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Item 1A. Risk Factors

2024-03-28 compared with 2023-03-24 · 133 added, 235 removed, 797 unchanged (32% of the section changed)

Our operations and financial results are subject to a high degree of risk.

These risks include, but are not limited to, those described below, each of which may have a material and adverse effect on our business, prospects, operating results, financial condition and the trading price of our common stock.

You should carefully consider the risks described below, together with all of the other information included in this Annual Report on Form 10-K.

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Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

In that event, the trading price of our common stock could decline and you could lose all or part of your investment.

In that event, the trading price of our securities could decline and you could lose all or part of your investment.

Summary of Risk Factors

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• If we receive approval for a product candidate that is not subject to our distribution agreement with Fresenius Medical Care, and we are unable to establish our own marketing, sales and distribution capabilities or are unable to enter into agreements with third parties do so, we may not be able to generate product revenue and will have to alter our development and commercialization plans.

• The ongoing effects of the COVID-19 pandemic may continue to adversely impact our business, including our manufacturing efforts and clinical trials.

• The manufacture of our product candidates is complex, we have not manufactured commercial product, and we may encounter difficulties in production.

If we or any third-party manufacturer encounter such difficulties, our ability to supply our product candidates for clinical trials or, if approved, for commercial sale could be delayed or halted entirely.

• The terms of our existing indebtedness may limit our ability to incur future debt.

• The terms of the Purchase Agreement may limit our ability to incur future debt.

• We rely on third parties to conduct and support our clinical trials, and those third parties may not perform satisfactorily, including by failing to adhere to regulatory requirements or our stated protocols or to meet deadlines for the completion of such trials.

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Risks Related to the Development and Commercialization of Our Product Candidates

If our clinical trials fail to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States or do not otherwise produce favorable results, we may incur significant additional costs or experience significant delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

If our clinical trials are delayed, do not produce favorable results, or otherwise fail to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States, we may incur significant additional costs or experience significant delays in completing, or ultimately be unable to complete, the development, approval, and commercialization of our product candidates.

If we experience significant delays or significant additional costs, our business will be materially harmed.

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Clinical testing is expensive and time-consuming, and its outcomes are uncertain.

A number of factors may impact the timing of our preclinical and clinical programs and the development and commercialization of our product candidates.

These include factors such as inability to recruit sufficient numbers of patients, delays in obtaining IRB approval for planned trials, or disagreements with regulatory agencies on clinical trial design and/or imposition of clinical holds.

We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all, or that they will be successful.

Any inability to successfully complete development of our product candidates would likely result in significant additional costs to us, create delays in filing a BLA for regulatory approval of our product candidates and impair our ability to generate revenue.

We believe the novelty of our research and development efforts, which are focused on the development of bioengineered human, acellular, tissue-based vessels for use across a wide spectrum of applications in vascular surgery, augments this uncertainty.

The scientific discoveries that form the basis for our efforts to develop our product candidates are relatively new, and the scientific evidence to support the feasibility of developing product candidates based on these discoveries is both preliminary and limited.

At this time, no products based on HAVs have been approved in the United States or in Europe.

The clinical trial requirements of the FDA and other regulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to

the type, complexity, novelty and intended use and market of the potential product, and we may not succeed in obtaining marketing approval even if we view our clinical trials as successful.

Data obtained from preclinical and clinical activities, and manufacturing comparability studies, are also subject to varying interpretations, which may delay, limit or prevent marketing approval.

In such circumstances, we could experience significant delays, or be prevented from, developing or commercializing our HAVs, and our business, prospects, operating results and financial condition could be materially harmed.

Our V006 trial did not meet its primary endpoint, and if we fail to achieve the primary endpoint of our other ongoing or future clinical trials, or if safety issues arise, or the results from our clinical trials are otherwise inadequate to support regulatory approval of our product candidates, we may incur significant additional costs or experience significant delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

At this time, no products based on HAVs have been approved in the United States, Europe or in any other jurisdiction.

In addition, because of the nature of the HAVs, many of our clinical trials are “open label,” meaning that both the patient and the investigator know whether the patient is receiving the investigational product candidate.

These studies often require the use of historical control arms consisting of patients previously treated with alternative therapies in the normal course of medical care.

Use of open label study designs further complicates the clinical development process.

Because of these and other factors, we may experience substantial difficulties in agreeing with FDA and other regulatory authorities on clinical trial design.

If our studies are not successful, we be delayed in obtaining marketing approval or may not receive marketing approval at all.

For example, our V006 trial did not meet its primary endpoint, which has delayed development of the HAV for the hemodialysis access indication.

If we fail to achieve the primary endpoint of our other ongoing or future clinical trials, or if safety issues arise, or the results from our clinical trials are otherwise inadequate to support regulatory approval of our product candidates, we may incur significant additional costs or experience significant delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Even if our clinical trials achieve their primary endpoints, the FDA may still determine that such trials do not adequately establish the safety and effectiveness of our products.

Data obtained from preclinical and clinical studies are subject to varying interpretations, which may delay, limit, or prevent marketing approval.

In such a circumstance, the FDA may require that we design and conduct new, additional clinical trials to demonstrate safety and effectiveness, or may determine not to approve our products at all.

Even if we receive FDA approval for our HAVs, we may face a number of difficulties if the results of our clinical trials are unfavorable, inconclusive, or only modestly favorable or if there are safety concerns, such as adverse events (“AEs”) or serious adverse events (“SAEs”), which could include clotting, mechanical failure, immunological rejection or infection, that could outweigh potential benefits associated with such product candidates.

Additionally, even if we receive FDA approval for our HAVs, we may face a number of difficulties if the results of our clinical trials are unfavorable, inconclusive, or only modestly favorable or if there are safety concerns, such as adverse events (“AEs”) or SAEs, which could include clotting, mechanical failure, immunological rejection or infection, that could outweigh potential benefits associated with such product candidates.

This could result in:

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Any of these events could cause us to incur significant additional costs, significant delays and prevent us from achieving or maintaining market acceptance of or commercializing one or more of our product candidates.

If we experience failures or delays in our preclinical and clinical programs, we would be prevented from developing and commercializing our product candidates in a timely matter, if at all.

A number of factors impact the timing of our preclinical and clinical programs and the development and commercialization of our product candidates.

We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all.

Events that prevent successful or timely completion of the development of our product candidates beyond unfavorable or inconclusive clinical trial results include, among others, the following:

• delays in the testing, validation, manufacturing or delivery of our product candidates to the clinical sites;

• delays in reaching — or inability to reach — agreement with the FDA or other regulatory agencies on trial design;

• delays in reaching agreement on acceptable terms with prospective clinical research organizations (“CROs”) and clinical trial sites;

• delays in obtaining required IRB approval at each clinical trial site;

• delays in recruiting suitable patients in sufficient volume to participate in our clinical trials and in having those patients complete participation in our clinical trials or return for follow-up, including delays related to the ongoing effects of the COVID-19 pandemic;

• the occurrence of SAEs associated with any of our product candidates that are viewed to outweigh their potential benefits;

• imposition of a clinical hold by regulatory agencies, including after an inspection of our clinical trial sites;

• failure by CROs, other third parties or us to adhere to clinical trial requirements;

• failure to perform in accordance with the FDA’s good clinical practices (“GCP”) or current good tissue practices (“cGTP”), or applicable regulatory guidelines in other countries;

• clinical trial sites dropping out of, or being removed from, a trial;

• changes in regulatory requirements and guidance that require amending or submitting new clinical protocols or data.

