Q4 2023 Humacyte Inc Earnings Call
Participants
Laura Niklason; President & CEO; Humacyte, Inc.
Dale Sander; CFO, Chief Corporate Development Officer & Treasurer; Humacyte, Inc.
Lauren Marek; Associate Director of Investor Communications; LifeSci Capital, LLC, Research Division
Ryan Zimmerman; Analyst; BTIG, LLC.
Kristen Kluska; Analyst; Cantor Fitzgerald & Co.
Josh Jennings; Analyst; Cowen & Co., LLC.
Suraj Kalia; Analyst; Oppenheimer & Co., Inc.
Allison Bratzel; Analyst; Piper Sandler & Co.
Vernon Bernardino; Analyst; H.C. Wainwright & Co., LLC
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to the Ubisoft 2023 fourth quarter year-end results. Conference call. Currently, all participants are in listen-only mode. Later we'll conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.
I will now turn the call over to Lauren Merrick with LifeSci Advisors. Please go ahead.
Lauren Marek
Thank you, operator. Before we would proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ from statements made on this call is contained in our periodic reports filed with the SEC for forward-looking statements made during this call speak only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, except as required by law. Information presented on this call is contained in the press release we issued this morning and in our Form 10 K, which after filing may be accessed from the Investors page of the human site website.
Joining me on today's call from Puma side are Dr. Laura Nicholson, President and Chief Executive Officer, Bill Sander, Chief Financial Officer and Chief Corporate Development Officer, and Dr. Heather Prichard, Chief Operating Officer. Dr. Nicholson will provide a summary of the Company's progress during the year and recent weeks, and Dale will review the Company's financial results for the quarter and year ended December 31st, 2023. Following their prepared remarks, the management team will be available for your questions.
I will now turn the call over to Dr. Nicholson.
Laura Niklason
Thank you, Lauren, and good morning, everyone, and thank you for joining us for our 2023 financial results and business update call. Our fourth quarter and the start of 2024 have been highly productive for human site. Importantly, human site completed submission of our BLA in December, and the FDA accepted our biologics license application for the HJV. in the vascular trauma indication in February of this year over the course of 2023, we also made progress on our broader HIV pipeline, including the completion of enrollment of our Phase three trial in dialysis access presentation and publication of clinical trial results in peripheral arterial disease and publication of preclinical results for our small-caliber, a JV in the juvenile heart model.
During today's call, I'll review these developments in more detail before turning the call over to Dale for a review of our financial results, then we'll be happy to open up the call to your questions.
I'll begin with our HIV program in vascular trauma. In December 2023, we submitted our BLA to the FDA. This was supported by a robust data package that included positive results from our VO. five Phase two three clinical trial BLA package also included real-world evidence from the treatment of wartime injuries in Ukraine under the humanitarian aid program that was supported by the FDA. Our data package showed that the HJV. had higher rates of patency and lower rates of amputation and infection as compared to historic synthetic graft benchmarks in the two trials combined, the 30-day patency or presence of blood flow for the HAV was 91.5% for extremity patients compared to 78.9% historically reported for synthetic grafts. The AJV. also demonstrated lower amputation rates with a rate of 4.5% as compared to 24.3% for synthetic graft. And furthermore, the HAV. had lower infection rates at 30 days with a rate of 0.9% as compared to 8.4% historically for synthetic grafts. In other words, patients treated with the HAV. or only 40% is likely to lose blood flow through their conduit after one month, which is a key period for recovery after traumatic injury, HIV patients were also only one fit as likely to suffer an amputation and only one nine is likely to have an infection of their graft as compared to patients who were treated with a synthetic graft. These results were also provided in November at multiple presentations at disease Symposium, which is a major vascular surgery meeting held in New York in February of 2024. The FDA accepted our BLA in vascular trauma, also granting priority review and establishing a Prescription Drug User Fee Act or PDUFA goal date for action of August 10th, 2024. The FDA's decision to grant Priority Review aligns with their prior grant of a Regenerative Medicine Advanced Therapy or RMAT designation for the AJV. for urgent arterial repair. We believe this also reflects the recognition that many patients with severe injuries are underserved by the current standards of care.
