Humacyte Inc (HUMA) 2021 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Humacyte Fourth Quarter and Year-end 2021 Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I will now turn the call over to [Lauren Merrick] with LifeSci Advisors. [Lauren], please go ahead.

Thank you, operator. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially based from our historical experience or present expectations. Additional information concerning factors that could cause actual results to differ materially from forward-looking statements made on this call is contained in our annual report on Form 10-K for the year ended December 31, 2021, and other filings made with the SEC when available.

The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, except as required by law. Information presented on this call is contained in the press release we issued this morning and in our Form 10-K, which may be accessed from the Investors page of the Humacyte website.

Joining me on today's call from Humacyte are Dr. Laura Niklason, President and Chief Executive Officer; Dale Sander, Chief Financial Officer and Chief Corporate Development Officer; and Dr. Heather Prichard, Chief Operating Officer. Dr. Niklason will provide a summary of the company's progress during the quarter and year ended December 31, 2021, and recent weeks before turning it over to Dale for a review of the company's financial results. Following their prepared remarks, the management team will be available for your questions.

I will now turn the call over to Dr. Niklason.

Thank you, Lauren. Good morning, everyone, and thank you for joining us on the inaugural Humacyte quarterly results call. As the company progresses toward commercial stage, it's our intent to expand our investor outreach and provide regular opportunities for interactive dialogue. We appreciate your attendance, and we look forward to our discussion today on future quarterly calls. Humacyte has made significant progress throughout 2021, including the closing of our business combination agreement with Alpha Healthcare Acquisition Corp. and our debut on the NASDAQ, which provided us a strong foundation that we're continuing to build upon in the early part of 2022.

As we progress forward, we remain focused on advancing our first-in-class regenerative medicine platform and our lead bioengineered human tissue product candidate, the Human Acellular Vessel or HAV, towards regulatory milestones and commercialization.

I'll spend just a few brief moments summarizing our recent developments before turning the call over to Dale for a review of our financials. I'll begin with our late Phase II/III clinical trial that is evaluating HAVs and vascular trauma, which is continuing to progress. As a reminder, this trial is a single-arm, open-label unblinded study, evaluating the use of HAVs for vascular repair, reconstruction and replacement in traumatic injury.

Currently, we have enrolled a total of 50 patients, and we are pleased with the results from the study to date, showing a very low rate of infection at approximately 2%. Furthermore, we've had no reports of limb amputation that occurred as a result of HAV malfunction. And we've seen high patency rates at a conduit. Results from this trial are expected to support (inaudible) filing with the FDA anticipated in 2022 or 2023.

We look forward to ongoing discussions about the trial design and the number of subjects to be enrolled with the FDA and will provide enrollment updates and guidance for completion of the trial when finalized. Concurrent with the advancement of our trauma trial, we've continued our strong working relationship with the Defense Department or DoD, using HAVs to address the unmet need for repair of vascular injuries incurred by military personnel. The DoD assigned a priority designation to the HAV and has provided approximately $7 million in grant support for the continued development of our HAVs for vascular reconstruction and repair. We expect that as a result of this collaboration, if approved by the FDA, Humacyte will supply HAVs for military hospitals to treat injured soldiers and veterans as well as supply HAVs to be stockpiled for use in areas where military personnel may be deployed.

In addition to vascular trauma, we're also evaluating HAVs for arteriovenous or AV access in hemodialysis patients. Last month, 5-year data from a Phase II clinical trial of patients receiving the HAV for access in hemodialysis were published in the journal EJVES Vascular Forum. In this trial, clinicians observed long-term usability of the HAV during the 5-year follow-up period with no reports of infection or immunogenicity, thus further supporting the continued development of HAV for hemodialysis.

To that end, we are nearing the expected completion of enrollment of our Phase III trial designed to assess the usability of the HAV for dialysis in comparison to autogenous fistulas in up to 240 patients with end-stage renal disease. There are currently more than 210 patients enrolled in the trial, and we expect enrollment to be completed this year. Based on the 1-year follow-up period built into the study, we anticipate top line results in 2023, followed by a BLA filing later in 2023. As we progress toward commercialization, we continue to work closely with our strategic partner and major shareholder Fresenius Medical Care, which is a leader in kidney care services, products and value-based care and providing valuable market insights and commercial launch advantages.

