Histogen Reports Third Quarter 2022 Financial Results and Provides Business Update

Rhea-AI Summary

Histogen Inc. (NASDAQ: HSTO) reported its Q3 2022 financial results, noting significant developments in its clinical pipeline. The company recognized $0 in product revenues, down from $0.9 million year-over-year, while license revenue surged to $3.8 million due to a one-time payment linked to a partnership with Allergan. R&D expenses decreased to $3.9 million, while G&A expenses rose to $7.5 million. Histogen has $14.6 million in cash, sufficient to meet needs through December 2023. Key projects include emricasan for MRSA and the HST 003 study for cartilage regeneration.

Positive

• License revenue increased to $3.8 million due to a $3.75 million payment from Allergan.
• R&D expenses decreased by $3 million, indicating improved cost management.
• Sufficient cash reserves of $14.6 million to meet operational needs through December 2023.

Negative

• Product revenue fell to $0 from $0.9 million, indicating a significant decline.
• General and administrative expenses increased by $1.2 million, raising concerns about cost control.
• Recruitment challenges in the HST 003 study remain unresolved, potentially delaying the clinical timeline.

SAN DIEGO, Nov. 10, 2022 (GLOBE NEWSWIRE) -- Histogen Inc. (NASDAQ: HSTO), a clinical-stage therapeutics company focused on developing both restorative therapeutics for orthopedic indications and pan-caspase and caspase selective inhibitors focused on treatments for infectious and inflammatory diseases, today reported financial results for the third quarter ended September 30, 2022 and provided an update on its clinical pipeline and other corporate developments.

“We remain focused on the feasibility of developing emricasan as a potential treatment for bacterial skin infections including those related to methicillin resistant staphylococcus aureus (“MRSA”) and evaluating our caspase-1 inhibitors that impact the inflammasome pathway,” said Steven J. Mento, Ph.D., Interim President and Chief Executive Officer. “We also continue to make progress on the ongoing feasibility evaluation of our HST 003 study for cartilage regeneration in the knee, including implementation of protocol modifications, and other study resources given the continued recruitment challenges and expect to complete our evaluation in the fourth quarter of 2022.”

Highlights from the Third Quarter 2022 and Business Updates

• HST 003 – Our Phase 1/2 clinical study of HST 003 to evaluate the safety and efficacy of human extracellular matrix (hECM) implanted within microfracture interstices and the cartilage defect in the knee to regenerate hyaline cartilage in combination with a microfracture procedure is on-going. Our feasibility assessment for the HST 003 study continues to progress, and despite adding three additional clinical sites in the first quarter of 2022, and implementing protocol modifications in the third quarter of 2022, our recruitment challenges remain unresolved due to both the overall nature of the study and the impact of COVID-19 on the elective surgery environment. We expect to complete our feasibility evaluation in the fourth quarter of 2022.
   
• HST 004 – Is a CCM solution intended to be administered through an intradiscal injection for spinal disc repair. In the second quarter of 2021, we initiated IND enabling activities for HST-004. However, due to pipeline program prioritization, we have made the decision to suspend all IND enabling activities for the HST-004 program.
   
• Emricasan MRSA - We continue to make progress on the feasibility of developing emricasan as a potential treatment for bacterial skin infections including those related to MRSA including testing emricasan in animal studies for MRSA. We expect to complete our feasibility assessment in the fourth quarter of 2022.

Nine Months Ended September 30, 2022 Financial Highlights

Product, License, and Grant Revenues

For the nine months ended September 30, 2022 and 2021, we recognized product revenues of $0 and $0.9 million, respectively. The revenue for the first nine months of 2021 was due to a one-time unanticipated sale of CCM to Allergan, unrelated to the Allergan Agreements. As of March 31, 2021, all obligations of the Company related to the additional supply of CCM to Allergan under the Allergan Agreements have been completed.

For the nine months ended September 30, 2022 and 2021, we recognized license revenue of $3.8 million and $22 thousand, respectively. The increase in the current period is due to a one-time payment of $3.75 million received in March 2022 as consideration for execution of the Allergan Letter Agreement.