Priority review is also consistent with the priority designation that was given by the Secretary of Defense under a law enacted to expedite the FDA's review of products that are intended to diagnose, treat or prevent serious life-threatening conditions better facing American military personnel. Bla acceptance brings us another step closer to our goal of providing an innovative regenerative medicine product for patients who are suffering traumatic vascular injury based on the strength of the data package from our VO. five trial in vascular trauma, combined with data from the humanitarian experience in Ukraine. We look forward to the per due for date with confidence in preparation for an anticipated FDA approval. Human side is also working to build out the commercial team as part of our go-to market strategy, health economic models have been developed, which are derived from large national databases of traumatic injury care in the U.S. based upon historical results for synthetic graft outcomes. It's clear that the HAV. can provide important health health benefits as well as important economic benefits for the health care system costs as conduit infection, sepsis and amputation are extremely high, adding tens or even hundreds of thousands of dollars to the costs of trauma care avoidance of these costly complications will we believe, help to drive market uptake of this revolutionary product candidate in the care of dramatically injured patients.
Turning now to our program in peripheral artery disease. In the fall, results were presented from an FDA regulated and investigator-sponsored clinical study that's being conducted at the Mayo Clinic of each of the HIV in patients with chronic lymphocytic leukemia, which is the end stage of PAD. most patients treated as part of the program required bypass surgery below the knee, which is a type of disease that is typically not well treated with stents and angioplasty procedures treated patients did not have suitable vein of their own to perform a needed bypass procedure and so receive the HAV. two ReVasc and rise their critically ischemic lower limb in presentations at the VA symposium and at the Midwestern vascular conference researchers observed that in the clinical study, the HAV. was a safe, resilient and effective conduit for arterial bypass and limb salvage in patients who did not have vain to provide a conduit to restore blood flow. This is an important result since approximately 40% of patients requiring lower extremity bypass do not have staff and the same available for revascularization with regard to publications in October of 2023, a publication in the Journal of Thoracic and Cardiovascular Surgery described a preclinical study showing the potential for the investigational small diameter HIV to treat technology I follow. This is a heart condition that affects one in every 2000 babies born in the U.S. each year. In this preclinical study, researchers from Nationwide Children's Hospital in Columbus, Ohio, implanted 3.5 millimeter diameter AGVs into a juvenile large animal model of pediatric heart disease in long-term follow-up in these animals, the 3.5 millimeter HJV.s remained patent for up to six months and showed evidence of cellular repopulation by host cells which is similar to what's been observed in human patients. Pediatric hard study also demonstrated the extension of human sites manufacturing platform, adding the 3.5 millimeter vessels to the six millimeter vessels that have been manufactured for more than a decade. As a reminder, our 3.5 millimeter vessels are currently being evaluated in IND-enabling preclinical studies in large animals to support future advancement of the HIV into human clinical trials in coronary artery bypass. We've previously reported excellent long term six month results in coronary artery bypass in large animals and cardiac implantations are continuing this year as we gather data in support of an IND filing in heart bypass surgery in July, results of a preclinical study were also published in the Journal of Vascular surgery, vascular science. This study provides a scientific basis for the low rates of infection that have been observed in our clinical trials of the HJV. researchers found that compared to synthetic grafts, the HAV. had a significantly lower bacterial infection rate. The infection resistance may be due to the HJV.s native like tissue structure that supports superior compatibility with the body's own immune cells. These results have broad implications for all of our intended HIV indications and further support the HEVs potential as a solution to the limitations of synthetic graft in a wide range of medical conditions.
And with that, I'll now turn it over to Dale for a review of our financial results in other business development Thank you, Laura.
Dale Sander
We had cash and cash equivalents of $80.4 million as of December 31st, 2023. We also completed two transactions in early 2024, which added substantially to our cash balances.