Clinical trial delays could also allow our competitors to bring products to market before we do, which could materially impair our ability to successfully commercialize our product candidates and may harm our business and prospects.

Our progress in early stage clinical trials may not be indicative of long-term efficacy in late stage clinical trials, and our progress in trials for one product candidate may not be indicative of progress in trials for another product candidate.

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Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published.

As a result, topline data should be viewed with caution until the final data are

As a result, topline data should be viewed with caution until the final data are available.

From time to time, we may also disclose interim data from our clinical trials.

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Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.

If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

In addition, the information we choose to publicly disclose regarding a particular clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.

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Our HAVs may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude us from obtaining marketing approval.

The reported SAEs related to the HAV for hemodialysis access, a patient population which typically has a high prevalence of existing medical conditions, are detailed in the table below which summarizes results from our V006 HUMANITY Phase 3 study in which subjects were randomized to receive either a HAV or a commercially available expanded polytetrafluoroethylene (“ePTFE”) graft.

SAEs Reported in V006 Phase 3 Clinical Study in AV Access

Number of SAEs

(% of total subjects)

Description of SAE HAV ePTFE

Number of subjects in V006 study 177 178

General disorders and administration conditions:

Implant site extravasation 0(0.0)% 1(0.6)%

Infections and infestations

Vascular access site infection 0(0.0)% 5(2.8)%

Injury, poisoning and procedural complications:

Anastomotic stenosis 1(0.6)% (0.0)%

Description of SAE Number of SAEs

(% of total subjects)

Vascular access site hematomas 1(0.6)% (0.0)%

Vascular access site hemorrhage 0(0.0)% 3(1.7)%

Vascular access site pain 1(0.6)% 0(0.0)%

Vascular access site pseudoaneurysm 10(5.6)% 0(0.0)%

Vascular access site rupture 2(1.1)% 0(0.0)%

Vascular access site thrombosis 41(23.2)% 28(15.7)%

Skin and subcutaneous tissue disorders:

Skin necrosis 0(0.0)% 1(0.6)%

Vascular disorders:

Steal syndrome 2(1.1)% 2(1.1)%

Subclavian vein occlusion 0(0.0)% 1(0.6)%

Vascular stenosis 34(19.2)% 27(15.2)%

Venous stenosis 3(1.7)% 9(0.0)%

In our V002 and V004 Phase 2 clinical studies in PAD in 35 subjects, another patient population which typically has a high prevalence of existing medical conditions, the SAEs reported for the HAV are detailed in the table below.

SAEs Reported in V002 and V004 Phase 2 Clinical Studies in PAD

Description of SAE Number of SAEs

(% of total subjects)

Number of subjects in V002 and V004 studies

Arterial bypass thrombosis

Anastomotic stenosis

Graft thrombosis

Vascular graft complication

If our HAVs are associated with undesirable side effects in clinical trials or have negative characteristics that are unexpected, we may need to perform additional clinical trials, abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.

Even if one of our product candidates is approved, the FDA and other regulatory authorities may take action to withdraw it from the market if serious safety concerns emerge.

Even if one of our product candidates is approved, the FDA and other regulatory authorities may limit the scope of that approval, require us to include detailed warnings and/or contraindications in product labeling, and/or implement a REMS, which may include restrictions on distribution or use of the product.

If serious safety concerns emerge after product approval, FDA and other regulatory authorities may take steps to withdraw the product from the market.

Any of these events could cause us to delay, abandon or limit the development and, if approved, marketing of our product candidates.

For more information, see the section of this Annual Report on Form 10-K titled “Business."

We may experience delays or difficulties in the enrollment of patients in our clinical trials, which may delay or prevent additional clinical trials and our receipt of necessary marketing approvals.

We are currently enrolling patients in several clinical trials, including in our V005 trial, which is a Phase 2/3 clinical trial of our 6 millimeter HAV in traumatic vascular repair and our V007 trial, which is a Phase 3 clinical trial comparing the safety and efficacy of our 6 millimeter HAV to AV fistula for hemodialysis access.

We are currently enrolling patients in several clinical trials, including in our V012 trial, which is a Phase 3 clinical trial comparing the safety and efficacy of our 6 millimeter HAV to AV fistula for hemodialysis access in women.

Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success.

The timing of our clinical trials depends in part on the rate at which we can recruit patients to participate in such trials.

Additionally, the COVID-19 pandemic has had and may continue to have a sustained impact on our ability to recruit and follow up with patients.

We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA and other regulatory authorities, and as such our product candidates could be delayed or otherwise adversely affected.

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Lack of experience by investigators and surgeons with our HAVs can lead to incorrect implantation or follow-up procedures which could harm the results of our clinical trials and market acceptance of our HAVs, if approved.

Our HAVs are currently in various stages of preclinical and clinical testing and have not been widely used.

Our HAVs are currently in various stages of preclinical and clinical testing.

We do not have the personnel capacity to directly conduct or manage all of the clinical trials that are necessary for the development of our HAVs.

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Some of the investigators in our clinical trials have not been, and, if our HAVs receive marketing approval, surgeons may not be, previously exposed to the implantation and follow-up procedures related to their use.

As a result, our HAVs may be, and have been in the past, incorrectly implanted and follow-up procedures may be performed incorrectly, resulting in violations of our trial protocols, increased interventions or failure of the HAV.

Our efforts to educate investigators, surgeons and interventionalists regarding the proper techniques for use of our HAVs both during clinical trials and following potential commercialization may be costly, prove unsuccessful and could materially harm our ability to continue the clinical trials or marketing of our HAVs.

As a result, our HAVs may be, and have been in the past, incorrectly implanted and follow-up procedures may be performed incorrectly, resulting in increased interventions or failure of the HAV, and complicating interpretation of clinical trial results.

Regulatory authorities may also seek to impose restrictive labeling or proactive communication obligations on any marketing approval granted for use of our HAVs as a result, which could reduce market acceptance of any of our HAVs that receive marketing approval.

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We may not be able to identify or develop future product candidates that are safe and effective.

Even if we are successful in building our pipeline, the potential product candidates that we identify may not be suitable for clinical development, including if they have harmful side effects or other characteristics that render them unlikely to receive marketing approval or achieve market acceptance.

Even if we are successful in building our pipeline, the potential product candidates that we identify may not be suitable for clinical development, including if they have harmful side

effects or other characteristics that render them unlikely to receive marketing approval or achieve market acceptance.

Research programs to identify new product candidates require substantial technical, financial and human resources, and we may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.

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Even with the requisite approvals from the FDA in the United States, the European Commission in the EU and other regulatory authorities internationally, the commercial success of our HAVs will depend, in part, on the acceptance of physicians, patients and health care payors, as medically necessary, cost-effective and safe.

Any product that we commercialize may not gain acceptance by physicians, patients, health care payors and others in the medical community

due to ethical, social, medical and legal concerns.

Any product that we commercialize may not gain acceptance by physicians, patients, health care payors and others in the medical community due to ethical, social, medical and legal concerns.

