This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Good morning, and welcome to Longevron's call today to discuss the company's 2022 fourth quarter and full year financial results. All participants are currently in a listen-only mode. Following the formal presentation, we will open up the call for a question and answer session. I would now like to turn the call over to James Clavijo, Longevron's Chief Financial Officer. James, you may proceed.
spk03: Thank you, Operators. Good morning, everyone, and welcome to Longevron's fourth quarter and full year 2022 call. Today, we will provide a business update and discuss financial results for the fourth quarter and full year 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 am joined on the call today by the following members of Longevron's management team. Mr. Wael Hashad, Chief Executive Officer, Dr. Chris Min, Chief Medical Officer, and Dr. Joshua Hare, Co-Founder, Chief Scientific Officer, and Chairman. Mr. Hashad will begin with a brief corporate overview. Dr. Min will follow by a review of updates from Longeviron's clinical programs on hypoplastic left heart syndrome or HLHS, Alzheimer's disease, and aging-related frailties. after which I will review our 2022 fourth quarter and full year financial results. Lastly, 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 statements should be considered in conjunction with cautionary statements in our press releases and risk factors discussions in our filings with the SEC including our annual report on 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 Mr. Wael Hashad, Chief Executive Officer of Longevron. Wael?
spk05: Thank you, James. Good morning, everyone. Welcome to Longevron fourth quarter and full 2022 business update and financial results. Thank you for joining us today. LongeVirone is a clinical stage biotechnology company developing regenerative medicine for unmet medical needs. We had productive 2022, executing multiple key milestones and advancing our lead investigational product Lamisil-B across multiple indications. I am honored to have recently joined LongeVirone as the chief executive officers. I'm excited by the broad therapeutic potential of Lomacil-B and the great progress that has been made already to date. I look forward to working alongside the outstanding Longevaron team to build on this progress for the rest of 2023 and beyond. Our lead investigational product called Lomacil-B, it is a living cell product made from a specialized cell isolated from bone marrow of young healthy adult donors age 18 to 45. These specialized cells are known in the literature as medicinal signaling cells, or MSCs, and are essential to our endogenous repair mechanism. MSCs are known to perform a number of complex functions, including the ability to form new tissue. They also home to sites of injuries or disease and secretes bioactive factors that are immunomodulatory and regenerative. We believe that LOMSL-B has multiple mechanisms of action that may lead to anti-inflammatory, provascular, regenerative responses, and therefore may have broad application for a range of rare and aging-related diseases. In the fourth quarter of 2022, we continue to make progress in advancing LOMSL-B for our suite of rare diseases and aging-related diseases. We have ongoing phase two trial in hypoplastic left heart syndrome, also known as HLHS, Alzheimer's disease, and aging-related frailty. In HLHS, we are currently conducting our LPS2 phase two randomized control study to determine whether Lomacil-B improve the conditions of infants with this life-threatening condition. In addition, in our aging-related frailty program, we are conducting a phase two study in Japan and expect to randomize our first patient in this study by the end of this quarter. I'll now turn the call over to Dr. Chris Min, Longiburon's chief medical officer, who will provide additional updates on the progress we made in our clinical program.
spk04: Chris? Thank you, Wael, and good morning, everyone. First, I'll begin with an update on our HLHS program. As a reminder, HLHS is a rare congenital heart defect that affects approximately 1,000 infants per year in the United States. People born with HLHS have an underdeveloped or absent left ventricle, impairing the heart's ability to pump blood. Left untreated, this condition is always fatal. The current 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% surviving to adolescence. There exists a tremendous unmet need for additional interventions beyond the current standard of care, and we believe that Lovacil-B, with its pro-regenerative, pro-vascular, and anti-inflammatory properties, when administered concurrently with surgical intervention, can fill that gap by improving cardiac performance in patients with HLHS. We are currently conducting a randomized controlled study in which LomaCellB is administered to infants during stage two surgery. Our cell product is administered in an approximately five-minute intraoperative procedure with injections directly into the mitocardium. The primary endpoint of this study is right ventricular ejection fraction. Consider the best functional endpoint for this condition. Based on the previous phase one study in 10 patients with HLHS, the FDA has granted Lomacil-B rare pediatric disease, orphan drug, and fast-track designations for the treatment of HLHS. Next, I'll move on to 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, up to 15% of the population over the age of 65. Aging-related frailty manifests typically as a combination of several signs and symptoms that may include sarcopenia or involuntary loss of muscle, the associated weakness, fatigue, weight loss, slowness, and low activity. Unfortunately, elderly frail individuals are more vulnerable to poor clinical outcomes associated with aging-related frailty, such as infection, falls, fractures, hospitalizations, and even death. At Longevron, we have been evaluating the effect of Lomacil-B that it may have on the health and function of these elderly frail patients, particularly on their physical immune system function. In early-stage exploratory trials, we have been using biomarkers of inflammation and vascular and endothelial function to measure this effect. Our critical development strategy in aging-related frailty is currently focused on Japan, which has one of the oldest populations in the world. This quarter, we continue screening patients for our Phase II study evaluating level cell B in patients with