In the most recent earnings call, Humacyte, Inc. (HUMA), a biotechnology company specializing in regenerative medicine, reported a net loss of $56.7 million for the second quarter of 2024. Despite this financial setback, the company shared significant progress in its product pipeline, specifically positive results from the Phase 3 trial of its flagship product, the ATEV, for use in arteriovenous access in hemodialysis.
However, the FDA has delayed the review of the ATEV for vascular trauma, leading to uncertainty about the approval timeline. Dr. Laura Niklason, Humacyte’s CEO, remains optimistic about eventual approval and highlighted the company’s collaboration with Fresenius and the potential for a new Phase 3 trial in peripheral artery disease.
Key Takeaways:
– Humacyte reported a net loss of $56.7 million for Q2 2024.
– Research and development expenses were $23.8 million, while general and administrative expenses were $5.7 million.
– The FDA’s delay in reviewing the ATEV for vascular trauma has created uncertainty regarding approval.
– The ATEV achieved its primary endpoint in a Phase 3 trial for arteriovenous access in hemodialysis.
– Humacyte received its third RMAT designation from the FDA for advanced peripheral artery disease.
– The company is planning to file a supplemental BLA for AV access and considering a Phase 3 trial for peripheral artery disease.
– The BioVascular Pancreas (BVP) showed promise in treating type 1 diabetes.
– Humacyte is collaborating with Fresenius on health economics and cost analysis, aiming to use ATEV where clinical value is demonstrated.
– Two new members, Dr. John P. Bamforth and Dr. Tony Jones, were added to the Board of Directors.
– Humacyte plans to apply for a new technology add-on payment (NTAP) in October, regardless of FDA approval.
Company Outlook:
– Humacyte is evaluating operating expenses and cash burn during this period of regulatory uncertainty.
– Plans to file for NTAP in October, potentially offering financial benefits if ATEV is approved before June of next year.
Bearish Highlights:
– FDA’s delay in approving the ATEV for vascular trauma creates uncertainty in the company’s timeline and potential Phase 3 trial for peripheral artery disease.
– Higher adverse events were reported in the dialysis study group, but no new safety signals for the ATEV were observed.
Bullish Highlights:
– The ATEV demonstrated positive results and potential use in various indications.
– Humacyte has the necessary ICD-10 codes from CMS to file for NTAP payment.
– The company’s stock has experienced significant growth, indicating investor optimism.
Misses:
– Increased expenses due to expanded initiatives, despite a decrease in general and administrative expenses.
– Higher adverse events reported in the dialysis study group.
Q&A Highlights:
– FDA’s decision on the ATEV in vascular trauma has been delayed, with no indication of needing additional clinical data.
– Collaboration with Fresenius on health economics and cost analysis projects, not data aggregation.
– Timing of a Phase 3 trial in peripheral artery disease under consideration based on trauma approval and cash runway.
– Positive FDA inspections with minor standard follow-up items related to assay and CMC validation.
Humacyte’s Q2 2024 results reflect a company facing innovation and regulatory challenges. With a strong scientific foundation and strategic collaborations, Humacyte aims to navigate uncertainties and continue advancing regenerative medicine solutions.
InvestingPro Insights:
– Market capitalization of approximately $794.89 million.
– Not profitable in the last twelve months, but stock has shown growth.
– Cash exceeds debt on the balance sheet, offering financial flexibility.
– Analysts do not expect profitability this year, recent volatility may be due to short-term challenges.
For a more in-depth analysis of Humacyte’s financials, performance metrics, and analyst forecasts, additional InvestingPro Tips are available at https://www.investing.com/pro/HUMA. Niklason reviewed the company’s progress during the quarter and recent weeks, highlighting the ATEV meeting its primary endpoint in the V007 Phase 3 trial for arteriovenous access in hemodialysis. The ATEV also received its third RMAT designation from the FDA in advanced peripheral artery disease. The BioVascular Pancreas was featured in medical presentations for type 1 diabetes, and the Board of Directors was strengthened with two new additions. Dale will review the company’s financial results for the quarter ended June 30, 2024, and then the management team will be available for questions. Todd Rasmussen and his team at the Mayo Clinic in Rochester, Minnesota, recently published a study on the outcomes of arterial bypass using the ATEV in patients with chronic limb ischemia or severe PAD. The study, which appeared in the Journal of Vascular Surgery, focused on patients with severe PAD who had no suitable vein for bypass and were treated under an investigator-sponsored trial. The results showed that the ATEV had comparable outcomes in terms of patency, blood flow, and limb salvage to historical control patients who underwent bypass using their own vein. This suggests that the ATEV could be a promising option for patients with severe PAD who lack suitable veins for bypass surgery.
Furthermore, the FDA recently granted an RMAT designation for the ATEV in the PAD indication, marking the third indication for which this designation has been given. This designation allows for expedited development and review of regenerative medicine therapies for serious or life-threatening conditions. Additionally, a newly issued IND for the ATEV in the PAD indication has been cleared. The ATEV has been evaluated in two Phase 2 trials in PAD patients, with promising results.
