Q1 2024 Humacyte Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the human side first quarter 2024 results Conference call. Currently all participants are in a listen only mode.
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.
I will turn the call over to Tom Johnson with lifestyle Advisors. Please go ahead.
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 Law. These.
These 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 morning, and our Form 10-Q, which after filing may be accessible from the investor page of the human psyche website.
Joining me on today's call from Hemocyte or Dr. Laura Nicholson.
President and Chief Executive Officer, Dale Sander, Chief Financial Officer, and Chief Corporate Development Officer, Dr. Heather Pritchard, Chief operating officer.
Doctor Nicholson will provide a summary of the company's progress during the year in recent weeks and Dale will review the company's financial results for the quarter ended March 31 2024.
Following their prepared remarks, the management team will be available for your questions I will now turn over the call to Dr. Nicholas.
Thank you Tom Good morning, everyone and thank you for joining us for our first quarter 'twenty 'twenty four financial results and business update call.
The start of 'twenty 'twenty four has been highly productive for humans site.
Notably the F D. A accepted our biologics license application for the H a V in the vascular trauma indication in February of this year.
The H a V was granted priority review by the FDA with the Paducah date set for August 10th 2024 the.
The entire human site team that's been actively engaged in commercial readiness readiness activities to support our anticipated U S market launch.
In addition, the H a V continues to be featured in a variety of medical and scientific presentations highlighting its significant promise across our broader H a V pipeline, including in dialysis access type one diabetes, using the bio vascular pancreas and in cardiac bypass surgery using our small caliber.
A V H a V.
Finally, we strengthened our balance sheet with a $43 million equity raise in February of 'twenty, 'twenty, four and 20 million in funding under our arrangement with Oberland capital, enabling us to continue executing on our corporate strategy.
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.
Dale: Then we'll be happy to open the call up for your questions.
I'll begin with our H a V program in vascular trauma.
You'll recall that in December of 2023 we submitted our BLA to the F D. A.
During our last quarterly call, we discussed in detail the robust data package supporting our submission which included positive results from our V 005 phase two three clinical trial as well as 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.
In February of 'twenty 'twenty four the FDA accepted our BLA in vascular trauma granted priority review and establishing a Purdue for goal date for action of August 10th.
The F D. A has completed its pre license like inspection of our manufacturing facilities in Durham, North Carolina as part of the BLA review process.
We remain on track with our BLA review and commercial launch preparations and we remain confident in the approve ability of the H a V in vascular trauma.
Building upon the positive clinical results and the priority review grant by the F. D. A we've implemented a companywide multi disciplinary program. That's designed to ensure U S launch readiness upon the anticipated approval of the H E D.
Among the major recent accomplishments is the completion of a budget impact model, which illustrates the potential economic value of the H J P as compared to the current standard of care and vascular trauma.
[laughter] presentations of clinical results and the budget impact model are planned at upcoming medical meetings and in publications throughout the remainder of 2024.
In addition, our medical affairs team is continuing to build awareness through demonstrations of the H a V at medical and military conferences and meetings conducted across the U S trauma medical centers.
We're also having productive discussions with payers and we're in the process of achieving an ICD 10 code for H a V implantation procedures with the centers for Medicare and Medicaid services or CMS.
Lastly, we've commenced the recruiting of a high quality sales team to support the planned market launch.
Human side is pleased to announce that we've hired Morgan ranking as vice president of sales joining human site. After 12 years at Teleflex medical.
Morgan most most recently served as the vice President of sales trauma and emergency medicine at Teleflex, where she led a team of approximately 100 sales professionals, who are focused on vascular access and hemorrhage control.
We are on the cost of us being able to provide an innovative regenerative medicine product for patients who are suffering from traumatic vascular injury based.
Based on the strength of our BLA data package combined with our priority review and the Army's designation from the FDA, We're looking forward to the <unk> date.
Turning now to our program in dialysis access.
In March of 'twenty 'twenty, four we hosted a key opinion leader webinar entitled Hemo dialysis care, a crossroads of care, which featured the H a V as a potential solution for arteriovenous access in patients with end stage kidney disease requiring hemodialysis.
A replay of that webinar can be found on the investors section of the human side website.
Dr. Tim He leaves Doctor Premier ROI, Childree and Dr. Michael Curie provided a thorough picture of the unmet need in dialysis access and discussed real world patient examples of the gaps in hemodialysis access care.
We also presented results from a study that we conducted with our corporate partner Fresenius medical care and its subsidiary for Novo Riedel research.