On March fifth, 2024, we closed an underwritten public offering of common stock and raised net proceeds of approximately $43.1 million. In addition, on March 11th, 2024, we received $20 million in proceeds from an additional draw under our revenue purchase agreement with Oberland Capital total net cash used was $69.0 million for the year ended December 31st, 2023, compared to $67.7 million for the year ended December 31st, 2022. We believe that our cash and cash equivalents are adequate to finance operations while past the currently anticipated timelines for FDA approval and commercialization of a JV in the vascular trauma indication. There is no revenue for the fourth quarters of 2023 and 2022. And there were no revenues for the year ended December 31st, 2023 revenue was $1.6 million for the year ended December 31st, 2022, and was related to a grant supporting development of a JV that was completed during 2022.
Research and development expenses were $20.2 million for the fourth quarter of 2023 compared to $15 million for the fourth quarter of 2022 and were $76.6 million for the year ended December 31st, 2023, compared to [$63.3] million for the year ended December 31st, 2020 to the 2023 increases resulted primarily from increased personnel, external services expenses and materials expenses, supporting the expanded research and development initiatives in our clinical studies including the completion of our field service or five Phase two three trial and our B. zero one seven Ukraine cemented Chairman trial for use with HAV. and extremity vascular trauma as well as our BLA filing in December and the clinical development of the JV for use in dialysis access, general and administrative expenses were $6 million for the fourth quarter of 2023 compared to $5.8 million for the fourth quarter of 2022 and were $23.5 million for the year ended December 31st, 2023 compared to $22.9 million for the year ended December 31st, 2020 to the 2020 threes. Slight increases in G&A expenses resulted primarily from increased personnel costs, primarily driven by preparations for the planned commercial launch of HIV in the vascular trauma indication. Either net income or expense was net income of $1.1 million for the fourth quarter of 2023 compared to net income of $17.1 million for the fourth quarter of 2022 and was net expense of $10.7 million for the year ended December 31st, 2023, compared to net income of $72.6 million for the year ended December 31st, 2022, the reduction in other net income in the fourth quarter of 2023 and an increase in other net expense for the year ended December 31st, 2023 resulted primarily from the non-cash remeasurement of the contingent earn-out liability associated with the August 2021 merger with Alpha Healthcare acquisition, core net loss was $25.1 million for the fourth quarter of 2023 compared to $3.7 million for the fourth quarter of 2022. The net loss was $110.8 million for the year ended December 31st, 2023, compared to $12 million for the year ended December 31st, 2022. The 2023 increases. Net loss resulted primarily from the non cash remeasurement of the contingent earn-out liability and increased operating expenses both described above.
With that, I'll turn it back, Laura for concluding remarks.
Lauren Marek
Thank you, Dale. This is a very exciting time for human site and all of our stakeholders. I'd like to take a moment to thank the human site team as well as our partners for their continued commitment to our programs. The entire team has worked incredibly hard to reach this point and we're approaching what could be a transformational time, not only for the Company, but for patients suffering from a variety of vascular diseases and complications across our clinical programs. CHAV. has already accumulated more than 1,200 patient years of experience, including in vascular, trauma, repair, dialysis access and peripheral artery disease. And we are continuing to study the HHE in our earlier programs in order to maximize the full potential of our technology platform and its value. We look forward to keeping you updated with our progress, and thank you all for joining us today. Operator, we're ready to take questions.
Question and Answer Session
Operator
Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, please press star one from your telephone keypad. A confirmation tone will indicate your line is in the question queue, you may press star two if you wish to withdraw your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please while we poll for questions. And once again, that's star one to ask a question. Thank you.
Thank you.
And our first question is from the line of Ryan Zimmerman with BTIG wishes to use your questions.
Ryan Zimmerman
Good morning. Tom, can you hear me okay, we can hear you Hello. Good morning and congrats on the progress. So close you can you can reach out and touch it. Maybe just to start as we talk about commercial preparations, Dale, you alluded to some of the health economic work you're doing. I think one of the questions that investors have is kind of where the HIV lives economically in the spectrum of product offerings and kind of how you think about where you'd like it to be price that and to the extent that you can elaborate on kind of, you know what the target opportunity looks like and the ramp that we should be thinking about as you prepare for commercial activity?
