Yahoo Finance Humacyte, Inc. (NASDAQ:HUMA) Q1 2024 Earnings Call Transcript
Humacyte, Inc. (NASDAQ:HUMA) Q1 2024 Earnings Call Transcript May 12, 2024
Humacyte, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, ladies and gentlemen, and welcome to the Humacyte 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'll now turn the call over to Tom Johnson with LifeSci Advisors. Please go ahead.
Tom Johnson: 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 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 on our Form 10-Q, which, after filing, may be accessible from the Investor 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; 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 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. Niklason.
Laura Niklason: Thank you, Tom. Good morning, everyone, and thank you for joining us for our first quarter 2024 financial results and business update call. The start of 2024 has been highly productive for Humacyte. Notably, the FDA accepted our Biologics License Application for the HAV in the vascular trauma indication in February of this year. The HAV was granted Priority Review by the FDA with a PDUFA date set for August 10, 2024. The entire Humacyte team has been actively engaged in commercial readiness activities to support our anticipated U.S. market launch. In addition, the HAV continues to be featured in a variety of medical and scientific presentations, highlighting its significant promise across our broader HAV pipeline, including in dialysis access, type 1 diabetes using the BioVascular Pancreas and in cardiac bypass surgery using a small-caliber version of the HAV.
Finally, we strengthened our balance sheet with a $43 million equity raise in February of 2024 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. Then we'll be happy to open the call up for your questions. I'll begin with our HAV program in vascular trauma. You'll recall that in December of 2023, we submitted our BLA to the FDA. During our last quarterly call, we discussed in detail the robust data package supporting our submission, which included positive results from our V005 Phase 2/3 clinical trial as well as real-world evidence from the treatment of wartime injuries in Ukraine under the humanitarian aid program that was supported by the FDA.
In February of 2024. the FDA accepted our BLA in vascular trauma, granting Priority Review and establishing a PDUFA goal date for action of August 10th. The FDA has completed its pre-licensing 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 approvability of the HAV in vascular trauma. Building upon the positive clinical results and the Priority Review grant by the FDA, we've implemented a company-wide multidisciplinary program that's designed to ensure U.S. launch readiness upon the anticipated approval of the HAV. Among the major recent accomplishments is the completion of a budget impact model, which illustrates the potential economic value of the HAV as compared to the current standard of care in vascular trauma.
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 HAV at medical and military conferences and at meetings conducted across the U.S. at trauma medical centers. We're also having productive discussions with payers, and we're in the process of achieving an ICD-10 code for HAV implantation procedures with the Centers for Medicare & Medicaid Services, or CMS. Lastly, we've commenced the recruiting of a high-quality sales team to support the planned market launch. Humacyte is pleased to announce that we've hired Morgan Rankin as Vice President of Sales, joining Humacyte after 12 years at Teleflex Medical.
Morgan 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 were focused on vascular access and hemorrhage control. We are on the cusp of being able to provide an innovative regenerative medicine product for patients who are suffering from traumatic vascular injury. Based on the strength of our BLA data package, combined with our Priority Review and the RMAT designation from the FDA, we're looking forward to the PDUFA date. Turning now to our program in dialysis access. In March of 2024, we hosted a key opinion leader webinar entitled Hemodialysis Care: A Crossroads of Care [sic] Hemodialysis Access: A Crossroads of Care, which featured the HAV 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 Humacyte website. Dr. Timmy Lee, Dr. Prabir Roy-Chaudhury and Dr. Michael Curi 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, Frenova Renal Research. In that study, we reviewed outcomes of nearly 180,000 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 HAV 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 access failures. The cost of maintaining dialysis access in patients, including the cost of infections and fistula failures, can average approximately $22,000 to $55,000 per year for these high-cost, high-complication patient groups. In addition, data indicate that vascular access costs in the upper quintile of patients exceeded approximately $91,000 per year. Based on these results, we believe that female patients could benefit from more reliable AV 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 HAV for dialysis access as compared to those receiving autogenous fistula.
The study, named the V012 study, is not only designed to evaluate the efficacy and safety of the HAV as compared to fistula in women, but will also capture important information on access complications and resulting health economic data. This study is the first is kind, and it will help to quantify the potential health economic benefits of the HAV and should provide additional support for reimbursement in women. We're very excited about this study, and we'll provide you with updates as it progresses. Results from our V007 Phase 3 trial of the HAV in patients with end-stage renal disease remain on track to be reported in the third quarter of 2024. As a reminder, we completed enrollment of 242 patients in this trial in April of 2023. The trial is designed to evaluate the usability of the HAV 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 HAV in our earlier-stage programs are slated to be featured in several upcoming medical meetings. Results from ongoing preclinical studies support the potential of our BioVascular Pancreas, or BVP, which is a product candidate to enable the delivery and survival of insulin-producing islets as a potential treatment for type 1 diabetes. In three month studies conducted in non-human primates, researchers observed that insulin-producing cells in the BVP survived after implantation for three months and continue 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 islets can 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'll also be presenting results from studies of our small 3.5 millimeter diameter HAV in cardiac bypass graft surgery, or CABG. Preclinical six month studies have been conducted in non-human primates to support the planned advancement of the small diameter HAV into human clinical trials in CABG. We have observed remodeling of the HAV to a diameter that closely matches that of the native coronary vessels in the non-human primates, which is an outcome that has not been observed with any other conduit. These promising results of HAV patency and remodeling will be presented at the Tissue Engineering and 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.
Dale Sander: 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 compared to net cash used of $20.2 million for the first three months of 2023. The increase in net cash provided resulted primarily from $43 million in net proceeds from a public offering of Humacyte's common stock in March 2024 and $20 million in proceeds from an additional draw under our funding arrangement with Oberland Capital Management. 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 HAV 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 I wanted to highlight that our overall expense run rate for the first quarter of 2024 is virtually identical to the fourth quarter of 2023. Total operating expenses, which include non-cash expenses, were $26.6 million for the first quarter of 2024, largely unchanged compared to the $26.2 million incurred in the fourth quarter of 2023. Regarding the year-over-year comparisons, research and development expenses were $21.3 million for the first quarter of 2024 compared 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 HAV for use in AV access for hemodialysis.
General and administrative expenses were $5.3 million for the first quarter of 2024 compared to $5.2 million for the first quarter of 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 from the first quarter of 2024 compared to 2023 resulted primarily from the noncash remeasurement of the contingent earnout liability 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 $37.0 million for the first quarter of 2023.
The current period decrease in net loss resulted primarily from the non-cash remeasurement of the contingent earnout liability described previously. I will now turn it back to Laura for concluding remarks.
Laura Niklason: Thank you, Dale. This is a very exciting time for Humacyte and for all of our stakeholders. I'd like to take a moment again to thank the Humacyte team as well as all of our partners for their continued commitment to our programs. Our team's dedication has been instrumental in reaching this crucial and 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.
Operator: Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Ryan Zimmerman with BTIG. Please proceed with your question.
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