Q4 2023 Humacyte Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Humacyte 2023 fourth quarter near-end results conference call. Currently, all participants are in listen-only mode.

Good morning, ladies and gentlemen, and welcome to the human side 2023 fourth quarter and year end results conference call.

Currently all participants are in listen only mode.

Operator: Later we'll conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I'll now turn the call over to Lauren Marek with Lifestyle Advisors. Please go ahead.

Later, we will conduct a question and answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded.

Speaker Change: I'll now turn the call over to Laura Lauren Merrick with lifestyle advisors. Please go ahead.

Lauren Marek: Thank you, operator. Before we 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 laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.

Speaker Change: Thank you operator before we would 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 laws.

Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations.

Lauren Marek: 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. The 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 morning and in our Form 10-K, which, after filing, may be accessed from the Investors page of the Humacyte website. Joining me on today's call from Humacyte are Dr. Laura Niklason, President and Chief Executive Officer, Dale Sander, Chief Financial Officer and Chief Corporate Development Officer, and Dr. Heather Prichard, Chief Operating Officer. Dr. Niklason will provide a summary of the company's progress during the year and recent weeks, and Dale will review the company's financial results for the quarter and year ended December 31, 2023. Following their prepared remarks, the management team will be available for your questions. I will now turn the call over to Dr. Niklason. Thank you, Lauren.

Speaker Change: 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.

Speaker Change: The 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 morning and in our Form 10-K, which after filing may be accessed from the investors page of the human state website.

Speaker Change: Joining me on today's call from him a site or a doctor Laura Nicholson, President and Chief Executive Officer.

Speaker Change: Bill Sander, Chief Financial Officer, and Chief Corporate Development Officer, and Dr. Heather Pritchard, Chief operating officer.

Speaker Change: Doctor Nicholson will provide a summary of the companys progress during the year and recent weeks and Dale will review the Companys financial results for the quarter and year ended December 31 2023.

Speaker Change: Following their prepared remarks, the management team will be available for your questions I will now turn the call over to Doctor Nicholson.

Doctor Nicholson: Thank you Lauren good morning, everyone and thank you for joining us for our 2023 financial results and business update call.

Laura E. Niklason: Good morning, everyone, and thank you for joining us for our 2023 Financial Results and Business Update call. Our fourth quarter and the start of 2024 have been highly productive for Humacyte. Importantly, Humacyte completed submission of our BLA in December, and the FDA accepted our biologics license application for HIV in the vascular trauma indication in February of this year. Over the course of 2023, we also made progress on our broader HAV pipeline, including the completion of enrollment in our Phase III trial in Dialysis Access, presentation and publication of clinical trial results in peripheral arterial disease, and publication of preclinical results for our small caliber HAV in During today's call, I'll review these developments in more detail before turning the call over to Dale for a review of our financial results. Then we'll be happy to open up the call to your questions.

Doctor Nicholson: Our fourth quarter and the start of 'twenty 'twenty four have been highly productive for human site.

Doctor Nicholson: Importantly, humans site completed submission of our BLA in December and the FDA accepted our biologics license application for the H a V in the vascular trauma indication in February of this year.

Doctor Nicholson: Over the course of 2023 we also made progress on our broader H a V pipeline, including the completion of enrollment of our phase III trial in dialysis access.

Presentation and publication of clinical trial results in peripheral arterial disease and publication of preclinical results for our small caliber H a V in a juvenile heart model.

Doctor Nicholson: During today's call I'll review these developments in more detail before turning the call over to Dale for a review of our financial results. Then we'll be happy to open up the call to your questions.

Laura E. Niklason: I'll begin with our HAV program in vascular trauma. In December 2023, we submitted our BLA to the FDA. This was supported by a robust data package that included positive results from our VO5 Phase 2-3 clinical trial. The BLA package also included real-world evidence from the treatment of wartime injuries in Ukraine under the humanitarian aid program that was supported by the FDA.

I'll begin with our H a V program in vascular trauma.

Dale: In December 2023, we submitted our BLA to the F D a.

Dale: This was supported by a robust data package that included positive results from our V O five phase two three clinical trial.

Dale: The BLA package also included real World evidence from the treatment of war time injuries in Ukraine under the humanitarian aid program that was supported by the F. D. A.

Laura E. Niklason: Our data package showed that the HAV had higher rates of patency and lower rates of amputation and infection as compared to historic synthetic graph benchmarks. In the two trials combined, the 30-day patency or presence of blood flow for the HAV was 91.5% for extremity patients, compared to 78.9% historically reported for synthetic grafts. The HAV also demonstrated lower amputation rates, with a rate of 4.5% as compared to 24.3% for synthetic grass, and furthermore, the HAV had lower infection rates at 30 days with a rate of 0.9% as compared to 8.4% historically for synthetic grafts.

Dale: Our data package showed that the H a V had higher rates of patency and lower rates of amputation and infection as compared to historic synthetic graft benchmarks.

Dale: In the two trials combined the 30 day patency or presence of blood flow for the H. A V was 91.5 per cent for extremity patients compared to 78.9% historically reported for synthetic grafts.

The H a V also demonstrated lower amputation rates with a rate of 4.5% as compared to 24.3 per cent for synthetic grafts and.

Dale: And Furthermore, the H a V had lower infection rates at 30 days with a rate of 0.9% as compared to 8.4% historically for synthetic grafts.

Laura E. Niklason: In other words, patients treated with the HAV were only 40% as likely to lose blood flow through their conduit after one month, which is a key period for recovery after traumatic injury. HAV patients were also only one-fifth as likely to suffer an amputation and only one-ninth as likely to have an infection of their graft as compared to patients who were treated with a synthetic graft. These results were also provided in November at multiple presentations at the Wyss Symposium, which is a major vascular surgery meeting held in New York. In February of 2024, the FDA accepted our BLA for vascular trauma, also granting priority review and establishing a Prescription Drug User Fee Act, or PDUFA, goal date for action of August 10, 2024.

Dale: In other words patients treated with the H a V. We're only 40% is likely to lose blood flow through their conduit after one month.

Dale: Which is a key period for recovery after traumatic injury.

Dale: H a V patients were also only one fifth as likely to suffer an amputation and only one ninth is likely to have an infection of their graft as compared to patients who were treated with a synthetic graft.

Dale: These results were also provided in November at multiple presentations at the Veith Symposium, which is a major vascular surgery meeting held in New York.

Dale: In February of 'twenty 'twenty four the FDA accepted our BLA in vascular trauma also granted priority review and establishing a prescription drug user fee Act or <unk> goal date for action of August 10th 2024.

Laura E. Niklason: The FDA's decision to grant priority review aligns with their prior grant of a Regenerative Medicine Advanced Therapy, or RMAD, designation for the HAV for urgent arterial repair. We believe this also reflects their recognition that many patients with severe injuries are underserved by the current standards of care. Priority review is also consistent with the priority designation that was given by the Secretary of Defense under a law enacted to expedite the FDA's review of products that are intended to diagnose, treat, or prevent many more serious life-threatening conditions that are facing American military personnel.

Dale: The Fda's decision to grant priority review aligns with their prior grant of a regenerative medicine advanced therapy or armet designation for the H a V for urgent arterial repair.

Dale: We believe this also reflects the recognition that many patients with severe injuries are underserved by the current standards of care.

Dale: Priority review is also consistent with the priority designation that was given by the secretary of defense under our law enacted to expedite the Fda's review of products that are intended to diagnose treat or prevent serious life threatening conditions that are facing American military personnel.

Laura E. Niklason: The BLA acceptance brings us another step closer to our goal of providing an innovative regenerative medicine product for patients who are suffering traumatic vascular injury. Based on the strength of the data package from our VO5 trial in vascular trauma, combined with data from the humanitarian experience in Ukraine, we look forward to the PDUFA date with confidence. In preparation for an anticipated FDA approval, Humacyte is also working to build out the commercial team as part of our go-to-market strategy. Health economic models have been developed, which are derived from large national databases of traumatic injury care in the U.S. Based upon historical results for synthetic graft outcomes, it's clear that the HAV can provide important health benefits as well as important economic benefits for the healthcare system. The costs of conduit infection, sepsis, and amputation are extremely high, adding tens or even hundreds of thousands of dollars to the costs of trauma care.

Dale: The BLA acceptance brings us another step closer to our goal of providing an innovative regenerative medicine product for patients who are suffering traumatic vascular injury.

