Humacyte Inc

Previous wording

We have generated no product revenue and incurred operating losses and negative cash flows from operations in each year since our inception in 2004. As of June 30, 2024 and December 31, 2023, we had an accumulated deficit of $625.9 million and $537.3 million, respectively, and working capital of $78.4 million and $64.8 million, respectively. Our operating losses were approximately $29.5 million and $56.1 million for the three and six months ended June 30, 2024, respectively, and $26.7 million and $49.2 million for the three and six months ended June 30, 2023, respectively.

Current wording

We have generated no product revenue and incurred operating losses and negative cash flows from operations in each year since our inception in 2004. As of September 30, 2024 and December 31, 2023, we had an accumulated deficit of $665.1 million and $537.3 million, respectively, and working capital of $2.1 million and $64.8 million, respectively. Our operating losses were approximately $30.2 million and $86.3 million for the three and nine months ended September 30, 2024, respectively, and $24.6 million and $73.9 million for the three and nine months ended September 30, 2023, respectively.

Previous wording

Net cash flows used in operating activities were $48.6 million and $41.2 million during the six months ended June 30, 2024 and 2023, respectively. Substantially all of our operating losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to incur substantial operating losses and negative cash flows from operations for the foreseeable future as we advance our product candidates.

Current wording

Net cash flows used in operating activities were $71.5 million and $54.3 million during the nine months ended September 30, 2024 and 2023, respectively. Substantially all of our operating losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to incur substantial operating losses and negative cash flows from operations for the foreseeable future as we advance our product candidates.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $93.6 million. The extension of time required by the FDA to review our vascular trauma BLA, and the delay in potential approval, has delayed, among other items, our ability to draw an additional $40.0 million in Purchase Agreement proceeds. Accordingly, we do not believe our available cash and cash equivalents on hand will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, for at least one year from the date of this Quarterly Report without achieving approval of the ATEV for vascular trauma and generating sufficient cash flows from commercial sales on a timely basis and/or obtaining additional capital. See Note 1 — Organization and Description of Business in the notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information regarding this assessment.

Current wording

As of September 30, 2024, we had cash and cash equivalents of $20.6 million and restricted cash of $50.4 million. Subsequent to September 30, 2024, we received an additional $29.6 million in net proceeds from the Registered Direct Offering and sales of shares to Lincoln Park under the Common Stock Purchase Agreement. The extension of time required by the FDA to review our vascular trauma BLA, and the delay in potential approval, has delayed, among other items, our ability to draw an additional $40.0 million in Purchase Agreement proceeds. Accordingly, we do not believe our available cash and cash equivalents on hand will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, for at least one year from the date of this Quarterly Report without achieving approval of the ATEV for vascular trauma and generating sufficient cash flows from commercial sales on a timely basis and/or obtaining additional capital. See Note 1 — Organization and Description of Business in the notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information regarding this assessment.

Previous wording

Since our inception, we have focused our resources on our research and development activities, including conducting preclinical studies and clinical trials, developing our manufacturing process and activities related to regulatory filings for our product candidates. We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of:

Current wording

Since our inception, we have focused our resources on our research and development activities, including conducting preclinical studies and clinical trials, developing and refining our manufacturing process and activities related to regulatory filings for our product candidates. We recognize research and development expenses as they are incurred. Our research and development expenses consist primarily of:

Previous wording

•development of clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that it or its third-party manufacturers are able to successfully manufacture our product;

Current wording

•development and refinement of clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that it or its third-party manufacturers are able to successfully manufacture our product;

Previous wording

Total other income (expense), net consists of (i) the change in fair value of the Contingent Earnout Liability that was accounted for as a liability as of the date of the Merger, and is remeasured to fair value at each reporting period, resulting in a non-cash gain or loss, (ii) interest income earned on our cash and cash equivalents and short-term investments, (iii) interest expense incurred on the Purchase Agreement (defined above), finance leases, and our former loan agreement with SVB, during the periods each were outstanding, (iv) the change in fair value of our derivative liabilities including the private placement Common Stock warrant liabilities related to the Private Placement Warrants, which we assumed in connection with the Merger; the contingent derivative liability related to the Purchase Agreement; a liability related to the Option Agreement; and the derivative liability related to our agreement with JDRF, all of which are subject to remeasurement to fair value at each balance sheet date resulting in a non-cash gain or loss, (v) a loss on debt extinguishment related to the prepayment of our loan agreement with SVB in May 2023, and (vi) an employee retention credit we recognized in June 2023.

