huma-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________________________________________________________________________________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.

Commission File Number: 001-39532

___________________________________________________________________________________________________

Humacyte, Inc.

(Exact name of registrant as specified in its charter)

___________________________________________________________________________________________________


Delaware		85-1763759
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2525 East North Carolina Highway 54
Durham,	NC	27713
(Address of principal executive offices)		(Zip code)

(919) 313-9633

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

___________________________________________________________________________________________________

Securities registered pursuant to 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

HUMA

The Nasdaq Stock Market LLC

Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50

HUMAW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 4, 2023, 103,329,171 shares of common stock, par value $0.0001, were issued and outstanding.

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Humacyte, Inc.

Quarterly Report on Form 10-Q

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		Page No.
	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	5

	Condensed Consolidated Balance Sheets (unaudited)	5

	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)	6

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)	7

	Condensed Consolidated Statements of Cash Flows (unaudited)	8

	Notes to Condensed Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	39

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

Item 3.	Defaults Upon Senior Securities	40

Item 4.	Mine Safety Disclosures	40

Item 5.	Other Information	40

Item 6.	Exhibits	42

SIGNATURES		43

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements that involve substantial risks and uncertainties. “Forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) are statements that are not historical facts and involve a number of risks and uncertainties. These statements include, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used therein, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, our management.

Forward-looking statements may include, for example, statements about:

•our plans and ability to execute product development, process development and preclinical development efforts successfully and on our anticipated timelines;

•our plans and ability to obtain marketing approval from the U.S. Food and Drug Administration (“FDA”) and other regulatory authorities, including the European Medicines Agency, for our bioengineered human acellular vessels (“HAVs”) and other product candidates;

•our ability to design, initiate and successfully complete clinical trials and other studies for our product candidates and our plans and expectations regarding our ongoing or planned clinical trials, including for our ongoing V005 Phase 2/3 clinical trial and V007 Phase 3 clinical trial;

•the outcome of our ongoing discussions with the FDA concerning the design of our clinical trials;

•our anticipated growth rate and market opportunities;

•the potential liquidity and trading of our securities;

•our ability to raise additional capital in the future;

•our ability to use our proprietary scientific technology platform to build a pipeline of additional product candidates;

•the characteristics and performance of our HAVs;

•our plans and ability to commercialize our HAVs and other product candidates, if approved by regulatory authorities;

•the expected size of the target populations for our product candidates;

•the anticipated benefits of our HAVs relative to existing alternatives;

•our assessment of the competitive landscape;

•the degree of market acceptance of HAVs, if approved, and the availability of third-party coverage and reimbursement;

•our ability to manufacture HAVs and other product candidates in sufficient quantities to satisfy our clinical trial and commercial needs;

•our expectations regarding our strategic partnership with Fresenius Medical Care Holdings, Inc. (“Fresenius Medical Care”) to sell, market and distribute our 6 millimeter HAV for certain specified indications and in specified markets;

•the performance of other third parties on which we rely, including our third-party manufacturers, our licensors, our suppliers and the organizations conducting our clinical trials;

•our ability to obtain and maintain intellectual property protection for our product candidates as well as our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others;

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•our ability to maintain the confidentiality of our trade secrets, particularly with respect to our manufacturing process;

•our compliance with applicable laws and regulatory requirements, including FDA regulations, healthcare laws and regulations, and anti-corruption laws;

•our ability to attract, retain and motivate qualified personnel and to manage our growth effectively;

•our future financial performance and capital requirements;

•our ability to implement and maintain effective internal controls; and

•the impact of the overall global economy and increasing interest rates and inflation on our business.

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. Any forward-looking statement is based on information current as of the date of this Quarterly Report and speaks only as of the date on which such statement is made. Actual events or results may differ materially from the results, plans, intentions or expectations anticipated in these forward-looking statements as a result of a variety of factors, many of which are beyond our control. More information on factors that could cause actual results to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission (the “SEC”), including, but not limited to, those described in the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Quarterly Report and our Annual Report on Form 10-K for the year ended December 31, 2022, which we filed with the SEC on March 24, 2023. We disclaim any obligation, except as specifically required by law, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Humacyte, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands except for share and per share amounts)


	March 31, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	129,570	$	149,772
Short-term investments	2,107		2,107
Accounts receivable	—		31
Prepaid expenses and other current assets	2,178		2,298
Total current assets	133,855		154,208

Finance lease right-of-use assets, net	18,858		19,373
Operating lease right-of-use assets, net	670		682
Property and equipment, net	29,593		30,039
Total assets	$	182,976	$	204,302

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,954	$	1,595
Accrued expenses	6,411		7,108
SVB loan payable, current portion	12,857		8,571
Finance lease obligation, current portion	2,329		2,256
Operating lease obligation, current portion	50		50