During 2021, we successfully deployed our commercial scale manufacturing system for the production of our HAVs. Our commercial scale system is up and running, and is producing HAVs for our ongoing clinical trials. Related to this achievement, positive results from a Phase II clinical trial in hemodialysis using HAVs that were produced in our commercial scale manufacturing systems were presented in the 6th World Congress of the Tissue Engineering and Regenerative Medicine International Society in November of last year. This presentation highlighted 12-month safety and efficacy data that were similar to those of HAVs produced in the legacy developmental scale manufacturing systems.

In 2021, the FDA agreed to the use of HAVs produced in the commercial-scale system to supply the company's ongoing clinical trials in the United States, thereby reinforcing our confidence in the launch readiness of our commercial scale manufacturing of HAVs.

Moving on to our broader pipeline, we're making great progress on our earlier portfolio programs in other indications. HAVs are continuing to be used under an Expanded Access Program or EAP, which is authorized by the FDA for patients with vascular conditions, including critical limb ischemia and peripheral vascular disease or PAD. To date, we've completed more than 20 implants in the U.S. under this program. The first use of the HAV in the treatment of a patient with an infected prosthetic vascular graft was a procedure performed in 2019 under the EAP and was published in the Journal of Vascular Surgery: Cases, Innovations and Techniques in December of 2021. This patient has resumed regular physical activity and has no signs of infection of the HAV.

Furthermore, outcomes of the first series of 8 compassionate use cases of HAVs for trauma and critical limb ischemia, were highlighted in the presentation at the 46th Annual Winter meeting of the Vascular and Endovascular Surgical Society in January of 2022. In this high-risk group of patients having no other options for revascularization, 5 of the bypasses performed with the HAV, currently remain functional with follow-up times ranging from 4 to 20 months and no instances of infection of the HAV have been noted. We believe the positive results highlight the potential of the HAVs for use in vascular reconstruction and limb salvage where few options exist.

With respect to our preclinical programs, Humacyte is investigating HAVs of 3.5 millimeters diameter as opposed to the 6-millimeter diameter vessels that are used in our current clinical program. The 3.5-millimeter vessels are being studied in primate models of both coronary artery bypass grafting, or CABG, as well as pediatric heart disease. In January 2022, we presented positive results from our first preclinical study of our small diameter HAVs in CABG at the Advanced Therapies Week. In this study, researchers observed that the HAV maintained patency and exhibited host cell regeneration in a nonhuman primate model that we believe is highly predictive of human outcomes, thus highlighting the potential of HAVs in CABG. In addition, results from a primate model simulating pediatric heart disease were presented at the American Heart Association's Scientific Sessions in November 2021. Researchers observed that each of the HAVs remained patent throughout the study and exhibited repopulation with vascular cells.

In addition, we continue to be encouraged by our efforts in developing HAVs as complex organ systems. Our biovascular pancreas, which is an HAV coated with islets and designed to deliver insulin to diabetics in a preclinical model, and these results were published in the Journal of Tissue Engineering last year.

We're currently moving into large animal preclinical studies, and we look forward to updating you all on the progress of this exciting program. As we prepare for our next phase of growth and planned expansion of the HAV applications, we're pleased to welcome 3 Surgical Key Opinion Leaders to advisory positions as we announced in December 2021. Doctors Alan Kypson, Luigi Pascarella and Todd Rasmussen are experts in the fields of cardiac, vascular and trauma surgery, respectively. We look forward to their expertise and support to guide the education and clinical advancement efforts of the HAV as well as help identify opportunities to advance the company's early-stage pipeline and platform.