For the nine months ended September 30, 2022 and 2021, we recognized grant revenue of $0 and $0.1 million, respectively. The related revenue is associated with a research and development grant awarded to the Company from the NSF. As of March 31, 2021, all work required by the Company under the grant has been completed.

Cost of revenues - for the nine months ended September 30, 2022 and 2021, we recognized $0 and $0.2 million, respectively, for cost of product sold to Allergan under the Allergan Agreements.

Research and development expenses - research and development expenses for the nine months ended September 30, 2022 and 2021 were $3.9 million and $6.9 million, respectively. The decrease of $3.0 million was primarily due to decreases in development costs of our clinical and pre-clinical product candidates, outside services, and personnel related expenses, partially offset by facility rent increases.

General and administrative expenses - general and administrative expenses for the nine months ended September 30, 2022 and 2021 were $7.5 million and $6.3 million, respectively. The increase of $1.2 million was primarily due to increases in royalty expenses, legal fees, outside services and rent expenses, offset by reductions in insurance and other administrative expenses.

Cash and cash equivalents - as of September 30, 2022, we had $14.6 million in cash and cash equivalents. Histogen believes that its existing cash and cash equivalents and cash inflow from operations will be sufficient to meet Histogen’s anticipated cash needs through December of 2023.

About Histogen Inc.

Histogen Inc. is a clinical-stage therapeutics company focused on developing both potential first-in-class restorative therapeutics that ignite the body’s natural process to repair and maintain healthy biological function as well as a pipeline of clinical and preclinical small molecule pan-caspase and caspase selective inhibitors focused on treatments for infectious and inflammatory diseases. Under our biologics technology platform, our product candidates in development are HST-003, a treatment for joint cartilage repair, and HST-004, a treatment for spinal disc repair. In addition, within our small molecule pipeline, our product candidates include emricasan, CTS-2090 and CTS-2096. Currently, emricasan is being developed jointly with our collaboration partner, Amerimmune, for the treatment of COVID-19, and we are evaluating the use of emricasan for bacterial skin infections including those related to MRSA, as well as other infectious diseases. We also have preclinical product candidates, CTS-2090 and CTS-2096, novel, potent, orally bioavailable, and highly selective small molecule inhibitors of caspase-1 designed for the treatment of certain inflammatory diseases. For more information, please visit www.histogen.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. For example, we are using forward-looking statements when we discuss our future operations and our ability to successfully initiate, enroll and complete clinical trials, obtain clinical trial data and achieve regulatory milestones and related timing, including those related to the initiation, completion and reporting of top line results for HST-003 Phase 1/2 clinical trial for regeneration of cartilage in the knee, the completion of IND enabling activities and the anticipated filing of the HST-004 IND for spinal disc repair and the timing of providing clinical development guidance on the emricasan and any further evaluation of CTS-2090 and CTS-2096. We may not actually achieve the plans, carry out the intentions or meet the expectations or projections disclosed in the forward-looking statements and you should not place undue reliance on these forward-looking statements. Because such statements deal with future events and are based on our current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of Histogen that could differ materially from those described in or implied by the statements in this press release, including: our ability to obtain funding for our operations, including funding necessary to complete further development and any commercialization of our product candidates; our expectations regarding the arbitration proceedings related to emricasan and the joint development with Amerimmune for COVID-19 and other infectious and inflammatory diseases, including its ability to carry out the development of emricasan and the potential for delays in the timing of regulatory approval and the requirement for additional capital to continue to advance these product candidates, which may not be available on favorable terms or at all; our expectations regarding the operation of our product candidates, collaborations and related benefits; our beliefs regarding the success, cost and timing of our product candidate development and collaboration activities and current and future clinical trials and studies; our beliefs regarding the potential markets for our product candidates, collaborations and our collaborators’ ability to serve those markets;  any impact of the COVID-19 pandemic, or responses to the pandemic, on our business, collaborations, clinical trials or personnel;  our beliefs regarding our industry;  our ability to attract and retain key personnel; regulatory developments in the United States and foreign countries, with respect to our product candidates; the expected impact of any arbitration and litigation proceedings on our business, cash resources and the time required by management to address such proceedings; the impact of any arbitration and litigation proceedings on our business and market and other conditions. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including those risks discussed in our filings with the Securities and Exchange Commission. Except as otherwise required by law, Histogen disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events, or circumstances or otherwise.