Dale Sander
Yes. Thanks, Ryan. And I'll tried to take those in somewhat order. But obviously, the JV as a biologic, which has produced clinical results, which are far superior two. The comparable standard of care today, particularly synthetic grafts, is going to be priced at a higher acquisition cost than the current standard of care. But we believe that our budget impact models, which are largely developed at this stage, will show that due to the reduction in complications such as amputations and infections. And in the case of saphenous vein, reperfusion injury and other complications like that, that are very expensive for the for the providers. In this case, the hospitals that the overall cost of treating a patient with a JV will be will be very favorable. And as you know, pricing itself is usually determined and announced at the time of launch because if you don't want to do that in a vacuum, you want to do that in combination with the clinical story and the health economic story. But I think as we've talked about in the past, if you look at our earliest SEC filings, we had suggested something in the $25,000 range for the product. It would be somewhat lower could be somewhat higher, but that wherever it falls within that range, clearly the health economic benefits that are going to be demonstrated due to this reduction of complications is going to be meaningful and certainly will support the pricing of that product.
Beyond that, I think you had a question about market size. There's around 80,000 vascular trauma cases each year within the United States. And when we drill down and look very specifically at kind of the low hanging fruit and the ones that are most immediately applicable to the JV by looking at hospital billing codes and other information like that, there's at least 26,000 cases. We believe that our are clear candidates for the HEV to be used within the United States, which was suggested buses, a market that could be somewhere in the 600 plus million range dependent upon on pricing. So and hopefully I've answered your questions, but at this point, turn it missed, and then I'll say.
Ryan Zimmerman
thank you, Dale, and it's still early. I know these are not fully flushed out as you get closer. I think more clarity will emerge there.
The other question is just around cash burn guidance. I think, you know, pro forma with the recent equity offering and some of the tranches from Overland, I think here around the one 40 range as of today, if I'm not mistaken, about 1435, and that's based on the gross proceeds from the recent equity offering. So so I'm just curious, you know what you can say for 2024 around cash burn and maybe any directional commentary on operating spend as you do kind of prepare for this commercial launch?
Dale Sander
Yes, certainly, I think your math is right. The way we looked at it as we ended December 31st with little more than well, right around $81 million in cash. And when we add on the 63 plus million that we achieved through the equity financing as well as the additional draws under our Overland facility. That means we're entering the year with about $144 million in cash, which leaves us very well positioned.
Our net cash burn for 2023 rounded to about $69 million. But if you back out the effect of some net financing transactions from operating cash point of view and from a capital expenditure point of view, we burned about $73.5 million in 2023. And those activities. So suggesting we're very well positioned with the cash that we have on hand right now in terms of how we'll proceed in the upcoming year?
We haven't given super specific guidance, but I'll share what we've guided in the past is that, but certainly we expect to expand our commercialization activities during the year, including near the time of launch, bringing on the relatively small sales force to address this very concentrated markets. So we will have obviously higher commercialization expenses during this year, but we do also have a wind down of certain clinical costs during the year with the deal size study just in long-term follow-up and not not as intensive activities as we had during 2023 as we prepared for the closeout of that study and for filing of the BLA and then also our dialysis trial B oh seven will be winding down in the second half of the year, too. So we expect somewhat of an increase in overall cash burn for the upcoming year, but not not to a great extent on a net basis. And we believe that the cash on hand is certainly adequate to take us well past the commercial launches in the in trauma and AV access well, perhaps the or certainly through 2026. So we're a we certainly don't have any cash concerns at this point in time.
Ryan Zimmerman
Very helpful, Dale. Thank you for all the information.
Operator
Our next question is from the line of Kristen Kluska with Cantor Fitzgerald. Please use your questions.
Kristen Kluska
Hi, everyone. Good morning and congrats as well on the progress I wanted to touch on manufacturing. And this is often something that creates a very nice design very closely during the new buzz and drug approval.
So I wanted to ask how you're feeling about your manufacturing and also anything you're doing to prepare for upcoming action and meetings with the FDA will be conducted?
Laura Niklason
Yes, Christian, this is Lauren Nicolas, and thank you for that question on So yes, certainly after the BLA file was accepted and we got our producer date in August as the FDA moved rapidly to begin scheduling, you know, interim meetings and also our inspection arm, which is upcoming in the near future.
As far as what we've been doing to prepare for this, we've actually run two mock inspections one last summer and one just last month in February where we brought consultants in to human site and who were all at ex FDA inspectors.
