Humacyte, Inc. (NASDAQ:HUMA) Q4 2022 Earnings Call Transcript

Humacyte, Inc. (NASDAQ:HUMA) Q4 2022 Earnings Call Transcript March 27, 2023

Operator: Good morning, ladies and gentlemen, and welcome to the Humacyte Fourth Quarter and Year-End 2022 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 now the call over to Lauren Marek with LifeSci 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. 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 will be filed today and 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. Nikalson will provide a summary of the company’s progress during the quarter and recent weeks; and Dale will review the company’s financial results for the quarter and year ended December 31, 2022. Following their prepared remarks, the management team will be available for your questions. I will now turn the call over to Dr. Nikalson.

Laura Niklason: Thank you, Lauren. Good morning, everyone, and thank you for joining us for our fourth quarter and year-end 2022 financial results and business update call. Humacyte has made significant progress throughout 2022 in advancing our universally implantable, bioengineered human tissue product candidate, the HAV or Human Acellular Vessel. We’re very close to completing enrollment in two trials of the HAV both in vascular trauma and in arteriovenous access, and we also continue to advance our earlier stage programs. As we begin 2023, we remain focused on advancing our HAV towards regulatory milestones and commercialization, beginning with the vascular trauma indication. During this call, I will review our recent highlights and the progress of our key programs 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.

I’ll begin with our HAV program in vascular trauma. We’re pleased that our Phase 2/3 V005 trial is nearing enrollment completion. We currently have a total of 63 patients, who received the HAV in the V005 trial, and an additional 17 patients, who’ve been treated with the HAV under our humanitarian program in Ukraine, bringing the total patients treated with the HAV for traumatic injury to 80. All patient results will be included in our upcoming BLA filing with the FDA. The efficacy of the endpoint of the HAV and trauma will be based on the 30-day patency in 50 patients from the V005 trial, who suffered vascular trauma in an extremity, either the arm or the leg. The primary efficacy analysis will not include torso injuries or iatrogenic trauma, which is trauma caused by physicians in patients, who were enrolled in the V005 trial.

Although data from these patients will contribute to the safety database. Currently, in the V005 trial, 46 patients comprising the extremity injury population have been treated with the HAV. We expect to enroll approximately six additional patients to support the BLA filing. This should bring us past the target of 50 patients that was discussed with the FDA in recent meeting. We’re working expeditiously to enroll the remaining six patients in V005. In addition to the recent addition of clinical sites in Israel, we now have efforts underway to add sites in Ukraine to the V005 trial in order to speed enrollment. We’ve been pleased to partner with the U.S. FDA and map out our strategy for BLA filing in trauma. Within approximately four months after completion of the V005 trial with the additional six patients, we plan to file a BLA for accelerated approval for an indication in vascular trauma.

The targeted indication will be an accelerated approval of the HAV for arterial repair following extremity trauma when synthetic graft is not indicated and when autologous vein is not feasible. Our plans for the BLA filing, including the primary efficacy analysis, are consistent with the recent pre-BLA meeting and other meetings that we’ve held with the FDA over the past several months. The potential of the HAV in vascular trauma, particularly in the wartime setting, was further highlighted in a webinar that we hosted in December, featuring Ukrainian surgeons, Dr. Alexander Sokolov; Dr. Vasyl Shaprynsky and Dr. Oleksandr Stanko, who shared their experiences using the HAV to treat patients with wartime traumatic injuries. As I mentioned previously, 17 patients in Ukraine have now been treated with the HAV, and our Ukrainian colleagues shared a series of case studies highlighting the types of injuries they’re treating with the HAV and their successful outcomes to-date.

As highlighted in the webinar, results demonstrated a 30-day patency that is excellent with zero cases of infection in all the patients treated. A replay of the webinar can be found on the Investors page of the Humacyte website. In addition to the webinar, our Ukrainian colleagues also presented patient outcomes at two vascular conferences in December of last year, The Congress of Vascular Surgeons, Phlebologists and Angiologists in Ukraine, and the Munich Vascular Conference in 2022. We extend our sincere gratitude to our colleagues for joining us for this webinar and sharing their positive experiences using the HAV for the medical community. Similar to our vascular trauma trial, our Phase 3 V007 trial of the HAV an arteriovenous access in hemodialysis patients is also nearing completion.

As a reminder, the V007 trial is designed to assess the usability of the HAV for hemodialysis in comparison to autogenous fistulas. This will be done in up to 240 patients with end-stage renal disease. We’re pleased to report that as of today 238 patients have been enrolled in this trial, meaning that we are on track to complete enrollment with the remaining two patients very shortly. Top line results are anticipated about one year after enrollment completion, and this is based on the one year follow-up period that’s built into the study. If successful, results from this trial will support a BLA filing for a secondary indication in dialysis access. Turning to our earlier-stage programs, we’re happy to provide updates on our recent progress, particularly in peripheral arterial disease, coronary artery bypass grafting and type 1 diabetes.

