LGVN - Longeveron Inc. (LGVN) Q3 2022 Earnings Call Transcript
Longeveron Inc. (LGVN)
Q3 2022 Earnings Conference Call
November 14, 2022 08:30 a.m. ET
Company Representatives
Dr. Chris Min - Interim Chief Executive Officer, Chief Medical Officer
Dr. Joshua Hare - Co-Founder, Chief Science Officer, Chairman
James Clavijo - Chief Financial Officer
Elsie Yau - Stern Investor Relations
Conference Call Participants
Michael Okunewitch - Maxim Group
Presentation
Operator
Good morning or good afternoon, and welcome to the Longeveron Inc., 2022 Third Quarter Earnings Call. My name is Ajay and I will be your operator today. [Operator Instructions]
I would now like to turn the call over to Elsie Yau from Stern Investor Relations. Elsie, you may proceed.
Elsie Yau
Thank you, operator. Good morning, everyone, and welcome to Longeveron, third quarter 2022 call. Today we will provide a business update and discuss financial results for the third quarter of 2022. Earlier this morning we issued a press release with these results, which can be found under the Investor section of our website at www.longeveron.com.
I'm joined on the call today by the following members of Longeveron's Management team; Dr. Chris Min, Interim Chief Executive Officer and Chief Medical Officer; Dr. Joshua M. Hare, Co-Founder, Chief Science Officer and Chairman; and James Clavijo, Chief Financial Officer.
Dr. Min will begin with a brief corporate overview, followed by a review of update from Longeveron's clinical program in Alzheimer's disease, Hypoplastic Left Heart Syndrome or HLHS and Aging Frailty. Then Mr. Clavijo will review our third quarter financials. Last, we will then open the call for Q&A.
As a reminder, during this call, we will be making 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 discussion in our filings with the SEC, including our Annual Report on Form 10-K, and cautionary statements made on this call. We assume no obligation to update any of these forward-looking statements or information.
Now, I'd like to turn the call over to Dr. Chris Min, Interim Chief Executive Officer and Chief Medical Officer of Longeveron. Chris.
Dr. Chris Min
Thank you, Elsie. Good morning, everyone, and welcome to Longeveron third quarter 2022 business update and financial results call. Longeveron is a clinical stage biotechnology company developing regenerative medicines for unmet medical needs. At Longeveron, our mission is to develop safe and effective cell-based therapies for some of the most challenging disorders associated with the aging process and other medical disorders.
Our lead investigational product called Lomecel-B is a living cell product made from specialized cells isolated from the bone marrow of young, healthy donors, ages 18 to 45. These specialized cells are known in the literature as medicinal signaling cell or MSC’s and are essential to our endogenous or built-in repair mechanism.
MSC’s are known to perform several complex functions, including the ability to form new tissue. They also home decisive injury or disease and secrete bioactive factors that are immunomodulatory and regenerative. We believe that Lomecel-B has multiple mechanisms of action that may lead to anti-inflammatory, pro-vascular and regenerative responses, and therefore may have broad applications for a range of ageing related and rare diseases.
In the third quarter of 2022 we continue to make progress advancing Lomecel-B for our suite of aging and rare disease indications. We have ongoing trials in Alzheimer’s Disease and Hypoplastic Left Heart Syndrome or HLHS and have initiated patient screening in a Phase 2 study evaluating Lomecel-B for aging related frailty in Japan.
First, I'll begin with an update on Alzheimer's Disease. Last week we were pleased to announce the completion of enrollment for a Phase 2a Trial. This represents an important milestone for Longeveron as we advanced Lomecel-B as a potential treatment for patients with mild-Alzheimer's Disease, a large area of unmet need, where treatment options remain limited.
Based on the growing pre-clinical and clinical data, we believe Lomecel-B may prevent slow or even reverse the clinical progression of Alzheimer's Disease by reducing disease related brain inflammation. Neuronal cell death caused by early and substantial neural information is a significant contributor to the pathogenesis of Alzheimer's Disease.
In preclinical models of Alzheimer's Disease, MSCs like Lomecel-B have been shown to cross the blood-brain barrier, potentially with an anti-inflammatory effect improving endothelial function and promoting neurogenesis, the process of how neuron formation occurs in the brain.
