Good afternoon, ladies and gentlemen, and welcome to the Humacyte Third Quarter Results Conference Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I will now turn the call over to Lauren Marek with LifeSci Advisors. Please go ahead.

Thank you, operator. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, except as required by law. Information presented on this call is contained in the press release we issued this afternoon and in our Form 10-Q, which after filing may be accessed from the Investors page of the Humacyte website. Joining me on today's call from Humacyte are Dr. Laura Niklason, President and Chief Executive Officer; Dale Sander, Chief Financial Officer and Chief Corporate Development Officer; and Dr. Heather Prichard, Chief Operating Officer. Dr. Niklason will provide a summary of the company's progress during the quarter and recent weeks, and Dale will review the company's financial results for the quarter ended September 30, 2023. Following their prepared remarks, the management team will be available for your questions. I will now turn the call over to Dr. Niklason.

Thank you, Lauren. Good afternoon, everyone, and thank you for joining us for our third quarter 2023 financial results and business update call. Our third quarter was a highly productive period for Humacyte, during which we achieved significant milestones in the advancement of our universally implantable bioengineered human tissue product candidate the Human Acellular Vessel, or HAV, and we've worked on this in multiple indications. This was led by our announcement in September of positive top line results from our Phase 2/3 clinical trial in vascular trauma repair, which positions us to submit our BLA filing for approval in this indication during the current quarter. We're also pleased that potential of our HAV pipeline has been shown in other clinical studies this quarter, including the presentation of Phase 2 results in severe Peripheral Artery Disease, or PAD. In addition, we recently published preclinical results of our small caliber HAV in a juvenile heart disease model. During today's call, I'll review these recent highlights in more detail before turning the call over to Dale for a review of our financial results, then we'll be happy to open the call to your questions. I'll begin with our HAV program in vascular trauma and the positive top line results that we announced from our V005 Phase 2/3 clinical trial of the HAV in trauma repair. In this clinical trial, the HAV had higher rates of patency and lower rates of amputation and infection as compared to historical published benchmarks of synthetic graft function in trauma patients. A total of 69 patients were enrolled in the V005 trial, and 51 of these had vascular injury of the extremities and comprise the primary evaluation group for the study. The 30-day patency or presence of blood flow for the HAV in the clinical trial was 90%…

Thank you, Laura. As of September 30, 2023, we had cash and cash equivalents of $100 million. In May 2023, we reported the completion of a funding arrangement with Oberland Capital of up to $160 million, of which we have received $40 million to date. Total net cash used was $49.4 million for the first nine months of 2023, compared to $53.8 million for the first nine months of 2022. We believe that our cash and cash equivalents and expected funding from the Oberland funding arrangement are adequate finance operations passed the currently anticipated timelines for FDA approval and commercialization of HIV in the vascular trauma indication. There was no revenue for the third quarter of 2023 and nine months ended September 30, 2023. Revenues were $31,000 for the third quarter of 2022 and $1.6 million for the nine months ended September 30, 2022. Revenue from 2022 was related to a grant supporting the development of HAV. Research and development expenses were $18.6 million for the third quarter of 2023 compared to $17.3 million for the third quarter of 2022, and were $56.4 million for the nine months ended September 30, 2023 compared to $48.3 million for the nine months ended September 30, 2022. The current period increases resulted primarily from increased personnel and external services to support expanded research and development initiatives and our clinical trials, including preparation for the HAV trauma clinical trial and completion and planned BLA filing for the vascular trauma indication and expansion of clinical development of HAV in AV access for hemodialysis. General and administrative expenses were $6.1 million for the third quarter of 2023 compared to $6.2 million for the third quarter of 2022, and were $17.5 million for the nine months ended September 30, 2023, compared to $17.1 million for the nine…

