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spk07: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Derek Cole, Investor Relations at Advisory Solutions. Thank you, sir. You may begin.
spk03: Thank you, Maria. Good afternoon, everyone, and thank you for joining us today to review Lungevra on second quarter 2024 financial results and business update. After the US markets close today, we issued a press release with financial results of the second quarter, which can be found under the investor relations section of the Lungevra website. On the call today are Wael Hashad, Chief Executive Officer, Dr. Natalia Agafanova, Chief Medical Officer, Lisa Locklear, Chief Financial Officer, and Joshua Hare, Co-Founder, Chief Science Officer and Chairman of the Board. As a reminder, during this call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties that could cause 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 discussed in the company's filings with the Securities Exchange Commission, which we encourage you to review. Following the company's prepared remarks, we will open the call to questions from covering analysts. With that, let me hand the call over to Wael Hashad, Chief Executive Officer. Wael.
spk06: Thank you, Derek. Good afternoon, everyone. And thank you very much for joining us today. Earlier this year in our letter to the shareholders, we laid out our vision for Lungevra and the strategy we would implement in pursuit of this vision. On our last quarterly call, I detailed the four reasons that drive my confidence in our ability to execute well and make an impact. One, our foundation in a strong science. The experience and the expertise of the Lungevra team and the team's dedication and commitment to advance this research. And fourth, and the most important, is a concerted focus on patients impacted by the diseases for which we are attempting to develop treatment. Now, I'm very pleased to update you on our progress and accomplishments since the end of the first quarter, which I can sum up as continuous strong execution across all aspects of the organization. As a reminder for those of you who are new to our story, Lungevra is a regenerative medicine company developing cutting edge cellular therapy. Our lead development compound, Lumisil-B, represents a pipeline and a product opportunity that is being evaluated across three important treatment areas, addressing numerous unmet medical needs with U.S. market potential opportunities of approximately 10 to 18 billion U.S. dollars. Lumisil-B is a proprietary scalable allogenic cellular therapy that has delivered positive initial results across five clinical trials in three indications. Phase one and two trials in Alzheimer's disease, phase one and two trials in aging-related trials, and phase one in hypoplasmic left heart syndrome, also known as HLHS. HLHS is a key strategic priority for us this year. The positive results of our phase one study, ALPHA-1, were the basis for our ongoing phase two study, ALPHA-2, which is evaluating Lumisil-B as a potential adjunct treatment for HLHS. The trials have continued to make progress in rolling patients with enrollment completion targeted for the end of 2024.
spk08: In June,
spk06: we hosted a successful ALPHA-2 investigator meeting. Dr. Agapeneva will provide more details on that meeting shortly, but I will share that the participation and the level of excitement and enthusiasm was incredible. We believe the HLHS program has high probability of success and the shortest path to potential regulatory approval across our pipeline. This belief is enhanced with ALPHA-1 data serving as the basis for the FDA, awarding the HLHS program with three distinct and important designations, orphan drug disease designation, fat-strap designation, and rare pediatric disease designation. While we are very focused on HLHS, we also continue to advance our Alzheimer's disease program. As you hopefully have seen in three important recent events, based on the phase one and the clear-mind phase two A clinical data, the FDA has granted Lumisil-B both regenerative medicine advanced therapy, R-NAD designation, and fat-strap designation for the treatment of mild Alzheimer's disease.
spk08: Lumisil
spk06: -B appears to be the first cellular therapy candidate to receive our MAC designation for Alzheimer's disease. We are honored to have received these designations and look forward to continue to work with the FDA on the next steps. Four results from the clear-mind phase two A clinical trials were presented in a featured research oral presentation at the 2024 Alzheimer Association International Conference, AAIC, that was just held in Philadelphia. Dr. Agafonoga will review the results, but I think it is important starting to highlight is that the clinical trial, in the clinical trial of Lumisil-B treated, an important treated patient showed an overall slowing or prevention of disease worsening compared to placebo. We understand Alzheimer's disease has historically been a very difficult area for development, so we are only more encouraged with the results we have seen to date with Lumisil-B.
