On May 12, 2022 Histogen Inc. (NASDAQ: HSTO), a clinical-stage therapeutics company focused on developing both restorative therapeutics and pan-caspase and caspase selective inhibitors focused on treatments for infectious and inflammatory diseases, reported financial results for the first quarter ended March 31, 2022 and provided an update on its clinical pipeline and other corporate developments (Press release, Conatus Pharmaceuticals, MAY 12, 2022, View Source [SID1234614478]).

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"We continue to focus on clinical execution of HST-003 in knee cartilage repair, IND enabling activities for HST-004 in spinal disk regeneration, exploration of testing emricasan in animal studies for methicillin resistant staphylococcus aureus infections ("MRSA"), and evaluating our caspase-1 inhibitors that impact the inflammasome pathway," said Steven J. Mento, Ph.D., Interim President and Chief Executive Officer.

Highlights from the First 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. In the first quarter of 2022, we added three additional clinical sites to help supplement enrollment of patients due to the recruitment challenges we have experienced related to both the specific nature of the study inclusion criteria and the impact of COVID-19 on the elective surgery environment. We continue to anticipate top line results in the first half of 2023, assuming we complete enrollment in the fourth quarter of 2022.

HST-004 – Our initial preclinical research has shown that HST-004 stimulates stem cells from the spinal disc to proliferate and secrete aggrecan and collagen II, regenerate normal matrix and cell tissue structure and restores disc height. HST-004 was also shown to reduce inflammation and protease activity and upregulate aggrecan production in an ex vivo spinal disc model. We have initiated IND enabling activities for HST-004 and anticipate filing IND for HST-004 in the second half of 2023.

Emricasan COVID-19 Amerimmune Collaboration Agreement – On March 3, 2022, we filed our demand for arbitration as we believe that Amerimmune has failed to undertake commercially reasonable efforts toward conducting and completing the Phase 2 study as required by the Collaborative Development and Commercialization Agreement that we previously entered into with Amerimmune in October of 2020.

Emricasan MRSA – We continue to make progress on exploring the feasibility of testing emricasan in animal studies for MRSA. We expect to complete our feasibility assessment in the second half of 2022 and, subject to the outcome of the arbitration with Amerimmune, explore further development of emricasan for MRSA.

$3.75 Million Allergan Payment – In March 2022, we received a one-time $3.75 million payment from Allergan pursuant to execution of a letter agreement entered into on March 18, 2022. The payment represents a full and final satisfaction of all monies due to the Company pursuant to the Allergan License Agreement.

First Quarter Ended March 31, 2022 Financial Highlights

Product, License, and Grant Revenues

For the three months ended March 31, 2022 and 2021, we recognized product revenues of $0 and $0.3 million, respectively. The revenue for the first quarter of 2021 was related to the additional supply of CCM to Allergan. 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 three months ended March 31, 2022 and 2021, we recognized license revenue of $3.8 million and $12 thousand, respectively. The increase in the current period is due to a one-time payment of $3.8 million received in March 2022 as consideration for execution of the Allergan letter agreement.

For the three months ended March 31, 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 three months ended March 31, 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 for the three months ended March 31, 2022 and 2021 were $1.9 million and $2.1 million, respectively. The decrease of $0.2 million was primarily due to decreases in development costs of our clinical and pre-clinical product candidates and personnel related expenses, partially offset by facility rent increases.

General and administrative expenses for the three months ended March 31, 2022 and 2021 were $2.5 million and $2.3 million, respectively. The increase of $0.2 million was primarily due to increases in royalty expenses and legal fees, offset by reductions in personnel related expenses.

Cash and cash equivalents as of March 31, 2022 were $17.8 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 third quarter of 2023.