Longeveron Q4 2023 Earnings Call Transcript

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February 27, 2024

Key Takeaways

  • In 2023, LomiCell B advanced with 100% survival and transplant-free outcomes at 5 years in the ELPIS-1 HLHS trial and clinically meaningful Phase IIa CLEAR MIND results in mild Alzheimer’s disease.
  • 2024 strategic priorities center on completing enrollment of the ELPIS-II Phase II HLHS trial—which is over 50% enrolled—and discontinuing the aging-related frailty program in Japan to reallocate resources.
  • Financially, the company reported a $21.4 million net loss for 2023 versus $18.8 million in 2022, ended the year with $5.4 million in cash and equivalents, and secured $6.4 million in equity financing, extending its cash runway into Q2 2024.
  • Cost-saving measures include staff reductions, trial discontinuations and discretionary spending cuts, and a reverse stock split has been approved to regain Nasdaq compliance.
  • The company is actively pursuing partnerships and non-dilutive funding to advance LomiCell B in Alzheimer’s disease and plans to present CLEAR MIND data at major medical meetings in 2024.
AI Generated. May Contain Errors.
Earnings Conference Call
Longeveron Q4 2023
00:00 / 00:00

There are 8 speakers on the call.

Operator

Ladies and gentlemen, good afternoon, and welcome to the LoveJavron Fourth Quarter and Full Year 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Moyer, Managing Director of LifeSky Advisors.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good afternoon, everyone, and welcome to Lungever Own's 2023 year end results conference call. Today, we will discuss financial results from the year ended December 31, 2023 and provide a business update. After the market closed today, we issued a press release with these results, which can be found under the Investors section of the Longeverone website.

Speaker 2

I'm joined on the

Speaker 1

call today by the following members of Longeverone's management team: Mr. Wael Hushad, Chief Executive Officer Doctor. Natalia Agafinova, Chief Medical Officer and Lisa Locklear, Chief Financial Officer. Mr. Hachad will begin with a brief corporate update, then Doctor.

Speaker 1

Agafinova will review Longeverone's progress and its clinical programs, Ms. Lafair will review the financial results for 2023. Following the company's prepared remarks, we will open the call to questions from covering analysts. As a reminder, during this call, we will make 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 discussed in our filings with the SEC, including our quarterly reports on Form 10 Q and annual report on Form 10 ks and cautionary statements made during this call.

Speaker 1

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 Shah, Chief Executive Officer of Longeverone. Wael?

Speaker 3

Thank you, Mike. Good afternoon, everyone. We are pleased speaking with you today. On this call, we briefly recap of the major highlights for our year in 2023 and outline strategic priorities for 2024. Then we will be happy to answer any questions you have.

Speaker 3

2023 was a productive year for Langebirone. During this year, that's 2023, we made significant progress advancing our lead asset LomaCell B to important milestones, presenting long term survival data from our ELPIS-one clinical trial in hypoplastic left heart syndrome at the American Heart Association Annual Meeting in Philadelphia and announcing clinically meaningful results from our Phase IIa CLEAR MIND trial in Alzheimer disease. We also took steps to strengthen our balance sheet securing $6,400,000 of gross proceeds from equity financing during the 4th quarter. For 2024, our strategic priorities are focused on our lead program in hypoplastic left heart syndrome or HLHS. With the goal of completing enrollment in our ELPES II Phase II clinical trial this year.

Speaker 3

LPS II has exceeded its 50% enrollment threshold, and we are working with the clinical investigators to expedite enrollment. HLHS is our top priority program and we believe our most important value driver in the near term. Accordingly, we made the strategic decision to discontinue our Phase 2 clinical program in aging related frailty in Japan in order to focus our available resources on HLHS and ELPIS II enrollment. We are also exploring opportunities to advance our Alzheimer's disease program through potential partnership or other sources of funding. These steps will allow us to focus our available resources on completing enrollment in our ELPHIS-two study in 2024.