Current wording

Total other income (expense), net consists of (i) the change in fair value of the Contingent Earnout Liability that was accounted for as a liability as of the date of the Merger, and is remeasured to fair value at each reporting period, resulting in a non-cash gain or loss, (ii) interest income earned on our cash and cash equivalents and short-term investments, (iii) interest expense incurred on the Purchase Agreement (defined above), finance leases, and our former loan agreement with SVB, during the periods each were outstanding, (iv) the change in fair value of our derivative liabilities and asset including the private placement Common Stock warrant liabilities related to the Private Placement Warrants, which we assumed in connection with the Merger; the contingent derivative liability related to the Purchase Agreement; a liability related to the Option Agreement; a derivative liability related to our agreement with JDRF; and a derivate asset related to our Common Stock Purchase Agreement, all of which are subject to remeasurement to fair value at each balance sheet date resulting in a non-cash gain or loss, (v) a loss on debt extinguishment related to the prepayment of our loan agreement with SVB in May 2023, and (vi) an employee retention credit we recognized in June 2023.

Previous wording

Research and development expenses were $23.8 million for the three months ended June 30, 2024, representing an increase of $3.2 million, or 16%, from $20.5 million for the three months ended June 30, 2023. The increase was primarily driven by expenses incurred to support our expanded research and development initiatives, including increased product manufacturing and development and support of the FDA review of the BLA in vascular trauma. Expense increases were primarily comprised of a $3.0 million increase in the purchase of materials and supplies and $1.5 million in additional payroll and personnel expenses.

Current wording

Research and development expenses were $22.9 million for the three months ended September 30, 2024, representing an increase of $4.4 million, or 24%, from $18.6 million for the three months ended September 30, 2023. The increase was primarily driven by expenses incurred to support our expanded research and development initiatives, including increased product manufacturing and development and support of the FDA review of the BLA in vascular trauma. Expense increases were primarily comprised of a $2.2 million increase in the purchase of materials and supplies and $2.0 million in additional payroll and personnel expenses.

Previous wording

General and administrative expenses were $5.7 million and $6.2 million for the three months ended June 30, 2024 and 2023, respectively. The decrease in general and administrative expenses during this period of $0.4 million, or 7%, was primarily driven by a $0.5 million decrease in payroll and personnel expenses, including a $0.7 million decrease in non-cash stock compensation expense, partially offset by a $0.2 million increase in salaries and benefits.

Current wording

General and administrative expenses were $7.3 million and $6.1 million for the three months ended September 30, 2024 and 2023, respectively. The increase in general and administrative expenses during this period of $1.2 million, or 20%, was primarily driven by preparation for the planned commercial launch of the ATEV in vascular trauma. Major changes in expenses included a $1.1 million increase in salaries and benefits and a $0.8 million increase in external services, partially offset by a $0.5 million decrease in non-cash stock compensation expense and a $0.4 million decrease in insurance expense.

Previous wording

Total other expense, net was expense of $27.2 million for the three months ended June 30, 2024 compared to income of $4.0 million for the three months ended June 30, 2023. The increase in net expense of $31.2 million during the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily resulted from the remeasurement of the Contingent Earnout Liability as of June 30, 2024, which resulted in a non-cash loss of $25.6 million for the three months ended June 30, 2024, compared to a $3.6 million non-cash gain for the three months ended June 30, 2023.

Current wording

Total other expense, net was $9.0 million for the three months ended September 30, 2024 compared to $1.4 million for the three months ended September 30, 2023. The increase in net expense of $7.6 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily resulted from a $7.3 million increase in the non-cash loss resulting from the remeasurement of the Contingent Earnout Liability during each period.

