10q10k10q10k.net

What changed in Longeveron Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Longeveron Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+579 added−435 removedSource: 10-K (2024-02-27) vs 10-K (2023-03-14)

Top changes in Longeveron Inc.'s 2023 10-K

579 paragraphs added · 435 removed · 310 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

126 edited+77 added−57 removed120 unchanged
Biggest changeRisks Related to Intellectual Property ● If our trade secret and patent position does not adequately protect our products and uses, others could compete against us more directly; ● If certain license agreements are terminated, our ability to continue clinical trials and commercially market products could be adversely affected; ● We may be unable to sufficiently protect the confidentiality of our proprietary information, trade secrets, and know-how; ● Third-party claims of intellectual property infringement may prevent or delay our product development efforts; ● If the Company’s intellectual property has not all been properly assigned to the Company, we may not be able to commercialize our technology and derive revenue; ● Intellectual property rights do not necessarily address all potential threats to our competitive advantage; and ● The potential impact of intellectual property regulation, legislation and litigation on our ability to operate.
Biggest changeRisks Related to Intellectual Property ● If our trade secret and patent position does not adequately protect our product candidates and their uses, others could compete against us more directly, which could harm our business and have a material adverse effect on our business, financial condition, and results of operations; ● If certain license agreements are terminated, our ability to continue clinical trials and commercially market products could be adversely affected; ● If we are unable to protect the confidentiality of our proprietary information, trade secrets, and know-how, our competitive position could be impaired and our business, financial condition, results of operations, and prospects could be adversely affected; ● Third-party claims of intellectual property infringement may prevent or delay our product development efforts; and ● Intellectual property rights do not necessarily address all potential threats to our competitive advantage. 25 Risks Related to Regulatory Approval and Other Government Regulations ● If we are not able to successfully develop and commercialize our product candidates and obtain the necessary regulatory approvals, we may not generate sufficient revenues to continue our business operations; ● We cannot market and sell our product candidates in the U.S. or in other countries if we fail to obtain the necessary regulatory approvals; ● Final marketing approval of our product candidates by the FDA or other regulatory authorities for commercial use may be delayed, limited, or denied, any of which could adversely affect our ability to generate operating revenues; ● We may not be able to secure and maintain research institutions to conduct our clinical trials; ● Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations; and ● Even if we receive regulatory approval of Lomecel-B™ or any of our other product candidates, we will be subject to ongoing regulatory requirements and continued regulatory review, which may result in significant additional expense.
The following table is a general, non-comprehensive list of cellular therapy companies that we believe could be considered our primary competition, either because they also develop MSCs as their primary mode of action, albeit for different indications in most cases or on the basis that these companies are addressing the same indications as Longeveron.
In the following table is a general, non-comprehensive list of cellular therapy companies that we believe could be considered our primary competition, either because they also develop MSCs as their primary mode of action, albeit for different indications in most cases or on the basis that these companies are addressing the same indications as Longeveron.
FDA may review sections of the marketing applications on a rolling basis before the complete application is submitted if the sponsor provides a schedule for the submission of the application sections, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section.
The FDA may review sections of the marketing applications on a rolling basis before the complete application is submitted if the sponsor provides a schedule for the submission of the application sections, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section.
Reference Product Exclusivity We believe that FDA will regulate Lomecel-B™ as a new biologic and will require submission and approval of a BLA under the PHS Act. The PHS Act includes a framework for determining when a biologic is a “reference product” and therefore eligible for marketing exclusivity.
Reference Product Exclusivity We believe that the FDA will regulate Lomecel-B™ as a new biologic and will require submission and approval of a BLA under the PHS Act. The PHS Act includes a framework for determining when a biologic is a “reference product” and therefore eligible for marketing exclusivity.
At the appropriate time, we intend to provide information to FDA so that FDA can determine the date of first licensure of Lomecel-B™ (or any other product candidate that will be regulated as a biologic) and the date from which statutory exclusivity will begin to run.
At the appropriate time, we intend to provide information to the FDA so that the FDA can determine the date of first licensure of Lomecel-B™ (or any other product candidate that will be regulated as a biologic) and the date from which statutory exclusivity will begin to run.
However, FDA may not make an immediate decision about the date of first licensure at the time it approves a new biologic. Furthermore, there is currently no precedent showing how FDA will apply this statutory framework to a cell therapy product. The law in this area will likely continue to evolve. Orphan Drug Designation and Exclusivity.
However, the FDA may not make an immediate decision about the date of first licensure at the time it approves a new biologic. Furthermore, there is currently no precedent showing how the FDA will apply this statutory framework to a cell therapy product. The law in this area will likely continue to evolve. Orphan Drug Designation and Exclusivity.
A request for ODD must be submitted to the FDA before a marketing application is submitted (i.e., BLA or NDA), but there is no assurance that FDA will award an ODD if requested. In the fourth quarter of 2021, FDA granted ODD to Longeveron’s Lomecel-B™ for the treatment of HLHS.
A request for ODD must be submitted to the FDA before a marketing application is submitted (i.e., BLA or NDA), but there is no assurance that FDA will award an ODD if requested. In the fourth quarter of 2021, the FDA granted ODD to Longeveron’s Lomecel-B™ for the treatment of HLHS.
The law involving ODDs and ODEs, including FDA’s interpretation of “same drug,” is continuing to evolve. Most notably, the U.S. Court of Appeals for the Eleventh Circuit issued a decision in Catalyst Pharmaceuticals, Inc. v. Becerra in September 2021 that significantly modified FDA’s longstanding interpretation and application of the scope of ODE.
The law involving ODDs and ODEs, including the FDA’s interpretation of “same drug,” is continuing to evolve. Most notably, the U.S. Court of Appeals for the Eleventh Circuit issued a decision in Catalyst Pharmaceuticals, Inc. v. Becerra in September 2021 that significantly modified the FDA’s longstanding interpretation and application of the scope of ODE.
Furthermore, there is no assurance that a product will be considered medically reasonable and necessary for a specific indication, will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be established even if coverage is available or that the third-party payors’ reimbursement policies will not adversely affect the ability for manufacturers to sell products profitably.
Furthermore, there is no assurance that a product will be considered medically reasonable and necessary for a specific indication, will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be established even if coverage is available or that the third-party payors’ reimbursement policies will not adversely affect the ability of manufacturers to sell products profitably.
If an investigational product with an ODD subsequently receives the first FDA approval for the disease or condition for which it has such designation, then the approved product may be eligible to receive orphan drug exclusivity (ODE) that prevents FDA from approving any other applications to market the same drug or biologic for the same rare disease or indication for seven years, except in several specific circumstances including, among others, demonstrating clinical superiority of a new product vs. the product with ODE because of greater safety, greater effectiveness, or making a major contribution to patient care.
If an investigational product with an ODD subsequently receives the first FDA approval for the disease or condition for which it has such designation, then the approved product may be eligible to receive orphan drug exclusivity (“ODE”) that prevents the FDA from approving any other applications to market the same drug or biologic for the same rare disease or indication for seven years, except in several specific circumstances including, among others, demonstrating clinical superiority of a new product vs. the product with ODE because of greater safety, greater effectiveness, or making a major contribution to patient care.
These cells undergo culture-expansion using proprietary processes, and are then formulated, packaged and stored frozen (cryopreserved) until shortly before use . Fresh bone marrow is procured from established, licensed U.S.-based third-party tissue suppliers, which harvest the tissue from young, healthy consenting donors. Lomecel-B™ is produced using processes that FDA has reviewed and authorized as part of our INDs.
These cells undergo culture-expansion using proprietary processes, and are then formulated, packaged and stored frozen (cryopreserved) until shortly before use . Fresh bone marrow is procured from established, licensed U.S.-based third-party tissue suppliers, which harvest the tissue from young, healthy consenting adult donors. Lomecel-B™ is produced using processes that FDA has reviewed and authorized as part of our INDs.
Allowed Allowed Pending Vietnam Registered Government Regulation and Biologic Drug Approval Government authorities in the U.S., at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, distribution, marketing and export and import of products such as those we are developing.
Allowed Allowed Registered Vietnam Registered Government Regulation and Biologic Drug Approval Government authorities in the U.S., at the federal, state and local level, and other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, distribution, marketing and export and import of products such as those we are developing.
Risks Related to Employee Matters, Managing Our Growth and Other Risks Related to Our Business ● We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators; and ● In order to successfully implement our plans and strategies, we will need to grow our organization, and we may experience difficulties in managing this growth. 20
Risks Related to Employee Matters, Managing Our Growth and Other Risks Related to Our Business ● We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators; and ● In order to successfully implement our plans and strategies, we will need to grow our organization, and we may experience difficulties in managing this growth.
Decreases of this nature surrounding reimbursement for any product or a decision by a government and third-party payor not to cover a product could result in reduced physician usage and patient demand for the product. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.
Decreases of this nature surrounding reimbursement for any product or a decision by a government and third-party payor not to cover a product could result in reduced physician usage and patient demand for the product. 22 In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.
For more information regarding the risks related to our intellectual property, see “ Risk Factors—Risks Related to Intellectual Property .” 7 The patent positions of biotechnology companies like ours are generally uncertain and involve complex legal, scientific and factual questions. Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties.
For more information regarding the risks related to our intellectual property, see “ Risk Factors—Risks Related to Intellectual Property .” The patent positions of biotechnology companies like ours are generally uncertain and involve complex legal, scientific, and factual questions. Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties.
Unpublished third-party patent applications may exist that would have an effect on our freedom to operate. For this and more comprehensive risks related to our intellectual property, please see “ Risk Factors—Risks Related to Intellectual Property .” The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.
Unpublished third-party patent applications may exist that would have an effect on our freedom to operate. For this and more comprehensive risks related to our intellectual property, please see “ Risk Factors—Risks Related to Intellectual Property .” 8 The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained.
Some clinical trials also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a data monitoring committee (DMC). A DMC authorizes whether or not a study may move forward at designated check points based on access to certain data from the trial.
Some clinical trials also include oversight by an independent group of qualified experts organized by the clinical trial sponsor, known as a data monitoring committee (“DMC”). A DMC authorizes whether or not a study may move forward at designated check points based on access to certain data from the trial.
As a revenue-generating opportunity, occasionally we utilize excess capacity, when available, to provide contract manufacturing and development services to third parties; however, our business development activity is limited in this area. Commercialization We currently have no established sales, marketing or product distribution infrastructure.
As a revenue-generating opportunity, occasionally we utilize excess capacity, when available, to provide contract manufacturing and development services to third parties; however, our business development activity is limited in this area. 5 Commercialization We currently have no established sales, marketing or product distribution infrastructure.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters, or untitled letters; ● clinical holds on clinical studies; ● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; ● consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; ● mandated modification of promotional materials and labeling and the issuance of corrective information; ● the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or ● injunctions or the imposition of civil or criminal penalties. 15 The FDA closely regulates the marketing, labeling, advertising and promotion of approved products.
Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters, or untitled letters; ● clinical holds on clinical studies; ● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; ● consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; ● mandated modification of promotional materials and labeling and the issuance of corrective information; ● the issuance of safety alerts, Dear Healthcare Provider letters, press releases and other communications containing warnings or other safety information about the product; or ● injunctions or the imposition of civil or criminal penalties. 20 The FDA closely regulates the marketing, labeling, advertising and promotion of approved products.
Receiving a fast-track designation is not the same as receiving FDA product approval. Priority Review Designation. A product is eligible for priority review designation if it is for a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness of the treatment, prevention, or diagnosis of a serious condition.
Receiving a fast-track designation is not the same as receiving FDA product approval. 17 Priority Review Designation . A product is eligible for priority review designation if it is for a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness of the treatment, prevention, or diagnosis of a serious condition.
We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from copying by competitors. Any patents that we hold may be challenged, circumvented, or invalidated by third parties.
We cannot predict whether the patent applications we are currently pursuing will be issued as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from copying by competitors. Any patents that we hold may be challenged, circumvented, or invalidated by third parties.
The designation includes all of the features of a fast-track designation, as well as more intensive FDA interaction and guidance. If a product receives this designation, then the FDA will work to expedite the development and review of that product. Receiving a breakthrough therapy designation is not the same as receiving FDA product approval. 13 Accelerated Approval.
The designation includes all of the features of a fast-track designation, as well as more intensive FDA interaction and guidance. If a product receives this designation, then the FDA will work to expedite the development and review of that product. Receiving a breakthrough therapy designation is not the same as receiving FDA product approval. Accelerated Approval .
We will work with FDA to confirm that a BLA is the most appropriate pathway and that CBER will be the FDA center responsible for review and licensure (i.e., approval). However, FDA may disagree with us, in which case we will follow FDA’s recommendation.
We intend to work with the FDA to confirm that a BLA is the most appropriate pathway and that CBER will be the FDA center responsible for review and licensure (i.e., approval). However, the FDA may disagree with us, in which case we will follow the FDA’s recommendation.
Additionally, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement of the companion pharmaceutical or biological product. However, separate reimbursement for the product itself, the companion product, or the treatment or procedure for which the product is used may not be available, which, in turn, may also impact physician utilization.
Additionally, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement of the companion pharmaceutical or biological product. However, separate reimbursement for the product itself, the companion product, or the treatment or procedure for which the product is used may not be available, which, in turn, may also impact utilization.
Summary of Clinical Development Strategy Our core strategy is to become a world-leading regenerative medicine company through the development and commercialization of novel cell therapy products for unmet medical needs, with a focus on HLHS.
Summary of Clinical Development Strategy Our core strategy is to become a world-leading regenerative medicine company through the development, approval, and commercialization of novel cell therapy products for unmet medical needs, with a focus on HLHS.
Even if an investigational product has an ODD, there is no guarantee that FDA will award ODE upon approval. 14 Competitors may receive approval of either a different product for the same use or indication, or the same product for a different use or indication.
Even if an investigational product has an ODD, there is no guarantee that the FDA will award ODE upon approval. Competitors may receive approval of either a different product for the same use or indication, or the same product for a different use or indication.
Sponsors typically use EOP2 meetings to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the new biologic. U.S.
Sponsors typically use EOP2 meetings to discuss Phase 2 clinical results and present plans for the pivotal Phase 3 clinical trials that they believe will support approval of the new biologic. 15 U.S.
The submission of a BLA is subject to the payment of a substantial application fee under the Prescription Drug User Fee Amendments (PDUFA). PDUFA fees apply to both drugs and biologics.
The submission of a BLA is subject to the payment of a substantial application fee under the Prescription Drug User Fee Amendments (“PDUFA”). PDUFA fees apply to both drugs and biologics.
FDA may grant an orphan drug designation (ODD) for a drug or biologic drug being developed to treat a “rare disease or condition,” defined as affecting fewer than 200,000 persons in the U.S., or affecting more than 200,000 persons in the U.S. but for which there is no reasonable expectation that development costs will be recovered from U.S. sales of the product.
The FDA may grant an ODD for a drug or biologic drug being developed to treat a “rare disease or condition,” defined as affecting fewer than 200,000 persons in the U.S. or affecting more than 200,000 persons in the U.S. but for which there is no reasonable expectation that development costs will be recovered from U.S. sales of the product.
As we move our product candidates through development toward regulatory approval, we will evaluate several options for each product candidate’s commercialization strategy. These options include further building an internal sales force, entering into a joint marketing collaboration with another pharmaceutical or biotechnology company, or out-licensing any future approved product to another pharmaceutical or biotechnology company.
As we move our product candidates through development toward regulatory approval, we plan to evaluate several options for each product candidate’s commercialization strategy. These options include further building an internal sales force, entering into a joint marketing collaboration with another pharmaceutical or biotechnology company, or out-licensing any future approved product to another pharmaceutical or biotechnology company.
