Good day, ladies and gentlemen, and welcome to Longeveron 2024 First Quarter Financial Results Earnings Call. [Operator Instructions] Please note that this conference call is being recorded. I would now like to turn the conference over to Derek Cole of Investor Relations Advisory Solutions. You may begin, sir. .
Thank you, Judith. Good afternoon, everyone, and thank you for joining us today to review Longeveron's first quarter 2024 financial results and business update. After the U.S. markets closed today, we issued a press release with financial results in the first quarter, which can be found under the Investors section of the Longeveron website. .
On the call today are Wa'el Hashad, Chief Executive Officer; Dr. 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 call to questions from covering analysts. .
With that, let me hand the call over to Wa'el Hashad, Chief Executive Officer.
Wa'el?.
Thank you, Derek. Good afternoon, everyone. We are pleased to update you on our progress and to share why we're confident in Longeveron's opportunity and its future. As a reminder, for those of you newer to our story, Longeveron is a regenerative medicine company developing cutting-edge cellular therapy.
Our lead development compound a cellular therapy candidate called Lomecel-B, represents a pipeline and a product opportunity that is being evaluated across 3 important treatment areas. Addressing numerous unmet medical needs with U.S. market potential opportunity of approximately USD 10 billion to USD 18 billion. .
There are 4 main reasons that give me confidence in our ability to achieve the opportunity of Lomecel-B. The first is launch of our own foundation and a strong science. Lomecel-B is a proprietary, scalable allogeneic cellular therapy that has delivered positive initial results across 5 clinical trials.
Phase I and II trials in Alzheimer's disease, Phase I and II trials in aging-related Frailty, and Phase I in hypoplastic left heart syndrome or HLHS. Second is the experience and expertise of the launch of our own team, which makes advancing this research possible across clinical development, regulatory and manufacturing.
Third, is the team's dedication and commitment to advance this research -- for the fourth and most important reason, the patients. .
Hypoplastic left heart syndrome, Alzheimer's disease, aging Frailty, these words convey a lot of information to scientists and doctors, but they can fully express the devastating impact these disease and conditions have on the patients and their families.
It is heartbreaking to see an infant after a heart surgery so early in their young lives for the lack of a memory and cognition associated with Alzheimer's. What freely drives everyone here at Longeveron, day in and day out is the patients and the opportunity to have a positive impact for them.
They are why we are working every day to hopefully develop therapeutic solutions for these unmet needs. These 4 reasons drive my confidence in our ability to make an impact, and that impact starts with HLHS, our strategic priority for this year. .
As you know, we completed Phase I study, known as ELPIS I, which produce positive results that were the basis for initiating our ongoing Phase II study, ELPIS II, which is evaluating Lomecel-B as a potential adjunct treatment for HLHS. Completing enrollment in this trial by the end of this year is our primary focus with this program.
HLHS is our top priority program as we believe it is the program with the highest probability of success and the shortest path to potential regulatory approval. The ELPIS I data were also the basis for the U.S. FDA awarding the HLHS program with 3 distinct and important designations.
Orphan Drug designation, Fast Track designation, Rare Pediatric Disease designation, which upon approval may lead to granting of a priority review factor, a very valuable additional assets, which have granted enable us to speed up FDA review of another Longeveron NDA or BLA, or to potentially sell the voucher to another company.
The selling price of these priority review vouchers has generally been in excess of USD 100 million. .
My earlier point about the strength of our science is further evidenced by the positive data from CLEAR MIND Phase IIa clinical trial in mild Alzheimer's disease. We anticipate meeting with the FDA late this year to review future clinical and regulatory strategy for continuing this important program. Our Chief Medical Officer, Dr.
Nataliya Agafonova, will provide some additional details on both HLHS and the Alzheimer's disease program later in this call. .
I want to take a moment to highlight 2 other areas of the company where we are optimizing our resources, and that reinforces the reason I just mentioned for our confidence.
