Humacyte, Inc.

Good afternoon, ladies and gentlemen, and welcome to the HumorSite second quarter results conference call. Currently, all participants are in 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 turn the call over to Lauren Merrick with LifeSci 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 a 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 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 investor's page of the Humacyte website. Joining me on today's call from Humacyte are Dr. Laura Nicholson, President and Chief Executive Officer, Dale Sander, Chief Financial Officer and Chief Corporate Development Officer, and Dr. Heather Pritchard, Chief Operating Officer. Dr. Nicholson 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 June 30th, 2024. Following their prepared remarks, the management team will be available for your questions. I will now turn the call over to Dr. Nicholson.

Thank you, Lauren. Good morning everyone and thank you for joining us on our second quarter 2024 financial results and business update call. This has been a very productive time for Humacyte. Although we were surprised to learn that the FDA needs additional time to complete their review of the ATEV, BLA and vascular trauma, the entire Humacyte team continues to engage in commercial preparation to support our planned US market launch if approved. In addition, The ATEV met its primary endpoint in the VO7 Phase III trial in arteriovenous access for hemodialysis, and it demonstrated superiority over current standard of care. The ATEV also received its third Regenerative Medicine Advanced Therapy, or RMAT, designation from the FDA, this time in advanced peripheral artery disease. This supports ATEV's broad applicability across multiple indications. The biovascular pancreas, or BVP, was featured in a variety of medical and scientific presentations, which is highlighting its significant promise in type 1 diabetes. And finally, we strengthened our board of directors with the addition of two seasoned experts, Dr. John Bamforth and Dr. Keith or Tony Jones. 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 to your questions. I'll begin with our program in vascular trauma. On Friday, we announced that the FDA will require additional time to complete its review of the BLA that we submitted for the ATEV in the vascular trauma indication. We were surprised to receive this notification from the FDA CBER leadership, who apologized and noted that our ATEV is a first-in-class product As a reminder, the BLA for the ATEV trauma program was submitted to the FDA in December of 2023. The FDA granted a priority review in February 2024, which allows only a six-month review cycle instead of the standard 10 months for most products. The original assigned PDUFA date was August 10, 2024. Despite the FDA's delay, I want to emphasize that we remain confident in the approvability of the ATEV in vascular trauma. Based on our interactions with the agency to date, during the course of the BLA review, the FDA has conducted inspections of our manufacturing facilities and our clinical sites. They've also actively engaged with us in multiple discussions regarding the BLA filing, including post-approval marketing and labeling discussions. the FDA apologized for missing the August 10th PDUFA date and we do not yet have a revised action date. As we await an updated action date from the FDA, Humacyte continues to prepare for a planned US launch. As we discussed last quarter, we've implemented a company-wide multidisciplinary program designed to ensure US launch readiness. In June, we announced issuance of four new ICD-10 codes from the Centers for Medicare and Medicaid Services, or CMS. These codes will be effective for hospital discharges beginning in October 2024 and will cover procedures for replacing arteries in the upper or lower extremities using the ATEF. Humacyte also previously announced that we've hired Morgan Rankin as Vice President of Sales, joining Humacyte after 12 years at Teleflex Medical. Morgan most recently served as VP of Sales, Trauma, and Emergency Medicine at Teleflex, where she led a team of approximately 100 sales professionals. Our entire commercialization team is positioning Humacyte to be ready for commercial launch of the ATEV in vascular trauma upon approval by the FDA in the future. Turning now to our program in dialysis access, in July of 2024, we were incredibly pleased to announce positive results from the VO7 Phase III trial of the ATEV for arteriovenous access in hemodialysis patients who have end-stage renal disease. As a reminder, this trial enrolled 242 patients and is a prospective, multicenter, randomized study designed to evaluate the usability of the