LGVN: CEO Leaving but Progress Continues

By Brad Sorensen, CFA

NASDAQ:LGVN

READ THE FULL LGVN RESEARCH REPORT

Longeveron (NASDAQ:LGVN) announced the departure of its CEO—Geoff Green—who is leaving “to pursue new opportunities,” effective June 1, 2022. Chief Medical Officer K. Chris Min will succeed Mr. Green on an interim basis and the company has formed a search committee and retained an executive search firm to aid in finding a permanent CEO. We believe that the departure of a key executive is rarely a good thing, but we gain some confidence that the rest of the management team is staying in place and we’ll be watching the process for finding a new CEO and have a large interest in the ultimate outcome.

Separately, Longeveron announced its 1Q 2022 results, which were largely in line with expectations, with the highlights outlined below:

– Longeveron posted a 1Q 2022 loss of $0.17 per share, slightly lower on a per share basis than 1Q 2021, due to an increase in share count. Total net loss was just over $3.5 million, up from $3.1 million in the same quarter a year earlier.

– Expenses remained roughly the same as last year, with administrative expenses rising from $1.7 million to $2.0 million—giving us confidence the company is keeping expenses in check.

– Importantly, cash levels were reported at $22.1 million, down from $25.7 million in 1Q 2021. Management noted that current cash levels should be able to provide the funding needed to continue operations through at least early 2024.

Lomocel-B is Longeveron’s primary therapy and they are shepherding the compound through the FDA approval process for several different conditions including: Hypoplastic Left Heart Syndrome, Alzheimer’s and Aging Frailty Disease. Lomecel-B is made from living cells called Medicinal Signaling Cells (MSCs) that are isolated from fresh bone marrow tissue donated by adult donors, alleviating some of the ethical concerns that can surround some forms of cell research and their sources. Once these MSCs are isolated, the cells are culture expanded (allowed to replicate under controlled laboratory conditions) into billions of living cells. After a specific number of expansion cycles, the cells are harvested and separated into specific doses. This method of harvesting and replicating cells has several inherent advantages, including:

– Cells harvested from living human donors have characteristics that allow them to be transplanted from donor to host without triggering a harmful immune response.

– Therapies using these cells can be administered on an out-patient basis in as little as 40 minutes after thawing.

– This has an advantage over a patient using their own cells and then reintroducing them back into the same person—which requires a surgical procedure and can take weeks or months and can only be used on one patient.

– Therapies using these cells are considered an “off-the-shelf” product, which means they are stored frozen and available for on-demand use.

– Data from clinical studies suggest the effects of a single dose may last over 6 months.

Lomocel-B is at various stages of the approval process for various conditions and we estimate it will be several years before the company comes forward with a commercialized product. However, with good cash balances enabling the research to continue and the encouraging early test results we’ve seen, we believe that Longeveron continues to be a good investment for those with patience and a high risk tolerance.

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