That study we reviewed outcomes of nearly 180000 adult patients who received in center dialysis at Fresenius kidney care dialysis centers.
The objective of the study was to further define the patient subgroups, who could most benefit from the H a V in hemodialysis.
Strikingly the study revealed that women, particularly those who are obese or diabetic.
Are much more likely to have higher dialysis access complication rates.
These complications of dialysis access include infections access removals thrombosis and excess failures.
The cost of meaning maintaining dialysis access in patients, including the cost of infections and fischler failures.
Can average approximately 22000 to $55000 per year for these high cost high complication patient groups.
In addition data indicate the vascular access costs and the upper quintile of patients exceeding exceeded approximately $91000 per year.
Based on these results, we believe that female patients could benefit for more reliable a V access by avoiding infections and other complications that are associated with the current standard of care.
To that end, we've initiated a study that will collect comprehensive data on the outcomes and complications in women receiving the H a V for dialysis access as compared to those receiving autogenous fischler.
Dale: This study named the V O 12 study.
It is not only designed to evaluate the efficacy and safety of the H a V as compared to officially in women.
But we will also capture important information on excess complications and resulting health economic data.
This study is the first of its kind and it will help to quantify the potential health economic benefits of the H a V and should provide additional support for reimbursement in women.
We're very excited about this study and will provide you with updates as it progresses.
Results from our V O seven phase three trial of the H a V in patients with end stage renal disease remain on track to be reported in the third quarter of 'twenty 'twenty four.
Dale: As a reminder, we completed enrollment of 242 patients in this trial in April of 2023.
Dale: The trial is designed to evaluate the usability of the H a V for dialysis during the first 12 months.
And participants will be followed for 24 months after implantation.
We look forward to sharing these results when they become available.
On the diabetes front results from our studies with the H a V and our earlier stage programs are slated to be featured in several upcoming medical meetings.
Results from ongoing preclinical studies support the potential of our bio vascular pancreas or B V. P, which is a product candidate to enable the delivery and survival of insulin producing islands as a potential treatment for type one diabetes.
In three months studies conducted nonhuman primates, researchers observed that insulin producing cells in the B V. P survived after implantation for three months and continued to make insulin.
In addition, we have advanced the manufacturing of islets from human stem cells and have shown that these human stem cell derived eyelets.
And arrest diabetes in rodent models.
These and other preclinical results will be presented at the American Diabetes Association annual meeting being held in June in Orlando, Florida.
We will also be presenting results from studies of our small 3.5 millimeter diameter H a V in cardiac bypass graft surgery or cabbage.
Preclinical six months studies have been conducted in nonhuman primates to support the planned advancement of the small diameter H a V into human clinical trials and cabbage.
We have observed remodeling of the H a V. Two of diameter that closely matches that of the native coronary vessels in the nonhuman primates, which is an outcome that has not been observed with any other conduit.
These promising results of H, a V patency and remodeling will be presented at the tissue engineering in regenerative Medicine conference in June.
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 March 31, 2024, we had cash and cash equivalents of $115 5 million.
Total net cash provided was $35 1 million for the first three months of 2024.
The net cash used of $20 2 million for the first three months of 2023.
Dale: Increase in net cash provided resulting primarily from 43 million in net proceeds from a public offering of Hino sites common stock in March 2024, and.
And $20 million in proceeds from an additional draw under our funding arrangement with Oberland capital management.
Dale: We believe that our cash and cash equivalents will be adequate to finance operations for at least 12 months from the date of this financial report well past. The currently anticipated timelines for FDA approval and commercialization of the HIV in the vascular trauma indication.
There were no revenues for either the first quarter of 2024 or the first quarter of 2023.
I will run through the normal year to year comparison of expenses, but first wanted to highlight that our overall expense run rate for the first quarter of 2024.
Firstly identical to the fourth quarter of 2023.
Dale: Total operating expenses, which include noncash expenses.
There were 26 6 million for the first quarter of 'twenty 'twenty, four largely unchanged compared to the $26 2 million incurred in the fourth quarter of 2023.
Dale: Regarding the year over year comparisons.
Research and development expenses were $21 3 million for the first quarter of 2024.
Pair to $17 3 million for the first quarter of 2023.
The current year increase resulted primarily from increased materials and personnel expenses to support expanded research and development initiatives and our clinical trials, including the ongoing clinical development of the HIV or use an AVR access for hemodialysis.
Dale: General and administrative expenses were $5 3 million for the first quarter of 2024 compared to $5 2 million for the first quarter.
2023.
The slight increase during the three months ended March 31, 2024 compared to the prior year period resulted primarily from increased professional fees and external service costs.
