Humacyte, Inc. (NASDAQ:HUMA) Q1 2023 Earnings Call Transcript May 12, 2023

Humacyte, Inc. misses on earnings expectations. Reported EPS is $-0.22 EPS, expectations were $-0.21.

Operator: Good morning, ladies and gentlemen, and welcome to the Humacyte First Quarter 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 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-Q, 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 quarter and recent weeks, and Dale will review the company’s financial results for the quarter ended March 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.

Laura Niklason: Thank you, Lauren. Good morning, everyone, and thank you for joining us for our first quarter 2023 financial results and business update call. This quarter was highly productive for Humacyte as we continued to advance our universally implantable bioengineered human tissue product candidate or the Human Acellular Vessel, or HAV, in multiple indications. We completed enrollment of our Phase III HAV trial and arteriovenous access in late March, and we’re very close to completing enrollment of our Phase III trial in vascular trauma. We also recently received the Regenerative Medicine Advanced Therapy designation from the FDA for the HAV and arterial repair following extremity vascular trauma. This makes the second indication for which the HAV has received the RMAT designation from the FDA.

In addition, we continue to add to the growing body of scientific publications highlighting the clinical potential of the HAV. And lastly, we recently announced our collaboration with the Juvenile Diabetes Research Foundation, or JDRF to advance our biovascular pancreas product candidate. During this call, I’ll review these recent highlights in more detail before turning the call over to Dale for a review of our financial results. Then we’ll be happy to open up the call for your questions. I’ll begin with our HAV program in vascular trauma. We’re excited to have recently received the FDA’s Regenerative Medicine Advanced Therapy, or RMAT designation for the HAV for urgent arterial repair following extremity vascular trauma. This is Humacyte’s second RMAT designation for the HAV, the first being for arteriovenous access for hemodialysis.

With the RMAT designation in extremity vascular trauma as well as our previously received priority designation from the defense department, we anticipate a higher potential for priority review of our planned BLA filing in the trauma indication. Regarding our Phase II/III V005 trial in vascular trauma, we’re very close to enrollment completion. As you may recall from our discussion last quarter, the efficacy endpoint of the HAV in the V005 trial will be based on 30-day patency in 50 patients who suffered vascular trauma of an extremity, either the arm or the leg. To date, we currently have a total of 66 patients who have received the HAV in the V005 trial, 49 of which comprise the primary endpoint population of extremity injuries. We plan to file a BLA with the FDA later in 2023 after we have enrolled 50 or more patients with extremity injuries.

This BLA will be for the treatment of extremity vascular trauma when synthetic graft is not indicated and when autologous vein is not feasible. We believe that our plans for the BLA filing, including the primary efficacy analysis in extremity patients, are consistent with the pre-BLA meeting and with other discussions that we’ve had with the FDA over the past several months. The potential of the HAV and vascular trauma was further highlighted in 2 recent peer-reviewed publications. In April of 2023, a preclinical study of the HAV compared ePTFE graphs, which are Teflon grafts in vascular repair following arterial trauma in a porcine model that was published in the Journal of Trauma and acute care surgery. Results from this study suggested that the HAV is potentially superior to ePTFE across multiple metrics, including recovery of limb function after prolonged ischemia, conduit patency and host recellularization.

Importantly, the HAV showed no evidence of infection, degradation, aneurysm or mechanical failure in the study. In addition, as announced earlier this week, a letter describing the use of the HAV to treat battlefield and other vascular trauma injuries in Ukraine was published in the Lancet Regional Health Europe. This publication describes how Ukrainian surgeons are using the HAV to save life and limb in a war time setting and also reports clinical outcomes of the first 9 patients treated with the HAV in Ukraine. Since June of 2022, a total of 19 patients have been treated with the HAV under our humanitarian program with most patients sustaining vascular injuries from blast and shrapnel and with overall excellent outcomes to date. We continue to be grateful to our Ukrainian colleagues and to all of those involved in the humanitarian program for their support, and we’re proud to help these medical professionals save lives during this conflict.

