Longeveron (LGVN) 12 Nov 242024 Q3 Earnings call transcript

Ladies and gentlemen, greetings, and welcome to the Longeveron Third Quarter 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to Derek Cole of Investor Relations Advisory Solutions. Please go ahead.

Thank you, Ziko. Good afternoon, everyone, and thank you for joining us today to review Longeveron's Third Quarter 2024 financial results and business update. After the U.S. markets closed today, we issued a press release with financial results for the third quarter, which can be found under the Investors section of the Longeveron website.

On the call with me today are Wa'el Hashad, Chief Executive Officer; Nataliya Agafonova, Chief Medical Officer; Lisa Locklear, Chief Financial Officer; and Joshua Hare, 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.

Following the company's prepared remarks, we will open the questions from our analysts. With that, let me hand the call over to Wa'el Hashad, Chief Executive Officer. Wa'el?

Thank you, Derek. Good afternoon, everyone, and thank you very much for joining us today.

We are pleased to update you on our progress and accomplishments since the end of the last quarter, which I can sum it up again as continued strong execution across all aspects of the organization. Today, we also want to talk a little bit about the long-term strategy.

As a reminder, for those of you newer to our story, Longeveron is a regenerative medicine company developing cutting-edge cellular therapies.

Our development compound, Lomecel-B represents a pipeline and a product opportunity that is being evaluated across 3 important treatment areas, addressing numerous unmet medical needs with the U.S. market potential opportunity of approximately $10 billion to $18 billion.

Before we get into our recent progress, I would like to ask Dr. Joshua Hare, our Co-Founder and Chief Science Officer, to discuss an important milestone for Longeveron. Josh?

Thank you, Wa'el, and good afternoon, everyone.

As Wa'el mentioned, we have just reached an important milestone for the company and our stem cell therapy research. This month marks the 10th anniversary of the founding of Longeveron.

Our vision back at the time of founding was to apply stem cell research to deliver regenerative medical therapies for unmet medical needs, and that remains our vision today.

As you'll hear from the team, we are making great progress advancing cellular therapy research and our product candidate, Lomecel-B.

Over the past decade, stem cell therapy has seen remarkable strides, transforming from a promising field into one delivering tangible clinical outcomes. We've seen the solidification of cell therapy's role in regenerative medicine and its potential to treat a wide range of conditions, signaling an exciting future for both scientific innovation and patient care. At the core of this progress is the increased understanding of different types of stem cells, including medicinal signaling cells, or MSCs, like our development candidate, Lomecel-B, embryonic stem cells, ESCs, adult stem cells, and induced pluripotent stem cells. Key breakthroughs, including the use of stem cells to treat degenerative diseases such as Parkinson's, diabetes, Alzheimer's disease, and heart disease. In 2020, the FDA approved the first stem cell-based treatment for spinal cord injuries, marking a significant milestone for the area of development. In regenerative medicine, stem cells have been used to create lab-grown tissues and mini-organs, which we call organoids. These open the door to personalized medicine and organ repair. Stem cell therapy has made significant advances in the development of new techniques, clinical applications, and regulatory frameworks.

While challenges remain, we have seen enhanced safety and precision of stem cell therapies. Governments and regulatory bodies like the FDA have begun to adapt more quickly to emerging stem cell technologies. More treatments are entering Phase 2 and 3 clinical trials with some therapies receiving breakthrough, fast track or regenerative medicine advanced therapy, RMAT designations for serious conditions. The stem cell market has expanded globally with collaborations between academia, biotech firms, and government-funded research programs. Longeveron has been at the forefront of this evolution in medicine. A decade ago, our stem cell therapy vision was an academic idea. Today, Lomecel-B, our product candidate, a proprietary, scalable allogeneic cellular therapy has been administered to over 540 patients, delivered positive initial results across 5 clinical trials in 3 indications. These include Phase 1 and 2 trials in Alzheimer's disease, Phase 1 and 2 trials in aging-related frailty, and a Phase 1 in hypoplastic left heart syndrome, or HLHS, which is also currently being evaluated in a pivotal Phase 2 clinical trial for HLHS. Lomecel-B development programs have received 5 distinct and important U.S. FDA designations.

