XML 22 R7.htm IDEA: XBRL DOCUMENT v3.19.1
Organization and Description of Business
12 Months Ended
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations

1. Organization and Description of Business

 

Description of the Business

 

The Company was incorporated on March 15, 2000 in California and reincorporated as a Delaware corporation in September 2001 under the name KaloBios Pharmaceuticals, Inc. Effective August 7, 2017, the Company changed its legal name to Humanigen, Inc.

 

During February 2018, the Company completed the restructuring transactions announced in December 2017 and furthered its transformation into a biopharmaceutical company pursuing cutting-edge science to develop its proprietary monoclonal antibodies for various oncology indications and to enhance T-cell therapies, potentially making these treatments safer, more effective and more efficiently administered.

 

The Company’s primary focus is on preventing the serious and potentially life-threatening side-effects associated with chimeric antigen receptor T-cell, also known as CAR-T, therapy, and in making those therapies more effective, efficient and cost-effective. Identifying, treating and managing severe side-effects consumes significant hospital resources and additional costs that we believe have impeded the pace of adoption of these promising and highly effective treatments as the standard of care for certain hematologic cancers. The side effects may also hamper the expansion of CAR-T to earlier line use beyond the relapsed or refractory setting in hematologic cancers and the utility of CAR-T in solid tumors, both of which represent significant growth drivers for the overall CAR-T marketplace. Lenzilumab, the Company’s lead product candidate, is a novel Humaneered® monoclonal antibody, or mAb, that has the potential to both improve the efficacy and safety associated with CAR-T therapy. There are currently no FDA approved therapies available for the prevention of the serious side effects associated with CAR-T cell therapies. Preclinical data generated in partnership with the Mayo Clinic indicates that the use of lenzilumab may prevent onset of both CAR-T induced neurologic toxicities (NT) and cytokine release syndrome (CRS) while also enhancing the proliferation and effector functions of the CAR-T therapy itself, thus simultaneously improving relapse rates and overall efficacy.

 

The Company continues to advance the development of lenzilumab through clinical trials that it expects will serve as the basis for registration in close collaboration with some of the leading and most experienced centers in the CAR-T field. The Company is also exploring partnerships with established CAR-T companies, who may have strong vested interest in the development and commercialization of lenzilumab. By succeeding in its efforts to develop lenzilumab, the Company aims to position lenzilumab as an essential companion product to any CAR-T therapy and a necessary part of the standard pre-conditioning drug regimen that all patients receiving CAR-T currently receive, which includes cyclophosphamide and fludarabine. In addition, lenzilumab’s success in preventing serious, potentially life-threatening side-effects will lead to substantial reductions in hospital in-patient and intensive care unit (ICU) admissions and duration of ICU stays. Use of lenzilumab alongside CAR-T therapy could result in potential efficacy improvements which could offer significant economic benefits to the healthcare system as a whole, including for hospitals, providers, patients and payers in the United States and abroad. These benefits, coupled with the potential to make CAR-T therapy capable of being administered on an out-patient basis, with follow-up care also monitored and managed in an out-patient setting, may improve access to and reimbursement of CAR-T therapy and would be expected to substantially improve, further expanding CAR-T uptake and utilization. In turn, the Company believes that delivering such payer benefits will also accelerate the use of lenzilumab, permitting us to generate further revenues from lenzilumab. The Company also believes it has the opportunity to benefit from various FDA regulatory incentives, such as orphan drug exclusivity, breakthrough therapy designation, fast track designation and accelerated approval.

Lenzilumab is a recombinant monoclonal antibody (mAb) that neutralizes soluble granulocyte-macrophage colony-stimulating factor (GM-CSF) a critical cytokine in the inflammatory cascade associated with serious and potentially life-threatening CAR-T-related side effects and in the growth of certain hematologic malignancies, solid tumors and other serious conditions. There is extensive evidence linking GM-CSF expression to serious and potentially life-threatening side-effects in CAR-T therapy. The Company’s focus for lenzilumab development is investigating its potential to improve efficacy of CAR-T and to prevent or ameliorate CAR-T-related NT and CRS. Following CAR-T administration GM-CSF initiates a signaling cascade of inflammation that results in the trafficking and recruitment of myeloid cells to the tumor site. These myeloid cells then produce key downstream cytokines known to be associated with development of NT and CRS, perpetuating the inflammatory cascade. Peer-reviewed publications in leading journals by well-recognized experts have shown that GM-CSF is a biomarker present in patients who suffer serious NT as a side-effect of CAR-T therapy. Pre-clinical work has demonstrated lenzilumab’s effectiveness in preventing or ameliorating NT and CRS associated with CAR-T therapy. Pre-clinical animal data also shows that there may be an increase in CAR-T cell expansion when CAR-T is combined with lenzilumab, which potentially could translate into improved CAR-T efficacy. In addition, the Company has completed enrollment of patients in a Phase I clinical trial for chronic myelomonocytic leukemia (CMML), to identify the recommended Phase II dose (RPTD) of lenzilumab and to assess lenzilumab’s safety, pharmacokinetics, and other measures. Fifteen patients in the 200, 400 and 600 mg dose cohorts of the CMML trial have been enrolled and the trial is fully enrolled.