aging-related frailty in Japan in partnership with the National Center for Geriatrics and Gerontology in Nagoya and Jutendo University Hospital in Tokyo. The Phase II clinical trial is a three-armed, parallel-designed, randomized, placebo-controlled, double-blind, single-infusion study of two different dose levels of lovacil-B. The primary objective of the study is to evaluate the safety of lovacil-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 the tremendous therapeutic potential of cell therapies. A potential 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 in Japanese patients, combined with our previous data in aging-related frailty. Such an approval would allow us to administer Lomacil-B as a treatment for aging-related frailty at select clinical sites, addressing a crucial unmet need amongst the Japanese population. And we expect to randomize our first patient in this Phase II trial this quarter. Finally, I'd like to cover updates on our Alzheimer's disease program. In November, we were pleased to announce the completion of enrollment of our Phase 2A trial. As a reminder, this trial, called the CLEARMIND trial, is a 48-patient, forearm, parallel-designed, randomized, and placebo-controlled trial of LomaCellB designed to evaluate the safety of single and multiple infusions of two different dose levels of Lomacil-B 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 the administration of Lomacil-B. Secondary and exploratory endpoints include brain volumetri by magnetic resonance imaging, biomarkers relevant to inflammation, and endothelial and vascular systems, and of course, measures of cognitive function. Each patient is followed in the study for a duration of nine months. Based on a robust study of preclinical and clinical data, we believe LOMO cell 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. cross the blood-brain barrier, potentially with an anti-inflammatory effect, improving endothelial function, and promoting neurogenesis, the process of new neuron formation in the brain. In a previously completed Phase 1B study in Alzheimer's patients, we demonstrated the preliminary safety of Lomacil-B in patients with mild to moderate Alzheimer's disease. With this Phase 2A trial, we hope to build on this body of evidence. We expect to share the top line results in early 2024. With that, I'd now like to turn the call over to James Cavillo, our Chief Financial Officer, to discuss our financial results for the fourth quarter and full year of 2022. James? Thanks, Chris.
spk03: 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 year ended December 31st, 2022. Fourth quarter and full year ended December 31st, 2022 revenue. Revenue in the fourth quarter 2022 was 0.1 million compared to 0.2 million in the same period of 21. The difference was primarily due to a decrease in clinical trial revenue during the fourth quarter 2022. During this quarter, fewer participants decided on having the treatment as compared to 2021. Revenue for the full year of 2022 was $1.2 million compared to $1.3 million in 2021. Clinical trial revenue was $0.9 million for 2022 compared to $0.7 million for 2021, an increase of $0.2 million, or 29%. Participation increased in 2022 as compared to 2021 as the effects of travel restrictions due to COVID-19 decreased. Grant revenue was $0.3 million for 22 compared to $0.6 million for 21, a decrease of $0.3 million, or 53%, which was primarily due to a reduction in grant funds available due in part to the completion of some of our grant-funded clinical trials. General and administrative expenses in the fourth quarter of 22 were $1.6 million compared to $2.1 million for the same period in 21. The decrease of approximately $0.5 million, or 24%, was primarily related to a decrease in equity-based compensation expenses and professional fees. General administrative expenses for full year 22 were $8.1 million compared to $9.7 million for 21. The decrease of approximately $1.6 million, or 16%, was primarily related to a decrease of $3 million in equity-based compensation expenses allocated to G&A expenses. However, employee benefit expenses did increase by 0.5 million, which included 0.4 million increase in expenses related to employee recruitment and insurance and professional fees increased by 0.2 million. Research and development expenses in the fourth quarter of 2022 were 3.2 million compared to 1.7 million for the same period in 2021. The increase of 1.5 million or 88% was primarily due to an increase in research and development expenses related to the completion of clinical trials that were not reimbursable by grants. R&D expenses for full year 2022 were 9.4 million compared to 7.1 million for 2021. The increase of 2.3 million or 32% was primarily due to an increase in research and development expenses related to the completion of clinical trials that were not reimbursable by grants. The increase was offset by a decrease in equity-based compensation allocated to research and development expenses, which decreased from $2.2 million in 2021 to $1.1 million in 2022. Selling and marketing expenses in the fourth quarter of 2022 and 2021 were $0.3 million. Selling and marketing expenses for the full year of 2022 were $1 million compared to $1.2 million for 2021. The decrease of 0.2 million, or 17%, was primarily due to a decrease in digital marketing expenses. Selling and marketing expenses consist primarily of investor and public relations expenses. Further, in its disclosed in Note 13 reclassification of prior year presentations on the Form 10-K during 2021, 0.9 million in expenses related to investor and public relations that were recorded as general and administrative expenses and were reclassified as selling and marketing expenses as they were in 2022. Our net loss was $4.5 million in the fourth quarter of 2022 compared to $4.1 million for the same period in 2021. Net loss for the full year was $18.8 million compared to $17 million in 2021. Our cash and short-term investments was $19.6 million compared to $35 million as of December 31st in 2022 and 2021, respectively. The decrease in cash period over period was a result of use of funds for operations. As a reminder, during 2021, we received gross proceeds from our initial public offering in February 2021 and our subsequent private placement offering in December 2021 of over $49.6 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 well into the first quarter of 2024. With that, thank you, and I will turn the call back to Y.O.