Competition The field of regenerative medicine, which includes gene therapies, cell therapies (such as Lomecel-B™), and tissue-engineered products, is broadly defined as “products intended to repair, replace or regenerate organs, tissues, cells, genes, and metabolic processes in the body,” per the Alliance for Regenerative Medicine (ARM), an international advocacy organization.
Competition The field of regenerative medicine, which includes gene therapies, cell therapies (such as Lomecel-B™), and tissue-engineered products, is broadly defined as “products intended to repair, replace or regenerate organs, tissues, cells, genes, and metabolic processes in the body,” per the Alliance for Regenerative Medicine (“ARM”), an international advocacy organization.
Name Corporate Headquarters Clinical stage pipeline indication(s) Athersys, Inc. U.S. Ischemic stroke; ARDS; GvHD; Acute Myocardial Infarction BioCardia, Inc. U.S. Heart failure; Acute myocardial infarction BrainStorm Cell Therapeutics U.S. ALS; MS Lisata Therapeutics U.S. Coronary microvascular dysfunction; Critical limb ischemia; Diabetic kidney disease Corestem South Korea ALS (Commercial in South Korea); Lupus Cynata Therapeutics Australia GvHD Healios K.K.
Name Corporate Headquarters Clinical stage pipeline indication(s) Athersys, Inc. U.S. Ischemic stroke; ARDS; GvHD; Acute Myocardial Infarction BioCardia, Inc. U.S. Heart failure; Acute myocardial infarction BrainStorm Cell Therapeutics U.S. ALS; MS Lisata Therapeutics U.S. Coronary microvascular dysfunction; Critical limb ischemia; Diabetic kidney disease CorestemChemon South Korea ALS (Commercial in South Korea); Lupus Cynata Therapeutics Australia GvHD Healios K.K.
A REMS may include medication guides, physician communication plans, or elements to assure safe use (ETASU) such as restricted distribution methods, patient registries, and other risk minimization tools. FDA may withdraw the product approval if the sponsor does not comply with PMRs, PMCs, a REMS program, or other post-marketing requirements.
A REMS may include medication guides, physician communication plans, or elements to assure safe use (“ETASU”) such as restricted distribution methods, patient registries, and other risk minimization tools. FDA may withdraw the product approval if the sponsor does not comply with PMRs, PMCs, a REMS program, or other post-marketing requirements.
The focus of an IND is the general investigational plan and protocol for the proposed clinical study. The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product; chemistry, manufacturing, and controls (CMC) information; and any available human data or literature to support the use of the investigational product.
The focus of an IND is the general investigational plan and protocol for the proposed clinical study. The IND also includes results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic characteristics of the product; chemistry, manufacturing, and controls (“CMC”) information; and any available human data or literature to support the use of the investigational product.
As a result, the coverage determination process can require manufactures to provide scientific and clinical support for the use of a product, and require providers to show medical necessity for use, to each payor separately. This process can be time-consuming, with no assurance that coverage and adequate reimbursement will be applied consistently or even obtained.
As a result, the coverage determination process can require manufacturers to provide scientific and clinical support for the use of a product, and require providers to show medical necessity for use, to each payor separately. This process can be time-consuming, with no assurance that coverage and adequate reimbursement will be applied consistently or even obtained.
Sponsors may seek a waiver of these fees in certain limited circumstances, including a waiver of the application fee for the first BLA or NDA submitted by a small business. Product candidates with an orphan drug designation (ODD) are not subject to the BLA application fee unless the product application also includes a non-orphan indication.
Sponsors may seek a waiver of these fees in certain limited circumstances, including a waiver of the application fee for the first BLA or NDA submitted by a small business. Product candidates with an ODD are not subject to the BLA application fee unless the product application also includes a non-orphan indication.
Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves; requirements to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; requirements relating to pricing and marketing information; requirements to track and report gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities or that require the registration of pharmaceutical sales representatives; requirements regarding the registration of pharmaceutical sales representatives; and other applicable laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Similar state and local laws and regulations may also restrict business practices in the pharmaceutical industry, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, or by patients themselves; requirements to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; requirements relating to pricing and marketing information; requirements to track and report gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities or that require the registration of pharmaceutical sales representatives; requirements regarding the registration of pharmaceutical sales representatives; and other applicable laws governing the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), thus complicating compliance efforts.
After the FDA evaluates a BLA, it will either issue an approval letter or a Complete Response Letter (CRL). The approval letter authorizes commercial marketing of the biologic with approved prescribing information for specific approved indications.
After the FDA evaluates a BLA, it will either issue an approval letter or a Complete Response Letter (“CRL”). The approval letter authorizes commercial marketing of the biologic with approved prescribing information for specific approved indications.
In most jurisdictions where we file, including the U.S., the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the U.S., a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office (USPTO), in examining and granting a patent.
In most jurisdictions where we file, including the U.S., the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the U.S., a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office “(USPTO”), in examining and granting a patent.
We believe having established manufacturing capabilities and operations within the U.S. early in the development of our product candidates is a competitive advantage. Over time, we expect to expand regional manufacturing capacity and potentially add external supply nodes to meet projected product requirements for commercialization.
We believe having established manufacturing capabilities and operations within the U.S. early in the development of our product candidates is a competitive advantage. Over time, as needed and appropriate, we expect to expand regional manufacturing capacity and potentially add external supply nodes to meet projected product requirements for commercialization.
Following marketing approval, a sponsor may need to fulfill certain post-marketing requirements (PMRs) or post-marketing commitments (PMCs). These may include Phase 4 studies that are used to gain additional experience from the treatment of patients for the intended therapeutic indication. The trials may be agreed upon prior to approval, or the FDA may require them if new safety issues emerge.
Following marketing approval, a sponsor may need to fulfill certain post-marketing requirements (“PMRs”) or post-marketing commitments (“PMCs”). These may include Phase 4 studies that are used to gain additional experience from the treatment of patients for the intended therapeutic indication. The trials may be agreed upon prior to approval, or the FDA may require them if new safety issues emerge.
The UM License is a worldwide, exclusive license, with right to sublicense, with respect to any and all know-how specifically related to the development of the culture-expanded MSCs for aging-related frailty used at the Interdisciplinary Stem Cell Institute of UM (“IMSCs”), all SOPs used to create the IMSCs, and all data supporting isolation, culture, expansion, processing, cryopreservation and management of the IMSCs.
The UM License is a worldwide, exclusive license, with right to sublicense, with respect to any and all know-how specifically related to the development of the culture-expanded MSCs for aging-related frailty used at the Interdisciplinary Stem Cell Institute of UM (“IMSCs”), all standard operating procedures used to create the IMSCs, and all data supporting isolation, culture, expansion, processing, cryopreservation, and management of the IMSCs.
The cGMP cleanrooms are used exclusively for the manufacture of human cellular therapy products for use in clinical trials. The facility is in compliance with FDA regulations in 21 CFR Parts 210 and 211. 3 Our lead product, Lomecel-B™, consists of human allogeneic bone-marrow derived MSCs as the active ingredient.
The cGMP cleanrooms are used exclusively for the manufacture of human cellular therapy products for use in clinical trials. The facility is in compliance with FDA regulations in the Code of Federal Regulations 21, Parts 210 and 211. Our lead product, Lomecel-B™, consists of human allogeneic bone-marrow derived MSCs as the active ingredient.
Japan Ischemic stroke; ARDS Medipost South Korea Osteoarthritis (commercial); BPD; AD Mesoblast Ltd. Australia Heart failure, low back pain, GvHD; ARDS; Crohn’s Disease Pluristem Therapeutics, Inc. Israel CLI; ARDS; ARS; GvHD ReNeuron U.K. Ischemic stroke; Retinitis pigmentosa SanBio Co., Ltd. Japan Ischemic stroke; Traumatic brain injury Stemedica Cell Technologies U.S.
Japan Ischemic stroke; ARDS Medipost South Korea Osteoarthritis (commercial); BPD; AD Mesoblast Ltd. Australia Heart failure, low back pain, GvHD; ARDS; Crohn’s Disease, HLHS Pluri, Inc. Israel CLI; ARDS; ARS; GvHD ReNeuron U.K. Ischemic stroke; Retinitis pigmentosa SanBio Co., Ltd. Japan Ischemic stroke; Traumatic brain injury Stemedica Cell Technologies U.S.
In addition, the Company paid legal fees of approximately, $25,000 for each of the years ended December 31, 2022 and 2021, in connection with the patent prosecution, issuance, and maintenance fees related to CD271+ technology. 9 In-licensed Patents and Applications Bone Marrow Derived CD271+ Precursor Cells for Cardiac Repair.
In addition, the Company paid legal fees of approximately $25,000 for each of the years ended December 31, 2023 and 2022, in connection with the patent prosecution, issuance, and maintenance fees related to CD271+ technology. 12 In-licensed Patents and Applications Bone Marrow Derived CD271+ Precursor Cells for Cardiac Repair.
In 2017, the FDA established the regenerative medicine advanced therapy (RMAT) designation as part of its implementation of the 21st Century Cures Act.
In 2017, the FDA established the regenerative medicine advanced therapy (“RMAT”) designation as part of its implementation of the 21st Century Cures Act.
Biologic Drug Development Process In the U.S., biologic drugs—or simply “biologics”—are regulated under two statutes: The Public Health Service Act (PHS Act) and the federal Food, Drug, and Cosmetic Act (FFDCA) and their implementing regulations. However, approval of only one application—typically either a BLA or an NDA—is required prior to marketing.
Biologic Drug Development Process In the U.S., biologic drugs—or simply “biologics”—are regulated under two statutes: The Public Health Service Act (“PHS Act”) and the federal Food, Drug, and Cosmetic Act (“FFDCA”) and their implementing regulations. However, approval of only one application—typically either a BLA or an NDA—is required prior to marketing.
Payors are also increasingly reducing reimbursements for pharmaceutical products and services through continued implementation of cost-containment programs, including price controls, requirements for substitution of generic products and restrictions on coverage and reimbursement, which could further limit sales of any product.
Payors are also increasingly reducing reimbursements for pharmaceutical products and services through continued implementation of cost-containment programs, including price controls and value-based care initiatives, requirements for substitution of generic products and restrictions on coverage and reimbursement, which could further limit sales of any product.
Key elements of our current business strategy are as follows. ● Focus on the execution of ELPIS II, a Phase 2 randomized controlled trial set forth in greater detail below, to measure the efficacy of Lomecel-B in HLHS.
Key elements of our current business strategy are as follows. ● Execution of ELPIS II, a Phase 2b randomized controlled trial set forth in greater detail below, to measure the efficacy of Lomecel-B™ in HLHS.
A deferred pediatric study, if required (and not waived) under the Pediatric Research Equity Act (PREA), may also be conducted post-approval if the product includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. 12 BLA approval may also include a risk evaluation and mitigation strategy (REMS) that requires sponsor post-marketing regulatory efforts.
A deferred pediatric study, if required (and not waived) under the Pediatric Research Equity Act (“PREA”), may also be conducted post-approval if the product includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration. 16 BLA approval may also include a risk evaluation and mitigation strategy (“REMS”) that requires sponsor post-marketing regulatory efforts.
We believe that the FDA will regulate Lomecel-B™ as a biologic drug (i.e., a biologic) through the biologics license application (BLA) process under the jurisdiction of the Center for Biologics Evaluation and Research (CBER).
We believe that the FDA will regulate Lomecel-B™ as a biologic drug (i.e., a biologic) through the biologics license application (“BLA”) process under the jurisdiction of the Center for Biologics Evaluation and Research (“CBER”).
By way of example, the ACA increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the Average Manufacturer Price (AMP) or the difference between AMP and “best price,” whichever is greater; required collection of rebates for drugs paid by Medicaid managed care organizations; imposed a non-deductible annual fee on each covered entity engaged in the business of manufacturing or importing branded prescription drugs; implemented a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected (often referred to as “5i drugs”); expanded eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending. 17 Since its enactment, there have been judicial and Congressional challenges that would either repeal, or repeal and replace, all or part of the ACA.
By way of example, the ACA increased the minimum level of Medicaid rebates payable by manufacturers of brand name drugs from 15.1% to 23.1% of the Average Manufacturer Price (“AMP”) or the difference between AMP and “best price,” whichever is greater; required collection of rebates for drugs paid by Medicaid managed care organizations; imposed a non-deductible annual fee on each covered entity engaged in the business of manufacturing or importing branded prescription drugs; implemented a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected (often referred to as “5i drugs”); expanded eligibility criteria for Medicaid programs; created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and established a Center for Medicare and Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending.
Certain claims in this family of patent applications relate to the ability for mesenchymal stem cell therapy to improve the immune system function in patients with chronic systemic inflammation, a hallmark of frailty.
Certain claims in this family of patent applications relate to the ability for MSC therapy to improve the immune system function in patients with chronic systemic inflammation, a hallmark of frailty.
We have and will continue to devote significant resources to optimization of process development and manufacturing to reduce per-unit manufacturing costs and to enable quick scale-up of production upon approval of any of our candidates in a particular country.
We have devoted and plan to continue devoting significant resources to optimization of process development and manufacturing to reduce per-unit manufacturing costs and to enable quick scale-up of production upon approval of any of our candidates in a particular country.
For future product candidates we will also confirm the appropriate approval pathway (i.e., BLA or new drug application (NDA)) and the appropriate FDA center with regulatory oversight (i.e., CBER or the Center for Drug Evaluation and Research (CDER)). U.S.
For future product candidates we will also confirm the appropriate approval pathway (i.e., BLA or new drug application (“NDA”)) and the appropriate FDA center with regulatory oversight (i.e., CBER or the Center for Drug Evaluation and Research (“CDER”)). 13 U.S.
Any agency or judicial enforcement action could have a material adverse effect on us. 10 The process required by the FDA before a biologic may be marketed in the U.S. generally involves the following steps: ● completion of preclinical laboratory tests, animal studies and formulation studies in accordance with applicable regulations; ● submission of an IND, which must become effective before human clinical trials may begin; ● approval by an independent institutional review board (IRB) at each clinical site (or by one “commercial IRB”) before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials in accordance with current good clinical practice (cGCP) requirements to establish the safety, purity, and potency (i.e., efficacy) of the proposed biologic for its intended use; ● submission of a BLA after completion of all clinical trials; ● satisfactory outcome of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of clinical investigation sites and the manufacturing facility or facilities at which the biologic is produced; and ● FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the U.S.
The process required by the FDA before a biologic may be marketed in the U.S. generally involves the following steps: ● completion of preclinical laboratory tests, animal studies and formulation studies in accordance with applicable regulations; ● submission of an IND, which must become effective before human clinical trials may begin; ● approval by an independent institutional review board (“IRB”) at each clinical site (or by one “commercial IRB”) before each trial may be initiated; ● performance of adequate and well-controlled human clinical trials in accordance with current good clinical practice (“cGCP”) requirements to establish the safety, purity, and potency (i.e., efficacy) of the proposed biologic for its intended use; ● submission of a BLA after completion of all clinical trials; ● satisfactory outcome of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of clinical investigation sites and the manufacturing facility or facilities at which the biologic is produced; and ● FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the U.S.
The manufacturing process must consistently produce quality batches of the product candidate. Furthermore, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final biologic. In addition, the sponsor must develop and test appropriate packaging, and conduct stability studies to demonstrate that it does not undergo unacceptable deterioration over its shelf life.