And they really did a deep dive on two separate occasions really helping us be as prepared as possible for this upcoming inspection.
And I would say that since we began preparing for this last summer, we've really been able to execute on all of the or all of the remediation that we've picked out, certainly from 2023. And we're feeling very confident about about how this inspection is going to go. We believe that the facility is in great shape on our manufacturing processes are well characterized and well understood. Obviously, at the Center for Biologics, you're right, a big focus is always on manufacturing and the facility and the robustness of the process, but we believe we're in good shape.
Kristen Kluska
Great. Thank you. For the preclinical study that you talked about, the new Canal animal model as it used to highlight the different applications of the ACP platform, though, how are you thinking about the flexibility for your current platform as it relates to different vessel and how you might go about implementing that on pilot or larger scale program?
Laura Niklason
So the one of the beauties of the platform and this was this was designed with intention, is that our Luna manufacturing machines, each of which right now can make up to about 1,040 centimeter AGVs per year. Those were designed specifically so as to be modular and flexible. So using the same machine, we can grow tissues of different diameters and different lengths without changing the machinery itself. It really only involves changing some of the plastic bag sizes and some of the tubing. So as we mentioned in the call, we've been making some 3.5 millimeter vessels that are suitable for heart bypass and pediatric heart surgery. We've been making those in our current system for the last couple of years, and we've been testing them in animals. It's also for us, we believe, a short haul to modify our system and make six millimeter vessels, but that are shorter or longer shorter vessels may have may have added utility in the trauma indication in the future because many traumatic injuries don't require 40 centimeters of conduit, you know they can they can utilize a shorter vessel. Conversely, in peripheral arterial disease, where we're also working pretty actively with our Phase two programs, it may be that in the future, some patients would benefit from a longer vessel, which can extend from the groin down to below the knee. And we believe that we can also make longer vessels, again using the same equipment. And so we were very intentional when we designed the platform so that we could pivot and make vessels of different shapes and sizes. And I would say we're already doing that and that will be, you know, after approval, you know, going forward, a follow-on product candidate will will be manufactured in our same system just using slight modifications of the of the tubing.
Kristen Kluska
Great. Thanks for taking the questions.
Operator
Thank you. Our next question is from the line of Josh Jennings with TD Cowen. Please proceed with your quest.
Josh Jennings
Yes, hi.
Good morning, clientele. Thanks for taking the questions. I wanted to just follow up on Ryan's question on health economics data for the download there. Just wanted to better understand any there's any color on your discussions with payers and just how you expect Medicare and private payer reimbursement for HIV in the vascular trial indication to evolve?
Yes. I mean, the DRG is in place? And then just any color as you think about the launch timing and how reimbursement and payment can be and evolve from there?
Dale Sander
Yes, certainly. So in parallel to date, we've had discussions with hospital administrators, interactions with CMS and also interactions with with private payers. And those discussions will are intensifying with the data in hand as we start rolling out our budget impact model and the budget impact model itself, which really supports the value proposition of HIV and the implications of these new HCV and the extent to which you can save the cost of other complications is essentially yes, that will essentially be presented and then published through the course of the year, presumably in advance of launch beyond that specific to your specific questions around reimbursement and how the HUB is reimbursed is going to be dependent upon the indication and also where the patient has been served. So specifically with regards to trauma, and that's an inpatient surgical setting. And so the hospitals are generally going to be reimbursed on a DRG or fixed price basis as you implied it. And so the JV would be an acquisition cost by the hospital, which is it's not separately ran first at its core, which is why the health economics implications of HEP's ability to save the cost of these complications is so important. But keep in mind that as a new technology because they and also as a biologic HEV, we believe, will qualify for and TAP or new technology add-on payment reimbursement, which will give the hospitals and additional reimbursement that they would not get under the normal DRGs. And clearly, the HUB qualifies for an entire reimbursement because it's innovative and because it provides a meaningful patient benefit. But I think both CMS and then private payers who can provide the equivalent of an NTAP reimbursement, we'll be motivated to do so because not only are the savings associated with a JV present during the time the patients in the hospital. But once the patient leaves the hospital, the reduction in in amputations and other complications, we'll save the payers a substantial amount of money in terms of ongoing rehabilitation and prosthetics and other cost like that. So we believe that within the get the existing DRGs, the use of A2B will be very favorable because of the reduction in complications, but that we will also get in tap in the equivalent from private pay due to the innovative nature of the product and the savings that it provides once a patient leaves the hospital.