Dale: Based on the strength of the data package from our V O five trial in vascular trauma.

Dale: Combined with data from the humanitarian experience in Ukraine, we look forward to the Paducah date with confidence.

In preparation for an anticipated FDA approval human side is also working to build out the commercial team as part of our go to market strategy.

Dale: Health economic models have been developed which are derived from large national databases of traumatic injury care in the U S.

Dale: Based upon the historical results for synthetic graft outcomes, it's clear that the H a V can provide important health benefits as well as important economic benefits for the health care system.

Dale: Cost of conduit infection, sepsis, and amputation are extremely high adding tens or even hundreds of thousands of dollars to the cost of trauma care.

Laura E. Niklason: Avoidance of these costly complications will, we believe, help to drive market uptake of this revolutionary product candidate in the care of traumatically injured patients. Turning now to our program in peripheral artery disease, in the fall, results were presented from an FDA-regulated and investigator-sponsored clinical study that's being conducted at the Mayo Clinic of the HAV in patients with chronic limb-threatening ischemia, which is the end stage of PAD. Most patients treated as part of the program required bypass surgery below the knee, which is a type of disease that is typically not well treated with stents and angioplasty procedures.

Dale: Avoidance of these costly complications will we believe help to drive market uptake of this revolutionary product candidate in the care of dramatically injured patients.

Dale: Turning now to our program in peripheral artery disease in the fall results were presented from an F. D. A regulated and investigator sponsored clinical study that's being conducted at the Mayo clinic of age of the H a V in patients with chronic limb threatening ischemia, which is the end stage of P. E D.

Dale: Most patients treated as part of the program required bypass surgery below the knee, which is a type of disease that is typically not well treated with stents and angioplasty procedures.

Laura E. Niklason: Treated patients did not have a suitable vein of their own to perform a needed bypass procedure and so received the HAV to revascularize their critically ischemic lower limb. In presentations at the Wyss Symposium and at the Midwestern Vascular Conference, researchers observed that in the clinical study, the HAV was a safe, resilient, and effective conduit for arterial bypass and limb salvage in patients who did not have veins to provide a conduit to restore blood flow. This is an important result since approximately 40% of patients requiring lower extremity bypass do not have saphenous veins available for revascularization. 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 HAV to treat Tetralogy of Fallot. This is a heart condition that affects one in every 2,000 babies born in the U.S. each year.

Treated patients did not have suitable vein of their own to perform a needed bypass procedure and so receive the H a V to revascularization critically ischemic lower limbs.

Dale: And presentations at the Veith symposium and the Midwestern vascular conference Reese.

Dale: Researchers observed that in the clinical study the H a V was a safe resilient and effective conduit for arterial bypass and limb salvage in patients who did not have vein to provide a conduit to restore blood flow.

This is an important result, since approximately 40% of patients requiring lower extremity bypass do not have safran has seen available for revascularization.

Dale: 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 a follow.

Dale: This is a heart condition that affects one in every 2000 babies born in the U S. Each year.

Laura E. Niklason: In this preclinical study, researchers from Nationwide Children's Hospital in Columbus, Ohio, implanted 3.5 millimeter diameter HAVs into a juvenile large animal model of pediatric heart disease. In long-term follow-up in these animals, the 3.5 millimeter HAVs remained patent for up to six months and showed evidence of cellular repopulation by host cells, which is similar to what's been observed in human patients. The pediatric heart study also demonstrated the extension of Humacyte's manufacturing platform, adding the 3.5 millimeter vessels to the 6 millimeter vessels that have been manufactured for more than a decade. As a reminder, our 3.5 millimeter vessels are currently being evaluated in IND-enabling preclinical studies in large animals, to support future advancement of the HAV into human clinical trials for coronary artery bypass.

Dale: In this preclinical study.

Dale: Researchers from nationwide children's hospital in Columbus, Ohio, implanted 3.5 millimeter diameter H a vs.

Dale: Into a juvenile large animal model of pediatric heart disease.

Dale: In long term follow up in these animals. The 3.5 millimeter H a vs remain patent for up to six months.

Dale: And showed evidence of cellular repopulation by host cells, which is similar to what's been observed in human patients.

Dale: The pediatric heart study also demonstrated the extension of human sites manufacturing platform, adding the 3.5 millimeter vessels to the six millimeter vessels that have been manufactured for more than a decade.

Dale: As a reminder, our 3.5 millimeter vessels are currently being evaluated in I N D, enabling preclinical studies in large animals.

Dale: To support future advancement of the HIV into human clinical trials in coronary artery bypass.

Laura E. Niklason: We've previously reported excellent long-term six-month results in coronary artery bypass in large animals, and cardiac implantations are continuing this year as we gather data in support of an IND filing for heart bypass surgery. In July, results of a preclinical study were also published in the Journal of Vascular Surgery. This study provides a scientific basis for the low rates of infection that have been observed in our clinical trials of the HAV. Researchers found that compared to synthetic grafts, The HAV had a significantly lower bacterial infection rate. The infection resistance may be due to the HAV's native-like tissue structure that supports superior compatibility with the body's own immune cells.

We've previously reported excellent long term six month results in coronary artery bypass in large animals.

Dale: And cardiac implantation are continuing this year as we gather data in support of an IND filing in heart bypass surgery.

Dale: In July results of a preclinical study were also published in the journal of vascular surgery vascular science.

Dale: This study provides a scientific basis for the low rates of infection that have been observed in our clinical trials of the H a V.

Researchers found that compared to synthetic grafts. The H a V had a significantly lower bacterial infection rate.

Dale: The infection resistance, maybe due to the H a vs native like tissue structure that supports superior compatibility with the body's own immune cells.

Dale A. Sander: These results have broad implications for all of our intended HAV indications and further support the HAV's potential as a solution to the limitations of synthetic grafts 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. We had cash and cash equivalents of $80.4 million as of December 31st, 2023. We also completed two transactions in early 2024, which added substantially to our cash balances. On March 5th, 2024, we closed an underwritten public offering of common stock and raised net proceeds of approximately $43.1 million. In addition, on March 11th, 2024, we received $20 million in proceeds from an additional draw under our revenue purchase agreement with Oberlin Capital.

Dale: These results have broad implications for all of our intended H a V indications and further support the H a vs potential as a solution to the limitations of synthetic grafts in a wide range of medical conditions.

Dale: And with that I'll now turn it over to Dale for a review of our financial results and other business development.

Dale: Thank you Laura.

Dale: We had cash and cash equivalents of 84 million as of December 31, 2023.

Dale: We also completed two transactions in early 'twenty, 'twenty, four which added substantially to our cash balances.

Dale: On March 5th 2024, we closed an underwritten public offering of common stock and raised net proceeds of approximately $43 1 million.

Dale: In addition.

Dale: March 11th 2024.

Dale: We received $20 million in proceeds from an additional draw under our revenue purchase agreement with Oberland capital.

Dale A. Sander: Total net cash used was $69.0 million for the year ended December 31st, 2023, compared to $67.7 million for the year ended December 31st, 2022. We believe that our cash and cash equivalents are adequate to finance operations well past the currently anticipated timelines for FDA approval and commercialization of the HAV in the vascular trauma indication. There was no revenue for the fourth quarters of 2023 and 2022, and there was no revenue for the year ended December 31st, 2023.

So net cash used was 69.01 billion for the year ended December 31 2023.

Dale: Compared to 67 7 million every year ended December 31 2022.

Dale: We believe that our cash and cash equivalents are adequate to finance operations well past. The currently anticipated timelines for FDA approval and commercialization of HIV in the vascular trauma indication.

Dale: There was no revenue for the fourth quarters of 2023 and 2022.

Dale: And there are no revenues for the year ended December 31 2023.

Dale A. Sander: Revenue was $1.6 million for the year ended December 31st, 2022 and was related to a grant supporting the development of the HAV that was completed during 2022. Research and development expenses were $20.2 million for the fourth quarter of 2023, compared to $15 million for the fourth quarter of 2022, and were $76.6 million for the year ended December 31st, 2023, compared to $63.3 million for the year ended December 31st, 2022. The 2023 increases resulted primarily from increased personnel, and many more, and other partners supporting the expanded research and development initiatives in our clinical studies, including the completion of our B005 Phase 2-3 trial and our B017 Ukraine humanitarian trial for use of the HAV in extremity vascular trauma as well as our BLA filing in December and the clinical development of the HAV for use in dialysis access. General and administrative expenses were $6 million for the fourth quarter of 2023 compared to $5.8 million for the fourth quarter of 2022 and were $23.5 million for the year ended December 31, 2023 compared to $22.9 million for the year ended December 31, 2022.