Given our preliminary Phase II clinical data suggesting that Lomecel-B may potentially address the problem associated with aging-related Frailty, we are gaining additional real-world evidence from our currency enrolling investigational Frailty and cognitive impairment registry trial in the Bahamas.
Eligible participants may receive Lomecel-B for aging-related Frailty, Alzheimer's disease or other indications at their own expense and are then followed for safety and clinical efficacy. .
Why this is important? First, it's an indicative of the strength of our initial data that supports the authorization for this investigational program in the first place.
Second, though that this investigational registry trial, we are able to collect real-world treatment data to better understand Lomecel-B activity, safety profile and potential efficacy. Lomecel-B has been safely administered in over 500 patients to date across clinical trials and this registry trial.
We believe this data will be important in guiding clinical development program for Lomecel-B. Finally and importantly, we are able to generate this data in a cost-neutral manner as participants do so at their own expense.
Building on the success of this registry trial so far, we plan to launch an investigational osteoarthritis registry trial in the Bahamas in the fourth quarter of this year. .
The second area is in regard on Longeveron's manufacturing expertise and capabilities. We have assembled a team of experts and proprietary technology that enable us to take systematic approach to rapidly develop improved cell therapies.
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 area as well as 1,150 square feet of process development, quality control and warehouse space. All products are manufactured and released based on FDA guidance.
While this facility gives us a capacity to manufacture Lomecel-B for clinical trial use and potentially, if approved, for commercial scale, we do not currently need the facilities full capacity.
This presents an additional opportunity for us as a company -- the company's manufacturing expertise, capabilities and facility are in demand from other pharmaceutical organizations. .
We plan to expand contract manufacturing operation as part of our overall resource optimization strategy. We have already secured the first contract under this initiative and started preliminary work with the client.
We believe this contract manufacturing has the potential to expand the team experience and generate approximately $4 million to $5 million in annual revenue once it's up and running fully, helping offset our clinical development cost and reducing but not eliminating our additional capital needs, which leads me to the final area of comments, capital allocation and spend.
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As I hope you can see from my prior comments, we are tightly focused on optimizing our resources and being good stewards of shareholders' capital. With focus on expense control, our total operating expenses are down 8% year-over-year.
In April, we raised $11.4 million, which combined with our existing balance sheet, will help us fund continued development of the HLHS program and regulatory discussion for Alzheimer's disease program into the fourth quarter. .
The data generated to date in HLHS and Alzheimer's disease, all support broad potential for Lomecel-B as a regenerative medical therapy across multiple indications. The strength of that data, our experienced and committed team, and the unwavering focus on patients give me confidence in the future of Lomecel-B and Longeveron. .
With that, I will turn the call to Dr. Agafonova to provide an update on the 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 as we believe it is the program with the highest probability of success and new lease term pathway to potential approval.
As a reminder, for those who might not know, HLHS or hypoplastic left heart syndrome, is a rare pediatric congenital heart birth defect in which the left ventricle of the heart is either severely underdeveloped or missing.
The current treatment requires infants to undergo a complex 3-stage heart reconstruction surgery process over the first 5 years of their life. .
Even with the comprehensive treatment, only 50% to 60% of infants survive to adolescents due to right ventricular failure. There is clearly an important unmet medical need to improve right ventricular function of these infants to positively impact both short- and long-term patient outcomes.
Our ELPIS I Phase I study of Lomecel-B in infant with HLHS, demonstrated that infants in the trial experienced 100% transplant-free survival up to 5 years of age after receiving Lomecel-B during the Stage 2 surgery, compared to approximately 20% mortality rate observed from historical control data. .
The ELPIS I data were highly encouraging and served as the basis for ELPIS II, our ongoing Phase IIb clinical trial designed to assess the potential of Lomecel-B to improve right ventricular function and long-term outcome.