Other net expense was $5 3 million for the first quarter of 2024.
Compared to net expense of $14 5 million for the first quarter of 2023.
The decrease in other net expense for the first quarter of 2024 compared to 2023 resulted primarily from the noncash remeasurement of the contingent earn out liabilities associated with the August.
2021 merger with Alpha Healthcare acquisition Corp.
Net loss was $31 9 million for the first quarter of 2024.
Compared to 37 planes zero a million for the first quarter of 2023.
The current period a decrease in net loss resulted primarily from the noncash remeasurement of the contingent earn out liability described described previously.
I will now turn it back to Laura for concluding remarks.
Laura: Thank you Darryl this is a very exciting time for human site and for all of our stakeholders I'd like to take a moment again to thank the humans site team as well as all of our partners for their continued commitment to our programs.
Laura: Our team's dedication has been instrumental in reaching this crucial an exciting stage in our company's development.
Not only are we nearing our first anticipated regulatory approval, but we're also making meaningful progress across our broader pipeline, bringing us closer to delivering a potential solution to patients with a variety of vascular diseases and complications.
We look forward to keeping you updated with our progress and thank you all for joining us today.
Operator, we're now ready to take questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.
You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of Ryan Zimmerman with BTG. Please proceed with your question.
Good morning can you hear me okay.
Yep.
Well congrats on all the progress you know getting closer to Purdue for here.
Lora can you talk about the facility inspection with FDA.
Any observations anything that you guys had to correct, how clean with that and just to help us know that you know we're kind of checking those boxes before producer.
So I'm going to ask art C O O Heather Pritchard, she and our head of quality really oversaw that inspection I'm going to ask her to take this question.
Hi, Ryan, Yes, Laura stated, we completed our pre licensure inspection of our manufacturing facility.
And had a very successful outcome.
And based on the outcome of the inspection and all of the other FDA interactions on the whole we remain very confident and approval of the HIV and vascular trauma and we won't necessarily comment on any single interaction or the details, but we do feel very confident in it was a very successful inner.
And that we have Linda F D. A and we felt like it concluded very successfully.
Okay I appreciate that and then.
Dale your SG&A costs for running a little lower than we expected at least this quarter. They were you know as you've noted in line with last quarter.
Help us understand kind of when that step up occurs as you prepare for commercialization we've talked in the past about.
Ah.
A smallish kind of modest sales force for the vascular trauma indication when do we think about that increase in cash and those needs.
I guess.
Help us understand what you're doing today in terms of preparing for commercialization.
Yeah, Yeah, certainly Ryan and so SG&A expenses are where we expected them keep in mind that <unk>.
Even though we're feverishly preparing for the commercial launch.
Have had a core commercial team, which is primarily on the marketing side that has been in place for some time, which is why the SG&A expenses are somewhat level because of a number of activities that we've been undertaking to prepare for launch including preparation of a budget impact model that demonstrates.
Laura: The the potential savings of abuse of HIV and vascular trauma versus standard of care and other longer time items like that such as working with payers and working with CMS to get the the coding that we need it had been underway for quite some time in terms of the actual <unk>.
<unk> associated with the sales force as indicated in the press release, where we're pleased that we have brought our vice.
Thanks, President of cells Morgan ranking onboard the actual sales team itself, which as you know we've discussed in the past will be relatively small because the vascular trauma market is very concentrated with only about 200 level one trauma centers in the United States.
That will be brought on closer to the time of approval. So you don't see those those expenses in place right now in terms of the size of that sales force. We haven't given you the absolute guidance other than the the point out that based on the level 200.
Trauma centers in the U S that salesforce will be somewhat less than 20 representatives most likely.
Okay very helpful and congrats on all the progress thank you.
Thank you. Our next question comes from the line of Kristen <unk> with Cantor Fitzgerald. Please proceed with your question.
Hi, everyone. Good morning, Let me also add my congratulation on all the progress the team is making three months now into the producer.
Maybe for me I'll start with a question on easy access it's exciting top line results a quarter away here. So can you maybe in light of all of these findings that you presented for US at your K O. All of that can you talk to us about how you're going to present the data as a whole, but then also maybe look at.
Some of these subset analyses in particular, where you've highlighted maybe the greatest unmet medical need and how that's going to ultimately play into future conversations with the agency.
Kristen This is Lauren that that's a great set of questions. You know in our partnership with Fresenius is is really what has allowed us to leverage their enormous a database that's really worldwide.