Josh Jennings
excellent detail and refer you to item two.
Laura Niklason
The only thing I would add there, and this is also in the public domain, but human so as part of applying for the eMed and tap if necessary to obtain an ICD-10 code from CMS and it we had a recent meeting with CMS that was in the public domain on the ICD-10 coding. And CMS has recommended that the HAVB., given a unique code. And so that's that's an important step. It's an important precursor to filing for the entire application later this year.
So I just wanted to say that from a CMS standpoint in terms of coding and reimbursement are definitely on track. And I also want to reiterate Dale's points, which I think are very important for CMS and for all private payers and Medicaid also is that the initial hospital costs for first severe traumatic injury. The initial hospital costs are only part of the equation on readmissions and complications due to the amputation and infection and sepsis are huge cost drivers and the insurers are going to understand this and the case for providing add-on payments to support HAV. adoption in trauma, I think it's going to be very strong.
Josh Jennings
Excellent. Thanks for that. And just to follow up on the AV access indication, and you've done work with presenting testing through their large data set on on a patient that could benefit most from HUV. as well as health economics. I'm not sure there's any details you can share from that or timing of when more until could come from that, that collaboration? And then just also remind us how you can leverage the vascular trauma indication in the filing for the AV access indication as we move down the year here, base work?
Laura Niklason
Well, as as we've said on several calls, we're looking forward to sharing that information from, you know, I think we have, you know, so I can't say that we're going to do a KOL event actually next week where we're going to present a lot of the for NOVA data that we've gathered with our partners presenting us for more than a year that really paints a very clear picture of how costly some of the most costly patients are and who those patients are. So we're really looking forward to that and that will be next week, you know, as far as how the trauma data will be leveraged for potential follow-on BLA supplement in dialysis access, you know, as you know, the outcome, the agency tends to look at safety and efficacy data within indication that will be their primary focus, although, of course, the long term safety updates that we're going to be providing as part of our drug safety update report.
And also just from a follow on, I'm sure will be part of that file. But but just realistically, I think that that particularly from an efficacy standpoint, since dialysis really is a different indication from trauma, I think the efficacy focus will be on the dialysis data, but I would anticipate that safety information from all indications, but especially from trauma, would factor into the FDA's thinking.
Josh Jennings
back somebody else.
Right. You can I was my assumption is you can leverage the modules on manufacturing and down?
I'll echo north-central.
Laura Niklason
Yes, absolutely.
Yes.
Thank you for that. Yes, no, the since the product is identical, all of the preclinical and all all of the shelf life and manufacturing data are identical.
Yes, that would all be leveraged. So that will be very helpful and efficiency generating.
Josh Jennings
Excellent. Okay, thanks so much.
Operator
Our next question is from the line of Suraj Kalia with Oppenheimer.
Suraj Kalia
Please proceed with your question by Laura and Dale, this is Seamus on for Suraj. Just to start, I know the HIV for dialysis access and been almost a year fully enrolled, I guess at this point, when could we expect some top-line results filing? Any any updates you can give us on that? Thank you.
Laura Niklason
Sure. So on our enrollment completed and actually in late April last year, so technically, we'll hit the 12 month point next month. This is a large trial that went on for a while it started pre-COVID on at many centers. So it's going to take us several months to pull this data together so that what we've guided the market is that we would expect top line results on the VO. seven trial in dialysis sometime in the third quarter of this year.
Suraj Kalia
Got it.
Thank you. And then just thinking through the initial sales force for trauma. I know you said somewhere around 20 individuals. How should we think about kind of the ramp for hiring as you do know what you'll have roughly around the PDUFA date? Or any updates you can give us there on where you would be at and I guess, percentage-wise of those 20 people?
Dale Sander
Yes. Well, I'm not going to
Laura Niklason
go ahead there?