And finally, as part of the company's preparation for potential commercial launch of the HAV and vascular trauma and AV access in hemodialysis, market research was conducted with 60 vascular surgeons in the U.S. Receptivity toward adoption of the HAV was high. According to surgeons queried, approximately 80% of trauma patients requiring vascular bypass would be eligible for HAV if approved by the FDA. Reduced operative time without an additional infection risk was perceived as being the biggest benefit of the HAV. In addition, surgeons are highly receptive to the HAV for use in AV access if approved by the FDA due to the potential for infection resistance that has been demonstrated to date and the potential of the HAV to reduce catheter exposure in prevalent dialysis patients.

We believe there is substantial opportunity for HAVs to deliver value to all relevant stakeholders, especially patients, and we are excited to continue our efforts to plan for approval and commercial launch. And with that, I'll now turn it over to Dale for a review of our financial results and other business developments.

Thank you, Laura. We had cash, cash equivalents and short-term investments of $225.5 million as of December 31, 2021, compared to $39.9 million as of December 31, 2020. The increase in cash, cash equivalents and short-term investments resulted from the $242.4 million in proceeds from the August 26, 2021 merger with Alpha Healthcare Acquisition Corp. and the related PIPE financing, partially offset by $56.8 million in net cash used in operating, investing and other financing activities during 2021.

We believe that the cash, cash equivalents and short-term investments are adequate to fund operations through the end of 2024, past our current expected time lines for the 2 potential approvals of HAV in vascular trauma and AV access for hemodialysis. Revenue was $177,000 for the fourth quarter of 2021, compared to $124,000 for the fourth quarter of 2020. Revenue was $1.3 million for the year ended December 31, 2021, compared to $1.5 million for the year ended December 31, 2020. Revenue in all periods related to grants supporting the development of the HAV.

Research and development expenses were $16.3 million for the fourth quarter of 2021, compared to $13.2 million for the fourth quarter of 2020, and were $61.3 million for the year ended December 31, 2021 compared to $54.1 million for the year ended December 31, 2020. The current year increases resulted primarily by increased personnel, external services and materials expenses designed to support expanded research and development initiatives, the development of commercial-scale manufacturing processes and support of our clinical studies.

General and administrative expenses were $5.6 million for the fourth quarter of 2021, compared to $2.6 million for the fourth quarter of 2020 and were $21.1 million for the year ended December 31, 2021, compared to $12 million for the year ended December 31, 2020.

The current-year increase resulted primarily from noncash stock compensation expense related to hiring leadership personnel, increases in professional fees and insurance costs related to the completion of the merger and transition to being a public company and additional personnel and recruiting costs associated with company growth.

Other net income or expense was $64.2 million in net income for the fourth quarter of 2021 compared to $0.5 million in net expense for the fourth quarter of 2020, and was $54.7 million in net income for the year ended December 31, 2021, compared to $1.9 million in net expense for the year ended December 31, 2020. The current-year increase in other net income resulted primarily from noncash gains related to remeasurement of the contingent earn-out liability associated with the merger.

Net income was $42.6 million for the fourth quarter of 2021, compared to a net loss of $16.2 million for the fourth quarter of 2020. Net loss was $26.5 million for the year ended December 31, 2021, compared to a net loss of $66.5 million for the year ended December 31, 2020. The current-year increase in net income for the fourth quarter and a decrease in net loss for the year 2021 resulted from the increase in other net income.

With that, I'll turn it back to Laura for concluding remarks.

Thank you, Dale. To conclude, we've made exciting progress over the last quarter and year, significantly advancing our clinical and our preclinical programs. We look forward to providing continued updates throughout the year and through the next several quarters as we move toward regulatory submissions and commercialization.

Operator, we're now ready to take questions.

(Operator Instructions) Our first question today is coming from Josh Jennings from Cowen.

It's great to be on your first public earnings call. I wanted to just ask about just the clinical trial enrollment environment. COVID presented some headwinds over the past 12-plus months. But just thinking about the enrollment pace for the Phase II/III vascular trauma trial and the Phase III AV access for hemodialysis trial. Any updates just in terms of the number of centers or any strategies to enhance the enrollment pace for those 2 trials?