ELPIS II is being conducted in collaboration with National Heart, Lung and Blood Institute through grants from the National Institutes of Health. ELPIS II remains on track to complete enrollment by the end of this year.
We intend to request a Type 2 -- Type B meeting with the FDA to discuss development strategy for HLHS and expectations for the potential biologic license application or BLA approval. .
Moving on to our Alzheimer's disease program. As we mentioned on our last call, in our Phase IIa clinical trial, CLEAR MIND Lomecel-B treated patients showed an overall slow in prevention of disease worsening compared to placebo.
The trial achieved the primary safety and secondary efficacy endpoints and show statistically significant improvements in prespecified clinical and biomarker endpoints in specific Lomecel-B groups compared to placebo.
Full results from the CLEAR MIND study has been selected for future research oral presentation at 2024 Alzheimer's Association International Conference, and Longeveron was invited to chair this session. .
We believe the results from CLEAR MIND support the therapeutic potential of Lomecel-B in the treatment of mild alzheimer disease and provided evidence-based support for the clinical development. We plan to meet with the FDA to review future clinical and regulatory strategy for the Alzheimer's program.
The second partnership and non-dilutive funding to support further development of Lomecel-B in Alzheimer's disease. .
Finally, as previously announced, as part of our strategic prioritization on HLHS in the first quarter, we discontinued our aging-related Frailty clinical trial in Japan. Cost saving from the discontinuation will support HLHS development and reduce but not eliminate our additional capital needs.
We continue to believe in the potential of Lomecel-B in this disease state, and we will evaluate options for continued development at a future date. .
I will hand the call over to Lisa Locklear, our Chief Financial Officer, to discuss our financial results for the first 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 now touch on some highlights. .
Revenues for the first quarter of 2024 were $0.5 million, up $0.2 million or 96% when compared to the first quarter of 2023, mainly as a result of increased participant demand for our Frailty and Cognitive Impairment registry trial in the Bahamas. Contract manufacturing revenue for the 3 months ended March 31, 2024, was less than $0.1 million.
However, as Wa'el indicated, we believe that there is an opportunity to expand this area of business to make use of our team's significant expertise and our state-of-the-art GMP manufacturing facility. .
Total operating expenses for the first quarter declined 8% year-over-year. G&A expenses for the quarter increased $0.2 million to $2.2 million, while R&D expenses decreased approximately $0.6 million to approximately $2.2 million, both amounts as compared to the same period in 2023.
The decrease in R&D expenses was primarily due to reduced expenses related to Alzheimer's disease, clinical trials including, and the discontinuation of the aging-related Frailty clinical trial in Japan. .
Our net loss decreased to approximately $4.1 million for the 3 months ended March 31, 2024, from a net loss of $4.6 million for the same period in 2023. Cash and cash equivalents and marketable securities as of March 31, 2024, were $2.3 million. In April 2024, the company completed 2 capital raises, which resulted in gross proceeds of $11.4 million.
The company believes that existing cash and cash equivalents will enable it to fund its operating expenses and capital expenditure requirements into the fourth quarter of 2024. .
I will now hand the call over to Dr. Joshua Hare, our Chief Science Officer and Chairman of the Board, to update you on several exciting changes to our Board of Directors.
Josh?.
Thank you, Lisa, and good afternoon, everyone. Since the founding of this company, we have made tremendous clinical progress with Lomecel-B. That success in the clinic has not been without corporate challenges, challenges that we've been able to navigate with the assistance and guidance of a terrific Board of Directors.
Recognizing Longeveron's continued growth and evolution, we've implemented a planned board refreshment process with a focus on bringing in new, relevant experienced leaders over time to add to the knowledge base and experience provided by current and departing board members.
As part of this process, Jeffrey Pfeffer and Cathy Ross departed the Board and Dr. Doug Losordo, will not run for reelection at the end of his term at the upcoming Annual Shareholder Meeting next month. On behalf of the Board and company, I want to recognize and thank them for their leadership and many contributions.