On on dialysis access complications and and which demographics, a farewell and which fare poorly and and so I just I just want to give a shout out to our team members at Fresenius you know we could not have done this research without them, but but you're right Kristen it is clear that that not.
Not all dialysis patients are created equal and there's clear quantitative evidence now that that female patients are diabetic obese patients all have more trouble with their access and are more expensive to care for than our male patients, particularly male patients who aren't burdened with those other does.
These processes, so you're right we're going to look at the V. O seven data in you know through the lens of all patients writ large but also through the lens of these different demographic subsets.
Laura: Because again, our the the benefits that accrue to some of these patients, particularly perhaps women or or the elderly or diabetics those relative benefits as compared to fistula, maybe even greater and so we anticipate that this will be part of our discussions with the agency.
Both for the V O seven trial, but then also obviously for the V. O 12 trial, which is our women only trial once we start to get those data in hand.
Okay. Thanks for that and then moving on to vascular trauma is clearly also done a lot of work with the community here in educating them about the benefits of this product but.
I know, it's going to require a relatively small sales force to bring this out but do you think that this is going to be a product where word of analysis is going to be essential and not initially youll target surgeons that are more open to trying new therapies and then they'll you know essentially tell their colleague at conferences events et.
And then have you gated from the surgeons.
Surgeons have participated in the trial that they would be open to using it in a commercial setting as well.
So I'll take the second question first you know some of our well many of our surgeons in the trauma trial, particularly our highest enrolling surgeons at the busiest centers. So for example, our surgeons at at and Denver, a trauma center at.
Baltimore shock trauma at Johns Hopkins and Ed Grady Medical center in in Atlanta, The Surgeons have expressed a lot of enthusiasm for the vessel and really see the enormous clinical benefits of having something that can be immediately available both for vascular surgeons and for trauma surgeons.
Quite frankly in the care of vascular injuries I do think it's important to point out that you know while vascular surgeons are obviously very experienced at harvesting vein.
Surgeons, who take care of a large fraction of these patients that's not really part of their training and so for a trauma surgeon to have at their fingertips, a conduit that isn't that is immediately available that they don't have to dig out of the patient.
And that will resist infection.
I I I think that that will have enormous appeal for many of these surgical caregivers that said you're correct, we're going to have to.
Our work and medical center by medical centers surgeon by surgeon and in in these major centers in metropolitan areas around the country and in fact, as we mentioned earlier on the call you know our our medical affairs team is already doing that we're already are essentially doing roadshows that are.
Educational because we're not marketing the product, but we are educating surgeons about biological conduits and their usefulness in trauma.
And we're targeting major medical centers, but also just a specific.
Geographies and and there is within geographies you know if if the leading academic center are in a particular in a particular metropolitan area. If if that center adopts the H a V. That then there is there is word of mouth, even within the local geography that we think will help spur adoption.
Thank you.
Thank you. Our next question comes from the line of Bruce Jackson with the Benchmark Company. Please proceed with your question.
Hi, most of my questions have been answered.
If maybe you could just give us a little bit of a flavor of the interaction with the FDA what types of questions are they asking in and how close do you think you're getting to concluding the BLA.
Well as as with any BLA filing I'm part of the standard procedure is that after you file and after they accept the file there is a lot of back and forth that they ask for clarifying they asked clarifying questions. They ask for additional information and that's been going on frankly.
January and and those interactions have been going very smoothly and we've been able to address all of the questions that they've been they've been asking them. There are also specific meetings that are a part of the that are part of the a normal process. There is what's called a mid cycle meeting, which we've already completed.
Pleated. So you know I I think that.
And as as we mentioned we've already completed the the inspection of our of our facility. So you know things are tracking along exactly as we would've expected given the timelines for a priority review.
So again, we see no reason that the that the Paducah date will shift of course, what exactly what the FDA does is always out out of our control, but we have no indication that that we're not on track everything just seems to be progressing along as we would've expected.
Okay.
Okay. That's great congratulations again on all the all the progress.
Thank you.
Our next question comes from the line of Josh Jennings with T V. Cowen. Please proceed with your question.
Hi, good morning, Thanks for taking the questions.
I was hoping to just with the assuming that it's August produced to date.
Is is it held up by the FDA and BLA is approved I.
I was just hoping you could walk us through the steps from there just in terms of the initial commercialization effort I mean, maybe talk about vac approvals, we've heard from some other device companies that the vac process is taking a little bit longer and then hopefully what I'm trying to get at is I mean should we be expecting initial revenues for Q issue you think we should take.
A more conservative approach in our modeling and thinking about <unk> 'twenty 'twenty four and then just have one follow up.