For the HLHS program, we received orphan drug designation, Fast Track Designation, and rare pediatric disease designation, and for the AD program, the Regenerative Medicine Advanced Therapy designation, or RMAT, and Fast Track Designation. We believe stem cell therapy has the potential to become a mainstream treatment for many conditions with significant unmet medical needs. The outlook for future breakthroughs is promising, and we will continue to work towards our mission and hopefully support patients battling a range of diseases and conditions.

As we do, we look forward to continuing to share our research, clinical and regulatory progress. Thank you, and I will turn the call back over to Wa'el.

Thank you, Josh. I am heartened to see the tremendous progress achieved both by the industry and specifically by Longeveron over the past decade.

For Longeveron, this has been further accelerated with our recent accomplishments.

As we have mentioned throughout the year, HLHS is a key strategic priority for us. We believe the HLHS program has a high probability of success and the path to potential regulatory approval across our pipeline.

Our ongoing Phase 2b study of ELPIS II, which is evaluating Lomecel-B as a potential adjunct treatment for HLHS has now achieved more than 80% enrollment, and we expect to complete enrollment towards the end of this year or early next year. Very importantly, we recently completed a Type C meeting with the U.S. Food and Drug Administration in which we were able to confirm that ELPIS II is a pivotal and if positive acceptable for biological license application or BLA submission for full traditional approval as well as reaching alignment on ELPIS II primary and secondary endpoints. This significantly accelerates the potential regulatory and if supported by clinical data from ELPIS II would allow us to initiate a rolling submission of BLA with the Food and Drug Administration in year 2026. Because of that opportunity, I'm delighted to welcome Devin Blass to Longeveron as the Chief Technology Officer and a Senior Vice President of CMC. He will join us on December 2 to lead the company's technology and manufacturing strategy and execution. Devin has over 15 years of distinguished experience in the development and manufacturing of advanced therapies. We look forward to working with him to advance Lomecel-B across all of our indications.

We also continue to advance our very important Alzheimer's disease program. We understand Alzheimer's disease has historically been a difficult area for development.

So we are only more encouraged with the results we have seen to date with Lomecel-B. Results from our CLEAR MIND Phase 2a clinical trial were presented in a featured research oral presentation at the 2024 Alzheimer's Association International Conference, AAIC. In the clinical trial, Lomecel-B treated patients showed an overall slowing or prevention of the disease worsening compared to placebo. Based on the CLEAR MIND Phase 2a trial clinical data and prior Phase 1, the FDA has granted Lomecel-B most regenerative medicine and therapy, also known as RMAT designation and Fast Track designation for the treatment of mild Alzheimer's disease. Lomecel-B appears to be the first cellular therapy candidate to receive RMAT designation for Alzheimer's disease.

With these data in hand, we anticipate meeting with the FDA in the first quarter of 2025, review future clinical and regulatory strategies for continuing this important program.

As we continue to [Technical Difficulty] optimizing our resources and being good stewards of shareholders' capital, while maintaining our investments in advancing our clinical pipeline and definitely BLA-enabling activities.

We have focused on expense control and program prioritization, leading to a total operating expenses through the first 9 months declining 14% year-over-year.

Our existing cash and cash equivalents are expected to be sufficient to fund the company through the fourth quarter of 2025. With that, I will turn the call to Dr. Agafonova to provide updates on our clinical development program. Nataliya?

Thank you, Wa'el, and good afternoon, everyone.

As Wa'el mentioned, our HLHS program is a primary focus for us with a near-term pathway to potential approval in an area of clear unmet medical need.