Revenue was $1 6 million for the year ended December 31, 2022 and was related to grants supporting development of HIV that was completed during 2022.

Research and development expenses were $20 2 million for the fourth quarter of 2023.

Dale: Compared to $15 million for the fourth quarter of 2022.

Dale: And were $76 6 million for the year ended December 31 2023.

Dale: Third to $63 3 million for the year ended December 31 2022.

Dale: The 2023 increases resulted primarily from increased personnel.

Dale: External services expenses and materials expenses.

Dale: Supporting the expanded research and development initiatives in our clinical studies.

Dale: Including the completion of our beta 005 phase two three trial in <unk>.

Dale: 017, Ukraine humanitarian trial for use with HIV and extremity vascular trauma as.

Dale: As well as our BLA filing in December.

And the clinical development of HIV for use in dialysis access.

Dale: General and administrative expenses were $6 million for the fourth quarter of 2023.

Dale: Third to $5 8 million for the fourth quarter 2022.

Dale: And were $23 5 million for the year ended December 31 2023.

Dale: Compared to $22 9 million for the year ended December 31 2022.

Dale: The 2023 slide that increases in G&A expenses resulted primarily from increased personnel costs, primarily driven by preparation for the planned commercial launch of HIV in the vascular trauma indication.

Dale A. Sander: The 2023 slight debt increases in G&A expenses resulted primarily from increased personnel costs, primarily driven by preparation for the planned commercial launch of the HAV in the vascular trauma indication. Other net income or expense was net income of $1.1 million for the fourth quarter of 2023 compared to net income of $17.1 million for the fourth quarter of 2022 and was net expense of $10.7 million for the year ended December 31, 2023 compared to net income of $72.6 million for the year ended December 31, 2022. The Reduction and Other Nets and the increase in other net expense for the year ended December 31st, 2023 resulted primarily from the non-cash remeasurement of the contingent earn-out liability associated with the August 2021 merger with Alpha Healthcare Acquisition Corp. That loss was $25.1 million for the fourth quarter of 2023 compared to $3.7 million for the fourth quarter of 2022. The net loss was $110.8 million for the year ended December 31, 2023, compared to $12 million for the year ended December 31, 2022.

Dale: Other net income or expense was net income of $1 1 million for the fourth quarter of 2023.

Dale: Compared to net income of $17 1 million for the fourth quarter of 2022.

Dale: And what's net expense of $10 7 million for the year ended December 31 2023.

Dale: Compared to net income of $72 6 million for the year ended December 31 2022.

Dale: The reduction in other net.

Dale: Income in the fourth quarter of 2023.

Dale: The increase in other net expense for the year ended December 31 2023.

Solid primarily from the non cash re measurement of the contingent earn out liability associated with the August 2021 merger with Alpha Healthcare acquisition Corp.

Dale: Net loss was $25 1 million for the fourth quarter of 2023 compared to $3 7 million for the fourth quarter of 2022.

Dale: The net loss was $110 8 million for the year ended December 31 2023.

Dale: Third to $12 million for the year ended December 31 2022.

The 2023 increases net loss resulted primarily from the non cash re measurement of the contingent earn out liability and increased operating expenses described.

Dale: Described above.

Dale: With that I'll turn it back to Laura for concluding remarks.

Laura E. Niklason: Thank you Danielle this is a very exciting time for humans site and all of our stakeholders.

Laura E. Niklason: The 2023 increases in net loss resulted primarily from the non-cash remeasurement of the contingent earn-out liability and increased operating expenses, both described above. With that, I'll turn it back to Laura for her concluding remarks. Thank you, Dale. This is a very exciting time for Humacyte and all of our stakeholders. I'd like to take a moment to thank the Humacyte team as well as our partners for their continued commitment to our program. The entire team has worked incredibly hard to reach this point, and we're approaching what could be a transformational time, not only for the company but for patients suffering from a variety of vascular diseases and complications. Across our clinical programs, the HAV has already accumulated more than 1,200 patient years of experience, including in vascular trauma repair, dialysis access, and peripheral artery disease, and we are continuing to study the HAV in our earlier programs in order to maximize the full potential of our technology platform and its value.

Laura E. Niklason: I'd like to take a moment to thank the humans site team as well as our partners for their continued commitment to our programs.

Laura E. Niklason: The entire team has worked incredibly hard to reach this point and we're approaching what could be a transformational time not only for the company, but for patients suffering from a variety of vascular diseases and complications.

Laura E. Niklason: Across our clinical programs. The H a V has already accumulated more than 1200 patient years of experience, including in vascular trauma repair dialysis access and peripheral artery disease and.

And we are continuing to study the H a V in our earlier programs in order to maximize the full potential of our technology platform and its value.

Laura E. Niklason: We look forward to keeping you updated with our progress and thank you all for joining us today.

Speaker Change: Operator, we're ready to take questions.

Thank you well now be conducting a question and answer session.

Speaker Change: If you'd like to ask a question at this time. Please press star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press star two if you'd like to withdraw your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Please so we poll for questions once again Thats star one to ask a question. Thank you.

Laura E. Niklason: We look forward to keeping you updated with our progress, and thank you all for joining us today. Operator, we're ready to take questions. Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, so we poll for questions. I want to see that star one to ask a question.

Speaker Change: Thank you and our first question is from the line of Ryan Zimmerman with P. T. I G. Please proceed with your questions.

Ryan Benjamin Zimmerman: Good morning.

Ryan Benjamin Zimmerman: You hear me okay.

Ryan Benjamin Zimmerman: We can hear you.

Ryan Benjamin Zimmerman: Good morning, Congrats on the progress.

Ryan Benjamin Zimmerman: So you can you can reach out and touch it.

Ryan Benjamin Zimmerman: Hmm.

Ryan Benjamin Zimmerman: Maybe just to start.

Ryan Benjamin Zimmerman: Thinking about commercial preparations.

Bill you alluded to some of the health economic work Youre doing I think one of the questions that investors have is this is kind of where the HIV lives economically.

Ryan Benjamin Zimmerman: In the spectrum of product offerings, and kind of how you think about where you'd like it to be priced at and to extent that you can elaborate on kind of what.

Ryan Benjamin Zimmerman: What the target opportunity looks like.

Operator: Thank you. Thank you. And our first question is from the line of Ryan Zimmerman with BTIG. Please proceed with your question. Good morning. Can you hear me OK?

Ryan Benjamin Zimmerman: The ramp that we should be thinking about as you prepare for commercial activity.

Speaker Change: Thanks, Ryan and I'll try to take those and somewhat order, but yeah.

Speaker Change: Obviously, the HIV is a biologic, which is produce clinical results, which are far superior to the comparable standard of care today, particularly synthetic grafts.

Operator: We can hear you. Oh, good morning. Congratulations on the progress. It's so close you can reach out and touch it.

Dale A. Sander: Maybe just to start, as we think about commercial preparations, Dale, you alluded to some of the health economic work you're doing. I think one of the questions that investors have is kind of where the HAV lives economically in the spectrum of product offerings and kind of how you think about where you'd like it to be priced. And to the extent that you can elaborate on kind of what the target opportunity looks like and the ramp that we should be thinking about as you prepare for commercial activity. Yeah, thanks Ryan, and I'll try to take those in somewhat order, but obviously, the HAV is the biologic, and has produced clinical results that are far superior to the comparable standard of care today, particularly synthetic grafts.

Speaker Change: It's going to be priced at a higher acquisition cost and then the current standard of care, but we believe that our budget impact models, which are largely developed at this stage will show that.

Speaker Change: Due to the reduction in complications such as amputations and infections and <unk>.

Speaker Change: The case of San Jose and report fusion injury and other complications like that that are very expensive for the provider.

Speaker Change: Providers in this case the hospitals.

Speaker Change: The overall cost of.

Speaker Change: Treating a patient with HIV will be will be very favorable.

Speaker Change: As you know pricing itself is usually determined and announced at the time of launch because you don't want to do that in a vacuum you want to do that in combination with the clinical story and the health economic story, but.

Speaker Change: I think as we've talked about in the past.

