maintained a “buy” rating on the stock.

In total, six analysts currently cover Abeona’s stock, with a consensus target price of $21.70 per share. All of them rate it as a “buy,” according to MarketWatch.

Abeona Therapeutics is a biopharmaceutical company developing and commercializing gene and cell therapies for severe and rare genetic diseases. Its lead product is Zevaskyn. It is also working on treatments for rare genetic eye disorders.

The company has yet to break even. According to its earnings released on March 20, Abeona posted a net loss of $63.7 million for 2024. Nearly half of that amount was spent on general and administrative expenses as the company prepared for the commercial launch of Zevaskyn.