On August 13, 2020 Histogen Inc. (NASDAQ: HSTO), a clinical-stage therapeutics company focused on developing potential first-in-class restorative therapeutics that ignite the body’s natural process to repair and maintain healthy biological function, reported financial results for the second quarter ended June 30, 2020 and provided an update on its clinical pipeline and other corporate developments (Press release, Conatus Pharmaceuticals, AUG 13, 2020, View Source [SID1234563596]).

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Key Second Quarter 2020 Highlights and Subsequent Updates

Filed Investigational Device Exemption (IDE) for HST-002. In April, Histogen filed an IDE application with the U.S. Food and Drug Administration (FDA) for the initiation of a Phase 1 clinical trial of HST-002 as a dermal filler for the treatment of moderate to severe nasolabial folds. If the application is approved, Histogen plans to initiate the clinical trial in fourth quarter of 2020.

Closed Reverse Merger with Conatus. In May, Histogen closed the reverse merger transaction with Conatus. The transaction included approximately $13.0 million in cash resources, which when combined with existing resources, is expected to fund Histogen’s current operating plan into the second quarter of 2021. The combined company changed its name from Conatus Pharmaceuticals Inc. to Histogen Inc. and began trading on the Nasdaq Capital Market under the ticker symbol "HSTO" on May 27, 2020.
Appointed Susan A. Knudson as Chief Financial Officer. In May, Ms. Knudson joined Histogen as its Executive Vice President and Chief Financial Officer. With over 20 years of experience in the biopharmaceutical industry, she brings a wealth of financial and corporate strategy expertise to Histogen. Ms. Knudson most recently served as Chief Financial Officer at Pfenex Inc. and prior to Pfenex, she held the position of Chief Financial Officer of Neothetics, Inc.

Completed Enrollment for HST-001 Phase 1a/2b trial for Androgenic Alopecia in Men with Topline Data Expected in the fourth quarter 2020. Histogen announced that it initiated the trial in June, completed enrollment in July and expects to report topline results in the fourth quarter of 2020.

Entered into Common Stock Purchase Agreement for Up to $10 Million. In July, Histogen entered into a common stock purchase agreement for up to $10 million with Lincoln Park Capital Fund, LLC. Upon execution of the purchase agreement, Lincoln Park made an initial purchase of $1.0 million of common stock.
"Throughout the second quarter of this year, we focused on transforming Histogen into a leading restorative therapeutics development company through the completion of the reverse merger, obtaining a NASDAQ listing, strengthening the executive team and advancing our innovative therapeutics pipeline," said Richard W. Pascoe, Histogen’s President and Chief Executive Officer. "In the remaining months of 2020, we will focus on achieving a number of near-term clinical and regulatory value-inflection points, such as filing an IND for our HST-003 program focused on knee cartilage repair, initiating a Phase 1 trial for HST-002 for the treatment of moderate to severe nasolabial folds and reporting topline results from our HST-001 Phase 1a/2b trial for androgenic alopecia in men. Moreover, I want to take this opportunity to commend the entire Histogen team for their tireless efforts, in the midst of a global pandemic, to position the company for success in 2020 and beyond."

Expected Second Half 2020 Milestones

Submit HST-003 IND for the regeneration of cartilage in the knee
Initiate HST-002 Phase 1 trial for the treatment of moderate to severe nasolabial folds, if IDE is approved
Report topline data for HST-001 Phase 1a/2b trial for androgenic alopecia in men
Financial Highlights for the Second Quarter 2020

Revenues for the three months ended June 30, 2020 and 2019 were $0.1 million and $1.4 million, respectively. The year-over-year decrease of $1.3 million was primarily due to a decrease in the fulfillment of supply orders of CCM to Allergan and one additional customer.

Cost of revenues for the three months ended June 30, 2020 and 2019, were $0 million and $0.5 million, respectively. The decrease of $0.5 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 was due to a decrease in fulfillment of supply orders of CCM to Allergan and one additional customer.

For both the three months ended June 30, 2020 and 2019, we recognized costs of professional services of $0.1 million related to our Allergan License Agreements.

In-process research and development expenses for the three months ended June 30, 2020 and 2019 were $7.1 million and $2.3 million, respectively. In the three months ended June 30, 2020, we incurred $7.1 million for in-process research and development acquired in connection with the reverse merger with Conatus and in the three months ended June 30, 2019, we incurred $2.3 million for in-process research and development related to the acquisition of HST-003 and HST-004 from PUR Biologics LLC.

Research and development expenses for the three months ended June 30, 2020 and 2019 were $1.4 million and $1.0 million, respectively. The increase of $0.4 million for the three months ended June 30, 2020 was primarily due to an increase in development costs for our product candidates.

General and administrative expenses for both the three months ended June 30, 2020 and 2019 were $1.6 million. The three months ended June 30, 2019 included success-based fees of approximately $0.8 million related to $7.5 million of license revenue received in the three months ended June 30, 2019 for which there was no comparable expense incurred in the three months ended June 30, 2020. This decrease for the three months ended June 30, 2020 was offset by increases in personnel related expenses, legal and accounting fees in the three months ended June 30, 2020.

Cash and cash equivalents as of June 30, 2020 were $10.4 million. Histogen believes that its existing cash and cash equivalents and cash inflow from operations will be sufficient to meet Histogen’s anticipated cash needs into the second quarter of 2021.