Corporate Presentation

Transcription

1 Corporate Presentation November 2018

2 Disclaimer Regarding Forward-Looking Statements This presentation includes statements that are, or may be deemed, forward-looking statements. All statements, other than statements of historical facts, included in this presentation regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as may, might, will, objective, intend, should, could, can, would, expect, believe, anticipate, project, target, design, estimate, predict, opportunity, proposition, strategy, potential, ongoing, plan or the negative of these terms and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Actual results may be materially different. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Forwardlooking statements include, but are not limited to, statements about: expectations regarding the timing and success of ongoing discussions with the FDA regarding the potential submission of a BLA for NeoCart; NeoCart s potential as a treatment for knee cartilage damage; the timing, associated expenses and ability to obtain and maintain regulatory approval of NeoCart or any other product candidates, and the labeling for any approved products; the market size and potential patient population in markets where Histogenics and its partners expect to compete; updated or refined data based on Histogenics continuing review and quality control analysis of clinical data; the scope, progress, timing, expansion, and costs of developing and commercializing Histogenics product candidates; the ability to obtain and maintain regulatory approval regarding the comparability of critical NeoCart raw materials following its technology transfer and manufacturing location transition; Histogenics expectations regarding its expenses and revenue; Histogenics ability to obtain additional debt or equity capital; and other factors that are described in the Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations sections of our Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the period ended September 30, 2018, which are on file with the SEC. All of our filings are available on the SEC s website at All written and verbal forward-looking statements attributable to Histogenics or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to herein. Histogenics cautions investors not to rely too heavily on the forward-looking statements Histogenics makes or that are made on its behalf. Histogenics has not yet received the official FDA meeting minutes from the Type C meeting held on October 30, 2018 and the information in this release may be altered or supplemented by the information contained in the official meeting minutes or any subsequent meetings that may be held with the FDA. The information in this presentation is provided only as of the date of this presentation, and Histogenics undertakes no obligation, and specifically declines any obligation, to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. NeoCart is limited by Federal Law to investigational use only and not available for sale. 2

3 The Histogenics Value Proposition»»»»» Powerful, proprietary platform that provides restorative cell therapies (RCTs) for active living Lead product candidate, NeoCart, is a proprietary RCT that potentially rebuilds patients own knee cartilage, reducing pain at the source and potentially preventing progression to osteoarthritis (OA) Large market opportunity to treat knee cartilage damage approximately 1.2M defects identified each year Clinically meaningful Phase 3 top-line results reported in Q3:18. Near-term value creation opportunity with possible U.S. launch of NeoCart in 2020 Planned expansion of NeoCart platform into additional markets and indications 3

4 Knee Cartilage Damage: A Complex Problem Cartilage is a complex tissue shock absorber that must withstand significant pressure, and allow for rolling and sliding Damage due to acute injury or repetitive trauma Cartilage injury causes pain and loss of function Limited ability to regenerate due to lack of vascularity Strong correlation between knee cartilage damage and OA Current treatment options are sub-optimal with variable outcomes due to variable cellular response Patients and physicians seeking alternatives that may offer a more rapid and durable recovery Cartilage Injury Focal Chondral Defect 4

5 OA Causes Significant Health and Economic Burdens Knee injury increases the risk of developing OA by more than fivefold ~27M Americans diagnosed each year with knee OA with a large portion due to cartilage damage 50% of Americans expected to develop symptomatic knee OA Globally, more than half of patients with knee OA ultimately undergo total join replacement Global direct expenditures for knee OA treatment are $185B annually 5

6 Limitations of Current Therapies Debridement may reduce pain but does not repair cartilage Microfracture yields variable outcomes 30% of microfracture patients continue to have pain and reduced knee function and require additional procedures Current treatments require extensive recovery time and impede return to work and daily living Current treatments are often ineffective in the long term because they do not adequately address cartilage damage May lead to additional surgeries Failure to correct cartilage damage may lead to development of OA 6

