Longeveron Inc. (LGVN) Q1 2023 Earnings Call Transcript
Good morning, and welcome to Longeveron’s call today to discuss the company’s 2023 First Quarter and Financial Results. All participants are currently in listen-only mode. Following the formal presentation, we will open the call up for a question-and-answer session.
I would now like to turn the conference over to James Clavijo, Chief Financial Officer of Longeveron. James, you may now proceed.
Thank you, operator. Good morning, everyone, and welcome to Longeveron’s first quarter 2023 Call. Today, we will provide a business update and discuss financial results for the first quarter of 2023. Earlier this morning, we issued a press release with these results, which can be found under the Investors section of our website at www.longeveron.com.
I am joined on the call today by the following members of Longeveron’s management team; Mr. Wa’el Hashad, Chief Executive Officer; Dr. Joshua Hare, Co-Founder, Chief Scientific Officer and Chairman; and Dr. Chris Min, Acting Chief Medical Officer and Consultant to Longeveron. Mr. Hashad will begin with a brief statement and corporate overview, then Dr. Min will provide a review of updates from Longeveron’s clinical programs in Hypoplastic Left Heart Syndrome or HLHS, Alzheimer’s disease and aging-related frailty, after which I will review our 2023 first quarter financial results. Last, we will 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 discussions in our filings with the SEC, including our annual report on Form 10-K and cautionary statements made during 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 Mr. Wa’el Hashad, Chief Executive Officer of Longeveron. Wa’el?
Thank you, James. Good morning, everyone. Welcome to Longeveron first quarter 2023 business update and financial results call. Longeveron is a clinical stage biotechnology company, developing regenerative medicine for unmet medical needs.
Our lead investigational product called Lomecel-B is a living cell product made from a specialized cells isolate from the bone marrow of young healthy adult donor aged 18 to 45. These specialized cells are known in the literature as medicinal signaling cells or MSC, and are essential to our endogenous or built-in repair mechanism.
MSCs are known to perform a number of complex functions, including the ability to form new tissue. They also home to sites of 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 provascular regenerative responses, and therefore, may have broad application for a range of aging-related and rare diseases.
Since I joined the company in March, I have been very pleased with the progress we have made in advancing Lomecel-B for our suite of rare diseases and aging indications. We have ongoing trials on Hypoplastic Left Heart Syndrome or HLHS, Alzheimer’s disease and recently, we dosed the first patient in our Phase 2 study evaluating, Lomecel-B for Aging-Related Frailty in Japan. Earlier this week, we were especially pleased to share additional long-term follow-up data from our Phase 1 study of Lomecel-B in patients and children with HLHS.
We look forward to sharing additional details on this new data and our ongoing clinical program. In April, Chris Min, departed Longeveron to pursue other opportunities, but Chris has agreed to continue to support our work and consulting capacity until a permanent replacement has been identified through our ongoing search.
With that, I would like to turn over the call to Dr. Chris Min, to provide detailed updates on our clinical program. Chris?
Thank you, Wa’el. I’m pleased to be here today to provide an update on Longeveron’s clinical progress. First, I will begin with an update on our HLHS program. Earlier this week, we announced new long-term follow-up data from our ELPIS-1 trial of Lomecel-B for patients with HLHS.
The data showed, that 100% of the 10 patients who participated in the ELPIS-1 trial, survived and remained heart transplant free for up to five years of age, compared to 20% survival at five years observed in historical clinical trials. These data reinforce the potential, survival benefits for Lomecel-B for patients with this severe disease.
As a reminder, HLHS is a rare congenital heart defect that affects approximately 1,000 babies per year in the United States. Infants born with HLHS have been underdeveloped or absent left ventricle, impairing the heart ability to pump blood and left and treated, this condition is always fatal. The current standard of care is extraordinarily burdensome, comprised of three reconstructive operations all before the age of five.
Further, even with those surgical interventions, children with HLHS are an elevated risk of short-term mentality, delayed development and long-term complications, including organ failure with only is somewhere between 50% to 60% surviving your adolescents. We hope that Lomecel-B can play out heart to address the burden of HLHS and improve cardiac performance in patients.
10 patients participated in the Phase 1 ELPIS-1 trial during which, Lomecel was injected concurrent with Stage 2 surgery, also known as a Glenn Procedure. Today, all 10 patients have been monitored for at least 3.5 years after treatment.
