Longeveron Q2 2023 Earnings Call Transcript

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August 11, 2023

There are 7 speakers on the call.

Operator

measured by occurrence of serious adverse events, within 1st 30 days of the administration of LomiCell B.

Operator

Secondary and exploratory endpoints include measures of cognitive function, fluid and radiological biomarkers relevant to inflammation and endothelial and vascular systems. In the previously completed Phase I study, we demonstrated the preliminary safety of LUNYCELL B patients with mild Alzheimer disease. With the Phase IIa trial, we hope to build on those results and further demonstrate the potential of Lonicil B as a treatment for Alzheimer disease. Data analysis from this trial is ongoing, and we anticipate sharing top line results from clear mind trial around October 2023. Finally, I'd now like to cover updates on our aging related frailty program.

Operator

Aging related frailty is an age associated decline across multiple physiological system, leading to the inability to cope with stressors. It is characterized by mobility impairment, weakness, fatigue, weight loss, slowness and low activity and puts individual at high risk for poor clinical outcomes such as infections, falls, fractures, hospitalization and even death. At Longeviron, we've been evaluating the effect of Lonicil B D may have on health and function of elderly frail patients, particularly on their physical and immune system function. In early stage exploratory trial, we have been using biomarkers of inflammation and vascular and endothelial function to measure effect. Our clinical development strategy in aging related frailty is currently focused on Japan, a country with one of the oldest population in the world.

Operator

As of 2021, Japan's population comprised of 36,400,000 individual aged 65 or older, representing 29.1 percent of the country. The overall prevalence of aging related frailty amongst the demographic is estimated to be 7.9%. Last quarter, we announced the dosing of the 1st patient in our Phase II clinical trial evaluating lomicel B in patients with agent related frailty in Japan. The Phase II trial is a 3 arm parallel design, randomized, evenly split, 1 to 1 to 1 of placebo as well as 2 different level of clonisel B single infusions. Enrollment is continuing, and the trial is expected to enroll 45 patients.

Operator

The primary endpoint is to evaluate safety with an overarching goal of providing support for an eventual limited approval under the Japan Act of the Safety of Regenerative Medicine, or ASRM, which recognizes the tremendous potential therapeutic potential of cell therapy. With that, I'd now like to turn the call over to Lisa Leclere, our CFO, to discuss our financial results for the Q2 of 2023 and the 6 month period ended June 30, 2023. Lisa?

Speaker 1

Thanks, Natalia, and good morning, everyone. Like Natalia, I'm excited to be a part of LUNGEVERON and to speak with all of you today. Most of what I'll be covering this morning will be presented in more detail in our condensed financial statements and in our management's discussion and analysis of operations in our quarterly report on Form 10 Q, which will be filed today. Revenues for each of the 3 months ended June 30, 2023, 2022 were approximately $200,000 $500,000 respectively. Grant revenue for the 3 months ended June 30, 2020 3 2022 was $0.1000000 respectively.

Speaker 1

The decrease of $100,000 was primarily due to a 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 registry trial for the 3 months ended June 30, 2023, 2022 was $200,000 $300,000 respectively. Clinical trial revenue for the 3 months ended June 30, 2023 was approximately $100,000 or 36 percent lower when compared to the same period in 2022 as a result of a decrease in participant demand. Related cost of revenues was approximately $100,000 $300,000 for the 3 months ended June 30, 2023 2022 respectively. The decrease of $200,000 or 59% was primarily related to the decrease in revenues earned from the PAHOMAS registry trial.

Speaker 1

This resulted in a gross profit of approximately $100,000 $200,000 for the 3 months ended June 30, 2023 and 2022 respectively. General and administrative expenses for the 3 months ended June 30, 2023 increased to approximately $3,400,000 compared to $2,400,000 for the same period in 2022. The increase of approximately $1,000,000 or 3.9 percent was primarily related to an increase of $700,000 in compensation and benefit expenses during the current year period and expenses related to professional fees. Research and development expenses for the 3 months ended June 30, 2023 increased approximately $2,300,000 from approximately $1,700,000 for the same period in 2022. This increase of $600,000 or 33 percent was primarily due to an increase of $500,000 in research and development expenses that were not reimbursable by grants.