spk08: With this
spk06: data in hand, we anticipate meeting with the FDA before year end to review future clinical and regulatory strategies for continuing this important program. As I mentioned on our last call, we are expanding our contract manufacturing operation as part of the overall resource optimization strategy. We have assembled a team of experts and proprietary technologies that enable us to take a systematic approach to rapidly develop improved cell therapies. Our -the-art GMT facility in Miami at Life Science and Technology Park
spk08: consists
spk06: of 3,000 square feet of clean room space containing eight ISO 7 clean rooms and ancillary areas as well as 1,160 square feet of process development, quality control, and warehousing space. While this facility gives us capacity to manufacture Lumisil-B for clinical trial use and potentially if approved for commercial scale, we are not currently using the facility's full capacity.
spk00: This
spk06: presents an additional opportunity for us as the company's manufacturing expertise and capabilities and the facility are in demand from other considerable organizations. We are performing work under the first contract and we have already generated over $200,000 in revenue. We believe the contract manufacturing business has the potential to expand our team experience and generate approximately -$5 million in annual revenue once it's up and running fully, helping offset our clinical development costs and reducing but not eliminating our additional capital needs. Lastly, we remain tightly focused on optimizing our resources and being good stewards of shareholders' capital. We focus on expense control and program prioritization. Our total operating expenses through the first half of the year are down 22% year over year. Following a successful capital raises and warrant exercises in the second quarter and in July, our existing cash and cash equivalents are expected to be sufficient to fund the company through the fourth quarter of 2025. With that, I will turn the call to Dr. Agatinova to provide updates on our clinical development program. Natalia?
spk02: Thank you, Vaheal, and good afternoon, everyone. As Vaheal mentioned, our HLHF program is the primary focus for us as we believe it is the program with the highest probability of success and nearly stem pathway to potential approval. HLHF or hypoplastic left heart syndrome is a rare pediatric congenital heart birth defect in which the left ventricle of the heart is either severely underdeveloped or missing. The current treatment requires infants to undergo complex three-stage heart reconstruction surgery process over the first five years of their life. Even with this comprehensive treatment, only 50% to 60% of infants survive to adolescence due to right ventricular failure. There is clear and important unmet medical needs to improve right ventricular function in this infant to positively impact both short and long-term patient outcomes. Our LPS1 phase one study of Lomicell B in infants with HLHS demonstrated that infants in the trial experience 100% transplant free survival up to five years of age after receiving Lomicell B during their stage two surgery compared to approximately 20% of infants with HLHS. The LPS1 data were highly encouraging and served as a basis for LPS2, our ongoing phase two B clinical trial designed to assess the potential of Lomicell B to improve right ventricular function and long-term outcomes. LPS2 is being conducted in collaboration with the National Heart, Lungs, and Blood Institute through the grants from the National Institute of Health. As Vaheal mentioned, in June we hosted an investigator meeting for LPS2 clinical trials bringing together principal investigators and side staff from premier infant and children's treatment institution across the country. Participating organizations included Children Hospital of Los Angeles, Children Healthcare of Atlanta, Ann and Robert Lorry Children Hospital of Chicago, Boston Children Hospital, Children's Nebraska, John and Catherine McGowan Medical School of University of Texas Health, Primary Children Hospital at University of Utah. Three additional nationally recognized pediatric cardiothoracic institutions participated in the investigator meeting as a part of their preparation for participating as investigators in LPS2. Since then, Children's Hospital of Colorado has officially became an active clinical trial site. We could not be more pleased with participating group and their enthusiasm for LPS2 and thank them for all their work they do for their patients and patient families. With their support we have now reached 70% enrollment in the trial and are targeting completing enrollment of the trial by the end of this year. We believe that pediatric cardiothoracic community recognizes that there is an important unmet medical need to improve right ventricular function in this infant to positively impact both short and long term patient outcomes. For the advanced advanced of this program, we anticipate feedback from a type c meeting with the FDA before end year on development strategy for HLHS and expectations for the potential biologic license application, BOA approval. Lastly for HLHS, we anticipate LPS1 five-year post-treatment completion data in the third quarter of this year and look forward to sharing that important information. Turning now to Alzheimer's disease program. We have multiple things to discuss. Data from the clear mind says to a clinical trial. We're selected for a future oral presentation at the 2024 Alzheimer's Association International Conference held at the end of July. We are very excited about the positive results. In the clinical trial, LOMYCEL-B treated patients showing overall slowing prevention of disease worsening compared to placebo. The trial achieved the primary safety and secondary efficacy endpoints and showed statistically significant improvement in pre-specified clinical and biomarker endpoints in specific LOMYCEL-B group compared to placebo. The established safety profile of LOMYCEL-B for single and multiple dosing regimens was demonstrated in study data that showed no incidence of hypersensitivity, infusion-related reactions, and no cases of amyloid-related imaging abnormalities. Administration of LOMYCEL-B was associated with slowing cognitive and decline and demonstrated by statistically significant results in the Montreal Cognitive Assessment and statistical training improvement compared to placebo and CDR-SB and MMSE. There was a statistically significant improvement relative to placebo observed in Alzheimer's disease disease. Brain MRI results demonstrated a 49% reduction in brain volume loss and improvement in cerebral blood flow. Based on the data generated on our Phase 1 and Phase 2 Alzheimer clinical trials in July, the FDA has granted LOMYCEL-B both for generative medicine advanced therapy, R-MAT designation, and fast tract designation for the treatment of mild Alzheimer's disease. We plan to meet with the FDA before year end to review future clinical and regulatory strategy for Alzheimer's program. We are currently seeking partnership and non-delusive functioning to fund and to support further development of LOMYCEL-B in Alzheimer's disease. We believe that results from ClearMind support the therapeutic potential of LOMYCEL-B in the treatment of mild Alzheimer's disease and provided evidence-based support for further clinical development. I will hand the call over Lisa Locklear, our Chief Financial Officer, to discuss our financial results for the second quarter. Lisa?
