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spk04: Good morning or good afternoon all and welcome to the Longevron Inc 2022 third quarter earnings call. My name is Adam and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I would now like to turn the call over to Elsie Yao from Stern Investor Relations. Elsie, you may proceed.
spk00: Thank you, operator. Good morning, everyone, and welcome to Longevron's third quarter 2022 call. Today, we will provide a business update and discuss financial results for the third quarter of 2022. Earlier this morning, we issued a press release with these results, which can be found under the investor section of our website at www.Longevron.com. I'm joined on the call today by the following members of Longevron's management team. Dr. Chris Min, Interim Chief Executive Officer and Chief Medical Officer. Dr. Joshua M. Hare, Co-Founder, Chief Science Officer and Chairman. and James Covijo, Chief Financial Officer. Dr. Min will begin with a brief corporate overview, followed by a review of updates from Longevra's clinical programs in Alzheimer's disease, hypoplastic left heart syndrome, or HLHS, and aging frailty. Then Mr. Covijo will review our third quarter financials. Last, we will open the call for Q&A. 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 statement should be considered in conjunction with cautionary statements in our press releases and risk factor discussions in our filings of the SEC, including our annual report on Form 10-K and cautionary statements made on 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 Dr. Chris Min, Interim Chief Executive Officer and Chief Medical Officer of Longevron. Chris?
spk02: Thank you, Elsie. Good morning, everyone, and welcome to Longevron's third quarter 2022 business update and financial results call. Longevron is a clinical stage biotechnology company developing regenerative medicines for unmet medical needs. At Longevron, our mission is to develop safe and effective cell-based therapies for some of the most challenging disorders associated with the aging process and other medical disorders. Our lead investigational product, called LomaCellB, is a living cell product made from specialized cells isolated from the bone marrow of young healthy donors ages 18 to 45. These specialized cells are known in the literature as medicinal signaling cells, or MSCs, and are essential to our endogenous or built-in repair mechanisms. MSCs are known to perform several complex functions, including the ability to form new tissue. They also home to sites of injury or disease and secrete bioactive factors that are immunomodulatory and regenerative. We believe that LomaCellB has multiple mechanisms of action that may lead to anti-inflammatory, provascular, and regenerative responses, and therefore may have broad applications for a range of aging-related and rare diseases. In the third quarter of 2022, we continue to make progress advancing LomaCellB for our suite of aging and rare disease indications. We have ongoing trials in Alzheimer's disease and hypoplastic left heart syndrome, or HOHS, and have initiated patient screening in a phase two study evaluating LomaCellB for aging-related frailty in Japan. First, I'll begin with an update on Alzheimer's disease. Last week, we were pleased to announce the completion of enrollment for our Phase 2A trial. This represents an important milestone for Lung Gen 1 as we advance Lomasol B as a potential treatment for patients with mild Alzheimer's disease, a large area of unmet need where treatment options remain limited. Based on growing preclinical and clinical data, we believe Lomasol B may prevent, slow, or even reverse the clinical progression of Alzheimer's disease by reducing disease-related brain inflammation. Neuronal cell death caused by early and substantial neuroinflammation is a significant contributor to the pathogenesis of Alzheimer's disease. In preclinical models of Alzheimer's disease, MSCs like Lomacil-B have been shown to cross the blood-brain barrier, potentially with an anti-inflammatory effect, improving endothelial function and promoting neurogenesis, the process of how neuron formation occurs in the brain. In a previously completed Phase 1B study, we demonstrated the preliminary safety of Lomacil-B in patients with mild Alzheimer's disease. With the Phase 2A trial, we hope to build on this body of evidence. I'd like to remind you that this Phase 2A trial is a 48-patient, forearm, parallel design, randomized clinical trial of Lomacil-B designed to evaluate the safety of single and multiple infusions of two different dose levels compared to placebo in patients with mild Alzheimer's disease. Our primary endpoint is safety, as measured by the occurrence of serious adverse events within the first 30 days after administration of Lumosome B. Secondary and exploratory endpoints include brain volumetry by magnetic resonance imaging, or MRI, biomarkers relevant to inflammation and endothelial vascular systems, and measures of cognitive functions. Each patient is following the