Longeveron Inc. Q4 FY2025 Earnings Call

Good afternoon, everyone, and thank you for joining us today to review Longeveron's 2025 Full Year Financial Results and Business update. After the U.S. markets closed today, we issued a press release with the financial results for 2025, which can be found under the Investors section of the Longeveron website. On the call today are Stephen Willard, Chief Executive Officer; Joshua Hare here, Co-Founder, Chief Science Officer and Executive Chairman of the Board; Nataliya Agafonova, Chief Medical Officer; and Lisa Locklear, Chief Financial Officer.

Thank you, Jenny, and thank you all for joining us today. I am excited and honored to join Longeveron at this pivotal moment for the company. The strength of the company's stem cell science and success in multiple clinical trials across several indications positions Longeveron to be a leader in the stem cell field. Upon assuming the role of CEO, I have had an immediate focus on three critical areas: first, securing necessary financial resources and planning efficient capital allocation. I'm delighted to report, as you have hopefully seen from our prior press releases, that we have secured $15 million in new capital from, among others, what I believe are two of the premier fundamental institutional investors in biopharma, Coastland Capital, that's Matthew Perry; and Janus Henderson Investments. We also have the potential to close a second tranche of an additional $15 million upon meeting certain milestones. We are grateful for their investment, support and shared vision of advancing stem cell therapies for the benefit of patients and their families. The initial capital from the financing provides runway comfortably into the fourth quarter of 2026. Second, this capital enables us to complete and deliver the results of the ELPIS II, our anticipated pivotal Phase IIb study in HLHS and potentially, if supported by the data, begin preparation of the company's first BLA with the U.S. FDA. Enrollment of the clinical trial was completed in June of last year, and we remain on track for reporting results in the third quarter of this year. Third, strategic partnering. We plan to pursue a robust partnering strategy across all of our development programs to accelerate potential time to market, increase capital use efficiency and leverage the greater resources of larger organizations. For HLHS, we believe that the optimal timing to secure a potential BLA and commercialization partner will be following the readout of the ELPIS II clinical trial results in the third quarter of this year. For Alzheimer's disease, we plan to leverage the strength of our Phase II data and clarity on the clinical pathway to a potential BLA for Alzheimer's disease to engage with potential funding commercialization partners. For pediatric dilated cardiomyopathy or PDCM, we intend to execute a single pivotal Phase II registrational study under our active FDA IND, leveraging an efficient development strategy appropriate for a rare pediatric disease. If successful, this study could form the basis of a potential BLA submission pending FDA alignment. Upon successful completion, we intend to pursue strategic partnership opportunities to support regulatory approval and commercialization. Finally, and potentially very significantly, are our opportunities for Priority Review Vouchers or PRVs. Our HLHS program has been granted rare pediatric disease designation by the FDA, which makes it eligible to receive a PRV upon approval of a BLA. And the same opportunity may exist for our PDCM program to also be eligible for PRV. Companies can either use the PRV to secure a speedier FDA review of a future therapy or sell it to another company. Since August of 2024, vouchers have been sold for between $150 million and $205 million each. Securing one or more PRVs would obviously be a tremendous financial outcome for the company and shareholders. In our recent private placement, we agreed to pursue a sale of a PRV received for HLHS if granted and that the investors would be entitled to 50% of the proceeds received from the potential future sale of the HLHS PRV. It is an exciting time for laromestrocel, the patients we serve, Longeveron and our shareholders. With that, I will turn the call over to Dr. Agafonova, our Chief Medical Officer, to touch on the clinical development programs.