Results from our Phase 2 trial in Peripheral Arterial Disease, or PAD, were recently published in the Journal of Vascular Surgery, Vascular Science. This publication describes the six-year analysis of the Phase 2 study. and researchers observed that HAVs provide long-term blood flow to patients with critical limb ischemia with a secondary patency rate of 60% at six years. Importantly, there was no evidence of graft rejection or infection over this follow-up period, and no patients underwent amputation of the treated limb. We’re pleased that these results highlight the long-term durability of the HAV in a relevant and a clinically complex patient population. We also continue to make progress in our preclinical coronary artery bypass grafting, or CABG program.

In November of 2022, Dr. Alan Kypson of UNC Rex Hospital presented a six month patency update of the HAV in a baboon CABG model at an oral presentation at the Annual American Heart Association Scientific Sessions meeting. In his presentation, Dr. Kypson highlighted that the HAV maintains structural integrity and patency for up to six months post implantation as a heart bypass graft, and also showed evidence of robust host cell repopulation and remodeling. We’re thrilled about the promising results of our small diameter HAVs in preclinical CABG models and we look forward to providing additional updates on this exciting program as it continues to advance into IND enabling preclinical study. In addition, Humacyte is happy to announce a recently funded award from the Juvenile Diabetes Research Foundation, or JDRF.

JDRF is the world’s largest nonprofit funder of Type 1 diabetes research. Humacyte and the JDRF will collaborate on the development of Humacyte’s product candidate, the BioVascular Pancreas, which is directed at the treatment of patients with Type 1 diabetes. With that, I’ll turn it over to Dale now for a review of our financial results and other business developments.

Dale Sander: Thank you, Laura. As of December 31, 2022, we had cash, cash equivalents and short-term investments of $151.9 million, compared to the $225.5 million as of December 31, 2021. The $73.6 million net use of cash, cash equivalents and short-term investments for the year ended December 31, 2022, resulted from spending related to net operating activities for the period, including clinical and earlier stage research and development programs and preparation for our anticipated commercial launch. We have been prudent with our expenditures and our use of cash for 2022 was approximately $8 million less than we had budgeted. We will continue to monitor our rate of expenditure, and we believe that our cash, cash equivalents and short-term investments are adequate to fund operations through the end of 2024, past our current expected time lines for potential approval of the HAV in vascular trauma.

There was no revenue for the fourth quarter of 2022, compared to $177,000 of revenue for the fourth quarter of 2021, and revenue was $1.6 million for the year ended December 31, 2022, compared to $1.3 million for the year ended December 31, 2021. Revenue in all periods related to grants supporting the development of HAV. Research and development expenses were $15 million for the fourth quarter of 2022, compared to $16.3 million for the fourth quarter of 2021, and they were $63.3 million for the year ended December 31, 2022, compared to $61.3 million for the year ended December 31, 2021. The decrease for the quarter ended December 31, 2022, compared to the prior year quarter resulted primarily from a decrease in non-cash stock-based compensation expenses.

The increase during the year ended December 31, 2022, compared to the prior year resulted primarily from increased personnel and materials expenses designed to support expanded clinical and research initiatives in support of our clinical studies. General and administrative expenses were $5.8 million for the fourth quarter of 2022, compared to $5.6 million for the fourth quarter of 2021, and were $22.9 million for the year ended December 31, 2022, compared to $21.1 million for the year ended December 31, 2021. The smaller current year increases resulted primarily from the transition to being a public company and preparations for the anticipated U.S. commercial launch of the HAV, including increased personnel costs, external services, and insurance costs.

Other net income was $17.1 million for the fourth quarter of 2022, compared to $64.2 million for the fourth quarter of 2021, and was $72.6 million for the year ended December 31, 2022, compared to $54.7 million for the year ended December 31, 2021. The reduction in other net income for the fourth quarter of 2022, and the increase in other net income for the year December 31, 2022, resulted primarily from non-cash gains related to the remeasurement of the contingent earn-out liability associated with the August 2021 merger with Alpha Healthcare Acquisition Corp. Net loss was $3.7 million for the fourth quarter of 2022 and compared to net income of $42.6 million for the fourth quarter of 2021. And net loss was $12 million for the year ended December 31, 2022, compared to net loss of $26.5 million for the year ended December 31, 2021.

The increase in net loss for the current year fourth quarter, compared to 2021 resulted from a decrease in other net income described previously. The decrease in net loss during the year ended December 31, 2022, compared to the prior year resulted from the increase in other net income described above, partially offset by operating expense increases also described previously. With that, I will turn it back to Laura for concluding remarks.