7 Next-Generation Fast-Follower Converts and Expands the Market ANNUAL PROCEDURES FOR KNEE CARTILAGE DEFECTS 1.2M Arthroscopies 500K+ Corrective Procedures 150K microfractures Satisfaction Gap: 60% of patients do nothing Chicago Tribune Article on Microfracture in Athletes July 6, 2018 (Widely discussed at AOSSM by leading KOL s) U.S. Total Addressable Market of 1.2M defects, with ~150,000 microfractures performed annually in lesions <6 cm 2 Potential to convert the microfracture market and expand the total addressable market by offering a product with: Faster recovery 1-year superiority data and Ease of use similar to microfracture Microfracture is the best of our worst options..the worst gold standard in medicine Riley Williams, ICRS 2018 (HSS, NYC) 7

8 Attributes of an Optimal Treatment for Knee Cartilage Damage Reduces pain Improves function Promotes repair of damaged cartilage Short rehabilitation / more rapid return to daily activities Durable response No specialized surgical techniques and less operating room time Non-opioid approach 8

9 NeoCart: Restorative Cell Therapy with Novel Mechanism of Action NeoCart combines breakthroughs in bio-engineering and cell processing to enhance the autologous cartilage repair process NeoCart merges a patient s own cells with a fortified 3-D scaffold designed to accelerate healing and reduce pain Patients receive functional cartilage at the time of treatment Follow-up Arthroscopy Demonstrates NeoCart Progression and Integration Initial Lesion Time Zero Implantation 8 Weeks 6 Months 9 Phase 3 patient follow-up arthroscopies unrelated to NeoCart implant.

10 Commercially Scalable Manufacturing Process Assessment of defect & biopsy Implantation into defect Surgical Steps 6 8 Week Process Manufacturing Steps Cell isolation & expansion, followed by seeding of 3D scaffold Implant processing in bioreactor under jointlike conditions Continued growth in static culture Manufacturing specifications: tissue histology & clear biomarkers Ex-vivo manufacture of living cartilage tissue with biomarkers & biomechanical data 10

11 NeoCart Benefits: Improved Outcomes Versus Well Established Suboptimal Alternatives Microfracture Competitive ACI and Other Products Accelerated patient recovery and improved clinical efficacy Clinical superiority at 1 year with 2 year data expected in label, with shorter recovery times than standard of care Excellent safety profile and long term performance; patients from Phase 2 are 10+ years post treatment Fewer complications and re-operations Lengthy rehab and recovery; variable outcomes 30% re-op rate within 2 years and 60% in four years Longer recovery (2 year clinical trial endpoint) Lack of clinical data Lower efficacy hurdle Simple, rapid surgery and superior economics Proprietary bioadhesive w/ curing agent enables rapid procedure (~30 mins) No special training required for NeoCart Established reimbursement codes, with favorable economics - Tissue quality and competence Proprietary tissue engineering process results in biomechanical competence at time of treatment NeoCart s ability to function like cartilage at treatment may allow earlier weight-bearing and return to activity Fibrocartilage/scar tissue at > 1 year Limited biomechanical competence at treatment; > 1 year to grow tissue * Comparison based on publicly available information and not head-to-head study 11

12 Growing Body of Clinical Evidence One of the most rigorously studied Cartilage RCTs 287 patients in Phase I, II & III trials Growing body of data demonstrates that NeoCart may provide rapid-onset of pain relief and restore function Only rapid-onset RCT with a one-year primary superiority endpoint compared with standard of care in a Phase 3 trial Randomized, controlled Phase 3 trial completed in 249 patients with severe and symptomatic cartilage lesions 12

13 Non Clinical Models Support Early Recovery and Clinical Outcomes Biomarkers of articular hyaline cartilage at time of treatment NeoCart cartilage constructs have ~70% of the biomechanical competence of native cartilage at the time of treatment Increased extracellular matrix and sgag lead to improved biomechanical competence 13 ORS Poster (March 2016): Mechanical Characterization of Autologous Chondrocyte Seeded Matrix Grafts After In Vitro Growth JM Middendorf, D Griffin, S Kennedy, S Shortkroff, C Dugopolski, J Siemiatkoski, L Bartell, I Cohen, LJ Bonassar (Associated Publication: J. Orthop. Res doi: /jor.23535)