If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable.

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Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

These competitors also

compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than the products that we develop.

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They may also be subject to unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives, any of which could harm our business, prospects, operating results and financial condition.

There is uncertainty around third-party coverage and reimbursement of newly approved regenerative medicine type products, even those with the RMAT designation from FDA, such as our 6 millimeter HAV for urgent arterial repair following extremity vascular trauma, which received the RMAT designation in 2023, and our 6 millimeter HAV for AV access for performing hemodialysis, which received the RMAT designation in 2017.

In the United States, third-party payors, including government payors such as the Medicare and Medicaid programs, play an important role in determining the extent to which medical products and biologics will be covered and reimbursed.

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The IRA also establishes a rebate obligation for drug manufacturers that increase prices of Medicare Part B and Part D covered drugs at a rate greater than the rate of inflation.

The inflation rebates may require us to pay rebates if we increased the cost of a covered Medicare Part B or Part D approved product faster than the rate of inflation.

The inflation rebates

may require us to pay rebates if we increased the cost of a covered Medicare Part B or Part D approved product faster than the rate of inflation.

In addition, the law eliminates the “donut hole” under Medicare Part D beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and requiring manufacturers to subsidize, through a newly established manufacturer discount program, 10% of Part D enrollees’ prescription costs for brand drugs below the out-of-pocket maximum and 20% once the out-of-pocket maximum has been reached.

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In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product.

To obtain reimbursement or pricing approval in some countries, we may be required to conduct a

clinical trial that compares the cost-effectiveness of our product candidate to other available therapies.

To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies.

If reimbursement of our products, if approved, is unavailable or more limited in scope or amount than we anticipate, or if pricing is set at even lower levels than we anticipate, our business could be harmed, possibly materially.

Product liability lawsuits against us could cause us to incur substantial liabilities that may not be covered by our limited product liability insurance and may limit development, approval and commercialization of our HAVs and any other product candidates that we develop in the future.

Product liability lawsuits against us could cause us to incur substantial liabilities that may not be covered by our limited product liability insurance and may limit the development, approval and commercialization of our HAVs and any other product candidates that we develop in the future.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face an even greater risk, if and when we commercially sell our HAVs and any other product candidates that we may develop.

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We also may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

The ongoing effects of the COVID-19 pandemic may continue to adversely impact our business, including our manufacturing efforts and clinical trials.

The ongoing effects of the COVID-19 pandemic has impacted our business and we expect it to continue to do so.

We have experienced delays in the ongoing enrollment of our clinical trials as a result of COVID-19.

If there is a resurgence of COVID-19 in the United States and elsewhere, we may experience disruptions that could severely impact our business and clinical trials, including:

• further delays or difficulties in enrolling patients in our clinical trials;

• delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

• delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials, including interruption in global shipping that may affect the transport of clinical trial materials;

• shortages of clinical trial site and hospital and clinic staff supporting the conduct of our clinical trials;

• risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, or will withdraw from the clinical trial due to concerns over COVID-19, which could impact the results of the clinical trial, including by increasing the number of observed adverse events, or reducing the statistical power of the clinical trials;

• delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources;

• changes to the clinical endpoints, statistical analysis plan, or enrollment plans for ongoing clinical trials due to limitations in patients, resources, or sites, including due to COVID-19;

• unanticipated deaths of clinical trial patients due to COVID-19 or due to lack of healthcare resources and follow-up as a consequence of COVID-19.

The extent to which ongoing effects of the COVID-19 pandemic impacts our business and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

Risks Related to Manufacturing Our Product Candidates

The manufacture of our product candidates is complex, we have not manufactured commercial product, and we may encounter difficulties in production.

The manufacture of our product candidates is complex, we have not manufactured commercial product, and we have in the past and may in the future encounter difficulties in production.

The process of manufacturing our HAVs is complex, highly regulated and subject to multiple risks.

The manufacture of biologics such as our HAVs has been, and continues to be, susceptible to product loss due to contamination, equipment failure, temporary power outages, improper installation or operation of equipment, damage to facilities, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process.

The manufacture of biologics such as our HAVs has been, and continues to be, susceptible to product loss due to a range of factors including contamination, equipment failure, temporary power outages, improper installation or operation of equipment, damage to facilities, vendor or operator error, inconsistency in yields, variability in product characteristics and difficulties in scaling the production process.

Even minor deviations from normal manufacturing processes has resulted, and could in the future result, in reduced production yields, product defects and other supply disruptions.

If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be closed for an extended period of time to investigate and remedy the contamination, which would harm our business, operating results and financial condition as well as our reputation.

If microbial, viral or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, manufacturing may be delayed for an extended period of time to investigate and remedy the contamination, which would harm our business, operating results and financial condition as well as our reputation.

We depend on cell banks in our manufacturing process, and the loss of our master cell banks would result in significant disruptions to that process.

We currently manufacture the 6 millimeter HAVs for our clinical trials at our manufacturing facility in Durham, North Carolina, where we have created a scalable modular manufacturing process, which we refer to as the LUNA200 system, that we believe will enable us to manufacture our HAVs, if approved, in commercial quantities in compliance with current good manufacturing practices (“cGMPs”).

Our efforts to scale out our manufacturing operations may not succeed.

Scaling out a biologic manufacturing process is a difficult task, as there are risks including, among others, cost overruns, process reproducibility, stability issues, lot consistency and timely availability of raw materials.

Prior to the establishment of our internal manufacturing facility, we employed a contract manufacturer who produced our HAVs using a smaller-production system known as the AURA system.

We have limited years of experience manufacturing our HAVs in-house with the LUNA200 system, and no experience manufacturing the volume that we anticipate will be required to supply all of our clinical trials or to achieve planned levels of commercial sales following marketing approval, if received.

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The forecasts of demand we plan to use to determine order quantities and lead times for components from outside suppliers may be incorrect, and we may be unable to obtain such components when needed and at a reasonable cost.

We also may experience interruptions in the supply of the raw materials required to manufacture our product candidates, or increased costs due to supply chain disruptions or inflation in the cost of goods, services or other operating inputs.

We also have experienced interruptions in the supply of the raw materials required to manufacture our product candidates, and increased costs due to supply chain disruptions or inflation in the cost of goods, services or other operating inputs.

Likewise, supply chain interruptions could affect the transport of clinical trial materials, such as our HAVs and other supplies used in our clinical trials, which would negatively impact our ability to conduct our clinical trials.

In addition, we may not be able to develop and implement efficient manufacturing capabilities and processes to manufacture our HAVs in sufficient volumes that also satisfy the legal, regulatory, quality, price, durability, engineering, design and production standards required to commercialize our HAVs successfully.

If we are unable to produce sufficient quantities of our HAVs for our clinical trial needs or commercialization due to production system limitations, we may need to make additional changes to our manufacturing processes and procedures.

If we are unable to produce sufficient quantities of our HAVs for our clinical trial needs or commercialization, we may need to make additional changes to our manufacturing processes and procedures.

Such changes to our manufacturing platform could trigger the need to conduct additional bridging studies between our prior clinical supply and that of any new manufacturing processes and procedures.

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Our manufacturing facility is subject to ongoing regulation and periodic inspection by the FDA and other regulatory authorities to ensure compliance with cGMPs.