Total current liabilities	23,601		19,580

Contingent Earnout Liability	42,084		27,893
SVB loan payable, net of current portion	16,410		20,336
Finance lease obligation, net of current portion	18,252		18,853
Operating lease obligation, net of current portion	620		632
Common stock warrant liabilities	122		80


Total liabilities	101,089		87,374

Commitments and contingencies (Note 10)

Stockholders’ equity
Preferred stock, $0.0001 par value; 20,000,000 shares designated as of March 31, 2023 and December 31, 2022; 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 250,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 103,329,171 and 103,229,013 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	10		10
Additional paid-in capital	545,384		543,456
Accumulated deficit	(463,507)		(426,538)
Total stockholders’ equity	81,887		116,928
Total liabilities and stockholders’ equity	$	182,976	$	204,302

The accompanying notes are an integral part of these financial statements.

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Humacyte, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands except for share and per share amounts)


	For the Three Months Ended March 31,
		2023		2022

Grant revenue		$	—	$	233

Operating expenses:
Research and development		17,278		16,314
General and administrative		5,234		5,682
Total operating expenses		22,512		21,996
Loss from operations		(22,512)		(21,763)

Other income (expense), net:
Interest income		1,475		31
Change in fair value of Contingent Earnout Liability		(14,191)		3,258
Change in fair value of common stock warrant liabilities		(42)		74

Interest expense		(1,699)		(1,432)

Total other income (expense), net		(14,457)		1,931
Net loss and comprehensive loss		$	(36,969)	$	(19,832)

Net loss per share attributable to common stockholders, basic and diluted		$	(0.36)	$	(0.19)
Weighted-average shares outstanding used in computing net loss per share attributable to common stockholders, basic and diluted		103,263,528		103,004,088

The accompanying notes are an integral part of these financial statements.

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Humacyte, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

(in thousands except for share amounts)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2022	103,229,013	$	10	$	543,456	$	(426,538)	$	116,928
Proceeds from the exercise of stock options	100,158	—		119		—		119
Stock-based compensation	—	—		1,809		—		1,809
Net loss	—	—		—		(36,969)		(36,969)
Balance as of March 31, 2023	103,329,171	$	10	$	545,384	$	(463,507)	$	81,887


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2021	103,003,646	$	10	$	536,737	$	(414,573)	$	122,174
Proceeds from the exercise of stock options	926	—		1		—		1
Stock-based compensation	—	—		1,547		—		1,547
Net loss	—	—		—		(19,832)		(19,832)
Balance as of March 31, 2022	103,004,572	$	10	$	538,285	$	(434,405)	$	103,890

The accompanying notes are an integral part of these financial statements.

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Humacyte, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	For the Three Months Ended March 31,
	2023		2022
Cash flows from operating activities
Net loss	$	(36,969)	$	(19,832)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	1,558		1,525
Stock-based compensation expense	1,809		1,547
Change in fair value of Contingent Earnout Liability	14,191		(3,258)
Change in fair value of common stock warrant liabilities	42		(74)

Amortization expense	515		515
Non-cash operating lease costs	12		11
Amortization of SVB debt discount	360		378
Changes in operating assets and liabilities:
Accounts receivable	31		(57)
Prepaid expenses and other current assets	120		822
Accounts payable	299		934
Accrued expenses	(597)		(1,297)
Operating lease obligation	(12)		(11)

Net cash used in operating activities	(18,641)		(18,797)

Cash flows from investing activities


Purchase of property and equipment	(1,152)		(22)

Net cash used in investing activities	(1,152)		(22)

Cash flows from financing activities
Proceeds from the exercise of stock options	119		1
Payment of finance lease principal	(528)		(462)





Net cash used in financing activities	(409)		(461)

Net decrease in cash and cash equivalents	(20,202)		(19,280)
Cash and cash equivalents at the beginning of the period	149,772		217,502
Cash and cash equivalents at the end of the period	$	129,570	$	198,222

Supplemental disclosure
Cash paid for interest on SVB loan	$	881	$	563

Supplemental disclosure of noncash activities:

Purchase of property and equipment in accounts payable and accrued expenses	$	95	$	30


Unpaid liabilities assumed in connection with Merger	$	—	$	130

The accompanying notes are an integral part of these financial statements.

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Humacyte, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Description of Business

Organization

Humacyte, Inc. and subsidiary (unless the context indicates otherwise, collectively, the “Company”) is pioneering the development and manufacture of off-the-shelf, universally implantable, bioengineered human tissues, advanced tissue constructs and organ systems designed to improve the lives of patients and transform the practice of medicine. The Company is leveraging its regenerative medicine technology platform to develop proprietary product candidates for use in the treatment of diseases and conditions across a range of anatomic locations in multiple therapeutic areas.