14 Summary of NeoCart Phase 3 Clinical Trial Results 1. NeoCart demonstrated clinically meaningful improvement at 1 year vs. microfracture on highest hurdle, dual-threshold endpoint. The trial narrowly missed statistical significance and did not meet the primary endpoint by 2 microfracture responders in the mitt population (one sided test: *p=0.025). 62% of NeoCart patients were responders at 6 months vs 46% of microfracture (*p=0.0188). 74% of NeoCart patients were responders at 1 year vs 62% of microfracture (p=0.0714). Based on current MCID on IKDC for example, NeoCart demonstrated statistically significantly superiority. 2. NeoCart demonstrated statistically significant results compared to microfracture at 1 year on KOOS and IKDC endpoints, as established in FDA Guidance & used in ongoing clinical trials conducted by third parties. It also demonstrated superiority at 2 years based on only ~120 patients (visits pending for rest). 3. NeoCart performed better than expected, demonstrating early and sustained clinically meaningful improvements at 1 year and 2 years. However, microfracture did better than expected in what we believe is the most robust study conducted to date under current FDA guidance in a population intended to maximize its performance (low BMI, most appropriate lesion size and strict rehabilitation program). 4. Risk / benefit believed to be established, safety between arms was comparable. 5. Based on totality of data and published FDA guidelines, we believe NeoCart should be acceptable for review and potential approval. Discussions for potential BLA submission with FDA are ongoing. 14

15 NeoCart Phase 3 Clinical Trial Design & Demographics Screening n = 249 Endpoints at 1 Year Key Inclusion Criteria Age: Severe and symptomatic cartilage lesions (0.5-6cm 2 ) Key Exclusion Criteria Prior lesion treatment High BMI Significant arthritis Concomitant surgeries Randomization Arm 1: NeoCart (n = 170) Arm 2: Microfracture (n = 79) Primary Knee pain/function improvement: 12 pts KOOS pain 20 pts IKDC Subjective Secondary Time to full weight-bearing Failure: Reop or deterioration Collagen layering via MRI Key Demographics NeoCart Microfracture Sex (Female/Male) 35% F / 65% M 39% F/ 61% M Age BMI # of Lesions (1/2) 83% 89% Lesion Size (Min/Max cm 2 ) 0.5 / / 5.3 Lesion Size (Mean cm 2 ) Mean KOOS Pain Score: Mean IKDC Function Score:

16 NeoCart Phase 3 Clinical Trial Preliminary Data (mitt Population) Responder Analysis: Responses required on both Pain & Function (~15% delta needed) Responder Analysis Results: 6 month data significant (early improvement) with 1 year data narrowly missing significance NeoCart (n=163) Microfracture (n=79) 74% IKDC Subjective +20 points Non- Responders Non- Responders Responders Non-Responders *62% 46% 62% Baseline +12 points 6 months 1 year KOOS Pain *p < p < year endpoint would have been statistically significant if two microfracture patients had not been responders Microfracture patients performed significantly better than expected, and better than in most previous published studies (62% response vs. 50% projected in statistical plan) and real world experience Clinicians in this trial requested current MCID analysis, which demonstrated superiority at 1 year 16

17 Statistically Significant Improvement at 1 Year Using Current Clinical Guidelines for MCID IKDC Subjective KOOS Pain Minimum Clinically Important Difference Responder Analysis Thresholds Existing Responder Analysis p= MCID Sensitivity Analysis *p= to Note: Analysis based on current clinical guidelines, not Phase 3 clinical trial.