Previous wording

Research and development expenses were $45.0 million for the six months ended June 30, 2024, representing an increase of $7.2 million, or 19%, from $37.8 million for the six months ended June 30, 2023. The increase was primarily driven by expenses incurred to support our expanded research and development initiatives, including increased product manufacturing and development and support of the FDA review of the BLA in vascular trauma. Expense increases were primarily comprised of a $6.3 million increase in the purchase of materials and supplies and $3.0 million in additional payroll and personnel expenses.

Current wording

Research and development expenses were $67.9 million for the nine months ended September 30, 2024, representing an increase of $11.6 million, or 21%, from $56.4 million for the nine months ended September 30, 2023. The increase was primarily driven by expenses incurred to support our expanded research and development initiatives, including increased product manufacturing and development and support of the FDA review of the BLA in vascular trauma. Expense increases were primarily comprised of a $8.4 million increase in the purchase of materials and supplies and $5.0 million in additional payroll and personnel expenses.

Previous wording

General and administrative expenses were $11.1 million and $11.4 million for the six months ended June 30, 2024 and 2023, respectively. The slight decrease in general and administrative expenses during this period of $0.4 million, or 3%, was primarily driven by a $1.0 million decrease in payroll and personnel expenses, including a $1.3 million decrease in non-cash stock compensation expense, partially offset by a $0.4 million increase in salaries and benefits. The decrease in payroll and personnel expenses was partially offset by a $0.7 million increase in professional fees.

Current wording

General and administrative expenses were $18.4 million and $17.5 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in general and administrative expenses during this period of $0.9 million, or 5%, was primarily driven by preparation for the planned commercial launch of the ATEV in vascular trauma. Major changes in expenses included (i) a $1.5 million increase in salaries and benefits expense, (ii) a $0.9 million increase in external services and (iii) a $0.9 million increase in professional fees, partially offset by a $1.8 million decrease in non-cash stock compensation expense and a $0.6 million decrease in insurance expense.

Previous wording

Total other income (expense), net was expense of $32.5 million for the six months ended June 30, 2024, compared to expense of $10.4 million for the six months ended June 30, 2023. The increase in net expense of $22.1 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily resulted from a $19.6 million increase in the non-cash loss resulting from the remeasurement of the Contingent Earnout Liability during each period.

Current wording

Total other expense, net was $41.5 million for the nine months ended September 30, 2024, compared to expense of $11.8 million for the nine months ended September 30, 2023. The increase in net expense of $29.6 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily resulted from a $26.9 million increase in the non-cash loss resulting from the remeasurement of the Contingent Earnout Liability during each period.

Previous wording

We have historically financed our operations primarily through the sale of equity securities and convertible debt, including pursuant to the Offering, proceeds from the Merger and related PIPE Financing, borrowings under loan facilities, the Purchase Agreement, and, to a lesser extent, through grants from governmental and other agencies. Since our inception, we have incurred significant operating losses and negative cash flows. As of June 30, 2024 and December 31, 2023, we had an accumulated deficit of $625.9 million and $537.3 million, respectively.

Current wording

We have historically financed our operations primarily through the sale of equity securities and convertible debt, including pursuant to the Offering, proceeds from the Merger and related PIPE Financing, borrowings under loan facilities, the Purchase Agreement, and, to a lesser extent, through grants from governmental and other agencies. Since our inception, we have incurred significant operating losses and negative cash flows. As of September 30, 2024 and December 31, 2023, we had an accumulated deficit of $665.1 million and $537.3 million, respectively.