Furthermore, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final biologic. In addition, the sponsor must develop and test appropriate packaging, and conduct stability studies to demonstrate that it does not undergo unacceptable deterioration over its shelf life.
Delays on the part of a patentee may decrease patent term adjustment. 6 In the U.S., the term of a patent that covers an FDA-approved “active ingredient” or methods of its use may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process.
In the U.S., the term of a patent that covers an FDA-approved “active ingredient” or methods of its use may also be eligible for patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process.
Benefits of the designation include, among others, early FDA interactions, and the RMAT designation does not require evidence to indicate that the drug may offer a substantial improvement over available therapies. Receiving an RMAT designation is not the same as receiving FDA product approval. Fast-Track Designation.
Benefits of the designation include, among others, early FDA interactions, and accelerated approval based on surrogate or intermediate endpoints. Additionally, the RMAT designation does not require evidence to indicate that the drug may offer a substantial improvement over available therapies. Receiving an RMAT designation is not the same as receiving FDA product approval. Fast-Track Designation .
It is believed that raising or lowering specific biomarkers after therapeutic intervention by a minimum amount may provide broad protection from an intellectual property standpoint and reflects clinical goals of treatment and treatment response. In this family we own one pending U.S. patent application, 12 patent applications outside of the U.S.
It is believed that raising or lowering specific biomarkers after therapeutic intervention by a minimum amount may provide broad protection from an intellectual property standpoint and reflects clinical goals of treatment and treatment response. In this family we received a notice of allowance for our U.S. patent application, and 14 patent applications outside of the U.S. (in 12 jurisdictions).
For more information, see “ Risk Factors—Risks Related to Intellectual Property .” When available to expand market exclusivity, our strategy is to obtain, or license additional intellectual property related to current or contemplated development platforms, core elements of technology and/or clinical candidates. Company-Owned Intellectual Property Methods of Using Human Mesenchymal Stem Cells to Effect Cellular and Humoral Immunity .
For more information, see “ Risk Factors—Risks Related to Intellectual Property .” When available to expand market exclusivity, our strategy is to obtain, or license additional intellectual property related to current or contemplated development platforms, core elements of technology and/or clinical candidates. Company-Owned Intellectual Property Mesenchymal Stem Cells as Vaccine Adjuvants and Methods for Using the Same.
The information found on, or that can be accessed from or that is hyperlinked to, our website does not constitute part of, and is not incorporated into, this Form 10-K. Our common stock is traded on the NASDAQ under the symbol “LGVN”.
The information found on, or that can be accessed from or that is hyperlinked to, our website does not constitute part of, and is not incorporated into, this Form 10-K.
This application family is directed towards increasing libido and improving sexual function and satisfaction in a female patient through the use of allogeneic or autologous MSC therapy, whether derived from bone marrow, adipose tissue or induced pluripotent stem cells (iPSCs). In this family we own one pending U.S. patent application, 12 patent applications outside of the U.S.
This application family is directed towards increasing libido and improving sexual function and satisfaction in a female patient through the use of allogeneic or autologous MSC therapy, whether derived from bone marrow, adipose tissue or induced pluripotent stem cells (iPSCs).
In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical hold is lifted and the clinical trial can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.
In such a case, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before the clinical hold is lifted and the clinical trial can begin.
A conditional approval allows the product to be marketed and partially reimbursed through Japan’s National Health Insurance. 16 Coverage and Reimbursement Sales of any pharmaceutical product depend, in part, on the extent to which the product will be covered and reimbursed by government payors (e.g., federal and state healthcare programs), third-party payors (e.g., commercial insurance and managed healthcare organizations), and other payors (e.g., foreign government healthcare programs).
Coverage and Reimbursement Sales of any pharmaceutical product depend, in part, on the extent to which the product will be covered and reimbursed by government payors (e.g., federal and state healthcare programs), third-party payors (e.g., commercial insurance and managed healthcare organizations), and other payors (e.g., foreign government healthcare programs).
Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results. Please refer to Item 1A “Risk Factors” of this Form 10-K below for additional discussion of the risks summarized in this Risk Factors Summary.
Our Class A common stock is traded on the Nasdaq under the symbol “LGVN”. 24 Risk Factors Summary The following is a summary of the principal risks that could adversely affect our business, operations and financial results. Please refer to Item 1A “Risk Factors” of this 10-K below for additional discussion of the risks summarized in this Risk Factors Summary.
Item 1. Business Overview We are a clinical stage biotechnology company developing regenerative medicines to address unmet medical needs. The Company’s lead investigational product is Lomecel-B™ brand MSCs, an allogeneic medicinal signaling cell (MSC) therapy product isolated from the bone marrow of young, healthy adult donors.
Item 1. Business Overview We are a clinical stage biotechnology company developing regenerative medicines to address unmet medical needs. The Company’s lead investigational product is Lomecel-B™, an allogeneic Mesenchymal Stem Cell (“MSC”) formulation sourced from the bone marrow of young, healthy adult donors.
Before approving a BLA, the FDA will typically inspect the locations where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMPs, and are adequate to assure consistent production of the product within required specifications.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMPs and are adequate to assure consistent production of the product within required specifications.
Human Capital Management As of December 31, 2022, we had 19 full-time employees, two part-time employees and one full-time and one part-time consultant. Among those, five had M.D. or Ph.D. degrees, one has an M.A. degree, and one has a J.D. degree. Of these full-time employees and consultants, 14 are engaged in research and development activities.
Human Capital Management As of December 31, 2023, we had 23 full-time employees, one part-time employee and one full-time consultant. Among those, four had M.D. or Ph.D. degrees, two are Certified Public Accountants, and one has a J.D. degree. Of these full-time employees and consultants, 18 are engaged in research and development activities.
Our cGMP facility went online in early 2017 and consists of 4,150 ft 2 (385.5 m 2 ) with approximately 3,000 ft 2 (279 m 2 ) of cGMP space comprised of ISO 7 cleanrooms, and ISO 8 ancillary areas and 1,150 ft 2 (107 m 2 ) of warehouse, research and development and Quality Control space.
Our current good manufacturing process (“cGMP”) facility went online in early 2017 and consists of 4,150 ft 2 (385.5 m 2 ) with approximately 3,000 ft 2 (279 m 2 ) of cGMP space comprised of eight International Organization for Standardization (“ISO”) 7 cleanrooms, and ISO 8 ancillary areas and 1,150 ft 2 (107 m 2 ) of warehouse, research and development and Quality Control space, including two research and development laboratories.
Patent term in the U.S. may be shortened if a patent is subject to a terminal disclaimer over another patent.
Patent term in the U.S. may be shortened if a patent is subject to a terminal disclaimer over another patent. Delays on the part of a patentee may decrease patent term adjustment.
All such commercialization will be in accordance with applicable federal and state law.
All such commercialization will be undertaken in accordance with applicable law.
A separate submission to the existing IND must be made for each successive clinical trial conducted during product development. Other submissions to an IND include protocol amendments, information amendments, IND safety reports and annual reports.
Clinical trials are conducted under protocols detailing, among other things, the study objectives, safety monitoring, and effectiveness criteria. A separate submission to the existing IND must be made for each successive clinical trial conducted during product development. Other submissions to an IND include protocol amendments, information amendments, IND safety reports and annual reports.
(in 12 jurisdictions), and a patent registration in South Africa. With two exceptions (The Bahamas and Taiwan), all of the applications are national or regional phase applications based on a PCT application filed in November 2017 and claiming priority to a U.S. provisional application filed in November 2016.
With two exceptions (The Bahamas and Taiwan), all of the applications are national or regional phase applications based on a PCT application filed in November 2017 and claiming priority to a U.S. provisional application filed in November 2016. The applications in The Bahamas and Taiwan claim priority to that same provisional application but were not filed using the PCT.
Through our research and development program, and through strategic in-licensing agreements, or other business development arrangements, we intend to actively explore promising potential additions to our pipeline. ● Continue to expand our intellectual property portfolio. Our intellectual property is vitally important to our business strategy, and we take significant steps to develop this property and protect its value.
Through our research and development program, and through strategic in-licensing agreements, or other business development arrangements, we intend to actively explore promising potential additions to our pipeline. ● Continue to expand our intellectual property portfolio.
Intellectual Property We seek to protect our proprietary technology, inventions, and improvements that are commercially important to the development of our business by seeking, maintaining, and defending patent rights, whether developed internally, acquired from third parties, or licensed from third parties.
There are many other pharmaceutical and biotechnology companies that are conducting clinical trials of various therapeutics for the treatment of AD. 7 Intellectual Property We seek to protect our proprietary technology, inventions, and improvements that are commercially important to the development of our business by seeking, maintaining, and defending patent rights, whether developed internally, acquired from third parties, or licensed from third parties.
One of the U.S. applications is currently under appeal with the USPTO. While method of use claims may relate to the use of CD271+ cells for cardiac repair, our license terms exclude our use of CD271+ cells for preventing and treating cardiovascular diseases or disorders, including congenital cardiovascular defects.
The patent application remains pending in the U.S While method of use claims may relate to the use of CD271+ cells for cardiac repair, our license terms exclude our use of CD271+ cells for preventing and treating cardiovascular diseases or disorders, including congenital cardiovascular defects.
We may also explore other indications in Japan, and potentially pursue Aging-related frailty and other indications in additional international locations for further development and commercialization. 1 Sunjay Kaushal, MD, PhD, Joshua M Hare, MD, Jessica R Hoffman, PhD, Riley M Boyd, BA, Kevin N Ramdas, MD, MPH, Nicholas Pietris, MD, Shelby Kutty, MD, PhD, MS, James S Tweddell, MD, S Adil Husain, MD, Shaji C Menon, MBBS, MD, MS, Linda M Lambert, MSN-cFNP, David A Danford, MD, Seth J Kligerman, MD, Narutoshi Hibino, MD, PhD, Laxminarayana Korutla, PhD, Prashanth Vallabhajosyula, MD, MS, Michael J Campbell, MD, Aisha Khan, PhD, Eric Naioti, MSPH, Keyvan Yousefi, PharmD, PhD, Danial Mehranfard, PharmD, MBA, Lisa McClain-Moss, Anthony A Oliva, PhD, Michael E Davis, PhD, Intramyocardial cell-based therapy with Lomecel-B during bidirectional cavopulmonary anastomosis for hypoplastic left heart syndrome: The ELPIS phase I trial, European Heart Journal Open , 2023. 1 ● Continue to pursue the therapeutic potential of Lomecel-B™ in Alzheimer’s disease (AD).
We hope that a positive outcome could add to the clinical data suggesting the functional and clinical benefit of Lomecel-B™ as part of standard-of-care treatment in HLHS patients. 1 Sunjay Kaushal, MD, PhD, Joshua M Hare, MD, Jessica R Hoffman, PhD, Riley M Boyd, BA, Kevin N Ramdas, MD, MPH, Nicholas Pietris, MD, Shelby Kutty, MD, PhD, MS, James S Tweddell, MD, S Adil Husain, MD, Shaji C Menon, MBBS, MD, MS, Linda M Lambert, MSN-cFNP, David A Danford, MD, Seth J Kligerman, MD, Narutoshi Hibino, MD, PhD, Laxminarayana Korutla, PhD, Prashanth Vallabhajosyula, MD, MS, Michael J Campbell, MD, Aisha Khan, PhD, Eric Naioti, MSPH, Keyvan Yousefi, PharmD, PhD, Danial Mehranfard, PharmD, MBA, Lisa McClain-Moss, Anthony A Oliva, PhD, Michael E Davis, PhD, Intramyocardial cell-based therapy with Lomecel-B™ during bidirectional cavopulmonary anastomosis for hypoplastic left heart syndrome: The ELPIS phase I trial, European Heart Journal Open , 2023. 1 Alzheimer’s Disease In September 2023, we completed our Phase 2a AD clinical trial, known as the CLEAR MIND trial.
The product candidate is administered to an expanded population that has the specified disease or condition to further evaluate dosage, provide statistically significant evidence of clinical efficacy and gain additional safety data.
The product candidate is administered to an expanded population that has the specified disease or condition to further evaluate dosage, provide statistically significant evidence of clinical efficacy and gain additional safety data. These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.
Other legislative changes have also been adopted since the ACA was enacted, including mandatory sequestration (e.g., aggregate reductions of certain Medicare payments of up to 2%), which will remain in effect through fiscal year 2031 absent Congressional action. With these Congressional changes came continued yet unsuccessful attempts to repeal the ACA in its entirety through the judiciary.
Other legislative changes have also been adopted since the ACA was enacted, including mandatory sequestration (e.g., aggregate reductions of certain Medicare payments of up to 2%), which will remain in effect through fiscal year 2031 absent Congressional action. We expect such judicial and Congressional challenges to continue.

… 180 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

119 edited+160 added−57 removed342 unchanged
Biggest changeFor as long as we continue to be an emerging growth company, we intend to take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including: ● being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this 10-K; ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; ● reduced disclosure obligations regarding executive compensation in this 10-K and our periodic reports and proxy statements; ● exemptions from the requirements of holding nonbinding advisory stockholder votes on executive compensation and stockholder approval of any golden parachute payments not previously approved; and ● An extended transition period for complying with new or revised financial accounting standards.
Biggest changeFor as long as we continue to be an EGC, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not EGCs, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, or Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Furthermore, FDA could decide not to grant our request to use one or more of the expedited review programs for a product candidate, even if the FDA’s initial feedback is that the product candidate would qualify for such program(s).
Furthermore, the FDA could decide not to grant our request to use one or more of the expedited review programs for a product candidate, even if the FDA’s initial feedback is that the product candidate would qualify for such program(s).
Moreover, FDA can decide to stop reviewing a product candidate under one or more of these expedited review programs if, for example, the conditions that warranted expedited review no longer apply to that product candidate.
Moreover, the FDA can decide to stop reviewing a product candidate under one or more of these expedited review programs if, for example, the conditions that warranted expedited review no longer apply to that product candidate.
This voucher program has been extended, but there is no guarantee the Congress will extend it again in the future. If we do receive a priority review voucher upon approval of Lomecel-B for this indication, then that voucher permits a future application to be treated as a priority review application by FDA.
This voucher program has been extended, but there is no guarantee the Congress will extend it again in the future. If we do receive a priority review voucher upon approval of Lomecel-B™ for this indication, then that voucher permits a future application to be treated as a priority review application by the FDA.
FDA does not guarantee that the future application will be reviewed in a particular period of time. Vouchers may be transferred, including by sale; accordingly, there is a market for these vouchers at prices that have historically fluctuated.
The FDA does not guarantee that the future application will be reviewed in a particular period of time. Vouchers may be transferred, including by sale; accordingly, there is a market for these vouchers at prices that have historically fluctuated.
These provisions, among other things: ● establish a classified board of directors so that not all members of our board are elected at one time; ● permit only the board of directors to establish the number of directors and fill vacancies on the board; ● provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders; ● provide for a dual class common stock structure, which provides certain affiliates of ours, including our co-founder and members of our Board, individually or together, with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A Common Stock and Class B Common Stock; ● authorize the issuance of “blank check” preferred stock that our Board could use to implement a stockholder rights plan (also known as a “poison pill”); ● eliminate the ability of our stockholders to call special meetings of stockholders; ● prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; ● prohibit cumulative voting; ● authorize our Board to amend our bylaws; ● establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; and ● require a super-majority vote of stockholders to amend some of the provisions described above.