In a previously completed Phase 1b study, we demonstrate a preliminary safety of Lomecel-B in patients with mild-Alzheimer's Disease. With the Phase 2a trial, we hope to build on this body of evidence. I'd like to remind you that this Phase 3 trial is a 48 patient, 4-arm, parallel design, randomized clinical trial of Lomecel-B designed to evaluate the safety of single and multiple infusions of two different dose levels compared to placebo in patients with mild-Alzheimer's Disease.
Our primary endpoint is safety as measured by the occurrence of a series of adverse events within the first-30 days after administration of Lomecel-B. Secondary and exploratory endpoints include brain volumetry by magnetic resonance imaging or MRI, biomarkers relevant to inflammation and endothelial/vascular systems and measures of cognitive function. Each patient is following the study for a duration of 12 months. With the trail fully enrolled, we expect to share the top line results in 2024.
Next, I'd like to move on to our HLHS program. This quarter we are excited to announce that the FDA granted fast track designation to Lomecel-B for infants with this rare and life-threatening pediatric disease. As a reminder, HLHS is a rare congenital heart defect that affects approximately 1,000 infants a year in the United States. People born with HLHS have an underdeveloped or absent left ventricle, impairing the heart's abilities of pump blood. Left untreated, this condition is always fatal.
Currently, the standard of care has comprised of three reconstructive operations before the age of five, an extraordinary treatment burden for these young pediatric patients. Further, even with these surgical interventions, children with HLHS are at elevated risk of short-term mortality, delayed development and long-term complications, including organ failure with only somewhere between 50% to 60% of these patients surviving to adolescence.
There exists a tremendous unmet need for additional interventions beyond the current standard of care. We believe Lomecel-B with its pro-regenerative, pro-vascular and anti-inflammatory properties, when administered concurrently with surgical intervention can fill that gap by improving cardiac performance in patients with HLHS. In combination with the previously announced rare-pediatric disease and orphan drug designations, the new fast track designation underscores the urgent unmet need for new treatments for HLHS.
Enrolment remains ongoing in our ELPIS II trail of Lomecel-B for HLHS. All clinical sites have been activated. As a reminder, ELPIS II is a Phase 2a clinical trial that intends to evaluate the safety and efficacy of intramyocardial injection of Lomecel-B in infants with HLHS who are undergoing Stage II reconstructive surgery. The primary endpoint is a change in right ventricular ejection fraction, a key measure of cardiac function at 12 months post-treatment. We intend to provide further guidance on timelines for ELPIS II when a sufficient portion of the intended treatment population have been enrolled.
Finally, I'd like to cover updates on our aging related frailty program. Aging related frailty is an age-associated decline and reversal function across multiple physiological systems. That leads to an inability to cope with stressors. This is common among the elderly, affecting millions of individuals in the United States and up to 15% of the population over the age of 65 depending on the specific clinical definition used.
Ageing related frailty manifests typically as a combination of several signs and symptoms that may include Sarcopenia or involuntary loss of muscle, associated weakness, fatigue, weight loss, slowness and low activity. Unfortunately, elderly frail individuals are more vulnerable to poor clinical outcomes related to aging related frailties such as infection, falls, fractures, hospitalizations and even death.
At Longeveron we have been evaluating the effects of Lomecel-B that it may have on the health and function of elderly frail patients, particularly on their physical and immune system function. In early stage exploratory trials, we have using biomarkers of information and vascular endothelial function to measure the effects.
Our clinical development strategy in aging frailty is currently focused on Japan, which has one of the oldest populations in the world. After re-evaluating our regulatory strategy in Japan last quarter to capitalize on near term value driving market opportunity, we initiated screening for our Phase 2 study evaluating Lomecel-B in patients with ageing related frailty in japan in partnership with the National Center for Geriatrics & Gerontology in Nagoya, and Juntendo University Hospital in Tokyo.
The Phase 3 clinical trial is a 3-arm, parallel design, randomized, placebo-controlled, double-blind single-infusion study of two different dose levels of Lomecel-B versus placebo. The primary objective of the study is to evaluate the safety of Lomecel-B as a treatment for aging related frailty, with an overarching goal of providing support for an eventual limited approval under the Act on the Safety of Regenerative Medicine or ASRM, which recognizes tremendous therapeutic potential of cell therapies.