On August 26, 2021 (the “Closing Date”), Alpha Healthcare Acquisition Corp. (“AHAC”) consummated a merger pursuant to a Business Combination Agreement, dated as of February 17, 2021 (the “Merger Agreement”), by and among Humacyte, Inc., a Delaware Corporation (“Legacy Humacyte”), AHAC and Hunter Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and wholly owned subsidiary of AHAC. As contemplated by the Merger Agreement, Merger Sub merged with and into Legacy Humacyte, with Legacy Humacyte continuing as the surviving corporation and as a wholly-owned subsidiary of AHAC (such transactions, the “Merger,” and, collectively with the other transactions described in the Merger Agreement, the “Reverse Recapitalization”). On the Closing Date, AHAC changed its name to Humacyte, Inc. (“New Humacyte”) and Legacy Humacyte changed its name to Humacyte Global, Inc. (“Global”). The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and under this method of accounting, AHAC was treated as the acquired company for financial reporting purposes and Legacy Humacyte was treated as the acquirer. Operations prior to the Merger are those of Legacy Humacyte.

Concurrently with the execution of the Merger Agreement, certain investors (the “PIPE Investors”) purchased an aggregate of 17,500,000 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock” and such shares purchased by the PIPE Investors, the “PIPE Shares”) in a private placement for an aggregate purchase price of $175 million (the “PIPE Financing”). The Company received $242.4 million in proceeds from the Merger and related PIPE Financing, and incurred $3.9 million of transaction costs, consisting of banking, legal, and other professional fees.

Liquidity and Going Concern

Since its inception in 2004, the Company has generated no product revenue and has incurred operating losses and negative cash flows from operations in each year. To date, the Company has financed its operations primarily through the sale of equity securities and convertible debt, proceeds from the Reverse Recapitalization, borrowings under loan facilities and, to a lesser extent, through governmental and other grants. At March 31, 2023 and December 31, 2022, the Company had an accumulated deficit of $463.5 million and $426.5 million, respectively. The Company’s operating losses were $22.5 million and $21.8 million for the three months ended March 31, 2023 and 2022, respectively. Net cash flows used in operating activities were $18.6 million and $18.8 million during the three months ended March 31, 2023 and 2022, respectively. Substantially all of the Company’s operating losses resulted from costs incurred in connection with the Company’s research and development programs and from general and administrative costs associated with the Company’s operations. The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future as the Company advances its product candidates.

As of March 31, 2023, the Company had cash and cash equivalents and short-term investments of $131.7 million. The Company believes its combined cash and cash equivalents and short-term investments on hand will be sufficient to fund operations, including clinical trial expenses and capital expenditure requirements, for at least 12 months from the issuance date of these interim financial statements.

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Humacyte, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company has prepared the accompanying financial statements in conformity with U.S. GAAP. The Company’s condensed consolidated financial statements reflect the operations of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in the financial statements include stock-based compensation costs, right-of-use assets, accruals for research and development activities, contingent earnout liability, fair value of common stock warrants and income taxes. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying interim condensed consolidated financial statements and the related footnote disclosures are unaudited. These unaudited interim financial statements have been prepared on the same basis as the audited financial statements and, in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2023 and its results of operations for the three months ended March 31, 2023 and 2022, and cash flows for the three months ended March 31, 2023 and 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ended December 31, 2023 or any other period. The December 31, 2022 year-end condensed consolidated balance sheet was derived from audited annual financial statements but does not include all disclosures from the annual financial statements.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 and the related notes included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 24, 2023 (the “Annual Report”), which provides a more complete discussion of the Company’s accounting policies and certain other information. There have been no significant changes to the significant accounting policies disclosed in Note 2 of the audited consolidated financial statements as of and for the years ended December 31, 2022 and 2021 included in the Company’s Annual Report.

Segments

The Company operates and manages its business as one reportable and operating segment. The Company is developing proprietary, bioengineered, acellular human tissues, advanced tissue constructs and organ systems that are designed to be used in the treatment of diseases and conditions across a range of anatomic locations in multiple therapeutic areas. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of evaluating financial performance and allocating resources.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments consisting of certificates of deposit (“CDs”). As of March 31, 2023 and December 31, 2022, there were no material cash balances in excess of balances insured by the Federal Deposit Insurance Corporation (“FDIC”). As of both March 31, 2023 and December 31, 2022, the Company had cash equivalents that are invested in highly rated money market funds that are invested only in obligations of the U.S. government and its agencies.

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Humacyte, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

As of both March 31, 2023 and December 31, 2022, the Company had approximately $10.1 million in CDs. These cash deposits are deposited at a bank that is a member of the Certificate of Deposit Account Registry Service (“CDARS”), in which large deposits are divided into smaller amounts and placed with other FDIC insured banks which are also members of the CDARS network. Those members issue CDs in amounts under $250,000, so that the entire deposit balance is eligib

SEC Form 10-Q filed by Humacyte Inc.