Dale A. Sander: It is going to be priced at a higher acquisition cost than the current standard of care. We believe that our budget impact models, which are largely developed at this stage, will show that due to the reduction in complications such as amputations and infections, and in the case of saponin, reperfusion injury, and other complications like that that are very expensive for the providers, in this case, the hospitals, the overall cost of treating a patient with HIV will be very favorable, and as you know, pricing itself is usually determined and announced at the time of You want to do that in combination with the clinical story and the health economic story, but I think, as we've talked about in the past, if you look at our earliest SEC filings, we had suggested something in the $25,000 range for the product could be somewhat lower, could be somewhat higher, but wherever it falls within that range.

Speaker Change: You look at our earliest SEC filings, we had suggested something in the $25000 range for the product it could be somewhat lower it could be somewhat higher but.

Speaker Change: Wherever it falls within that range clearly the health economic benefits that are going to be demonstrated due to this reduction of complications.

Going to be meaningful and it certainly will support the pricing of that.

Speaker Change: Got it.

Speaker Change: Beyond that I think you had a question about the market.

Speaker Change: The market size there.

Speaker Change: There's around 80000 vascular trauma cases, each year within the United States.

Speaker Change: When we drill down and look very specifically kind of the low hanging fruit in the the ones that are most immediately applicable to the HIV by by looking at hospital billing codes and other information like that there's at least 26000 cases, we believe that our.

Speaker Change: Their candidates for the HIV to be used within the United States, which with suggestions.

Speaker Change: No.

Speaker Change: A market that could be somewhere in the 600 plus million dollar range dependent upon pricing so.

Speaker Change: Hopefully I've answered your questions, but yes.

Dale A. Sander: Clearly, the health economic benefits that are going to be demonstrated due to this reduction of complications are going to be meaningful and certainly will support the pricing of the product. Beyond that, I think you had a question about market size. There are around 80,000 vascular trauma cases each year within the United States. And when we drill down and look very specifically at the low-hanging fruit and the ones that are most immediately applicable to the HAV by looking at hospital billing codes and other information like that, there's at least 26,000 cases we believe that are clear candidates for the HAV to be used in the United States, which would suggest that this is a market that could be somewhere in the $600-plus Hopefully, I've answered your questions, but you pointed out any that I'd missed. No, no, thank you, Dale. It's still early.

Speaker Change: Yes.

Speaker Change: No no. Thank you Dallas.

Speaker Change: You know it's still early I know these are not fully flush.

Flushed out as you get closer I think more clarity will emerge there. The other question is just around cash burn guidance.

Speaker Change: Pro forma with the recent equity offering and some of the tranches from overland and then here around the $1 40 range as of today, if I'm not mistaking my 143, five and that's based on the gross proceeds from the recent equity offering so so I'm just curious.

Speaker Change: What you can say for 'twenty 'twenty four around cash burn maybe any directional commentary on operating spend as you do kind of prepare for this commercial launch.

Speaker Change: Yeah, Yeah, certainly I think your math is right the way we look at it as we ended December 31.

Speaker Change: A little more than.

Speaker Change: Right around $81 million in cash and when we add on the 63 plus million that we.

Speaker Change: Cheap through the equity financing as well as the.

Speaker Change: Additional draw them into our Berlin facility.

Speaker Change: It means we're entering the year with around 144 million in cash, which leaves us very well positioned.

Dale A. Sander: I know these are not fully flushed out. As you get closer, I think more clarity will emerge there. The other question is just around cash burn guidance. I think pro forma, with the recent equity offering and some of the tranches from Overland, I think you're around the 140 range as of today, if I'm not mistaken, about 143.5, and that's based on the gross proceeds from the recent equity offering.

Speaker Change: Our net cash burn for.

Speaker Change: 2023 round it to about $69 million, but if you back out the effect of some net financing transactions from our operating.

Speaker Change: Operating cash point of view and from a capital expenditure point of view.

Speaker Change: We burned about 73 million.

Speaker Change: And too.

2023, and those activities. So, suggesting you know, we're very well positioned with the cash that we have on hand right now.

Speaker Change: In terms of how we will proceed in the upcoming year, we haven't given super specific guidance.

Speaker Change: Sure.

Dale A. Sander: So I'm just curious, you know, what you can say for 2024 around cash burn, maybe any directional commentary on operating spend as you do kind of prepare for this commercial one. Yeah, yeah, certainly. I think your math is right.

Speaker Change: Guided in the past is that we.

Speaker Change: Certainly we expect to expand our commercialization activities during the year, including.

Speaker Change: Near at the time of launch to bring it on.

Speaker Change: That's a relatively small sales force to address this very closely.

Concentrated market. So we will have obviously higher commercialization expenses. During this year, but we do also have a wind down of certain clinical costs. During the year with the deals I study just in long term follow up and not not us.

Dale A. Sander: The way we look at it is we ended December 31st with a little more than, well, right around $81 million in cash. And when we add on the $63 plus million that we achieved through the equity financing as well as the additional draw into our Oberlin facility, that means we're entering the year with around $144 million in cash, which leaves us very well positioned, and our net cash burned for 2023 rounds to about $69 million. But if you back up the effect of some net financing transactions from an operating cash point of view and from a capital expenditure point of view, we burned about $73.5 million in 2023 on those activities. So suggesting that we're very well positioned with the cash that we have on hand right now.

Speaker Change: Since of activities as we had during 2023 as we prepared for the close out of that study and for filing of the BLA and then also our Dallas as travel deals seven will be winding down in the second half of the year or two so we expect somewhat of an increase in overall cash burn for the upcoming year, but not.

Speaker Change: Not to a great extent on a net basis.

Speaker Change: We believe the cash on hand is certainly adequate to take us.

Speaker Change: Well past the commercial launches in the U S.

Speaker Change: Trauma and access them.

Speaker Change: Well past or certainly through 2026, so where are we certainly don't have any cash concerns at this point in time.

Speaker Change: Very helpful. Dale Thank you for all the information.

Speaker Change: Our next question is from the line of Kristen <unk> with Cantor Fitzgerald. Please proceed with your questions.

Kristen: Hi, everyone, good morning, and congrats as well.

Dale A. Sander: Now, in terms of how we'll proceed in the upcoming year, we haven't given super specific guidance, but I'll share what we've guided in the past is that certainly we expect to expand our commercialization activities during the year, including near the time of launch, bringing on a relatively small sales force to address these very, concentrated markets. So we will obviously have higher commercialization expenses during this year, but we do also have a winding down of certain clinical costs during the year with the DO5 study just in long-term follow-up and not as intensive activities as we had during 2023 as we prepared for the closeout of that study and for filing of the BLA. And then also, our dialysis trial B07 will be winding down in the second half of the year too. So we expect somewhat of an increase in overall cash burn for the upcoming year, but not to a great extent on a net basis, and we believe that the cash on hand is certainly adequate to take us well past the commercial launches, in trauma and AV access, and many more. Point.

Kristen: I wanted to touch on manufacturing.

Kristen: This is al.

Speaker Change: Thank you very very.

Speaker Change: Gary.

Speaker Change: Thank you Budd.

Speaker Change: So wanted to ask how you're feeling about your manufacturing and also.

Speaker Change: Anything you're doing to prepare.

Speaker Change: Call me back.

Speaker Change: The FDA will be conducted.

Yeah Kristen this is Laura Nicholas and thank you for that question.

Laura E. Niklason: So yes, certainly after the BLA file was accepted and we got our Paducah date in August the F. D. A moved rapidly to begin scheduling you know interim meetings and also our inspection.

Laura E. Niklason: M, which is upcoming in the near future you know as far as what we've been doing to prepare for this we've actually run two mock inspections, one last summer and one just last month in February.

Laura E. Niklason: There we brought consultants in to human site, who are all ex FDA inspectors and and they really did a deep dive on two separate occasions really helping us be as prepared as possible for this upcoming inspection.

Dale A. Sander: Very helpful, Dale. Thank you for all the information. Our next question is from the line of Kristen Kluska with Canterford, Charlotte. Please proceed with your question. Hi everyone, good morning, and congratulations as well on the progress.

Laura E. Niklason: I would say that since we began preparing for this last summer.

Laura E. Niklason: I wanted to touch on manufacturing, as you know this is often something the FDA scrutinizes very closely during PDUPAs and drug approval. So wanted to ask how you're feeling about your manufacturing and also, you know, anything you're doing to prepare for upcoming inspections and meetings that the FDA will be conducting. Yeah, Kristen, this is Laura Niklason.

Laura E. Niklason: We've we've really been able to execute on all of the all of the remediation that that were picked out certainly from 2023.