18 Clinically Relevant and Statistically Significant Improvement on Most Subscales at 1 and 2 Years Pain & Function Patient Reported Outcomes (KOOS & IKDC) Change from Baseline *p= *p= *p= Year 1 *p= NeoCart (n=158) Microfracture (n=71) *p= p= *p=0.008 *p= *p= Year 2 p= p= NeoCart (n=87) Microfracture (n=34) *p= Pain Activities of Daily Life Sports & Recreation Quality of Life Symptoms IKDC Subjective Note: Analysis based on current clinical guidelines, not Phase 3 clinical trial. KOOS 18

19 Current FDA Endpoints: KOOS Pain & IKDC Function Outcomes Visit KOOS Pain: Clinically Meaningful & Statistically Significant Improvements KOOS pain score (mitt Population) Change from Baseline (NeoCart Baseline = 54.0; Microfracture Baseline = 52.4) N NeoCart Mean Improvement Microfracture Mean N Improvement P Value 3 months months year years years IKDC Function: Clinically Meaningful & Statistically Significant Improvements Visit IKDC subjective knee exam score (mitt Population) Change from Baseline (NeoCart Baseline = 40.3; Microfracture Baseline = 40.0) N NeoCart Mean Improvement N Microfracture Mean Improvement P Value 3 months months year years years Note: The discussion in this presentation of how NeoCart hypothetically would have performed against endpoints other than those included in its Phase 3 clinical trial are for illustrative purposes only and do not impact or change the outcome of the Phase 3 clinical trial and NeoCart s performance against its endpoints

20 Market Research: Well-Defined Market Seeking Better Treatments LOW LEVELS OF PHYSICIAN SATISFACTION (N=170) WILLINGNESS TO PRESCRIBE NEOCART (PRODUCT X); (N=79) 25% Satisfied with Current Treatments Extremely likely Likely Neutral 8% 9% Unlikely 43% 41% Dissatisfied or Open to New Therapies 75% Market research confirmed unmet need: Sports medicine physicians seeing patients with knee pain & function loss, regularly performing debridement & microfracture Surgeons see 10 to 20 patients with cartilage damage each month but treat only 30-40% of these patients due to low satisfaction with the current treatment options Over time, Novel products with 1-year clinical superiority to microfracture and minimal training/procedure time may also grow the market as patients opt in 20 * Source: Histogenics primary market research with U.S. orthopedic surgeons.

21 Targeted Initial Commercial Build and Marketing Strategy Focused Customer Selection Medical Affairs Education & limited training Commercial & Practice Management Consumer Marketing Medical Affairs Customer Service - Logistics Infrastructure (~20 FTE s) Market Access Reimbursement & Add NeoCart to existing ACI coverage Reimbursement Reimbursement FTE s to provide case support (Fast Follower) Third-party Providers - white glove service Consumer Order Fulfillment Convert Consumers (education) new standard Education & Local DTC drive patients into prominent clinics Marketing Expand - get patients off sidelines and opt-in Strategy 21

22 Favorable Reimbursement Dynamics and Value to Payors NeoCart will enter a largely untapped market with superior clinical data Reimbursement for class of ACI products already established Current coverage requirements are not overly restrictive (~1 to 1.5 cm minimum lesion size, some level of prior treatment, up to age 55) Simple rapid addition of NeoCart to existing ACI coverage policies Value to payors: 1 year clinical data, rapid recovery, and less costly re-ops and less rehabilitation Surgeon economics: ~$1K on diagnostic scope/biopsy, ~$2K on NeoCart Existing codes are applicable to NeoCart (non exhaustive list) Code System Code Description 3 HCPCS J7330 Autologous cultured chondrocytes, implant Reimbursement & Appeals Support CPT S2112 Arthroscopy, knee, surgical for harvesting of cartilage (chondrocyte cells) CPT Autologous chondrocyte implantation, knee 22

23 U.S. Commercial Launch Strategy: Fast Follower to Market Leader Total addressable market: Microfracture: ~150K+ annual procedures; $6B+ opportunity Patients opting out, sitting on sidelines: K -> $10B+ opportunity Potential revenue generation from high volume centers: 5 surgeons with 75 NeoCarts/year = 375 Units ($15M) 50 surgeons with 40 NeoCarts/year = 2,000 Units ($80M) 100 surgeons with 30 NeoCarts/year = 3,000 Units ($120M) Boutique launch strategy: High volume Phase 3 clinical sites Experienced user base (~87 surgeons) who see ~15K patients per year currently Demonstrate success with small investment, then scale-up Post year 1, convert and expand the market 23