Thank you, Steve, and good afternoon, everyone. As Steve mentioned, our HLHS program is the primary focus for us with a near-term pathway to potential approval in an area of clear unmet medical need. The Phase IIb clinical trial, ELPIS II, evaluating the potential of laromestrocel to improve right ventricular function and long-term clinical outcomes in infants with HLHS is nearing completion. Enrollment of 40 patients was completed in June of last year. Top line results from the ELPIS II trial are anticipated in the third quarter of 2026. Based on FDA feedback received in August 2024, ELPIS II may be considered a pivotal study subject to the trial results, which could potentially accelerate the regulatory pathway for laromestrocel. If supported by the data, we plan to initiate preparation for a potential biologic license application, BLA. This would represent our first BLA submission and targets a serious pediatric condition with significant unmet medical need. Our laromestrocel program in HLHS is designed to improve cardiac function in these children with the goal of potentially improving long-term clinical outcomes. The earlier Phase I ELPIS I study established the safety and feasibility of laromestrocel administration and provided supportive clinical observations that informed the design of the ongoing pivotal ELPIS II trial. Due to its small size and single-arm design, ELPIS I was not intended to evaluate efficacy outcomes. We look forward to sharing the results of the ELPIS II clinical trial in the third quarter. Pediatric dilated cardiomyopathy is a rare pediatric cardiovascular disease in which the muscles in one of the more of the heart chambers become enlarged or stretched dilated with nearly 40% of children with PDCM required the heart transplant or dying within two years of diagnosis. Our investigational new drug IND application for laromestrocel as a potential treatment for PDCM became effective in July 2025. This IND allows advancement directly into a single pivotal Phase II registrational clinical trial, reflecting the serious nature of this rare pediatric disease and the significant unmet medical need. We currently anticipate planning and preparation for the study in 2026 with potential initiation of the study in 2027. I will hand the call over to Lisa Locklear, our Chief Financial Officer.

Thank you, Nataliya, and good afternoon, everyone. This afternoon, we issued a press release and filed our annual report on Form 10-K, both of which present our financial results in detail, so I will touch on some highlights. Revenues for the year ended December 31, 2025, were $1.2 million and consisted of $1 million of clinical trial revenue and $0.2 million of contract manufacturing revenue. Revenues for the year ended December 31, 2024, were $2.4 million and consisted of $1.4 million of clinical trial revenue, $0.5 million of contract manufacturing lease revenue and $0.5 million of contract manufacturing revenue. 2025 revenues decreased $1.2 million or 50% when compared to 2024 as a result of lower participant demand for our Bahamas registry trial and reduced demand for contract manufacturing services from our third-party clients. General and administrative expenses for the year ended December 31, 2025, increased to approximately $12 million compared to $10.3 million for the same period in 2024. The increase of approximately $1.8 million or 17% was primarily related to an increase in personnel and related costs in 2025 as we increased headcount year-over-year and a one-time accrued severance cost for our former CEO. Research and development expenses for the year ended December 31, 2025, increased to approximately $12 million from $8.1 million for the same period in 2024. This increase of $3.9 million or 48% was primarily driven by a $2.2 million increase in personnel and related costs, including equity-based compensation, $1.4 million increase in CMC costs associated with technology transfer, including nonclinical manufacturing batches that advance our readiness for future commercial production as part of our BLA-enabling efforts, and a $0.2 million increase in amortization expense related to patent costs. Our net loss increased to approximately $22.7 million for the year ended December 31, 2025, from a net loss of $16 million for the same period in 2024. The increase in the net loss of $6.7 million or 41% was for the reasons outlined previously. Our cash and cash equivalents as of December 31, 2025, were $4.7 million with approximately $1.4 million in working capital. On March 11, we completed a private placement that raised gross proceeds of approximately $15.9 million. We're delighted to welcome Coastland Capital and Janus Henderson investors as key shareholders. As a result of the financing, we currently anticipate our existing cash and cash equivalents will enable us to fund operating expenses and capital expenditure requirements into the fourth quarter of 2026 based on our current operating budget and cash flow forecast. I will now hand the call over to Josh Hare, our Founder and Chief Science Officer.

Thank you, Lisa. Good afternoon, everyone. As you've heard from the previous speakers, we believe we are on the cusp of pivotal data in HLHS which, if positive, would be an important step in our mission to help patients and families through the application of stem cell research. This important milestone for Longeveron reflects not only the continued advancement of laromestrocel, but also the significant progress occurring across the broader field of stem cell research, clinical application and commercialization. In recent years, we've seen increasing validation of cell therapy's role in regenerative medicine and its potential to address a wide range of serious conditions, reinforcing the promise of this rapidly evolving area of medicine. We believe these advances are helping to establish cell therapy as a potentially transformative approach for treating serious diseases with significant unmet medical need. Longeveron has been an active participant in this evolution, with multiple clinical stage programs, publications of clinical trial results in premier journals such as Nature Medicine and Cell Stem Cell and multiple stem cell therapy patents issued globally. The potential for stem cell therapies to address large and underserved patient populations represents a significant opportunity, and we remain focused on executing our clinical, regulatory and strategic priorities to unlock the value of our platform. I will now turn the call back to Stephen.