Their guidance and insights were instrumental in Longeveron's success to this point and we will miss their collaboration. .
We are delighted to have attracted several new experienced industry veterans that are interested in joining the Longeveron board. Richard Kender has been appointed to the Board filling the seat vacated by Jeffrey Pfeffer. Dr. Roger Hajjar and Neha Motwani have been nominated as candidates for the Board to replace Dr.
Losordo and Cathy Ross, subject to their election at our upcoming Annual Meeting of Stockholders next month. I believe all 3 of these individuals will add tremendous value to the Board and to Longeveron. .
Rich Kender is a retired Senior Vice President of Business Development and Corporate Licensing at Merck & Co., Inc. He spent his entire professional career at Merck in various corporate roles of increasing responsibility and was evolved in more than 100 business development and licensing transactions. Dr.
Roger Hajjar brings incredible experience as a scientist, academic and operational executive. He is an internationally recognized scientists whose cardiac gene therapy discoveries has 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 are doing here at Longeveron. He was recently Head of R&D at Ring Therapeutics and was appointed as the inaugural Director of the Gene and Cell Therapy Institute at Mass General Brigham. .
Finally, the third board candidate, Neha Motwani, 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 & Company, Stifel Financial and Cowen and Company, where collectively she completed transactions raising over $6.8 billion.
I'm delighted Rich's join the Board and enthusiastically support the election of Roger and Neha at the upcoming Annual Meeting of Stockholders. I believe their experience, expertise and insights will help guide Longeveron through its next stages of growth and opportunity. .
Thank you all very much, and I will now turn the call back to Wa'el. .
Thank you, Josh. We believe there are tremendous opportunity in our cellular therapy research and with Lomecel-B. The trend of initial clinical data from ELPIS I and CLEAR MIND reinforces that belief.
Our clinical development program in HLHS and Alzheimer's disease are designed to evaluate Lomecel-B's potential in this indication in order to potentially provide new therapeutic options to patients impacted by these devastating diseases.
With multiple upcoming important catalysts, we believe 2024 has the potential to be a transformational year for Longeveron. .
Operator, we would now like to open the call for questions from covering analysts. .
[Operator Instructions] Our first question comes from Ram Selvaraju of H.C. Wainwright. .
Two regulatory items, please. Firstly, with respect to the applicability of Lomecel-B in HLHS.
If we look at the hypothetical scenario in which the ongoing study replicates the earlier clinical data, what perspective can you provide to us regarding the regulatory receptivity to such a result and the potential for the drug to be the subject of accelerated approval.
And what other parameters, if any, might be taking into consideration here?.
All right. Well, Raghuram, thank you so much for that question. I will tell you that our intention is -- right now is with -- to finalize submitting the briefing book and ask for the timely meeting. And our goal is to ask for actually the potential of getting full approval, not just accelerated approval, and our backup plan is accelerated approval.
So -- but our primary target is a full approval of Lomecel-B and HLHS. .
The second point, I will have Nataliya probably take this one. But I want to remind you that the Phase I program was not done as a head-to-head trial, there was only 10 patients, all of them have received Lomecel-B.
The Phase II program is done as a head-to-head program with 19 patients in each arm of the standard of care and the other 19 patients with adjunct therapy of Lomecel-B. .
With that, I will have Nataliya or Dr. Hare may comment related to the endpoints and the clinical outcome that we can drive from Phase I into Phase II. .
Absolutely. And Grant (sic) [ Ragu ], I would like to echo the same comment with Wa'el that the current clinical trial ELPIS II, it's a standard of care control trial, which, as you know, probably in rare disease indication is a big benefit for seeing results in a controlled fashion.
Secondly, we are exploring all kind of opportunities to design and -- design a good statistical methodology to show -- to increase probability of success. As you know, this trial is a 12-month trial and a lot of time based on the physiological changes and the condition of these children, we would need a little bit longer time.