Yes, Josh. This is Laura Niklason. We are strongly focused on that, as you might imagine. In fact, our clinical team just returned from Israel last week where we opened up a total of 4 new clinical sites for the V005 trauma trial in efforts to spur enrollment by adding additional sites. So we've currently increased our total site number in the U.S. to 20 with 4 additional new sites in Israel. We're also really leaning into sites that have -- that are located in population areas that see a higher amount of civilian trauma and we're offering to support them with logistical help as necessary.

That said, enrollment has started to pick up in recent months as COVID has receded, and we're seeing that actually in both of our Phase III trials in trauma and in dialysis access.

Excellent. And just 2 quick follow-ups, 1 on the vascular trauma program. Just it's hard to understanding the FDA is requiring 75 patients, but I think you're in negotiations with the FDA. And is there a chance that, that 75 patient number can be reduced? And -- anything you can share just in terms of next steps? Are there any meetings on the calendar with the FDA to kind of finalize that the clinical trial plan? And then the second follow-up is just on the AV access, clinical development program and just Fresenius' role, they are an investor and partner. What is their role in the clinical development program and regulatory efforts and how are they collaborating in these early stages with Humacyte?

So yes, in response to your first question with respect to the size of the trauma trial, the guidance that we've given previously is that we estimate that approximately 75 patients will be required. But to your point, we're continuing discussions with the FDA that have been quite active trying to nail down that final number. Unfortunately, I don't have any more specific guidance to give you for at this time. So I think we're still estimating 75 patients. But certainly, when we get more clarity from our regulatory colleagues, we'll pass that along at the appropriate time.

As far as the Fresenius role in the dialysis access program, it's certainly true that for our V007 trial, which is our Phase III trial in dialysis, we actually have a number of sites that are Fresenius affiliated with whom we have excellent relationships with the trial coordinators as far as trying to coordinate and speed enrollment. We're also working with Fresenius and the databases that they have, both in the U.S. and in Europe, trying to understand which patients are the most difficult to care for or the most expensive to care for or who suffer the most complications with respect to their dialysis access. As you might imagine, the bulk of dialysis patients have somewhat uncomplicated courses, but there are some patients who have larger numbers of complications with their -- with maintaining access for dialysis. And we're really working with Fresenius to identify those patient cohorts who we think will benefit most from the HAV and really trying to be targeted as we think about our next steps in commercialization and marketing.

Your next question is coming from Ryan Zimmerman from BTIG.

And again, let me echo the sentiment, congrats on your first public call. I guess I want to ask a few questions, Laura, about you have the LUNA system kind of up and running now producing your commercial-scale HAVs. Can you just talk about kind of the benefits that, that can afford over time, certainly not today necessarily, but as you start to think about commercialization, what kind of scale and benefits that could afford? And then I have a couple of follow-ups.

Well, Ryan, you're right, in that we were pleased in 2021 to submit what is effectively a complete module of the biologics licensing application to the FDA that describes our commercial manufacturing methods. And they signed off on that as far as using HAVs that are made in our current commercial system in our ongoing trials. So we view that as an important and potentially derisking event for gaining eventual FDA approval for the HAV.

Currently, we have the capacity in the building to grow approximately 8,000 HAVs per year, which we anticipate will be sufficient to address the first 1 or 2 years' worth of demand post commercialization. But importantly, in the building, we also have a large amount of square footage that is shelled out and that is ready for essentially the installation of more of these modular manufacturing units. We have room in the building actually for about 40 modular units, which we call LUNA200 units. And each unit can produce 1,000 vessels per year.

So in the building where we currently reside, we have capacity to produce 40,000 vessels per year, which we believe should lead us through at least the first several years of commercialization. So we really feel very well positioned from a manufacturing standpoint that we can meet demand and that we've tackled many of the technical risks that can commonly afflict cell therapy companies or biologics companies.

