Q3 2023 Humacyte Inc Earnings Call
Okay.
Good afternoon, ladies and gentlemen, and welcome to the human side third quarter results Conference call.
Currently all participants are in a listen only mode.
Later, we will conduct a question and answer session.
Instructions will follow at that time.
As a reminder, this conference call is being recorded.
I will now turn the call over to Loren Mirror with life Science Advisors. Please go ahead.
Thank you operator before you proceed with the call I would like to remind everyone that certain statements made during this call are forward looking statements under U S Federal Securities law.
Statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.
Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC.
Forward looking statements made during this call speak only as of the date hereof and the company undertakes no obligation to update or revise the forward looking statements except as required by law.
Information presented on this call is contained in the press release, we issued this afternoon and in our Form 10-Q, which after five years and may be accessed from the investors page of the human psyche website.
With me on today's call from Hemocyte are Dr. Ron Nicholson, President and Chief Executive Officer, Dale Sanders, Chief Financial Officer, and Chief Corporate Development Officer, and Dr. Heather Pritchard, Chief operating officer.
Doctor Nicholson, who will provide a summary of the company's progress during the quarter in recent weeks and Jill will review the company's financial results for the quarter ended September 30th 2023.
Following their prepared remarks, the management team will be available for your questions I will now turn the call over to Doctor Nicholson.
Thank you Lauren good afternoon, everyone and thank you for joining us for our third quarter 2023 financial results and business update call.
Our third quarter was a highly productive period for human site.
During which we achieved significant milestones in the advancement of our universally implantable bioengineered human tissue product candidate the human cellular vessel or H a V.
And we've worked on this in multiple indications.
This was led by our announcement in September of positive topline results from our phase two three clinical trial in vascular trauma repair, which positions us to submit our BLA filing for approval in this indication during the current quarter.
We're also pleased that potential of our HIV pipeline has been shown in other clinical studies this quarter, including the presentation of phase two results in severe peripheral artery disease or P. A D and.
In addition, we recently published preclinical results of our small caliber H a V in a juvenile heart disease model.
During today's call I'll review. These recent highlights in more detail before turning the call over to Dale for a review of our financial results then we'll be happy to open the call to your questions.
I'll begin with our H a V program in vascular trauma and the positive topline results that we announced from our V 005 phase two three clinical trial of the H a V in trauma repair.
In this clinical trial, the H a V had higher rates of patency and lower rates of amputation and infection as compared to historical published benchmarks of synthetic graft function in trauma patients.
A total of 69 patients were enrolled in the V O five trial and 51 of these had vascular injury of the extremities and comprised the primary evaluation group for the study.
The 30 day patency or presence of blood flow for the H a V. In the clinical trial was 90% as compared to approximately 81% historically reported for synthetic grafts.
Importantly, the H a V also demonstrated lower amputation rates with a rate of nine 8% for the H a V. That's compared to over 20% being reported historically for synthetic grafts.
This means that for a vascular trauma patient receiving the H a V. The chances of amputation or less than half of the chances are associated with receiving a synthetic graft.
It's also important to note that in the V. O. Five trial there were no amputations that occurred because of failure of V. H a V. All of the amputation occurred because of severe injuries to the limb and not due to loss of blood flow from the HIV implant.
C. H a V also demonstrated lower rates of infection with an infection rate of 2% compared to over 8% historically reported for synthetic grafts in other words patients receiving the H a V. In this trial.
Less than half is likely to suffer an amputation and one fourth is likely to have an infection of their graft as patients who historically got synthetic grafts for their injuries.
Building on the momentum of these positive results, we plan to submit a biologics licensing application or BLA with the FDA during this quarter.
In may of this year humans site received a regenerative medicine advanced therapy or our mat designation from the FDA.
Which will allow us to request a priority review of our BLA filing.
Cause we've also received priority designation from the Department of Defense, We believe that will have a high potential for priority review of our planned BLA filing in the trauma indication.
Further buttressing the real world utility of the H a V in treating injured patients human science vessels have been used in Ukraine under humanitarian aid program.
During the one year humanitarian effort.
19 vascular trauma patients received the H a V in Ukraine.
Results will also be highlighted from these patients in our BLA filing with the F D. A.
Outcomes from these 19 patients were described in our presentation at the 2023 military health system Research Symposium in August with clinicians reporting a very high success rate in treating these patients with the H a V to date.
The war wanted patients in Ukraine, who suffered blast and shrapnel injuries that were often severe both a 30 day limb salvage and 30 day patient survival or 100%.