HISTOGEN INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Revenue
Product revenue		$	—			$	586			$	—			$	892
License revenue			5				5				3,765				22
Grant revenue			—				—				—				113
Total revenue			5				591				3,765				1,027
Operating expense
Cost of product revenue			—				—				—				220
Research and development			907				2,338				3,932				6,866
General and administrative			2,696				2,110				7,508				6,264
Total operating expense			3,603				4,448				11,440				13,350
Loss from operations			(3,598	)			(3,857	)			(7,675	)			(12,323	)
Other income (expense)
Interest expense, net			(1	)			(2	)			(2	)			(9	)
Other Income			—				1				—				476
Net loss			(3,599	)			(3,858	)			(7,677	)			(11,856	)
Loss attributable to noncontrolling interest			3				17				20				41
Deemed dividend - accretion of discount and redemption feature of redeemable convertible preferred stock			—				—				(488	)			—
Net loss available to common stockholders		$	(3,596	)		$	(3,841	)		$	(8,145	)		$	(11,815	)
Net loss per share available to common stockholders, basic and diluted		$	(1.01	)		$	(1.84	)		$	(2.85	)		$	(6.41	)
Weighted-average number of common shares outstanding used to compute net loss per share, basic and diluted			3,554,623				2,086,403				2,853,713				1,843,426

HISTOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

		September 30, 2022				December 31, 2021
		(unaudited)
Assets
Current assets
Cash and cash equivalents		$	14,552			$	18,685
Restricted cash			400				400
Accounts receivable, net			74				165
Prepaid and other current assets			1,312				2,359
Total current assets			16,338				21,609
Property and equipment, net			473				399
Right-of-use asset			4,738				4,432
Other assets			638				805
Total assets		$	22,187			$	27,245
Liabilities and stockholders’ equity
Current liabilities
Accounts payable		$	561			$	1,393
Accrued liabilities			593				791
Current portion of lease liabilities			225				127
Current portion of deferred revenue			19				19
Total current liabilities			1,398				2,330
Lease liabilities, non-current			4,443				4,617
Noncurrent portion of deferred revenue			84				98
Finance lease liability, non-current			8				14
Total liabilities			5,933				7,059
Commitments and contingencies (Note 8)
Stockholders' Equity
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at September 30, 2022 and December 31, 2021; no shares issued and outstanding at September 30, 2022 and December 31, 2021			—				—
Common stock, $0.0001 par value; 200,000,000 shares authorized at September 30, 2022 and December 31, 2021; 4,271,759 and 2,497,450 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively			5				5
Additional paid-in capital			102,584				98,839
Accumulated deficit			(85,309	)			(77,652	)
Total Histogen Inc. stockholders’ equity			17,280				21,192
Noncontrolling interest			(1,026	)			(1,006	)
Total equity			16,254				20,186
Total liabilities and stockholders’ equity		$	22,187			$	27,245

CONTACT:

Susan A. Knudson
Executive Vice President & CFO
Histogen Inc.
ir@histogen.com 

FAQ

What were Histogen's Q3 2022 financial results?

In Q3 2022, Histogen reported $0 in product revenues and $3.8 million in license revenues due to a payment from Allergan.

What is the current status of Histogen's HST 003 study?

The HST 003 study is ongoing but faces recruitment challenges. The feasibility evaluation is expected to be completed in Q4 2022.

How much cash does Histogen have as of September 30, 2022?

Histogen reported $14.6 million in cash and cash equivalents, expected to cover operational needs through December 2023.

What are Histogen's plans for emricasan?

Histogen is progressing on developing emricasan for bacterial skin infections, including MRSA, with feasibility assessment completion expected in Q4 2022.