Got it. That's helpful. And then just 2 follow-ups for me. One, in the compassionate use cases, I'm just wondering if you could talk a little bit about kind of who the users are from a surgeon perspective, who are seeing these patients with critical limb ischemia and whether those are similar to, say, the trauma -- the vascular trauma surgeons that you may be working with and how that does potentially benefit or help derisk maybe that launch there?

And then the second question just for Dale, is just, Dale, I appreciate your comments on the cash position for the company. But if you could just give us your thoughts about kind of cash burn in 2022, it would be much appreciated.

So Ryan, you're correct. The majority of the surgeons with whom we've been working in the clinical sphere are vascular surgeons. But as far as the care of trauma patients in vascular trauma in the American medical system, there's actually a lot of overlap between vascular surgeons and trauma surgeons and there are some surgeons who are board certified in both areas, in vascular and trauma surgery. And because of our extensive reach with vascular surgeons in our various AV access and PAD trials as well as the 20 Level 1 trauma centers that we're at in the U.S. for our trauma trial, we're really seeing that we have connections with large numbers of vascular surgeons, but also trauma surgeons as well.

An answer to your question as far as who's reaching out for the expanded access cases? That's mostly vascular surgeons. In some cases, the -- or in many cases, they're treating patients with really critical limb ischemia who are facing amputation and who have no other options for care. We have, on occasion, treated severely injured trauma patients, patients who have suffered gunshot wounds or really severe industrial accidents. And so typically, we have a combination of trauma surgeons and vascular surgeons reaching out in those situations.

And then just the cash.

Yes, Ryan, from a cash flow point of view, we haven't given specific guidance, certainly kind of the average burn over the next 3 years can be extrapolated by our comments around runway. But clearly, the vast majority of our cash burn in the upcoming years is focused on R&D, including currently the late-stage programs in trauma and AV access as well as our earlier-stage pipeline in CABG and biovascular pancreas for type 1 diabetes. And obviously, R&D will shift over the course of the next 3 years with trauma and AV access winding down, and we expect human trials of -- in CABG and ultimately BVP pancreas program ramping up. A portion of the burn, obviously, coming up is also geared towards our planned market launches with trauma and AV access, including ultimately a ramp up of sales and marketing expenses and manufacturing readiness. But that's probably as details will be at this stage until we start providing very more specific guidance.

Our next question today is coming from Brooks O'Neil from Lake Street Capital.

I just want to ask a couple of bigger picture questions. I'm curious if there's been any significant change in your expected timing for commercialization of your big programs? And if so, you could just describe what's caused that change?

Yes. We are not projecting any big changes in the timing of our BLA filings for trauma and dialysis access. The previous guidance that we've given is that we anticipate filing a BLA in late 2022 for trauma, or perhaps early 2023. Obviously, this depends on the total number of patients that are -- that need to be enrolled in this pivotal trauma trial. And we are continuing discussions with the FDA regarding that total patient number. But as of today, we have no specific guidance from the FDA that would make us change this projection of BLA filing in late 2022 or early 2023.

With respect to dialysis, our Phase III trial in hemodialysis access is more than 90% enrolled. As other analysts have mentioned earlier in the call, COVID has certainly provided headwinds for dialysis enrollment over the last 2 years. There have been time periods where dialysis operations were simply canceled at the vast majority of medical centers in the country because they were viewed as sort of discretionary operations. So enrollment there has been slowed by COVID, but I would say it's starting to pick up. And we would anticipate completing enrollment in the V007 trial, or dialysis trial later on this year.

Since we have a 12-month endpoint, after that trial, I would anticipate that 12 months after completion of enrollment, we would have top line results that would support a filing in dialysis access late in 2023.

Right. And then I'm just guessing based on your earlier comments that your relationship with Fresenius continues to be quite strong. Any comments or update there?

Well, I'll let Dale comment on this as well. But I would say that Fresenius and Humacyte have really mutually embraced each other on several projects over the last year, 1.5 years. As I mentioned earlier in the call, we're working with Fresenius to really identify those patients in the U.S. and Europe who suffer a lot of complications from their dialysis access site. And it's really these patients who, in a commercial sense, ourselves and Fresenius would like to target in the U.S. and Europe as far as potentially benefiting from the HAV.