ATEV for dialysis during the first 12 months after implantation. All participants will continue to be followed for a total of 24 months after implantation. The primary endpoint assessed functional patency or usability for dialysis access at six months, as well as secondary patency or blood flow through the conduit at 12 months. These assessments were co-primary endpoints and were compared to arteriovenous fistula which is the current standard of care in dialysis access. At six months, 81% of patients implanted with the ATEV had functional patency as compared to 66% of patients receiving a fistula. At 12 months, 68% of patients implanted with the ATEV had secondary patency or blood flow through the conduit as compared to 62% of patients receiving an AV fistula. The joint test for superiority of the ATEV versus AV fistula at 6 and 12 months was statistically significant. Patients who received the ATEV also utilized the conduit significantly longer for hemodialysis during the first 12 months as compared to fistula. There were more adverse events reported in patients on the ATEV treatment arm than on those in the dialysis fistula treatment arm, although the impact of this observation is not clear currently. We're highly encouraged by these results, and we believe that they demonstrate the potential of the ATEV to improve arteriovenous access in hemodialysis patients who are underserved by the current standard of care. We look forward to presenting more detailed clinical results, including subgroup analyses, at upcoming medical meetings. We're also making progress in our program in advanced peripheral arterial disease, or PAD. PAD is a cardiovascular disease of blood vessels, most commonly affecting arteries in the legs. As many as 40% of patients who require a bypass to repair arteries of the lower leg do not have an autologous vein available for revascularization. Autologous vein is the standard of care for such patients. In June of 2024, Dr. Todd Rasmussen and colleagues at the Mayo Clinic in Rochester, Minnesota, published the outcomes of arterial bypass using the ATEV in patients with chronic limb ischemia, or severe PAD. In this paper, which appeared in the Journal of Vascular Surgery, all patients treated with the ATEV for severe PAD had no suitable vein of their own for bypass and were treated under an investigator-sponsored trial. Outcomes for the ATEV patency or blood flow and limb salvage in patients with severe PAD having no vein were comparable to historical control patients having similar disease but having received a bypass using their own vein at the Mayo Clinic. Mayo investigators reported that patency and limb salvage were similar for patients receiving ATEV and patients receiving bypass with their own vein historically. This result highlights the potential impact that Humacyte's ATEV may have on patients suffering from severe PAD and having no vein of their own to perform a bypass operation. In July, the FDA also granted an RMAT designation for the ATEV in the PAD indication. Following vascular trauma and AV access and hemodialysis, This marks the third indication for which the ATEV has been granted this RMAT designation. This designation is designed to provide pathways for expedited development and review of regenerative medicine therapies for serious or life-threatening diseases or conditions. This designation allows for close interactions with the FDA and potentially an expedited or priority review of any BLA. At the same time, We also received clearance for a newly issued IND for the ATEV in the PAD indication. To date, the ATEV has been evaluated in two Phase II trials in PAD with patients followed for as long as six years. In addition, the ongoing study at the Mayo Clinic is evaluating the ATEV in 30 patients with chronic limb-threatening ischemia. All patients treated with the ATEV and PAD to date have had no autologous vein available for revascularization. And we believe the ATEV may represent an important therapeutic alternative for these patients. Returning now to diabetes, results from an ongoing preclinical study of our biovascular pancreas or BVP product candidate continue to be featured in medical meetings. The BVP is designed to enable the delivery and survival of insulin-producing islets as a potential treatment for type 1 diabetes. At the Breakthrough T1D Beta Cell Consortium meeting in June, scientists presented data in which stem cell-derived islets were observed to restore normal blood sugar in diabetic mice. In the mice, the stem cell islets survived and continued to produce insulin. with no evidence of adverse events from the stem cell-derived islets. These experiments were performed in collaboration with the Diabetes Research