Speaker 3

The data that we have generated in HLHS and Alzheimer disease all support broader potential for LomaCIL B as a regenerative medical therapy for range of unmet medical needs. Though we remain confident in the broader therapeutic potential of this asset, we believe that narrowing our focus in the near term on HLHS is the best interest of the patients, investors and our shareholders. With that, I will turn the call to Doctor. Akzo Nova to provide you a review of the recent data on our clinical program so far. Natalia?

Speaker 4

Thank you, Wariel, and good afternoon, everyone. Today, I will provide a brief overview of our HLHS program, discuss the extended survival data we presented from our LPISS-one trial results at the scientific session and update our progress in enrollment for our LPIS-two study. Then I will review the additional results we announced from our CLEAR MIND study in Alzheimer disease. HLHS, for those who might not know, is a rare congenital and devastating birth defect in which the left ventricle of the heart is either severely underdeveloped or missing. The condition affects approximately 1,000 babies per year in the United States.

Speaker 4

Babies born with this condition have severely diminished systemic blood flow, which require children to undergo a complex 3 stage heart reconstruction surgery process over the course of the first 5 years of their life. While these children can now live into adulthood with surgical intervention, only 50% to 60% of affected individuals survive to adolescence due to right ventricle failure, which is often unable to handle the increased load required to support systemic circulation. Furthermore, even those children with successful surgical intervention are at elevated risk of short term mortality, delayed development and long term complications, including organ failure. As such, there is an important unmet medical need to improve right ventricular function in these patients to improve both short term and long term patient outcomes. As Wael mentioned, the latest long term survival data from our LPISS-one study, a Phase 1 of lomi cell B in children with HLHS were presented as a poster at the scientific sessions of the American Heart Association.

Speaker 4

10 patients participated in LPISS-one trial during which lomicel B was injected into the right ventricle, concurred with the Stage II surgery, also known as the GLAN procedure. In the presented data, 10 patients were monitored for up to 5 years after treatment. The data show that 100 percent of the 10 patients who participated in LPS I trial survived and remain heart transplant free for up to 5 years of age after receiving LomiSel B during their Stage 2 surgery. The extended follow-up data on all patients enrolled in the study now includes monitoring for up to 5 years following treatment with lomisel B. The average age at the time of the last follow-up visit was 4.5 years with 2 patients being 5 years of age.

Speaker 4

Additional long term follow-up is ongoing in the LPISS-one participants. Historical results from outside studies have shown that children with HLHS has approximately 20% mortality by 5 years. The LPISS-one data were highly encouraging and reinforced our enthusiasm for LomiCell B as a potential treatment to transform care for patients with HLHS. Our LPS II trial is designed to assess the potential of LomiCell B to improve right ventricular function and long term outcomes. The trial is a 38 patient controlled Phase 2 clinical trial evaluating the safety and efficacy of LomiSel B as an adjunct therapeutic to standard of care HLHS surgery.

Speaker 4

The primary outcome measure is the change in right ventricular ejection fraction from baseline to 12 months. The trial is funded by a grant from the National Institute of Health, National Heart, Lung and Blood Institute. Our LTISS II trial is more than 50% enrolled and we are working with clinical investigators and trial sites to expedite enrollment. Completion of LTYS II is our priority and our focus and current plan is to complete enrollment in this trial in 2024. I will turn now to our Phase IIa trial of lomicel B for mild Alzheimer disease.

Speaker 4

We call it CLEAR MIND trial, a 48 patient, 4 arm parallel design, randomized clinical trial of LomiCell B, designed to evaluate the safety of single and multiple infusions of 2 different dose level of LomiCell B compared to placebo in patients with mild Alzheimer disease. We announced top line results from this trial in October 2023 and additional positive clinical data and MRI data results last December. To recap these results, the study met the primary safety endpoint and no patients experienced Alzheimer related imaging abnormalities. The study also met its secondary endpoint, a pre specified composite Alzheimer disease endpoint with pre specified P value of less than 0.1. The additional clinical data and MRI data we announced in December showed improvements in clinical and MRI endpoints in specific Lumicel B group compared to placebo.