To monitor compliance with applicable regulations, the FDA routinely conducts inspections of facilities and may identify potential deficiencies.

For example, the FDA issues what are referred to as “Form 483s” that set forth observations

and concerns that are identified during its inspections.

Failure to satisfactorily address the concerns or potential deficiencies identified in a Form 483 could result in the issuance of a warning letter, which is a notice of the issues that the FDA believes to be significant regulatory violations requiring prompt corrective actions.

Failure to respond adequately to a warning letter, or to otherwise fail to comply with applicable regulatory requirements could result in enforcement, remedial or punitive actions by the FDA or other regulatory authorities.

Failure to follow and document adherence to such regulations or other regulatory requirements may (i) lead to significant delays in the availability of product for our clinical trials, (ii) result in the termination of or a hold being placed on one or more of our clinical trials, (iii) require significant modifications to our manufacturing facility, personnel, and procedures, (iv) delay or prevent filing or approval of marketing applications for our HAVs, (v) result in temporary or permanent closures of our manufacturing facilities, and/or (vi) result in other civil or criminal penalties.

Risks Related to Our Reliance on Third Parties

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ultimately, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and trial protocol.

Failure by us or these third parties to do so could require us to enroll additional trial subjects beyond those we anticipate, could require us to modify our protocol, which may cause us to lose previously established Special Protocol Assessment (“SPA”) agreements with the FDA or similar agreements with other regulatory authorities concerning whether the design and size of our clinical trial adequately addresses scientific and regulatory requirements to support marketing approval, or could materially harm our ability to complete our clinical trials, including as a result of the need to remove trial sites and participants from the trial.

We have in the past and may in the future need to terminate trial sites due to failure to conduct a trial in accordance with its protocol, applicable regulations, and generally accepted research standards.

We have in the past and may in the future need to terminate trial sites due to failure to conduct a trial in accordance with its protocol, applicable regulations, GCPs, and generally accepted research standards.

The performance of the sites for our clinical trials may also be adversely affected by various other issues, including the lack of familiarity with the properties of our HAVs, intervention rates, insufficient training of personnel, variances in medical infrastructure, lack of familiarity with conducting clinical trials in accordance with international regulatory standards, communication difficulties or changes in local regulations.

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As of December 31, 2023 and 2022, we had an accumulated deficit of $537.3 million and $426.5 million, respectively.

Up to the date of the consummation of the Merger, we financed our operations primarily through the sale of equity securities and convertible debt and, to a lesser extent, through grants from governmental agencies.

We have historically financed our operations primarily through the sale of equity securities and convertible debt, proceeds from the Merger and related PIPE Financing, borrowings under loan facilities, the Purchase Agreement and, to a lesser extent, through grants from governmental agencies.

We have devoted substantially all of our financial resources and efforts to research and development, including preclinical studies and clinical trials and development of manufacturing technology, and we anticipate that our expenses will continue to increase over the next several years as we continue these activities.

Our V005 and V007 trials are currently enrolling, and we currently intend to submit a BLA to the FDA relating to vascular trauma and a subsequent BLA filing related to AV access for hemodialysis.

We also intend to continue scaling out our manufacturing facility to satisfy potential demand if the FDA approves our BLA, advancing preclinical and clinical development of additional clinical applications for our HAVs and funding our operations.

Accordingly, we expect to continue to incur substantial operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year.

To become and remain profitable, we must succeed in obtaining marketing approval for our HAVs in the United States, in commercializing our HAVs, and in developing and commercializing additional product candidates that generate significant revenue.

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Even if we do achieve profitability, we may not be able to sustain or increase profitability.

Our failure to become and remain profitable would depress the value of our company and could impair our ability to maintain our research and

development efforts, expand our business, diversify our product offerings or even continue our operations.

Our failure to become and remain profitable would depress the value of our company and could impair our ability to maintain our research and development efforts, expand our business, diversify our product offerings or even continue our operations.

A decline in the value of Humacyte could also cause you to lose all or part of your investment in our securities.

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If we are unable to raise capital, we could be forced to delay, reduce, suspend or cease our research and development programs or any future commercialization efforts, which would have a negative impact on our business, prospects, operating results and financial condition.

As of December 31, 2022 and 2021, we had $151.9 million and $225.5 million, respectively, in cash and cash equivalents and short-term investments.

Based upon our current operating plan, we believe that our cash and cash equivalents and short-term investments will be sufficient to fund our operations, including clinical trial expenses and capital expenditure requirements, for at least 12 months from the date of this Annual Report on Form 10-K.

Pursuant to the terms of our outstanding indebtedness, we may be limited in our ability to incur future debt.

In March 2021, Humacyte Global, Inc., or Legacy Humacyte, entered into a Loan and Security Agreement (as amended, the “Loan Agreement”) with Silicon Valley Bank and SVB Innovation Credit Fund VIII, L.P., which provides a term loan facility of up to $50.0 million with a maturity date of March 1, 2025.

We became a co-borrower under the Loan Agreement in connection with the Merger.

The obligations of Humacyte and Legacy Humacyte under the Loan Agreement are secured by substantially all of their assets, except for their intellectual property.

Pursuant to the terms of the Loan Agreement, we are limited in our ability to incur additional indebtedness.

In addition, a failure to comply with the covenants under the Loan Agreement could result in an event of default and an acceleration of amounts due.

If an event of default occurs that is not waived by the lenders, and the lenders accelerate any amounts due, we may not be able to make accelerated payments, and the lenders could seek to enforce their security interests in the collateral securing such indebtedness, which could have a material adverse effect on our business and results of operations.

Our payment obligations under the Loan Agreement reduce cash available to fund working capital, capital expenditures, research and development and other corporate purposes, and limit our ability to obtain additional financing for working capital, capital expenditures, expansion plans and other investments, which may in turn limit our ability to implement our business strategy, heighten our vulnerability to downturns in our business, the industry, or in the general economy, limit our flexibility in planning for, or reacting to, changes in our business and the industry and prevent us from taking advantage of business opportunities as they arise.

If market rates increase, we will have to pay additional interest on this indebtedness, which would further reduce cash available for our other business needs.

We cannot assure you that our business will generate sufficient cash flow from operations or that future financing will be available to us in amounts sufficient to enable us to make required and timely payments on our indebtedness, or to fund our operations.

To date, we have not requested or obtained marketing approval for, or commercialized, any of our product candidates, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

As of December 31, 2023, we had cash and cash equivalents of $80.4 million and as of December 31, 2022, we had cash and cash equivalents and short-term investments of $151.9 million.

Subsequent to December 31, 2023, in March 2024 we completed the Offering (defined below), which provided approximately $43.1 million in net proceeds and received an additional $20.0 million under the Purchase Agreement (defined below).

Based upon our current operating plan, we believe that our cash and cash equivalents will be sufficient to fund our operations, including clinical trial expenses and capital expenditure requirements, for at least 12 months from the date of this Annual Report on Form 10-K.

Pursuant to the terms of the Purchase Agreement, we may be limited in our ability to incur future debt.

