Histogenics Corporation (NASDAQ:HSGX), a regenerative medicine company focused on developing and commercializing products in the musculoskeletal space, announced its financial and operational results for the quarter ended September 30, 2016.
“We continue to execute on our strategy and operating initiatives in the third quarter of 2016. We have now enrolled more than three-quarters of the 245 patients required to complete our NeoCart Phase 3 clinical trial, and made continued progress on the manufacturing elements of the NeoCart development program. Enrollment is expected to be completed prior to the end of the second quarter of 2017, and we are preparing for the top-line data in the middle of 2018 and a BLA submission shortly thereafter,” stated Adam Gridley, President and Chief Executive Officer of Histogenics. “Furthermore, we believe that the financing completed in the third quarter of 2016 was in large part due to our execution over the last year and the recognition of the market opportunity for this important therapy. We believe we are now funded to our expected top-line Phase 3 data read-out in mid-2018,” continued Mr. Gridley.
Third Quarter 2016 and Recent Highlights
|•||NeoCart Phase 3 Clinical Trial Status: As of November 9, 2016 Histogenics has enrolled 186 of the 245 patients required under the Special Protocol Assessment (SPA) with the United States Food and Drug Administration (the FDA) in its NeoCart Phase 3 clinical trial. Enrollment trends have remained strong in each of the completed three quarters of 2016 and continue to run ahead of Histogenics’ expectations. As a result, Histogenics confirms both its year-end enrollment guidance of 190 to 200 patients and its expectations that patient enrollment will be complete by the end of the second quarter of 2017. As of November 9, 2016, there were 33 sites participating in the clinical trial.|
|•||Completion of $30 Million Financing: Histogenics completed a $30 million private placement of common stock, Series A Convertible Preferred Stock and warrants in September 2016. The financing was led by new healthcare-focused, institutional investors and supported by existing Histogenics investors. Histogenics believes the financing will enable it to reach its objective of generating top-line data from the ongoing NeoCart Phase 3 clinical trial in the middle of 2018.|
|•||Additional Progress on NeoCart Critical Raw Materials: Having reached agreement with the FDA on internally produced collagen in April 2016, and incorporating this material in the ongoing Phase 3 trial beginning in June 2016, Histogenics reached agreement with the FDA in August 2016 regarding the qualification plan for the NeoCart collagen scaffold to its in-house manufacturing facility in Lexington, Massachusetts. Histogenics is in the process of qualifying those materials to be used upon commercialization of NeoCart, if approved.|
|•||Additional Discussions with Japanese Regulatory Authority: During the third quarter of 2016, Histogenics continued its dialog with the Japan Pharmaceuticals and Medical Devices Agency (PMDA) regarding the development of NeoCart for the Japanese market. There were two informal|
|meetings to discuss the NeoCart Phase 1 and Phase 2 data generated to date, the proposed development program and the required regulatory submission package for potential conditional approval. In the first half of 2017, Histogenics intends to conduct formal meetings with the PMDA to define and agree upon the regulatory pathway and development requirements for the potential conditional approval of NeoCart in Japan. Histogenics intends to leverage the results of these meetings to create value in discussions with potential partners for the Japanese market.|
|•||Intrexon Collaboration: Histogenics and Intrexon Corporation continue to generate compelling proof-of-concept data demonstrating our ability to make iPSC derived chondrocytes as measured by the same cartilage biomarkers as NeoCart. The partners are currently working on a strategy to engage with the FDA and other regulatory authorities and anticipate the identification of a development plan in the first half of 2017.|
|•||Expansion of Scientific Advisory Board: Histogenics recently expanded its Scientific Advisory Board (SAB) with the addition of Professor Lawrence Bonassar, a leading researcher in the field of cartilage biomechanics and tissue engineering, including the structure-property relationships in cartilage to elucidate mechanisms of disease and inform the design of tissue replacement. Dr. Bonassar is a Professor at Cornell University in the Meinig School of Biomedical Engineering and the Sibley School of Mechanical and Aerospace Engineering. As part of a Sponsored Research Agreement, Dr. Bonassar’s lab and Histogenics have successfully demonstrated the biomechanical competence of cartilage tissue engineered using the NeoCart manufacturing technology. The work has resulted in three presentations including one at the Orthopedic Research Society annual meeting in March 2016 and a more recent presentation at the Biomedical Engineering Society Annual Meeting in October 2016.|
Financial Results for the Third Quarter of 2016
For the third quarter of 2016, Histogenics reported a loss from operations of $(6.6) million compared to $(8.0) million in the third quarter of 2015. The decrease in operating expenses was driven by reductions in both research and development and general and administrative expenses.
Research and development expenses were $4.9 million in the third quarter of 2016, compared to $5.8 million in the third quarter of 2015. The decrease in expense was primarily due to a reduction in consulting and temporary labor costs, hiring fees, and raw materials and patient recruiting expenses related to the NeoCart Phase 3 clinical trial. This decrease was partially offset by an increase in clinical trial related expenses and facility-related and other expenses in the third quarter of 2016. General and administrative expenses were $1.8 million in the third quarter of 2016, compared to $2.2 million in the third quarter of 2015. The decrease was primarily due to a reduction in hiring fees, facility-related costs and legal and consulting costs which were partially offset by an increase in stock-based compensation expense.
For the third quarter of 2016, Histogenics reported a net loss attributable to common stockholders of $(9.2) million, or $(0.70) per share, compared to $(8.1) million, or $(0.61) per share, in the third quarter of 2015. The increase in net loss attributable to common stockholders is primarily due to accounting charges related to the warrants issued as part of the financing that was completed in September 2016 and was partially offset by the aforementioned reductions in operating expenses.
At September 30, 2016, Histogenics had cash, cash equivalents and marketable securities of $38.0 million, compared to $30.9 million at December 31, 2015. Histogenics believes its current cash position will fund its operations into the middle of 2018.
Conference Call and Webcast Information
Management will host a conference call on Thursday, November 10, 2016 at 8:30 a.m. EST. A question-and-answer session will follow Histogenics’ remarks. To participate on the live call, please dial (877) 930-8064 (domestic) or (253) 336-8040 (international) and provide the conference ID “73416804” five to ten minutes before the start of the call.
A live audio webcast of the presentation will be available via the “Investor Relations” page of the Histogenics website, www.histogenics.com. A replay of the webcast will be archived on Histogenics’ website for approximately 45 days following the presentation.
About Histogenics Corporation
Histogenics is a leading regenerative medicine company developing and commercializing products in the musculoskeletal segment of the marketplace. Histogenics’ regenerative medicine platform combines expertise in cell processing, scaffolding, tissue engineering, bioadhesives and growth factors to provide solutions to treat musculoskeletal-related conditions. Histogenics’ first investigational product candidate, NeoCart, is currently in Phase 3 clinical development. NeoCart is an autologous cell therapy designed to treat cartilage defects in the knee using the patient’s own cells. Knee cartilage defects represent a significant opportunity in the United States, with an estimated 500,000 or more applicable procedures each year. NeoCart is designed to exhibit characteristics of articular, hyaline cartilage prior to and upon implantation into the knee and therefore does not rely on the body to make new cartilage, characteristics not exhibited in other current treatment options. For more information, please visit www.histogenics.com.