Speaker 4

Specifically, cognitive function improved as measured by MOCA, Montreal Cognitive Assessment Score, with p value 0.05. Daily life activity increased as assessed by the caregiver and measured by Alzheimer disease cooperative study activity daily living with p value 0.05. Brain MRI demonstrated whole brain volume loss slowed accompanied by significant preservation of less hippocampal volume. Both with p value 0.5. Brain near inflammation as measured by diffuse tensor imaging DTI also diminish with p value 0.01.

Speaker 4

We believe these results support the therapeutic potential of Lomicil B in the treatment of mild Alzheimer disease and provide evidence based support for further clinical development. We intend to present ClearMind results at major medical meetings in 2024. As Wael mentioned, we are seeking appropriate partnership and source of non dilutive finding to support further development of Lomicile B in Alzheimer disease. With that, I'd now like to turn the call over Lisa LaClair, our CFO, to discuss our financial results for 2023. Lisa?

Speaker 5

Thanks, Natalia, and good afternoon, everyone. Most of what I'll be covering this afternoon is presented in more detail in our condensed financial statements and in our management's discussion and analysis of operations in our annual report on Form 10 ks, which we filed today. Revenues for the years ended December 31, 2023, 2022 were $700,000 $1,200,000 respectively. 2023 revenues decreased $500,000 or 42 percent when compared to 2022 as a result of decreased grant revenue and lower participant demand for our Bahamas registry trial. Grant revenue for the years ended December 31, 2023, 2022 was less than $100,000 $300,000 respectively.

Speaker 5

The decrease of $200,000 when compared to 2022 was primarily due to reduction in grant funds available due in part to the completion of the grant funded clinical trials. Clinical trial revenue, which is derived from the Bahamas years ended December 31, 2023, 2022 was $700,000 $900,000 respectively. Clinical trial revenue for the year ended December 31, 2023 decreased by $200,000 when compared to 2022 as a result of decreased participant demand. Related cost of revenues was $500,000 $700,000 for the years ended December 31, 2023 and 2022 respectively. The decrease of $200,000 was primarily due to the decrease in the revenues earned from the Mohan's registry trial and reduced direct costs associated with our grants program.

Speaker 5

This resulted in a gross profit of approximately $200,000 for the year ended December 31, 2023, when compared a decrease of $300,000 when compared with a gross profit of $500,000 for 2022. General and administrative expenses for the year ended December 31, 2023 increased to approximately $11,400,000 compared to $8,100,000 for the same period in 2022. The increase of approximately $3,300,000 was primarily related to an increase of $1,600,000 for compensation and benefit expenses, which included $400,000 of separation costs, $1,000,000 in higher legal, professional and consulting fees, dollars 400,000 of public company expenses and 200,000 dollars higher equity based compensation costs allocated to general administrative expenses and $100,000 for higher board fees. Research and development expenses for the year ended December 31, 2023 decreased to approximately $9,100,000 from approximately $9,400,000 for the same period in 2022. The decrease of $300,000 was primarily due to decreases of $500,000 in equity based compensation allocated to research and development expenses and $300,000 in compensation and benefits, offset by increases of $400,000 in supplies and costs to manufacture LomaCell B and $200,000 in research and development expenses that were not reimbursable by grants.

Speaker 5

Selling and marketing expenses for the years ended December 31, 2023 2022 were $800,000 $1,100,000 respectively. The decrease of $300,000 was primarily due to decreases in Investor Relations and International Development Expenses. Other expense for the years ended December 31, 2023 2022 was $400,000 $800,000 respectively. Other expense for 2023 decreased mainly as a result of non operating lawsuit expenses of 1 point $4,000,000 in 2022 compared to less than $100,000 in 2023. This decrease was partially offset by realized losses on sales of marketable securities of 300,000 dollars write off of intangible assets of $300,000 and reduced benefit of tax credits of $300,000 Also recorded in other income in 2020 2 was approximately $27,000 for a gain resulting from foreign currency changes and $27,000 of sublease rental income.