In addition, we're also discussing with Fresenius, the design of a pivotal PAD trial, which would be based in Europe, but which might also include sites in the U.S. Design of this pivotal trial will probably be preceded by some Phase II work and perhaps buy some registry work that we're planning in Europe right now. So this is still in the planning stages, but I would say that Fresenius and Humacyte are working very closely on a variety of projects in several different markets. And it's been synergistic for both of us.

Great. Fantastic. I'll just ask 1 more, and I just love any comments you have about, are you seeing anybody else doing anything significant in terms of competition overlap with the broad outlines of the work you guys are doing, just help to kind of get a sense for what else you might be seeing out there in the marketplace right now?

Well, in terms of engineered tissues, I would say that the situation has remained essentially unchanged, certainly over the past year in that there are a small number of smaller start-up biotechnology companies who are making attempts to mimic to a degree what Humacyte is doing. Just looking objectively at where those other smaller companies are, there's probably a 10-year gap as far as development pathway between where these other potential competitors are and where Humacyte sits.

Of course, there are -- there's a continuous evolution of new synthetic products, whether they be degradable or non-degradable or electric spun. But there's a continuous evolution of new synthetic materials that are being tested in the vascular system. That said, the fact remains that Teflon and Dacron are the 2 synthetics that have been used widely in the vascular system for 30 or 40 years. And despite a continuous march of new materials being brought forward, none of them has really gained significant clinical traction.

Great. Fantastic. Keep up all the great work.

Our next question is coming from Matthew O'Brien from Piper Stanley.

Laura, is there any way to just talk a bit more about the discussions with FDA? Because I thought that we would have the full design buttoned up by now the actual number of patients kind of buttoned up for vascular trauma, and I don't think we're there yet. So is there some sort of pushback that they're giving you? Is there any kind of commentary that makes you concerned about what you're doing with your clinical study? Or is it just more the agency is busy with a lot of things at the moment?

Well, I think the agency is very busy. I do not perceive any fundamental difficulties with Humacyte and our technology with respect to the regulators. I actually think that from a technical standpoint and a scientific and clinical standpoint, we have a great relationship with the FDA. And I think that's illustrated by the fact that they've reviewed our commercial-scale manufacturing system and have agreed that we can use it in ongoing clinical trials.

So we have a good working relationship with the FDA, but this is -- first of all, this is a fundamentally new product. And I think regulatory bodies tend to be more cautious with fundamentally new technology, although we're working through that. And I think secondarily, even though we sort of feel like a device, we're regulated as a biologic. So we're regulated by the Center for Biologics at the FDA, which, as we all know, has been caught up in the COVID maelstrom for the last 2 years. So between the huge distraction that COVID has provided to the biologics group, combined with the newness of our technology and also combined, frankly with leadership changes in the FDA, as we all know, Rob Califf came in as the commissioner only a few weeks ago after a long hiatus with an interim commissioner. So I think there are a lot of factors that are contributing here. But what I don't see is fundamental problems between the agency and our company with respect to the technology or the medicine or the science.

Okay. That's great to hear. How do we think about the relationship with the DoD here? When you do knock on wood get approval for the HAV? I mean how quickly can they start purchasing the product and using it?

You know I'm going to ask Dale to field that question because I think he'll have a better answer for you than I will.

Yes. Thanks, Matt, for the question. I mean certainly, we appreciate the support we've had from the DoD, the quarter of the ongoing trial and trauma and probably more importantly, have been key in our discussions with the FDA in terms of their advocacy for the product. I think we expect, from a commercial point of view, their support to manifest itself 2 ways. One would be from a pure military point of view, stockpiling the products that it can be forward deployed to wherever our forces are deployed throughout the world in the event of conflict because obviously, in vascular trauma, the product needs to be nearby at the point in time of injury to expeditiously treat the patient. Beyond that, we also expect, based on our ongoing discussions that this would be heavily used within the VA hospital system. And in fact, when you look at our history of compassionate use cases, many of those have been veterans that have been treated for severe limb ischemia. So we think there's clearly going to be a stockpiling the Department of Defense post approval. In terms of exact timing right now, it will be difficult to comment on that as any aspect of time lines are. But we'll be able to give more guidance, I think, as we get closer to the actual approval date.