Now, such an ASRM approval could enable us to enter the Japanese market based on demonstrated safety in Japanese patients with an expectation of efficacy, which can be established through the conduct of a small well controlled trial, combined with our previous data in aging frailty, and such an approval will allow us to administer Lomecel-B as a treatment for Aging Related Frailty of select clinical sites, addressing a crucial unmet need amongst the Japanese population. We remain on track to enroll our first patient in this Phase 3 trial this quarter.
With that, I'd like now to turn the call over to James Clavijo, our Chief Financial Officer to discuss our financial results for the third quarter of 2022. James.
James Clavijo
Thanks Chris. Good morning e twenty twentytwoGveryone. Most of what I'll be covering this morning will be presented in more detail in our condensed financial statements and our management's discussion analysis of operations for the quarter ended September 30, 2022 in our quarterly report and Form 10-Q which will be filed today.
Revenue for the third quarters of ’22 and ’21 was $0.3 million and $0.2 million respectively. The difference was due to an increase in clinical trial revenue and grant revenue as follows:
Clinical trial revenue, which derives from our Bahamas Registry Trial was $210,000 in the third quarter of ’22, compared to $164,000 in the same period in 2021, an increase of $46,000 or 28%. This increase in clinical trial revenue is primarily due to an increase in participant demand at the Bahamas Registry Trial.
Third quarter 2022 Grant revenue was approximately $55,000 compared to $68,000 in the same period of 2021, a decrease of $13,000 or 19%. The decrease in grant revenue is primarily due to a reduction in grant funds available due in part to the completion of the grant funded clinical trials.
Research and development expenses in the third quarter of 2022 were $2.9 million compared to $2 million for the same period in 2021. The increase of $0.9 million or 45% was primarily due to an increase of $1.8 million and research and development expenses that were not reimbursable by grants. The increase was partially offset by a decrease in equity based compensation allocated to research and development expenses, which decreased from $0.9 million for the three months ended September 30, 2021 to $0.1 million for the same period in 2022.
General and administrative expenses in the third quarter of 2022 were $2.1 million compared to $3 million for the same period in 2021. The decrease of approximately $0.9 million or 31% is primarily related to decrease of $1.2 million in the equity based compensation expenses allocated to general and administrative expenses. However, expenses related to legal and consulting services increased by $0.3 million in the three months ended September 30, 2022 compared to the same period in 2021.
Our net loss was $5.2 million in the third quarter of 2022 compared to $4.9 million for the same period in 2021. Cash and short term investments at the end of the September 30, 2022 was $22.3 million. 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 first half of 2024.
With that, thank you and I will turn the call back to Chris.
Chris Min
Thank you, James. So as you've heard today, we've made strong progress in the third quarter across our pipeline. I look forward to wrapping up – excuse me, I look forward to wrapping up a strong 2022 and advancing into the New Year.
I would now like to open the call for questions. Operator.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] And our first question today comes from Michael Okunewitch from Maxim Group. Michael, please go ahead. Your line is open.
Michael Okunewitch
Hey! Thank you for taking the questions. So I'd like to start out a bit on the program in Japan and in particular see if you could discuss how Lomecel-B might be applied in Japan from a commercial perspective under the ASRM pathway? How heavily regulated would it be for prescribing and what level of reimbursement support would you suspect? It seems like frailty is something where older patients may wish to seek treatment even if they would be considered otherwise healthy, so could you give a bit more color on that?
Dr. Chris Min
Yeah, thank you for that question Michael. Just to be clear, when you refer to reimbursement, you mean in terms of insurers and things like that? I just want to – because just…
Michael Okunewitch
Yes.
A - Dr. Chris Min
Let me address that by saying that the ASRM approval, unlike PMDA approval, does not actually allow insurers to reimburse patients or to pay for treatment. So it is limited to patients who will pay out of pocket.
So that you know, what we do intend to do eventually is to go for conditional approval, which is the next level, which is under the auspices of the PFDA. So in the ASRM pathway, this is a treatment that cannot be advertised, but which specific doctors can sign up to administer to their patients and so it will depend on the – whether the gerontologists in Japan are interested in providing this as an option for their patients, and then they would prescribe it for their patients and their patients would have to have the means to pay for the treatment out of their own financial means. Did that address your question?