Speaker 5

Net loss increased to approximately $21,400,000 for the year ended December 31, 2023 from a net loss of $18,800,000 for the same period in 2022. The increase in the net loss of $2,600,000 was for the reasons I explained previously. As of December 31, 2023, we had $5,400,000 in cash, cash equivalents and marketable securities. We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the Q2 of 2024. We are actively seeking financing opportunities to extend our cash runway while taking measures to reduce our cash expenditures as we focus our resources on our primary strategic program in HLHS.

Speaker 5

These cost saving measures include the discontinuation of our aging related frailty clinical trial in Japan, related staff reductions and continued prudent management of our discretionary spend. I would also like to share a key subsequent event. On February 21, 2024, the company's stockholders approved an amendment to the company's certificate of incorporation to effect a reverse stock split of its outstanding shares of Class A common stock and Class B common stock at a ratio ranging from 1 for 5 to 1 for 15 with the exact ratio to be set within that range at the discretion of its Board of Directors without further approval or authorization of its stockholders. The date of our reverse stock split and the ratio have not yet been determined. The reverse stock split is intended to address the current stock price, which has been trading below the NASDAQ minimum requirement of $1 per share for nearly a month.

Speaker 5

With that, I thank you, and I will turn the call over to Wael.

Speaker 3

Thank you, Lisa. So to conclude, our focus in 2024 is on advancing our clinical program in HLHS and completing ELPIS II enrollment. We also are leveraging the data from our CLEAR MIND study with the goal of securing an appropriate partnership for continued advancement of LAMASIL B in Alzheimer disease indication. We are taking appropriate measures to support our efforts within currently available resources, managing our cash spending and are seeking additional financing opportunities to help realize LomaCell B full potential. Supported by data obtained from Lpis1 and ClearMind, we are confident that LomaCell B represents an important potential breakthrough for patients and an attractive value proposition for our investors.

Speaker 3

Now, I would like to open the call for questions. Operator, please open the line to our covering analysts.

Operator

Thank you. Ladies and gentlemen, we will now be conducting a question and answer Our first question is from the line of Bhubaland Pachacian with H. C. Wainwright. Please go ahead.

Speaker 6

Hi, this is Dipesh on behalf of Bupal and H. C. Wainwright. I had several questions. The first is with respect to the HLHS study, can you give us additional granularity on the timing of the enrollment completion?

Speaker 6

So are you looking at maybe Q3 of 'twenty four or Q4 of 'twenty four?

Speaker 3

Q4 of 'twenty four.

Speaker 6

Sorry, what was that, Q3 you said?

Speaker 3

Q4 of 2024.

Speaker 6

Okay. Thank you. And then second question, you recently presented LPIS-one trial survival data at the American Heart Society presentation. Can you give us a general sense of the response that you received mainly from the physicians who are treating HLHS patients?

Speaker 3

Natalia, do you want to take that question since you attended the read one?

Speaker 4

One? Sure. Thank you so much. I had an thank you for the question. I had an opportunity to be in front of the poster and reply to questions of some treating physicians, surgeons who came to the poster.

Speaker 4

Overall, it's excitement in the area. As you know, HLHS, even if it's addressed by the surgery, but in 3 stages of surgery, there are still limitations and surgeons and everybody who taking care of these patients also looking for the opportunities to improve lives of these patients and mostly improve the long term survival and delay or even not to have heart transplantation. So there is overall excitement that there is an option for this patient and the feedback was overwhelmingly positive.

Speaker 6

Great. Thank you for that additional clarity. And I've got one last question. Can you characterize the ex U. S.

Speaker 6

Interest in LomaCell B's potential in HLHS treatment? Do you believe you could out license the asset by ex U. S. Commercialization? And so any information that you can share around the ex U.

Speaker 6

S. Partnership interest would be appreciated? Thank you.

Speaker 3

Sure. I'll take that question. 1st and foremost, I would say that we are open for, as I mentioned in our earning call, that we are open to any partnership opportunity that may come both in the U. S. And outside of the U.

