Longeveron Q2 2024 Earnings Call Transcript

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August 14, 2024

There are 7 speakers on the call.

Operator

Good day, and welcome to the Longegveron's 2024 Second Quarter Financial Results 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, Derek Cole, Investor Relations at Advisory Solutions.

Operator

Thank you, sir. You may begin.

Speaker 1

Thank you, Maria. Good Good afternoon, everyone, and thank you for joining us today to review Longevron's Q2 2024 financial results and business update. After the U. S. Markets closed today, we issued a press release with financial results in the Q2, which can be found under the Investor Relations section of the Longeveron website.

Speaker 1

On the call today are Wael Hassad, Chief Executive Officer Doctor. Natalia Agafanova, Chief Medical Officer Lisa Locklear, Chief Financial Officer and Joshua Hair, 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 and Exchange Commission, which we encourage you to review.

Speaker 1

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 Hassad, Chief Executive Officer. Wael?

Speaker 2

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 launch of our own 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. 1, our foundation in a strong science.

Speaker 2

The experience and the expertise of the launch of our own team and the team's dedication and commitment to advance this research. And 4th 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 Q1, which I can sum up as continued strong execution across all aspects of the organization. As a reminder for those of you who are new to our story, Longivarone is a regenerative medicine company developing cutting edge cellular therapy. Our lead development compound LUMASIL B represents a pipeline and a product opportunity that is being evaluated across 3 important treatment areas, addressing numerous unmet medical needs with U.

Speaker 2

S. Market potential opportunities of approximately $10,000,000,000 to $18,000,000,000 dollars Lumixil B is a proprietary scalable allogeneic cellular therapy that has delivered positive initial results across 5 clinical trials in 3 indications. Phase 1 and 2 trials in Alzheimer's disease, Phase 1 and 2 trials in aging related frailty, and Phase 1 in hypoplastic left heart syndrome also known as HLHS. HLHS is a key strategic priority for us this year. The positive results of our Phase 1 study, ALPHAGE 1, were the basis for our ongoing Phase 2 study, ALPHIS 2, which is evaluating Lomacil B as a potential adjunct treatment for HLHS.

Speaker 2

The trial to continue to make progress enrolling patients with enrollment completion targeted for the end of 2024. In June, we hosted successful LPHAS II investigator meeting. Doctor. Agafinova will provide more details on the meeting shortly. But I will share that the participation and the level of excitement and enthusiasm was incredible.

Speaker 2

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 LPH1 data serving as the basis for the U. S. FDA awarding the EDGELA CHAT program with 3 distinct and important designations: Orphan Drug Disease Designation, Fast Track Designation and Rare Pediatric Disease Designation. While we are very focused on HLHS, we also continue to advance our Alzheimer's disease program.

Speaker 2

As you hopefully have seen in 3 important recent events, based on the Phase 1 and the ClearMind Phase 2a clinical data, the FDA has granted Lonasol B both Regenerative Medicine Advanced Therapy, RNAT designation and Fast Track designation for the treatment of mild Alzheimer disease. Loma Cell B appears to be the 1st cellular therapy candidate to receive our MAT 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. Full results from the clear market Phase 2a clinical trials were presented in a featured research oral presentation at the 2024 Alzheimer Association International Conference, AAIC, that was just held in Philadelphia. Doctor.

Speaker 2

Agapanova will review the results, but I think it is important starting highlight is that the clinical trial in the clinical trial of Lomacil B treated an important treated patients 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 LomaSoutheast. With this data in hand, we anticipate meeting with the FDA before year end to review future clinical and regulatory strategy for continuing this important program. As I mentioned on our last call, we are expanding our contract manufacturing operations as part of the overall resource optimization strategy.

Speaker 2

We have assembled a team of experts and proprietary technologies that enable us to take a systematic approach to rapidly develop improved cell therapy. Our state of the art GMP facility in Miami at Life Science and Technology Park consists of 3,000 square feet of clean room space containing 8 ISO 7 clean rooms and ancillary areas as well as 11 60 square feet of process development, quality control and warehousing space. While this facility give us capacity to manufacture Lonasil B for clinical trial use and potentially if approved for commercial scale, we are not currently using the facility's full capacity. This presents an additional opportunity for us as the company's manufacturing expertise and capabilities and the facility are in demand from other pharmaceutical organizations. We are performing work under the first contract and we have already generated over $200,000 in revenue.