Dale Sander
You can have. Yes, we yes, we I think we've indicated with it. It's a relatively concentrated market and level one trauma centers. There are up 200 of them within that states that we expect the sales force somewhat less than 20 to be able to reach that market in terms of when that group will be brought on the exact sizing, we'll be probably more specific around that as we get closer to launch. But much of the infrastructure for the sales team is being built right now in terms of the management of that team and complementing our current commercialization group.
In terms of the actual sales reps, they will be brought on much, much closer to the exact time of approval as opposed to too far in advance. You will make a decision as to whether that an entire team will be brought on day one to accommodate the launch or whether it will be yield. You've layered into one or two segments there facilitate the launch that way. But those are decisions that we are under active discussion right now, and we'll decide as we get close.
Suraj Kalia
Understood. Thank you. And just one last quick one for me. On the N-type cycle, you guys believe that's going to be a 2025 event or 2026. Thank you for taking our questions.
Laura Niklason
So based on the revised rules for when you can file and then tap application, our earliest that we can file will be October of this year. And typically our decisions are made a couple of quarters after that. And then the NTAP reimbursement would be scheduled to kick in, I believe, to the best of my knowledge in October of 2025. And again, we expect an annual type application to be successful, but the year is our earliest date when we can apply this October.
Operator
Thank you.
Our next question is from the line of Allison Russell with Piper Sandler. Please just use your question.
Allison Bratzel
Hey, and good morning and congrats on all the progress, and thank you for taking my question, really just one from me and a follow up on the dialysis Specifar access setting. And just on the VO. seven trial reading out in Q3, could you just remind us kind of what you see as the bar for success that would that would lead to a JV being widely adopted and for dialysis access, what do you hope to show in that trial readout.
And then just related, you know, how does the ongoing trial in female patients and just play into your plans for filing and commercialization in that indication? Thank you.
Laura Niklason
Yes, Allison, thanks for these questions.
So again, the VIEW seven trial is a prospective randomized blinded trial that compares the HAV. to fistula in a broad range of patients on at more than 20 sites in the US. So the primary endpoints for this trial are looking at usability for dialysis and patency at six and 12 months. And this is a superiority trial. Again, we're blinded and we don't have top line. So we don't know how it's going to go. Obviously, our goal and our interest and our hope is that is that across the board, we will have superiority across the whole trial and for all patient groups. And however, it's possible that we would have subgroups that would show more superiority or increased beneficial effects as compared to other groups. Again, it's very hard to predict in advance of the data. And so I don't want to give specific guidance here. But I would hope that if we had some superiority in either across the trial or within a subgroup that clinical data in combination with an already approved HIV product in the trauma indication. Our hope that would be that would be sufficient to file a supplemental BLA BLA, perhaps sometime in 2025 for the dialysis indication.
As far as the female only trial. That's a trial that we've very newly initiated that really focuses on on us. It's a smaller trial and it focuses on women. I'm comparing the HAV. to Fisher in women.
And again, we're going to be discussing this more at the KOL event next week.
And so I don't want to I don't want to get ahead of the information and the story here on this call. But again, based on our health economic data and looking at the complications that are suffered by dialysis patients, it's become clear from our work with for NOVA that women in general. And there are certain subsets of women that have extraordinarily high complication rates and are extraordinarily expensive for the system. And we believe that the for NOVA data in combination with additional data that we're going to gather in our clinical trials will really help make the health economic case around the HAV. on in female patients who have very high complication rates.
Allison Bratzel
Excellent. Thanks so much.
Operator
Thank you. Our next question is from the line of Vernon Bernardino with H.C. Wainwright.
Vernon Bernardino
It's a serious request.
And Lauren, Dale, and thanks for taking my question and congrats on the progress. Definitely looking forward to on the approval later this year and launch.
I just wanted to follow up on a few questions. One of them being the expenses some rising according to what you said, Dale, on this year, do you anticipate more on you said that there's probably going to be a ramp down as far as R&D maybe. And so therefore, maybe most of the ramp-up in OpEx would be from G&A. And do you anticipate that to be mostly heavily weighted towards the back of the year, of course, because that's when the expected launch would be.