Laura Niklason: Thank you, Dale. To conclude, we’ve made significant progress throughout 2022 in both our clinical and our preclinical programs. We’re excited to move closer to our BLA filing in vascular trauma, and we will be pleased to close the enrollment soon in our AV access trial, the V007 trial. 2023 is shaping up to be a significant year for Humacyte, and we are poised to build on our momentum from the past year, and we look forward to providing further updates as we approach clinical and regulatory milestones. Operator, we’re now ready to take questions.

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Q&A Session

Operator: Thank you. Our first question comes from the line of Ryan Zimmerman with BTIG. Please proceed with your question.

Ryan Zimmerman: Good morning. Thanks for taking the questions, Laura and Dale and appreciate it. I want to talk about the V005 trial a little bit. It sounds like the FDA maybe had some feedback for you guys in terms of how you think about usage of the HAV in trauma? Or I was wondering if you could kind of speak to that specifically and how that impacts both utilization going forward and commercialization once you get that product to the market?

Laura Niklason: Yes. So we’re really happy that we’ve gotten clarity and direction from the FDA as far as number of patients and the analysis in V005, as well as the targeted indication statement. The indication statement is really based on the fact that our V005 trial has always been designed for patients, who do not have autologous vein/saphenous vein for treatment of their vascular injuries. The contraindication for saphenous vein and for synthetic graph really falls out of both the V005 trial design, but also the fact that most traumatic injuries actually are not deemed suitable for synthetic grafts. So for example, penetrating injuries, but also many blunt injuries that are — have contaminated wounds are all known to be at high risk for infection.

And so if you speak with most vascular or trauma surgeons, most of these people will indicate that a synthetic graft is really not suitable in many or most cases of trauma. So the limitation as far as the indication really speaks to patients who do not have available saphenous vein, which is the enrollment criteria in the V005 trial. Something that we didn’t speak to in our comments earlier is the fact that, with an accelerated approval, the FDA also asked that we perform a confirmatory study after we gain approval — after we’re granted approval in the trauma indication. And we’re currently designing that Phase 4 confirmatory study with the FDA right now. Our anticipation is that the design of the confirmatory study would, sort of, throw the gates open to a broader patient population, and completion of that study, we would anticipate would allow us to broaden the indication.

But that said, the indication statement, we do not believe, is very narrowing from the standpoint that having something that’s immediately available that doesn’t require the hour of saphenous vein harvesting and that resists infection is going to be highly sought after for surgeons who are treating acute traumatic injury.

Ryan Zimmerman: Okay. And just to be clear though, what is the new — what is the — is it limited — the HAV is limited to extremity injuries because your — I appreciate that you’re including some of those other injuries in the safety data, but I just want to be clear about where you can — or you think potentially you can or cannot use the HAV after BLA?

Laura Niklason: So the indication statement is focused on extremity injury, because the data subset that we’re analyzing in the trauma trial focuses on patients, who have at least one anastomosis in an extremity. So some of these patients have an anastomosis also in the pelvis or the thorax, but at least one anastomosis is in the extremity. This is — the FDA asked us to do this because traumatic injury, as you would imagine, is very heterogeneous. And the focus on extremity injury was a way of, sort of, focusing on a slightly more homogeneous group of patients, although these patients still have a wide variety of injuries. The reality is that the current 6 millimeter diameter of the HAV is suitable for the anatomies that I’ve talked about.

But if you talk about, for example, aortic traumatic injury, the HAV really isn’t suitable there, because the diameter isn’t a good match. So we believe that the extremity focus in the indication really doesn’t change functionally where the HAV will be used very much.

Ryan Zimmerman: Yes. Now that makes sense. Okay, and then just last question for me and then I’ll hop back in queue. In terms of timing, I think we’re, kind of, thinking middle of this year previously in terms of getting enrollment complete. I know you’re bringing up some sites in Israel and Ukraine. Do you think the timing for the HAV V005 trial and still maintain completion kind of mid- €˜23? Or do you think you’re maybe push it back a little bit just because of the nature of the patients you’re targeting?

Laura Niklason: Well, it’s always hard to predict enrollment in a trauma trial. Certainly, we’re going to work as hard as possible to get the remaining six patients enrolled. We’re targeting six. Technically, we need a minimum of four more enrollments. So I will say that our prior enrollment rate of one per month has picked up a little bit recently with the addition of the Israeli sites. If we’re able to bring up the Ukrainian sites, I would expect that the enrollment would tick up above one per month, because frankly, the Ukrainian sites all by themselves enroll 1 per month or more. So again, hard to predict, but I would hope that in the next couple of months that we’ll complete enrollment and then about 120 days after that, we would file.

Ryan Zimmerman: Okay. Thank you for taking the questions, Laura.