Speaker 2

We believe the contract manufacturing business has the potential to expand our team experience and generate approximately $4,000,000 to $5,000,000 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 with 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 Q2 and in July, we are our existing cash and cash equivalents are expected to be sufficient to fund the company through the Q4 of 2025. With that, I will turn the call to Doctor.

Speaker 2

Agassinova to provide updates on our clinical development program. Natalia?

Speaker 3

Thank you, Vael, and good afternoon, everyone. As Vael mentioned, our HLHS program is a primary focus for us as we believe it is the program with the highest probability of success and nearly stem pathway to potential approval. HLA hep or hyperplastic left heart syndrome is a rare pediatric congenital heart defect in which the left ventricle of the heart is either severely underdeveloped or missing. The current treatment requires infants to undergo complex 3 stage heart reconstruction surgery process over the 1st 5 years of their life. Even with this comprehensive treatment, only 50% to 60% of infants survive to adolescence due to right ventricular failure.

Speaker 3

There is clear and important unmet medical need to improve right ventricular function in this infant to positively impact both short and long term patient outcomes. Our LPISS-one Phase 1 study of lomicel B in infants with HLHS demonstrated that infants in the trial experienced 100% transplant free survival up to 5 years of age after receiving RUNEcell B during the Stage 2 surgery compared to approximately 20% mortality rate observed from historical control data. The LPISS-one data were highly encouraging and served as a basis for LPISS-two, our ongoing Phase 2b clinical trial designed to assess the potential of laminacell B to improve right ventricular function and long term outcomes. LPS II is being conducted in collaboration with National Heart, Lungs and Blood Institute through the grants from the National Institute of Health. As Wael mentioned, in June, we hosted an investigator meeting for LPISS-two clinical trial, bringing together principal investigators and site staff from premier Infant and Children's Treatment Institutions across the country.

Speaker 3

Participating organizations included Children's Hospital of Los Angeles, Children's Healthcare of Atlanta, Ann and Robert Lawrie Children's Hospital of Chicago, Boston Children's Hospital, Children's Nebraska, John and Catherine McGovern Medical School of University of Texas Health, Primary Children's Hospital at University of Utah. 3 additional nationally recognized pediatric cardiothoracic institution participated in the investigator meeting as a part of their preparation for participating as investigators in LPISS-two. 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 LPSTOR and thanks them for all their work they do for their patients and patient families. With their support, we have now reached 70 percent enrollment in the trial and are targeting completing enrollment of the trial by the end of this year.

Speaker 3

We believe that pediatric cardiothoracic community recognizes that there is an important unmet medical need to improve right into colore function in this infant to positively impact both short and long term patient outcomes. Further advancing this program, we anticipate feedback from a Type C meeting with the FDA before end of the year on development strategy for HLHS and expectations for the potential biologics license application, BOA approval. Lastly, for HLHS, we anticipate LPISS-one's 5 year post treatment completion data in the Q3 of this year and look forward to sharing that important information. Turning now to our Zenerg Digits program. We have multiple exciting things to discuss.

Speaker 3

Data from the CLEAR MIND Phase 2a clinical trial we selected for a future research 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, Lonicil 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 lomicel B group compared to placebo. The established safety profile of Lomicil B placebo and multiple dosing regimen was demonstrated in study data that showed no incidence of hypersensitivity, infusion related reactions and no cases of amyloid related imaging abnormalities, IRI.

Speaker 3

Administration of LomiSel B was associated with slowing cognitive and functional decline and demonstrated by statistically significant results in the Montreal cognitive assessment and statistical trends and improvement compared to placebo and CDR SB and MMSE. There was a statistically significant improvement relative to placebo observed in Alzheimer's disease cooperative study activities of daily living. 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 Lomicile B both for generative medicine advanced therapy, RMAT designation and fast track designation for the treatment of mild OZYMIR disease. We plan to meet with the FDA before year end to review future clinical and regulatory strategy for Alzheimer program.

Speaker 3

We are currently taking partnership in non dilutive functioning to funding to support further development of LomiSel B in Alzheimer disease. We believe that results from ClearMind support the therapeutic potential of LomiSel B in the treatment of mild Alzheimer disease and provided evidence based support for further clinical development. I will hand the call over to Lisa Lachler, our Chief Financial Officer to discuss our financial results for the Q2. Lisa?