Thank you, Josh. The anticipated near-term pivotal clinical data for HLHS, the strengthening of our balance sheet, the support of high-quality fundamental investors and possibly our first BLA submission as well as potential partnerships across our development programs make this an extraordinarily exciting time for Longeveron. We deeply appreciate the support of all of our stakeholders and look forward to continuing collaboration and progress in the future. Operator, we would now like to open the call for questions from our covering analysts.

Our first question comes from Ram Selvaraju with H.C. Wainwright.

Congratulations on all the recent progress, very exciting. I wanted to ask about the commercial perspectives as these pertain to scaled up manufacturing and CMC for laromestrocel were it to be approved in the HLHS indication? And also wanted to see if you could just enumerate for us again which potential areas of inquiry for laromestrocel could conceivably be eligible for PRVs in the future beyond HLHS?

Sure. This is Steve. I'll address the second question. We could establish a separate PRV for PDCM and we'll be pursuing that soon. There are two different PRVs, one of which we sold half to our investors while retaining the other half for ourselves. The PDCM is fully allocated for our use. In terms of manufacturing in CMC, it remains a key focus for us this year, and we have made significant progress. We are working with a CDMO that will handle our manufacturing needs, which will allow us to utilize our lab space for other projects. Do you have a follow-up question, Ram?

Yes. With respect to indications like, for example, Alzheimer's disease and age-related frailty, what potential nondilutive sources of capital to fund those initiatives? Could you access beyond the PRVs that you just enumerated?

Great question. And the answer is it's going to be a real priority for us to seek licensing partners for both Alzheimer's disease and for age-related frailty. We've already got some preliminary conversations set up. I have a background in licensing. I ran a company called Flamel Technologies, ticker symbol FLML based in Lyon, France, and we had partnerships with 24 of the world's largest pharmaceutical companies. I have a pretty active Rolodex and Alzheimer's disease is a very attractive possibility for us now. And age-related frailty, we have a wonderful paper in Cell Stem Cell that just came out. I recommend it to you highly. And we already had incoming interest with regard to licensing that technology. So those two things will be on the priority list for 2026.

Our next question comes from Boobalan Patheon with ROTH Capital Partners.

Of course, congratulations on your new role. So firstly, with respect to the HLHS program, assuming the data is positive in the third quarter '26, how sooner you can file for BLA for the HLHS program? And also, if you can provide some granularity in terms of whether you'll be filing your BLA on a rolling basis and also if you're expecting a priority review?

Thank you very much for those questions. Josh, would you care to answer with regard to the various attractive things that have granted to us by the FDA with regard to HLHS?

Yes. Thank you, Steve. Boobalan, thank you for the question. Yes, we are potentially eligible for rolling submission, which we would take advantage of if allowed by the FDA. At this stage, our next big milestone is, of course, the data readout, which will then trigger an end-of-phase meeting with the FDA to help determine the speed and timing of the application process because we have the rare pediatric disease designation. We are eligible for the rolling submission. And I believe we're also eligible for priority review based on the designations that we have. So of course, data permitting, our objective would be to initiate that regulatory process as quickly as possible and as allowed by the FDA. Perhaps I might also ask Nataliya to comment on that since she's so involved in that process.

Thank you so much, Josh, and thank you, Boobalan, for your question. So assuming the data are positive in the third quarter of 2026, definitely, we would like to take advantage of a rolling submission. And as you know, it's not only the readiness of clinical data and all the modules related to clinical data but also CMC, but we are going to take all advantage and target a BLA submission sometime in 2027.

Okay. That's really helpful. And then in terms of PRV because that has been mentioned many times in today's call. So obviously, the most recent PRV was sold for a very high price of $205 million. This is from Fortress Biotech, right? But at the same time, we have a new sunset date for the PRV, which is September 2029, which is a little more than three years from today. So because the sunset date is a little far, do you expect any challenges in terms of monetizing PRV for a heavy premium given this new sunset date? Just curious.