Previous wording

As of June 30, 2024 and December 31, 2023, we had working capital of $78.4 million and $64.8 million, respectively. As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $93.6 million and $80.4 million, respectively. We are required to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for at least one year from the issuance date of our financial statements. By August 17, 2024, we are required to fund the restricted cash account, in accordance with our amended Purchase Agreement, of which $50.0 million will not be subject to our unilateral control. Based on current plans and assumptions, which excludes this $50.0 million of cash and the potential approval of the BLA from our forecasted liquidity, we will not have sufficient cash and cash equivalents to fund our operations beyond one year from the issuance of these financial statements if we are unable to achieve approval of the ATEV and generate sufficient cash flows from commercial sales on a timely basis and/or obtain additional capital. These factors raise substantial doubt about our ability to continue as a going concern. We will, over the course of the next year, require additional financing to continue our operations. Adequate additional capital may not be available to us when needed or on acceptable terms. If we are unable to raise sufficient capital when required, we may be required to reduce or discontinue our operations, sell assets, or cease all operations. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern. See Note 1 — Organization and Description of Business to our accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information regarding our assessment. We believe that our longer-term working capital, planned research and development, capital expenditures and other general corporate funding requirements may be satisfied through the sale of equity, debt, borrowings under credit facilities or through potential collaborations with other companies, other strategic transactions or government or other grants. Our liquidity plans are subject to a number of risks and uncertainties, including those described in the sections entitled “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report and our Annual Report. If we are unable to raise sufficient capital, we could be forced to further delay, reduce, suspe…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Based on current plans and assumptions, which excludes the $50.0 million of restricted cash and the potential approval of the BLA from our forecasted liquidity, we will not have sufficient cash and cash equivalents to fund our operations beyond one year from the issuance of these financial statements if we are unable to achieve approval of the ATEV and generate sufficient cash flows from commercial sales on a timely basis and/or obtain additional capital. These factors raise substantial doubt about our ability to continue as a going concern. We will, over the course of the next year, require additional financing to continue our operations. Adequate additional capital may not be available to us when needed or on acceptable terms. If we are unable to raise sufficient capital when required, we may be required to reduce or discontinue our operations, sell assets, or cease all operations. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern. See Note 1 — Organization and Description of Business to our accompanying unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information regarding our assessment. We believe that our longer-term working capital, planned research and development, capital expenditures and other general corporate funding requirements may be satisfied through the sale of equity, debt, borrowings under credit facilities or through potential collaborations with other companies, other strategic transactions or government or other grants. Our liquidity plans are subject to a number of risks and uncertainties, including those described in the sections entitled “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report and our Annual Report. If we are unable to raise sufficient capital, we could be forced to further delay, reduce, suspend or cease our research and development programs or any future commercialization efforts, which would have a negative impact on our business, prospects, operating results and financial condition.

Previous wording

On February 18, 2024, we agreed with the Purchasers and the Agent, to waive certain breaches related to, and extend the deadline for certain post-closing obligations under, the Purchase Agreement, including the requirement for us to deliver a leasehold mortgage in favor of the Agent over our headquarters. On May 8, 2024, we reached an agreement with the Purchasers to amend the Purchase Agreement to remove requirements related to the leasehold mortgage. In exchange for the removal of this requirement, we agreed to fund, no later than August 17, 2024, an account in the amount of $54.0 million, over which the Agent will have certain consent and other rights to $50.0 million of the funds. As of the date of this filing, we have not funded the required amount but intend to do so prior to the August 17, 2024 deadline. If we do not fund the required amount by August 17, 2024, the Purchasers have the right to terminate the Purchase Agreement and to require Global to repurchase the Revenue Interests. See Note 6 for further information.

Current wording

On February 18, 2024, we agreed with the Purchasers and the Agent, to waive certain breaches related to, and extend the deadline for certain post-closing obligations under, the Purchase Agreement, including the requirement for us to deliver a leasehold mortgage in favor of the Agent over our headquarters. On May 8, 2024, we reached an agreement with the Purchasers to amend the Purchase Agreement to remove requirements related to the leasehold mortgage. In exchange for the removal of this requirement, on August 14, 2024 we funded an account in the amount of $54.0 million, over which the Agent will have certain consent and other rights to $50.0 million of the funds. See Note 6 for further information.

Previous wording

As of June 30, 2024, we had non-cancellable purchase commitments of $27.5 million for supplies and services that are primarily for research and development. We have existing license agreements with Duke University and Yale University, a distribution agreement with Fresenius Medical Care and our JDRF Agreement. The amount and timing of any potential milestone payments, license fee payments, royalties and other payments that we may be required to make under these agreements are unknown or uncertain at June 30, 2024. For additional information regarding our agreement with Fresenius Medical Care, see Note 12 — Related Party Transactions to our unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report. For additional information regarding our agreements with Duke University, Yale University and JDRF, see Note 11 — Commitments and Contingencies to our unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report.