These provisions, among other things: ● establish a classified board of directors so that not all members of our Board are elected at one time; ● permit only the board of directors to establish the number of directors and fill vacancies on the Board; ● provide that directors may only be removed “for cause” and only with the approval of two-thirds of our stockholders; ● provide for a dual class common stock structure, which provides certain affiliates of ours, including our co-founder and members of our Board, individually or together, with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock and Class B common stock; ● authorize the issuance of “blank check” preferred stock that our Board could use to implement a stockholder rights plan (also known as a “poison pill”); ● eliminate the ability of our stockholders to call special meetings of stockholders; ● prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; ● prohibit cumulative voting; ● authorize our Board to amend our bylaws; ● establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; and ● require a super-majority vote of stockholders to amend some of the provisions described above.
The degree of market acceptance of any of our future developed and potential products will depend on a number of factors, including: ● the clinical safety and effectiveness of our products and their perceived advantage over alternative treatment methods; ● our ability to demonstrate that our cell-based products can have a clinically significant effect, initially for Aging-related frailty, AD, HLHS, and other disease states for which we may seek marketing approval; ● ethical controversies that may arise regarding the use of stem cells or human tissue of any kind, including adult stem cells, adult bone marrow, and other adult tissues derived from donors; ● adverse events involving our product candidates or candidates of others that are cell based; ● our ability to supply a sufficient amount of our products to meet regular and repeated demand in order to develop a core group of medical professionals familiar with and committed to the use of our products; and ● the cost of our products and the reimbursement policies of government and third-party payors.
The degree of market acceptance of any of our future developed and potential products will depend on a number of factors, including: ● the clinical safety and effectiveness of our products and their perceived advantage over alternative treatment methods; 29 ● our ability to demonstrate that our cell-based products can have a clinically significant effect, initially for Aging-related frailty, AD, HLHS, and other disease states for which we may seek marketing approval; ● ethical controversies that may arise regarding the use of stem cells or human tissue of any kind, including adult stem cells, adult bone marrow, and other adult tissues derived from donors; ● adverse events involving our product candidates or candidates of others that are cell based; ● our ability to supply a sufficient amount of our products to meet regular and repeated demand in order to develop a core group of medical professionals familiar with and committed to the use of our products; and ● the cost of our products and the reimbursement policies of government and third-party payors.
For example: ● others may be able to develop products that are similar to our product candidates but that are not covered by the claims of the patents that we own or license; ● we or our licensors might not have been the first to make the inventions covered by the issued patents or patent application that we own or license; ● we or our licensors might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● some or all of our licensors’ pending patent applications may not lead to issued patents; ● issued patents that we own or license may be held invalid or unenforceable as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets or in commercial markets where we do not have patent rights; ● we may not develop additional proprietary technologies that are patentable; and ● the patents of others may have an adverse effect on our business.
For example: ● others may be able to develop products that are similar to our product candidates but that are not covered by the claims of the patents that we own or license; ● we or our licensors might not have been the first to make the inventions covered by the issued patents or patent application that we own or license; ● we or our licensors might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● some or all of our licensors’ pending patent applications may not lead to issued patents; ● issued patents that we own or license may be held invalid or unenforceable as a result of legal challenges by our competitors; ● our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets or in commercial markets where we do not have patent rights; 39 ● we may not develop additional proprietary technologies that are patentable; and ● the patents of others may have an adverse effect on our business.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include: ● the timing and results, or perception of the results, of preclinical studies and clinical trials of our product candidates or those of our competitors; ● the success of competitive products or announcements by potential competitors of their product development efforts; ● regulatory actions with respect to our or our competitors’ product candidates or approved products; ● actual or anticipated changes in our growth rate relative to our competitors; ● regulatory or legal developments in the U.S. and other countries; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key personnel; ● announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, or capital commitments; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● market conditions in the pharmaceutical and biotechnology sector; ● changes in the structure of healthcare payment systems; ● share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; ● announcement or expectation of additional financing efforts; ● sales of our Class A Common Stock by us, our insiders or our other stockholders; ● expiration of market stand-off or lock-up agreements; and ● general economic, industry and market conditions.
In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include: ● the timing and results, or perception of the results, of preclinical studies and clinical trials of our product candidates or those of our competitors; ● the success of competitive products or announcements by potential competitors of their product development efforts; ● regulatory actions with respect to our or our competitors’ product candidates or approved products; ● actual or anticipated changes in our growth rate relative to our competitors; ● regulatory or legal developments in the U.S. and other countries; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key personnel; ● announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, or capital commitments; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● market conditions in the pharmaceutical and biotechnology sector; ● changes in the structure of healthcare payment systems; ● Class A common stock price and volume fluctuations attributable to inconsistent trading volume levels of our Class A common stock; ● announcement or expectation of additional financing efforts; ● sales of our Class A common stock by us, our insiders, or our other stockholders; ● expiration of market stand-off or lock-up agreements; and ● general economic, industry and market conditions.
Whether or not we are ultimately successful in any product liability litigation, such litigation either before or after product approval and marketing could consume substantial amounts of our financial and managerial resources and could result in, among other things: ● significant awards against us; ● substantial litigation costs; ● recall of products or termination of clinical trials; ● FDA withdrawal of marketing approval of products or suspension or revocation of an IND for a product candidate; ● injury to our reputation; ● withdrawal of clinical trial participants; ● withdrawal of clinical trial sites or investigators; or ● adverse regulatory action.
Whether or not we are ultimately successful in any product liability litigation, such litigation either before or after product approval and marketing could consume substantial amounts of our financial and managerial resources and could result in, among other things: ● significant awards against us; ● substantial litigation costs; 34 ● recall of products or termination of clinical trials; ● FDA withdrawal of marketing approval of products or suspension or revocation of an IND for a product candidate; ● injury to our reputation; ● withdrawal of clinical trial participants; ● withdrawal of clinical trial sites or investigators; or ● adverse regulatory action.
In addition, Section 203 of the General Corporation Law of the State of Delaware, or the DGCL, prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
In addition, Section 203 of the General Corporation Law of the State of Delaware prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.
Because our product candidates are based on MSCs, any negative developments regarding the therapeutic potential or side effects of our MSCs, or regarding scientific and medical knowledge about MSCs in general, could have a material adverse effect on our business, financial condition, results of operations, and prospects. 21 Our product development programs are based on novel technologies and are inherently risky.
Because our product candidates are based on MSCs, any negative developments regarding the therapeutic potential or side effects of our MSCs, or regarding scientific and medical knowledge about MSCs in general, could have a material adverse effect on our business, financial condition, results of operations, and prospects. Our product development programs are based on novel technologies and are inherently risky.
These items must be manufactured and supplied to us in sufficient quantities and in compliance with the regulations governing cGMP and Current Good Tissue Practice (cGTP) promulgated by the FDA. To meet these requirements, we have entered into supply agreements with firms that manufacture these components to meet cGMP and cGTP standards.
These items must be manufactured and supplied to us in sufficient quantities and in compliance with the regulations governing cGMP and Current Good Tissue Practice (“cGTP”) promulgated by the FDA. To meet these requirements, we have entered into supply agreements with firms that manufacture these components to meet cGMP and cGTP standards.
The stock market in general, and pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our Class A Common Stock, regardless of our actual operating performance.
The stock market in general, and pharmaceutical and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. 64 Broad market and industry factors may negatively affect the market price of our Class A common stock, regardless of our actual operating performance.
Our dependence upon our current and potential future collaborations exposes us to a number of risks, including that our collaborators (i) may fail to cooperate or perform their contractual obligations, including financial obligations, (ii) may choose to undertake differing business strategies or pursue alternative technologies, or (iii) may take an opposing view regarding ownership of clinical trial results or intellectual property. 39 Due to these factors and other possible events, we could suffer delays in the research, development, or commercialization of our product candidates and future products or we may become involved in litigation or arbitration, which could be time consuming and expensive.
Our dependence upon our current and potential future collaborations exposes us to a number of risks, including that our collaborators (i) may fail to cooperate or perform their contractual obligations, including financial obligations, (ii) may choose to undertake differing business strategies or pursue alternative technologies, or (iii) may take an opposing view regarding ownership of clinical trial results or intellectual property. 54 Due to these factors and other possible events, we could suffer delays in the research, development, or commercialization of our product candidates and future products or we may become involved in litigation or arbitration, which could be time consuming and expensive.
The information reported will be publicly available on a searchable website, with disclosure required annually; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. 45 Some state laws require biotechnology companies to comply with the biotechnology industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures.
The information reported will be publicly available on a searchable website, with disclosure required annually; and ● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers. 61 Some state laws require biotechnology companies to comply with the biotechnology industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures.
The University of Miami may terminate the Exclusive License Agreement for material breach if the fees and royalties are not paid, or if the milestones are not met and an extension to achieve the milestones is not agreed upon. 28 Some of our employees, including but not limited to Dr.
The University of Miami may terminate the Exclusive License Agreement for material breach if the fees and royalties are not paid, or if the milestones are not met and an extension to achieve the milestones is not agreed upon. Some of our employees, including but not limited to Dr.
If we are unable to reach agreement with suitable research institutions on acceptable terms, or if any resulting agreement is terminated, we may be unable to quickly replace the research institution with another qualified institution on acceptable terms. Even if we do replace the institution, we may incur additional costs to conduct the trial at the new institution.
If we are unable to reach agreement with suitable research institutions on acceptable terms, or if any resulting agreement is breached or terminated, we may be unable to quickly replace the research institution with another qualified institution on acceptable terms. Even if we do replace the institution, we may incur additional costs to conduct the trial at the new institution.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. 44 We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product.
At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. 60 We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product.
To the extent the activities of these groups are successful, or if the laws and regulations regarding animal testing otherwise change, our research and development activities may be interrupted, delayed or become more expensive. Our business activities may be subject to the U.S.
To the extent the activities of these groups are successful, or if the laws and regulations regarding animal testing otherwise change, our research and development activities may be interrupted, delayed or become more expensive. 63 Our business activities may be subject to the U.S.
We cannot assure you that we will be able to manage our existing third-party service providers or find other competent outside contractors and consultants on economically reasonable terms, or at all. 55 If we are not able to effectively expand our organization by hiring new employees and/or engaging additional third-party service providers, we may not be able to successfully implement the tasks necessary to further develop and commercialize our current and future product candidates and, accordingly, may not achieve our research, development and commercialization goals.
We cannot assure you that we will be able to manage our existing third-party service providers or find other competent outside contractors and consultants on economically reasonable terms, or at all. 71 If we are not able to effectively expand our organization by hiring new employees and/or engaging additional third-party service providers, we may not be able to successfully implement the tasks necessary to further develop and commercialize our current and future product candidates and, accordingly, may not achieve our research, development and commercialization goals.
Since patent applications in the U.S. and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we were the first to either (1) file any patent application related to our product candidates or (2) invent any of the inventions claimed in our patents or patent applications. 31 The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation.
Since patent applications in the U.S. and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we were the first to either (1) file any patent application related to our product candidates or (2) invent any of the inventions claimed in our patents or patent applications. 40 The Leahy-Smith Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation.
If we fail to establish and maintain satisfactory relationships with our future third-party distributors, our revenues and market share may not grow as anticipated, and we could be subject to unexpected costs which could harm our results of operations and financial condition. 38 The successful commercialization of our current or future product candidates will depend on obtaining reimbursement from government and third-party payors, and price controls in foreign markets could adversely affect our future profitability.
If we fail to establish and maintain satisfactory relationships with our future third-party distributors, our revenues and market share may not grow as anticipated, and we could be subject to unexpected costs which could harm our results of operations and financial condition. 53 The successful commercialization of our current or future product candidates will depend on obtaining reimbursement from government and third-party payors, and price controls in foreign markets could adversely affect our future profitability.
If the FDA, PMDA or any applicable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates not receiving approval for commercialization in the applicable jurisdiction. 41 Obtaining and maintaining regulatory approval of a product in one jurisdiction does not mean that we will be successful in obtaining or maintaining regulatory approval in other jurisdictions.
If the FDA, PMDA or any applicable foreign regulatory authority does not accept such data, it would result in the need for additional trials, which would be costly and time-consuming and delay aspects of our business plan, and which may result in our product candidates not receiving approval for commercialization in the applicable jurisdiction. 57 Obtaining and maintaining regulatory approval of a product in one jurisdiction does not mean that we will be successful in obtaining or maintaining regulatory approval in other jurisdictions.
Our ability to utilize those NOLs could be limited by an “ownership change” as described above and consequently, we may not be able to utilize a material portion of our NOLs and certain other tax attributes, which could have a material adverse effect on our cash flows and results of operations. 56 A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business.
Our ability to utilize those NOLs could be limited by an “ownership change” as described above and consequently, we may not be able to utilize a material portion of our NOLs and certain other tax attributes, which could have a material adverse effect on our cash flows and results of operations. 72 A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business.
If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, our ability to commercialize our product candidates may be impaired or delayed, which could in turn significantly harm our business. 29 Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidates.
If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, our ability to commercialize our product candidates may be impaired or delayed, which could in turn significantly harm our business. 37 Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidates.
If such an event were to occur, it could have a material adverse effect on our business, financial condition, and results of operations. 33 Risks Related to Regulatory Approval and Other Government Regulations If we are not able to successfully develop and commercialize our product candidates and obtain the necessary regulatory approvals, we may not generate sufficient revenues to continue our business operations.
If such an event were to occur, it could have a material adverse effect on our business, financial condition, and results of operations. 42 Risks Related to Regulatory Approval and Other Government Regulations If we are not able to successfully develop and commercialize our product candidates and obtain the necessary regulatory approvals, we may not generate sufficient revenues to continue our business operations.
The delays associated with the qualification of a new third party could negatively affect our ability to develop product candidates or receive approval for any product candidates in a timely manner. 36 We currently depend upon third parties for services and raw materials needed for the manufacture of our product candidates, and if these products are successfully commercialized, we may become dependent upon third parties for product distribution.
The delays associated with the qualification of a new third party could negatively affect our ability to develop product candidates or receive approval for any product candidates in a timely manner. 50 We currently depend upon third parties for services and raw materials needed for the manufacture of our product candidates, and if these products are successfully commercialized, we may become dependent upon third parties for product distribution.
If we are not able to obtain regulatory approvals for use of our product candidates under development, we will not be able to commercialize such products, and therefore may not be able to generate sufficient revenues to support our business. 34 If we are not able to conduct our clinical trials properly and on schedule, marketing approval by FDA and other regulatory authorities may be delayed or denied.
If we are not able to obtain regulatory approvals for use of our product candidates under development, we will not be able to commercialize such products, and therefore may not be able to generate sufficient revenues to support our business. 44 If we are not able to conduct our clinical trials properly and on schedule, marketing approval by FDA and other regulatory authorities may be delayed or denied.
A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended. 32 Patent term extension may also be available in certain foreign countries upon regulatory approval of our product candidates.
A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only those claims covering such approved drug product, a method for using it or a method for manufacturing it may be extended. 41 Patent term extension may also be available in certain foreign countries upon regulatory approval of our product candidates.
See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below. For a summary of these risk factors, please see “Risk Factors Summary” beginning on page 21 of this 10-K.
See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below. For a summary of these risk factors, please see “Risk Factors Summary” beginning on page 29 of this 10-K.
There are no assurances that we will be able to continue to finance operations through these means, and our inability to generate sufficient revenue in the near term may have an adverse impact on our business, operations and prospects. 25 We face risks related to health epidemics and outbreaks.
There are no assurances that we will be able to continue to finance operations through these means, and our inability to generate sufficient revenue in the near term may have an adverse impact on our business, operations and prospects. 32 We face risks related to health epidemics and outbreaks.
We expect that our sales, research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future programs and product candidates, contracting with contract research organizations (CROs) to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations.
We expect that our sales, research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future programs and product candidates, contracting with contract research organizations (“CROs”) to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations.
