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spk00: Greetings and welcome to Long Everon's call today to discuss the results of the company's third quarter of 2021 financial results. All participants are currently in listen-only mode. Following the formal presentation, we will open the call up for a question and answer session. I would now like to turn the call over to Brendan Payne from Stern IR. Brendan, you may proceed.
spk03: Thank you, operator. Good morning, everyone. And welcome to Longevron's call today to provide a business update and to discuss financial results for the third quarter of 2021. And we're also contained in a press release issued earlier this morning. You can access the press release by going to the news section of our website at www.longevron.com. I'm joined on the call today by the following members of Longevron's management team. Mr. Jeff Green, Chief Executive Officer. Mr. Joshua Hare, Co-Founder, Chief Scientific Officer and Chairman. and James Clavio, Chief Financial Officer. We will begin with a general update and summary of recent events, followed by a recap of our financial results from the third quarter 2021, and then conclude with a question and answer period. As a reminder, during this call, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our press releases and risk factor discussions in our filings with the SEC, including our last annual report and Form 10-K and cautionary statements made during this call. We assume no obligation to update any of these forward-looking statements or information. Now, I'd like to turn the call over to Jeff Green, Chief Executive Officer of Loggeveron. Jeff?
spk04: Yeah, thank you, Brendan. Good morning, everyone, and thank you for attending Longevron's third quarter 2021 business update and financial results call. We've had another busy and productive quarter, and let me get started on our progress with LomasLB clinical research. Following this, James Plavio, our CFO, will go through the financial performance for the quarter. Longeviron is a leading clinical stage biotechnology company developing living cell therapies for chronic aging-related diseases and other life-threatening conditions for which there are no approved treatments. Aging is the number one risk factor for chronic disease. Stem cell exhaustion, cellular senescence, chronic inflammation, together referred to as inflammation, compromises our ability to repair and regenerate damaged tissues and organs. Inflamma aging is linked to the rise of progressive chronic disease such as Alzheimer's and aging frailty. Our focus since day one has been to develop safe and effective allogeneic cell therapy solutions for the treatment and prevention of these diseases. Longevron's lead therapeutic investigational product called LomaCellB is a living cell biologic made from the specialized cells isolated from the bone marrow of young healthy adult donors aged 18 to 45. These specialized cells called medicinal signaling cells, or MSCs, reside within various tissues in our bodies and are considered to be the body's endogenous or built-in repair mechanism that promotes regeneration of damaged tissues and organs. It is our goal to increase healthspan and reverse or prevent chronic disease and other life-threatening conditions by harnessing the regenerative potential of MSCs. Now I'll provide an update on our LOMA Cell B clinical research program, beginning with our Alzheimer's disease. With Alzheimer's disease, it is believed that early and substantial inflammation in the brain leads to neurodegeneration and neuronal cell death, which is a significant contributor to the development and progression of this deadly disease. In animal models of Alzheimer's, MSCs, like the ones used in loma cell B, have been shown to cross the blood-brain barrier, decrease harmful inflammatory cytokines, and increase anti-inflammatory cytokines, which led to the generation of new neurons and improved blood vessel function. Our hypothesis is that the promascular, pro-regenerative, and anti-inflammatory properties of MSCs alleviates neuroinflammation in the brain, which may in turn prevent or reverse the clinical progression of Alzheimer's. In July, we presented data from our Phase I Alzheimer's Disease Clinical Trial as a poster presentation at the 2021 Annual Alzheimer's Association International Conference. This trial, funded in part by an Alzheimer's Association Park the Cloud Challenge on Neuroinflammation grant, used a randomized placebo-controlled double-blind design testing a single IV infusion of LomaCellB 20 million cells, we call this the low dose, LomaCellB 100 million cells, in this case the high dose or placebo. Key results from this trial include demonstrating tolerability in the target patient population of mild to moderate AD and a slow reduction in mini mental state exam score on average for the low dose LomaCellB group compared to the placebo group, as well as positive changes in various biomarkers of interest. The program is now transitioning to Phase 2, and we anticipate the initiation of a Phase 2 study by year-end or early 2022. The Phase 2 trial is anticipated to be a randomized placebo-controlled double-blind design to evaluate biomarkers, cognitive function, and other disease-specific endpoints. Further details about the trial design will be provided once the protocol is finalized. The protocol has already been filed as an amendment to our IRD. However, the design is undergoing some final adjustments. Now, transitioning now to our aging frailty research. On August 13th, we announced the top-line results of the Phase 2B U.S. Multi-Center Randomized Placebo-Controlled Aging Frailty Trial. The trial's primary objective was to evaluate whether LomaCell B infusion could improve walking distance in mild to moderately frail older adults