Institute at the University of Miami. In addition, we also presented results from a non-human primate study at the American Diabetes Association annual meeting in June. In this study, primate BVP implants showed islet survival and continued insulin production throughout the three-month duration of the study. Eyelids also developed capillaries to support survival of the insulin-producing cells. This study was also performed in collaboration with the Diabetes Research Institute. We also presented results from studies of our small-caliber 3.5-millimeter diameter ATEV in the coronary artery bypass grafting or CABG setting. This presentation was at the Tissue Engineering and Regenerative Medicine Conference in June. Preclinical six-month studies have been conducted in non-human primates to support the planned advancement of the small diameter ATEV into phase one human clinical trials in cabbage. We have observed remodeling of the ATEV to a diameter that closely matches that of the native coronary vessels. which is an outcome that has not been observed with any other conduit previously. This finding demonstrates the favorable biologic response of the host to the engineered human arteries in the coronary system. We're very pleased that the preclinical studies of the BVP and small diameter ATEV continue to show promising results, and we'll continue to update on the progress of this and other pipeline programs as they advance. Finally, last quarter we welcomed pharmaceutical industry veteran Dr. John P. Bamforth and the distinguished health system leader and physician Dr. Tony Jones to the company's board of directors. John and Tony are both distinguished commercialization and health system leaders whose experience and perspectives will be extremely valuable as we prepare for planned commercial launch of the ATEV in vascular trauma. 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. Now turning to the financial report that came out this morning. There were no revenues in any of the quarters or six-month periods reported today. Revenue, sorry, research and development expenses were $23.8 million for the second quarter of 2024. compared to 20.5 million for the second quarter of 2023, and were 45.0 million for the six months into June 30, 2024, compared to 37.8 million for the six months into June 30, 2023. The current period increases resulted primarily from increased materials and personnel expenses to support expanded research and development initiatives, primarily in the areas of expanding our manufacturing activities, and in support of the FDA review of the BLA and vascular trauma. General and administrative expenses were $5.7 million for the second quarter of 2024, compared to $6.2 million for the second quarter of 2023, and were $11.1 million for the six months ended June 30, 2024, compared to $11.4 million for the six months ended June 30, 2023. The decreases during 2024 resulted primarily from decreased non-cash stock compensation expense, partially offset by increased personnel expenses and increased professional fees. Other net income or expense was net expense of $27.2 million for the second quarter of 2024 compared to net income of $4.0 million for the second quarter of 2023. For the six months ended June 30, 2024, other net expense was $32.5 million compared to other net expense of $10.4 million for the six months ended June 30, 2023. The increase in other net expense for the second quarter of 2024 and for the six months ended June 30, 2024 compared to 2023 resulted primarily from the non-cash re-measurement of the contingent earn-out liability associated with the company's August 2021 merger with Alpha Healthcare Acquisition Corp. Net loss was $56.7 million for the second quarter of 2024, compared to $22.7 million for the second quarter of 2023. Net loss was $88.6 million for the six months ended June 30, 2024. compared to $59.7 million for the six months ended June 30, 2023. The current period increase in net loss resulted primarily from the non-cash remeasurement of the contingent earn-out liability and net operating expense increases described previously. The company reported cash and cash equivalents of $93.6 million as of June 30, 2024. Total net cash provided was $13.1 million for the first six months of 2024 compared to net cash used of $35.2 million for the first six months of 2023. The increase in net cash provided resulted primarily from the receipt of approximately $43 million in net proceeds from an underwritten public offering of common stock in March 2024 and $20 million in proceeds from an additional draw under our funding arrangement with Oberlin Capital Management. With that, I'd like to turn it back to Laura for some concluding remarks.

