Humacyte(HUMA) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The unaudited financial statements reflect the company's transition to commercial operations with initial revenues reported in 2025 Condensed Consolidated Balance Sheets The balance sheet shows stable total assets and a significant improvement in stockholders' equity, which turned positive due to liability reductions Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $38,032 | $44,937 | | Inventory | $11,067 | $— | | Total current assets | $51,730 | $47,859 | | Total assets | $138,795 | $137,872 | | Liabilities & Equity | | | | Total current liabilities | $21,085 | $19,954 | | Contingent Earnout Liability | $26,700 | $70,961 | | Common stock warrant liabilities | $4,358 | $19,254 | | Total liabilities | $134,743 | $190,541 | | Total stockholders' equity (deficit) | $4,052 | $(52,669) | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) The company reported its first revenues and achieved net income of $1.5 million, driven by a significant non-cash gain Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $301 | $— | $818 | $— | | Research and development | $22,006 | $23,753 | $37,424 | $45,017 | | Selling, general and administrative | $7,809 | $5,746 | $15,945 | $11,060 | | Loss from operations | $(29,727) | $(29,499) | $(52,911) | $(56,077) | | Change in fair value of Contingent Earnout Liability | $(5,470) | $(25,571) | $44,261 | $(30,164) | | Net income (loss) | $(37,658) | $(56,663) | $1,481 | $(88,559) | | Net income (loss) per share, basic | $(0.24) | $(0.48) | $0.01 | $(0.78) | Condensed Consolidated Statements of Cash Flows Cash used in operations increased while financing inflows decreased, resulting in a net cash decrease of $6.9 million for the period Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(55,014) | $(48,638) | | Net cash used in investing activities | $(796) | $(575) | | Net cash provided by financing activities | $48,905 | $62,328 | | Net (decrease) increase in cash | $(6,905) | $13,115 | Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies, liquidity, fair value measurements, and the recent capitalization of inventory - The company has a history of operating losses, with an accumulated deficit of $684.5 million as of June 30, 2025[25] - Management believes its cash, cash equivalents, and existing financing capacity will be sufficient to fund operations for at least twelve months from the financial statement issuance date[31] - In early 2025, the company concluded it met the criteria to capitalize inventory costs, resulting in $11.1 million of inventory on the balance sheet as of June 30, 2025[47][85] - On April 28, 2025, the company implemented a cost reduction plan, reducing its workforce by 30 employees and incurring $0.7 million in severance costs[184] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the transition to a commercial-stage entity, financial results, liquidity, and capital resources following the launch of Symvess - The FDA granted full approval for Symvess on December 19, 2024, for use in adults with extremity arterial injury, and the company commenced commercial shipments in March 2025[211][213] - A cost reduction action implemented on April 28, 2025, is estimated to generate savings of approximately $13.8 million in 2025 and up to $38.0 million in 2026[219] - In July 2025, the Centers for Medicare and Medicaid Services (CMS) declined to approve the company's New Technology Add-On Payment (NTAP) application for Symvess[220] Results of Operations The company generated its first revenue, saw R&D expenses decrease due to inventory capitalization, and SG&A expenses increase with commercial launch activities Comparison of Six Months Ended June 30, 2025 and 2024 (in thousands) | Account | YTD 2025 | YTD 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total revenue | $818 | $— | 100% | | Research and development | $37,424 | $45,017 | (17)% | | Selling, general and administrative | $15,945 | $11,060 | 44% | | Loss from operations | $(52,911) | $(56,077) | (6)% | | Net income (loss) | $1,481 | $(88,559) | (102)% | - The decrease in R&D expenses was primarily driven by a $3.6 million reduction in materials and supplies expense due to inventory capitalization and a $2.4 million decrease in other R&D expenses related to capitalizing manufacturing overhead[244] - The increase in SG&A expenses was mainly due to a $4.1 million increase in payroll and personnel expenses and a $0.5 million increase in professional fees to support the commercial launch of Symvess[245] Liquidity and Capital Resources The company's liquidity is supported by $38.0 million in cash, recent equity offerings, and available financing facilities - As of June 30, 2025, the company had cash and cash equivalents of $38.0 million and working capital of $30.6 million[248] - The company raised net proceeds of approximately $46.7 million from its 2025 Public Offering, which closed on March 27, 2025[257] - As of June 30, 2025, the company had $69.3 million remaining under its ATM Facility and $47.5 million remaining under its Common Stock Purchase Agreement with Lincoln Park[249][254] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - As a smaller reporting company, Humacyte is exempt from providing quantitative and qualitative disclosures about market risk[278] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal controls during the quarter - Based on an evaluation as of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[280] - No changes occurred in the company's internal control over financial reporting during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, these controls[281] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is defending a class action lawsuit and related derivative actions concerning its BLA and manufacturing facility disclosures - A putative class action lawsuit, Cutshall v. Humacyte, Inc., et al., was filed against the company and certain officers, alleging violations of the Exchange Act related to statements about the BLA for Symvess and manufacturing deficiencies[284] - Multiple stockholder derivative actions have been filed and subsequently consolidated and stayed pending the outcome of the primary Securities Litigation[285][288] - The company disputes all claims and has not accrued any material liabilities for these lawsuits, as a negative outcome is not deemed probable nor is a range of loss estimable[289] Item 1A. Risk Factors A new risk factor was added concerning the potential negative consequences of the company's recent cost-saving measures - A new risk factor was added related to the cost-saving measures implemented on April 28, 2025, warning that these measures may not be successful, could be disruptive, and might lead to adverse effects such as personnel attrition[291] Item 5. Other Information Several executive officers terminated and adopted new Rule 10b5-1 trading plans during the second quarter of 2025 - CFO Dale Sander terminated his 10b5-1 trading plan on April 14, 2025, under which no shares had been sold[295] - CRO Yang (Cindy) Cao's 2024 plan terminated in May 2025, and she adopted a new 10b5-1 plan on May 20, 2025, for the sale of up to 41,944 shares[296][297] - CCO William (B.J.) Scheessele terminated his 2024 plan in April 2025 and adopted a new 10b5-1 plan on June 12, 2025, covering the exercise of options and sale of up to 85,900 shares[298][299]