Alright.
Speaker Change: Excuse me.
Yeah, absolutely. Thanks, so thanks.
Thanks, Josh and and Youre right were.
We are a biologic, but oh is it in terms of the process of getting through hospitals, it will not be too dissimilar from.
The med tech world and devices, but yeah in terms of launch it as you would expect I mean typically the timeline post launches is driven a little bit by the magnitude of changes to the package insert some labeling and then just some of the the.
Speaker Change: The logistics of getting if required new packaging done and things like that to get the launch out there.
Typically there there's the approval there's some period of time, which could be a few weeks to implement any packaging their package insert changes.
Speaker Change: Then typically there's a soft launch where the.
The company is positioned to start responding to orders and filling orders and then.
Speaker Change: Shortly thereafter.
A full promotional effort, which which as you know the major a formal launch of the product.
Yes.
Speaker Change: We would certainly expect that but for most hospitals there'll be some type of a value analysis Committee program.
I guess with launches I've been associated with in the past you know you got surprised sometimes there there's hospitals that order on day one.
You, either avoiding the process or or just ordering them in parallel while the process is going on and theres other hospitals that routinely.
Routinely go through the full D C processing, which as you know historically has averaged about six months to get through to get to a hospital and get to the process. The feedback we've gotten from a number of the.
Trauma surgeons in vascular surgeons, who have been.
Real advocates within hospitals for the product as they feel pretty confident that they have a great deal ability to influence that that process on that.
Yeah, particularly in the area of trauma and vascular trauma, because the the ends or not so great in terms of the number of patients.
Necessarily being seen on a week to week basis within a hospital, but they feel like they've had a pretty.
High success rate and would expect.
Speaker Change: In their words, a high success rate of getting.
The H E b through the process on an expeditious manner.
Thanks for that that's super helpful and.
Speaker Change: And just I know, it's been a little a little while since I'm new hosted.
That's your headquarters and that gave us the towards manufacturing facility, but just wanted to.
Again, a reminder of where manufacturing capacity.
Today what steps.
We needed to take it to me to take to kind of ramp up capacity in these early days.
As is the vascular trauma indication is opened up with with this with this BLA approval.
Thanks for taking the questions.
Yeah.
I'm going to ask Heather our C O O to take that question.
Thanks, Laura so Josh as our manufacturing capacity stands now and as you know.
We're at about 8000, hav's growth per year, and as far as the scaling that out with the Luna system that we have that manufactures our product.
That is just a case of putting in more lines.
Our facility is already.
Ready and a shelled out space, that's already plums for electrical oil and gases and utilities for us to add additional units.
Speaker Change: Up to about a 40000 <unk> per year annual gross yield so we're prepared.
We're prepared.
For launch to be able to produce.
Enough vessels in the first few years and then we're also prepared and have begun.
Speaker Change: Planning for that expansion within the space. So as demand grows we can produce enough H E b for that market.
Speaker Change: Great. Thank you.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad. Our next question is a fall off from the line of Ryan Zimmerman with BTG. Please proceed with your question.
Hey, guys, sorry, I just had one follow up I wanted to ask you.
You did talk about ICD 10 for humor site for the HIV excuse me and I'm. Just wondering if you can speak a little bit kind of how you're thinking about that process. You know any timing that you think.
You can you want to put out there in terms of potentially getting a code.
For implantation of HIV.
B invest their trauma or AB access or so forth.
Thanks for taking the follow up.
Yes, Ryan So we submitted the application with CMS for the ICD 10 code in trauma, because the ICD 10 code. In this case is going to be Ah indication specific so we submitted the application in December.
Ryan: And we had a public forum meeting on the on the ICD 10 code application in March and this is in the public domain that the the CMS recommendation at the time was that the H a V be granted its own ICD 10 code offer the implant implantation of our bioengineered vessel.
In the upper and lower extremities.
Ryan: CMS doesn't execute on the final decision on that I don't think until June but based on the CMS recommendation, which is already in the public domain.
We expect that to go through and to have that in hand before approval and just as a side note also with respect to C. M. S. A we are planning to apply for a new technology add on payment with CMS. After after our projected approval date. So you can apply for an IND tap once per year at that.
The application date is typically around October 1st and we plan on on hitting that application date and applying a this year.
Yeah, no that makes sense.
I appreciate that color Larry Thanks for the follow up.
Yeah.
Thank you I'm showing no further questions at this time in queue. This concludes the human psyche first quarter results conference call. Thank you all for participating you may now disconnect your lines.