with demonstrated mobility disability. Mobility disability, or the inability to walk a quarter mile, is a powerful predictor of future health and function. None of the subjects at screening could walk a quarter mile in six minutes prior to receiving Lomas LB or placebo. Six months after infusion, subjects in the three highest Lomas LB dose groups could, on average, walk statistically significantly further than they could at baseline, with an average increase of between 27 meters and 55 meters. By contrast, the placebo group could walk, on average, just nine meters further compared to baseline. Now, 90 days later, at nine months, the middle LOMOS-LB group and the highest LOMOS-LB group were still walking statistically significantly further compared to both baseline and to placebo, suggesting a durable, sustained improvement in exercise tolerance and endurance. At this stage, we are continuing to evaluate the clinical safety and efficacy data from this trial, as well as the blood-based biomarker data, in anticipation of determining the next step in this program. Results from Longeviron's other aging frailty trial, the Phase I-II HERA study, are anticipated in the first quarter of 2022. The primary objectives of the HERA study are to assess safety and tolerability and to explore the effect of LLB on the frail immune system and other frailty endpoints in subjects receiving the influenza vaccine. We plan to evaluate the results of the HERA study in the context of the results from the Phase IIb frailty trial as we plan the next steps in the U.S. Frailty Research Program. The planned Japanese Aging Frailty Phase II trial is currently on track to initiate by end of first quarter 2022. This investigator-initiated randomized placebo-controlled double-blind single infusion trial is being led by our clinical partners at the National Center for Geriatrics and Gerontology in Nagoya and Jintendo University Hospital in Tokyo. In Japan, where nearly one-third of the population is 65 or older, frailty's adverse outcomes and increased healthcare costs and use are already a significant public health concern. Japan has placed significant importance on the prevalence of frailty and implementing programs intended to prevent functional decline and to promote well-being. We anticipate and look forward to announcing the first subject pain roles in the Phase 2 trial. Excuse me. Related to – one second, please. Related to evaluating walking distance and mobility, in September, we announced our agreement with Kinesiometrics to provide a digital data-driven solution for objective real-time measurement of functional capacity and quality of life in Longevron's clinical studies. Kinesiometrics' mobile phone-based platform can collect not only years of historical data regarding a subject's activity levels via steps, distance walked, flights climbed, and energy expenditure, but also real-time response information for comparison of activity level changes pre- and post-Lomus LB infusion. The data may be used to understand and gauge outcomes of treatment regimens. Activity levels can be provided continuously rather than relying solely on single time points throughout the follow-up period. This could provide a rapid understanding of the effect of LomasLB and may have the potential to reduce the number of protocol-specific visits a research subject is asked to make to the clinic. And now, transitioning now to our hypoplastic left heart syndrome research program. This past third quarter, we announced the final results of our Phase I open-label safety study. The results from that trial showed that injection of LomasLB into the right ventricle during reconstructive surgery was well tolerated. Exploratory efficacy results show that, on average, the babies showed growth and development consistent with normal healthy babies and a transplant-free survival of all 10 babies one year post-surgery. We've continued to monitor the status of the children enrolled in this Phase 1 study and are very encouraged that all 10, as of September this year, remain alive and transplant-free two or more years after the surgery and administration of LOMUS-LB. Enrollment in the Phase II HLHS trial, referred to as ELPAS II, continues to progress nicely. Currently, five centers are open and actively recruiting subjects. Four babies have been enrolled and randomized as of today. ELPAS II has a target enrollment of 38 infants with one year of safety and efficacy follow-up per protocol. Currently, the ELPAS II team is projecting completion of enrollment in 2023. ELPAS II is being funded in part by a grant from the National Institute of Health, National Heart, Lung, and Blood Institute in collaboration with Longevron and is led by Principal Investigator Sanjay Kashal, Division Head, Cardiovascular Thoracic Surgery at the Lurie Children's Hospital of Chicago. Now moving on to our acute respiratory distress syndrome due to COVID-19 infection trial. The phase one trial continues to screen subjects at three participating centers in the U.S. We expect enrollment to continue into 2022. Enrollment in this trial has been slower than expected due to a number of factors that include a reduction in hospitalizations and increasing vaccination rates. The trial is funded in part by a Maryland Stem Cell Research TEDCO grant that goes through October of 2020-22. As a general note, we have a demonstrated track record of successfully applying for and receiving grant awards to help fund our research. With the new data coming out of our various trials and successful execution of said trials, we intend to continue to apply for grants as part of our funding strategy and to further our goal of commercializing LomasLB. With that, I'd like to turn the call over to James Cordejo, CFO, to discuss our financial results for the third quarter of 2021. James.