Our HLHS program began with the ELPIS I Phase 1 clinical trial evaluating Lomecel-B in infants with HLHS, which produced positive encouraging results. Most recently, ELPIS II 5-year post-treatment long-term survival data was selected for presentation at the Congenital Heart Surgeons Society, CHSF 51st Annual Meeting. This data included the following: 5-year post-gland procedure Kaplan-Meier survival was 100% in patients treated with Lomecel-B in ELPIS I with none required heart transplant. This compared to 83% survival in the single ventricle reconstruction trial through 5 years post-gland surgery and a 5.2% heart transplantation rate. No major cardiovascular adverse cardiovascular events were reported during the study. No Lomecel-related safety issues also were reported. The findings support the use of Lomecel-B as a potential adjunct to HLHS reconstruction surgery to improve transplant-free survival. The ELPIS I data served as the basis for ELPIS II, our ongoing Phase 2b clinical trial evaluating the potential of Lomecel-B to improve right ventricular function and long-term outcomes. ELPIS I is being conducted in collaboration with the National Heart, Lung and Blood Institute through grants from the National Institute of Health. This trial will enroll 38 pediatric patients, and we have reached more than 80% enrollment.

We have 12 leading pediatric cardiothoracic institutions participating as a clinical trial site with 3 of them having joined in the last quarter. We could not be more pleased with the participating group and their enthusiasm for ELPIS II and thank them for all the work they do for their patients and the patient's family.

With their support, we are working towards completing enrollment of the trial by the end of this year, and there are patients in the queue that can make that time line achievable.

However, we obviously do not control scheduling from surgery.

So we may see enrollment completion occurred in the first quarter of the next year.

As Wa'el mentioned, we recently completed a Type C meeting with the FDA where we discussed HLHS our development program, the data it has produced in our ongoing Phase 2 clinical trial. We reached alignment on ELPIS II primary and secondary endpoints and very significantly, we were able to confirm that ELPIS II is pivotal and is positive acceptable for BLA submission. If results from ELPIS II are positive, we would be positioned to initiate a rolling submission with the FDA in 2026.

Turning now to our Alzheimer's disease program. Data from CLEAR MIND Phase 2a trial clinical trial were 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 trial positive results, which we have reviewed previously. I would just reiterate that the trial achieved the primary safety and secondary efficacy endpoints and also that in the clinical trial, Lomecel-B treated patients show an overall slowing prevention of disease worsening compared to placebo. Continue the positive data trend, Lomecel-B data in Alzheimer's disease was selected to be presented in a late-breaking poster presentation at the Clinical Trial on Alzheimer's Disease Conference, CTAT 2024 in late October 2024. That data showed the following: Lomecel-B capacity to inhibit MMNP14 correlates with improved clinical and biomarker outcomes in mild Alzheimer's disease. Pfizer offer potential mechanistic and clinical insights in the development of cellular-based therapy for Alzheimer's disease. We believe the results from CLEAR MIND support the therapeutic potential of Lomecel-B in the treatment of mild Alzheimer's disease and provided evidence-based support for future clinical development. Based on data generated in our Phase 1 and Phase 2 Alzheimer's clinical trials in July, the FDA has granted Lomecel-B both Regenerative Medicine Advanced Therapy, RMAT designation and Fast Track Designation for the treatment of mild Alzheimer's disease. We plan to meet with the FDA before -- in the first quarter of the next year to review clinical trial and regulatory strategy for the Alzheimer's program. I will hand the call over to Lisa Locklear, our Chief Financial Officer, to discuss our financial results for the second quarter. Lisa?