24 Strong Competitive Position and Scalable Process Regulatory pathway creates complex barrier to competition BLA pathway and SPA Phase 2 demonstrated 1-year superiority leading to Phase 3 trial design Robust intellectual property More than 85 global and 45 U.S. owned and licensed patents covering cell culture, bioreactors and materials; provide broad coverage for methods in cartilage production and tissue sciences Coverage through 2031 cgmp manufacturing process and facility Autologous process; no generic substitute Fully integrated manufacturing reduces risk around potential BLA approval, supports commercial scaling and enables potential improvements in gross margin 24

25 Progress on the Path to Commercialization and Launch Completed: H H H H H FDA raw materials strategy approved collagen and scaffold Acquisition of Japanese NeoCart product rights Publication of Phase 2 MRI and clinical outcomes data Publication of NeoCart biomechanical data Japanese regulatory pathway established NeoCart Phase 3 trial fully enrolled Top-line Ph 3 Data and BLA Filing Data Presentations: Cornell and others, Phase 3 Clinical Trial Japanese Phase 3 Clinical Trial Additional Manufacturing Capacity Additional business development activities new territories, products Med Affairs Planning, KOL Devt, Training and Patient Education NeoCart Japanese licensing agreement NeoCart top-line Phase 3 data Hire and Train Sales Force Next Gen Preclinical Studies (U.S. Approval and Launch) 25

26 Multiple Opportunities for Value Creation Multiple value inflection points through continued advancement of NeoCart platform Indication Expansion Ankle Shoulder Toe Allogeneic Expansion Intrexon Collaboration Tissue Type Expansion Ligaments Pediatric vascular grafts International Expansion Japan (MEDINET) OUS Partnering Leveraging 15 years of CMC investment, significant CMC biologics and raw materials expertise 26

27 Leveraging the RCT Platform $87M partnership for Japan commercialization and development rights completed in December 2017 $10M up-front payment; up to ~$77M in additional milestones 30 Patient Ph3 bridging study begins in H2:18 leading to potential launch in 2021 Large market with reimbursement in place at ~$20K USD Tiered royalties rising to low double digits with increasing annual sales Exploring additional International partnerships (e.g. China, Korea) Research collaborations with leading universities and institutions NeoCart BLA support Manufacturing initiatives to reduce COGs including 3-D tissue printing and optical testing Additional product opportunities in soft tissues, bones and nerves 27 * Source: Histogenics primary market research with Japanese orthopedic surgeons (n=80)

28 A Leadership Team with a Track Record of Success Adam Gridley, Chief Executive Officer Multiple IPO s and transactions, global operating/r&d & commercial experience (Merz, BioForm, Gliatech) across devices, drugs & biologics Don Haut, Chief Business Officer Business development, strategic planning, line management and banking/consulting experience (Medicines Co, Smith & Nephew, JBS, 3M, McKinsey), with over $4 billion of transactions in biotechnology, and medical device businesses Lynne Kelley, Chief Medical Officer board certified general and vascular surgeon, significant product development and medical affairs experience (Senseonics, Becton Dickinson, Kimberly-Clark and Boston Scientific) Steve Kennedy, Chief Operating Officer Global product development, manufacturing, technical operations experience leading global clinical and commercial launches (Genzyme, Mascoma, Genencor, MIT) across devices, drugs & biologics Jonathan Lieber, Chief Financial Officer Investment banking & CFO experience, multiple IPO s & financing & public market experience (Salomon, Cowen / Altus, Repligen, Xcellerex, Metamark) across drugs, diagnostics, tools & biologics 28