These new data show that 100% of those patients, including two that have reached five years of age have survived after treatment, compared to historical clinical trial results showing that children with HLHS who undergo the Glenn Procedure typically have more than 20% mortality by five years of age. These new data from ELPIS-1 are highly encouraging and reinforce our enthusiasm for Lomecel-B as a potential treatment that can transform care for patients with HLHS.
Furthermore, about three years after Stage 3 Surgery, most HLHS patients undergo the third Stage of surgery, the last of the sequence of surgeries that comprise the current standard of care for HLHS.
Historical data collected by The National Heart, Lung, and Blood Institute has shown that more than 15% of HLHS patients either require a heart transplant or die from the illness 12 months after Stage 2 surgery and thus, do not undergo the third period of surgery. To-date, five of five eligible patients from the ELPIS-1 trial have already undergone this third surgery.
We are excited by the totality of this follow-up data from the ELPIS I trial and look forward to building on this progress. We will continue to provide additional updates as we monitor the ELPIS I patient cohort while advancing our current Phase IIa ELPIS II trial.
As a reminder, this trial, the ELPIS II trial, is a Phase IIa clinical trial intended to evaluate the safety and efficacy of intramyocardial injection of Lomecel-B in infants with HLHS who are undergoing Stage 2 reconstructive surgery.
The primary endpoint is right ventricular ejection fraction, RVEF, a key measure of cardiac function, at 12 months post treatment. Enrollment remains ongoing in the ELPIS II trial. We have fully activated seven clinical sites and expect to add one additional clinical site.
Now, I’d like to move on to our Alzheimer’s disease program. In November of 2022, we completed enrollment in our Phase IIa trial of Lomecel-B for the treatment of Alzheimer’s disease.
As a reminder, the Phase IIa trial called the CLEAR MIND 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 of Lomecel-B compared to placebo in patients with mild Alzheimer’s disease.
Our primary endpoint is safety, as measured by the occurrence of severe — serious 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 as well as measures of cognitive function.
Based on a growing body of preclinical and clinical data, we believe Lomecel-B may prevent, slow or even reverse the clinical progression of Alzheimer’s disease by reducing the disease-related brain inflammation.
Neuronal cell death caused by early and substantial neuroinflammation 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 neuron formation in the brain.
In a previously completed Phase Ib study, we demonstrated a preliminary safety of Lomecel-B patients with mild to moderate Alzheimer’s disease. With the Phase IIa trial, we hope to build on those results and further demonstrate the potential of Lomecel-B as a treatment for Alzheimer’s disease. We expect to share topline results from the CLEAR MIND trial at the end of 2023.
Finally, I’d now like to cover updates on our aging-related frailty program. Aging-related frailty is an age-associated decline and reserve and function across multiple physiological systems leading to the inability to cope with stressors. It is characterized by mobility impairment, weakness, fatigue, weight loss, slowness and low activity and puts individuals at higher risk for poor clinical outcomes such as infections, falls, failure — fractures, sorry, hospitalization and even death.
At Longeveron, we’ve been evaluating the effect Lomecel-B 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 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 populations in the world. As of 2021, Japan’s population comprised of 36.4 million individuals aged 65 or older, representing 29.1% of the country. The overall prevalence of aging-related frailty amongst the demographic is estimated to be 7.9%.
This quarter, we were pleased to announce the dosing of the first patient in our Phase 2 clinical trial, evaluating Lomecel-B in patients with aging-related frailty in Japan. The Phase 2 trial is a 3-arm parallel design randomized evenly split 1:1:1 of placebo as well as two different levels of Lomecel-B single infusions.
The trial is expected to enroll 45 patients and the primary objective of the study is to evaluate safety with an overarching goal of providing support for an eventual limited approval under the Japan’s Act on the Safety of Regenerative Medicine, or ASRM, which recognizes the tremendous potential, therapeutic potential of cell therapies. The dosing of the first patient in this trial represents a key step towards this goal.
With that, I’d now like to turn the call over to James Clavijo, Longeveron’s CFO to discuss our financial results for the first quarter of 2023. James?
Thanks, Chris. 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 for the quarter ended March 31, 2023, and in our quarterly report on Form 10-Q, which will be filed today.
In the first quarter, March 31, 2023, revenue for the first quarter, 2023 was $0.3 million and $0.4 million, respectively, compared to 2022. Clinical trial revenue, which derives from our Bahamas Registry Trial for the three months ended March 31, 2023 and 2022 was $0.2 million and $0.3 million, respectively, representing a 23% decline. Despite an increase in demand for the first quarter 2023 compared to the first quarter 2022 discounts and a one-time price adjustment reduced the overall revenue from our Bahamas Registry Trial.