Laura E. Niklason: And we're we're feeling very confident about about how this inspection is going to go you know we believe that the facility is in great shape or our manufacturing processes are well characterized and well understood.

Laura E. Niklason: Thank you for that question. So, certainly, after the BLA file was accepted and we got our PDUFA date in August, the FDA moved rapidly to begin scheduling interim meetings and also our inspection, which is coming up in the near future. As far as what we've been doing to prepare for this, we've actually run two mock inspections, one last summer and one just last month in February, where we brought consultants in to Humacyte who were all ex-FDA inspectors and they really did a deep dive on two separate occasions, really helping us be as prepared as possible for this upcoming inspection. I would say that since we began preparing for this last summer, we've really been We believe that the facility is in great shape. Our manufacturing processes are well characterized and well understood. Obviously, with the Center for Biologics, you're right. A big focus is always on manufacturing and the facility and the robustness of the process.

Laura E. Niklason: Obviously with the center for Biologics you write a big focus is always on manufacturing and the facility and the robustness of the process, but we believe we're in good shape.

Laura E. Niklason: Okay.

Speaker Change: Great. Thank you for that.

Speaker Change: Study that you talked about.

Speaker Change: Our model.

Speaker Change: Alright, great.

Speaker Change: Okay.

Or how are you.

Speaker Change: About the flexibility for your current platform as it relates to basketball and how you might go about it.

Speaker Change: Highlight our larger scale program.

Speaker Change: Yeah.

Speaker Change: So the one of the beauties of the platform and this was this was designed with the intention is that arent Luna manufacturing machines, each of which right now can make up to about a thousand 40 centimeter H a vs per year those were designed specifically.

Speaker Change: So as to be modular and flexible so using the same machine, we can grow tissues of different diameters and different lengths without changing the machinery itself. It really only involves changing some of the plastic bag sizes and some of the tubing. So you know as we mentioned in the call.

Laura E. Niklason: But we believe we're in good shape. Great, thank you for that. And then the preclinical study that you talked about in the juvenile animal model seems to highlight the different applications of the HIV platform. So how are you thinking about the flexibility for your current platform as it relates to different vessels and how you might go about implementing this on a pilot or larger scale program? So one of the beauties of the platform, and this was designed with intention, is that our Luna manufacturing machines, each of which right now can make up to about 1,040 centimeters HAVs per year, those were designed specifically so as to be modular and flexible. So using the same machine, we can grow tissues of different diameters and different lengths without changing the machinery itself. It really only involves changing some of the plastic bag sizes and some of the tubing.

Speaker Change: We've been making three and a half millimeter vessels that are suitable for heart bypass in pediatric heart surgery, we've been making those in our current system for the last couple of years and we've been testing them in animals.

Speaker Change: It's also for US we believe a short hop to modify our system and make six millimeter vessels, but that a shorter or longer shorter vessels may have may have added utility in the trauma indication in the future because many traumatic injuries don't require 40 centimeters of Khan.

Speaker Change: Do it you know they they can they can utilize a shorter vessel Conversely in peripheral arterial disease, where we're also working pretty actively with our phase two programs. It may be that in the future. Some patients would benefit from a longer vessel, which can extend from the groin down to below the knee and we believe that we can also make longer.

Laura E. Niklason: So, you know, as we mentioned in the call, we've been making 3.5 millimeter vessels that are suitable for heart bypass and pediatric heart surgery. We've been making those in our current system for the last couple years, and we've been testing them on humans. And animals.

Speaker Change: Vessels again, using the same equipment. So we we were very intentional when we designed the platform. So that we could pivot and make vessels of different shapes and sizes and I would say, we're already doing that and.

Laura E. Niklason: It's also for us, we believe, a short hop to modify our system and make 6mm vessels that are shorter or longer. Shorter vessels may have added utility in the trauma indication in the future because many traumatic injuries don't require 40cm of conduit, you know, they can utilize a shorter vessel. And conversely, in peripheral arterial disease, where we're also working pretty actively with our phase two programs, it may be that in the future, some patients would benefit from a longer vessel, which can extend from the groin down to below the knee, and we believe that So we were very intentional when we designed the platform so that we could pivot and make vessels of different shapes and sizes, and I would say we're already doing that, and that will be, after approval, and going forward, follow-on product candidates will be manufactured in our same system just using slight modifications of the tubing. Great, thanks for taking the questions. Thank you. Our next question comes from the line of Josh Jennings with TD Cowan.

Speaker Change: And that will be you know after approval you know going forward a follow on product candidates are will will be manufactured in our same system just using slight modifications of the of the tubing.

Speaker Change: Yeah.

Speaker Change: Great. Thanks for taking the question.

Speaker Change: Thank you.

Speaker Change: Our next question now from the line of Josh Jennings with T. D. Cowen. Please proceed with your questions.

Joshua Thomas Jennings: Hi, good morning, Alright, thanks for taking the questions.

Joshua Thomas Jennings: I wanted to just follow up on Ryan's question on health Economics data. Thanks for the download there, but just wanted to.

Joshua Thomas Jennings: Better understand if theres any color on your discussions with payers and just how you expect Medicare and private payer reimbursement for HIV in the vascular trauma indication to evolve.

Joshua Thomas Jennings: DRG is in place and.

Joshua Thomas Jennings: Just any any color as you think about at lunchtime, then how how reimbursement and payment can move kind of off from there.

Yes.

Speaker Change: Yeah, Yeah, certainly so.

Speaker Change: In parallel.

To date, we've had discussions with hospital administrators interactions with CMS and also your interactions with with private payers and those discussions will are intensifying with the data in hand and as we.

Operator: I'm pleased to see what your question is. Hi, good morning, Laura and Dale. Thanks for taking the questions. I wanted to just follow up on Ryan's question on health economics data. Thanks for the download there.

Speaker Change: Start rolling out or a budget impact model.

You know the budget impact model itself, which really supports the value proposition of HIV and the implications of abusing the HIV and the extent to which you can save the cost of other complications.

Dale A. Sander: But just wanted to better understand if there's any color on discussions with payers and just how you expect Medicare and private payer reimbursement for HIV and the vascular trauma indication to evolve. The DRG is in place, and any color as you think about it at launch time and then how reimbursement and payment can evolve from there. Yeah, yeah, certainly. So, um, in parallel.

Is it essentially.

Speaker Change: We will essentially be presented and published through the course of the year presumably.

Speaker Change: It's a launch.

Speaker Change:

Beyond that though specific your specific questions around reimbursement.

Speaker Change: How the HEB is reimbursed is going to be dependent upon the indication and also where the patient is being served so specifically with regards to trauma, that's an inpatient surgical setting and so the hospitals are generally going to be reimbursed on a DRG or fixed price basis as you implied it in so.

Dale A. Sander: To date, we've had discussions with hospital administrators, interactions with CMS, and also interactions with private payers. And those discussions are intensifying with the data in hand as we start rolling out our budget impact model, and the budget impact model itself, which really supports the value proposition of HAV and the implications and the extent to which it can save the cost of other complications, will essentially be presented and then published through the course of the year, presumably in advance of launch. Beyond that, though, your specific questions around reimbursement, how the HAV is reimbursed, are going to be dependent upon the indication and also where the patient is being served. So specifically with regard to trauma, that's an inpatient surgical setting.

Speaker Change: The JV would be an acquisition costs by the hospital, which is it's not.

Speaker Change: Separately Ram burst at its core.

Speaker Change: Which is why the health economic.

Speaker Change: Implications of HIV and the ability to save the cost of these complications is so important.

Speaker Change: But keep in mind that as a new technology.

Speaker Change: Excuse me.

Speaker Change: And also as a biologic.

Speaker Change: B, we believe will qualify for and tap a new technology add on payment reimbursement, which will give the hospitals and additional reimbursement that they would not get under the normal drg's and clearly the HIV qualifies for an untapped reimbursement because its innovative and because it provides a meaningful patient benefit but.

Speaker Change: I think both CMS and private payers, who can provide the equivalent of an end cap reimbursement.