spk01: Thank you, Natalia, and good afternoon, everyone. This afternoon, we issued a press release and filed our quarterly report on Form 10Q, both of which present our financial results in detail. So I will touch on some highlights, including our expense management, contract manufacturing business, and successful capital raising. Revenues for the first half of 2024 were $1 million, up $0.5 million, or 105%, when compared to the first half of 2023, mainly as a result of increased participant demand for our frailty and cognitive impairment registry trial in the Bahamas and new contract manufacturing revenue. Contract manufacturing revenue for the six months ended June 30, 2024, was $0.2 million from our first manufacturing services contract with Secretome Therapeutics. As YL indicated, we believe that there is opportunity to expand this area of business to make use of our team's significant expertise and our -the-art GMP facility to potentially generate up to $4 to $5 million in revenue annually. Earlier this year, we discussed our plan for program prioritization and focused expense management, and we have successfully executed in both areas. First half total operating expenses declined 22% year over year, with GNA expenses for the six-month period ending June 30, 2024, decreasing to approximately $4.3 million, compared to $5.5 million for the same period in 2023. R&D expenses for the six months ended June 30, 2024, also decreased approximately $1.2 million, or 22%, to approximately $3.9 million. The decrease was primarily due to a reduced expenses associated with the completed Clear Mind Alzheimer's Disease clinical trial and reduced costs for the aging-related frailty clinical trial following our decision to discontinue trial activities in Japan. Our net loss decreased to approximately $7.5 million for the six months ended June 30, 2024, from a net loss of $10.3 million for the same period in 2023. Cash and cash equivalents as of June 30, 2024, were $12.4 million. Following capital raises and warrant exercises in April and June 2024, resulting in gross proceeds of $17.6 million, in July 2024, we completed a registered direct offering, which resulted in existing warrants in July, generating gross proceeds of another $6.3 million. We believe our existing cash and cash equivalents will fund our operating expenses and capital expenditure requirements through the fourth quarter of 2025, based on our current spending estimates. I will now hand the call over to Dr. Joshua Hare, our co-founder, chief science officer, and chairman of the board. Joshua?
spk04: Thank you, Lisa, and good afternoon, everyone. As you've heard from the team, we are making great progress advancing cellular therapy research and our lead product candidate, Lomacell B. Recognizing Longervon's continued growth and evolution, we are fortunate to have recently added three industry veterans to our board of directors. First, Dr. Raja Hajar brings incredible experience as a scientist, academic, and operational executive. He is an internationally recognized scientist whose cardiac gene therapy discoveries have spurred clinical trials for heart failure and whose methodologies for cardiac-directed gene transfer are currently utilized by investigators around the world. So he knows quite a lot about what we are doing here at Lomacell B. He was recently head of R&D at Ring Therapeutics and was appointed as the inaugural director of the gene and cell therapy institute at Mass General Brigham. Our second new director is Rich Kinder, who is a retired senior vice president of business development and corporate licensing at Merck and Company, Inc. He spent his entire professional career at Merck in various roles of increasing responsibility and was involved in more than 100 business development and licensing transactions. Finally, Neha Makhwani has over 25 years of healthcare investment banking experience, most recently having served as managing director of healthcare investment banking at William Blair. She previously held investment banking roles of increasing responsibility with Truett Securities, Oppenheimer & Company, Stiefel Financial, and Cowan & Company, where collectively she completed transactions raising over $6.8 billion. I believe all three of these individuals will add tremendous value to the board and to Longeveron and look forward to collaborating with them. Thank you, and I will turn the call back over to Wael at this time.
