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Longeveron: Time to Buy the Di – GuruFocus.com

August 17th, 2021 1:50 am

Longeveron Inc. (LGVN, Financial) is an emerging clinical-stage biotechnology player that utilizes stem cell research. It is working towards developing regenerative medication via allogeneic mesenchymal stem cells. It is in the progress of building a number of cellular therapies at its facility, utilizing healthy bone marrow of adult donors to develop treatments for aging and aging-related diseases like Alzheimers Disease.

The companys lead candidate is a therapy known as Lomecel-B, an allogeneic product containing medicinal signaling cells from the adult donor bone marrow (from an 18 to 45 age group) and culture expanded in the companys cell processing facility. They identify and use cells with regenerative properties to build a therapy that could carry out various functions, including tissue repair and organ maintenance.

Longeveron has been in the news recently as it released the data of the Phase 2b aging frailty trials for Lomecel-B. The results did not live up to expectations, causing the stock to plunge. However, the long-term prospects of the company have not changed, in my opinion, which could mean now is a great opportunity to buy the dip.

The Phase 2b trial data

Longeveron carried out a multi-center study to assess the effect of its lead candidate Lomecel-B therapy on 148 random subjects. Its trial was partially funded by an SBIR (Small Business Innovation Research) grant from the National Institute of Aging. The company carried out a single peripheral intravenous infusion of the lead candidate in various quantities ranging from 25 million to 200 million cells. It kept the subjects under observation for 52 weeks to evaluate the efficacy and safety of the therapy. The management performed a six-minute walk test on the subjects to assess their exercise tolerance and endurance in order to evaluate the impact of the treatment. This test also analyzed gait speed, short physical performance battery, grip strength, performance-oriented mobility assessment, sexual function, cognition, depression and other factors associated with the subjects in their daily lives.

Longeveron did not see statistically significant results compared to the placebo after 180 days, which is what has disappointed investors and led to the recent selloff. However, the management saw a significant difference from placebo after 270 days of the treatment. Moreover, Lomecel-B continues to demonstrate a high level of safety as no patients showed signs of any severe adverse conditions.

The information is sufficient for Longeveron to continue pursuing their research aggressively, not just in the U.S. but in other countries as well. The management aims to initiate the Phase 2 Japanese Aging Frailty trial this year while waiting for the results of Phase 1/2 HERA trial data. The 'HERA' trial data is expected to evaluate the effects of Lomecel-B on the immune response to influenza vaccination in Aging Frailty subjects.

The importance of aging and frailty research

Aging Frailty-oriented research is gaining a very high amount of importance because of its substantial addressable market. Most patients who suffer from it show symptoms like muscle loss and decreased strength, low-level activity, slow walking, poor energy level and endurance, weight loss, nutritional deficiencies and fatigue. It has a negative impact on muscle and bone tissue health. Apart from muscles and bones, aging and frailty also negatively affects the cardiovascular system, immune system and cognition.

Stem cell treatments for aging-associated diseases are a crucial area of research given the ageing population. However, there are no FDA approved stem cell treatments in the U.S. within this domain. The potential addressable market for aging and frailty is rising sharply due to the gradual increase in average life expectancy as well as declining birth rates. Longeveron is one of the key movers in this domain and has shown significant results through their Lomecel-B therapy trials.

While the trials may not have shown a statistically significant result in a 180-day period, the 270-day data is extremely encouraging for the companys future. Furthermore, if the Lomecel-B trials continue to show success in the upcoming quarters, Longeveron could become a top candidate for a large pharma acquisition.

Is the crash justified?

Longeverons stock crashed after the companys Phase 2b press release came out, but is this crash justified? The trial results may not have been positive for a 180-day time horizon as hoped, but the 270-day results have been encouraging. Moreover, given the fact that the safety of Lomecel-B has been unquestionable, this implies that the company can go ahead with other trials (including the Phase 2 trial for aging and frailty in the Japanese market) with great confidence.

There is also a huge upside potential with respect to the future prospects of Lomecel-Bs application in Alzheimers Disease and other ageing-related diseases. Last but not the least, the company has sufficient cash to go through with multiple trials across different geographies. Thus, I believe that the recent crash in Longeverons stock price is no reason for investors to panic. Moreover, biotech microcap investors with a high risk appetite could see this drop as an investment opportunity.

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Longeveron: Time to Buy the Di - GuruFocus.com

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