Dale A. Sander: And so the hospitals are generally going to be reimbursed on a DRG or fixed price basis as you implied. And so the HAV would be an acquisition cost by the hospital, which is not separately reimbursed at its core, which is why the health economics is so important, and the ability to save the cost of these complications is so important, but keep in mind that it's a new technology, and also as a biologic, HAV we believe will qualify for an NTAP or new technology add-on payment reimbursement, which will give the hospitals an additional reimbursement that they would not get under the normal DRGs. And clearly the HAV qualifies for an NTAP reimbursement because it's innovative and because it provides a meaningful patient benefit, but I think both CMS and then private payors who can provide the equivalent of an end-to-end reimbursement will be motivated to do so because and not only are the savings associated with the HAV present during the time the patient's in the hospital, but once the patient leaves the hospital, the reduction in amputations and other complications will save the payers a substantial amount of money in terms of ongoing rehabilitation and prosthetics and other costs like that.

Speaker Change: Will be motivated to do so because not only are the savings associated with HIV present during the time of the patients in the hospital, but once the patient leaves the hospital the reduction in amputations and other complications will save the payers a substantial amount of money in terms of ongoing rehabilitation in prosthetics.

Speaker Change: And other costs like that so.

Speaker Change: We believe that with them to get the existing DRG is used.

Speaker Change: The use of <unk>.

Speaker Change: <unk> because of the production and complications.

Speaker Change: We will also get tapped and the equivalent from private pay due to the innovative nature of the product and the savings that it provides once a patient need for hospital.

Speaker Change: Excellent Dale and I and the only thing I would add there and then this is also in the public domain, but humans as part of applying for the M to M. Tap it's necessary to obtain an ICD 10 code from from CMS and are at it. We we had a recent meeting.

Speaker Change: With CMS that that was in the public domain on the ICD 10 coding and CMS has recommended that the H a V. A b given our unique code and and so that's that is an important step. It is an important precursor to filing for the Untap application. Later this year. So I just wanted to say that for.

Speaker Change: CMS standpoint in terms of coding and reimbursement, we're definitely on track and I also want to reiterate dale's points, which I think are very important for C. M. S. N for all private payers and Medicaid also is that the the the initial hospital costs for for severe.

Laura E. Niklason: So we believe that within the existing DRGs, the use of the ATV will be very favorable because of the reduction in complications, but that we will also get in tap the equivalent from private pay due to the innovative nature of the product and the savings that it provides once the patient leaves the hospital. Dale, and the only thing I would add there, and this is also in the public domain, but as part of applying for the NTAP, it's necessary to obtain an ICD-10 code from CMS. And we had a recent meeting with CMS that was in the public domain on ICD-10 coding, and CMS has recommended that the HAV be given a unique code.

Speaker Change: Traumatic injury. The initial hospital costs are only part of the equation readmissions and and complications due to do the amputation and infection and sepsis.

Our huge cost drivers and and the insurers are going to understand this and and the case for providing a add on payments to support H a V adoption in trauma I think it's going to be very strong.

Laura E. Niklason: And so that's an important step. It's an important precursor to filing the NTAP application later this year. So I just wanted to say that from a CMS standpoint, in terms of coding and reimbursement, we're definitely on track. And I also want to reiterate Dale's points, which I think are very important for CMS and for all private payers and Medicaid. Also, is that the initial hospital costs for severe traumatic injury are only part of the equation.

Speaker Change: Excellent thanks for that and.

Speaker Change: Just to follow up on the <unk> indication.

Speaker Change: And you've done work with Fresenius to their large dataset.

Speaker Change: Patient that could benefit most from <unk> as well as the economics I'm not sure. If there's any details you can share from that or time, when more Intel could come from that.

Speaker Change: Collaboration and then just also remind us how you can leverage the vascular trauma indication in.

Laura E. Niklason: Readmissions and complications due to amputation, infection, and sepsis are huge cost drivers, and the insurers are going to understand this. And the case for providing add-on payments to support HAV adoption in trauma, I think it's going to be very significant. Excellent. Thanks for that.

Speaker Change: In the filing for the <unk> indication as we move down the year here. Thanks.

Speaker Change: Well as as we've said on several calls we're looking forward to sharing that information you know I I think we have you know so I I I can't say that we're going to do a K O. L event actually next week, where we're going to present a lot of the for Nova data that we've gathered.

Laura E. Niklason: Just to follow up on the AV-AXIS indication, you've done work with Fresenius, digging through their large data set on patients that could benefit most from HIV as well as health economics. I'm not sure if there are any details you can share from that or the timing of when more intel could come from that collaboration. And then just also remind us how you can leverage the vascular trauma indication in the filing for the AV-AXIS indication as we move down the air here. Thanks.

Speaker Change: With our partners Fresenius for more than a year.

Speaker Change: That really paints a very clear picture of how costly some of the most costly patients are and who those patients are so we're really looking forward to that end and that will be next week, you know as far as how the trauma data will be leveraged for a potential follow on BLA.

Laura E. Niklason: Well, as we've said on several calls, we're looking forward to sharing that information. You know, I think we have, so I can say that we're going to do a KOL event actually next week where we're going to present a lot of the Franova data that we've gathered with our partners for CENIUS for more than a year. That really paints a very clear picture of how costly some of the most costly patients are and who those patients are.

Speaker Change: Supplement in dialysis access.

Speaker Change: As you know the the agency tends to look at safety and efficacy data within indication that will be their primary focus.

Speaker Change: Although of course, the long term safety updates that we're going to be providing.

Speaker Change: As part of our you know drug safety update report and also just a trauma follow on I'm sure will be part of that file.

Speaker Change: But but you just realistically I think that.

Laura E. Niklason: So we're really looking forward to that, and that will be next week. As far as how the trauma data will be leveraged for a potential follow-on BLA supplement in dialysis access, as you know, the agency tends to look at safety and efficacy data within indications. That will be their primary focus, although of course, the long-term safety updates that we're going to be providing as part of our drug safety update report and also just trauma follow-on, I'm sure will be part of that file. But just realistically, I think that, particularly from an efficacy standpoint, since dialysis really is a different indication from trauma, I think the efficacy focus will be on the dialysis data, but I And also, my assumption is you can leverage the modules for manufacturing and clinical detection. Oh, yes, of course. Yes. Absolutely, yeah. Thank you for that. Yes, no, since the product is identical, all of the preclinical, and all of the shelf life and manufacturing data are identical, yes, that would all be leveraged.

Speaker Change: That particularly from an efficacy standpoint, since dialysis really isn't different indication from trauma I think the efficacy focus will be on the dialysis data.

But I would anticipate that safety information from all indications, but especially from trauma would factor into the Fda's thinking.

Speaker Change: Excellent.

Speaker Change: You can.

Speaker Change: I'm sure that you can leverage the modules on manufacturing and Oh, Yes of course, yes.

Speaker Change: Absolutely yeah. Thank you for that yes, no. The since the product is identical all of the preclinical and all all of the shelf life and manufacturing data are identical yes that would all be leverage. So so that will be very helpful in and efficiency generating.

Speaker Change: Excellent okay. Thanks, so much.

Speaker Change: Our next question is from the line of Suraj Kalia with Oppenheimer. Please proceed with your questions.

Speaker Change: Yeah.

Speaker Change: Hi, Laura Dale this is seamus on for Suraj.

Seamus: Just to start I know the HIV for dialysis access you know has been almost a year fully enrolled I guess you know at this point and when could we expect some top line results filing you know any any updates you can give us on that thank you.

Laura E. Niklason: So that will be very helpful and efficiency generated. Okay, thanks so much. Our next question is from the line of Siraj Kalia with Oppenheimer.

Laura E. Niklason: Sure so or enrollment completed in actually in late April last year. So technically we will hit the 12 month point next month. This is a large trial that went on for awhile. It started pre COVID-19 at many centers. So it's going to take us several months to pull this data together so what we have.

Operator: Please proceed with your question. Hi, Laura and Dale. This is Seamus on behalf of Siraj.

Laura E. Niklason: Just to start, I know the HAV for dialysis access has been fully enrolled for almost a year. I guess at this point, when can we expect some top-line results, filing, any updates you can give us on that? Thank you. Sure. So our enrollment completed in actually late April last year.

Laura E. Niklason: Guided the market is that we would expect top line results on the V O seven trial in dialysis sometime in the third quarter of this year.

Speaker Change: Got it. Thank you and then just thinking through the initial sales force for trauma I know you said somewhere around 20 individuals how should we think about you know kind of the ramp for hiring as you do you know what you'll have roughly around the paducah date.

Laura E. Niklason: So technically, we'll hit the 12 month point next month. This is a large trial that went on for a while. It started before COVID at many centers.