Thank you, Dale. This is a very exciting time for Humacyte and for all of our stakeholders. As we move closer to our planned regulatory filing in our first HAV indication, I'd like to take a moment to thank the entire Humacyte team as well as our partners for their continued commitments to our programs. The entire team has worked incredibly hard to reach this point, and we are approaching what could be a transformational time not only for the company, but for patients who are suffering from a variety of vascular diseases. Across our clinical programs, the HAV has already accumulated more than 1,200 patient years of experience, including in vascular trauma, vascular access and hemodialysis and peripheral artery disease. We're also continuing to study the HAV in our earlier-stage programs in order to maximize the full potential of the HAV's value for our patients and for our investors. We look forward to keeping you updated on our progress, and thank you all for joining us today. Operator, we're now ready to take questions.

[Operator Instructions] Our first question comes from Suraj Kalia of Oppenheimer. Your line is open.

Hi, Laura, Dale. Can you hear me all right?

Yes, we can.

Perfect. Congrats on all the progress. Laura at VEITH, what additional data on V005 should we expect?

At the VEITH meeting, we're going to share, in addition to the efficacy results, we're going to share some of the safety outcomes. That's during a podium presentation that will occur during the meeting on Wednesday. In addition, on Thursday evening, we have a dinner symposium session where we will talk about the V005 outcomes and also the outcomes from Ukraine and look at the combination of those outcomes and as they compare to our benchmarks in synthetic graft treatment for vascular trauma.

Got it. Laura, assuming nine months post BLA filing for a vascular trauma indication, how should we start thinking about -- my understanding is the label would be sort of not indicated for synthetic grafts. So, can you size up the market and also the low-hanging fruit post approval?

So, I think in terms of the size of the market, as we've shared in earlier presentations, there's approximately 70,000 vascular injuries in the U.S. that occur every year that require some sort of repair, and tens of thousands of those probably require grafting or active surgical repair. So, of those, about 12% or 15% are done with synthetic grafts. But if you talk to trauma surgeons and if you look at the literature, essentially all traumatic injuries are viewed as being contaminated or potentially contaminated and infected. So, if you -- again, if you talk to trauma practitioners, they will tell you that synthetic grafts are essentially never indicated in patients with traumatic injury. In addition, we believe that in many cases, the extra hour that it takes to harvest vein is going to make many patients who might have otherwise gotten a vein be more suitable for an HAV, because the extra hour that it takes to harvest the vein puts the injured limb at increased risk of amputation. So, we believe that we will take a sizable fraction of certainly the synthetic graft use, but also we believe we'll eat into vein use as well in the traumatic injury indication.

And Suraj, some of the data that may will be presented at VEITH will be the outcome from the study in terms of why surgeons use the HAV in those particular patients and that may provide some further evidence to support what Laura just said about the likely uses and why they would choose to use it in certain instances over synthetic or saphenous vein?

Got it. Appreciate the additional color. Dale, one final question for you. Dale, the contingent earnout in revenue interest liability caught my attention. Love some additional color. I'm assuming the revenue interest liability is the $40 million from Oberland, but I might be wrong, if you could just walk us through that? Thank you.

Yeah, you're exactly right. The -- what we call the RIP, or the Revenue Interest Liability, is essentially the debt instrument with Oberland. And so, that will accrue up over time as interest is accrued. But right now, the face amount of that debt is $40 million. The contingent earnout liabilities associated with our going public transaction, the legacy holders of Humacyte are potentially due shares if the stock price hits certain levels. And so, every quarter, if the price goes down, that liability increases and there's a non-cash expense recorded and if the stock goes down that quarter, there's a non-cash gain and the liability goes down.

Got it. Thank you so much for taking my questions.

Our next question comes from Josh Jennings of TD Cowen. Your line is open.

Hi. This is Eric on for Josh. Thanks for taking the question. On the RMAT designation that you have in vascular trauma, I was wondering if you could share with us when you will know whether or not you received priority review for your BLA filing. And secondly, if you do receive prior to review, could you specify what that entitles you to throughout the BLA review process? Thank you.