Speaker 4

Thank you, Natalia, and good afternoon, everyone. This afternoon, we issued a press release and filed our quarterly report on Form 10 Q, 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 twenty twenty four were $1,000,000 up $500,000 or 105 percent when compared to the first half of twenty twenty three, 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 6 months ended June 30, 2024 was $200,000 from our first manufacturing services contract with Secretome Therapeutics.

Speaker 4

As Wael indicated, we believe that there is opportunity to expand this area of business to make use of our team's significant expertise and our state of the art GMP facility to potentially generate up to $4,000,000 to $5,000,000 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 G and A expenses for the 6 month period ending June 30, 2024 decreasing to approximately $4,300,000 compared to $5,500,000 for the same period in 2023. R and D expenses for the 6 months ended June 30, 2024 also decreased approximately $1,200,000 or 22 percent to approximately $3,900,000 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 $7,500,000 for the 6 months ended June 30, 2024 from a net loss of $10,300,000 for the same period in 2023.

Speaker 4

Cash and cash equivalents as of June 30, 2024 were $12,400,000 Following capital raises and warrant exercises in April June 2024, resulting in gross proceeds of $17,600,000 In July 2024, we completed a registered direct offering, which resulted in gross proceeds of $9,000,000 Additionally, certain warrant holders exercised their existing warrants in July, generating gross proceeds of another $6,300,000 We believe our existing cash and cash equivalents will fund our operating expenses and capital expenditure requirements through the Q4 of 2025 based on our current spending estimates. I will now hand the call over to Doctor. Joshua Hair, our Co Founder, Chief Science Officer and Chairman of the Board. Joshua?

Speaker 5

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 Lungevon's continued growth and evolution, we are fortunate to have recently added 3 industry veterans to our Board of Directors. First, Doctor. Raja Hajjar brings incredible experience as a scientist, academic and operational executive.

Speaker 5

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're doing here at Longevron. He was recently Head of R and 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 Incorporated. He spent his entire professional career at Merck in various corporate roles of increasing responsibility and was involved more than 100 business development and licensing transactions.

Speaker 5

Finally, Neha Matwani has over 25 years of Healthcare Investment Banking experience, most recently having served as Managing Director, Healthcare Investment Banking at William Blair. She previously held investment banking roles of increasing responsibility with Truist Securities, Oppenheimer and Company, Stifel Financial and Cowen and Company, where collectively she completed transactions raising over US6.8 billion dollars I believe all three of these individuals will add tremendous value to the board and to Lungeveron and look forward to collaborating with them. Thank you. And I will turn the call back over to Wael at this time.

Speaker 2

Thank you, Doctor. Haire. The data generated today in natural chest and Alzheimer's disease supports broad potential for Loma Cell B as a regenerative 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 Lomotil B and Longivarone. What really drives everyone here at Longivarone day in and day out is the patients and the opportunity to have a positive impact for them.

Speaker 2

They 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 analysts. Thank you.

Operator

Thank you. We will now be conducting a question and answer Our first question comes from Raj Silvaju, B. C. Wainwright. Please proceed with your question.

Speaker 6

Hello. Thank you very much for taking my questions and congratulations on all this important progress. Firstly, with respect to LOMAS Lb and the LPISS II 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 disclosable before the end of 2025?

Speaker 6

Thank you.

Speaker 2

Sure. Hi, this is Wael Hassane. So first, 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. So we're still targeting the end of this year.

Speaker 2

We're 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 heard from Natalia that we are 70% enrolled and she can Nataya 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 1 year from the last patient in and that has not changed. And with that, I will give it to Natalia to give you more specificity around your question.

Speaker 3

Thank you very much, Rael. As Rael mentioned and thank you Raj for your question. As Rael mentioned, currently, we enrolled 27 out of 38 patients. So we have 11 patients remaining to enroll. We are absolutely hopeful that the new sites which we just currently enrolled to the clinical trial will help us to expedite enrollment.

Speaker 3

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 Q1 of 2026 as a best scenario.

Speaker 6

And with respect to the LPIS-one 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 LOMAS L B 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 LPIS-one patients. So just wanted to get some additional color there. Thank you.