Laura E. Niklason: So it's going to take us several months to pull this data together, so what we've told the market is that we would expect top-line results from the VO7 trial in dialysis sometime in the third quarter of this year.

Speaker Change: Any updates you can give us there on where you would be and I guess percentage wise of those 20 people.

Yes.

Speaker Change: Well go ahead go ahead Dale No. You go ahead, yeah, we yeah, we I think we've indicated with the.

Dale A. Sander: And then just thinking through the initial sales force for trauma, I know you said somewhere around 20 individuals. How should we think about, you know, kind of the ramp for hiring as you do, what you'll have roughly around the Paducah date, you know, any updates you can give us there on where you would be, you know, I guess, percentage wise of those 20 people? Yes, go ahead. Go ahead, Dale.

Relatively concentrated market in level, one trauma centers, there are about 200 of them within the United States.

Speaker Change: We expect at Salesforce, so much less than 20 to be able to reach that at market.

Dale: In terms of when that group will be brought on the exact sizing.

Dale: Well, we'll be that'd be more specific around that as we get closer to launch.

Dale: But much of the infrastructure for the sales team is.

Dale: Is being built right now in terms of the management of that team and complementing our current commercialization group.

Dale A. Sander: No, you go ahead. Yeah, I think we've indicated that, and the rest, and many more. We'll be more specific about that as we get closer to one, but much of the infrastructure for the sales team is being built right now in terms of the management of that team and complementing our current commercialization group. In terms of the actual sales reps, they will be brought on much closer to the exact time of approval as opposed to too far in advance, and we'll make a decision as to whether that entire team will be brought on Day one to accommodate the launch or whether it'll be layered into one or two segments and the rest of the team.

Dale: In terms of the actual sales reps.

Dale: They will be brought on much much closer to the exact time of approval as opposed to too far in advance.

Speaker Change: Yeah, we'll make a decision as to whether that entire team will be brought on Dave.

Speaker Change: They wanted to accommodate the launch or whether it'll be.

Speaker Change: Layered into one or two segments.

Facilitate the launch that way, but those are decisions that are under active discussion right now we'll decide as we get close.

Speaker Change: Understood. Thank you and just one last quick one for me.

Speaker Change: And top cycle you guys believes that's going to be a 2025 of them are 2026. Thank you for taking our questions.

Dale A. Sander: Understandable. Thank you. And just one last quick one for me.

So based on the revised rules for when you can file and then tap application. Our earliest that we can file will be October of this year.

Dale A. Sander: The NTAP cycle, do you guys believe that's going to be a 2025 event or a 2026 event? Thank you for taking our question. So, based on the revised rules for when you can file an NTAP application, our earliest that we can file will be October of this year.

Speaker Change: Typically decisions were made a couple of quarters after that and but then the end tap reimbursement would be scheduled to kick in I believe to the best of my knowledge in October of 2025.

Laura E. Niklason: Typically, decisions are made a couple quarters after that, but then the NTAP reimbursement would be scheduled to kick in, I believe, to the best of my knowledge, in October of 2025. Again, we expect an NTAP application to be successful, but our earliest date when we can apply is this October. Thanks. Our next question is from the line of Allison Broussel with Piper Sandler. Please answer your questions. Hey, good morning.

Speaker Change: Again, we expect an AD and then tap application to be successful, but but the.

Speaker Change: Our earliest date when we can apply as this October.

Speaker Change: Thank you.

Speaker Change: Our next question is from the line of Allison Russell with Piper Sandler. Please proceed with your question.

Allison Russell: Hey, good morning, Congrats on all the progress and thank you for taking my question.

Allison Russell: Really just one for me and a follow up on the dialysis vascular access setting I'm just I'm a V O seven trial reading out in Q3 could you just remind us kind of what you see as the bar for success that what that would lead to the H M. P being widely adopted him for dialysis access what do you hope to show them.

Operator: Congratulations on all the progress and thank you for taking my question. Really just one for me, a follow-up on the dialysis vascular access setting. Just on the VOO7 trial reading out in Q3, could you just remind us kind of what you see as the bar for success that would lead to HIV being widely adopted for dialysis access? What do you hope to show when that trial reads out?

Allison Russell: That trial reads out and then just Relatedly how does the the ongoing trial in female patients just play into your plans for filing and.

Allison Russell: And commercialization in that indication. Thank you.

Speaker Change: Yeah Allison. Thanks for these questions. So again the V. O. Seven trial is is a prospective randomized blinded trial that compares the H a V to fistula in a broad range of patients at more than 20 sites in the U S. So the the primary endpoints for this.

Laura E. Niklason: And then just related, you know, how does the ongoing trial in female patients just play into your plans for filing and commercialization and that indication? Thank you. Yeah, Allison, thanks for these questions.

Laura E. Niklason: So, again, the VO7 trial is a prospective randomized blinded trial that compares the HAV to fistula in a broad range of patients at more than 20 sites in the U.S. The primary endpoints for this trial are looking at usability for dialysis and patency at 6 and 12 months, and this is a superiority trial. Again, we're blinded, and we don't have the top line, so we don't know how it's going to go. Obviously, our goal and our hope is that, across the board, we will have superiority across the whole trial and for all patient groups. However, it's possible that we would have subgroups that would show more superiority or increased beneficial effects as compared to other groups.

Speaker Change: Trial are looking at usability for dialysis and patency at six and 12 months and this is a superiority trial.

Speaker Change: Again, we're blinded and we don't have topline. So we don't know how it's going to go obviously, our goal and our anti <unk> and our hope is that is that across the board. We will have superiority across the whole trial and for all patient groups.

However, it's possible that we would have subgroups that would show some more superiority or or increased beneficial effects as compared to other groups.

Speaker Change: Again, it's very hard to predict in advance of the data and so I don't want to give specific guidance here, but I would hope that if we had superiority in either across the trial or within a subgroup that that clinical data.

Laura E. Niklason: Again, it's very hard to predict in advance of the data, and so I don't want to give specific guidance here, but I would hope that if we had superiority across the trial or within a subgroup, that clinical data, in combination with an already approved HAV product in the trauma indication. Our hope would be that it would be sufficient to file a supplemental BLA perhaps sometime in 2025 for the dialysis indication. As far as the female-only trial, that's a trial that we've very recently initiated that really focuses on, it's a smaller trial, and it focuses on women, comparing the HAV to fistula in women. And again, we're going to be discussing this more at the KOL event next week, and so I don't want to get ahead of the information and the story on this call.

And in combination with with an already approved a H a V product in the trauma indication or hoped it would be that would be sufficient to file a supplemental BLA, perhaps sometime in 2025 for the dialysis indication.

Speaker Change: As far as the female only trial that that's a trial that we've very newly initiated that really focuses on honest, it's a smaller trial and it focuses on women comparing the H a V to fistula in women and again, we're going to be discussing this more at the K O L event next week.

Speaker Change: So I don't want to I don't want to get ahead of the the information and the story here on this call, but again based on our health economic data and and looking at the complications that are suffered by dialysis patients. It's become clear from our work with for Nova that women in <unk>.

Laura E. Niklason: But again, based on our health economic data and looking at the complications that are suffered by dialysis patients, it's become clear from our work with Franova that women, in general, and there are certain subsets of women that have extraordinarily high complication rates and are extraordinarily expensive for the system, and we believe that the Franova data, in combination with additional data that we're going to gather in our clinical trials, will really help make the health Excellent Thanks so much. Thank you. Our next question is from the line of Vernon Bernardino with HC Wainwright. Please proceed with your question. Hi Lauren and Dale.

Speaker Change: General and there are certain subsets of women that have extraordinarily high complication rates and are extraordinarily expensive for the system.

Speaker Change: And we believe that the for Nova data in combination with additional data that we're going to gather in our clinical trials will really help make the health economic case around a D. H a V in in female patients who have very high complication rates.

Speaker Change: Excellent. Thanks, so much.

Speaker Change: Thank you. Our next question is from the line of Vernon Bernardino with H C. Wainwright. Please proceed with your questions.

Vernon Bernardino: Hi, Lauren Gail Thanks for taking my question and congrats on the progress definitely looking forward to.

Operator: Thanks for taking my question and congrats on the progress. Definitely looking forward to the approval later this year and the launch. Just want to follow up on a few questions, one of them being the expenses rising according to what you said, Dale, this year. Do you anticipate there's probably going to be a ramp down as far as R&D is concerned, maybe, and so therefore, maybe most of the ramp up in OpEx would be from G&A? And do you anticipate that it will be heavily weighted toward the back of the year, of course, because that's when the expected launch would be and then I have a follow-up. Yeah, you're right. Much of, I mean we do have a lot and many more.