So as part of the BLA filing, we are going to apply for priority review, which, as you may know, would entitle us to a six-months review period in PDUFA date as opposed to a standard 10-months, which is more typical for biologics. So, it's my understanding that once we file that within 60 days, the agency comes back to us with the acceptance of the file and also with a determination at that time as whether or not they've granted priority review. So, I would expect 60 days after we file, we'll know if we have a priority pathway. Again, I would hope and expect that we do because of the RMAT and also because of the priority designation from the Defense Department. The priority review provides a speedier review process. I'm not sure that it really changes the amount of interaction you have with the agency. Certainly, once you file a BLA, the amount of interaction and the back and forth and the discussion is always really robust. So, I think it's more about speed.

Understood. That's great. And then sticking with vascular trauma, with the target you have here submitting the BLA in 4Q, could you tell us what steps remain for the process before you actually make that submission?

Well, without providing too much detail that we haven't provided already in a public forum, I can say that a BLA is thousands of pages and that it's a complex document. But I can say that much of the BLA has actually been largely ready for some time. Our Module 3, which is really the description of the manufacturing pieces, has been in a fairly final form for many months now because we transitioned to our commercial stage manufacturing actually in 2021. Also, our preclinical work is essentially -- has been done for years practically. And that's Module 4. So, there are really five modules to the BLA. I would submit that two of them have been done or mostly done for a while, and it's really about wrapping up the clinical modules and some of the labeling. So, we do not anticipate that there will be any difficulties filing this quarter. We see ourselves as completely on track.

Understood. Thank you for that, and thank you for taking the questions.

Our next question comes from Matthew O'Brien of Piper Sandler. Your line is open.

Hi. This is Samantha on for Matt. We just have a couple of questions for you. I guess, first off, we were wondering if you thought about providing humanitarian efforts during the Gaza conflict like you have in the past?

Yes. That's a very interesting question. I think it's an excellent question. It is a topic that's come up amongst our leadership. In the Ukraine conflict, we had surgeons reach out to us and ask for access to the HAVs as part of treating patients who were injured in the conflict. To date, we have not yet received any request from surgeons in Israel along these same lines. I think it may be that the Israeli healthcare system is perhaps better equipped to handle the casualties that they're seeing. I honestly don't know. Certainly, if we had requests come in inbound from surgeons in Israel, we would certainly consider them and work with our regulatory and clinical teams and work with the FDA to consider those requests.

That's great. Thank you. And then, I guess, on another note, maybe you could talk a little bit about launch preparations that are ongoing for the HAV, maybe in terms of hiring sales reps and how you anticipate launching this product?

Well, I'll let Dale handle the sales force and part of the launch, but I will say that an ongoing focus for Humacyte and one where we've made tremendous progress is really speaking to the health economics and the budget impact modeling of the vessel in the care of trauma patients. It's been incredibly useful that our clinical trial results have shown a real decrease in amputation and in infection as compared to patients who were historically treated with synthetic grafts. That really provides us excellent hard data to make strong economic arguments around the utility of the HAV not just for improving patient outcomes, but also for improving the total expenditures for hospitals and for insurers. So, we're working closely now with our colleagues and health economics that we've brought on a whole team here at Humacyte, really mapping out those arguments, and also putting together dossiers that we're going to bring forward to insurers even in advance of approval to outline for them the size of the clinical problem and the benefits that we think the HAV can bring to patients into the healthcare system. So that's really in terms of we're doing work with healthy economics, reimbursement and also in coding, and that's all very active work streams. But I'll let Dale speak to the sales force and the timing on that.