In addition to the ATEV, promising results have also been seen in preclinical studies of the BioVascular Pancreas (BVP) product candidate for type 1 diabetes. Collaborative studies with the Diabetes Research Institute have shown that stem cell-derived islets can restore normal blood sugar in diabetic mice, with no adverse events observed. Results from non-human primate studies have also shown islet survival and continued insulin production with the BVP implants.
The company has also presented results from studies of the small caliber ATEV in coronary artery bypass grafting settings, showing favorable biologic responses. The company continues to make progress in its pipeline programs and recently welcomed new members to its Board of Directors to support the planned commercial launch of the ATEV in vascular trauma.
Financially, research and development expenses have increased to support expanded initiatives, while general and administrative expenses have decreased. Other net income or expense has fluctuated, with a net expense reported for the second quarter of 2024. Laura Niklason and Dale Sander discussed the financial performance of Humacyte for the second quarter of 2024 and the six months ended June 30, 2024, compared to the same periods in 2023. They noted that the increase in other net expenses was primarily due to the non-cash remeasurement of the contingent earnout liability related to the company’s merger with Alpha Healthcare Acquisition Corp in 2021. The net loss for the second quarter of 2024 was $56.7 million, compared to $22.7 million in the second quarter of 2023. For the six months ended June 30, 2024, the net loss was $88.6 million, compared to $59.7 million in the same period of 2023. The increase in net loss was attributed to the non-cash remeasurement of the contingent earnout liability and other operating expense increases.
They also mentioned that the company had cash and cash equivalents of $93.6 million as of June 30, 2024. Total net cash provided for the first six months of 2024 was $13.1 million, compared to net cash used of $35.2 million for the same period in 2023. The increase in net cash provided was due to proceeds from a public stock offering and additional funding from Oberland Capital Management.
Regarding the delayed FDA approval for the ATEV in vascular trauma, Laura Niklason mentioned that they did not have specific information on a new clearance date and that the timing for their BLA submission for AV access remains on track. Dale Sander added that they are monitoring the situation closely and will adjust their operations and expenses accordingly as more information becomes available.
In response to questions from analysts, they discussed their plans for managing cash burn during the interim period caused by the FDA delay and how they will adapt their operations based on the evolving situation. They also addressed concerns about adverse events in the ATEV study group and provided insights into their strategy moving forward. I don’t believe you are providing much information on that topic, but it seems that the efficacy was not affected by our assumption that these are minor adverse events overall. However, I am curious if there are any additional details you can share on that.
LauraNiklason: Yes, Josh, just to clarify, that was in relation to dialysis, not trauma.
Josh Jennings: Thank you for the correction. I appreciate it.
LauraNiklason: Most of the adverse events in dialysis access are minor, as these patients undergo numerous procedures to maintain access patency. We have not observed any new safety signals for this conduit. The increased number of adverse events may be due to the vessels being used for a longer period during the first year and receiving more needle punctures. We are still investigating this and plan to share more information at medical meetings later this year.
Josh Jennings: Understood. Regarding the AV access indication and the top-line data, how involved is Fresenius in aggregating the data and what are the next steps in terms of the agreement and collaboration?
LauraNiklason: Fresenius is not actively involved in aggregating or analyzing our data, but we are working closely with them on health economics and cost-benefit analysis for dialysis patients. They have agreed to adopt the ATEV in dialysis for their centers based on clinical and health economic results. We are collaborating with them to identify patient populations where the ATEV could be beneficial.
Josh Jennings: Thank you. Just a quick question on the PAD indication and the progress in initiating a clinical trial. Can you provide any updates on that?
LauraNiklason: We have received requests from vascular surgeons to initiate a Phase 3 trial in PAD, and we are in the process of designing the trial. However, the timing will depend on factors such as the approval in trauma and our financial situation as a pre-revenue company. We are actively considering when to start a Phase 3 trial in PAD.
Josh Jennings: Thank you for the information.
Operator: Thank you. The next question is from Allison Bratzel of Piper Sandler. Please go ahead.
Allison Bratzel: Hi, thank you for taking my questions. Regarding the vascular trauma review, what feedback from the agency indicates that this will take months to complete? Do you anticipate needing to generate additional clinical data for FDA approval in trauma? Regarding the part of the file they were working on, no insight was provided, so I cannot provide an answer. There was no mention of needing more clinical data on the call. In terms of adverse events measured in the dialysis access data, they are measured over the entire study period. Subgroup analysis data for AV access will focus on demographics known to have poorer maturation rates for fistulas. Inspections for vascular trauma went well, with standard follow-up items being addressed. The delay in FDA approval does not impact plans to apply for the NTAP payment this October. Thank you all for your questions. Please proceed.