Speaker 1

Non operating lawsuit expense for the 6 months for the 3 months ended June 30, 20232022 was 0 and approximately $1,400,000 respectively. Net loss was approximately $5,600,000 for the 3 month period ended June 30, 2023 and 2022. For the 6 month period ended June 30, 2023, 2022 results were as follows. Revenues for each of the 6 months ended June 30, 2023, 2022 were approximately $500,000 $800,000 respectively. Revenues for this period were approximately $300,000 or 41% lower when compared to the same period in 2020.

Speaker 1

Grant revenue for the 6 months ended June 30, 2023 2022 was less than $100,000 $200,000 respectively. Grant revenue for this period was approximately $100,000 dollars or 78% lower compared to the same period in 2022, primarily due to a reduction in grant funds available due in part to the completion of the grant funded clinical trial. Clinical trial revenue, which is derived from the Bahamas registry trial for the 6 months ended June 30, 2023, 2022 was $500,000 $600,000 respectively. Clinical trial revenue for this period was approximately $100,000 or 30% lower when compared to the same period in 2022. During the 6 months ended June 30, 2023, Microfall revenue decreased as a result of decrease in participant demand.

Speaker 1

Related cost of revenues was approximately $300,000 $400,000 for the 6 months ended June 30, 2023 2022 respectively. Cost of revenues for this period was $100,000 or 13% less when compared to the same period in 2022, primarily due to the corresponding decrease in the revenues earned from the Bahamas registry trial. This resulted in a gross profit of approximately $200,000 $500,000 for the 6 months ended June 30, 2023, 2022 respectively. General and administrative expenses for the 6 months ended June 30, 2023 increased to approximately $5,200,000 compared to $4,400,000 for the same period in 2022. The increase of approximately $800,000 or 19 percent was primarily related to an increase of $800,000 in compensation and benefit expenses.

Speaker 1

Research and development expenses for the 6 months ended June 30, 2023 increased to approximately $5,100,000 from approximately $3,100,000 for the same period in 2022. The increase of $1,900,000 or 61 percent was primarily due to an increase of $1,400,000 in research and development expenses that were not reimbursable by grants, an increase of $300,000 in supplies to manufacture LomaCell B and an increase in equity based compensation allocated to research and development expenses of $200,000 Non operating lawsuit expense for the 6 months ended June 30, 2023, 2022 was 0 and approximately $1,400,000 respectively. Our net loss increased to approximately $10,300,000 for the 6 months ended June 30, 2023 from a net loss of $9,100,000 for the same period in 2022. As of June 30, 2023, the company had cash and cash equivalents of $2,700,000 marketable securities of $5,900,000 and working capital of approximately $6,200,000 As of December 31, 2022, cash and cash equivalents were $10,500,000 marketable securities were $9,200,000 and working capital was approximately $15,400,000 Based on the company's current operating plan and financial resources, we believe that our existing cash and short term investments will be sufficient to cover expenses and capital requirements into the Q1 of 2024.

Speaker 1

Before turning over to Yael, I want to remind everyone that on June 27, 2023, the company filed a registration statement with the SEC to conduct a tradable subscription rights offering for up to $30,000,000 of shares of Class A common stock to its shareholders and holders of warrants to purchase common stock as of the future record date to be determined. The company expects to undertake and close the offering as outlined in the registration statement. We believe the rights offering allows us to balance the need to raise capital while remaining cognizant not to dilute existing shareholders. We believe this is an opportunity to participate for all shareholders and to raise needed capital. With that, thank you.

Speaker 1

And I will turn the call over to Wael.

Speaker 2

Thank you, Lisa. As you have here today, we are making steady progress in advancing LUXOBI across three indications. We are looking forward to highlighting the potential of these assets in the HLHS on our key opinion leader webinar next week. As Natalia has mentioned, it's August 16, Wednesday. I would like to open the call now for questions.

Speaker 2

Operator, please open the line for our covering

Operator

Our question comes from Paul O'Brien from Group. Please proceed with your question.

Speaker 3

Hey, guys. Thank you for taking my question.

Speaker 4

So I guess, I'd like to just get your take on the FDA decision for me to go back to CLA. Obviously, this was a disappointment for the space, but given that you're both in rare pediatric disease, just do anything to inform your future development for LMSL and HLHS? And just to give you additional confidence in the design of LPS II as a placebo controlled study.

