On November 10, 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 third quarter ended September 30, 2022 and provided an update on its clinical pipeline and other corporate developments (Press release, Conatus Pharmaceuticals, NOV 10, 2022, View Source [SID1234623826]).

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"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.