On May 12, 2023, the Company and Global entered into the Purchase Agreement with the Purchasers and another affiliate of Oberland, as agent for the Purchasers (the “Agent”), to obtain financing with respect to the further development and commercialization of the Company’s HAV, to repay the Company’s credit facility with Silicon Valley Bank (“SVB”), and for other general corporate purposes.

Pursuant to the terms of the Purchase Agreement, we are limited in our ability to incur additional indebtedness without the prior written consent of the Purchasers.

The Purchasers have an option to terminate the Purchase Agreement and to require Global to repurchase the Revenue Interests in the event that we incur additional indebtedness in violation of the terms of the Purchase Agreement.

We cannot assure you that our business will generate sufficient cash flow from operations, that we will be able to incur future debt on favorable terms or at all, or that future financing will be available to us in amounts sufficient to fund our operations.

To date, we have not obtained marketing approval for, or commercialized, any of our product candidates, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

We are a development-stage company.

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A BLA must be supported by extensive preclinical and clinical data, as well as extensive information regarding chemistry, manufacturing and controls (“CMC”), sufficient to demonstrate the safety, purity, potency and effectiveness of the applicable product candidate to the satisfaction of the FDA.

We have never submitted a BLA for approval or otherwise obtained FDA approval for any of our product candidates.

In February 2024, the FDA accepted and granted priority review for our first BLA seeking approval of our HAV for urgent arterial repair following extremity vascular trauma when synthetic graft is not indicated and autologous vein use is not feasible, but there can be no assurance that we will obtain FDA approval for that indication or for any of our product candidates.

The BLA approval process is expensive and uncertain, it may take several years to complete, and we may not be successful in obtaining such approval.

The FDA has substantial discretion in the approval process and decisions made by the FDA can be unpredictable.

The FDA may use its discretion at any time to withdraw statements or representations, including written statements, that it has made or may make to us regarding our product candidates, clinical trials or the BLA process.

The number and types of preclinical studies and clinical trials that will be required for BLA approval varies depending on the product candidate, the disease or the condition that the product candidate is designed to target and the regulations applicable to any particular product candidate.

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Further, the results of pivotal clinical trials are always subject to thorough FDA review.

Even highly significant clinical trial results are no guarantee of approval.

We currently intend to submit a BLA to the FDA relating to vascular trauma and a BLA for AV access in hemodialysis, based on the results and trial design of our V005 and V007 trials, respectively.

The FDA may decline to approve our 6 millimeter HAV on the basis of these or other trial results, or for other reasons.

Even highly significant and favorable clinical trial results are no guarantee of approval.

Even if we obtain and maintain approval for our HAVs from the FDA, we may never obtain approval for our HAVs outside of the United States, where the regulatory process is also complex and subject to significant uncertainty.

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The marketing approval process for novel product candidates such as ours may take longer to complete and be more expensive than the process for other, better known or extensively studied pharmaceutical or other product candidates.

We may be eligible for a “rolling review” of a BLA, which means we may submit completed modules of a BLA rather than waiting until every module of the BLA is completed before submitting the full BLA for FDA review.

Such “rolling review” is common for indications that are part of one of FDA’s expedited programs, such as our 6 millimeter HAV, which has received Fast Track and RMAT designations for AV access in hemodialysis.

The FDA may also designate one or more of our product candidates for priority review after we submit a BLA.

On December 12, 2023, we submitted our BLA for the HAV in urgent arterial repair following extremity vascular trauma when synthetic graft is not indicated and autologous vein use is not feasible.

We submitted our BLA using a “rolling review,” which means we may submit completed modules of a BLA rather than waiting until every module of the BLA is completed before submitting the full BLA for FDA review.

In February 2024, the FDA accepted our BLA in the vascular trauma indication and granted priority review of that BLA.

Under priority review, the FDA’s goal is to review an application within six months of the 60-day filing date, compared to ten months for a standard review.

Even if we are able to utilize a “rolling review” and/or the FDA designates one or more of our product candidates for priority review, it may not lead to a shorter review period.

Even though we have utilized a “rolling review” and we have received priority review for that BLA, it may not lead to a shorter review period.

The FDA could require us to submit major amendments to the BLA, which could lead to a longer review time.

The FDA could also decide to consult an advisory committee as part of our BLA review process, which often leads to a longer review time.

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Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

Even if one of our product candidates receives orphan exclusivity, the FDA can still approve other drugs that have a different active ingredient for use in treating the same indication or disease, as well as the same drug or biologic for a different indication or disease.

In addition, if FDA approves a BLA for a biologic that has received orphan drug designation, then FDA may not approve another application for the same drug or biologic for the same disease or condition until the expiration of seven years from the date of the approval of the orphan BLA.

This is known as orphan exclusivity.

However, even if one of our biological product candidates receives orphan exclusivity, the FDA can still approve different drugs or biologics for use in treating the same indication or disease, as well as the same drug or biologic for a different indication or disease.

The FDA can also approve the same drug or biologic for the same indication or disease if the subsequent drug or biologic demonstrates clinical superiority.

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regulatory authorities approve any of our product candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the manufacturing, labelling, packaging, AE reporting, storage, advertising, distribution, promotion and recordkeeping for our products.

If we, our product candidates or the manufacturing facilities

for our product candidates fail to comply with regulatory requirements of the FDA and, if relevant, other non-U.S.

If we, our product candidates or the manufacturing facilities for our product candidates fail to comply with regulatory requirements of the FDA and, if relevant, other non-U.S.

regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including the following:

• issuance of warning letters or untitled letters by regulatory authorities asserting that we are in violation of the law;

• imposition of injunctions or significant civil monetary penalties or pursuit by regulatory authorities of civil or criminal prosecutions and fines against us or our responsible officers;

• imposition of injunctions or significant civil monetary penalties or pursuit by regulatory authorities of civil or criminal prosecutions and fines or other civil and/or criminal penalties against us or our responsible officers;

• suspension or withdrawal of marketing approval;

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Designation of our product candidates for expedited programs, such as Fast Track designation, Breakthrough Therapy Designation, or RMAT designation, or accelerated approval by the FDA, or priority designation by the Department of Defense, may not lead to a faster development or regulatory review or approval process, and even if granted, will not increase the likelihood that our product candidates will receive marketing approval.

In 2014, the FDA granted Fast Track designation for our 6 millimeter HAV for use in the creation of AV access for hemodialysis, and, in 2017, the FDA granted RMAT designation for our 6 millimeter HAV for the creation of vascular access for performing hemodialysis.

We have submitted a request for RMAT designation of the HAV for vascular trauma but there is no guarantee that the FDA will grant this request.

And we have not received designations pursuant to any of the FDA’s expedited programs for peripheral artery disease or our other indications, although we may in the future seek such designations if such product candidates meet the criteria for that designation.

As a result, even if we submit a BLA for trauma, our Fast Track and RMAT designations, and their attendant benefits, may not apply to this requested indication unless the FDA grants our request for RMAT designation.

In 2014, the FDA granted Fast Track designation for our 6 millimeter HAV for use in the creation of AV access for hemodialysis, in 2017, the FDA granted RMAT designation for our 6 millimeter HAV for the creation of vascular access for performing hemodialysis and in 2023, the FDA granted RMAT designation for our 6 millimeter HAV for urgent arterial repair following extremity vascular trauma.