Thank you, Nataliya, 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. Revenues for the first 9 months of 2024 were $1.8 million, up $1.1 million or 177% when compared to the same period in 2023, 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 9 months ended September 30, 2024, was $0.8 million. We believe the contract manufacturing business has the potential to expand our team's expertise and generate approximately $4 million to $5 million in annual revenues once it is up and running fully, helping offset our clinical development costs and reducing but not eliminating our additional capital need. This year, we have focused on prioritizing investments in our clinical programs and expense management, and we have successfully executed in both areas. Total operating expenses through the first 9 months of the year declined 14% year-over-year, with G&A expenses for the 9-month period ended September 30, 2024, decreasing to approximately $7.4 million compared to $8.9 million for the same period in 2023. This G&A expense decrease of approximately $1.5 million or 16% was primarily due to lower personnel expenses as a result of reduced severance, legal and other administrative expenses, partially offset by higher stock compensation costs in 2024. R&D expenses for the 9 months ended September 30, 2024, also decreased approximately $0.8 million or 11% to approximately $6.1 million. The decrease was primarily due to 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 22% to approximately $11.9 million for the 9 months ended September 30, 2024, from a net loss of $15.3 million for the same period in 2023 for the reason I just explained.

Our cash and cash equivalents as of September 30, 2024, were $22.8 million. The company believes its existing cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements through the fourth quarter of 2025 based on our current operating budget and cash flow forecast. It is important to note, however, that with our successful Type C meeting with the FDA with respect to the HLHS regulatory pathway, we have started to ramp up BLA-enabling activities as we currently anticipate initiation of a rolling submission with the FDA in 2026 if the current ELPIS II trial is successful. To the extent that our operating expenses and capital expenditure requirements accelerate in calendar 2025 as a result of these activities, which includes CMC, chemistry manufacturing and controls and manufacturing readiness, there will be a need to increase our current proposed spend and further increase our capital investments. We intend to seek additional financing, capital raises, non-dilutive funding options to support these activities and current cash projections may be impacted by these ramped-up activities as well as any financing transactions entered into. I will now hand the call back to Wa'el.

Thank you, Lisa. The data generated to date in HLHS and Alzheimer's disease support the broad potential for Lomecel-B as a regenerative medical therapy across multiple and significant indications. The strength of the data, our experienced and committed team and unwavering focus on patients give me confidence in the future of Lomecel-B and Longeveron. Operator, we would like now to open the call for questions from covering analysts.

[Operator instructions] The first question comes from the line of Raghuram Selvaraju with H.C. Wainwright.

This is Dan on for Ram. Congratulations on your anniversary.

So what would represent an appropriate benchmark, from a performance standpoint, in the ELPIS II trial that would catalyze the accelerated approval? And what's the current thinking with respect to the path forward for Lomecel-B in Alzheimer's disease? Is there a shorter-term clinical design paradigm that could be applicable, for example, positioning it initially as a symptomatic rather than a disease-modifying therapy?

So Ram, I don't know the first part of the question. I hope I got it right. But if not, feel free to correct me as well.

So regarding the plan, as you know, we met with the FDA. We confirmed a lot of the assumptions.

So basically, the current existing Phase 2b trial will be accepted for full approval, and we also confirmed with the GMC plan, the potency assay, the primary and secondary endpoint.

So we have a confirmation, we have minutes from this one.

We also have, as you know, Fast Track Designation and the Fast Track designation, by definition, allow you to have enrolling submission, which we intend to use once we finish the enrollment and get the top line results immediately we'll start. We actually started preparing from it, assuming that we will have a positive data coming out of that trial.

So I think a lot of this is not based on assumptions, but actually based on feedback with the agency and the current designation, what it allows us to do. I hope that this answers your question before I go to the Alzheimer's part.

Yes, that was a great answer.

All right.

So regarding the Alzheimer's, so I think -- and Nataliya and Dr. Hare can jump in as well and weigh in on this one. But I'll give you my perspective here. We really believe that from that [Technical Difficulty] and we actually have most recently even at the CTAD meeting with a lot of the advisers and external thought leaders, and these are the top Alzheimer's thought leaders around the world. And I think a unanimous feedback is you guys need to continue the development, there might be something very helpful for the patients here.

Of course, we don't have the data to get approval today.

However, as you know, there is over 140 programs that is being developed right now in Alzheimer's disease. Many of these programs are developed by small companies of our size.