We have not conducted any studies to determine annual limitations, if any, that could result from such changes in the ownership.
We have not conducted any studies to determine annual limitations, if any, that could result from such changes in ownership.
The process of obtaining or creating such a diagnostic is time consuming and costly. 42 Companion diagnostics are developed in conjunction with clinical programs for the associated product and are subject to regulation as medical devices by the FDA and comparable regulatory authorities.
The process of obtaining or creating such a diagnostic is time consuming and costly. 58 Companion diagnostics are developed in conjunction with clinical programs for the associated product and are subject to regulation as medical devices by the FDA and comparable regulatory authorities.
Further, the utilization of donated bone marrow creates the potential for transmission of cancer and communicable disease, including but not limited to human immunodeficiency virus (HIV), viral hepatitis, syphilis, Creutzfeldt-Jakob disease, and other viral, fungal, or bacterial pathogens.
Further, the utilization of donated bone marrow creates the potential for transmission of cancer and communicable disease, including but not limited to human immunodeficiency virus (“HIV”), viral hepatitis, syphilis, Creutzfeldt-Jakob disease, and other viral, fungal, or bacterial pathogens.
Leqembi ™ (lecanemab-irmb), also an amyloid beta-directed antibody, was approved in January 2023 under the accelerated approval pathway as well and will therefore likewise require confirmatory trials. 35 Many new types and classes of drugs have been developed and tested in AD, including monoclonal antibodies, g-secretase modulators and inhibitors, β-site amyloid precursor protein cleaving enzyme (BACE) inhibitors, receptor for advanced glycation end-products (RAGE) inhibitors, nicotinic agonists, serotonin subtype receptor (5HT6) antagonists, and others.
Leqembi ™ (lecanemab-irmb), also an amyloid beta-directed antibody, was approved in January 2023 under the accelerated approval pathway as well and will therefore likewise require confirmatory trials. 45 Many new types and classes of drugs have been developed and tested in AD, including monoclonal antibodies, g-secretase modulators and inhibitors, β-site amyloid precursor protein cleaving enzyme (BACE) inhibitors, receptor for advanced glycation end-products (“RAGE”) inhibitors, nicotinic agonists, serotonin subtype receptor (5HT6) antagonists, and others.
For additional detail regarding the grant awards, we have received from governmental and non-profit associations, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Grant Awards” on page 64 of this report .
For additional detail regarding the grant awards, we have received from governmental and non-profit associations, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Grant Awards” on page 79 of this report .
In addition, we have other potential competitors developing a variety of therapeutics, and in some cases, such as with Alzheimer’s disease, there may be tens or hundreds of companies seeking to commercialize therapeutics. We also face competition in the cell therapy field from academic institutions and governmental agencies.
In addition, we have other potential competitors developing a variety of therapeutics, and in some cases, such as with AD, there may be tens or hundreds of companies seeking to commercialize therapeutics. We also face competition in the cell therapy field from academic institutions and governmental agencies.
Obtaining and enforcing patents in the biopharmaceutical industry involve a high degree of technological and legal complexity. Therefore, obtaining and enforcing biopharmaceutical patents is costly, time-consuming and inherently uncertain.
Obtaining and enforcing patents in the biopharmaceutical industry involves a high degree of technological and legal complexity. Therefore, obtaining and enforcing biopharmaceutical patents is costly, time-consuming and inherently uncertain.
More specifically, our ability to begin Phase 3 (i.e., pivotal) trials in a “Frailty” or “Aging-related frailty” indication will depend on our Phase 2 clinical data and subsequent interactions with FDA where we would discuss the size and scope of a Phase 3 program, the appropriate target patient population (i.e., defining the indication), and agreement on one or more primary endpoints that demonstrate clinically meaningful outcome.
More specifically, our ability to begin Phase 3 (i.e., pivotal) trials in a “Frailty” or “Aging-related frailty” indication would depend on our subsequent interactions with FDA where we would discuss the size and scope of the next program, the appropriate target patient population (i.e., defining the indication), and agreement on one or more primary endpoints that demonstrate clinically meaningful outcome.
As a result, topline and preliminary data should be viewed with caution until the final data are available. 40 From time to time, we may also disclose interim data from our preclinical studies and clinical trials. For example, we have reported interim data from our ongoing clinical trials elsewhere in this report.
As a result, topline and preliminary data should be viewed with caution until the final data is available. 56 From time to time, we may also disclose interim data from our preclinical studies and clinical trials. For example, we have reported interim data from our ongoing clinical trials elsewhere in this report.
The trading market for our Class A Common Stock will be influenced by the research and reports that securities or industry analysts publish about us, our business or our market. We do not currently have and may never obtain research coverage by securities or industry analysts.
The trading market for our Class A common stock is influenced by the research and reports that securities or industry analysts publish about us, our business, or our market. We do not currently have significant research coverage and may never obtain significant research coverage by securities or industry analysts.
There are no FDA-approved allogeneic, cell-based therapies for Aging-related frailty, Alzheimer’s disease (AD), or other aging-related conditions, nor Hypoplastic Left Heart Syndrome or other cardiac-related indications. This could complicate and delay FDA approval of our product candidate for these indications, or other indications we study or will study.
There are no FDA-approved allogeneic, cell-based therapies for Aging-related frailty, Alzheimer’s disease (AD), or other aging-related conditions, nor HLHS or other cardiac-related indications. This could complicate and delay FDA approval of our product candidate for these indications, or other indications we study or will study.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel, the availability of industry-paid user fees, and statutory, regulatory, and policy changes.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel, accept payments of user fees, and statutory, regulatory, and policy changes.
If securities or industry analysts do not publish research or reports, or if they publish adverse or misleading research or reports, regarding us, our business or our market, our stock price and trading volume could decline.
If securities or industry analysts do not publish research or reports, or if they publish negative, adverse, or misleading research or reports, regarding us, our business or our market, our Class A common stock price and trading volume could decline.
As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources. As of December 31, 2022, we had $19.7 million in cash and cash equivalents and marketable securities.
As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources. As of December 31, 2023, we had $5.4 million in cash and cash equivalents and marketable securities.
Although FDA has approved several cell therapy products, there are no allogeneic cell-based or stem cell therapies currently approved by the FDA for the treatment of Aging-related frailty or our other indications. There are also no conventional drugs or therapies currently approved by the FDA with stated indications for Aging-related frailty, Aging, or Frailty.
Although FDA has approved several cell therapy products, there are no allogeneic cell-based or stem cell therapies currently approved by the FDA for the treatment of Aging-related frailty or our other indications.
These challenges may prevent us from developing and commercializing products on a timely or profitable basis, or at all. 22 If we are not able to recruit and retain qualified management and scientific personnel, we may fail in developing our technologies and product candidates.
To the extent the Company decides to pursue these indications, these challenges may prevent us from developing and commercializing products on a timely or profitable basis, or at all. If we are not able to recruit and retain qualified management and scientific personnel, we may fail in developing our technologies and product candidates.
It is possible that a broader or more active public trading market for our common stock will not develop or be sustained, or that trading levels will not continue. These factors may materially adversely affect the market price of our Class A Common Stock, regardless of our performance.
It is possible that a broader or more active public trading market for our common stock will not develop or be sustained, or that trading levels will not continue. These factors may materially adversely affect the market price of our Class A common stock, regardless of our performance. We will need to raise substantial additional funding.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business or permit us to maintain our competitive advantage.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business or permit us to maintain our competitive advantage.
In addition, the expansion of MSCs through our proprietary manufacturing methods utilizes biologic growth media that may be in limited supply. Our product candidates will be inherently more difficult to manufacture at commercial-scale than conventional pharmaceuticals, which are manufactured using precise chemical formulations and operational methods.
In addition, the expansion of MSCs through our proprietary manufacturing methods utilizes biologic growth media that may be in limited supply. Our product candidates will be inherently more difficult to manufacture at commercial-scale than conventional pharmaceuticals, which are manufactured using precise chemical formulations and operational methods. Cost-effective production at clinical trial or commercial scale quantities may not be achievable.
While the Company believes that each patent application or patent has already been assigned or, if it has not yet been formally assigned, is under an obligation to be assigned to the Company either through direct employment agreements between the Company and the inventors, or through research agreements with a third party and the Company, if such is not the case, our business, financial condition, results of operations, and prospects could be adversely affected. 30 Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
While the Company believes that each patent application or patent has already been assigned or, if it has not yet been formally assigned, is under an obligation to be assigned to the Company either through direct employment agreements between the Company and the inventors, or through research agreements with a third party and the Company, if such is not the case, our business, financial condition, results of operations, and prospects could be adversely affected.
Although we do not use embryonic stem cells or fetal tissue, but the public may not be able to, or may fail to, differentiate our use of adult MSCs from the use of embryonic stem cells or fetal tissue by others, which could result in a negative perception of our company or our future products or product candidates, thereby reducing demand, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Although we do not use embryonic stem cells or fetal tissue, but the public may not be able to, or may fail to, differentiate our use of adult MSCs from the use of embryonic stem cells or fetal tissue by others, which could result in a negative perception of our company or our future products or product candidates, thereby reducing demand, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. 31 We may obtain MSCs from volunteer adult bone marrow donors from non-profit organizations that collect and process tissue donations.
We are conducting several trials in the U.S., and we recently entered into a sponsored clinical research agreement with the National Center for Geriatrics and Gerontology and Juntendo University Hospital in Japan to explore the safety and efficacy of Lomecel-B™ in older, frail Japanese subjects. The acceptance of study data by the U.S.
We are conducting several trials in the U.S., and previously entered into a sponsored clinical research agreement with the National Center for Geriatrics and Gerontology and Juntendo University Hospital in Japan to explore the safety and efficacy of Lomecel-B™ in older, frail Japanese subjects. This study in Japan has been discontinued by the Company in 2024.
We have ongoing challenges with respect to our liquidity and access to capital. As we advance the preclinical and clinical development of our programs, we expect to continue to incur significant expenses and operating losses, for which we do not have offsetting revenue.
As we advance the preclinical and clinical development of our programs, we expect to continue to incur significant expenses and operating losses, for which we do not have offsetting revenue.
The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our Class A Common Stock. 48 Our ability to raise capital in the future may be limited.
The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and adverse impact on the market price of our Class A common stock.
Our trade secrets attempt to bridge the gap that threatens patent exclusivity for the protection of products derived from MSCs. Our trade secrets also remain valid and enforceable without regard to limitations such as term restrictions that are imposed on patents.
Our trade secrets attempt to bridge the gap that threatens patent exclusivity for the protection of products derived from MSCs. Our trade secrets also remain valid and enforceable without regard to limitations such as term restrictions that are imposed on patents. Our trade secrets and know-how are the subject of various license agreements and confidentiality agreements as further discussed below.
FDA, Japanese PMDA or other comparable foreign regulatory authority from clinical trials conducted outside of their respective jurisdictions may be subject to certain conditions.
The acceptance of study data by the U.S. FDA, Japanese PMDA or other comparable foreign regulatory authority from clinical trials conducted outside of their respective jurisdictions may be subject to certain conditions.
However, even though FDA has granted Lomecel-B Rare Pediatric Disease designation for the treatment of HLHS, receipt of Rare Pediatric Disease designation does not provide any guarantee that we would or will receive a priority review voucher upon approval for this indication.
These designations were granted following our Phase 1 safety-focused ELPIS trial, However, even though the FDA has granted Lomecel-B™ Rare Pediatric Disease designation for the treatment of HLHS, receipt of Rare Pediatric Disease designation does not provide any guarantee that we would or will receive a priority review voucher upon approval for this indication.
Inadequate funding for the FDA and other government agencies, future government shutdown or furlough of government employees, or public health emergencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being reviewed or approved in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
A variety of factors, including inadequate funding for the FDA, the SEC and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
Our future success depends to a significant extent on the skills, experience, and efforts of the principal members of our scientific and management personnel. These members include Joshua M. Hare, M.D. and our staff of scientific consultants. Our co-founder, Dr.
Our future success depends to a significant extent on the skills, experience, and efforts of the principal members of our scientific and management personnel. These members include Joshua M. Hare, M.D. and our staff of scientific consultants. Our co-founder, Dr. Hare, remains employed by UM, and provides services to us as a consultant on a limited basis.
In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue adverse or misleading research or reports regarding us, our business model, our intellectual property, our stock performance or our market, or if our operating results fail to meet the expectations of analysts, our stock price would likely decline.
In the event we obtain significant, or any securities or industry analyst coverage and such coverage is negative, or adverse or misleading regarding us, our business model, our intellectual property, our stock performance or our market, or if our operating results fail to meet the expectations of analysts, our Class A common stock price would likely decline.
Our trade secrets and know-how are the subject of various license agreements and confidentiality agreements as further discussed below. 27 The claims of existing U.S. and foreign patent applications and patents, and those patents that may issue in the future, or those to be licensed to us, that are owned by the Company or under an obligation of assignment to the Company, may not confer on us significant commercial protection against competing products.
The claims of existing U.S. and foreign patent applications and patents, and those patents that may issue in the future, or those to be licensed to us, that are owned by the Company or under an obligation of assignment to the Company, may not confer on us significant commercial protection against competing products.
There can be no assurance that the FDA, PMDA or any applicable foreign regulatory authority will accept data from trials conducted outside of its respective jurisdiction.
Furthermore, such foreign trials would be subject to the applicable local laws of the foreign jurisdictions where the trials are conducted. There can be no assurance that the FDA, PMDA or any applicable foreign regulatory authority will accept data from trials conducted outside of its respective jurisdiction.
We do not have insurance to cover claims arising from our use and disposal of these hazardous substances other than limited clean-up expense coverage for environmental contamination due to an otherwise insured peril, such as fire. Risks Related to Our Dependence on Third Parties We rely on third parties to provide us with supplies to produce our product candidates.
We do not have insurance to cover claims arising from our use and disposal of these hazardous substances other than limited clean-up expense coverage for environmental contamination due to an otherwise insured peril, such as fire.
Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject of controversy and adverse publicity.
Our research and development activities could be affected or delayed as a result of possible restrictions on animal testing. Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving humans. Animal testing activities have been the subject of controversy and adverse publicity.
As noted elsewhere in this report, FDA has granted both Rare Pediatric Disease designation and Orphan Drug Designation status for the use of Lomecel-B to treat HLHS. These designations were granted following our Phase 1 safety-focused ELPIS trial,.
As noted elsewhere in this report, the FDA has granted both Rare Pediatric Disease designation and Orphan Drug Designation status for the use of Lomecel-B™ to treat HLHS.
Although the Company has obligations of assignment and has been assigned patents and patent applications concerning stem cell products and their uses, none of those patents or presently pending applications has granted claims or pending claims that, if granted, would prevent a third party from commercializing their own allogeneic stem cell therapy for those indications that we are studying.
Our patents might not contain claims that are sufficiently broad to prevent others from practicing our technologies or from competing with us with their own technology in the fields of interest to us. 35 Although the Company has obligations of assignment and has been assigned patents and patent applications concerning stem cell products and their uses, none of those patents or presently pending applications has granted claims or pending claims that, if granted, would prevent a third party from commercializing their own allogeneic stem cell therapy for those indications that we are studying.
Risks Related to Employee Matters, Managing Our Growth and Other Risks Related to Our Business We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators.
We cannot predict the size of future issuances or the effect, if any, that they may have on the market price of our Class A common stock. 70 Risks Related to Employee Matters, Managing Our Growth and Other Risks Related to Our Business We have never commercialized a product candidate before and may lack the necessary expertise, personnel and resources to successfully commercialize any products on our own or together with suitable collaborators.