We have not received designations pursuant to any of the FDA’s expedited programs for PAD or our other indications, although we may in the future seek such designations if such product candidates meet the criteria for that designation.

In addition, even with one or more of these designations, we may not experience a faster development process, or faster review or approval, for our product candidates compared to product candidates that are not part of the expedited programs.

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The loss of a designation under an expedited program, including a Fast Track designation, Breakthrough Therapy Designation, or RMAT designation, could significantly increase the costs of development and length of time required before we could seek marketing approval of such a product candidate.

We may seek accelerated approval for our HAV relating to vascular trauma.

A product candidate may be eligible for accelerated approval if it treats a serious or life-threatening condition, generally provides a meaningful advantage over available therapies, and demonstrates an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.

As a condition of accelerated approval, the FDA may require that a sponsor of a product receiving accelerated approval perform adequate and well-controlled confirmatory clinical trials post-approval.

These confirmatory trials must be completed with due diligence.

In addition, the FDA currently requires the pre-approval of promotional materials as a condition for accelerated approval, which could adversely impact the timing of the commercial launch of the product.

Even if we do receive accelerated approval, we may not experience a faster development or regulatory review or approval process, and receiving accelerated approval does not provide assurance of ultimate full FDA approval.

Accelerated approval may also be withdrawn if, among other things, a confirmatory trial required to verify the predicted clinical benefit of the product fails to verify such benefit or if such trial is not conducted with due diligence.

In addition, in 2018, our HAV product candidate was assigned a priority designation by the Secretary of Defense under Public Law 115-92.

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Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services.

For example, ACA, enacted in 2010 and amended by the Health Care and Education Reconciliation Act, contains a number of provisions that were intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies for fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry, and impose additional health policy reforms.

The Bipartisan Budget Act of 2018, among other things, amended the ACA to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole,” in part by requiring greater discounts from manufacturers.

Various members of Congress have expressed a desire to repeal all or portions of the ACA, and in December 2017, portions of the ACA dealing with the individual mandate insurance requirement were effectively repealed by the Tax Cuts and Jobs Act of 2017.

On February 10, 2021, the Biden administration withdrew the federal government’s support for overturning the ACA.

Further, on January 28, 2021, President Biden issued an executive order to initiate a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace, which ran until August 15, 2021.

The executive order also instructs certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

In June 2021, the United States Supreme Court held that the individual plaintiffs and states lacked standing to challenge the constitutionality of the ACA.

Additionally, in December 2018, CMS published a final rule permitting further collections and payments to and from certain ACA qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment.

Since then, the ACA risk adjustment program payment parameters have been updated annually.

In addition, CMS published a final rule that gave states greater flexibility, starting in 2020, in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces.

At this time, it remains unclear whether there will be further changes made to the ACA.

The ACA, as currently enacted or as amended in the future, may adversely affect our business and operating results, and we do not know how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.

Other legislative changes that have been adopted since enactment of the ACA could also affect potential pricing and utilization of our product candidates.

In addition, the Secretary of Health and Human Services, various members of Congress and CMS have made statements and issued proposals regarding containment of drug prices through various means, including enabling CMS to negotiate U.S.

drug pricing to align with foreign drug pricing, pricing transparency measures, reform of drug rebate programs, and conditioning coverage and reimbursement of certain drugs upon the prior failure or inadequacy of less expensive therapies, sometimes referred to as “step therapy.” Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

Specifically, there have been several recent U.S.

Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies.

At the federal level, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.

In addition, at the state level, individual states have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Beginning in fiscal year 2018, CMS altered the reimbursement formula on specified covered outpatient drugs (“SCODs”).

A SCOD drug product may also be a covered outpatient drug under the 340B program, which allows 340B-participating hospitals to purchase the drug product at the 340B discounted rate and, when prescribing it to a Medicare patient, be reimbursed at the Medicare rate.

Under the prior Medicare reimbursement rate, this created a significant, positive gap for 340B-participating health care facilities.

CMS’s change in the Medicare reimbursement rate for SCODs significantly impacted, or eliminated, the positive gap for 340B-participating health care facilities.

The District Court for the District of Columbia invalidated the formula change, but the U.S.

Court of Appeals for the District of Columbia Circuit reversed the district court’s decision and found that the changes were within the Secretary’s authority.

The case is currently under review by the U.S.

Supreme Court, and a decision is expected by summer of 2022.

It is unlikely the Medicare rate litigation will impact 340B pricing for our approved products in the future, but it possible it could affect covered hospitals who might purchase our products.

The FDA also released a final rule on September 24, 2020, which went into effect on November 30, 2020, providing guidance for states to build and submit importation plans for drugs from Canada.

At the federal level, for example, the Inflation Reduction Act of 2022, or IRA, was signed into law on August 16, 2022.

Among other key provisions, the IRA:

• Requires manufacturers to pay rebates for a Medicare Part B or Part D drug if the price increases for the drug exceed the rate of inflation.

• Eliminates the “donut hole” under Medicare Part D beginning in 2025 by significantly lowering the beneficiary maximum out-of-pocket cost and requiring manufacturers to subsidize 10% of Part D enrollees’ prescription costs for brand drugs below the out-of-pocket maximum and 20% once the out-of-pocket maximum has been reached.

• Delays the rebate rule that would require pass through of pharmacy benefit manager rebates to beneficiaries.

• Directs the Centers for Medicare & Medicaid Services, or CMS, to engage in price-capped negotiation for certain Medicare Part B and Part D drugs and biologics.

Specifically, the IRA’s Price Negotiation Program applies to high-expenditure single-source drugs and biologics that have been approved for at least 7 or 11 years, respectively, among other negotiation selection criteria, beginning with ten high-cost Part D drugs starting in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in 2029 and beyond.

The negotiated prices will be capped at a statutorily determined ceiling price.

There are statutory exemptions from the IRA’s Price Negotiation Program, including for a drug that has only a single orphan drug designation and is approved only for an indication or indications within the scope of such designation.

The IRA’s Price Negotiation Program is currently the subject of legal challenges.

Manufacturers that fail to comply with the IRA may be subject to various penalties, including civil monetary penalties or a potential excise tax.

The IRA permits the Secretary of Health and Human Services, or HHS Secretary, to implement many of the IRA’s provisions through guidance, as opposed to regulation, for the initial years.

The IRA is anticipated to have significant effects on the pharmaceutical industry and may reduce the prices pharmaceutical manufacturers can charge and the reimbursement pharmaceutical manufacturers can receive for approved products, among other effects.

The Biden administration has indicated that lowering prescription drug prices is a priority.

On October 14, 2022, President Biden signed an executive order to lower prescription drug costs for Americans.

In response to this directive, the Center for Medicare and Medicaid Innovation is developing new models intended to lower drug costs under Medicare and Medicaid.

These models include designing new payment methods for drugs approved under accelerated approval to encourage timely confirmatory trial completion and improve access to post-market safety and efficacy data, with the goal of reducing Medicare spending on drugs that have no confirmed clinical benefit;

creating a list of generic drugs for which the out-of-pocket Part D costs will be capped at $2 a month per drug;

and establishing a new approach for administering outcomes-based agreements for cell and gene therapies.