Thank you, Dale. We're very excited about the future of Humacyte. We're confident that the FDA approval of the ATEV in vascular trauma is coming soon, and we and our entire organization are continuing to prepare for commercialization of our first product if approved. We also remain committed to advancing our pipeline programs, which continue to demonstrate encouraging results and underscore the promise of the ATEV across a wide range of diseases, injuries, and chronic conditions. This is a transformational period for us, and we're grateful for your continued support. Thank you for joining us on the call today. Operator, we're ready to take questions.

Thank you.

Ladies and gentlemen, at this time we will be conducting a question and answer session. If you would like to ask a question, please press star then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then 2 if you would 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. Again, if you would like to ask a question, please press star and then 1 now. The first question that we have comes from Ryan Zimmerman of BTIG. Please go ahead.

Good morning. Thanks for taking our questions, Laura and Dale. Apologies for this myopic focus here on vascular trauma, but just a couple questions for me. First, If the FDA does communicate with you, I guess I'm curious, should we expect a new date for clearance, or will it simply provide a clearance at a future date as you understand it today? And then as part of that, what impact does this have on your BLA submission timing for AV access, which I think is expected later this year? And then I have one follow-up. Thank you.

So, Ryan, this is Laura Nicholas, and thanks for that question. As far as what to expect as far as a new PDUFA date or timing on a decision, I wish I could provide more clarity for this group, but I can't. You know, again, the phone call from the senior leadership at CBER on Friday said simply that they need more time, and they did not give us insight into a new date or how we would be informed. That said, I would expect that within the next several months we will hear a decision, but the exact mechanics of that is very hard for me to predict. I just can't at this stage. With respect to the supplemental BLA that we had been planning and hoping to file in Dialysis Access, From my standpoint, that's still on track. The reality is that we just got top line results in our phase three trial a couple weeks ago. We're still processing those results. Our plan had been, assuming FDA approval and trauma in the second half of this year, our plan had been to initiate commercial launch and then look at filing a supplemental BLA, perhaps sometime in 2025. So I don't think we've messaged the market that we were going to file a supplemental BLA in late 24. So, you know, from my standpoint, you know, barring any other changes in timing from the FDA, the communicated timing on BLA filing for dialysis kind of remains the same. You know, depending on conversations with the FDA, we would hope to file sometime in 2025. So that remains on track as near as I can tell.

Okay, very helpful. And then for Dale, how do you think about operating expenses and cash burn during this interim period? Just given the delay impact, are you pulling back anything? Are you full steam ahead, foot on the gas? Help us understand kind of how you're managing your cash in this kind of limbo period that you're in right now as a result of Friday's update?

Yeah, Ryan, I think to extrapolate from what Laura said, we don't know what the delay will be at this instance, but the entire BLA process has been one that's been very iterative. And so our expectation is that as these weeks unfold, we're going to have a better sense of what that timeline is. based on our assessment of timeline to completing this process, then we will apply that knowledge and be prudent in terms of how we undertake new programs and how we manage operating expenses. I think being essentially two working days out from the notice from the FDA, there's limits to what we know right now. We're certainly thinking about how we're going to respond to different potential outcomes in terms of what that timeline is. but it's a little early to give specifics in terms of how we might change our operations under different scenarios of timelines. But clearly we're looking at it very closely.

Understood.

Thank you for taking the questions. Thank you.

The next question we have comes from Josh Jennings of TD Cohen and Company. Please go ahead.

Hi, good morning. Thanks for taking the questions, Lauren Dale. Wanted to just ask about the vascular trauma data set and just, you know, the call out that adverse events were higher in the ATEV study group. I don't think that you're disclosing much around that, but the efficacy was not impacted. Our assumption that these are minor adverse events in total, but just wanted to see if there's any other color you can share on that.

Sure. Yeah, so Josh, just to clarify, that was on dialysis. That's not on trauma.

Thank you. Sorry about that.

I appreciate the correction. I just don't want our listeners to think that was on trauma. Yeah, so on dialysis, yeah, we're still digging into that. You know, most of these adverse events are minor. As you know, in dialysis access, you know, these patients undergo a lot of procedures in general to maintain access patency. It's just how life is for these patients. I will say very clearly that we have no new safety signals for this conduit, none. It's not like we've seen something new that we haven't seen before. So the increased number of adverse events, I'm not sure. It could be related to the fact that our vessels were used for a longer period of time during the first year and got more needle punctures. or something else. So it's hard for me to comment on right now, but we're in the process of sorting that out, and we expect to share this information at medical meetings later this year.

Understood. And the second one on the access indication and the top line data. Just how involved is Fresenius in terms of aggregating the data? How much have they seen? And I guess what's next steps in terms of that agreement and collaboration on two fronts? One, just continued collection of cost effectiveness data. And then two, I think down the line, Fresenius has agreed to use ATEV in any indication where clinical value has been demonstrated.