We cannot predict if investors will find our Class A Common Stock less attractive because we may rely on these exemptions. If some investors find our Class A Common Stock less attractive as a result, there may be a less active trading market for our Class A Common Stock and our stock price may be more volatile.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
If no or few securities or industry analysts commence coverage of us, the stock price would be negatively impacted.
If no or few securities or industry analysts provide coverage of us, the Class A common stock price could be negatively impacted.
Any provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our Class A Common Stock.
Any provision of our certificate of incorporation, bylaws or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our capital stock and could also affect the price that some investors are willing to pay for our Class A common stock. 69 We are an emerging growth company, and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.
Disruptions at the FDA and other agencies, including those resulting from the ongoing COVID-19 global pandemic, may also slow the time necessary for new products to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.
We may obtain MSCs from volunteer adult bone marrow donors from non-profit organizations that collect and process tissue donations. Bone marrow donors receive payment, but ethical concerns have been raised by some about the use of donated human tissue in a for-profit setting, as we are doing.
Bone marrow donors receive payment, but ethical concerns have been raised by some about the use of donated human tissue in a for-profit setting, as we are doing.
Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets, which may adversely affect our business. We have a history of losses and may not be able to achieve profitability going forward.
Such challenges have caused, and may continue to cause, uncertainty and instability in local economies and in global financial markets, which may adversely affect our business. 33 We may not be able to raise additional capital necessary to continue as a going concern.
Governmental regulation of the import or export of our products and technology, or our failure to obtain any required import or export authorization for our products, when applicable, could harm our international sales and adversely affect our revenue.
In addition, our products and technology may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations. Governmental regulation of the import or export of our products and technology, or our failure to obtain any required import or export authorization for our products, when applicable, could harm our international sales and adversely affect our revenue.
The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. 24 Ethical and other concerns surrounding the use of stem cell therapy or human tissue may negatively affect public perception of us or our future products or product candidates, or may negatively affect regulatory approval of our future products or product candidates, thereby reducing demand for our future products.
Ethical and other concerns surrounding the use of stem cell therapy or human tissue may negatively affect public perception of us or our future products or product candidates, or may negatively affect regulatory approval of our future products or product candidates, thereby reducing demand for our future products.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international activities, our ability to attract and retain employees and our business, prospects, operating results and financial condition. 47 In addition, our products and technology may be subject to U.S. and foreign export controls, trade sanctions and import laws and regulations.
Any such violations could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our international activities, our ability to attract and retain employees and our business, prospects, operating results and financial condition.
Moreover, even if our clinical trials are successful and we obtain marketing approval for our product candidates, our inability to secure enough bone marrow or biologic growth media to meet product demand could limit our potential revenues.
Moreover, even if our clinical trials are successful and we obtain marketing approval for our product candidates, our inability to secure enough bone marrow or biologic growth media to meet product demand could limit our potential revenues. 30 MSCs are biological entities derived from human bone marrow and therefore have the potential for disease transmission and can pose risks to the recipient.

… 256 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties Our principal executive office is located at 1951 NW 7th Avenue, Suite 520, Miami, Florida 33136. We rent approximately 15,000 ft 2 of space, which includes our executive offices and cGMP manufacturing facility, and research and development operations. See “ Manufacturing ” on page 3 of this 10-K for additional details regarding our facilities.
Biggest changeItem 2. Properties Our principal executive office is located at 1951 NW 7th Avenue, Suite 520, Miami, Florida 33136. We rent approximately 15,000 ft 2 of space, which includes our executive offices and cGMP manufacturing facility, and research and development operations. See “ Manufacturing ” on page 7 of this 10-K for additional details regarding our facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+3 added−1 removed2 unchanged
Biggest changeThe action seeks damages on behalf of a proposed class of purchasers of our Common Stock during said period. The Company entered into an agreement in principle with the plaintiffs to settle the litigation for $1.4 million. The settlement agreement is subject to final approval by the Court, which we expect to occur sometime in 2023.
Biggest changeThe complaint sought unspecified damages on behalf of a proposed class of purchasers of our Class A common stock during said period. On July 12, 2022, all parties preliminarily agreed to settle the action for approximately $1.4 million, which amount was accrued as of June 30, 2022, and was paid during the quarter ended June 30, 2023.
The suit alleges there were materially false and misleading statements made (or omissions of required information) in the Company’s initial public offering materials and in other disclosures during the period from our initial public offering on February 12, 2021, through August 12, 2021, in violation of the federal securities laws.
The suit alleged there were materially false and misleading statements made (or omissions of required information) in the Company’s initial public offering materials and in other disclosures during the period from our initial public offering on February 12, 2021, through August 12, 2021, in violation of the federal securities laws.
Removed
This amount is recorded as Non-operating Lawsuit expenses. Legal expenses incurred in ordinary business activities are reported within general and administrative expenses. Item 4. Mine Safety Disclosures Not Applicable. 57 PART II
Added
On or about May 18, 2023, a former employee of the Company filed a charge with the Equal Employment Opportunities Commission (“EEOC”) and the Florida Commission on Human Relations alleging discrimination based on disability, and on or about August 15, 2023, the former employee filed a complaint in Miami-Dade Circuit Court alleging unpaid wages were outstanding.
Added
Both matters were addressed, fully resolved and settled in a mediation between the Company and the former employee held on September 28, 2023, by which it was agreed that the former employee would be paid $75,000 (a total of $35,000 towards this resolution was paid by the Company and all remaining costs were covered by the Company’s insurance carrier) and that the EEOC and FCHR charges were withdrawn and the action in the Miami-Dade Circuit Court was dismissed with prejudice.
Added
Item 4. Mine Safety Disclosures Not Applicable. 75 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−0 removed1 unchanged
Biggest changeAny future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities; Repurchases of Securities None.
Biggest changeAny future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.
The information set forth under Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Equity Compensation Plan Information” is incorporated herein. Item 6. Reserved Reserved.
The information set forth under Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Equity Compensation Plan Information” is incorporated herein.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Stock; Holders Our common stock is traded on The Nasdaq Capital Market under the under the symbol “LGVN.” Holders of Common Stock As of March 7, 2023, there were 12 and 13 holders of record of our Class A and Class B Common Stock, respectively, based on information provided by our transfer agent, Colonial Stock Transfer Co., Inc.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Stock; Holders Our Class A common stock is traded on The Nasdaq Capital Market under the under the symbol “LGVN.” Holders of Common Stock As of February 16, 2024, there were 15 and 12 holders of record of our Class A and Class B common stock, respectively, based on information provided by our transfer agent, Colonial Stock Transfer Co., Inc.
As of such date, 6,147,481 shares of our Class A Common Stock and 14,891,085 shares of our Class B Common Stock were issued and outstanding.
As of such date, 10,294,603 shares of our Class A common stock and 14,839,993 shares of our Class B common stock were issued and outstanding.
Added
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities; Repurchases of Securities ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased (a) Average Price Paid per Share (or Unit) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs October 1-31, 2023 8,809 $ 2.29 - - November 1-30, 2023 - $ - - - December 1-31, 2023 361 $ 2.20 - - Total 9,170 $ 2.29 - - (a) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock units during the period.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

57 edited+28 added−10 removed51 unchanged
Biggest changeSince the time that we became a publicly traded company in February, 2021, we have sold 4,079,288 shares of Class A Common Stock through our IPO and a December 2021 private issuance of public equity (PIPE) offering, and warrants to purchase 1,169,288 shares of Class A Common Stock at an initial exercise price of $17.50 per share, for aggregate gross proceeds of $49.6 million prior to discounts, commissions and other offering expenses.
Biggest changeSince the time that we became a publicly traded company in February 2021, we have sold 6,798,041 shares of Common Stock through our IPO, a December 2021 private issuance of public equity (“PIPE”) offering (the “2021 PIPE Offering”), a September 2023 rights offering, an October 2023 registered direct offering with pre-funded warrants and concurrent private placement (the “October 2023 Offering”) and a December 2023 registered direct offering and concurrent private placement (the “December 2023 Offering”), along with warrants to purchase (i) 106,400 shares of common stock at an initial exercise price of $12.00 per share issued to the underwriter in our IPO in February 2021 (the “IPO Warrants”), (ii) 1,169,288 shares of Common Stock at an initial exercise price of $17.50 per share in the 2021 PIPE Offering (the “PIPE Purchaser Warrants”) as well as representative warrants to purchase 46,722 shares of common stock at an exercise price of $17.50 per share (the “PIPE Representative Warrants” and together with the PIPE Purchaser Warrants the “PIPE Warrants”), (iii) 4,848,486 warrants to purchase shares of common stock at an exercise price of $1.65 per share (the “October 2023 Private Placement Warrants”) as well as placement agent warrants to purchase 169,697 shares of common stock at an exercise price of $2.0625 per share (the “October 2023 Placement Agent Warrants”) in the October 2023 Offering (collectively, the “October 2023 Warrants”), and (iv) 1,355,301 warrants to purchase shares of common stock at an exercise price of $1.62 per share (the “December 2023 Private Placement Warrants”) as well as placement agent warrants to purchase 94,871 shares of common stock at an exercise price of $2.1813 per share (the “December 2023 Placement Agent Warrants”) in the December 2023 Offering (collectively, the “December 2023 Warrants”).
Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered. 67 Emerging Growth Company Status We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, which is a law intended to encourage funding of small businesses in the U.S. by easing many of the country’s securities regulations, and we may take advantage of reduced reporting requirements that are otherwise applicable to public companies.
Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered. 88 Emerging Growth Company Status We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, which is a law intended to encourage funding of small businesses in the U.S. by easing many of the country’s securities regulations, and we may take advantage of reduced reporting requirements that are otherwise applicable to public companies.
Specifically, our expenses will increase as we: ● advance the clinical development of Lomecel-B™ for the treatment of several disease states and indications; ● pursue the preclinical and clinical development of other current and future research programs and product candidates; ● in-license or acquire the rights to other products, product candidates or technologies; ● maintain, expand and protect our intellectual property portfolio; ● hire additional personnel in research, manufacturing and regulatory and clinical development as well as management personnel; ● seek regulatory approval for any product candidates that successfully complete clinical development; and ● expand our operational, financial and management systems and increase personnel, including personnel to support our operations as a public company.
Specifically, we will incur expenses to: ● advance the clinical development of Lomecel-B™ for the treatment of several disease states and indications; ● pursue the preclinical and clinical development of other current and future research programs and product candidates; ● in-license or acquire the rights to other products, product candidates or technologies; ● maintain, expand and protect our intellectual property portfolio; ● hire additional personnel in research, manufacturing and regulatory and clinical development as well as management personnel; ● seek regulatory approval for any product candidates that successfully complete clinical development; and ● optimize our operational, financial and management systems and increase personnel, including personnel to support our operations as a public company.
Investing Activities . Net cash used in investing activities for year ended December 31, 2022 was $0.7 million, consisting primarily of an increase in purchases of equipment of $0.6 million and purchases of intangibles of $0.3 million.
Net cash used in investing activities for year ended December 31, 2022 was $0.7 million, consisting primarily of an increase in purchases of equipment of $0.6 million and purchases of intangibles of $0.3 million. Financing Activities .
We have not included milestone or royalty payments or other contractual payment obligations if the timing and amount of such obligations are unknown or uncertain. 66 Critical Accounting Policies and Use of Estimates Our management’s discussion and analysis of financial condition, results of operations and liquidity are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S.
We have not included milestone or royalty payments or other contractual payment obligations if the timing and amount of such obligations are unknown or uncertain. 87 Critical Accounting Policies and Use of Estimates Our management’s discussion and analysis of financial condition, results of operations and liquidity are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S.
Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered. 60 We currently do not carry any inventory for our product candidates, as we have yet to launch a product for commercial distribution.
Based on the timing of amounts invoiced by service providers, we may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as the related services are rendered. 79 We currently do not carry any inventory for our product candidates, as we have yet to launch a product for commercial distribution.
Since 2016 our clinical programs have received over $16.0 million in competitive extramural grant awards ($11.5 million which has been directly awarded to us and which are recognized as revenue when the performance obligations are met) from the NIH, Alzheimer’s Association, and MSCRF. ● The Bahamas Registry Trial.
Since 2016 our clinical programs have received over $16.0 million in competitive extramural grant awards ($11.5 million which has been directly awarded to us and which are recognized as revenue when the performance obligations are met) from the NIH, Alzheimer’s Association, and MSCRF. ● The Bahamas Registry Trials.
For grants we record allocated expenses for Research and development costs to a grant as a cost of revenues. For the clinical trial revenue, directly related expenses for that program are allocated and accrued as incurred. These expenses are similar to those described under “Research and development expense” below.
For grants we record allocated expenses for research and development costs to a grant as a cost of revenues. For the clinical trial revenue, directly related expenses for that program are allocated and accrued as incurred. These expenses are similar to those described under “Research and Development Expenses” below.
Grant Awards From inception through December 31, 2022, we have been awarded approximately $11.9 million in governmental and non-profit association grants, which have been used to fund our clinical trials, research and development, production and overhead.
Grant Awards From inception through December 31, 2023, we have been awarded approximately $11.9 million in governmental and non-profit association grants, which have been used to fund our clinical trials, research and development, production and overhead.
As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources. To date, we have financed our operations primarily through our IPO, private placement equity financings, grant awards, and fees generated from the Bahamas Registry Trial and contract manufacturing services.
As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements, or other sources. To date, we have financed our operations primarily through our IPO, registered and private placement equity financings, grant awards, and fees generated from the Bahamas Registry Trials and contract manufacturing services.
There are typically multiple applicants applying and competing for a finite amount of funds. As such we cannot be sure that we will be awarded grant funds in the future despite our past success in receiving such awards. Funding Requirements Our operating costs will continue to increase substantially for the foreseeable future in connection with our ongoing activities.
There are typically multiple applicants applying and competing for a finite amount of funds. As such we cannot be sure that we will be awarded grant funds in the future despite our past success in receiving such awards. Funding Requirements Our operating costs will continue to be substantial for the foreseeable future in connection with our ongoing activities.
Any resulting impairment loss is reflected on the statements of operations. Management determined that there was no impairment of long-lived assets during the years ended December 31, 2022 and 2021. Revenue recognition.
Any resulting impairment loss is reflected on the statements of operations. Management determined that there was no impairment of long-lived assets during the years ended December 31, 2023 and 2022. Revenue recognition.
During 2021, the underwriters assigned 95,760 of the warrants to its employees. As of December 31, 2022, 51,061 warrants have been exercised, which provided net proceeds to the Company of $0.6 million.
During 2021, the underwriters assigned 95,760 of the warrants to its employees. As of December 31, 2023, 51,061 warrants have been exercised, which provided net proceeds to the Company of $0.6 million.
We expect that our sales, research and development and general and administrative costs will increase in connection with conducting additional preclinical studies and clinical trials for our current and future programs and product candidates, contracting with CROs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations.
We expect that our sales, research and development and general and administrative costs will remain substantial in connection with conducting additional preclinical studies and clinical trials for our current and future programs and product candidates, contracting with CROs to support preclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations.
As of December 31, 2022, and 2021, the amount of unused grant funds that were available for us to draw was approximately $0.8 million and $1.4 million, respectively. The following table summarizes the grants awarded.
As of December 31, 2023, and 2022, the amount of unused grant funds that were available for us to draw was approximately $0.1 million and $0.8 million, respectively. The following table summarizes the grants awarded.
We expect that our research and development expenses will increase in the future as we increase our headcount to support increased research and development activities relating to our clinical programs, as well as incur additional expenses related to our clinical trials.