Speaker 3

S. We remain confident that we can launch the product in the U. S. And outside the U. S.

Speaker 3

On our own for HLHS. Definitely for larger indication, we will need a bigger support. As for the opportunity for HLHS outside of the United States, the prevalence of the disease is fairly similar to the prevalence of the disease in the United States and it represents a total opportunity of acceptable patients of more than 5,000 outside of the United States. Many of them will be in Europe, but there is also a considerable amount of HLHS in Japan and other countries as well. That represents a very good opportunity for the international market.

Speaker 3

I would say that we believe our trial, once completed, could also be used as a submission trial for filing the same application outside in the United States, including Europe. And the one nice thing that I will add on this one, and I've mentioned it before, is that the treating community for HLHS is very small community and that represents a very good commercial opportunity. It just represents a much easier path for commercialization in general with that, I would say, small community.

Speaker 6

Thank you. I appreciate the details, Wael, Natalia. Thanks for the update.

Speaker 4

Thank you.

Operator

Thank you. Our next question is from Michael O'Kornovich with Maxim Group. Please go ahead.

Speaker 7

Hey, there. Thank you for taking my questions tonight. I guess just first off, I would like to see if you could help quantify what kind of impact on your expense profile we could see from the termination of the frailty program in Japan?

Speaker 3

Michael, I will tell you that, as you know, the trial wasn't significant from a number of patients. And there is still some closing costs that we need to do before we close the trial as a whole. Definitely, we had a lot of expenses as well in 2025 and some even may bleed into 2026. I can tell you that all the 2025, 2026 expenses will be saved in addition to a significant saving in 2024. How much exactly, we have not finalized, as I said, because we haven't closed all the costs, but it will be rounded to about $1,000,000 potentially from Japan.

Speaker 7

All right. Thank you for that. And then at the top of the call, you did mention that you're taking some steps to expedite enrollment in ELVIS II. Could you help provide some color on what steps you are taking?

Speaker 3

Yes. I can have Nataya take the first stab at this one and I'm happy to add any further, but I'm sure Nataya can answer that question.

Speaker 4

Thank you so much. So there are a few measures we've taken to expedite enrollment and to help to complete enrollment in 2024. One of the steps we are currently in the middle of activating 4 new sites and they are very prominent sites with potential to enroll many patients to the trial. And then we do have other measures to investigate their mission and internal communications, etcetera. But the most probably important is to engage other investigators by enrolling new sites.

Speaker 4

Currently, we have 7 sites activated and with 4 additional, we are confident that the enrollment will be completed in 2024.

Speaker 3

Michael, let me add a couple of things to what I think Natalia has alluded to them briefly. One is the investigator meeting. We're planning on doing an investigator meeting. That is we believe is an important step. As you heard from Natalia, we're adding 4 new sites.

Speaker 3

In order to accelerate this, we believe that one of the best mechanisms is to share some of the best practices from the sites that has been there. As you also know, that was a trial that has been going now for over 1.5 year. Sometimes sites get fatigued. So we believe that the investigator meeting will be used to or utilized to reinvigorate the sites and the excitement around the study and enable us to complete. And the last thing that I will add is that the team also Nataya's team is working with advocacy groups and so on to increase the level of awareness among the with advocacy groups and so on to increase the level of awareness among the patients.

Speaker 3

I remind you that this is still a very small population. So it is it has all the challenges of rare diseases, but we are committed to, as I said, working with advocacy group and drive awareness about our trial and the work that we're doing.

Speaker 7

All right. Thank you. And then just one last one for me and then I'll hop back into the queue. So over the last couple of months, we have seen some activity from Mesoblast in HLHS, specifically some FDA designations in the publication back in December. So could you just, I guess, give us an idea of how the drugs stack up beyond Lomacel obviously being in a more advanced stage?

Speaker 7

Specifically, I guess, if there are any key differences in the signaling profiles that might provide a competitive advantage? And then further, given that you are in a potentially pivotal trial, does this provide some additional validation for stem cells as a modality in HLHS overall?