Speaker 3

Thank you so much. It's a very great question. You're absolutely right. We are collecting long term data from 10 patients in LPS-one. In August end of August this year, we will have full 5 year follow-up after the patient completed Glenn procedure, Stage 2 procedure.

Speaker 3

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 endpoints such as long term transplant free survival and can support the rest of the data data for the rest of the patients. And we did present 4 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.

Speaker 6

Great. And then shifting to Lomicile B on the regulatory front, I just wanted to confirm what the outlook was there with respect to the Type D meeting that you originally indicated you would seek on LomaCell B? And then with respect to Alzheimer's disease, maybe you can comment a little bit on the changing state of the field. You mentioned earlier the lack of ARIA abnormalities in patients treated with LomaCell B and how important that is from a competitive positioning perspective. But I also wanted to better understand how you're thinking about the timing with which you may advance LomaCell B into further clinical development within the Alzheimer's context.

Speaker 6

And if you are contemplating the 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?

Speaker 3

Wael, would you like to take the first part of the question?

Speaker 2

Yes. So there is multiple questions here, Raj, and I will try to address and if I forget any of the parts of the question, you can remind me. But first, regarding the regulatory process, we're actually meeting with the CPIR division or we're planning to meet with the CPIR division on both HLHS as well as the Alzheimer 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 indication as well. We as you know, part of the RMAT 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.

Speaker 2

That Type B meeting, as you know, it takes time to prepare for from a briefing book and timing from the agency, but we're hopeful that we can get this one done by the end of the year. With same thing what's happening also with HLHS, and we'll update you once the meeting takes place and the minutes comes in. So that's 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 RMAD designation, it's an equivalent of breakthrough. And therefore, there could be a streamlined approach to the approval as well with Alzheimer's disease.

Speaker 2

And we want to discuss that first with the FDA before we finalize our plan moving forward because we believe that this could be a 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, with others as well. And we're also pursuing, as you have heard from multiple, also possibility of partnerships and none also private funding as well from other sources as well.

Speaker 2

So we're exploring multiple avenues when it comes to funding related to Alzheimer 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 path 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.

Speaker 2

Natalia, if I missed anything, feel free to add. And if I missed any part of your question, happy to answer it as well, Raj.

Speaker 6

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 2 parts here. The first is, wanted to understand better, you mentioned that there may be the possibility to generate as much as 4 point $5,000,000 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?

Speaker 6

Would it be a year from now, 2 years from now? How are you thinking about that? And then the second question is specifically around one of your 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 technology platform company and its approach may be viewed as complementary to that of Longeveron and could potentially broaden Longeveron's own pipeline.

Speaker 6

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.

Speaker 2

Sure. So first, I can tell you that I will start with the second part of your question, which is the relationship with Secretome. And 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 in any other fronts. We have not been engaged in any other discussions or anything outside of the scope of the manufacturing at this time.

Speaker 2

We're always open to new technologies and new areas that we can expand our science and research and therapeutic areas. But we in that avenue, we're going to pursue much more broader opportunities. And you've heard from Doctor. Haire, we brought several experts on our Board that can help us formulate that strategy of how we can go and move forward. And we'll be communicating some of that also in the future is, what I would say, Longivron 2.0 of how we can go beyond Dromasol B in the future.

Speaker 2

And those things is always going to be in our plan and the strategy. And definitely, there will be a time and place when we are ready to communicate around this. But it would be much more broader than Syncrude. Regarding the potential and when can we see the $4,000,000 to $5,000,000 we are working on full scale, full speed, and full steam ahead. We try to get everything ready.

Speaker 2

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 sort of other types of cell therapies that we can manufacture in our facility. And we don't want to limit ourselves onto 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're ready from both human capital and human resource standpoint as well as any other needs.

Speaker 2

And we are already engaging that we are present in many of the meetings of the cell therapies and gene therapies. And we're speaking with potential customers and looking forward to build it up. How specifically, I don't know, but we anticipate a year or 2 we'll be able to get to the full potential with the 4 to 5000000.

Speaker 6

Thank you very much. Very helpful.

Operator

There are no further questions at this time. I would now like to turn the floor back over to Lail Shahshad for closing comments.

Speaker 2

Thank 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.

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