And then I have a follow-up question.
Dale Sander
Yes, you're right, much of I mean, we do have very meaningful commercial team in place right now, which is undertaking much of the activities that are longer lead time to get ready for a successful launch and that does include the budget impact model and applications for ICT. Then I see the 10 codes and other activities like that that are that are ongoing, but much of the heavy increase in terms of commercialization expenses will come in the second half of the year with the addition of the sales force. And you're right, there is somewhat of a wind-down of certain R&D expenses in part because and certain of the clinical trials are winding down and also in part because everything we do from a manufacturing point of view, kind of rolls into R&D expense to date. But as we move towards commercialization, a number of those manufacturing costs are going to be appearing in cost of sales, which have the effect of reducing R&D expense. And so with that, we expect on an overall net basis just really a slight increase in overall burn for 2024 compared to 2023.
Vernon Bernardino
And then the coating on law you had alluded to are using the same manufacturing and so on. Do you anticipate margins improving over time? And so using the same equipment on regardless of whether or not you're making, let's say, mostly at large versus small or whatever mix of diameter of look on a JV.
Laura Niklason
And yes, there are some you know that there are two main sources of decrease in COGS over time.
And I would say that both apply, regardless of whether we're making a 40 centimeter vessel or say, a short vessel in the future, for example, down the road on the first is just more efficient use of our of our facility. Right now. We I've built out only a fraction of our manufacturing floor because we have eight units installed, although we have room for 40. So we're essentially amortizing all of the all of the facility costs across a smaller amount of production as production increases that that inherent overhead obviously will fall linearly. But in addition, we believe that there are additional reductions in COGS that will result from efficiencies of how we use our raw materials, how we prepare and bring in our raw materials, which as we go to greater scale and as we're able to negotiate improved contracts with some of our suppliers, some of those cost inputs will also come down on. So we anticipate that regardless of what type of product we're making, our COGS should fall at a fairly predictable rate.
Vernon Bernardino
and one further follow-up, if I may on regarding, let's say, the launch this year.
I know that with vascular trauma, you would expect not to really have insight into on a really it's much longer than, let's say, short term vision of a need. But and do you have any idea of vision, let's say on that you might have at some point on what you could describe as an inventory of patients who need something such that you could protect the Netflix, for example, much longer than, let's say, the next week, two weeks, maybe even month, but on longer term on one or two or three months, or is that really just going to be on for when you have the AV access and PAT and Kabbage markets for HIV. has approval for applications? Thank you.
Laura Niklason
So Vincent, I'm going to trying to answer your question. I'm not completely sure I understood the question, but let me let me take a shot.
So certainly trauma care, there is some variability there, some seasonal variability, but overall, it's not a hugely variable market. And in the aggregate, there are some centers that will have more trauma, maybe some months than others. But in the aggregate, it's not a hugely variable market so on so we have we have shared, you know, in some of our in some of our filings that you know and on this call. But we think the total addressable market in trauma is about 26,000 patients in all of those we would expect to capture, you know it at full saturation at three or five or seven years at full market saturation, we would expect expect to capture a reasonable fraction of those might be 30% might be 50% of those patients. Some could be more so and we've shared that we expect market penetration in dialysis and peripheral artery disease, ultimately at full penetration to be at around 20% because we again, we're targeting the HAV. toward patients. They do not have their needs met by the current standard of care. But you know, trauma overall, even though it's locally episodic, as you know, globally, a little bit more predictable. So we believe we'll be able to ramp production tracking tracking demand, we'll be able to ramp production and add more unit capacity and meet that as it grows.
Does that answer your question?
Vernon Bernardino
No, that's that's perfect. And by the way, it's run. And Vincent, my April trends of Thank you for taking my I'm sorry,
Laura Niklason
I'm sorry, very contemporary.
Vernon Bernardino
It's okay.
Maybe 20 and I can tell you that's why I'm looking forward to your KOL event. And thanks again for taking my call. Thank you.
Laura Niklason
Thank you.
Operator
Thank you. I'm showing no further questions in the queue at this time. This would conclude the human side 2023 Results Conference Call. Thank you all for participating.