Grant revenue was approximately less than $0.1 million for both the first quarter 2023 and 2022. The Research and development expenses in the first quarter of 2023 were $2.8 million compared to $1.4 million for the same period of 2022.
The increase of approximately $1.4 million or 94% was primarily due to an increase of $1.1 million in research and development expenses that were not reimbursable by grants, in addition to the equity-based compensation allocated to research and development expenses increased to $0.3 million for the three months ended March 31, 2023, from $0.1 million for the same period in 2022.
General and administrative expenses in the first quarter of 2023 were $1.9 million compared to $2 million for the same period in 2022. The decrease of approximately $0.1 million or 5% was primarily related to a decrease in equity-based compensation expenses allocated to general and administrative expenses.
The net loss was $4.6 million in the first quarter of 2023 compared to $3.5 million for the same period in 2022. Cash and short-term investments, was $13.7 million and $19.6 million as of March 31, 2023 and December 31, 2022. 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 second quarter of 2024.
With that, thank you, and I will turn the call over to Wa’el.
Thank you, James. As you have heard today, we have made a steady progress in advancing Lomecel-B in the first quarter for multiple indications. We look forward to building on this progress in the remainder of 2023.
I would now like to open the call for questions. So operator, please let us know if there’s any questions.
Thank you. [Operator Instructions] So our first question comes from the line of Michael Okunewitch of Maxim Group. Your line is open. Please go ahead.
Thank you very much for taking my question and congrats on the progress. So I’d just like to say if you could give us a bit more of an idea of what you’d be presenting when you do end up presenting this long-term follow-up. Besides survival, are there any other end points that you’ve been looking up as you’re following these patients out to 3.5 years post transplant or post procedure?
Hi, Michael, thank you for the question. So what we have been doing is mainly following up in terms of the — as you said survival and the lack of intervention by a transplant. We have chosen in the long-term follow-up study not to be looking at a lot of other outcome measures because of the long time frame involved. So we do — we are continuing, for example, with annual evaluations of RVF, although we do try to find out information just in their clinical care, but it’s not part of our long-term follow-up study.
And Michael, I will add that the intention of the follow-up is mostly for the safety aspect. And of course, when you do a follow-up on safety you have to look at the survival of the children, we also look at transplant, and we look at other things. But we don’t look for a specific clinical measure. As Chris mentioned, it becomes much more difficult to perform and also burdensome to these patients.
Yes. Thank you for that. And then just to follow-up on that. Obviously, a 100% overall survival is fantastic to see, but that was also transplant free. So you could provide a bit more color on the importance of preventing cardiac death in these patients? And then what the expected transplant rate would be by that five years old range?
To be honest with you, Michael, I did have those numbers in my head at one point. I don’t want to quote a number that’s inaccurate. I would have to come back to you, but there is information on that. And I just don’t want to give a wrong number without having the reference in front of me. But there is an expectation that a certain number of patients despite the reconstructive surgery require heart transplant. And so that’s one factor and then a certain number security condition and actually unfortunately die because, as you know, hard organs are not always available as needed. But the overall that, we give is kind of a sum of what is expected, like 20% overall either have required a heart transplant or die from the condition.
All right. Thank you. And then just one more for me and I’ll hop back into the queue. In terms of the in terms of the pathway in Japan for aging-related frailty, have you given any thoughts to the next steps following your ASRM targeting trial? Is this something where you would follow up with something to demonstrate efficacy and go for a more robust approval, or do you think that the ASRM approval is sufficient to start really commercializing this in Japan?
So Michael, I think the first step is we want to get the ASRM approval. That definitely will give us access to a good portion of the market. Our goal is definitely always to make sure that the access to the product is available to the wider population. So I would say that, yes, the intention is to go beyond that. But no formal plans have been set in place around what is the next step yet.
All right. Thank you very much for taking my questions there.
Thank you, Michael.
That concludes the question-and-answer session of this call. I would now like to turn the conference call back over to Mr. Wa’el Hashad for closing remarks.
All right. Well, thank you. On behalf of the company, I would like to thank everyone for their continued interest and support, and wish you all happy and good day today. Thank you.
Ladies and gentlemen, this concludes today’s call. Have a great day ahead. You may now disconnect your lines.