29 World-Class Advisory Board and Academic Collaborations Dr. Shuichi Mizuno: Assistant Professor, Orthopedic Surgery, Harvard University /Brigham Women s (Histogenics Technical Founder), ongoing collaborations for HA / Col Gel Formulations Academic Collaborations Dr. Lane Smith: Department of Orthopedic Surgery, Stanford University. Decades of cartilage research experience, Licensed Patents Dr. Kerry Athanasiou: UC Irvine, Distinguished Professor BioMedical Engineering, Orthopedic Surgery Dr. Charles Cooney: MIT Professor of Chemical Engineering (Emeritus). Board of Directors at Genzyme, Focus on Biopharmaceutical Manufacturing, Carticel experience, Biologics including original process engineering work with Genentech Dr. Lonnie Shea: University of Michigan Department of BioMedical Engineering. Department Chair. Working at intersection of scaffolds and biologics, including regeneration of axons, donor islet cells. Dr. Jennifer Elisseeff: Johns Hopkins Department of Biomedical Engineering Cartilage regeneration, hydrogels, stem cells, Industry friendly, founder of several companies Dr. Lawrence Bonassar: Cornell University Meinig School of Biomedical Engineering and Sibley School of Mechanical and Aerospace Engineering, leader in cartilage biomechanics and tissue engineering, ongoing collaborations for biomechanical testing of NeoCart 29

30 Financial and Market Metrics Financing History Dec 2014 IPO $70M Sep 2016 PIPE $30M Jan 2018 Registered Direct $6.3M Q3:18 ATM Sales $4.0M Q4:18 ATM Sales $0.5M Q4:18 Follow-on $17M Key Financial Metrics ~62.0 M primary shares o/s; ~99 M 11/5/18 Cash and mktbl 9/30/18: ~$5.2M (a) Cash runway into mid-2019 Key Market Metrics >1M patients with cartilage defects WW Multi-billion dollar market opportunity ~$40K price point (based on publicly available competitor information) Based on analyst estimates, company expects gross margins of ~50% by end of first year of commercialization (2020) with potential to increase to ~70% three years after launch (~3,000 units) through manufacturing efficiencies and higher volumes (a) Excludes approximately $15.9 million of net proceeds from an underwritten public offering of common stock and warrants and sales through Histogenics at-the-market offering facility in October

31 The Histogenics Value Proposition»»»»» Powerful, proprietary platform that provides restorative cell therapies (RCTs) for active living Lead product candidate, NeoCart, is a proprietary RCT that potentially rebuilds patients own knee cartilage, reducing pain at the source and potentially preventing progression to osteoarthritis (OA) Large market opportunity to treat knee cartilage damage approximately 1.2M defects identified each year Clinically meaningful Phase 3 top-line results reported in Q3:18. Near-term value creation opportunity with possible U.S. launch of NeoCart in 2020 Planned expansion of NeoCart platform into additional markets and indications 31

32 References & Supporting Information 1. D Crawford MD, PhD, RJ Williams III, MD, TM DeBerardino MD NeoCart, an Autologous Cartilage Tissue Implant, Compared to Microfracture for Treatment of Distal Femoral Cartilage Lesions. An FDA Phase 2 Prospective, Randomized Clinical Trial after two Years.J Bone Joint Surg Am. 012;94: D Crawford MD, PhD, DE Anderson, PhD, RJ. Williams III, MD, TM DeBerardino, MD, DC Taylor, MD, CB Ma, MD, and M Kane, MS - Magnetic Resonance Imaging Characterization and Clinical Outcomes After NeoCart Surgical Therapy as a Primary Reparative Treatment for Knee Cartilage Injuries, American Journal of Sports Medicine AJSM Vol. 45, No. 4, p DC Crawford MD, PhD, CM Heveran, WD Cannon Jr, MD, LF Foo, MD, and HG P, MD An Autologous Cartilage Tissue Implant NeoCart for Treatment of Grade III Chondral Injury to the Distal Femur Prospective Clinical Safety Trial at 2 Years 4. Maturation of Human Tissue Engineered Constructs Improves GAG Content and Fibrous Matrix Stability - JM Middendorf, S Shortkroff, C Dugopolski, S Kennedy, J Siemiatkoski, L Bartell, I Cohen, LJ Bonassar. 5. Mechanical Characterization of Autologous Chondrocyte Seeded Matrix Grafts After In Vitro Growth JM Middendorf, D Griffin, S Kennedy, S Shortkroff, C Dugopolski, J Siemiatkoski, L Bartell, I Cohen, LJ Bonassar 32