spk06: Thank you, Dr. Harris. The data generated today to natural LCHS and Alzheimer's disease support the broad potential for Loma Cell B as a regenerative medicine medicinal therapy across multiple indications. The strength of the data, our experience and committed team, and unwavering focus on patients give me confidence in the future of Loma Cell B and Longeveron. What really drives everyone here at Longeveron day in and day out is the patients and the opportunity to have a positive impact for them.
spk08: They
spk06: are why we are working every day to hopefully develop therapeutic solutions for these unmet needs. Operator, we would now like to open the call for questions from our covering analyst. Thank you.
spk07: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the line. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Our first question comes from Raj. Please proceed with your question.
spk05: Hello. Thank you very much for taking my questions and congratulations on all this important progress. Firstly, with respect to Lome Cell B in the LPIS-2 study, can you give us some more granularity around how close you are to completion of enrollment, how long you expect the enrollment of the remaining patients to take, and assuming completion of enrollment in accordance with your previously reported guidance, when could we see top line data from this trial? Is it potentially disposable before the end of 2025? Thank you.
spk08: Sure. Hi, this
spk06: is Wael Hashad.
spk08: First,
spk06: I want to remind you and everyone, our projection is the best of our ability. Of course, as you know, with rare diseases, there is no easy way to predict exact timing to close. We are still targeting the end of this year. We are hoping that the addition of the new sites will accelerate the enrollment, but definitely things can also vary a little bit. But we are not that far as you hear from Natalia that we are 70% enrollment. Natalia can give you more specificity around the exact number of patients being recruited. And then the second thing is I just want to remind you that our follow-on to the closure of the trial is one year from the last patient, and that has not changed. And with that, I will give it to Natalia to give you more specificity around your question.
spk02: Thank you very much, Wael. As Wael mentioned, and thank you, Raj, for your question, as Wael mentioned, we are absolutely hopeful that the new sites which are currently enrolled to the clinical trial will help us to expedite enrollment. So the primary endpoint design, that way that we evaluate the effect of cardiac function 12 months after the last patient enrolled. So approximately, we are looking for filing in probably first quarter of 2026 as a best scenario.
spk05: And with respect to the ELPIS-1 study, can you just remind us about what additional data you expect to generate from long-term follow-up of the patients who are enrolled and followed as part of that study? And what do you expect to be the key amount of follow-up necessary to secure regulatory approval of LMS-LB in HLHS? I would understand and imagine that it would be the 12-month follow-up endpoint, but you certainly would be able to obtain longer term follow-up data from the ELPIS-1 patients. So just wanted to get some additional color there. Thank you.
spk02: Thank you so much. It's a very great question. You're absolutely right. We are collecting long-term data from 10 patients in ELPIS-1. In August, end of August this year, we will have five-year follow-up after the patient completed blend procedure, stage two procedure. So the type of the data we are looking for is transplant survival and transplant free survival data. That can definitely be included in our BLA submission to support not only safety but actually the most important endpoint such as long-term transplant free survival and can support the rest of the data for the rest of the patients. And we did present four-year survival last year in the American Heart Association. And hopefully once we have more data this year, you might see this information on future scientific presentation.
spk05: Great. And then shifting to Loma cell B on the regulatory front, I just wanted to confirm what the outlook was there with respect to the type B meeting that you originally indicated you would seek on Loma cell B. And then with respect to Alzheimer's disease, maybe you can comment a little bit on that. You mentioned earlier the lack of ARIA abnormalities in patients treated with Loma cell B and how important that is from a competitive positioning perspective. But I also wanted to better understand how you are thinking about the timing with which you may advance Loma cell B into further clinical development within the Alzheimer's context. And if you are contemplating possibility of doing that before we actually see final data from the HLHS study and if you are pursuing any potential non-dilutive routes of funding to advance that initiative like for example from NIH and so on.
spk02: Wael, would you like to take the first part of the question? Yes.