Michael Okunewitch
Yeah, thank you. I also like to touch on the program in HLHS. If you could discuss what the typical disease trajectory looks like following completion of all three phases of surgery, and how long you would need to follow these patients to demonstrate a clinical benefit on something like time to transplant or mortality? Is this something that you could evaluate in the current studies, perhaps in a longer term follow-up?
A - Dr. Chris Min
So I'll address this in a more general way. So one of the facts about this disease is that after the stage two surgery, within the first year approximately 20% of patients require either a heart transplant or unfortunately die from their condition, and that number I think bottoms out somewhere between 20% and 30% of after stage two surgery, then they move on to stage three surgery.
Part of the reason we got the fast track, you know our original trial was an open label, so we cannot make any kind of determination of the efficacy of our treatment, because we had no comparison group, but it was an open label study with ten patients, and when we look at the natural history of the disease, the expectation is that – you know there are a lot of caveats here.
This was a small study of just 10 patients, open label, but the expectation was that at one year two of them would have either required a heart transplant or died from their disease, and all ten children survived, not only to one year, but we've been following them for as long as three and a half years and none of them have died. And even though this is not proof of efficacy, it was promising enough that the FDA gave us rare disease, orphan diseases and fast track designations.
In our ongoing Phase 2 study, we are now comparing to standard of care versus standard of care plus Lomecel-B, so we will be able to make some judgment about efficacy. We are using RVF as our outcome measure, but to your point about mortality which would be the strongest evidence of an effect, any outcome study of this type depends on two things; the amount of time that you collect the information and the size of the study. This was designed to be a very efficient study, so it's not sufficient at one year. It's unlikely to be sufficient to provide us definitive proof of mortality.
We have designed it, so that we will just like our Phase 1b study continue to follow our patients beyond the 12 months of the study, so that we can try to generate mortality data, and then one can imagine that that information might be combined with a subsequent study trying to look at outcome measures. But I think our first pass at going for approval will be aiming for this kind of physiologic measure or right ventricular ejection fraction with continued monitoring over a period of time to determine whether we have a benefit in mortality.
Michael Okunewitch
All right, thank you. I appreciate that insight. And then one last one for me and then I'll hop back in the queue. Regarding the ongoing study in all Alzheimer’s Disease, I know this is a – you know it’s a comparatively small trial, but I am curious to see, in particular on the cognitive function endpoint, if you have any particular thoughts on what sort of a change in trajectory you would need to see in order to consider it a clinically meaningful benefit.
Dr. Chris Min
Well, we're – you know to be clear, as you say with 12 per arm, this is not something that based on our previous experience. You know, this all – the fact is we don't know what the effect size is, so whenever you think about power and ability to measure, it's a factor of your signals and noise, and based on other therapies that have been trying in the space, it would be really unlikely that you would measure something from say a traditional measure like ADAS-Cog and have a definitive improvement.
What we are doing is, we're working very closely with very experienced statisticians in the space to come up with a composite measure that will be made up of cognitive measures composite with a number of biomarkers to try to glean the signal. We haven't arrived at that final composite marker, but that is an area that we're actively trying to pursue, so that we can have and that a pre, you know pre database log proposed composite measure that we can test against to try to measure for an actual efficacy signal, which would be not just cognition, but would be a combination of factors.
And within cognition in this mild space, what we have determined is that you know most of the trial work in this space has been – recently we've been – we have been having you know [inaudible] with the disease modifying therapies and even MCI, but generally speaking the tools and the mild space have been very limited. So we're not just going to do a senior set of boxes, we're going to try to do an optimal composite that's really designed to be highly sensitive to the mild-stage of disease.
Michael Okunewitch
Thank you. It's very helpful answer. Thank you very much for taking my questions and congratulations on the progress this quarter.
Dr. Chris Min
Thank you. We're quite proud of our enrollment. It really is quite a bit higher than the standard performance and enrollment of AD trials, which I think speaks to the interest of our patients in other kinds of therapies.
Operator
That concludes the question-and-answer session of this call. I would now like to return the call back to Dr. Chris Min for closing remarks.
Chris Min
Okay, Thank you. Thank you for everyone's attention. We continue to feel that we are executing very strongly and look forward to providing future results in future quarters.
Operator
This concludes today's call. Thank you very much for your attendance. You may now disconnect your line.
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Longeveron Inc. (LGVN) Q3 2022 Earnings Call Transcript