Vernon Bernardino: The approval later, this year and and launch.

Vernon Bernardino: Just wanted to follow up on a few questions one of them being the expenses.

Vernon Bernardino: Rising according to what you said there this year.

Vernon Bernardino: Dissipate more you said, there's probably going to be a ramp down as far as R&D, maybe and so therefore, maybe most of the ramp up in Opex would be from G&A and do you anticipate that there'll be mostly heavily weighted towards tobacco beer of course, because that's when do you expected lots would be and then I have a.

Vernon Bernardino: Follow up question.

Speaker Change: Yeah, you're right much of.

Speaker Change: I mean, we do have a.

Very meaningful commercial team in place right now, which is undertaken much of the activities that are longer lead time to get ready for a successful launch and that does conclude the budget impact model and the.

Dale A. Sander: The applications for ICD-10 codes and other activities like that that are ongoing, but much of the heavy increase in terms of commercialization expenses will come in the second half of the year with the addition of the sales force, and you're right, there is somewhat of a winding down of certain R&D expenses, in part because certain of the clinical trials are winding down and also in part because all of our other partners, and a number of those manufacturing costs are going So with that, we expect on an overall net basis just a slight increase in overall burn for 2024 compared to 2023. And then regarding, Laura, you had alluded to using the same manufacturing process and so on.

Applications for ICD, then I see the 10 codes and other activities like that that are that are ongoing.

Speaker Change: But much of the heavy increase in terms of commercialization expenses will come in the second half of the year with the addition of the sales force.

And you're right there is somewhat of a wind down of certain R&D expenses in part because.

Speaker Change: Certain of the clinical trials are winding down and also in part because.

Speaker Change: Everything we do from a manufacturing point of view.

Speaker Change: And it rolls into R&D expense to date, but as we move towards commercialization.

Speaker Change: A number of those manufacturing costs are.

Speaker Change: Appearing in cost of sales, which shows the effect of reducing R&D expense.

So with that we expect on an overall net basis, just really a slight increase in an overall burn for 2024 compared to 2023.

And then regarding.

Speaker Change: Laura you had alluded to using the same manufacturing and so on do you anticipate margins improving over time and so we're using the same equipment.

Dale A. Sander: Do you anticipate margins improving over time since you're using the same equipment regardless of whether or not you're making, let's say, mostly large versus small or whatever mix of diameter of what HAV? Yes, there are two main sources of decreasing COGS over time, and I would say that both apply regardless of whether we're making a 40 centimeter vessel or, say, a short vessel in the future, for example, down the road.

Speaker Change: Regardless of whether or not you're making let's.

Speaker Change: Let's say most of these large versus small or whatever mix of diameter of what H M. H.

Laura: Yes. There are you know that there are two main sources of decreasing Cogs over time.

Laura: And I would say that both apply regardless of whether we're making a 40 centimeter vessel or say a short vessel in the future for example down the road I'm. The first is just more efficient use of our of our facility right. Now we have built out only a fraction of our manufacturing floor.

Laura E. Niklason: The first is just more efficient use of our facility. Right now, we have built out only a fraction of our manufacturing floor because we have eight lunas installed, although we have room for 40. So we're essentially amortizing all of the facility costs across a smaller amount of production. As production increases, that inherent overhead obviously will fall linearly, but in addition, we believe that there are additional reductions in COGS that will result from efficiencies in how we use our raw materials, how we prepare and bring in our raw materials, which as we go to greater scale and as we're able to negotiate improved contracts with some of our suppliers, some of those So we anticipate that regardless of what type of product we're making, COGS should fall at a fairly predictable rate. And one further question, if I may, regarding, let's say, the launch this year. I know that with vascular trauma, you would expect not to really have insight into a much longer than, let's say, short-term vision of need.

Because we have eight Luna installed although we have room for 40. So we're essentially amortizing all of the all of the facility costs across a smaller amount of production as production increases that that inherent overhead obviously will fall linearly.

Laura: But in addition, we believe that there are additional reductions in Cogs that will result from efficiencies of how we use our raw materials, how we prepare and bring in our raw materials, which as we go to greater scale and as we're able to negotiate improved contracts.

Laura: Some of our suppliers some of those cost inputs will also come down.

Laura: So it's we anticipate that regardless of what type of product, we're making Cogs should fall at a fairly predictable rate.

Laura: And one.

Speaker Change: Further follow up if I may regarding let's say the launch this year I know that you know with vascular trauma, you would expect not to really have insight into a really.

Much longer than lets say, a short term vision of all of them need but do.

Laura E. Niklason: But do you have any idea of vision, let's say, that you might have at some point, what you could describe as an inventory of patients who need something such that you could predict the need, for example, much longer than let's say the next week, two weeks, maybe even a month, but longer term, one, two, three months, or is that really just gonna be for when you have the AP access and PAD and CABG markets, and many more. So Vincent, I'm going to try to answer your question. I'm not completely sure I understood the question, but let me take a shot. So certainly trauma care, there is some variability. There's some seasonal variability.

Do you have any idea of a vision, let's say that you might have at some point what you could described as an inventory of patients who need them.

Speaker Change: You could predict.

Speaker Change: The need for <unk> for example, much longer than lets say the next week two weeks, maybe even months but longer term.

Speaker Change: One.

Speaker Change: Two or three months or is that really just going to be for when you have access.

Speaker Change: Access M D.

Speaker Change: Cabbage markets.

Speaker Change: Or HIV has approval for application. Thank you.

Speaker Change: So Vincent I'm going to try to answer your question I'm I'm not completely sure I understood. The question, but let me let me take a shot so certainly trauma care.

Speaker Change: There is some variability there some seasonal variability, but overall, it's it's not a hugely variable market in the aggregates that there are some centers that will have more trauma some months than others, but in the aggregate, it's not a hugely variable market.

Laura E. Niklason: But overall, it's not a hugely variable market in the aggregate. There are some centers that will have more trauma some months than others. But in the aggregate, it's not a hugely variable market.

Speaker Change: So so we we have we have shared you know in some of our and some of our filings that you know and and on this call that we think the total addressable market in trauma is about 26000 patients.

Laura E. Niklason: So we have shared in some of our filings and on this call that we think the total addressable market in trauma is about 26,000 patients, and many more could be more. And we've shared that we expect market penetration in dialysis and peripheral artery disease, ultimately, at full penetration, to be around 20% because, again, we're targeting the HAV toward patients who do not have their needs met by the current standard of care. But trauma overall, even though it's locally episodic, is globally a little bit more predictable. So we believe we'll be able to ramp up production, tracking demand. We'll be able to ramp production and add more lunar capacity to meet that demand as it grows.

Speaker Change: Of those we would expect to capture you know it at full saturation and at three or five or seven years at full market saturation. We would expect expect to capture a reasonable fraction of those might be 30% might be 50% of those patients.

Speaker Change: Could be more so and we've we've shared that you know, we expect market penetration in dialysis and peripheral artery disease ultimately at full penetration to be at around 20% because we again, we're targeting the H a V toward patients who do not have their needs met by the current standard of care.

Speaker Change: But you know trauma overall, even though it's locally episodic.

Laura E. Niklason: Do you think that answers your question? No, that's perfect. And, by the way, it's Vern and Vincent, my evil twins. So thank you for taking my question. Oh, I'm sorry. I'm sorry, Vern. I'm sorry. That's okay. My evil twin and I get in each other's way.

Speaker Change: Is you know globally, a little bit more predictable. So we believe we will be able to ramp production. You know tracking are tracking demand will be able to ramp production and and add more lunar capacity and meet that as it grows does that answer your question.

Operator: I'm looking forward to your KOL event and thanks again for taking my question. Thank you. Thank you, and many more. This will conclude the Humacyte 2023 Results Conference Call. Thank you all for participating.

Speaker Change: No that's perfect.

Speaker Change: By the way, it's Vernon Vincent.

Speaker Change: Twin so thank you for taking Oh, I'm, sorry, I'm, sorry, I'm sorry.

Speaker Change: Okay.

And again, it's the other way.

Speaker Change: I'm looking forward to your Kols and thanks again for taking my questions. Thank you.

Speaker Change: Thank you.

Showing no further questions in the queue. At this time this will conclude the human side 2023 results conference call. Thank you all for participating.