 

 

Ifabotuzumab is an anti-Eph Type-A receptor 3 (EphA3) mAb that has the potential to offer a novel approach to treating solid tumors, hematologic malignancies and serious pulmonary conditions. Anti-EphA3 as a CAR construct may also be useful in the treatment of a range of cancers. EphA3 is aberrantly expressed on the surface of tumor cells and stroma cells in certain cancers. The Company has completed the Phase I dose escalation portion of a Phase I/II clinical trial in ifabotuzumab in multiple hematologic malignancies for which the preliminary results were published in the journal Leukemia Research in 2016. An investigator-sponsored Phase I radio-labeled imaging trial of ifabotuzumab in glioblastoma multiforme, a particularly aggressive and deadly form of brain cancer, has begun at the Olivia-Newton John Cancer Institute (ONJCI) in Melbourne, Australia. Collaborators at the ONJCI, are also evaluating an ADC comprising ifabotuzumab.  The current trial has enrolled five patients to date, with more expected. The Company has partnered with a leading center in the U.S. to make a series of CAR constructs based on ifabotuzumab and may take these into pre-clinical testing for a range of cancer types.   The Company continues to explore partnering opportunities to enable further/faster development of ifabotuzumab.

 

HGEN005 is a pre-clinical stage anti-human epidermal growth factor-like module containing mucin-like hormone receptor 1 (EMR1) mAb. EMR1 is a therapeutic target for eosinophilic disorders. Eosinophils are a type of white blood cell. If too many are produced in the body, chronic inflammation and tissue and organ damage may result. Analysis of blood and bone marrow shows that surface expression of EMR1 is restricted to mature eosinophils and correlated with eosinophilia. Tissue eosinophils also express EMR1. In pre-clinical work, the Company has demonstrated that eosinophil killing is enhanced in the presence of HGEN005 and immune effector cells. A major limitation of current eosinophil targeted therapies is incomplete depletion of tissue eosinophils and/or lack of cell selectivity, which may mean that HGEN005 could offer promise in a range of eosinophil-driven diseases, such as eosinophilic asthma, eosinophilic esophagitis and eosinophilic granulomatosis with polyangiitis. The Company is considering developing a series of CAR constructs based on HGEN005 and may take or partner these constructs, if developed, into pre-clinical testing.

 

The Company’s monoclonal antibody portfolio was developed with its proprietary, patent-protected Humaneered® technology, which consists of methods for converting antibodies (typically murine) into engineered, high-affinity antibodies designed for human therapeutic use, typically for chronic conditions.

 

Liquidity and Going Concern

 

The Company has incurred significant losses since its inception in March 2000 and had an accumulated deficit of $274.6 million as of December 31, 2018. At December 31, 2018, the Company had a working capital deficit of $7.0 million.  On February 27, 2018, the Company issued 91,815,517 shares of common stock in exchange for the extinguishment of all term loans, related fees and accrued interest and received $1.5 million in cash proceeds.  See Note 10 for a more detailed discussion of these restructuring transactions. On March 12, 2018, the Company issued 2,445,557 shares of common stock for proceeds of $1.1 million to accredited investors. On June 4, 2018, the Company issued 400,000 shares of common stock for proceeds of $0.2 million to an accredited investor. In June, July and August of 2018, the Company received aggregate proceeds of $0.9 million from advances made to the Company (the “Advance Notes”) by four different lenders including Dr. Cameron Durrant, the Company’s Chairman and Chief Executive Officer; Cheval Holdings, Ltd., an affiliate of Black Horse Capital, L.P., the Company’s controlling stockholder; and Ronald Barliant, a director of the Company. Commencing September 19, 2018, the Company delivered a series of convertible promissory notes (the “Notes”) evidencing an aggregate of $2.5 million of loans made to the Company by six different lenders, including an affiliate of Black Horse Capital, L.P., the Company’s controlling stockholder. See Note 7 for further description of the Advance Notes and the Notes. To date, none of the Company’s product candidates has been approved for sale and therefore the Company has not generated any revenue from product sales. Management expects operating losses to continue for the foreseeable future. The Company will require additional financing in order to meet its anticipated cash flow needs during the next twelve months. As a result, the Company will continue to require additional capital through equity offerings, debt financing and/or payments under new or existing licensing or collaboration agreements. If sufficient funds are not available on acceptable terms when needed, the Company could be required to significantly reduce its operating expenses and delay, reduce the scope of, or eliminate one or more of its development programs. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, could materially harm its business, financial condition and results of operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

 

The Condensed Consolidated Financial Statements for the twelve months ended December 31, 2018 were prepared on the basis of a going concern, which contemplates that the Company will be able to realize assets and discharge liabilities in the normal course of business. The ability of the Company to meet its total liabilities of $9.5 million at December 31, 2018 and to continue as a going concern is dependent upon the availability of future funding. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.