study for a duration of 12 months. With the trial fully enrolled, we expect to share the top-line results in 2024. Next, I'd like to move on to our HLHS program. This quarter, we were excited to announce that the FDA granted fast-track designation to LMS-LB for infants with this rare and life-threatening pediatric disease. As a reminder, HLHS is a rare congenital heart defect that affects approximately 1,000 infants a year in the United States. People born with HOHS have an underdeveloped or absent left ventricle impairing the heart's ability to pump blood. Left untreated, this condition is always fatal. Currently, the standard of care is comprised of three reconstructive operations before the age of five, an extraordinary treatment burden for these young pediatric patients. Further, even with these surgical interventions, Children with HLHS are at elevated risk of short-term mortality, delayed development, and long-term complications, including organ failure, with only somewhere between 50% to 60% of these patients surviving to adolescence. There exists a tremendous unmet need for additional interventions beyond the current standard of care. We believe LOMOS-LB, with its pro-regenerative, pro-vascular, and anti-inflammatory properties, when administered concurrently with surgical interventions, can fill that gap by improving cardiac performance in patients with HLHS. In combination with the previously announced rare pediatric disease and orphan drug designations, the new FAST-TRACK designation underscores the urgent unmet need for new treatments for HLHS. Enrollment remains ongoing in our ELPAS-2 trial of Lomacil-B for HLHS. All clinical sites have been activated. As a reminder, ELPAS-2 is a phase 2A clinical trial that intends to evaluate the safety and efficacy of intramarocardial injection of LOMOS-LB in infants with HLHS who are undergoing stage 2 reconstructive surgery. The primary endpoint is a change in right ventricular injection fraction, a key measure of cardiac function at 12 months post-treatment. We intend to provide further guidance on timelines for ELPAS-2 when a sufficient portion of the intended treatment population have been enrolled. Finally, I'd like to cover updates on our aging-related frailty program. Aging-related frailty is an age-associated decline and reversal in function across multiple physiologic systems that leads to an inability to cope with stressors. This is common among the elderly, affecting millions of individuals in the United States, and up to 15% of the population over the age of 65 depending on the specific clinical definition used. Aging-related frailty manifests typically as a combination of several signs and symptoms that may include sarcopenia or involuntary loss of muscle, associated weakness, fatigue, weight loss, slowness, and low activity. Unfortunately, elderly frail individuals are more vulnerable to poor clinical outcomes related to aging-related frailties, such as infection, falls, fractures, hospitalizations, and even death. At Longevron, we have been evaluating the effect of Lomus OB that it may have on the health and function of elderly frail patients, particularly on their physical and immune system function. In early-stage exploratory trials, we have been using biomarkers of inflammation and vascular and endothelial function to measure the effect. Our clinical development strategy in aging frailty is currently focused on Japan, which has one of the oldest populations in the world. After reevaluating our regulatory strategy in Japan last quarter to capitalize on near-term value-driving market opportunity, we initiated screening for our Phase II study, Evaluating Lobo Cell B in Patients with Aging-Related Feralty in Japan in partnership with the National Center for Geriatrics and Gerontology in Nagoya and Junten Do University Hospital in Tokyo. The Phase II clinical trial is a three-arm parallel design randomized, placebo-controlled, double-blind, single-infusion study of two different dose levels of LomaCell B versus placebo. The primary objective of the study is to evaluate the safety of LomaCell B as a treatment for aging-related frailty with an overarching goal of providing support for an eventual limited approval under the Act on the Safety of Regenerative Medicine, or ASRM, which recognizes tremendous therapeutic potential of cell therapies. Now, such an ASRM approval could enable us to enter the Japanese market based on demonstrated safety in Japanese patients with an expectation of efficacy, which can be established through the conduct of a small, well-controlled trial combined with our previous data in aging frailty. And such an approval will allow us to administer LOMOS-LB as a treatment for aging-related frailty at select clinical sites, addressing a crucial unmet need amongst the Japanese populations. We remain on track to enroll our first patient in the Phase II trial this quarter. With that, I'd like now to turn the call over to James Clavijo, our Chief Financial Officer, to discuss our financial results for the third quarter of 2022. James?