Speaker 3

Natalia, do you want to take a first stab on this one? I'm happy to add also from a competitive standpoint. Sure.

Speaker 4

The means of blood study in Boston Children's Hospital, which was just published, even though involve kids with HLHS, it's a different degree of HLHS and they inject stem cells into the left ventricle. So they just basically try to regenerate left ventricle. So the severity of those cases are slightly different. So even though is competitor and seems like the same disease is not. So the mechanism which we are trying to achieve long term survival and

Speaker 3

transplant free survival is injecting

Speaker 4

into the right heart. Transplant free survival is injecting into the right heart and to increase the right injection ventricle function, which is surrogate endpoint, proof surrogate endpoint for the long term grade outcome. So again, it is the same disease, but the severity and the safety and the case with this disease are slightly different. I hope I did address that part of the question. And Wael, maybe you can continue.

Speaker 4

Yes.

Speaker 3

I will just add that I really although it is very hard to speculate why Mesoplast made the decision, but I really believe that their approach is very different than our approach. We are there to go as an adjunct therapy to the current standard of care. We are in a much more advanced stage. And I also believe there could be also with the type of data that we have presented so far that this is going to get more people to be excited about that field. But I do believe that we are ahead of them from the clinical development standpoint and even the possibility of validating our mechanism as well, Michael.

Speaker 7

Yes, thank you. That's certainly extremely helpful.

Operator

Thank you. Our next question is from the line of Brad Sorensen with Zacks Research. Please go ahead.

Speaker 2

Yes, thank you. Good to talk to you guys and good presentation. I just wanted to know if I could get a little more color on the progress of the Alzheimer's research. It seemed like there have been some pretty positive results from that. And I just wondered if you were you said you were looking for additional partners and funding.

Speaker 2

Is that on the back burner until you get that funding? Are you going to continue the research while concurrently with looking for that funding? Just a little more color on that would be appreciated.

Speaker 3

I'll take that question. So Brad, we realized that advancing our work, first, I want to say that we are extremely excited and happy with the results that we have seen out of the CLEAR MIND trial. This Phase 2a have really showed, I would say, a signal that definitely getting everybody and we have reviewed this with thought leaders in the scientific community. And I think everybody agrees that further development and progress of this program and Alzheimer is warranted. And with that, we want to get into being more pragmatic and practical here.

Speaker 3

And there is a lot of what are we doing? We are pursuing possibly a partnership business to a business development opportunity or a partnership. We're also evaluating there is a big, as you know, available public funding and private funding actually for that matter to support the development of medicines to treat Alzheimer disease. It is one of the biggest public health crisis that we have faced in recent years and there is a lot of people who have put money. So what we're doing is we're pursuing the 2 parallel path and we are trying to secure funding.

Speaker 3

We're also doing a lot of analysis of our data and formulating our opinion about the possible design of the trial and the progress, so we are not slowing down or not doing anything. But we're definitely trying to do this in a very responsible and financially responsible and focus our resources on the areas where it brings the fastest and the greatest return on investment. I have no doubt that we will continue developing our program for Alzheimer's disease and we will continue to do all the setup work that is needed and we will vigorously pursue partnership and other sources of funding like non dilutive funding and so on.

Speaker 2

Okay. Thank you. Yes, just yes, positive results and like you said, it's a major problem in the United States. So I just wanted to I think you should be able to find partners. So I just want to make sure we are going to continue the progress that we're seeing on that.

Speaker 2

So I appreciate it.

Speaker 3

Yes, definitely. Vigorously seeking partners, I would say.

Operator

Thank you. As there are no further questions, I would now hand the conference over to Wael Harshad for his closing comments.

Speaker 3

All right. Well, thank you everyone for attending today's call. On behalf of Longebron, I would like to thank you for your continued interest and support and wish you a good day today. Thank you.

Operator

Thank you. The conference of Longeverone has now concluded. Thank you for your participation. You may now disconnect your lines.

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