So we really -- and we're all realized how big is the investment needed to advance this program and definitely partnership or a significant -- whether this is with a company or a government entity or whatever would be very helpful. The question is why these companies or these government entities would really invest in your program and not any of the other 140 programs that are being developed. We're going to have to provide something very useful. And therefore, we really have been working on a proposed accelerated and streamlined approach [Technical Difficulty] that the FDA at the beginning of next year. But if approved by the FDA or endorsed by the FDA, that will allow us to come to the market faster and more economical, which we believe will present a very good opportunity for us to be able to compete on these additional funds, whether public funds or partnership with companies and separate ourselves from other companies that operate in [Technical Difficulty] strategy. That is our plan. And you're going to ask why do we do that? The simple answer is part of the RMAT designation is actually allow you, if you read the RMAT guidelines, it's to actually allow you to have a streamlined path to approval. We just want to make sure that the FDA [Technical Difficulty] this. And I want to also tell you one additional thing is that path that we are proposing, we have actually had the opportunity to spend time with some of the top advisers. Nataliya has done this at the CTAD, where she really got their thoughts, and we got very, very good positive feedback from our advisers about our proposed plan as well. Nataliya and Josh, do you want to add anything for Ram's question?

Sure, Wa'el. Ram, thank you for your question.

I think you mentioned also the symptomatic DMT. I would like just to mention that CLEAR MIND study, which is proof of concept and Phase 1 study, which was placebo-controlled, both were conducted on mild Alzheimer's disease patient population. It is considered early. It's symptomatic. And the advice we got recently on CTAD that we should continue our development as disease-modified treatment remaining in a mild Alzheimer's disease patient population because there is a clear good signal on our prior development.

So -- and this is where we plan to continue apply Lomecel-B for this patient population. I hope we addressed your question, Ram.

The next question comes from the line of Boobalan Pachaiyappan with ROTH Capital Partners.

So firstly, with respect to ELPIS I trial, long-term follow-up, I see that you have 100% survival, which is really fantastic.

So I was wondering whether you are able to measure additional cardiac parameters such as RVEF or tricuspid regurgitation at the end of 5 years that would have given you any indication that the ELPIS -- ongoing ELPIS II trial might read out positive similar to ELPIS I? Or is this merely a 5-year safety follow-up?

Wa'el, do you want me to take this one?

Yes. Nataliya or Josh can take that question.

Thank you, Boobalan, for your question. It's a very important one and it basically aligned with our thinking.

So initially, ELPIS I protocol as Phase 1 was open-label trial. And initially, we set up the trial that we are collecting only -- we call it passive follow-up, basically, after completion of 1 year post-gland procedure surgery, sites called the patients with 2 questions. Is the patient alive? Yes or no? And if patient had heart transplant? However, you're absolutely right. If we have -- and beyond that, we have no additional data at this time.

However, we do understand if we enrich data by collecting more granular data on ejection fraction on [indiscernible] basically on all ultrasound or MRI data exists, that will help us to navigate BLA submission. It will help us actually.

So we are entertaining right now this idea to retrospectively go back and gather this data with support of our investigators for ELPIS I investigators.

So to answer your question, currently, we have only survival and transplant-free survival data.

However, we are entertaining this idea to gather more information on these patients retrospectively.

So if you wanted to get that data in a retrospective manner, do you have to go back to agency and do some sort of trial protocol revision? Or do you need to get some additional approval from the participating clinical trials? Because I really feel because these patients were alive after 5 years, which is -- it's a new high watermark in HLHS, at least in my view.

So I was just curious whether additional parameters would make your case more convincing not that it is less convincing now, but it would make it more convincing?

Absolutely. And we don't have to go back to agency. We just need to revise our contracts with our sites. And this is actually ongoing effort right now, but we don't have to go back to agency. And we are currently collaborating on one particular investigator who is very enthusiastic in this indication, who provides his guidance, cardiology guidance, what data we should collect in order to enrich our ELPIS II trial and get the package more complete.