spk01: Thanks, Chris. Good morning, everyone. Most of what I'll be covering this morning will be presented in more detail in our condensed financial statements and our management's discussion analysis of operations, for the quarter ended September 30th, 2022 in our quarterly report on form 10Q, which will be filed today. Revenue for the third quarters of 22 and 21 was 0.3 million and 0.2 million respectively. The difference was due to an increase in clinical trial revenue and grant revenue as follows. Clinical trial revenue, which derives from our Bahamas registry trial was 210,000 in the third quarter of 22. compared to $164,000 in the same period in 2021, an increase of $46,000 or 28%. This increase in clinical trial revenue is primarily due to an increase in participant demand in the Bahamas Registry trial. Third quarter 2022 grant revenue was approximately $55,000 compared to $68,000 in the same period in 2021, a decrease of $13,000 or 19%. The decrease in grant revenue is primarily due to a reduction in grant funds available due in part to the completion of the grant-funded clinical trials. Research and development expenses in the third quarter of 2022 were $2.9 million compared to $2 million for the same period in 2021. The increase of $0.9 million, or 45%, was primarily due to an increase of $1.8 million in research and development expenses that were not reimbursable by grants. The increase was partially offset by a decrease in equity-based compensation allocated to research and development expenses, which decreased from $0.9 million for the three months ended September 30 of 2021 to $0.1 million for the same period in 2022. General administrative expenses in the third quarter of 2022 were $2.1 million compared to $3 million for the same period in 2021. The decrease of approximately $0.9 million, or 31%, is primarily related to a decrease of $1.2 million in equity-based compensation expenses allocated to general and administrative expenses. However, expenses related to legal and consulting services increased by $0.3 million in the three months ended September 30, 2022, compared to the same period in 2021. Our net loss was $5.2 million in the third quarter of 2022 compared to $4.9 million for the same period in 2021. Cash and short-term investments at the end of September 30, 2022 was $22.3 million. Based on the company's current operating plan and financial resources, we believe that our existing cash and short-term investments will be sufficient to cover expenses and capital requirements into the first half of 2024. With that, thank you, and I will turn the call back to Chris.
spk02: Thank you, James. So as you've heard today, we've made strong progress in the third quarter across our pipeline. I look forward to wrapping up a strong 2022 and advancing into the new year. I would now like to open the call for questions. Operator?
spk04: Thank you. As a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad now. When preparing to ask a question, please ensure your headset is fully plugged in and unmuted locally. That's star followed by one to ask a question. And our first question today comes from Michael Akanovic from Maxim Group. Michael, please go ahead. Your line is open.
spk03: Hey, thank you for taking the questions. So I'd like to start out a bit on the... on the program in Japan, and in particular, see if you could discuss how LomaCell B might be applied in Japan from a commercial perspective under the ASRM pathway. How heavily regulated would it be for prescribing, and what level of reimbursement support would you suspect? It seems like frailty is something where older patients may wish to seek treatment, even if they would be considered otherwise healthy. So could you give a bit more color on that?
spk02: Yeah, thank you for that question, Michael. Just to be clear, when you refer to reimbursement, you mean in terms of insurers and things like that? I just want to, because just, let me address that by saying that the ASRM approval, unlike a PMDA approval, does not actually allow insurers to reimburse patients or to pay for treatment. So it is limited to patients who will pay out of pocket. So what we do intend to do eventually is to go for conditional approval, which is the next level, which is under the auspices of the PMDA. So in the ASRM pathway, this is a treatment that cannot be advertised. and but which specific doctors can sign up to administer to their patients and and so it'll depend on the whether the gerontologists in japan are interested in providing this as an option for their patients and then they would prescribe it for their patients and their patients would have to have the means to pay for the treatment out of their own financial means Does that address your question?