However, there are parameters, cardiac parameters, extra cardiac parameters, which can be seen within 12 months after the injection of Lomecel directly into myocardium. And they are definitely going to have a conversation about it with FDA, again, to have this dialogue to make sure that the probability of success is there. .
That's very helpful.
With respect to the potential future development of Lomecel-B in Alzheimer's disease, I was wondering if you could comment on the regulatory guidance that appears to indicate that impact on a single clinical efficacy endpoint, notably the ADAS-Cog scale would be considered sufficient to entertain the possibility of approval of an investigational drug product in early Alzheimer's disease patients.
And I was just wondering what implications this guidance may have for the future development of Lomecel-B in the Alzheimer's disease context, along with the information that we already have, indicating that Lomecel-B may have safety advantages versus existing approved anti-Alzheimer's drugs, particularly with respect to the absence of ARIA seen so far in clinical development.
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So I will take that -- I was going to say -- I will take just to add a couple of things, and I will have Nataliya give you more details as well, Raghuram on this one.
As you know, there is a draft document that was circulated by the FDA looking also for inputs from all parties, including the industry into potential surrogate endpoints as well related to Alzheimer's disease.
I think the agency have definitely realized that -- current, I would say, available end points to the industry is not enough, and there is a room to change or modify some of these things to help companies bring more therapies into the marketplace in a much more streamlined fashion.
And of course, we are planning to provide our inputs as part of that process as well. .
With that being said, I will have Nataliya give you a little bit of why we still believe we are very confident about -- even with the existing guidelines for approval, we're still very optimistic about our plan, and we want to move forward there, of course. And Nataliya, feel free to add to that. .
Absolutely. Raghuram, you mentioned this FDA guidelines, which actually was a really good and positive message for all of us and as well as for the community and Alzheimer’s disease.
In our proof-of-concept Phase IIa study, probably the strongest result besides showing some improvement and stabilization in cognitive function, we've seen a lot of data points to show the slowing of brain volume decrease and deterioration.
We also did a number of post-hoc analysis, which shows that there is a connection between the slowing of brain volume and the cognitive and functional improvement, which is a great positive finance. .
When we find out about these guidelines, actually, it gave us -- it gave us the more opportunities to have dialogue with FDA, have dialogue with the experts in this field to design clinical trial, having in mind that imaging biomarkers, such as the brain volume. We have a slightly different approach for Alzheimer's disease treatment.
We're trying to target early Alzheimer's disease, NCI and patients with Alzheimer’s disease mild dementia, where we can prevent not only cognitive function -- not only the brain volume changes, but also cognitive function by demonstrating and by designing of combination of imaging biomarkers and clinical biomarkers. .
So I think we have a great potential to have a next stage Phase IIb study to implement all the brain imaging biomarkers. This definitely is a good validated clinical scales. We do have some preliminary thoughts on our next design. Definitely, cognitive and functional measures will be probably upfront.
We think it may be about [ CVRSB ] maybe combination outcomes, which has been implemented before, followed by the great key secondary endpoint, which are imaging biomarkers and ADAS-Cognitive scales and MoCA scales, et cetera. .
So having results of our Phase IIa study really help us to navigate to the future of our design and development. And also, there are vast majority of literature rates right now speaking that there is an opportunity to design Alzheimer's disease study with image and biomarkers with less financial burden and smaller sample size.
And we are trying to be very creative, but scientifically correct to explore that opportunity as well. .
Ladies and gentlemen, we have reached the end of our question-and-answer session. I will now hand over to Wa'el Hashad for closing remarks. .
Thank you. And I wanted to thank you all for attending today's call. We greatly appreciate your interest and support and look forward to updating you on our progress throughout the year. Thank you. Operator, you may end the call now. .
Thank you. Ladies and gentlemen, that concludes today's event. Thank you for attending, and you may now disconnect your lines..