So -- but yes, we don't have to go back to agency for that.

Just for historical, I know we haven't talked about ELPIS I for a long time. The good thing about ELPIS I, it was conducted only on 3 sites.

One of them only had almost half of the patients.

So I don't think it is a taken to work with the sites. It's not as big as the number of sites in the ELPIS II.

So we're hopeful that we are able to be able to collect this data, as Nataliya said.

Fantastic. All right. And then focusing your attention on ELPIS II, which is your pivotal trial and -- so speaking about the endpoint, which is RVEF, the right ventricular ejection fraction, can you maybe provide some context in terms of the efficacy benchmark that will make you feel more comfortable given this is a pivotal trial? I understand no such benchmark exists to date and probably you will be a pioneer in this field. But nevertheless, based on your discussions with the agency and the feedback that you got and all of that, can you maybe provide some color, at least can you maybe tell us what's your current thinking? What would be the expected RVEF of HLHS patients at this juncture with Lomecel-B and then what could be without the drug?

Yes. Wa'el, do you want me to take this one?

Yes. Nataliya you go ahead, that's fine.

Thanks, Boobalan. And Josh, please chime in as well.

Yeah, I'll add a few.

So great question. And again, you're speaking as we thought.

So we did have a very meaningful conversation with FDA, and they agree in principle that right ventricle ejection fraction would not be sufficient for 1 year after the Gland procedure evaluation of the clinical response.

So we are adding clinical points as well to the composite endpoint. And we're still flushing out the final simulations and final exercise to present to agency. But in principle, they did agree in addition of right ventricular ejection fraction, there will be clinical outcome measures as a primary endpoint. And Josh, if you want to speak about specifically right ventricular ejection fraction, I'd appreciate.

Yes. The right ventricular ejection fraction is a well-established surrogate for outcome in HLHS patients. And really, the important difference here will be between the treated and the standard of care patients.

I think if the number is higher, statistically significantly higher in the treated patients than in the standard of care that would be considered a significant finding. But I do want to reiterate what Nataliya has said that -- which is very important is that the agency was very supportive of the idea that we combine right ventricular ejection fraction with clinical endpoints as well, such as the survival.

So I think that the survival difference that we see in the ELPIS I is highly encouraging for what the ultimate finding will be in ELPIS II.

Okay. Great. And then maybe one more question, if I may.

So I just want to get your high-level thoughts whether you think the HLHS competitive landscape has meaningfully changed in the recent past. I was doing some quick search in clinical trials website. There's a product called VentriGel. I'm sure you might have heard of it, Josh.

So I'm curious, do you think VentriGel could be, at some point, be competing with Lomecel-B? Or what are your preliminary thoughts?

If I'm correct about VentriGel, it's basically an inert substance. It's a substance that you -- really what it does is it prevents remodeling. It prevents the heart from enlarging. I'm not sure if they even have Phase 1 data yet for the VentriGel. I am aware that a trial is being planned.

I think the major difference between the VentriGel strategy and our strategy is that, again, the VentriGel isn't just an inert substance that affects the structural components of the ventricle, whereas Lomecel-B has a multifactorial action, which includes anti-inflammatory, pro-vascular, antifibrotic and potentially pro-regenerative effects, stimulating endogenous myocyte replication.

So I think that the mechanism of action of the 2 strategies is very, very different.

So I don't believe it would be a strong competitor. But of course, as you enter into these kind of novel strategies, you always have to be guided by the data.

So we will see what the data shows. And we are obviously very excited about our data, particularly the new survival data from ELPIS I.

Thank you.

As there are no further questions, I would now like to hand the conference over to Wa'el Hashad for closing comments.

Thank you. Thanks to all who attended our call today. We greatly appreciate your interest and support. And we look forward to updating you on our progress as we continue. Thank you, operator, and you may end the call right now.

Thank you. This concludes today's teleconference.

You may disconnect your lines at this time. Thank you for your participation.