Turning now to our trial of the HAV in arteriovenous access in hemodialysis patients. We recently announced completion of enrollment of our Phase III V007 trial. We’re pleased to have reached this milestone that brings us closer to a planned BLA filing in this indication. As a reminder, the V007 trial is designed to compare the HAV to an arteriovenous fistula in 240 hemodialysis patients suffering from end-stage renal disease. This trial will evaluate the usability of the conduit for dialysis during the first year with top line results that are anticipated to be available in 2024. Finally, we’re happy to announce our collaboration with the Juvenile Diabetes Research Foundation, or JDRF, which is the world’s largest nonprofit funder of type 1 diabetes research.

Humacyte and the JDRF will collaborate on the development of Humacyte biovascular pancreas or BVP, which is our product candidate for the treatment of patients with type 1 diabetes. The BVP is designed to enable the delivery and survival of insulin-producing islets, using the HAV as a carrier for delivery into the patient. We believe that the BVP has the potential to transform the treatment of type 1 diabetes, and we’re thrilled to have JDRF support in advancing this technology. 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, 2023, we reported cash, cash equivalents and short-term investments of $131.7 million. We are pleased to report the completion of an up to $160 million funding arrangement with Oberland Capital, the details of which were in today’s press release. The agreement allows us to extend our cash runway while ensuring adequate resources for the planned commercial launch of the HAV in vascular trauma. We believe that our cash equivalents and short-term investments and planned funding from the agreement are adequate to fund operations well past our expected time lines for potential approval of the HAV in vascular trauma. Regarding the quarterly financial results, there was no revenue for the first quarter of 2023 compared to $0.2 million for the first quarter of 2022.

Revenue for 2022 was related to a grant supporting development of the HAV. Research and development expenses were $17.3 million for the first quarter of 2023 compared to $16.3 million for the first quarter of 2022. The current period increase resulted primarily from increased personnel expenses to support our expanded research and development initiatives and support of clinical trials. General and administrative expenses were $5.2 million for the first quarter of 2023 compared to $5.7 million for the first quarter of 2022. The current year decrease resulted primarily from reduced professional fees in 2023. Other net expense totaled $14.5 million for the first quarter of 2023 compared to other net income of $1.9 million for the first quarter of 2022.

The current period increase in other net expense resulted primarily from the remeasurement of the contingent earn-out liability associated with our August 2021 merger with Alpha Healthcare Acquisition Corp. Net loss was $37 million for the first quarter of 2023 and compared to $19.8 million for the first quarter of 2022. The current period increase in net loss resulted from the increase in other net expenses described previously. Net cash used in operations was $18.6 million for the first quarter of 2023 compared to $18.8 million for the first quarter of 2022. Total net cash used was $20.2 million for the first quarter of 2023 compared to $19.3 million for the first quarter of 2022, with the current year increase related to purchases of property and equipment to prepare for the planned commercial launch of HAV.

With that, I’ll turn it back over to Laura for concluding remarks.

Laura Niklason: Thank you, Dale. And to conclude, we’ve already made significant progress in 2023 in our late-stage HAV programs in vascular trauma NAV access. We’re excited to be moving closer to BLA filings in both indications, all while continuing to make progress in our earlier stage HAV programs like the BVP. We look forward to continued momentum throughout the remainder of the year, and I’ll keep you apprised of further updates as we approach clinical and regulatory milestones. Operator, we are ready to take questions.

Q&A Session

Operator: [Operator Instructions]. And our first question comes from the line of Matthew O’Brien with Piper Sandler. Please proceed with your question.

Operator: Our next question is from the line of Ryan Zimmerman with BTIG. Please proceed with your question.

Operator: The next question is coming from the line of Joshua Jennings with TD Cowen. Please proceed with your question.

Operator: [Operator Instructions] The next question is from the line of Suraj Kalia with Oppenheimer & Company. Please proceed with your question.

Operator: The next question is from the line of Bruce Jackson with Benchmark Company. Please proceed with your question.

Operator: I’m showing no further questions in the queue at this time. This concludes the Humacyte first quarter 2023 results conference call. Thank you all for participating.

Laura Niklason: Thank you very much.