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Nature of Operations
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations

1. Nature of Operations

 

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 engaging therapies, potentially making these treatments safer, more effective and more efficiently administered.

 

The Company’s primary focus is on improving the efficacy and safety of approved and development stage chimeric antigen receptor T-cell therapy, also known as CAR-T, through the prophylactic administration of its proprietary Humaneered® monoclonal antibody, lenzilumab, the Company’s lead product candidate. The prophylactic administration of lenzilumab in combination with CAR-T is in development to prevent the serious and potentially life-threatening side-effects associated with CAR-T while simultaneously making those therapies more effective, efficient and cost-effective. Identifying, treating and managing severe side-effects of CAR-T 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. These side-effects may also hamper the use of CAR-T in earlier stage treatment of hematologic cancers as well as the expansion of CAR-T into treatment of solid tumors, both of which represent significant growth drivers for the overall CAR-T marketplace.

 

There are currently no FDA-approved therapies available for the prevention of the serious side-effects associated with CAR-T. Pre-clinical data generated in partnership with the Mayo Clinic indicates that the use of lenzilumab may prevent or significantly minimize the 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 itself, thus simultaneously improving efficacy and potentially reducing relapse rates, a key issue with current CAR-T where approximately half the patients who initially respond have relapsed within a year of therapy. 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 investigators in the CAR-T field. The Company is also exploring additional partnerships with established CAR-T companies as a potential means of accelerating the development and commercialization of lenzilumab in conjunction with their existing CAR-T offerings. The Company aims to position lenzilumab as an essential companion product to CAR-T and a necessary part of the standard pre-conditioning drug regimen that all patients treated with CAR-T currently receive.

 

Lenzilumab is a recombinant monoclonal antibody (mAb) that neutralizes soluble granulocyte-macrophage colony-stimulating factor (GM-CSF) a critical cytokine which is elevated early in the inflammatory cascade and where peak levels are associated with serious and potentially life-threatening CAR-T-related side-effects. GM-CSF is also implicated in the growth of certain hematologic malignancies, such as chronic myelomonocytic leukemia (CMML) and juvenile myelomonocytic leukemia (JMML), graft-versus-host-disease (GVHD) associated with hematopoietic stem cell transplant (HSCT), hemophagocytic lymphoproliferative disease (HLH), macrophage activation syndrome (MAS), certain solid tumors and other serious conditions, particularly a range of auto-immune conditions.

 

There is extensive published evidence from multiple academic and expert clinical centers linking early elevation of GM-CSF to serious and potentially life-threatening side-effects in CAR-T therapy. 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, further perpetuating the inflammatory cascade.

 

Peer-reviewed publications in leading journals by well-recognized experts have shown that GM-CSF is a biomarker elevated in patients who suffer severe NT as a side-effect of CAR-T. Pre-clinical studies have demonstrated lenzilumab’s effectiveness in preventing CRS and significantly reducing NT associated with CAR-T. The data from these studies also shows an increase in CAR-T cell expansion when lenzilumab is administered prophylactically in combination with CAR-T.

 

 

On May 30, 2019, the Company entered into a Clinical Collaboration Agreement (the “Collaboration Agreement) with Kite Pharma, Inc. (“Kite”), a wholly owned subsidiary of Gilead Sciences, Inc., pursuant to which the parties agreed to conduct a multi-center Phase 1b/2 study of lenzilumab with Kite’s Yescarta® (axicabtagene ciloleucel) in patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) (the “Study”). The primary objective of the Study is to determine the effect of lenzilumab on the safety of Yescarta. Various other important parameters, including efficacy and healthcare resource utilization, will also be measured. Kite will act as the sponsor of the Study and will be responsible for its conduct. 

 

On June 19, 2019 the Company entered into an exclusive worldwide license agreement (the “Mayo Agreement”) with the Mayo Foundation for Medical Education and Research (“Mayo”) for certain technologies used to create CAR-T cells lacking GM-CSF expression through various gene-editing tools including CRISPR-Cas9 (GM-CSF knock-out). The license covers various patent applications and know-how developed by Mayo in collaboration with the Company. These licensed technologies complement and broaden the Company’s position in the GM-CSF neutralization space and expand the Company’s discovery platform aimed at improving CAR-T to include gene-edited CAR-T cells.

 

On July 19, 2019 the Company entered into an exclusive worldwide license agreement (the “Zurich Agreement”) with the University of Zurich (“UZH”) for technology used to prevent Graft versus Host Disease (“GvHD”) through GM-CSF neutralization. The Zurich Agreement covers various patent applications filed by UZH which complement and broaden the Company’s position in the application of GM-CSF and expands the Company’s development platform to include improving allogeneic Hematopoietic Stem Cell Transplantation (“HSCT”).

 

Ifabotuzumab is an anti-Eph Type-A receptor 3 (EphA3) mAb that has the potential for treating solid tumors, hematologic malignancies and serious pulmonary conditions. Anti-EphA3 as a CAR-T construct, which utilizes certain sequences of ifabotuzumab to generate a specific type of CAR-T, may also be useful in the treatment of a range of cancers. The Company is collaborating with an expert CAR-T center to make a series of CAR constructs based on ifabotuzumab, of which initial constructs have been created, and plans to move to pre-clinical testing with these constructs for a range of cancer types. EphA3 is a tumor specific antigen expressed on the surface of a multitude of solid bulk tumor cells, tumor stroma cells and tumor vasculature in certain cancers. The Company 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. A Phase I radio-labeled imaging trial of ifabotuzumab in recurrent glioblastoma multiforme, a particularly aggressive and deadly form of brain cancer, is currently enrolling at two centers in Australia, the Olivia-Newton John Cancer Research Institute (ONJCRI) in Melbourne and the Queensland Institute for Medical Research in Brisbane. The lead investigators at the ONJCI, are also evaluating an antibody-drug conjugate (ADC) comprising ifabotuzumab.  The current trial has enrolled eight patients to date, and is expected to complete enrollment with a total of twelve patients by year end and to report on the initial findings soon thereafter.   The Company continues to explore partnering opportunities to facilitate the further development of ifabotuzumab in a range of cancer types.

 

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. Importantly, and in contrast to other agents, HGEN005 appears to have an effect solely on eosinophils, without impacting other populations, such as mast cells.

 

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, with a focus on oncology and other serious, chronic conditions.

 

 

Liquidity and Going Concern

 

The Company has incurred significant losses since its inception in March 2000 and had an accumulated deficit of $280.5 million as of June 30, 2019. At June 30, 2019, the Company had a working capital deficit of $8.1 million.  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 three and six months ended June 30, 2019 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 $12.3 million at June 30, 2019 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.

 

Basis of Presentation

 

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and on a basis consistent with the annual consolidated financial statements and include all adjustments necessary for the presentation of the Company’s condensed consolidated financial position, results of operations and cash flows for the periods presented. The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. These financial statements have been prepared on a basis that assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The December 31, 2018 Condensed Consolidated Balance Sheet was derived from the audited financial statements but does not include all disclosures required by U.S. GAAP. These interim financial results are not necessarily indicative of the results to be expected for the year ending December 31, 2019, or for any other future annual or interim period. The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s 2018 Form 10-K.

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ materially from those estimates. The Company believes judgment is involved in determining the valuation of the fair value-based measurement of stock-based compensation, accruals and warrant valuations. The Company evaluates its estimates and assumptions as facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from these estimates and assumptions, and those differences could be material to the Condensed Consolidated Financial Statements.