Humacyte, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; filed May 13, 2024. Humacyte is a clinical-stage regenerative medicine company developing bioengineered human acellular vessels (HAVs). It has not generated product revenue.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / prior period |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $21.3 million | $17.3 million |
| General and administrative expense | $5.3 million | $5.2 million |
| Operating loss | $26.6 million | $22.5 million |
| Net loss | $31.9 million | $37.0 million |
| Basic and diluted loss per share | $0.29 | $0.36 |
| Cash used in operating activities | $27.3 million | $18.6 million |
| Cash and cash equivalents at period-end | $115.5 million | $80.4 million at December 31, 2023 |
| Working capital | $103.8 million | $64.8 million at December 31, 2023 |
Revenue was zero, so a revenue margin is not meaningful. Total operating expenses rose 18%, led by higher R&D spending on manufacturing, materials, personnel and clinical development. Net loss improved by $5.1 million year over year, mainly because the non-cash loss from remeasurement of the contingent earnout liability was $4.6 million versus $14.2 million in Q1 2023. Interest income declined to $1.0 million from $1.5 million.
Cash from financing was $62.8 million, principally $43.4 million net proceeds from a March public offering and $20.0 million from the revenue-interest financing. Investing cash use was $0.4 million. Stock issued in the offering totaled 15.41 million shares at $3.00 per share; quarter-end shares outstanding were 119.08 million, up from 103.67 million at year-end.
At March 31, total assets were $161.5 million, total liabilities $135.3 million and stockholders’ equity $26.2 million. The $58.0 million revenue-interest liability is accounted for as long-term debt; its estimated effective annual interest rate was 14.6%. Finance lease obligations totaled $18.5 million, including current and long-term portions. The former SVB loan was repaid in 2023.
Business developments, outlook and risks
- The FDA accepted Humacyte’s vascular-trauma BLA in February 2024, granted priority review and set an August 10, 2024 PDUFA date. The filing reports no approval as of the report date.
- Humacyte completed enrollment in its V007 Phase 3 hemodialysis AV-access trial in April 2023. Management anticipated trial completion in 2024 and plans a supplemental BLA, dependent on clinical results. V012 and other clinical and preclinical programs also contribute to development spending.
- Management expects substantial operating losses and negative operating cash flows for the foreseeable future, with expenses expected to increase as it advances trials, prepares for potential commercialization and scales manufacturing. It says cash on hand should fund operations for at least 12 months from the filing date, but this assessment is subject to the financing-agreement issue described below.
- Under the Oberland-affiliate revenue-interest agreement, purchasers may receive a 7.5% royalty on global net sales, subject to specified terms, and up to $90 million in further conditional installments was available at March 31: $40 million upon FDA approval by December 31, 2024 and $50 million upon reaching the specified sales threshold by December 31, 2025.
- A material liquidity contingency concerns post-closing obligations under that agreement. In a May 8, 2024 waiver, the company was required, among other conditions, to deliver a headquarters landlord consent and waiver by June 7 and fund a $54 million account by August 17, 2024, unless it delivered a leasehold mortgage by June 7. If the requirements are not met, purchasers may terminate the agreement and require repurchase of the revenue interests. Humacyte warned that restricted cash or a repurchase could substantially limit operating liquidity and raise substantial doubt about its ability to continue as a going concern in the quarter ending June 30, 2024, absent additional capital and/or BLA approval.
- As of March 31, the company had $23.0 million in non-cancellable R&D-related purchase commitments. Future funding needs depend on trial and regulatory outcomes, commercialization and manufacturing costs, and available financing; additional capital may not be available on acceptable terms.
- Management reported effective disclosure controls as of March 31 and no material change in internal control over financial reporting. It reported no legal proceedings believed to have a material adverse effect and no material changes to the risk factors in its 2023 Form 10-K.
Most important facts for investors to verify
- FDA’s decision and timing for the vascular-trauma BLA, including the stated August 10, 2024 PDUFA date.
- Whether Humacyte met the June 7 headquarters-documentation deadline and the August 17 $54 million account requirement, or otherwise resolved the revenue-interest agreement contingency.
- Cash runway after operating cash use, required financing-agreement funding or any repurchase obligation, and potential need for additional financing.
- Clinical results and timelines for V007, V012 and other HAV programs, alongside rising R&D and manufacturing expenditures.
- The dilution and continuing costs associated with equity issuance, outstanding options and warrants, and the revenue-interest financing’s repayment and royalty terms.