spk06: So there are multiple questions here, Raj, and I will try to address them if I forget any of the parts of the question you can remind me. But first regarding the regulatory process. We are actually meeting with the CIPA division or we are planning to meet with the CIPA division on both HLHS as well as the Alzheimer's program and those will be separate meetings. And while both of them are reviewed by the same division, sometimes the reviewers could be different depending on the education as well. As you know, part of the R-MAT designation that we have received, the FDA has requested us to prepare for type B meeting as Natalia has mentioned, which we plan to have before the end of the year. That type B meeting as you know takes time to prepare for from a briefing book and timing from the agency, but we are hopeful that we can get this one done by the end of the year. The same thing is happening with HLHS and we will update you once the meeting takes place and the minutes come in. So that is regarding our regulatory process and both of them are very important because both are going to outlay what is the path for BLA on the HLHS front. And the other one is very important because as you know with the R-MAT designation, it is an equivalent of breakthrough and therefore there could be a streamlined approach to approval as well with Alzheimer's disease. And we want to discuss that first with the FDA before we finalize our plan moving forward because we believe that this could be streamlined and the cost needed could be significantly reduced. Now we will not know that until we meet with the FDA and agree on that plan. In terms of our needs, yes, we are pursuing non-dilutive funding that is looking at grants all the time. NIA is one of them, others as well, and we're also pursuing as you know funding as well from other sources as well. So we're exploring multiple avenues when it comes to funding related to Alzheimer's research. So that's regarding the funding, that's regarding the regulatory path. Do we have a final plan yet for the FDA for the Alzheimer's forward? As I said, we will not be able to specifically communicate anything until we meet with the FDA. I hope I answered all your questions. Natalia, if I missed anything, feel free to add and if I missed any part of your question, happy to answer
spk05: it as well, Raj. No, I think that was very helpful. And then the last question I had was in relation to the contract services business, and there are really two parts here. The first is I wanted to understand better, you mentioned that there may be the possibility to generate as much as $4.5 million in annualized revenue from contract services. I just wanted to get a sense of what the timeline might be to get to that level of revenue generation. Would it be a year from now, two years from now? How are you thinking about that? And then the second question is specifically around one of contract manufacturing clients, Secretome Therapeutics. It would be interesting to learn a bit more about this company, what they do, what the nature of Longeveron's relationship is to Secretome, and if there might ultimately be the possibility of Longeveron collaborating with Secretome on programs from Secretome's proprietary platform. Because as I understand it, this is a be viewed as complementary to that of Longeveron and could potentially broaden Longeveron's own pipeline. So I was just hoping maybe you could comment a little bit on that and how you see the relationship between yourselves and Secretome developing over time. Sure.
spk06: So first, I can tell you that I will start with the second part of your question, which is the relationship with I can tell you at this time, our relationship is purely related to us helping them with the manufacturing capabilities of their product. We are not collaborating with Secretome and any other fronts. We have not been engaged in any other discussions or anything outside of the scope of manufacturing at this time. We are always open to new technologies and new areas that we can expand our science and research and therapeutic areas. But in that avenue, we are going to pursue much more broader opportunities. And you will hear from Dr. Hare, we brought several experts on our board that can help us formulate that strategy of how we can go and move forward. And we will be communicating some of that also in the future is what I would say Longeveron 2.0 of how we can go beyond LMSLB in the future. And those things is always going to be in our plan and the strategy. And definitely there will be time and place when we are ready to communicate around this. But it will be much more broader than Secretome. Regarding the potential and when can we see the $4 to $5 million,
spk00: we
spk06: are working on full scale, full speed, full steam ahead to try to get everything ready. We are doing a full assessment of what additional equipment because we don't want to limit ourselves to just the stem cell manufacturing. We want to go broader for cell therapy. We have the capabilities and expertise to cover broader other types of cell therapies that we can manufacture in our facility. And we don't want to limit ourselves to one type of manufacturing. And therefore, we are right now in the middle of assessing what additional needs that we need to do and make sure that we are ready from both human capital and human resource standpoint as well as any other needs. And we are already engaging. We are present in many of the meetings of the cell therapies and gene therapies. And we are speaking with potential customers and looking forward to build it up. How specifically, I don't know, but we anticipate a year or two we will be able to get to the full potential with the $4 to $5 million.
spk08: Thank you very much. Very helpful. As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. There are
spk07: no further questions at this time. I would now like to turn the floor back over to Leil Ashad for closing comments. Thank
spk06: you, Maria. And thank you all for attending our today's call. We greatly appreciate your interest and support and look forward to updating you on our progress throughout the remainder of the year. Thank you, operator. You may end the call now.
spk07: This includes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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