spk03: Yes, thank you. I'd also like to touch on the program in HLHS and if you could discuss what the typical disease trajectory looks like following completion of all three phases of surgery and how long you would need to follow these patients to demonstrate a clinical benefit on something like time to transplant or mortality. Is this something that you could evaluate in the current studies, perhaps in a longer-term follow-up?
spk02: So I'll address this in a more general way. So one of the facts about this disease is that after the stage 2 surgery, Within the first year, approximately 20 percent of patients require either a heart transplant or unfortunately die from their condition. And that number, I think, bottoms out somewhere between 20 and 30 percent of after stage two surgery. Then they move on to stage three surgery. Part of the reason we got the fast track, you know, our original trial was an open label, so we cannot make any kind of determination of the efficacy of our treatment because we had no comparison group. But it was an open-label study with 10 patients. And when we look at the natural history of the disease, the expectation is that about, you know, there are a lot of caveats here. This is a small study. It was just 10 patients, open-label. But the expectation was that at one year, two of them would have either required a heart transplant or died from their disease. And all 10 children survived, not only to one year, but we've been following them for as long as three and a half years, and none of them have died. And even though this is not proof of efficacy, it was promising enough that the FDA gave us rare disease, orphan disease, and fast-track designations. In our ongoing Phase II study, we are now comparing to standard of care versus standard of care plus low-cell B. So we will be able to make some judgment about efficacy. We are using RVEF as our outcome measure, but to your point about mortality, which would be the strongest evidence of an effect, any outcome study of this type depends on two things, the amount of time that you collect the information and the size of the study. This was designed to be a very efficient study, so it's not sufficient at one year. it's unlikely to be sufficient to provide us definitive proof of mortality. We have designed it so that we will, just like our Phase 1B study, continue to follow our patients beyond the 12 months of the study so that we can try to generate mortality data. And then one can imagine that that information might be combined with the subsequent study trying to look at outcome measures. But I think our first pass at going for approval will be aiming for this kind of physiologic measure of right ventricular ejection fraction with continued monitoring over a period of time to determine whether we have a benefit in mortality.
spk03: All right, thank you. I appreciate that insight. And then one last one for me, and then I'll hop back into the queue. Regarding the ongoing study in all the time it sees. I know this is a comparatively small trial, but I am curious to see, in particular on the cognitive function endpoint, if you have any particular thoughts on what sort of a changing trajectory you would need to see in order to consider it a clinically meaningful benefit.
spk02: Well, we're, you know, to be honest, clear, as you say, with 12 per arm, this is not something that, based on our previous experience, you know, the fact is we don't know what the effect size is. So whenever you think about power and ability to measure, it's a factor of your signal to noise. And based on other therapies that have been tried in the space, it would be really unlikely that you would measure something from, say, a traditional measure like ADAS-COG and have a definitive improvement. What we are doing is we're working very closely with very experienced statisticians in the space to come up with a composite measure that will be made up of cognitive measures composite with a number of biomarkers to try to glean a signal. We haven't arrived at that final composite marker, but that is an area that we're actively trying to pursue so that we could have a pre-database log proposed composite measure that we can test against to try to measure for an actual efficacy signal, which would be not just cognition, but would be a combination of factors. And within cognition, in this mild space, what we have determined is that most of the trial work in this space has been... Recently, we have been having prodromal with the disease-modifying therapies and even MCI, but generally speaking, the tools and the mild space have been very limited. So we're not just going to do a CDR set of boxes. We're going to try to do an optimal... optimal composite that's really designed to be highly sensitive to the mild stage of disease.
spk03: Thank you. It's a very helpful answer. Thank you very much for taking my questions, and congratulations on the progress this quarter.
spk02: Thank you. We're quite proud of our enrollment. It really is quite a bit higher than the standard performance in enrollment in AD trials, which I think speaks to the interest of our patients in other kinds of therapies.
spk04: That concludes the question and answer session of this call. I would now like to return the call back to Dr. Chris Min for closing remarks.
spk02: Okay, thank you. Thank you for everyone's attention. We continue to feel that we are executing very strongly and look forward to providing future results in future quarters.
spk04: This concludes today's call. Thank you very much for your attendance.
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