That's a great question. It's hard to predict that part, but I don’t think prices immediately prior to that $205 million was a $200 million from Jazz Pharmaceuticals. So the last two have been in the $200 million range. I would expect prices to remain strong for these as we approach 2029.

All right. And then with respect to PDCM, pediatric dilated cardiomyopathy program, can you provide some context in terms of what would be the next step in this program? How sooner you can start your clinical study? I know your IND has been sort of cleared. So maybe provide some context in terms of the timeline, design and potential endpoints you could possibly explore? And also, I'm trying to understand what is the unmet need you're trying to address here with laromestrocel? Is it something that patients who would be treated with laromestrocel not seek the heart transplantation? Or is this an ambitious goal?

Nataliya, would you care to respond to that?

Sure, absolutely. Regarding your first question about the timing of the PDCM, our goal was to start the trial this year. However, due to funding, we were not able to achieve this. Nonetheless, it remains a priority for us. We aim to conduct a feasibility assessment sometime this year and hopefully begin the trial and start opening sites in 2027.

No, no, go ahead, sorry.

Yes. Can you remind me what you asked about timing?

Design, sample size and also is the goal here to have patients not to seek transplantation?

Absolutely. We plan to use a Hierarchical Composite Endpoint similar to the HLHS, which includes listings for transplant since the left ventricle is silent. Our aim is to see a reduction in heart transplants and hospitalizations, which are standard approaches for heart failure patients, and we are implementing this. The FDA has accepted this as a primary endpoint with a few comments that we will address through a protocol amendment once they are ready to start the trial. We are planning a one-year study with administration of laromestrocel every three months, targeting 70 patients. Our goal is to conduct the trial globally, not just in the U.S., but across all geographic areas. As previously mentioned, we plan to conduct a feasibility assessment this year to identify high enrolling sites and optimal geographic regions. We hope to share an update on this in our next call.

Josh, do you have any comments on that?

Thank you, Steve. Regarding the potential clinical outcomes of laromestrocel in this population, we are very optimistic about the possibility of achieving meaningful disease modification. Dilated cardiomyopathy affects both adults and children, but in children, the clinical burden is significantly more severe. Young children face a higher risk of poor outcomes, with extremely high rates of death or transplantation in early years due to the progressive nature of the disease. Currently, there are no curative treatments available, only palliative medications. However, laromestrocel has the potential to cure or reverse the disease, supported by studies in adults showing complete reversal and remission. We will only know for certain after the trial is completed, but there is a reasonable expectation that the results could be substantial and potentially curative in children, possibly eliminating the need for heart transplants altogether. At this point, this remains a hypothesis, and we cannot guarantee it will happen, but the trial is designed to assess the possibility of complete disease reversal, representing one of the first true disease-modifying treatments for this condition.

That's wonderful.

Yes, maybe one last question, sorry. You recently received a patent for Laro's use in treating sexual dysfunction in females, which is a fascinating program. I'm trying to understand your strategy here. Do you see this as a partnered program rather than something you will develop independently? Also, do you anticipate this drug being a short-term or long-term therapy for this indication?

Josh, you take that one as well, please.

Yes. Thank you. That's another great question. Yes. The finding of the improvement of female sexual dysfunction arose from our aging frailty work. And so this is an issue and the patent is related to older female individuals. This is a very important unmet need in this population as well. And there's a tremendous amount of interest in women's health in general that's emerging. It's particularly highlighted by the recent FDA decision to remove the black box warning on postmenopausal estrogen. And so I think we see a new era of focus on women's health in women in postmenopausal women. There's also the recognition in the field that sexual performance and sexual function at that stage of life is incredibly important for health and quality of life. And so we do see a big clinical need here and a physician community that's now very focused on this particular matter. In terms of development, I think this would be an indication that would be ripe for partnership as opposed to us going it alone. There would clearly be another study that would need to be done and a formal regulatory pathway with the FDA established. So in short, I do see this as addressing a very high unmet need and something that would be ripe for a partnership opportunity.

We have reached the end of the question-and-answer session. I'd now like to turn the call back to Stephen Willard for closing comments.

Thank you, operator, and thank you all for attending today's call. We greatly appreciate your interest and support and look forward to updating you on our continued progress. Thank you once again. Operator, you may end the call.

Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.