spk02: Thank you, Jeff. Good morning, everyone. Most of what I'll be covering this morning will be presented in more detail in our consolidated financial statements and in our management's discussion and analysis of operations for the three months ended September 30th, 2021, which will be filed today. Third quarter ended September 30th, 2021 and 2020. Revenue in the third quarter of 2021 was $0.2 million compared to $1.8 million in the same period in 2020. The difference was largely due to a decrease in grant revenue as follows. Clinical trial revenue, which derives from the company's Bahamas registry trial, was $0.2 million in the third quarter of 2021 compared to less than $0.1 million in the same period in 2020, an increase of $0.2 million or 100%. COVID-19-related travel concerns continues to negatively impact clinical trial revenue generally. Third quarter 2021 grant revenue was less than 0.1 million compared to 1.8 million in the same period in 2020, a decrease of 1.7 million or 96%. The reduction in grant revenue is due to the completion of several grant funded clinical trials and corresponding completion of the grant. Research and development expenses for the three months ended September 30th, 2021 increased to 2.0 million from 0.6 million for the same period in 2020. The increase of $1.4 million, or 250%, was primarily due to an increase in research and development expenses that were not reimbursable by grants, as well as $0.9 million of equity-based compensation expense recorded for the RSUs and stock options granted during the quarter. General administrative expenses for the three months ended September 30, 2021, increased to $3 million compared to $0.7 million for the same period in 2020. The increase of $2.3 million, or 327%, was primarily related to an increase for compensation, insurance, and professional expenses incurred during the current period, including $1.6 million of equity-based expense recorded during the quarter. Net loss increased approximately $4.9 million for the three months ended September 30, 2021, from a net loss of $0.9 million for the same period in 2021. The increase in net loss of $4 million or 418% was for the reasons outlined above. Cash and short-term investments as of September 30th, 2021 was $19 million compared to $0.8 million as of December 31st, 2020. The increase in cash period over period was a result of the completion of the company's initial public offering in February of 2021. Our cash in the nine months ended September 30th, 2020 was increased by $29.1 million in funds received from our IPO. As of September 30th, 2021, our position, which includes short-term investments, was $19 million. We believe based on the current operating plan and financial resources that our existing cash on hand will be sufficient to cover expenses and capital requirements through at least the fourth quarter of 2022. With that, thank you, and I will turn the call back to Jeff.
spk04: Super. Thank you, James. I believe now we're going to open the call for questions. Operator?
spk00: Thank you for our Q&A. If you would like to ask a question, please press star followed by 1 in the telephone keypad. If you change your mind, please press star followed by 2. When preparing to ask a question, please ensure your device is unmuted locally. As a reminder, that's star 1 in your telephone keypad. We have no questions. I'll now transfer back to Brendan and Peng for questions submitted independently.
spk03: Yes. So for the management team, a few questions that were submitted independently on online. First is with regards to aging frailty, the Phase IIb. On Geberon released news a few months ago about a biomarker finding from its Phase IIb aging frailty trial that may shine some light on the mechanism of action that supports the therapeutic effects of LomaCellB with respect to improved exercise and walking distance. Can you summarize those findings and what the significance is?
