On August 11, 2021 Histogen Inc. (NASDAQ: HSTO), a clinical-stage 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, 2021 and provided an update on its clinical pipeline and other corporate developments (Press release, Conatus Pharmaceuticals, AUG 11, 2021, View Source [SID1234586331]).

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"In the second quarter, we charted a more strategic course for our restorative therapeutics pipeline with a focus on orthopedic indications that we believe sit at the crossroads of pre-clinical and clinical proof-of-concept, significant commercial opportunity and unmet medical needs," said Richard W. Pascoe, President and Chief Executive Officer. "Moreover, we believe that there is a significant value-creating opportunity for emricasan as a COVID-19 therapeutic given the positive safety and efficacy signals we reported in the recently completed Phase 1 study in mild symptomatic patients. Looking forward, we will concentrate our efforts on achieving meaningful regulatory, pre-clinical and clinical milestones for our pipeline assets in an effort to create long-term value for the benefit of patients, the healthcare community and our shareholders."

Highlights from the Second Quarter Ended June 30, 2021 and Business Updates

Technology and Pipeline Focus – In June 2021, we completed a strategic evaluation of our regenerative medicine platform technology and announced that our pipeline focus will be on what we believe to be high-value orthopedic indications, creating pipeline synergies and maximizing resources in an effort to further drive long-term shareholder value. Our current orthopedic development programs include HST 003 for cartilage regeneration in the knee and HST 004 for spinal disk repair. Histogen is also evaluating the potential for additional pipeline opportunities targeting other soft tissues such as the tendon and ligament.

HST 003 – In June 2021, we initiated 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. We anticipate having top-line results from this study in the second quarter of 2022.
HST 004 – We recently initiated investigational new drug application (IND) enabling activities for HST 004, a CCM solution intended to be administered through an intradiscal injection for spinal disc repair. 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 restore disc height. HST 004 was also shown to both reduce inflammation and protease activity and upregulate aggrecan production in an ex vivo spinal disc model. We anticipate filing an IND for HST 004 in the second quarter of 2022.
Emricasan – In June 2021, we, along with our partner Amerimmune, announced positive results from the Phase 1 study of emricasan in mild symptomatic COVID-19 patients. Emricasan was shown to be safe and well-tolerated during the 14 days of dosing and at the day 45 follow up, as compared to placebo with no reports of serious adverse events. Patients who completed treatment with emricasan had a complete resolution of the symptoms most commonly associated in mild COVID-19, such as a cough, headache, and fatigue at day 7 and continued through Day 45. Patients in the placebo arm who completed the study did not experience COVID-19 symptom resolution at any time point out to day 45. We, along with our partner Amerimmune, are currently evaluating our clinical development plans for the emricasan program and expect to complete our evaluation in the third quarter of 2021.
Second Quarter 2021 Financial Highlights

Second Quarter Ended June 30, 2021 and 2020

License and Service Revenues in the second quarter of 2021 decreased nearly 100% to $5 thousand from $0.1 million in the second quarter of 2020. The decrease is primarily related to the completion of technology transfer obligations of Histogen under the Allergan Agreements. During both periods, $5 thousand of deferred revenue was recognized in relation to the Potential Future Improvements remaining performance obligation currently being amortized over the remaining 9-year patent life.

Cost of Professional Services Revenues for the three months ended June 30, 2021 and 2020 were zero and $0.1 million, respectively.

Acquired In-Process Research and Development for the three months ended June 30, 2021 and 2020 were zero and $7.1 million, respectively. Histogen incurred $7.1 million for in-process research and development acquired during the three months ended June 30, 2020 in connection with the merger.

Research and Development Expenses for the three months ended June 30, 2021 and 2020 were $2.4 million and $1.4 million, respectively. The net increase of $1.0 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 was primarily due to increases in expanded development costs of our product candidates partially offset by $0.2 million in qualifying expenses in connection with the Department of Defense grant and increases in personnel-related expenses.

General and Administrative Expenses for the three months ended June 30, 2021 and 2020 were $1.8 million and $1.6 million, respectively. The $0.2 million increase for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 was primarily due to increases in personnel-related expenses and insurance fees offset by other expenses, such as legal and accounting fees.

Cash and Cash Equivalents as of June 30, 2021 were $23.1 million. We believe that Histogen’s existing cash and cash equivalents and cash inflow from operations will be sufficient to meet its anticipated cash needs into the fourth quarter of 2022.