Current wording

As of September 30, 2024, we had non-cancellable purchase commitments of $23.0 million for supplies and services that are primarily for research and development. We have existing license agreements with Duke University and Yale University, a distribution agreement with Fresenius Medical Care and our JDRF Agreement. The amount and timing of any potential milestone payments, license fee payments, royalties and other payments that we may be required to make under these agreements are unknown or uncertain at September 30, 2024. For additional information regarding our agreement with Fresenius Medical Care, see Note 12 — Related Party Transactions to our unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report. For additional information regarding our agreements with Duke University, Yale University and JDRF, see Note 11 — Commitments and Contingencies to our unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report.

Previous wording

On May 12, 2023, we entered into the Purchase Agreement and repaid in full all of the outstanding obligations under our Loan Agreement. Under the Purchase Agreement, as of June 30, 2024, we had$60.1 million recorded as a revenue interest liability on our condensed consolidated financial statements. For additional information regarding repayment, see Note 6 — Revenue Interest Purchase Agreement to our unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report.

Current wording

On May 12, 2023, we entered into the Purchase Agreement and repaid in full all of the outstanding obligations under our Loan Agreement with SVB and SVB Innovation Credit Fund VIII, L.P. Under the Purchase Agreement, as of September 30, 2024, we had$62.1 million recorded as a revenue interest liability on our condensed consolidated financial statements. For additional information regarding repayment, see Note 6 — Revenue Interest Purchase Agreement to our unaudited condensed consolidated financial statements contained elsewhere in this Quarterly Report.

Previous wording

(1) Includes depreciation, amortization related to our leases and our debt discount, stock-based compensation expense, non-cash interest expense related to our revenue interest liability and our JDRF Award liability, and the changes in fair value of our Contingent Earnout Liability and our derivative liabilities, and in 2023 includes a loss on extinguishment of debt and an immaterial amount of loss on disposal of property and equipment.

Current wording

(1) Primarily includes depreciation, amortization related to our leases and our debt discount, stock-based compensation expense, non-cash interest expense related to our revenue interest liability and our JDRF Award liability, and the changes in fair value of our Contingent Earnout Liability and our derivative liabilities and asset, and in 2023 includes a loss on extinguishment of debt and an immaterial amount of loss on disposal of property and equipment.

Previous wording

The increase in net cash used in operating activities fromthe six months ended June 30, 2023 tothe six months ended June 30, 2024 was primarily due to increased spending on pre-clinical, clinical and pre-commercial activities as well as payroll and personnel expenses, expansion of clinical development of the ATEV for use in AV access, and preparation for the planned commercial launch of the ATEV for an indication in vascular trauma, if approved by the FDA.

Current wording

The increase in net cash used in operating activities fromthe nine months ended September 30, 2023 tothe nine months ended September 30, 2024 was primarily due to increased spending on pre-clinical, clinical and pre-commercial activities as well as payroll and personnel expenses, expansion of clinical development of the ATEV for use in AV access, and preparation for the planned commercial launch of the ATEV for an indication in vascular trauma, if approved by the FDA.

Previous wording

Net cash used in investing activities forthe six months ended June 30, 2024 consisted of purchases of property and equipment. Net cash provided by investing activities forthe six months ended June 30, 2023 consisted of proceeds from the maturity of our short-term investments (certificates of deposit), partially offset by the purchases of property and equipment.

Current wording

Net cash used in investing activities forthe nine months ended September 30, 2024 consisted of purchases of property and equipment. Net cash used in investing activities forthe nine months ended September 30, 2023 consisted of purchases of property and equipment, which fully offset proceeds from the maturity of our short-term investments (certificates of deposit).

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2024 consisted primarily of $43.0 million of net proceeds from our Offering and $20.0 million of proceeds from the Purchase Agreement. Net cash provided by financing activities for the six months ended June 30, 2023 consisted primarily of principal payments of our finance leases.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2024 consisted primarily of $43.0 million of net proceeds from our Offering and $19.5 million of net proceeds from our Purchase Agreement. Net cash provided by financing activities for the nine months ended September 30, 2023 consisted primarily of $37.9 million of net proceeds from our Purchase Agreement, partially offset by $31.8 million of cash payments related to the repayment of our Loan Agreement.