Got it. And then just last 1 for you, Laura. Everybody's focused on vascular -- vascular trauma and AV access and maybe a little bit on PAD, but -- it seems like there was some other updates. I don't know if CABG was really the other update that was a little bit newer and maybe a little bit more progress than the last time that we spoke. So outside of those kind of 3 indications, can you just maybe highlight 1 area where you've made some real progress that you really want to emphasize here today.

So yes, if you're asking me to choose between our CABG development program and our diabetes development program, it's sort of like choosing between 2 children. But I guess I'll go with CABG. We've been working on developing this animal model for a couple of years. As you might imagine, doing heart bypass surgery on a nonhuman primate is actually a nontrivial set of experiments. But they're well underway now at Duke University, which is a leading primate research organization, and they're just down the street from Humacyte and so that makes this development program a lot smoother.

We currently -- so we reported in January 6-month results of a human-sized coronary artery bypass conduit that had been studied in nonhuman primates, and we really saw very favorable outcomes and good patency and good remodeling and good biological functioning of the graft. So we're very encouraged by these results because as I've mentioned, with in prior meetings, we believe that the nonhuman primate model, particularly the baboon, is very highly predictive of what we've seen in patients. We did all of our preclinical work in baboons prior to going into AV access, and this was more than a decade ago. And the results in baboons were very predictive of what we went on to see in humans. So the fact that we're getting positive results in baboons in a coronary model for me is very encouraging. We're going to continue to do more coronary work in baboons this year and expect to progress to a pre-IND filing on CABG.

Your next question today is coming from Suraj Kalia from Oppenheimer.

Laura, Dale, can you hear me all right?

Yes.

Yes.

Perfect. So Laura, thanks for the clarification or a bunch of endeavors. Laura, if I may, the production capacity with the LUNA, where are we in terms of quality sampling rates today? And how do you envision the 40,000 units? What would be the normalized quality sampling rate?

Suraj, that's an excellent question, and I might have to be supported by our COO, Heather Prichard, who's also on the phone call with us. But I would -- we haven't really shared the sampling rates in the public domain as of yet. You can expect though that our sampling rates currently, because we're still in the fairly early phases of commercial-scale production, are higher than they will be in the long term. I can say in the long term, I would expect that the sampling rates would be well under 10%. But I would ask Heather also to weigh in on those projections.

Sure, Laura. What we're predicting, as Laura said, as our sampling rates are somewhat higher now, but we predict by commercial year 1 or 2 to have it similar to other biologics products. So in the rates that Laura was speaking to.

Fair enough. Hey Laura, I know you provided, at least you referenced your efforts with Fresenius identifying the dialysis target market and whatnot. Forgive me, I'm drawing a blank, Laura. Are there any contractual minimums post commercialization? Or is this more of a best effort basis post commercialization -- post approval?

We -- I don't believe we have any set minimums that are built into our commercialization agreement with Fresenius. As you may recall, Fresenius is charged with leading commercialization and marketing for AV access and trauma and PAD in Europe, while Humacyte will lead those analogous efforts in the U.S.

Fair enough. And last question from my side, Laura. It's interesting you guys are following the nonhuman primate model, right? So Laura, whether it's diabetes, whether it's CABG or any other target segment that you're exploring, is there enough body of evidence apples-to-apples in, let's say, baboons, to eventually sort of have a smooth -- whatever the data shows, right, to have a smooth sailing through the FDA. And the reason I asked, for example, in CABG, right? Most of the preclinical data, if you look at literature, it's more centered around calves, pigs, sheep, so on and so forth. I would agree, it makes sense, but I'm just curious how the FDA would view that? And how are you all doing risk mitigation overall?