President Biden also signed an executive order on July 9, 2021, affirming the administration’s policy to support legislative reforms that would lower the prices of prescription drugs, including by supporting the development and market entry of lower-cost generic drugs and biosimilars, and support the enactment of a public health insurance option.

Among other things, the executive order directs the HHS Secretary to provide a report on actions to combat excessive pricing of prescription drugs, continue to clarify and improve the approval framework for generic drugs and identify and address any efforts to impede generic drug competition, enhance the domestic drug supply chain, reduce the price that the Federal government pays for drugs, and address price gouging in the industry.

The American Rescue Plan Act of 2021 eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1, 2024.

In addition, individual states have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We cannot predict how further developments of or changes to these laws and regulations will affect our business.

The FDA also released a final rule on September 24, 2020, which went into effect on November 30, 2020, providing guidance for states to build and submit plans for importation of drugs from Canada.

Additionally, on November 20, 2020, HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law.

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The regulations that may affect our ability to operate include, without limitation:

the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs, even if the person does not have actual knowledge of the statute or specific intent to violate it;

• the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs, even if the person does not have actual knowledge of the statute or specific intent to violate it;

• the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the U.S.

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If such an event were to occur and cause interruptions in our operations, it could have a material adverse effect on our business operations, including a material disruption of our development program.

Unauthorized disclosure of sensitive or confidential patient or employee data, including personally identifiable information, whether through breach of computer systems, systems failure, employee negligence, fraud or misappropriation, or otherwise, or unauthorized access to or through our information systems and networks, whether by our

employees or third parties, could result in negative publicity, legal liability and damage to our reputation.

Unauthorized disclosure of personally identifiable information could also expose us to sanctions for violations of data privacy laws and regulations around the world.

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The Company believes that it was not materially impacted by the attack.

Our third-party service providers and partners, with whom we may share data, are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems, as well as employee failures.

While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, and our management of multiple third party service providers increases our operational complexity.

If we fail to adequately monitor our third party service providers’ and partners’ performance,

including for compliance with our agreements and regulatory and legal requirements, we may have to incur additional costs to correct errors, our reputation could be harmed or we could be subject to litigation, claims, legal or regulatory proceedings, inquiries or investigations.

These risks may also be present if our third party service providers and partners use separate information systems that are not integrated with our systems and suffer a cybersecurity incident.

As a result, we are subject to the risk that the activities associated with our third party service providers and partners will adversely affect our business, even if the cyber incident does not directly impact our systems or information.

As we become more dependent on information technologies to conduct our operations, cyber incidents, including deliberate attacks, such as ransomware attacks, and attempts to gain unauthorized access to computer systems (including our LUNA200 manufacturing system) and networks, may increase in frequency and sophistication.

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The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, prospects, operating results and financial condition.

Moreover, if our data management systems do not effectively collect, store, process and report relevant data for the operation of our business (whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack and/or human error), our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially.

Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines and penalties or incur costs that could harm our business.

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The GDPR will increase our responsibility and liability in relation to personal data that we process, and we may be required to put in place additional mechanisms to ensure compliance with the new EU (which also includes the European Economic Area, or “EEA”) data protection rules.

Further, the United Kingdom’s vote in favor of exiting the EU, often referred to as Brexit, has created more uncertainty with regard to data protection regulation in the United Kingdom (the “UK”).

Further, the United Kingdom’s separation from the EU has created more uncertainty with regard to data protection regulation in the United Kingdom (the “UK”).

The UK retained the GDPR in UK law, which sits alongside the amended version of the Data Protection Act 2018.

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In particular, it is unclear to what extent the UK regime will begin diverging from the GDPR and how data transfers to and from the UK will be regulated.

In addition, California recently enacted the California Consumer Privacy Act (“CCPA”), which creates new individual privacy rights for California consumers (as defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.

The CCPA became effective on January 1, 2020, but the California Consumer Rights Act (“CPRA”) was recently enacted to strengthen elements of the CCPA effective January 1, 2023.

In addition, there are a number of other states that have considered similar privacy proposals, with states like Virginia and Colorado enacting their own privacy laws (also scheduled to come into effect in January 1, 2023 and July 1, 2023, respectively).

There are a number of other states that have considered similar privacy proposals, with states like Virginia and Colorado enacting their own privacy laws.

These privacy laws may impact our business activities and exemplify the vulnerability of our business to the evolving regulatory environment related to personal data.

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The disaster recovery and business continuity plans we have in place currently may prove inadequate in the event of a natural disaster or similar event.

We may incur substantial expenses as a result of any natural disaster, which could have a material adverse effect on our business.

may incur substantial expenses as a result of any natural disaster, which could have a material adverse effect on our business.

We are subject to anti-corruption and a variety of other laws governing our international operations.

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The issuance of a patent is not conclusive as to its scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad.

Such challenges may result in patent claims being narrowed, invalidated or

held unenforceable, which could limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.

Such challenges may result in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.

Given the amount of time required for the development, testing and regulatory review of future product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized.

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Patent and Trademark Office (“USPTO”), or to other patent offices around the world.

Alternately or additionally, we may become involved in post-grant review procedures, oppositions, derivation

proceedings, ex parte reexaminations, inter partes review, supplemental examinations, or interference proceedings or challenges in district court, in the United States or in various foreign patent offices, including both national and regional, challenging patents or patent applications in which we have rights, including patents on which we rely to protect our business.

Alternately or additionally, we may become involved in post-grant review procedures, oppositions, derivation proceedings, ex parte reexaminations, inter partes review, supplemental examinations, or interference proceedings or challenges in district court, in the United States or in various foreign patent offices, including both national and regional, challenging patents or patent applications in which we have rights, including patents on which we rely to protect our business.

An adverse determination in any such challenges may result in loss of the patent or in patent or patent application claims being narrowed, invalidated or held unenforceable, in whole or in part, or in denial of the patent application or loss or reduction in the scope of one or more claims of the patent or patent application, any of which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.

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For example, patent laws in various jurisdictions, including significant commercial markets such as Europe, restrict the patentability of methods of treatment of the human body more than United States law does.

If these developments were to occur, they could have a material adverse effect on our ability to generate revenue.

Any such developments could have a material adverse effect on our ability to generate revenue.

Issued patents that we have or may obtain or license may not provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage.

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We are a party to intellectual property license agreements with third parties.

For example, we have licenses with each of Duke University and Yale University for patents associated with our proprietary technology, and may enter into additional license agreements in the future.

For example, we have licenses with each of Duke University and Yale University for patents associated with our proprietary technology, among others, and may enter into additional license agreements in the future.

Our existing license agreements impose, and we expect that our future license agreements will impose, various diligence, royalty payment, milestone payment, insurance and other obligations on us.

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Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.

The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our owned or licensed patents or marketing of competing products in violation of our proprietary rights generally.

competing products in violation of our proprietary rights generally.

Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our owned or licensed patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.

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As of December 31, 2023, we had 185 employees.

As we move forward in our efforts to commercialize our HAVs, if approved, we expect to continue to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of development, regulatory affairs, manufacturing and quality and compliance and support functions.

Due to our limited financial resources, we may not be able to effectively manage the expansion of our operations, maintain competitive compensation packages, or recruit and train additional qualified personnel.