Well, so certainly we've worked with a number of Fresenius centers, dialysis access centers, as part of the VO7 phase three trial. That said, Fresenius is not active in aggregating or analyzing our data. That's a human site endeavor for sure. But as you mentioned, our partnership with them really does focus on the health economics and the cost benefit analysis for different demographics of dialysis patients. So we are working closely with Fresenius actually on putting together a publication on some of the costs that are incurred with patients who have multiple access failures and what that costs the system. And we're also working with them on a similar project in Europe. So they've been great partners for that. And you're right. Fresenius, as part of our commercialization agreement, they have agreed to adopt the ATEV in dialysis for their centers in patients where the clinical results and the health economic results make sense. So working with them to identify those patient populations where the health economics become really prohibitive for dialysis access, that's a key part of our long-term market adoption strategy in the U.S., and they're working with us very closely on that.

Great. Just one more to sneak in, just on the PAD indication. And you've had some positive updates and RMAT designation. Just wanted to, I'm not sure if you did this earlier in the call and you're prepared, Mark, but just any next steps, outline you can provide in terms of moving forward with initiation of a clinical trial and getting that up and running. Thanks a lot.

Yes, well, as I may have mentioned on prior calls, we've certainly had multiple requests from vascular surgeons to initiate a Phase III trial in PAD. I think there's a lot of excitement on the clinical vascular surgery side for looking at this as an option for patients who are facing potential amputation. And we are, you know, designing that trial, so we're doing the intellectual work around that. But, you know, I think that we're going to have to play it by ear in terms of the timing of the approval and trauma and our cash runway. You know, again, we remain a pre-revenue company. And so we'll just have to be holistic and mindful as we think about when to start a phase three trial in PAD, you know, given that that would be a third phase three program. So, you know, after trauma and dialysis. So it's something that we're thinking about very actively. But as Dale said, with respect to our finances and our cash runway, you know, we're evaluating this, you know, month over month.

Understood. Thanks a lot. Thank you.

The next question we have comes from Allison Brassell of Piper Sandler. Please go ahead.

Hey, thank you. Good morning, and thanks for taking the questions. A couple for me on the vascular trauma review. Just what's your sense of the area of the filing that the agency needs more time to review, you know, clinical, non-clinical, manufacturing, or something else? And then in terms of, you know, how much additional time FDA is going to need to complete the review, I think, Laura, earlier you indicated this could take a couple of months. So just help us understand what feedback from the agency indicates that this will be wrapped up in months as opposed to days or weeks. And then also, is it your sense that you will need to generate additional clinical data for FDA to be able to complete the review in vascular trauma? Or said another way, what gives you confidence that the clinical data package you've submitted is sufficient for FDA to grant approval in trauma?

So Allison, I'll try to answer those questions as best as I can with the extremely limited knowledge that I have. So with respect to the timeline regarding days versus weeks versus months, the senior CBER leadership said this could possibly take months, that they were not sure. And so we have messaged the market exactly what the FDA told us. So it might be sooner than that, it might. But what we didn't wanna do is message the market that this would be weeks or days when it may not be. So you now have the full extent of my knowledge on this topic. With respect to what part of the file they feel like they need more time for, again, I can't answer that. There was literally no insight provided on what parts of the file they were continuing to work on. And thirdly, with respect to do we think we will need more clinical data, I did not hear that on the call. And we have never gotten that indication in any part of the review, and I certainly didn't hear that on the call. And so that's where it stands.

Got it. And then maybe just one follow-up question on the dialysis access data. Could you just clarify over what period adverse events are measured? Is that, you know, comment in the press release talking about AEs over the entire 12 months of the study or just AEs during the time the ATEV or fistula, you know, was actually used for hemodialysis?

I believe. I believe that it's AEs over the entire study because that's the typical way that adverse events are reported for study outcomes. So it's the entirety of the data that we have in hand.

Got it. Thank you. Thank you.

Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then 1 now. The next question we have comes from Kristen Kluska of Cantor Fitzgerald.