30 day patency or blood flow was <unk> 95 per cent and there were no reported instances of infection of the H a V.
We believe that these remarkable results are an important addition to our BLA filing and we're proud to be able to help our Ukrainian surgeon colleagues safe life and limb in this war time setting.
A site and our collaborators expect to make multiple presentations at the Veith Symposium, which is a major vascular surgery meeting in New York next week. These include an expanded presentation of the results of our V. O five vascular trauma trial and also the outcome of research, which seeks to identify which dialysis patients.
<unk> experienced the most difficulties with their dialysis access and which patients may benefit from an access that is both durable and resists infection.
In September clinical results were also presented on an F. D. A regulated the investigator sponsored clinical study at the Mayo clinic.
In this study patients with severe peripheral arterial disease, who face possible limb amputation, and who had no vein of their own for bypass surgery were treated with the H a V to restore blood flow to their limbs.
In the presentation at the mid Western Vascular conference Mayo researchers observed that the H a V with a safe resilient and effective conduit for arterial bypass and limb salvage.
This is an important result, since approximately 40% of patients requiring lower extremity bypass do not have safran has seen available in.
In the future of the H a V may represent a promising alternative for preserving limbs and patients with advanced peripheral artery disease.
With regard to publications in October of 2023, a publication in the journal of thoracic and cardiovascular surgery described a preclinical study showing the potential for the investigational small diameter H a V to treat petrology and flow, which is a heart condition that affects one.
In every 2000 babies born each year.
And this large animal study humans site collaborated with researchers from nationwide Children's hospital in Columbus, Ohio to implant 3.5 millimeter H a vs into a juvenile model of pediatric heart surgery.
The 3.5 millimeter H a vs remained patent for up to six months and showed evidence of repopulation by host cells, which was similar to what's been observed in human patients.
This study also demonstrated the extension of human science manufacturing platform, adding production of 3.5 millimeter vessels.
In the same platform that is used to produce humans sites six millimeter H a vs which are the ones that are in current clinical use.
In July results from a preclinical study on the ability of the H a V to resist infection were published in the journal of vascular surgery vascular science.
This study provides a scientific basis for the low rates of infection that we've observed in clinical trials of the H a V to date.
Researchers found that compared to synthetic graph the H a V had a significantly lower bacterial infection rate.
This infection resistance of the H a V. Maybe due to the native like biocompatibility of the H a V material, which supports the survival and function of human immune cells that are the key to fighting bacterial infection.
These results have broad implications for all of our intended clinical indications and further support the potential of the H a V. As an excellent alternative to synthetic graph in a wide range of medical conditions.
And with that I'll now turn it over to Dale for a review of our financial results and other business developments.
Thank you Laura.
As of September 32023, we had cash and cash equivalents of $100 million.
May 2023.
The completion of our funding arrangement with Oberland capital buffer of $160 million.
We have received $40 million okay.
Total net cash used was $49 4 million.
10 months of 2023.
We had $53 8 million first nine months of 2022.
We believe that our cash and cash equivalents and expected funding from the overland funding arrangement.
Adequate to finance operations currently.
Sidelines, FDA approval and commercialization of HIV.
On the vascular trauma indication.
There was no revenues for the third quarter of 2023 nine months ended September 32023.
Revenues were 31000 for the third quarter of 2022.
One six months nine months.
September 32022.
Revenue for 2022 related to a grant supporting the development of the JV.
Research and development expenses were $18 6 million for the third quarter of 2023 compared to $17 three third quarter of 2000 and poultry.
And were $56 4 million for the nine months.
September 32023.
Compared to $48 3 million for the nine months ended September 32022.
The current period increases resulted primarily from increased personnel and external services.
Support expanded research and development initiatives, and our clinical trials, including preparation for the HEB.
The clinical trials and completion.
And planned BLA filing for the vascular trauma indication.
And the expansion of clinical development of HIV and Navy access.
Yes.
General and administrative expenses were $6 1 million for <unk>.
Third quarter of 2023 compared to $6 2 million for the third quarter of 2020.
And were 17 5 million for the nine months ended.
September 32023, compared to $17 1 billion.
Nine months ended September 32022.
The increase during the nine months ended September 32014, compared to the prior year period.
Primarily from increased personnel costs.
Really driven by preparation for the planned U S commercial launch of <unk>.
Hum.
Nation.
Slight increase during the third quarter of 2020, but to keep up in 'twenty two.
Consultants, primarily from a reduction in external surface basketball team.
Partially offset by an increase in personnel expense.
Other net income or expense was a net expense of one 4 million for the third quarter of 2023.
Two a net expense of one 8 million third quarter of 2022.
And the other net expense was 11 8 million for the nine months.
September 32023 compared to other net income.
$5 5 million for the nine months ended September 32022.
The increase in other net expenses for the third quarter of 2023 compared to 2022 resulted primarily from an increase in interest income grew at a.
Great.
The increase in other net expense for the nine months.
September 32003 2019.
Resulting primarily from the noncash remeasurement of the.
Contingent earn out liability associated with the 2021 merger with Alpha four.
Net loss was 26.0 million third quarter of 2023.
Paired with $25 3 million third quarter of 2022.
Yeah.
And net loss was 85 7 million for the nine months.
September 32023 compared.
Compared to $8 2 million for the mine.
32022.
The current period increase in net loss resulted from the noncash remeasurement of the contingent earn out liability and increased operating expense.
With that I'll turn it back over to Laura.
Months.
Thank you Danielle this is a very exciting time for human site and for all of our stakeholders as we move closer to our planned regulatory filing and our first HIV indication I'd like to take a moment to thank the entire human site team as well as our partners for their continued commitment to our programs.
The entire team has worked incredibly hard to reach this point and we are approaching what could be a transformational time not only for the company, but for patients who are suffering from a variety of vascular diseases.
Our clinical programs. The H a V has already accumulated more than 1200 patient years of experience, including in vascular trauma vascular access in hemodialysis and peripheral artery disease.
We're also continuing to study the H a V and our earlier stage programs in order to maximize the full potential of the a T v's value for our patients and for our investors.
We look forward to keeping you updated on our progress and thank you all for joining us today.
Operator, we're now ready to take questions.
If you would like to ask a question. Please press star one on your telephone keypad now.
You'll be placed into the queue in the order received.
Please be prepared to ask your question when prompted.
Once again, if you have a question. Please press star one on your telephone keypad now.
Okay.
And our first question comes from Suraj Kalia of Oppenheimer.
Your line is open.
Hi, Laura Dale can you hear me all right.
Yes, we can.
Perfect. Congrats on all the progress Laura Weil.
What.
Additional data on V O five should we expect.
Yeah.
Hum.
At the Veith meeting, we're going to share. In addition to the efficacy results, we're going to share some of the safety outcomes. That's during a podium presentation that will occur during the meeting on Wednesday.
In addition on Thursday evening, we have a dinner symposium session, where we will talk about the V O five outcomes and also the outcomes from Ukraine and look at the combination of those outcomes and as they compare to our benchmarks are in synthetic graft treatment for vascular trauma.
Got it.
Laura.
Assuming nine months post BLA filing for a vascular trauma indication.
How should we start thinking about you know.
My understanding is the label would be.
For not indicated for synthetic grafts. So can you size up the market and also the the low hanging fruit post approval.
Yeah.
So I think in terms of the the size of the market you know as as we've shared in earlier presentations. There's approximately 70000 vascular injuries in the U S that occur every year that require some sort of repair and tens of thousands of those probably require grafting or you know active surgical repair.
Sure.
So of those about 12 or 15% are done with synthetic grafts.
But if you talk to trauma surgeons and if you look at the literature essentially all traumatic injuries are viewed as being contaminated or potentially contaminated and infected.
So if you again, if you talk to trauma practitioners. They will tell you that synthetic grafts are essentially never indicated in patients with traumatic injury.
In addition, we believe that in many cases, the extra hours that it takes to harvest vein is going to make many patients who might have otherwise gotten a vein us be more suitable for an H a V. Because the extra hours that it takes to harvest the vein puts the injured limb at increased risk of amputation.
So so we believe that we will take a sizable fraction of.
Certainly the synthetic graft.
Use but also we believe we will eat into intervene use as well are in the traumatic injury indication.
And surely some of the data that they will be presented at this will be the outcome from the study in terms of why surgeons.
Use the HIV in those particular patients and that made for them.
Some further.
Evidenced.
Evidence to support what Laura just said about the likely uses and why they would choose to use it in certain instances over over synthetic or or a step in the state.
Got it I appreciate the additional color Dell one final question for you Bill.
The contingent earn out and revenue interest liability caught my attention.
Love some additional color on <unk>.
I'm, assuming the revenue interest liability as the $40 million from Oberlin, but I might be wrong, if you could.
You're exactly right that the.
What we call the rip out of the revenue interest liability is essentially the.
The debt instrument with overland and so that will accrue up over time as interest is accrued but right now the face amount of that debt is $40 million.
The contingent earn out liabilities associated with our going public transaction, but the legacy holders of of Hemocyte our.
Or potentially do shares if the stock price hit certain levels and so.
Every quarter is that if the price goes down that liability increases and there isn't a noncash expense recorded in if the stock goes down that quarter Theres a.
The noncash gain in the liability goes down.
Got it.
Thank you so much for taking my questions.
Yeah.
Our next question comes from Josh Jennings of T D Cohen your.
Your line is open.
Hi, This is Eric on for Josh. Thanks for taking the question on the Army's designation that you have in vascular trauma I was wondering if you could share with us when you will know whether or not you received a priority review for your BLA filing and secondly, if you do receive priority review could you specify.
Specify what that entitles you to throw out the BLA review process. Thank you.
Yeah.
So as part of the BLA filing we are going to apply for priority review, which as you may know would entitle us to a six month review period in Paducah date as opposed to a standard 10 month off which is more typical for biologics.
So it's my understanding that once we file.
Within 60 days the agency comes back to us with the acceptance of the file and also with a determination at that time as weather, whether or not they've granted priority review. So I would expect 60 days. After we file we'll know if we have a priority pathway again, I would hope and expect that we do because of the army.
And also because of the priority designation from the Defense Department.
The priority review provides a speedier review process I'm not sure that it that it really changes the amount of interaction you have with the agency certainly once you file a BLA the amount of interaction in the back and forth and the discussion is is always.
Really a robust so I think it's more about speed.
Understood that's great and then sticking with vascular trauma with the target you have here of submitting the BLA and <unk>.
You tell us what steps remain for their process before you actually make that submission.
Yeah.
Well without a without providing too much detail that we haven't provided already in a public forum you know I can say that a BLA as thousands of pages and that it is a complex document.
But I can say that much of the BLA has actually been largely ready for some time or module three which is really the description of the manufacturing pieces has been in a fairly final form for many months now because we transitioned to our commercial stage manufacturing are actually in 'twenty.
21 also our preclinical work is essentially you know has been done for years practically and that's that's module for so they are really five modules to the BLA I would submit that two of them have been done or mostly done for a while and it's really about wrapping up.
Clinical modules and some of the labeling so we do not anticipate that there will be any difficulties filing. This quarter are we said, we see ourselves is completely on track.
Understood. Thank you for that and thank you for taking the questions.
Our next question comes from Matthew O'brien of Piper Sandler.
Your line is open.
Hi, This is from anther on for Matt. We just have a couple of questions for you I guess first off we were wondering if you've thought about providing them.
It's here in Africa.
The Gaza conflict.
Like you have in the past.
Yes, that's a very interesting question I think it's an excellent question.
It is a topic that's come up amongst our leadership are in the Ukraine conflict, we had surgeons reach out to us.
And ask for access to the H a vs as part of treating patients who are injured in the conflict to date, we have not yet received any requests from surgeons in Israel. Along these same lines I think it may be that that the Israeli health care system is.
Perhaps a better equipped.
To handle the casualties that they're seeing I honestly don't know.
Certainly if if we had requests come in.
Inbound from surgeons in Israel, we would certainly consider them and work with our regulatory and clinical teams and work with the FDA to consider those requests.
Well that's great. Thank you and then I guess.
Oh, no I haven't.
Maybe you could talk a little bit about mm launch preparations are ongoing for the HIV.
Maybe in terms of hiring sales reps and how you anticipate launching a product.
Well I'll, let dale handle the the Salesforce and part of the launch, but I will say that and ongoing focus for humans site and one that we're we've made tremendous progress is really speaking to the health economics and the budget impact modeling.
The vessel in the care of trauma patients.
It's been it's been incredibly useful that that our clinical trial results have shown a real decrease in amputation and an infection as compared to patients who are historically treated with synthetic graph that really provides us excellent hard data to make strong economic arguments around.
The utility of the H a V not just for improving patient outcomes, but also for improving the the total expenditures for hospitals and for insurers. So we're working closely now are with our colleagues in health and health economics that we've we've brought on a whole team here at human site are really map.
Being out those arguments and also putting together dossiers that we're going to bring forward to insurers even in advance of approval.
To outline for them that the size of the clinical problem and the benefits that we think the H a V can bring to patients into the health care system.
So that's really in terms of we're doing work on health economics reimbursement and also in coding and that's all that's all very active work streams, but I'll, let dale speak to the the the sales force and the timing on that.
Yeah, Thanks, Lauren Smith as Laura said.
Much of the effort of the core commercial team right now is geared towards those longer lead time items. Yeah. She mentioned you know the budget impact model coding and reimbursement and market access.
In terms of the sales force itself certainly there is planning going on in terms of sizing that force.
How we would divide up territories and.
In strategies like that.
But the actual sales force itself will be brought on.
Be recruited but brought on closer to market launch. So there's certainly not a need to bring them on so far in advance of the of the 'twenty 'twenty four launch, but certainly the planning that's underway right now as a reminder, this is a very concentrated market. We've talked about before where you know 80 plus percent of the patients tend to be treated at level one.
MS centers and there's approximately 200 of those centers. So this will be a highly qualified.
Sales force geared towards surgical type products within the trauma setting, but it will not be a huge sales force.
Great. Thank you.
Okay.
As a reminder, if you do have a question. Please press star one on your phone now.
And our next question comes from Kristen Cuzco of Cantor Fitzgerald.
Your line is open.
Yeah.
Hi, This is Jason on for Christian Thanks for taking our questions two from us.
As the.
Surgeon base, whose how open are they to trying new procedures and options as the first question and then the second is.
Just some insight on your plans.
If any to collect real world evidence and stats.
It helped to launch and further years out and then I'll take.
The answer is offline. Thank you.
So yeah those are excellent questions in the trauma indication that the end users are really going to be a combination of vascular surgeons and trauma surgeons.
For from the standpoint of both of these types of surgeons I, it's true that there hasn't been an important new advance.
In conduits for vascular restoration, and and replacement and probably 30 years. So for for these practitioners who feel like they've been stuck with the same tools for a very long time, having a new biologic.
That has as much experience as we now have with over 200 patient years, I I think both vascular surgeons and trauma surgeons find this very exciting and where we're getting just spontaneous questions and comments whenever we're at the podium about you know when can I get my hands on this you know when will it be on the shelf how fast can I.
Use this so I think theres a lot of anticipation out there in the vascular surgical market I would also say that for trauma surgeons in particular, you know the there more trained as general surgeons and not as vascular surgeons per se and so trauma surgeons by and large would rather not spend time harvesting vein.
It's not it's not something that's really in their wheelhouse. So for trauma surgeons in particular, having a biologic that's going to resist infection that they can pull off the shelf, it's going I think going to be very attractive.
As far as real World evidence.
You know certainly we're making progress on our coding so that we can capture cases that are done with the H a V. In various trauma scenarios after were on the market and we certainly plan on.
Continuing to follow that data I also anticipate that we'll work with some of our key opinion leaders, who are who have already been part of our phase two three V O five trial.
And and look at post launch.
Ah studies of either specific types of injuries or or specific geographies and look at usage and outcomes. So I definitely want to take advantage of that after we are on the market.
Yeah.
Great. Thanks, a lot.
Yeah.
Our next question comes from Bruce Jackson from the Benchmark company.
Your line is open.
Hi, congratulations on all of the progress.
Most of my questions have been answered I, just got the veith symposium coming up here shortly or are there any particular presentations that you're excited about.
I'm excited about he was sites presentations [laughter], but I'm also excited about a couple of other things that we haven't mentioned I will say that Oh, there's a surgeon from the Mayo clinic who's been doing a peripheral artery disease.
Work that he's doing an investigator sponsored study a with the H a V in patients with critical limb ischemia, who are facing potential amputation. So he's going to talk about those results, which are very encouraging.
We also have a joint presentation with Fresenius, where we're where we're.
Presenting some early results of a data dive that we're doing to look into the the types of patients who have problems with their access either access failures or frequent access infections to really hone in on which dialysis patients may benefit from the H a V in the long term.
Alright, that's it for me thank you.
And seeing no further questions I'll turn the call back over to our house.
Okay.
Well. Thank you very much for everyone for your time and attention it's been an exciting quarter and everybody at human side is working hard to continue to meet our milestones as I've said since we went public we have been delivering on what we said we would deliver on the timelines on which we said we would deliver.
For it and we're just continuing to do that and I'm, just so proud of our team and all the hard work that they've done and also all of our collaborators whether it's collaborating surgeons or our corporate partner. So I just wanted to give a big shout out to everybody who has helped us get this far.
Okay.
That concludes today's conference call.
For joining and have a pleasant day.
The host has ended this call goodbye.