spk05: Thank you, James. As you appear today, we have made strong progress in 2022, and we look forward to building on this momentum and sharing additional updates in 2023. I would like now to open the call for questions. So, operator?
spk01: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, please press star followed by one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. The first question today comes from the line of Michael Oakenwich from Maxim Group. Please go ahead, your line is now open.
spk02: Hey, guys, thank you for taking the question. And, Wael, congratulations on coming aboard.
spk05: Thank you, Michael.
spk02: So I guess first off, you know, there was recently some activity in this space. We recently saw that the FDA accepted the BLA for mesoblasts from a stem cell L in GBHD. So I'd like to see if there are any takeaways from the new inclusions in their refiled BLA that you can or already have applied to your programs to ensure a more streamlined regulatory workflow.
spk05: So Michael, I will take a stab in answering this, but I will ask also Chris to add any additional comments related to this. First and foremost, we definitely are encouraged by the fact that the FDA has accepted the application from Mesoblast. And we believe that specifically for conditions of rare diseases, you know that definitely the path to regulatory approval is much faster than typical other indications. We are doing here at Longeviron, we're doing all the right setup for our trial to hopefully meet the criteria if we are able to achieve the results that we hope to achieve to possibly have it filed with the FDA. and potentially get an indication once the trial is being concluded. But I will let Chris to add any specific comments from his side.
spk04: Thank you, Wael. So, Michael, to be frank, we haven't certainly made any changes or adjustments immediately. We are definitely studying their application closely. I would point out that our indication is an ultra-rare indication and a cardiac indication. We have our own strategy that we're forming, but we will definitely keep a close eye on mesoblasts activities and try to leverage anything that we can glean from their approach.
spk02: All right. Yeah, thanks for that. And then just on the HLAC, As a program, I'd like to see if you could provide a bit more color on the enrollment and how you view that regulatory pathway, given your existing interactions with the FDA. As you mentioned, it's an ultra-rare pediatric disease, so do you think you would need an additional study, or would it help us to potentially support accelerated or even full approval, given how significant the unmet need is here at Southern?
spk04: Mayal, would you allow me to address that question?
spk05: Absolutely.
spk04: Go ahead, Chris. Okay, thank you. So, Michael, those are good points, and I certainly would not give a definitive answer about those questions. However, I would acknowledge, as you point out, that given that this is an ultra-rare indication, that there is the potential that our current phase two trial, if it has a positive outcome, could serve potentially as a pivotal study. We would be planning, depending on the outcome of the study, to ask those questions of the agency. And even prior to submission, because we do have these avenues of communication with the orphan disease, rare disease, and fast track designations, we intend to utilize our access to the agency to ask questions even before the completion of the study regarding aspects of that future end of phase two slash discussion of what the study could represent. And so we don't presume that it will serve as a pivotal study, but we will definitely ask the agency about the possibility of consideration for those designations. such as approval study, such as accelerated approval, and so on.
spk02: All right. Thank you very much. And then just one last from me, and I'll hop back in the queue. I wanted to ask on the all-time study, which endpoints are you most focused on for the evaluation of efficacy? Obviously, function is key, but, you know, it's a smaller study, so I'd like to get your take on How do you look at the importance of the different biomarkers and anatomical measures that you're evaluating?
spk04: So in that trial, as you point out, we certainly wouldn't project that we would definitively determine efficacy of LMSLB in such a small trial with 12 patients per arm. In order to try to enhance the ability to glean an efficacy signal, we're taking a combined endpoint approach where we're combining several of the cognitive endpoints. And then in terms of the biomarker for efficacy, the key endpoint we're combining into that global assessment is the volumetric hippocampal volume, which is being determined by a central blinded read that is looking and we're also obtaining high field magnet, high Tesla MRIs to get the best anatomical resolution we can. And so we're going to combine that imaging measure combined with these cognitive measures to try to glean an efficacy signal.
spk00: All right. Thank you for taking my questions and congrats on the progress.
spk01: Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. There are no additional questions waiting at this time, so I'd like to pass the conference back over to Mr. Wael Hashad for any closing remarks.
spk05: Thank you. On behalf of the company, I would like to thank everyone for their continued interest and support for Longevorone. And have a great day, everyone. And definitely we'll be reaching out to any additional questions after the call. Thank you.
spk01: This concludes today's conference call. Thank you all for your participation. You may now disconnect your line.
Disclaimer