Please go ahead. Hi. Good morning, everybody, and congrats on the second positive Phase III trial result for you in the last year. So maybe I'll start with AV Access. Can you talk about some of the subgroup analyses data that you're going to share and ultimately why you believe that's going to be helpful with future commercial considerations? And to be clear, I'm not asking for the data, just which analyses in general you are conducting.

Yeah, thanks, Kristen, for that question. So, you know, as we've shared in previous sessions, quarterly calls and other presentations, it's clear from our work with Fresenius and other publications that there are certain subgroups of dialysis patients that tend to have a very hard time with dialysis access. They have a lot of failures and a lot of complications, and they're very expensive for the system. These patients are often women, often diabetic or obese women, These patients often will not mature their fistulas and are using synthetic grafts or catheters and for all of those reasons have higher complication rates and are more expensive. So it's known since this study compared our ATEV against arteriovenous fistula, it's known in the literature that there are certain demographics that have poorer maturation rates for their fistulas so underrepresented minorities have different fistula maturation rates the elderly women diabetics etc so built into our statistical analysis plan we had pre-specified looking at these different subgroups to try to understand what the Delta is between the ATEV and dialysis particularly in these subgroups, the ATEV and FISHLA, I'm sorry, particularly in these subgroups where FISHLA is known not to work very well. So, again, there's nothing magic here. This is just sort of the standard subgroups that are known in the literature to be problematic. And I think diving down into those groups will really give us a better sense of which patients are the most underserved currently and which can benefit the most. from the ATEV and dialysis.

Okay, thanks. Appreciate that. And then just one on vascular trauma. Sounds like the clinical site and the manufacturing inspections occurred a few months ago. Can you just give us a sense of how those inspections went and in terms of the follow-up items that were required that, you know, is there anything in particular you were working with the FDA on addressing? Thank you again.

So we had a total of five inspections. I would say all of those inspections went very well. You know, in terms of follow-up items, there's a small number of standard follow-up items on assays and CMC having to do with validation of certain methods. But these are sort of standard things that we've worked out with the agency. Some of those were completed, you know, pre-PDUFA. Some of those were slated for post-PDUFA. For example, one study is shipping the product during winter. And we couldn't do that until winter. So we agreed to do that in winter. So, you know, but these are sort of standard, I don't want to say cookie cutter, but these are standard validation and test procedures, you know, that we do not believe are impacting the timing of the file.

Thanks again. Thank you.

The next question we have comes from Bruce Jackson of Benchmark Company. Please go ahead.

Hi, good morning, and thank you for taking my questions. I was hoping to get an update on the new technology add-on payment application. Are you still going to apply for it this October, and how does the delay in the FDA approval factor into that?

Bruce, that's a good question. Thank you very much. As you know, we got ICD-10 codes from CMS in June, and that's a prerequisite for filing an NTAP application. To the best of my knowledge, unless the rules have changed, but to the best of my knowledge, even without approval, we can file for an NTAP payment during this cycle. NTAP applications are only allowed once per year, and the deadline is typically around October 1st. So we can file for an NTAP add-on payment, and so long as we have approval, I believe, before June of next year, then that NTAP payment would kick in in October of 2025. So this delay on the front end with our PDUFA date, in my mind, does not change our plans for filing an NTAP application this October.

Okay, great.

That's it for me. Thank you. Thank you, sir.

Ladies and gentlemen, we have reached the end of our question and answer session, and I would like to turn the call back to Dr. Nicholson for closing remarks. Please go ahead.

Well, I'd like to thank everybody on the call, including our analysts and our investors and any board members that might be on the call and our leadership. You know, this has been a very interesting part of Humacyte's journey. Again, we have full confidence that we will receive approval in the trauma indication for ATEV. We believe that ATEV provides important benefits for patients in terms of limb salvage, in terms of infection. We believe this is an important adjunct in therapy for both civilian and military trauma. And so we're pushing forward and we're looking forward to not only the trauma indication but also future approvals and other indications as well. I continue to be very excited about our prospects, and it's going to be a very interesting journey. So thank you for coming along with us on the journey.

Thank you. Ladies and gentlemen, that then concludes today's conference.

Thank you for joining us. You may now disconnect your lines.