Zacks Small Cap Research – LGVN Provides Encouraging Update and Improved Revenue – Technologist

By Brad Sorensen, CFA

NASDAQ:LGVN

READ THE FULL LGVN RESEARCH REPORT

The recent string of positive developments for Longeveron (NASDAQ:LGVN) continues and we are becoming more encouraged that the company will be able to help parents desperate for a treatment for an often-fatal condition. Hypoplastic Left Heart Syndrome (HLHS) is a rare and life-threatening congenital heart defect affecting approximately 1,000 babies per year according to the company. Infants born with HLHS have an underdeveloped or absent left ventricle. Current standard-of-care is comprised of three reconstructive heart surgeries (Stage 1 – 3) to reconfigure the right ventricle to provide all cardiac output. These three surgeries must be performed within the first five years of life. The Stage 1 surgery (the Norwood procedure) is conducted within 2 weeks of birth and the Stage 2 (the Glenn procedure) is typically conducted by 4-5 months of age. A Stage 3 surgery (the Fontan procedure) is typically performed when the children are 4-5 years of age. Without surgical treatment, the condition is always fatal, and even with reconstructive surgical reconstruction, patients often die or require heart transplantation by 15 years of age.

The company believes that Lomecel-B can improve these patients’ outcomes and is currently involved in a Phase 2b clinical trial in an attempt to verify this belief. This trial is to evaluate the safety and efficacy of intramyocardial injection of Lomecel-B in infants with HLHS undergoing the Glenn Procedure.

Recently, the company gave an update on a meeting with investigators involved with the study that we view as extremely encouraging. The company described it as successful, but we believe a quote from a principal investigator in the study says it better than we could. Dr. Ram Kumar Subramanyan, division chief of Pediatric Cardiothoracic Surgery and Children’s Nebraska said, “While we have made significant advances in diagnosing HLHS before a baby is born, we don’t yet know the cause, and current HLHS treatment requires infants to undergo a complex three-stage surgical reconstruction over the first 3-4 years of their life. Even with this comprehensive treatment, only 50% to 60% of infants survive to adolescence due to right ventricular failure. There is clearly an important unmet medical need to improve right ventricular function in these infants to positively impact both short- and long-term patient outcomes. Lomecel-B’s Phase 1 clinical data is highly encouraging and suggests it has the potential to be a new, additive treatment option for physicians and their patients dealing with HLHS. The community is very much looking forward to the results of ELPIS II (the Stage 2b trial).”

Following the meeting, company management confirmed that Longeveron “remains on track to complete enrollment of the clinical trial by the end of the year.”

As a reminder and another reason to like LGVN, Lomecel-B for HLHS has received Fast Track, Rare Pediatric Disease, and Orphan Drug Designations from the FDA. In the earnings call, Mr. Hashad noted that enrollment in the trial should be completed by the end of the year, and also reminded investors that the Rare Pediatric Disease designation is a valuable one and can be sold should the company choose to do so—with current prices hovering around the $100 million mark.

Additionally, management recently outlined the company’s plan to add to revenue generated while going through the FDA approval process. The company owns a world-class manufacturing facility that has excess capacity at the current time. As part of this plan, Longeveron announced the signing of its first contract to use its facility in a deal with Secretome Therapeutics. We are every encouraged by the addition of this revenue stream, which the company estimates could reach $4-5 million annually, which will help to fund the important work the company is undergoing.

Summary

We continue to believe that Longeveron is an exciting clinical-stage company and investors aren’t appropriately appreciating the game-changing potential Lomecel-B may be able to have on multiple serious medical conditions. As a result of the prudent decisions made by management, we believe Lomecel-B will ultimately have a substantial impact on the health situations of thousands of patients. We encourage investors to take a close look at Longeveron and the company’s prospects and potential, which we believe to be quite positive.

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