We expect that our research and development expenses will continue to be significant in the future as we increase our headcount to support increased research and development activities relating to our clinical programs, as well as incur additional expenses related to our clinical trials.
To the extent that we raise additional capital through the sale of convertible debt or equity securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.
To the extent that we raise additional capital through the sale of convertible debt or equity securities, current stockholder ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect stockholder rights.
Such financing may result in dilution to stockholders, imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect our business.
Such financing will likely result in dilution to stockholders, and may result in imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect our business.
We accrue for costs incurred by external service providers, including CROs and clinical investigators, based on estimates of service performed and costs incurred. These estimates include the level of services performed by the third parties, subject enrollment in clinical trials, administrative costs incurred by the third parties, and other indicators of the services completed.
We accrue for costs incurred by external service providers, including contract research organizations (“CROs”) and clinical investigators, based on estimates of service performed and costs incurred. These estimates include the level of services performed by the third parties, subject enrollment in clinical trials, administrative costs incurred by the third parties, and other indicators of the services completed.
When appropriate funding opportunities arise, we routinely apply for grant funding to support our ongoing research and since 2016 we have received approximately $16.0 million in grant awards ($11.9 million of which has been directly awarded to us and is recognized as revenue when the performance obligations are met) from the National Institute on Aging (NIA) of the National Institutes of Health (NIH), the National Heart Lung and Blood Institute (NHLBI) of the NIH, the Alzheimer’s Association, and the Maryland Stem Cell Research Fund (MSCRF) of the Maryland Technology Development Corporation, or TEDCO. 59 Components of Our Results of Operations Revenue We have generated revenue from three sources: ● Grant awards.
When appropriate funding opportunities arise, we routinely apply for grant funding to support our ongoing research and since 2016 we have received approximately $16.0 million in grant awards ($11.5 million of which has been directly awarded to us and is recognized as revenue when the performance obligations are met) from the National Institute on Aging (“NIA”) of the National Institutes of Health (“NIH”), the National Heart Lung and Blood Institute (“NHLBI”) of the NIH, the Alzheimer’s Association, and the Maryland Stem Cell Research Fund (“MSCRF”) of the Maryland Technology Development Corporation, or TEDCO. 78 Components of Our Results of Operations Revenue We have generated revenue from three sources: ● Grant awards.
Selling and Marketing Expenses Selling and marketing expenses consist primarily of royalty and license fees associated with our agreements with the University of Miami (“UM”), as well as attending and sponsoring industry, investment, organization and medical conferences and events.
Selling and Marketing Expenses Selling and marketing expenses consist primarily of royalty and license fees associated with our agreements with the University of Miami, investor and public relations costs, as well as attending and sponsoring industry, investment, organization and medical conferences and events.
It identifies: 1. those activities that should be identified as research and development; 2. the elements of costs that should be identified with research and development activities, and the accounting for these costs; and 3. the financial statement disclosures related to them.
It identifies: first, those activities that should be identified as research and development; second, the elements of costs that should be identified with research and development activities, and the accounting for these costs; and third the financial statement disclosures related to them.
Since we were formed, we have raised approximately $77.2 million in gross proceeds from the issuance of equity. As of December 31, 2022, the Company had cash and cash equivalents of $10.5 million, marketable securities of $9.2 million and working capital of approximately $15.4 million.
Since we were formed, we have raised approximately $83.9 million in gross proceeds from the issuance of equity. As of December 31, 2023, the Company had cash and cash equivalents of $4.9 million, marketable securities of $0.4 million and working capital of approximately $2.0 million.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Contractual Obligations and Commitments As of December 31, 2022, we have $3.0 million in operating lease obligations and $2.9 million in contract research organization obligations.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Contractual Obligations and Commitments As of December 31, 2023, we have $2.0 million in operating lease obligations and $1.5 million in CRO payment obligations.
Longeveron is currently conducting a controlled study to determine the actual benefit of Lomecel-B in these patients. As of March 7, 2023, we have completed four U.S. clinical studies of Lomecel-B: Phase 1 AD, Phase 1 HLHS, Phase 1/2 Aging-related frailty (“HERA Trial”) and Phase 2b Aging-related frailty.
Longeveron is currently conducting a controlled study to determine the actual benefit of Lomecel-B™ in these patients. 77 As of February 16, 2024, we have completed five U.S. clinical studies of Lomecel-B™: Phase 1 AD, Phase 1 HLHS, Phase 1/2 Aging-related frailty (“HERA Trial”), Phase 2a AD (CLEAR MIND Trial”), and Phase 2b Aging-related frailty.
This resulted in a gross profit of approximately $0.5 million for the year ended December 31, 2022, a decrease of $0.1 million, or 16%, when compared with a gross profit of approximately $0.6 million for 2021.
This resulted in a gross profit of approximately $0.2 million for the year ended December 31, 2023, a decrease of $0.3 million, or 56%, when compared with a gross profit of $0.5 million for 2022.
Longeveron Project Funding Agency (1) Total Amount ($) Status of Award Aging-related frailty Phase 2b Trial SBIR (DHHS) NIA 3,957,813 Complete Aging-related frailty Phase 2b Trial SBIR (DHHS) NIA 283,040 Complete Alzheimer’s Disease Phase 1 Trial (2) Alzheimer’s Association 3,000,000 Complete Alzheimer’s Disease Phase 1 Trial Alzheimer’s Association 1,000,000 Complete The Metabolic Syndrome Sub-Study STTR (DHHS) NIA 150,000 Complete The Metabolic Syndrome Sub-Study STTR (DHHS) NIA 901,486 Complete Aging-related frailty Influenza Vaccine Trial (“HERA”) MSCRF - TEDCO 750,000 Complete HLHS Phase 1 Trial MSCRF - TEDCO 750,000 Complete HLHS Phase 2 Trial (3) UG3 (DHHS) NHLBI 477,566 Ongoing ARDS Phase 1 (4) MSCRF - TEDCO 650,000 Ongoing Total 11,919,905 (1) SBIR=Small Business Innovation Research programs; STTR=Small Business Technology Transfer programs; DHHS=Department of Health and Human Services; NIA = National Institute on Aging; NHLBI=National Heart, Lung, and Blood Institute. 64 (2) Under the grant award agreement with the Alzheimer’s Association, we may be required to make revenue sharing or distribution of revenue payments for products or inventions generated or resulting from this clinical trial program.
Longeveron Project Funding Agency (1) Total Amount ($) Status of Award Aging-related frailty Phase 2b Trial SBIR (DHHS) NIA 3,957,813 Complete Aging-related frailty Phase 2b Trial SBIR (DHHS) NIA 283,040 Complete Alzheimer’s Disease Phase 1 Trial (2) Alzheimer’s Association 3,000,000 Complete Alzheimer’s Disease Phase 1 Trial Alzheimer’s Association 1,000,000 Complete The Metabolic Syndrome Sub-Study STTR (DHHS) NIA 150,000 Complete The Metabolic Syndrome Sub-Study STTR (DHHS) NIA 901,486 Complete Aging-related frailty Influenza Vaccine Trial (“HERA”) MSCRF - TEDCO 750,000 Complete HLHS Phase 1 Trial MSCRF - TEDCO 750,000 Complete HLHS Phase 2 Trial (3) UG3 (DHHS) NHLBI 477,566 Ongoing ARDS Phase 1 MSCRF - TEDCO 650,000 Complete Total 11,919,905 (1) SBIR=Small Business Innovation Research programs; STTR=Small Business Technology Transfer programs; DHHS=Department of Health and Human Services; NIA = National Institute on Aging; NHLBI=National Heart, Lung, and Blood Institute.
Research and development expenses consisted primarily of the following items (less those expenses allocated to the cost of revenues for the grants)(in thousands): Year Ended December 31, 2022 2021 Clinical trial expenses-statistics, monitoring, labs, sites, etc. $ 4,170 $ 1,935 Supplies and costs to manufacture Lomecel-B™ 817 504 Employee compensation and benefits 2,203 1,354 Equity-based compensation 1,096 2,228 Depreciation 681 720 Amortization 212 194 Travel 72 60 Other activities 119 97 Total $ 9,370 $ 7,092 Selling and Marketing Expenses: Selling and marketing expenses for each of the years ended December 31, 2022 and 2021 was $1.0 million and $1.2 million, respectively.
Research and development expenses consisted primarily of the following items (less those expenses allocated to the cost of revenues for the grants)(in thousands): Year Ended December 31, 2023 2022 Clinical trial expenses-statistics, monitoring, labs, sites, etc. $ 4,349 $ 4,170 Supplies and costs to manufacture Lomecel-B™ 1,214 817 Employee compensation and benefits 1,861 2,203 Equity-based compensation 555 1,096 Depreciation 722 681 Amortization 224 212 Travel 38 72 Other activities 103 119 Total $ 9,066 $ 9,370 Selling and Marketing Expenses: Selling and marketing expenses for the years ended December 31, 2023 and 2022 were $0.8 million and $1.1 million, respectively.
We expect to incur significant expenses and operating losses as we advance the preclinical and clinical development of our programs.
LIQUIDITY AND CAPITAL RESOURCES Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses as we advance the preclinical and clinical development of our programs.
The Bahamas Registry Trial administers Lomecel-B to eligible participants at two private clinics in Nassau for a variety of indications. While Lomecel-B is considered an investigational product in The Bahamas, under the approval terms from the National Stem Cell Ethics Committee, we are permitted to charge a fee to participate in the Registry Trial.
While Lomecel-B™ is considered an investigational product in The Bahamas, under the approval terms from the National Stem Cell Ethics Committee, we are permitted to charge a fee to participate in the Registry Trial.
Capital Raising Efforts In our IPO, we sold 2,910,000 shares of Class A Common Stock at a public offering price of $10.00 per share for aggregate gross proceeds of $29.1 million, inclusive of the underwriter’s partial exercise of its over-allotment option, prior to deducting underwriting discounts, commissions, and other offering expenses.
These cost saving measures include the discontinuation of our Aging-related Frailty clinical trial in Japan, related staff reductions, and continued prudent management of discretionary spend. 83 Capital Raising Efforts In our IPO, we sold 2,910,000 shares of Class A common stock at a public offering price of $10.00 per share for aggregate gross proceeds of $29.1 million, inclusive of the underwriter’s partial exercise of its over-allotment option, prior to deducting underwriting discounts, commissions, and other offering expenses.
Net cash used in financing activities for the year ended December 31, 2022 was $0.5 million consisting primarily of $0.5 million in payment of taxes and consultants.
Net cash provided by financing activities for the year ended December 31, 2023 was $5.3 million consisting primarily of $5.4 million of net proceeds received from the October 2023 and December 2023 Offerings. Net cash used in financing activities for the year ended December 31, 2022 was $0.5 million consisting primarily of $0.5 million in payment of taxes and consultants.
We have incurred losses since inception. Net cash used in operating activities for the year ended December 31, 2022 was $14.0 million, consisting primarily of our net loss of $18.8 million as we incurred $1.4 million in non-operating lawsuit expenses, $2.3 million in equity-based compensation expenses and $0.9 million in depreciation and amortization expenses.
Net cash used in operating activities for the year ended December 31, 2022 was $14.0 million, consisting primarily of our net loss of $18.8 million, partially offset by $1.4 million in non-operating lawsuit expenses not paid until May 2023 and other non-cash expenses of $2.2 million in equity-based compensation expenses and $0.9 million in depreciation and amortization expenses.
Terms and Conditions of Grant Awards Grant projects are typically divided into periods (e.g., a three-year grant may have three one-year periods), and the total amount awarded is divided according to the number of periods.
The total award was $4.6 million, and we have received $0.3 million of the approximately $0.5 million apportioned to us. 85 Terms and Conditions of Grant Awards Grant projects are typically divided into periods (e.g., a three-year grant may have three one-year periods), and the total amount awarded is divided according to the number of periods.
The potential payments, although not currently defined, could result in a maximum payment of five times (5x) the award amount. (3) The HLHS Phase 2b clinical trial grant was awarded to Sunjay Kaushal, MD, PhD, Ann and Robert H. Lurie Children’s Hospital of Chicago, and the trial will be conducted under our IND and will test Lomecel-B™.
(3) The HLHS Phase 2b clinical trial grant was awarded to Sunjay Kaushal, MD, PhD, Ann and Robert H. Lurie Children’s Hospital of Chicago, and the trial will be conducted under our IND and will test Lomecel-B™.
The decrease of $0.3 million, or 53% decrease when compared to 2021, was primarily due to a reduction in grant funds available due in part to the completion of the grant-funded clinical trials. Clinical trial revenue, which is derived from the Bahamas Registry Trial, for the year ended December 31, 2022 and 2021 was $0.9 million and $0.7 million, respectively.
Grant revenue for the years ended December 31, 2023 and 2022 was less than $0.1 million and $0.3 million, respectively. The decrease of $0.2 million, or 85%, when compared to 2022, was primarily due to a reduction in grant funds available due in part to the completion of the grant-funded clinical trials.
Net Loss: Net loss increased to approximately $18.8 million for the year ended December 31, 2022, from a net loss of $17.0 million for the same period in 2021. The increase in the net loss of $1.8 million, or 11%, was for reasons outlined above.
Net Loss: Net loss increased to approximately $21.4 million for the year ended December 31, 2023, from a net loss of $18.8 million for the same period in 2022.
Our mission is to advance Lomecel-B and other cell-based product candidates into pivotal Phase 3 trials, with the goal of achieving regulatory approvals, subsequent commercialization, and broad use by the healthcare community.
We are currently pursuing three pipeline indications: Hypoplastic Left Heart Syndrome (“HLHS”), Alzheimer’s disease (“AD”) and Aging-related Frailty. Our mission is to advance Lomecel-B™ and other cell-based product candidates into pivotal trials, with the goal of achieving regulatory approvals, subsequent commercialization, and broad use by the healthcare community. Financial Overview.
Cash Flows The following table summarizes our sources and uses of cash for the period presented for the (in thousands): Year Ended December 31, 2022 2021 Net cash used in operating activities $ (13,969 ) $ (9,636 ) Net cash used in investing activities (677 ) (10,696 ) Net cash (used in) provided by financing activities (509 ) 45,174 Net (decrease) increase in cash and cash equivalents $ (15,155 ) $ 24,842 Operating Activities .
The increase in the net loss of $2.6 million, or 14%, was for reasons outlined above. 82 Cash Flows The following table summarizes our sources and uses of cash for the period presented for the (in thousands): Year Ended December 31, 2023 2022 Net cash used in operating activities $ (19,002 ) $ (13,969 ) Net cash proved by (used in) investing activities 8,186 (677 ) Net cash provided by (used in) financing activities 5,262 (509 ) Net decrease in cash and cash equivalents $ (5,554 ) $ (15,155 ) Operating Activities .
The increase of $2.3 million, or 32%, was primarily due to an increase of $2.6 million in research and development expenses that were not reimbursable by grants. The increase was offset by a decrease in equity-based compensation allocated to research and development expenses, which decreased from $2.2 million in 2021 to $1.1 million in 2022.
The decrease of $0.3 million, or 3%, was primarily due to decreases of $0.5 million in equity-based compensation allocated to research and development expenses and $0.3 million in compensation and benefits, offset by increases of $0.4 million in supplies and costs to manufacture Lomecel-B™ and $0.2 million in research and development expenses that were not reimbursable by grants.
Clinical trial revenue for the year ended December 31, 2022 increased by $0.2 million, or 33%, higher when compared to 2021 as a result of less COVID-19 travel restrictions, were less in 2022 as compared to 2021, and increased participant demand in the Bahamas Registry Trial in 2022.