Speaker 2

So, Michael, I will take the first step in answering that question, and then I will have Natalia add any additional comments or also I have Josh on the line, he can also add any additional comments. But I would say that from the beginning, we are trying to conduct our HLHS program as a pivotal trial. We are doing everything to make sure that this trial meet the FDA requirements and hopefully provide the necessary balance between benefit risk ratio to accept it for filing. Having said that, there is definitely no guarantee that this is going to happen. As you know, it's always a matter of review and FDA typically weigh in the significant medical need of the disease itself as well as the body of evidence of the data, not just in the study that was conducted for that disease, but also for the overall body of evidence.

Speaker 2

So while we were really hoping that Mesoblast gets their approval of their product, I cannot draw 100% parallel to HLHS due to one, we are conducting a trial maybe in a different way and second, it's a different disease state. So with that, I will let Natalia and or Josh to add any further comment to my comments.

Operator

Thank you very much. Okay. Go ahead, Josh.

Speaker 5

Yes. I wanted to make a comment and I'll turn it over to Natalia. Thank you. I think one of

Speaker 2

the critical aspects that need

Speaker 5

to be recognized at our ongoing HHS trial is that it is a controlled trial, so that there is a active and best conventional care arm, which is conducted in a rigorous blinded fashion. And I think that's one of the critical aspects that the FDA has commented on that is crucial for this field. So we are I do want to emphasize that the ELPUS II trial had key control group. Thank you. And Natalia, please take it there.

Operator

Thank you so much. And it's always directed to use credit. And definitely, as we indicated, it's a completely different indication. But we are learning from communication between FDA and Mirabai. Thank you.

Speaker 4

Thank you, Tien. Thank you very much for the additional clarity. And then I just wanted to see if you have any additional insights here on what kind of result that you would need to demonstrate for aptitude

Operator

therapy?

Speaker 2

So Michael, our prior endpoint is the right ventricular ejection fraction. Again, we believe as it's all at 5% improvement. Remember, at the end of the day, it's all about that risk ratio. So it's not really one specific measure. If we hit, then it's overrun, but I think to the overall body.

Speaker 2

Survival rate could be also net benefit, which we are encouraged from those that I've seen from the lab on ALKIS-one. So both the right ventricular ejection fraction and survival rate, in addition, of course, to the safety profile of the product will be important consideration for the HNT2A on that indication. But again, I'll leave it up to Natalia to add any comments.

Operator

Thank you. May I have more comments?

Speaker 5

Well, may I make a quick comment?

Speaker 2

Sure, Josh.

Speaker 5

One of the things to understand about hypostated left heart that's unique from adult forms of heart failure disease is a very clear association between cringorrhea function and clinical outcome. It's been well shown in studies over going back over 25 years now. So, the decline in ejection fraction at stage 2 surgery is very closely correlated with the clinical outcome and therefore pose a very valuable surrogate. Our trial is designed to look to see whether Lomicil B increases projection of action relative to placebo,

Speaker 2

and not placebo to say, but that's

Speaker 4

a national therapy. Both patients are approved to

Speaker 5

be in surgery. And so we think that the finding could be of great clinical value in interpreting

Speaker 2

the efficacy of LUXEL B in the position.

Speaker 4

All right. Thank you very much. One more for me and I'll hop back into the queue. I'd just like to see if for LPS II, if you could remind us the expected time lines between completion of enrollment and the ASVIR as we're approaching that enrollment completion on 2024?

Speaker 2

Michael, as we announced, we expect to finish the enrollment. We're targeting hopefully mid next year. Of course, with the software venue site, there are a lot of plans to try to expedite our enrollment and the program. But as you know, we've failed to do this, it's hard to predict exactly when. Once we finish the enrollment, it will take 1 year after that to better the endpoints and then close the file and provide results from it.

Speaker 2

It should have been a couple of months after the finish enrollment 1 year after about finish enrollment.

Speaker 4

All right. Thank you very much. And I'll follow-up to that KOL then.

Speaker 2

Thank you.

Speaker 6

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

Operator

All right.

Speaker 2

Thank you. All right. Well, thanks everyone for attending our today's call. On behalf of the company and the Board of Roni, I would like to thank you for all your continued interest and support and wish you a good day today. Ladies and gentlemen, thank you so much.

Operator

This concludes today's conference. You may disconnect your lines at

Speaker 6

this time. Thank you for your participation.

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Earnings Conference Call
Longeveron Q2 2023
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