Yes. Thanks, Laura. And Samantha, as Laura said, much of the effort of the core commercial team right now is geared towards those longer lead time items, as she mentioned, the budget impact model and coding and reimbursement and market access. In terms of the sales force itself, certainly, there is planning going on in terms of sizing that for us and how we would divide up territories and strategies like that. But the actual sales force itself will be brought on -- will be recruited, but brought on closer to market launch. So there's certainly not a need to bring them on so far in advance of the 2024 launch. But certainly, the planning is underway right now. As a reminder, this is a very concentrated market. We've talked about before where 80%-plus of the patients tend to be treated at level one trauma centers, and there's approximately 200 of those centers. So, this will be a highly qualified sales force geared towards surgical type products within the trauma setting, but it will not be a huge sales force.

Great. Thank you.

[Operator Instructions] And our next question comes from Kristen Kluska of Cantor Fitzgerald. Your line is open.

Hi. This is Jason on for Kristen. Thanks for taking our questions. Two from us. Is the surgeon base, who's -- how open are they to trying new procedures and options, is the first question. And then, the second is just some insight on your plans, if any, to collect real-world evidence and stats that could help the launch in further years out? And I'll take the answers offline.

So yes, those are excellent questions. In the trauma indication, the end users are really going to be a combination of vascular surgeons and trauma surgeons. From the standpoint of both of these types of surgeons, it's true that there hasn't been an important new advance in conduits for vascular restoration and replacement in probably 30 years. So, for these practitioners who feel like they've been stuck with the same tools for a very long time, having a new biologic that has as much experience as we now have with over 1,200 patient years, I think both vascular surgeons and trauma surgeons find this very exciting. And we are getting just spontaneous questions and comments whenever we're at the podium about when can I get my hands on this? When will it be on the shelf? How fast can I use this? So, I think there's a lot of anticipation out there in the vascular surgical market. I would also say that for trauma surgeons, in particular, they're more trained as general surgeons and not as vascular surgeons per se. And so, trauma surgeons, by and large, would rather not spend time harvesting vein. It's not something that's really in their wheelhouse. So, for trauma surgeons, in particular, having a biologic that's going to resist infection that they can pull off the shelf is, I think, going to be very attractive. As far as real-world evidence, certainly, we're making progress on our coding so that we can capture cases that are done with the HAV and various trauma scenarios after we're on the market. And we certainly plan on continuing to follow that data. I also anticipate that we'll work with some of our key opinion leaders who are -- who have already been part of our Phase 2/3 V005 trial and look at post launch studies of either specific types of injuries or specific geographies and look at usage and outcomes. So, I definitely want to take advantage of that after we're on the market.

Great. Thanks a lot.

Our next question comes from Bruce Jackson from The Benchmark Company. Your line is open.

Hi, congratulations on all of the progress. Most of my questions have been answered. I just -- you got the VEITH Symposium coming up here shortly. Are there any particular presentations that you're excited about?

I'm excited about Humacyte's presentations. But I'm also excited about a couple of other things that we haven't mentioned. I will say that there's a surgeon from the Mayo Clinic, who's been doing peripheral artery disease work that he's doing an investigator-sponsored study with the HAV in patients with critical limb ischemia who are facing potential amputation. So, he's going to talk about those results, which are very encouraging. We also have a joint presentation with Fresenius, where we're presenting some early results of a data dive that we're doing to look into the types of patients who have problems with their access, either access failures or frequent access infections to really hone in on which dialysis patients may benefit from the HAV in the long term.

All right. That's it for me. Thank you.

I'm seeing no further questions. I'll turn the call back over to our host.

Well, thank you very much for everyone for your time and attention. It's been an exciting quarter. And everybody at Humacyte is working hard to continue to meet our milestones. As I've said, since we went public, we have been delivering on what we said we would deliver on the timelines on which we said we would deliver it, and we're just continuing to do that. And I'm just so proud of our team and all the hard work that they've done, and also all of our collaborators, whether it's collaborating surgeons or our corporate partners. So, I just want to give a big shout out to everybody who's helped us get this far.

That concludes today's conference call. Thank you for joining, and have a pleasant day.