Clinical trial revenue, which is derived from the Bahamas Registry Trial, for the years ended December 31, 2023 and 2022 was $0.7 million and $0.9 million, respectively. Clinical trial revenue for the year ended December 31, 2023 decreased by $0.2 million, or 29%, when compared to 2022 as a result of decreased participant demand.
Related cost of revenues was $0.7 million for the years ended December 31, 2022 and 2021. The less than $0.1 million, or 1%, increase when compared to 2021, was primarily due to more direct costs associated with our clinical trial revenue than our grants program.
Related cost of revenues was $0.5 million and $0.7 million for the years ended December 31, 2023 and 2022, respectively. The decrease of $0.2 million, or 33%, was primarily due to the decrease in the revenues earned from the Bahamas Registry Trials and reduced direct costs associated with our grants program.
We currently have three clinical trials actively enrolling patients: Phase 2a HLHS (“ELPIS II” trial), Phase 2a AD and Japan Phase 2 study in Japanese patients with Aging-related frailty. Additionally, we sponsor a registry in The Bahamas under the approval and authority of the National Stem Cell Ethics Committee.
We currently have one clinical trial actively enrolling patients: Phase 2b HLHS (“ELPIS II” trial). Additionally, we sponsor a registry in The Bahamas under the approval and authority of the National Stem Cell Ethics Committee. The Bahamas Registry Trials may administer Lomecel-B™ to eligible participants at private clinics in Nassau for a variety of indications.
Introduction and Overview We are a clinical stage biotechnology company developing regenerative medicines to address unmet medical needs. The Company’s lead investigational product is Lomecel-B™.
Introduction and Overview We are a clinical stage biotechnology company developing regenerative medicines to address unmet medical needs. The Company’s lead investigational product is Lomecel-B™. Lomecel-B™ has multiple modes of action that include pro-vascular, pro-regenerative, and anti-inflammatory mechanisms, promoting tissue repair and healing with broad potential applications across a spectrum of disease areas.
General and Administrative Expense: General and administrative expenses for the year ended December 31, 2022 decreased to approximately $8.1 million, compared to $9.7 million for the same period in 2021. The decrease of approximately $1.6 million, or 17%, was primarily related to a decrease of $3.0 million in equity-based compensation expenses allocated to general and administrative expenses.
The increase of approximately $3.3 million, or 40%, was primarily related to an increase of $1.6 million for compensation and benefit expenses (including $0.4 million of separation costs), $1.0 million in legal, professional and consulting fees, $0.4 million of public company expenses, $0.2 million in equity-based compensation costs allocated to general and administrative expenses, and $0.1 million for higher board fees. 81 Research and Development Expenses: Research and development expenses for the year ended December 31, 2023 decreased to approximately $9.1 million, from approximately $9.4 million for the same period in 2022.
We also expect to continue to incur expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance costs, and investor and public relations costs. Other Income and Expenses Interest income consists of interest earned on cash equivalents and short-term investments.
We expect that our general and administrative expenses will continue to be significant in the future as we increase our headcount to support increased administrative activities as a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with Nasdaq and SEC requirements, director and officer insurance costs, and investor and public relations costs.
Other tax credits: Other tax credits for each of the years ended December 31, 2022 and 2021 was $0.3 million and $0.1 million, respectively. Other tax credit increased in 2022 due to receiving the Employee Retention Credit under the CARES Act which encourages businesses to keep employees on their payroll.
Other tax credits was greater in 2022 due to receiving the Employee Retention Credit under the CARES Act which encourages businesses to keep employees on their payroll. Eligible businesses receive a refundable tax credit of up to 50% of up to $10,000 in wages paid.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements through second half of 2024.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
Net cash used in investing activities for year ended December 31, 2021 was $10.7 million, consisting primarily of an increase of $9.4 million in marketable securities, recorded CRADA license agreement to intangibles of $0.8 million, and purchases of equipment of $0.3 million. Financing Activities .
Investing Activities . Net cash provided by investing activities for the year ended December 31, 2023 was $8.2 million consisting primarily of proceeds from the sale of marketable securities of $8.9 million, which was partially offset by additions to intangible assets of $0.4 million and purchases of equipment of $0.3 million.
No provision for income taxes has been recorded for the years ended December 31, 2022, and 2021. We may incur income taxes in the future if we have earnings. At this time the Company has not evaluated the impact of any future profits.
In past years they have been primarily a result of tax refunds received for social security taxes as part of a research and development tax credit program. Income Taxes No provision for income taxes has been recorded for the years ended December 31, 2023, and 2022. We may incur income taxes in the future if we have earnings.
RESULTS OF OPERATIONS COMPARISON OF THE YEARS ENDED DECEMBER 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021, together with the changes in those items in dollars (in thousands): Year Ended December 31, Increase 2022 2021 (Decrease) Revenues $ 1,222 $ 1,306 $ (84 ) Cost of revenues 725 716 9 Gross profit 497 590 (93 ) Operating Expenses General and administrative 8,119 9,740 (1,621 ) Research and development 9,370 7,092 2,278 Selling and marketing 1,051 1,214 (163 ) Total operating expenses 18,540 18,046 494 Loss from operations (18,043 ) (17,456 ) (587 ) Other (expenses) and income Lawsuit expense (1,398 ) - (1,398 ) Forgiveness of Paycheck Protection Program loan - 300 (300 ) Interest expense - (4 ) 4 Other tax credits 306 58 248 Other income, net 300 57 243 Total other (expenses) and income, net (792 ) 411 (1,203 ) Net loss $ (18,835 ) $ (17,045 ) $ (1,790 ) 61 Revenues, Cost of Revenues and Gross Profit: Revenues for the years ended December 31, 2022 and 2021 were $1.2 million and $1.3 million, respectively.
At this time the Company has not evaluated the impact of any future profits. 80 RESULTS OF OPERATIONS COMPARISON OF THE YEARS ENDED DECEMBER 31, 2023 AND 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022, together with the changes in those items in dollars (in thousands): Year Ended December 31, Increase 2023 2022 (Decrease) Revenues $ 709 $ 1,222 $ (513 ) Cost of revenues 488 725 (237 ) Gross profit 221 497 (276 ) Operating Expenses General and administrative 11,401 8,119 3,282 Research and development 9,066 9,370 (304 ) Selling and marketing 783 1,051 (268 ) Total operating expenses 21,250 18,540 2,710 Loss from operations (21,029 ) (18,043 ) (2,986 ) Other (expense) and income Lawsuit expense (30 ) (1,398 ) 1,368 Other tax credits 23 306 (283 ) Other (expense) income, net (377 ) 300 (677 ) Total other expenses, net (384 ) (792 ) 408 Net loss $ (21,413 ) $ (18,835 ) $ (2,578 ) Revenues, Cost of Revenues and Gross Profit: Revenues for the years ended December 31, 2023 and 2022 were $0.7 million and $1.2 million, respectively. 2023 revenues decreased $0.5 million, or 42%, when compared to 2022 as a result of decreased grant and lower participant demand for our Bahamas Registry Trial.
We expect our interest income to increase due to the current cash and short-term investment balances. Other income consists of funds earned that are not part of our normal operations. In past years they have been primarily a result of tax refunds received for social security taxes as part of a research and development tax credit program.
Other Income and Expenses Interest income consists of interest earned on cash equivalents and marketable securities. We expect our interest income to fluctuate due to changes in the current cash and marketable securities balances. Other income consists of funds earned that are not part of our normal operations.
We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect. 65 Because of the numerous risks and uncertainties associated with research, development and commercialization of our product candidates, it is difficult to estimate with certainty the amount of our working capital requirements.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024. We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.
Net cash used in operating activities for the year ended December 31, 2021 was $9.6 million, consisting primarily of our net loss of $17.0 million as we incurred expenses associated with research activities for our lead product candidates and incurred general and administrative expenses, including an aggregate of $6.4 million of equity-based compensation recorded for RSUs and stock options granted and $1.3 million for non-cash stock payments to consultants.
We have incurred losses since inception. Net cash used in operating activities for the year ended December 31, 2023 was $19.0 million, consisting primarily of our net loss of $21.4 million and payments for accounts payable of $1.1 million and payment of the non-operating lawsuit of $1.4 million.
However, employee benefit expenses increased by $0.5 million, which included a $0.4 million increase in expenses related to employee recruitment and insurance and professional fees increased by $0.2 million. Research and Development Expenses: Research and development expenses for the year ended December 31, 2022 increased to approximately $9.4 million, from approximately $7.1 million for the same period in 2021.
General and Administrative Expense: General and administrative expenses for the year ended December 31, 2023 increased to approximately $11.4 million, compared to $8.1 million for the same period in 2022 .
Eligible businesses receive a refundable tax credit of up to 50% of up to $10,000 in wages paid. Other Income, net: Other income for the years ended December 31, 2022 and 2021 was $0.3 million and $0.1 million, respectively. Other income for 2022 increased as a result of an increase in realized returns from marketable securities of $0.2 million.
Other (Expense) Income, net: Other expense for the years ended December 31, 2023 and 2022 was $0.4 million and $0.8 million, respectively. Other expense for 2023 decreased mainly as a result of non-operating lawsuit expenses of $1.4 million in 2022, compared to less than $0.1 million in 2023.
Also recorded was approximately $27,000 for a gain resulting from foreign currency changes and $27,000 of sublease rental income. During 2021, $125,000 was received in rental payments recorded from a sublease, $60,000 from recorded investment income, $17,000 from a gain resulting from an equity exchange, $85,000 unrealized loss on marketable securities and $60,000 for a loss on disposal of equipment.
This decrease was partially offset by realized losses on sales of marketable securities of $0.3 million, write-offs of intangible assets of $0.3 million and reduced benefit of tax credits of $0.3 million. Also recorded in other (expense) income in 2022 was approximately $27,000 for a gain resulting from foreign currency changes and $27,000 of sublease rental income.
Removed
Lomecel-B™ has multiple modes of action that include pro-vascular, pro-regenerative, and anti-inflammatory mechanisms, promoting tissue repair and healing with broad potential applications across a spectrum of disease areas. 58 We are currently pursuing three pipeline indications: Hypoplastic Left Heart Syndrome (HLHS), Aging-related Frailty, and Alzheimer’s disease (AD).
Added
Since inception, the Company has primarily been engaged in organizational activities, including raising capital, and research and development activities. The Company does not yet have a product that has been approved by the FDA, and has only generated revenues from grants, the Bahamas Registry Trials and contract manufacturing.
Removed
We expect that our general and administrative expenses will increase in the future as we increase our headcount to support increased administrative activities as a public company.
Added
The Company has not yet achieved profitable operations or generated positive cash flows from operations. The Company has incurred recurring losses from operations since its inception, and as of December 31, 2023 the Company had an accumulated deficit of $85.0 million. The Company expects to continue to generate operating losses for the foreseeable future.
Removed
Income Taxes As of December 31, 2022, we are treated as a C corporation for federal and state income tax purposes. Prior to February 12, 2021, we were treated as a partnership for federal and state income tax purposes, whereby we passed our earnings and losses through to our members based on the terms of our Operating Agreement.
Added
We currently have no credit facility or committed sources of capital. To continue as a going concern we will need to obtain additional capital, which we will likely obtain through a variety of means, including through public or private equity, debt financings or other sources, including up-front payments and milestone payments from strategic collaborations.
Removed
The $0.1 million, or 6%, decrease when compared to 2021 was primarily due to a decrease in grant revenue year-over-year. Grant revenue for the year ended December 31, 2022 and 2021 was $0.3 million and $0.6 million, respectively.
Added
In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Operational Overview .
Removed
The decrease of $0.2 million, or 13%, was primarily due to a decrease in digital marketing expenses. Selling and marketing expenses consists primarily of investor and public relations expenses. Further and as disclosed in Note 13.
Added
The exercise price of the PIPE Purchaser Warrants were re-set in accordance with their terms upon announcement and in connection with the consummation of the September 2023 rights offering to $5.25 per share.
Removed
Reclassification of Prior Year Presentations , during 2021, $0.9 million in expenses related to investor and public relations was recorded as general and administrative expenses and was reclassified as selling and marketing expenses as they were in 2022. 62 Non-operating Lawsuit expense: Non-operating Lawsuit expense for the year ended December 31, 2022 was approximately $1.4 million.
Added
The decrease of $0.3 million, or 25%, was primarily due to decreases in investor relations and international development expenses. Non-operating Lawsuit expense: Non-operating Lawsuit expense for the years ended December 31, 2023 and 2022 was less than $0.1 million and approximately $1.4 million, respectively. Additional detail can be found in Part I, Item 3 “Legal Proceedings” of this Form 10-K.
Removed
This expense was deemed probable and therefore the amount was accrued in this period. Additional detail can be found in Part I, Item 3 “Legal Proceedings” of this Form 10-K. Legal expenses incurred in ordinary business activities are reported within general and administrative expenses.
Added
Legal expenses incurred in ordinary business activities are reported within general and administrative expenses. Other tax credits: Other tax credits for each of the years ended December 31, 2023 and 2022 was less than $0.1 million and $0.3 million, respectively.
Removed
Forgiveness of Paycheck Protection Program loan: Forgiveness of Paycheck Protection Program loan for the year ended December 31, 2022 was $0, compared to $0.3 million for the same period in 2021, due to the non-recurring nature of the forgiveness of the PPP loan.
Added
This was partially offset by non-cash expenses of $2.0 million in equity-based compensation expenses, $0.9 million in depreciation and amortization, and $0.3 million for the write-off of intangible assets, as well as an increase in accrued expenses of $1.5 million.
Removed
Net cash provided by financing activities for the year ended December 31, 2021 was $45.2 million consisting primarily of $26.7 million in net proceeds received from our IPO and $18.6 million in net proceeds received from the 2021 PIPE Offering. 63 LIQUIDITY AND CAPITAL RESOURCES Since our inception, we have incurred significant operating losses.
Added
We are actively seeking financing opportunities to extend our cash runaway while taking measures to reduce our cash expenditures as we focus our resources on our primary strategic program in HLHS.
Removed
The total award was $4.6 million, and we have received $0.2 million of the approximately $0.5 million apportioned to us. (4) MSCRF - TEDCO has sent the first tranche of $325,000.
Added
On August 16, 2023, the Company announced its rights offering, which triggered the downward pricing mechanism on certain warrants of the 2021 PIPE Offering, at which time these warrants were adjusted downward to an exercise price of $5.25 for the period remaining through expiration.
Added
On June 27, 2023, the Company filed a registration statement with the SEC to conduct a tradeable subscription rights offering for up to $30.0 million of shares of Class A common stock to its stockholders and holders of certain warrants to purchase common stock On July 28, 2023, the Company filed a first amendment to the registration statement.
Added
On August 16, 2023, the registration statement was declared effective by the SEC, and on August 22, 2023, the Company launched the subscription rights offering at a subscription price of $3.00 per share of Class A common stock. On September 21, 2023, the subscription period for the rights offering of the Company expired.
Added
At the end of the subscription period, the Company sold 108,497 shares of its Class A common stock at a price of $3.00 per share. There were no net proceeds to the Company after deducting the $0.3 million of expenses associated with the rights offering.

… 15 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed2 unchanged
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. We held cash, cash equivalents and marketable securities of approximately $19.7 million as of December 31, 2022. We generally hold our cash in interest-bearing money market accounts.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. We held cash, cash equivalents and marketable securities of approximately $5.4 million as of December 31, 2023. We generally hold our cash in interest-bearing money market accounts.

Other LGVN 10-K year-over-year comparisons