Yes. Suraj, that is a good question. And certainly, very early in Humacyte development, more than 12 or 15 years ago, Humacyte looked at using pig models or canine models to evaluate our products. However, these are human engineered tissues comprising human extracellular matrix that's not cross-linked. And because of that, when we implant the HAV into a pig or to a dog, over a period of weeks or months, that HAV rejects. The human matrix is eventually recognized by these lower animal models and is rejected. And so because of that, it's not a high-fidelity model for the human.

Certainly, we have experience with the FDA in terms of providing them primate data, which we did in advance of our AV access program and also in advance of our Phase II PAD program in the U.S. So certainly, the numbers of animals that tend to get utilized for these types of preclinical packages are smaller. Typically less than 20 animals is what we've submitted to the FDA to support Phase I work. But again, the FDA realizes that these nonhuman primate models are very high fidelity. So we have never encountered any difficulty with them questioning the body of preclinical work.

Next question is coming from Bruce Jackson from Benchmark.

With regard to the compassionate use data, which looks great, with the compassionate use program, do you have any plans to expand that? And maybe you could tell us a little bit about what's required to get that expansion and why it might be an indication of support for your product from the clinicians?

Well, in terms of the EAP program, there actually has been an expansion that is obviously affiliated with Humacyte, but is not Humacyte-driven. So Dr. Todd Rasmussen, who is a former military surgeon, was a colonel in the Air Force, and was deployed as a vascular surgeon to the Middle East multiple times, has now left the service, and he is a -- in addition to being a long-term adviser for Humacyte, he's now a vascular surgeon operating at the Mayo Clinic in Rochester, Minnesota. Recently, Todd initiated a compassionate use protocol with the FDA, which is a Mayo-sponsored IND. And under that protocol, Dr. Rasmussen will be enrolling compassionate use patients on a more regular basis. That program is underway, and we're not at liberty to share those results as of yet. But we're very encouraged by the fact that the Mayo has taken up this program.

Okay. Great. And then a question for Dale about the operating expenses for 2022. In terms of research and development, should we look for levels that are similar to the fourth quarter? And will there be any change for the quarter in the cadence?

Yes, you cut out on the second part, Bruce, but I'll address the first part first. Yes, I think in terms of any expansion of our expenses with the kind of the advancement during this year heavily in terms of CABG and the biovascular pancreas, we'll see a slight uptick or somewhat of an uptick in R&D expenses, that's about as much as the guidance we've given so far. And I think you cut out a little bit on the second part, or at least I didn't -- cut out for me, Bruce, on the second part of the question.

Yes. So sorry about that. The -- in terms of the quarter-to-quarter variance, is it going to be a fairly straight line pattern? Or will there be any candidates like differences in the calendar quarters quarter-to-quarter?

Yes. I mean individual components can change. I think on an overall basis, you'll see relative consistency from quarter-to-quarter. My only qualification of that is, as we get late in the year, dependent upon the very specific time line of the BLA filing for trauma, associated with that, you'll start seeing an uptick in marketing and sales preparation expenses for the planned launch.

Okay. All right. And congratulations on all of the progress in 2021.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Well, this is Laura Niklason. I'd just like to say that I'm very grateful to the Humacyte team, which has really executed beautifully during 2021 and during the first quarter of 2022. We have a lot of irons in the fire in terms of multiple clinical development programs and also preclinical development programs as well as growing our commercialization efforts and also growing our communication efforts with analysts and with investors. So this has been a time of tremendous growth, but also tremendous stick-to-itiveness from our team. And we really look forward to 2022 being very exciting as far as further advancing our clinical milestones and also regulatory milestones. Dale, I'd like to ask, do you have any final comments?

No. I mean clearly, 2021 was a very pivotal year. We've been greatly supported by our legacy Humacyte shareholders that supported us during the private period, and we've been pleased to add public shareholders as part of the transaction that we completed in August. So clearly, we appreciate the support of our shareholders and wouldn't be able to improve patient care without that level of support.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.