spk04: Sure. Thanks, Brendan. We also have our chief science officer on the call, so I'll ask him to get to weigh in on the answer. But, yes, we were quite interested to see that a biomarker linked to healthy blood vessel function showed a positive change in subjects treated with LomaCellB. The biomarker we refer to as Ti2 is a self-surface receptor that's present on cells that line blood vessels and protects against vascular leakage and inflammation. So increased levels of Ti2 in the bloodstream may be indicative of poor vascular health and dysfunction. And since poor vascular health and endothelial dysfunction are associated with the onset and development of frailty in older adults, the finding that loneliness cell B may potentially be associated with a reduction in that biomarker suggests that improving vascular and endothelial function may be a potential mechanism of action of this product. This is the first time that we're aware of that a cell therapy has been associated with a reduction in this TIE2. in the bloodstream so it's a biomarker we plan to look at in our other frailty trial the data that we're waiting in the hair trial and then potentially to explore that further in future research dr hair did you want to add anything to that uh thank thank you jeff um yes the the soluble type 2 receptor has been extensively studied in other diseases but not in frailty
spk01: and has been shown to be a rather important marker of endothelial function. We think that this is potentially meaningful with regard to frailty. Frailty is driven by sarcopenia in some patients, which is the loss of skeletal muscle, and we think the linkage between the poor regulation of blood flow to skeletal muscle might be able to be indexed by our measurement of of soluble type 2. So we will be pursuing this in future research and in future trials, and this could potentially become a valuable tool for us to monitor how patients are responding to the infusion of lone cell B. Perfect.
spk03: Thank you. The next question submitted, again, is related to aging frailty. What is the estimated prevalence of frailty in the U.S. and Japan, and how big is the market opportunity?
spk04: Yeah, this is Jeff. I'll take that. The answer is in part dependent on the definition used, but the general prevalence of frailty in individuals over the age of 65 in the U.S. is about 15%. In the U.S., this translates to roughly 8 million people, which is larger than Alzheimer's disease. It's larger than heart failure. It's a big unmet medical need. There's actually another 20 million or so people that are considered pre-frail and at risk for becoming frail. In Japan, the general prevalence has been reported to be as high as 11% of the population, and that translates... to about three and a half to four million people who are 65 and older in that country. So I would consider both of these very large market opportunities.
spk03: Wow. Okay, thank you. The next question we received transitions into the HLHS program. What is the prevalence of hypoplastic left heart syndrome in the US and what's the standard of care currently?
spk04: Yeah, thank you. It is considered a rare disease. For every 10,000 births, there's two to three babies born with HLHS. So that works out roughly to about 1,000 babies each year. You know, the standard of care, we have our cardiologists on the line, but I'll just say the standard of care at present is to perform three palliative reconstructive surgeries every two of which occur typically early, I think, in the first year of their life, and then the third as the child is a little older, but before the age of five, I believe. Dr. Hare, do you want to comment at all about the standard of care with HLHS?
spk01: Yeah, the standard of care is quite dramatic. The first surgery has to be performed at two weeks of life. It's called the Norwood procedure. And the second surgery is at four months. So you're absolutely correct. The first two surgeries on the first year of life. I think what's important to understand is that even with the three surgeries, which are required for the child to survive, there's still a high incidence of the development of heart failure and a need for heart transplantation during childhood. So...
spk03: that is the uh that is the standard of care the three surgeries and then possibly a fourth surgery of a heart transplant in some of the babies perfect thank you and the final question that we received um that was submitted was with regards to the alzheimer's program you noted that you expect to initiate enrollment in phase two uh with lomas lb in alzheimer's by the first quarter of next year of 2022. What's the design of that trial and what endpoints would you be looking at?
spk04: Yeah, so this is correct. We have filed a new protocol as an amendment to our existing IND. We're preparing for enrollment to begin in Q1 next year. We've modified the design from what was originally contemplated to include multidosing. Our Phase I trial, you know, is a safety trial of a single administration of LOMA cell B. and it was intended to evaluate the safety and to explore the efficacy. So in our next trial, we would like to administer Lungless LB multiple times at several dose levels over the course of a three- to six-month period and evaluate the safety of that as well as explore the efficacy. So we anticipate that it will be a randomized placebo-controlled double-blind multi-arm trial, and we intend to measure a handful of endpoints focused on cognitive function, activities of daily living, disease-specific biomarkers, cytokines, and brain volumetry. So once that trial design is locked down, we'll provide another update for investors for the precise design.
spk03: Perfect. Thank you. So that concludes the questions that we were submitted and the Q&A session for the call. I'd just like to now turn the call back to Jeff to close out with remarks.
spk04: Sure. Thanks, Brendan, and thank you, everyone. On behalf of the company, we'd like to thank everyone for their continued interest and support, and we look forward to updating you again when we discuss year-end 2021 results.
spk00: This concludes today's call. You may now disconnect your lines, and we thank you for joining.
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