On August 11, 2022 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, reported financial results for the second quarter ended June 30, 2022 and provided an update on its clinical pipeline and other corporate developments (Press release, Conatus Pharmaceuticals, AUG 11, 2022, View Source [SID1234618211]).

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"We continue to focus on execution of IND enabling activities for HST 004 in spinal disc 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. "We also initiated a feasibility evaluation of our ongoing HST 003 study for cartilage regeneration in the knee, including implementation of protocol modifications, adding more sites, and other study resources given the continued recruitment challenges stemming from both the study protocol and impact of COVID-19 on the elective surgery environment and expect to complete our evaluation in the fourth quarter of 2022."

Highlights from the Second 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. Despite adding three additional clinical sites in the first quarter of 2022, we continue to experience recruitment challenges due to both the specific nature of the study inclusion criteria and the impact of COVID-19 on the elective surgery environment. We are currently evaluating the overall feasibility of the ongoing HST 003 trial, including implementing protocol modifications, adding more sites, and other study resources. We expect to complete our feasibility evaluation 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, regenerates 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 continue to execute on IND enabling activities for HST-004 and anticipate filing IND for HST-004 in the second half of 2023.
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 third quarter of 2022.

Regained Compliance with Nasdaq Minimum Bid Listing Requirement – On June 2, 2022, we effected a 1-for-20 reverse stock split of the Company’s issued and outstanding common stock, par value $0.0001 per share. Subsequently, we received written notice from the Listing Qualifications Department of the Nasdaq Stock Market stating that the Company has regained compliance with the Nasdaq minimum bid price listing requirement.

$5 Million Financing – In July 2022, we closed a $5 million private placement financing. We anticipate that the net proceeds, in addition to our cash of $12.6M as of June 30, 2022, will support our operations through December 2023.
Six Months Ended June 30, 2022 Financial Highlights

Product, License, and Grant Revenues

For the six months ended June 30, 2022 and 2021, we recognized product revenues of $0 and $0.3 million, respectively. The revenue for the first six months of 2021 was related to the additional supply of cell conditioned medium (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 six months ended June 30, 2022 and 2021, we recognized license revenue of $3.8 million and $17 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 six months ended June 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 National Science Foundation (NSF). As of March 31, 2021, all work required by the Company under the grant has been completed.

Cost of revenues for the six months ended June 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 for the six months ended June 30, 2022 and 2021 were $3.0 million and $4.5 million, respectively. The decrease of $1.5 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 six months ended June 30, 2022 and 2021 were $4.8 million and $4.2 million, respectively. The increase of $0.6 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 June 30, 2022 were $12.6 million which excludes gross proceeds of approximately $5 million from the private placement financing closed in July 2022. 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.