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• potential or actual military conflicts or acts of terrorism;

• announcements concerning Humacyte or our competitors;

• announcements concerning the Company or our competitors;

• the general state of the securities markets.

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Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our common stock.

We expect that securities research analysts will establish and publish their own periodic projections for the business of Humacyte.

We expect that securities research analysts will establish and publish their own periodic projections for our business.

These projections may vary widely and may not accurately predict the results we actually achieve.

Our stock price may decline if our actual results do not match the projections of these securities research analysts.

Similarly, if one or more of the analysts who write reports on Humacyte downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price could decline.

If one or more of these analysts ceases coverage of Humacyte or fails to publish reports on Humacyte regularly, our stock price or trading volume could decline.

Similarly, if one or more of the analysts who write reports on the Company downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price could decline.

If one or more of these analysts ceases coverage of the Company or fails to publish reports on the Company regularly, our stock price or trading volume could decline.

We may issue additional shares of common stock or other equity securities without stockholder approval, which would dilute your ownership interests and may depress the market price of our common stock.

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In addition, the aggregate number of shares under the 2021 Plan and the ESPP will automatically increase on January 1 of each year commencing January 1, 2022, in an amount equal to 5% and 1%, respectively, of the number of shares of our capital stock outstanding on December 31 of the preceding year, unless our board of directors (the “Board”) acts prior to January 1 of a given year to provide that the increase for such year will be a lesser number.

At the end of 2021 and 2022, our Board elected not to increase the number of shares under the 2021 Plan and the ESPP.

As of December 31, 2023, we had the Option outstanding to purchase up to $10 million worth of shares of our common stock.

We may also issue additional shares of common stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances.

Our issuance of additional shares of common stock or other equity securities of equal or senior rank would have the following effects:

• our existing stockholders’ proportionate ownership interest in Humacyte will decrease;

• our existing stockholders’ proportionate ownership interest in the Company will decrease;

• the amount of cash available per share, including for payment of dividends in the future, may decrease;

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Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.

We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future.

We intend to retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future.

Any decision to declare and pay dividends as a public company in the future will be made at the discretion of the Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Board may deem relevant.

In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we

or our subsidiaries incur.

In addition, our ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur.

As a result, you may not receive any return on an investment in our securities unless you sell your securities for a price greater than that which you paid for it.

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We have derivative securities that are accounted for as liabilities and the changes in value of such derivative securities could have a material effect on our financial results.

Included on the Company’s consolidated balance sheets as of December 31, 2022 are derivative liabilities related to the Contingent Consideration and the Private Placement Warrants.

Included on the Company’s consolidated balance sheets as of December 31, 2023 are derivative liabilities related to the Contingent Consideration, the Private Placement Warrants, and the Purchasers’ put option under the Purchase Agreement.

Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations.

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Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on the Contingent Consideration and the Private Placement Warrants each reporting period and that the amount of such gains or losses could be material.

Prior to the Merger, on April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”).

Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the Public Warrants.

As a result of the SEC Statement, prior to the Merger, AHAC reevaluated the accounting treatment of the Public Warrants and determined to classify the Public Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.

As a result, included on AHAC’s balance sheet as of December 31, 2020 are derivative liabilities related to embedded features contained within the Public Warrants.

In connection with its Amended Annual Report on Form 10-K/A for the year ended December 31, 2020, AHAC reached a determination to restate certain previously issued financial statements and related disclosures for the periods disclosed in order to correct the accounting treatment for the Warrants following the publication of the SEC Statement.

As a result, prior to the Merger, AHAC incurred unanticipated costs for accounting and legal fees in connection with or related to the restatement, and we may become subject to additional risks and uncertainties related to the restatement.

AHAC restated certain previously issued financial statements and related disclosures for the periods disclosed, and as of September 30, 2021, our management concluded that the conditions causing the material weakness that led to these restatements did not exist.

However, in the future, we may determine that we have additional material weaknesses.

Our failure to remediate any material weaknesses or failure to identify and address any material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis, which could cause investors to lose confidence in our reported financial information, which may result in volatility in and a decline in the market price of our common stock.

Our business could be adversely impacted by inflation.

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The Sarbanes-Oxley Act requires, among other things, that a public company establish and maintain effective internal control over financial reporting.

As a result, we will incur significant legal, accounting and other expenses that we did not incur as a private company.

Our entire management team and many of its other employees will need to devote substantial time to compliance, and may not effectively or efficiently manage our transition into a public company.

These rules and regulations will result in our incurring substantial legal and financial compliance costs and will make some activities more time-consuming and costly.

As a result, we will incur significant legal, accounting and other expenses.

Our entire management team and many of its other employees devotes substantial time to compliance.

These rules and regulations result in our incurring substantial legal and financial compliance costs and will make some activities more time-consuming and costly.

For example, these rules and regulations have made it more difficult and more expensive for Humacyte to obtain director and officer liability insurance, and it has accepted reduced coverage.

result, it may be difficult for us to attract and retain qualified people to serve on the Board or committees of the Board or as executive officers.

As a result, it may be difficult for us to attract and retain qualified people to serve on the Board or committees of the Board or as executive officers.

We are an “emerging growth company” and a “smaller reporting company” within the meaning of the rules adopted by the SEC, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

In connection with its

Amended Annual Report on Form 10-K/A for the year ended December 31, 2020, AHAC reached a determination to restate certain previously issued financial statements and related disclosures for the periods disclosed in order to correct the accounting treatment for the Warrants following the publication of the SEC Statement.

Our assessment is that, after the Merger, we have a sufficiently staffed and technically experienced finance and accounting team to address the financial reporting requirements of a public company.

Because the conditions causing the material weakness no longer existed, and are not expected to exist in the foreseeable future, we determined the material weakness did not exist in internal control over financial reporting as of September 30, 2021.

Prior to the Merger, AHAC’s management concluded that its disclosure controls and procedures were not effective as of December 31, 2020, and that its internal control over financial reporting was not effective as of December 31, 2020, as a result of a material weakness in controls related to the accounting for the Warrants.

As a result, AHAC incurred unanticipated costs for accounting and legal fees in connection with or related to the restatement, and we may become subject to additional risks and uncertainties related to the restatement, such as a negative impact on investor confidence in the accuracy of our financial disclosures, and may face reputational risks for our business.

Effective as of the closing of the Merger, our management is responsible for internal control over financial reporting and the former management of AHAC no longer participates in financial reporting.

As long as we are an emerging growth company under the JOBS Act or a non-accelerated filer and a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.

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Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.

Anti-takeover provisions in our Second Amended and Restated Certificate of Incorporation and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult, and may prevent attempts by our stockholders to replace or remove our current management.

Anti-takeover provisions in our Second Amended and Restated Certificate of Incorporation and under Delaware law could make an acquisition of the Company, which may be beneficial to our stockholders, more difficult, and may prevent attempts by our stockholders to replace or remove our current management.

Our Second Amended and Restated Certificate of Incorporation (the “Charter”) contains provisions that may delay or prevent an acquisition of the company or change in our management.

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These provisions would apply even if the offer may be considered beneficial by some stockholders.

substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our Charter provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware and the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our Charter provides that the Court of Chancery of the State of Delaware will be the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

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In addition, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the rules and regulations promulgated thereunder.

Unresolved Staff Comments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors