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x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware						85-1763759
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
2525 East North Carolina Highway 54
Durham,			NC			27713
(Address of principal executive offices)						(Zip code)

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

HUMA

The Nasdaq Stock Market LLC

Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50

HUMAW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

x

Smaller reporting company

x

Emerging growth company

x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

						Page No.
			PART I – FINANCIAL INFORMATION
Item 1.			Financial Statements			5
			Condensed Consolidated Balance Sheets (unaudited)			5
			Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)			6
			Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) (unaudited)			7
			Condensed Consolidated Statements of Cash Flows (unaudited)			8
			Notes to Condensed Consolidated Financial Statements (unaudited)			9
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			30
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			41
Item 4.			Controls and Procedures			42
			PART II – OTHER INFORMATION
Item 1.			Legal Proceedings			43
Item 1A.			Risk Factors			43
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			43
Item 3.			Defaults Upon Senior Securities			43
Item 4.			Mine Safety Disclosures			43
Item 5.			Other Information			43
Item 6.			Exhibits			44
SIGNATURES						45

•our plans and ability to execute product development, process development and preclinical development efforts successfully and on our anticipated timelines;

•our plans and ability to obtain marketing approval from the U.S. Food and Drug Administration (“FDA”) and other regulatory authorities, including the European Medicines Agency (“EMA”), for our bioengineered human acellular vessels (“HAVs”) and other product candidates;

•our ability to design, initiate and successfully complete clinical trials and other studies for our product candidates and our plans and expectations regarding our ongoing or planned clinical trials, including for our ongoing V005 Phase II/III clinical trial and V007 Phase III clinical trial;

•the outcome of our ongoing discussions with the FDA concerning the design of our ongoing V005 Phase II/III clinical trial, including determination of trial size;

•our anticipated growth rate and market opportunities;

•the potential liquidity and trading of our securities;

•our ability to raise additional capital in the future;

•our ability to use our proprietary scientific technology platform to build a pipeline of additional product candidates;

•the characteristics and performance of our bioengineered human, acellular vessels (“HAVs”);

•our plans and ability to commercialize our HAVs and other product candidates, if approved by regulatory authorities;

•the expected size of the target populations for our product candidates;

•the anticipated benefits of our HAVs relative to existing alternatives;

•our assessment of the competitive landscape;

•the degree of market acceptance of HAVs, if approved, and the availability of third-party coverage and reimbursement;

•our ability to manufacture HAVs and other product candidates in sufficient quantities to satisfy our clinical trial and commercial needs;

•our expectations regarding our strategic partnership with Fresenius Medical Care Holdings, Inc. (“Fresenius Medical Care”) to sell, market and distribute our 6 millimeter HAV for certain specified indications and in specified markets;

•the performance of other third parties on which we rely, including our third-party manufacturers, our licensors, our suppliers and the organizations conducting our clinical trials;

•our ability to obtain and maintain intellectual property protection for our product candidates as well as our ability to operate our business without infringing, misappropriating or otherwise violating the intellectual property rights of others;

•our ability to maintain the confidentiality of our trade secrets, particularly with respect to our manufacturing process;

•our compliance with applicable laws and regulatory requirements, including FDA regulations, healthcare laws and regulations, and anti-corruption laws;

•our ability to attract, retain and motivate qualified personnel and to manage our growth effectively;

•our future financial performance and capital requirements;

•our ability to implement and maintain effective internal controls; and

•the impact of the COVID-19 pandemic on our business, including our manufacturing efforts, and our preclinical studies and clinical trials.

			June 30, 2022						December 31, 2021
ASSETS
Current assets
Cash and cash equivalents			$	181,035					$	217,502
Short-term investments			8,000						8,000
Accounts receivable			1,301						176
Prepaid expenses and other current assets			2,694						3,662
Total current assets			193,030						229,340
Finance lease right-of-use assets, net			20,403						21,432
Operating lease right-of-use assets, net			705						727
Property and equipment, net			32,227						35,034
Total assets			$	246,365					$	286,533
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	2,537					$	2,094
Accrued expenses			6,186						6,757
Finance lease obligation, current portion			2,115						1,981
Deferred payroll tax, current portion			173						173
Operating lease obligation, current portion			47						45
Total current liabilities			11,058						11,050
Contingent earnout liability			44,049						103,660
SVB loan payable			28,132						27,361
Finance lease obligation, net of current portion			20,018						21,109
Operating lease obligation, net of current portion			658						682
Common stock warrant liabilities			190						497
Total liabilities			104,105						164,359
Commitments and contingencies (Note 11)
Stockholders’ equity
Preferred stock, $0.0001 par value; 20,000,000 shares designated as of June 30, 2022 and December 31, 2021; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021			—						—
Common stock, $0.0001 par value; 250,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 103,006,803 and 103,003,646 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively			10						10
Additional paid-in capital			539,787						536,737
Accumulated deficit			(397,537)						(414,573)
Total stockholders' equity			142,260						122,174
Total liabilities and stockholders’ equity			$	246,365					$	286,533

			For the  Three Months Ended June 30,												For the  Six Months Ended June 30,
			2022						2021						2022						2021
Grant revenue			$	1,301					$	690					$	1,534					$	845
Operating expenses:
Research and development			14,652						14,568						30,966						29,705
General and administrative			5,180						5,391						10,862						10,178
Total operating expenses			19,832						19,959						41,828						39,883
Loss from operations			(18,531)						(19,269)						(40,294)						(39,038)
Other income (expense), net:
Interest income			301						2						332						3
Change in fair value of contingent earnout liability			56,353						—						59,611						—
Change in fair value of common stock warrant liabilities			233						—						307						—
Gain on PPP loan forgiveness			—						3,284						—						3,284
Interest expense			(1,488)						(1,215)						(2,920)						(1,748)
Total other income, net			55,399						2,071						57,330						1,539
Net income (loss) and comprehensive income ( loss)			$	36,868					$	(17,198)					$	17,036					$	(37,499)
Net income (loss) per share attributable to common stockholders, basic			$	0.36					$	(2.89)					$	0.17					$	(6.35)
Weighted-average shares outstanding used in computing net income (loss) per share attributable to common stockholders, basic			103,005,651						5,941,675						103,004,874						5,908,372
Net income (loss) per share attributable to common stockholders, diluted			$	0.35					$	(2.89)					$	0.16					$	(6.35)
Weighted-average shares outstanding used in computing net income (loss) per share attributable to common stockholders, diluted			103,908,440						5,941,675						103,923,138						5,908,372

			Redeemable Convertible Preferred Stock															Common Stock												Additional Paid-in Capital						Accumulated Deficit						Total Stockholders' Equity
			Shares						Amount									Shares						Amount
Balance as of December 31, 2021			—						$	—								103,003,646						$	10					$	536,737					$	(414,573)					$	122,174
Proceeds from the exercise of stock options			—						—									926						—						1						—						1
Stock-based compensation			—						—									—						—						1,547						—						1,547
Net loss			—						—									—						—						—						(19,832)						(19,832)
Balance as of March 31, 2022			—						$	—								103,004,572						$	10					$	538,285					$	(434,405)					$	103,890
Proceeds from the exercise of stock options			—						—									2,231						—						11						—						11
Stock-based compensation			—						—									—						—						1,491						—						1,491
Net income			—						—									—						—						—						36,868						36,868
Balance as of June 30, 2022			—						$	—								103,006,803						$	10					$	539,787					$	(397,537)					$	142,260

			Redeemable Convertible Preferred Stock															Common Stock												Additional Paid-in Capital						Accumulated Deficit						Total Stockholders' (Deficit) Equity
			Shares						Amount									Shares						Amount
Balance as of December 31, 2020			69,613,562						$	420,989								5,822,396						$	1					$	37,778					$	(388,096)					$	(350,317)
Proceeds from the exercise of stock options			—						—									116,149						—						206						—						206
Stock-based compensation			—						—									—						—						2,528						—						2,528
Issuance of warrants in conjunction with debt			—						—									—						—						2,360						—						2,360
Net loss			—						—									—						—						—						(20,301)						(20,301)
Balance as of March 31, 2021			69,613,562						$	420,989								5,938,545						$	1					$	42,872					$	(408,397)					$	(365,524)
Proceeds from the exercise of stock options			—						—									5,204						—						30						—						30
Stock-based compensation			—						—									—						—						2,930						—						2,930
Net loss			—						—									—						—						—						(17,198)						(17,198)
Balance as of June 30, 2021			69,613,562						$	420,989								5,943,749						$	1					$	45,832					$	(425,595)					$	(379,762)

			For the Six Months Ended June 30, 2022,
			2022						2021
Cash flows from operating activities
Net income (loss)			$	17,036					$	(37,499)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation expense			3,032						3,106
Stock-based compensation expense			3,038						5,458
Change in fair value of contingent earnout liability			(59,611)						—
Change in fair value of common stock warrant liabilities			(307)						—
Amortization expense			1,029						1,030
Non-cash operating lease costs			22						21
Amortization of SVB debt discount			771						313
Accrued interest on PPP loan obligation			—						11
Gain on PPP loan forgiveness			—						(3,284)
Changes in operating assets and liabilities:
Accounts receivable			(1,125)						(576)
Prepaid expenses and other current assets			968						(75)
Accounts payable			374						769
Accrued expenses			(571)						1,524
Operating lease obligation			(22)						(21)
Net cash used in operating activities			(35,366)						(29,223)
Cash flows from investing activities
Purchase of short-term investments (certificates of deposit)			(8,000)						—
Proceeds from maturity of short-term investments (certificates of deposit)			8,000						—
Purchase of property and equipment			(156)						(92)
Net cash used in investing activities			(156)						(92)
Cash flows from financing activities
Proceeds from the exercise of stock options			12						236
Payment of finance lease principal			(957)						(834)
Proceeds from SVB loan			—						19,659
Payment of deferred offering costs			—						(706)
Net cash (used in) provided by financing activities			(945)						18,355
Net decrease in cash and cash equivalents			(36,467)						(10,960)
Cash and cash equivalents at the beginning of the period			217,502						39,929
Cash and cash equivalents at the end of the period			$	181,035					$	28,969
Supplemental disclosure
Cash paid for interest on SVB loan			$	1,165					$	258
Supplemental disclosure of noncash activities:
Purchase of property and equipment in accounts payable			$	90					$	—
Issuance of warrants in conjunction with debt			$	—					$	2,360
Unpaid deferred offering costs			$	—					$	2,536

On August 26, 2021 (the “Closing Date”), Alpha Healthcare Acquisition Corp. (“AHAC”) consummated a merger pursuant to a Business Combination Agreement, dated as of February 17, 2021 (the “Merger Agreement”), by and among Humacyte, Inc., a Delaware Corporation (“Legacy Humacyte”), AHAC and Hunter Merger Sub, Inc. (“Merger Sub”), a Delaware corporation and wholly owned subsidiary of AHAC. As contemplated by the Merger Agreement, Merger Sub merged with and into Legacy Humacyte, with Legacy Humacyte continuing as the surviving corporation and as a wholly owned subsidiary of AHAC (such transactions, the “Merger,” and, collectively with the other transactions described in the Merger Agreement, the “Reverse Recapitalization”). On the Closing Date, AHAC changed its name to Humacyte, Inc. (“New Humacyte”) and Legacy Humacyte changed its name to Humacyte Global, Inc. The Merger is accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and under this method of accounting, AHAC is treated as the acquired company for financial reporting purposes and Legacy Humacyte is treated as the acquirer. Operations prior to the Merger are those of Legacy Humacyte.

As of both June 30, 2022 and December 31, 2021, the Company had approximately $10.0 million in CDs. These cash deposits are deposited at a bank that is a member of the Certificate of Deposit Account Registry Service (“CDARS”), in which large deposits are divided into smaller amounts and placed with other FDIC insured banks which are also members of the CDARS network. Those members issue CDs in amounts under $250,000, so that the entire deposit balance is eligible for FDIC insurance. As of both June 30, 2022 and December 31, 2021, the Company classified $2.0 million of its certificates of deposit as cash and cash equivalents and $8.0 million of its certificates of deposit as short-term investments on its condensed consolidated balance sheets.

						Three Months Ended June 30,												Six Months Ended June 30,
($ in thousands, except share and per share amounts)						2022						2021						2022						2021
Numerator:
Net income (loss) attributable to common shareholders						$	36,868					$	(17,198)					$	17,036					$	(37,499)
Denominator:
Weighted-average common shares outstanding - basic						103,005,651						5,941,675						103,004,874						5,908,372
Dilutive effect of assumed conversion of options to purchase common stock						902,789						—						918,264						—
Weighted-average common shares outstanding - diluted						103,908,440						5,941,675						103,923,138						5,908,372
Net income (loss) attributable to common shareholders - basic						$	0.36					$	(2.89)					$	0.17					$	(6.35)
Net income (loss) attributable to common shareholders - diluted						$	0.35					$	(2.89)					$	0.16					$	(6.35)

						Three and Six Months Ended June 30,
												2022						2021
Shares issuable upon conversion of Series A redeemable convertible preferred stock												—						18,421,897
Shares issuable upon conversion of Series B redeemable convertible preferred stock												—						24,137,647
Shares issuable upon conversion of Series C redeemable convertible preferred stock												—						11,241,283
Shares issuable upon conversion of Series D redeemable convertible preferred stock												—						15,812,735
Exercise of options under stock plan												5,347,250						6,520,690
Warrants to purchase common stock												5,588,506						287,704

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, successful discovery and development of its product candidates, the success of clinical trials and other studies for its product candidates, including for its ongoing V005 Phase II/III clinical trial and V007 Phase III clinical trial, the regulatory approval and commercialization of its HAVs and other product candidates, the expected size of the target populations for the Company’s product candidates, the degree of market acceptance of the HAVs, if approved, the availability of third-party coverage and reimbursement, development by competitors of new technological innovations, the ability to manufacture HAVs and other product candidates in sufficient quantities, expectations regarding the Company’s strategic partnerships, dependence on third parties, key personnel and the ability to attract and retain qualified employees, protection of proprietary technology and confidentiality of trade secrets, compliance with governmental regulations, the impact of the COVID-19 pandemic, the Company’s implementation and maintenance of effective internal controls, and the ability to secure additional capital to fund operations and commercial success of its product candidates.

In May 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2021-04, “Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” (“ASU 2021-04”). The FASB issued this update to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity classified written call options (for example, warrants) that remain equity classified after modification or exchange. ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring after the effective date of the amendments. The Company adopted ASU 2021-04 as of January 1, 2022. The adoption of this ASU had no impact on the Company’s financial statements and related disclosures.

•each outstanding share of Legacy Humacyte common stock was converted into approximately 0.26260 shares of New Humacyte’s common stock, par value $0.0001 (“Common Stock”);

•each outstanding share of preferred stock of Legacy Humacyte was cancelled and converted into the aggregate number of shares of New Humacyte’s common stock that would be issued upon conversion of the shares of Legacy Humacyte preferred stock based on the applicable conversion ratio immediately prior to the effective time, multiplied by approximately 0.26260; and

•each outstanding option or warrant to purchase Legacy Humacyte common stock was converted into an option or warrant, as applicable, to purchase a number of shares of New Humacyte’s common stock equal to the number of shares of Legacy Humacyte common stock subject to such option or warrant multiplied by approximately 0.26260, at an exercise price per share equal to the current exercise price per share for such option or warrant divided by approximately 0.26260;

			Shares
Common stock of AHAC, outstanding prior to Merger			10,355,000
Less redemption of AHAC shares			(3,008,551)
Common stock of AHAC			7,346,449
AHAC Founder Shares			2,500,000
New Humacyte shares issued to PIPE Investors			17,500,000
Issuance of common stock upon reverse recapitalization and PIPE Financing			27,346,449
New Humacyte shares issued in Merger to Legacy Humacyte stockholders			75,656,935			(1)
Total shares of Common Stock immediately after Merger			103,003,384

(1)Includes 69,613,562 shares of Common Stock issued upon conversion of Legacy Humacyte’s redeemable convertible preferred stock.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. Accounting Standards Codification (“ASC”) 820, Fair Value Measurement and Disclosures, establishes a hierarchy whereby inputs to valuation techniques used in measuring fair value are prioritized, or the fair value hierarchy. There are three levels to the fair value hierarchy based on reliability of inputs, as follows:

•Level 1 — Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets.

•Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 — Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions.

($ in thousands)						Fair Value Measured as of June 30, 2022
						Level 1						Level 2						Level 3						Total
Assets:
Cash equivalents (money market funds)						$	176,446					$	—					$	—					$	176,446
Cash equivalents (certificates of deposit)						—						2,005						—						2,005
Short-term investments (certificates of deposit)						—						8,000						—						8,000
Total financial assets						$	176,446					$	10,005					$	—					$	186,451
Liabilities:
Contingent Earnout Liability						$	—					$	—					$	44,049					$	44,049
Private Placement Warrants liability						—						—						190						190
Total financial liabilities						$	—					$	—					$	44,239					$	44,239

($ in thousands)						Fair Value Measured as of December 31, 2021
						Level 1						Level 2						Level 3						Total
Assets:
Cash equivalents (money market funds)						$	208,821					$	—					$	—					$	208,821
Cash equivalents (certificates of deposit)						—						2,000						—						2,000
Short-term investments (certificates of deposit)						—						8,000						—						8,000
Total financial assets						$	208,821					$	10,000					$	—					$	218,821
Liabilities:
Contingent Earnout Liability						$	—					$	—					$	103,660					$	103,660
Private Placement Warrants liability						—						—						497						497
Total financial liabilities						$	—					$	—					$	104,157					$	104,157

($ in thousands)						Contingent Earnout Liability
						Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
Fair value as of beginning of period						$	(100,402)					$	(103,660)
Change in fair value included in other income, net						56,353						59,611
Fair value as of end of period						$	(44,049)					$	(44,049)

						Private Placement Warrants
($ in thousands)						Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
Fair value as of beginning of period						$	(423)					$	(497)
Change in fair value included in other income, net						233						307
Fair value as of end of period						$	(190)					$	(190)

($ in thousands)						June 30, 2022						December 31, 2021
Scientific equipment(1)						$	27,789					$	27,641
Computer equipment						232						155
Software						335						335
Furniture and fixtures						988						988
Leasehold improvements						26,355						26,355
						55,699						55,474
Accumulated depreciation						(23,472)						(20,440)
Property and equipment, net						$	32,227					$	35,034

___________________________

(1)Includes $3.6 million as of both June 30, 2022 and December 31, 2021 related to scientific equipment not placed into service and therefore not being depreciated.

Depreciation expense totaled $1.5 million and $3.0 million for the three and six months ended June 30, 2022 and $1.6 million and $3.1 million for the three and six months ended June 30, 2021, respectively. All long-lived assets are maintained in the United States.

($ in thousands)						June 30, 2022						December 31, 2021
Accrued external research, development and manufacturing costs						$	2,203					$	2,520
Accrued employee compensation and benefits						3,589						3,943
Accrued professional fees						394						294
Total						$	6,186					$	6,757

The Loan Agreement provides that the term loans will be distributed in tranches. The initial term loan tranche of $20.0 million was drawn on March 31, 2021, and on October 13, 2021, the Company borrowed an additional $10.0 million under the Loan Agreement. Borrowings under the Loan Agreement are accounted for net of issuance costs which are being accreted to interest expense over the term of the loan using the effective interest method. As of June 30, 2022, two subsequent $10.0 million term loan tranches will be eligible to be drawn at the request of the Company during specified draw periods prior to March 31, 2023, subject to the achievement of certain business milestones and other requirements by the dates specified in the Loan Agreement. Borrowings bear interest at the greater of 7.5% or the Wall Street Journal Prime Rate plus 4.25% (9.00% as of June 30, 2022). Interest only payments on the principal amount outstanding are due monthly beginning in the first month after the loan is dispersed. Repayment of principal may begin as soon as July 1, 2023 under the level of borrowing outstanding at June 30, 2022, and no later than April 1, 2024 if the remaining two loan tranches are drawn. The term loans may only be prepaid in full, and such prepayment requires 30 days’ advance notice and was subject initially to a prepayment fee of 3.00% that was decreased to 2.00% after March 30, 2022 (with a further decrease to 1.00% after March 30, 2023). The Company is not obligated to pay a prepayment fee if the Company makes a prepayment after March 30, 2024.

In connection with the Loan Agreement, the Company granted warrants to the lenders to purchase shares of Common Stock at an exercise price of $10.28 per share, of which 287,704 warrants were immediately exercisable. The warrants are classified within stockholders’ equity as the settlement of the warrants is indexed to the Company’s own stock. The Company recognized the fair value of the warrants immediately exercisable within stockholders’ equity using a Black-Scholes valuation model at issuance.

($ in thousands)						June 30, 2022
Principal amount of SVB loan payable						$	30,000
Final payment amount of SVB loan payable						1,500
Net premium associated with accretion of final payment and other debt issuance costs						(3,368)
SVB loan payable, current and noncurrent						28,132
Less SVB loan payable, current portion						—
SVB loan payable, noncurrent portion						$	28,132

Year ending December 31:						($ in thousands)
2022 (remainder)						$	—
2023						8,571
2024						17,143
2025						4,286
Total future payments						$	30,000

8. Stockholders’ Equity (Deficit)

Immediately prior to the Merger, Legacy Humacyte had outstanding series A redeemable convertible preferred stock, series B redeemable convertible preferred stock, series C redeemable convertible preferred stock and series D redeemable convertible preferred stock, which are collectively referred to as “redeemable convertible preferred stock.”

			June 30, 2022
Common stock reserved for Contingent Earnout Shares			15,000,000
Exercise of options under stock plans			6,899,995
Issuance of options under stock plans			7,226,977
Shares available for grant under ESPP			1,030,033
Warrants to purchase Common Stock			5,588,506
			35,745,511

			Common Stock Warrants Outstanding
Legacy Humacyte Common Stock Warrants			411,006
Private Placement Warrants			177,500
Public Warrants			5,000,000
Total Common Stock Warrants			5,588,506

In connection with the Merger, the Company assumed 5,000,000 publicly-traded warrants (“Public Warrants”) and 177,500 private placement warrants issued to AHAC Sponsor LLC (the “Sponsor”), Oppenheimer & Co. Inc. and Northland Securities, Inc, in connection with AHAC’s initial public offering (“Private Placement Warrants” and, together with the Public Warrants, the “Common Stock Warrants”). The Common Stock Warrants entitle the holder to purchase one share of Common Stock at an exercise price of $11.50 per share. The Company evaluated the Common Stock Warrants to determine the appropriate financial statement classification upon the consummation of the Merger. The Common Stock Warrants are not mandatorily redeemable and are considered to be freestanding instruments as they are separately exercisable into common shares. As such, the Common Stock Warrants were not classified as liabilities under FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company then evaluated the Common Stock Warrants under FASB ASC Topic 815, Derivatives and Hedging.

The Public Warrants are considered to be “indexed to the Company’s own stock”. The agreement provides that in the event of a tender or exchange offer made to and accepted by holders of more than 50% of the outstanding shares of the Company’s Common Stock, all holders of the Common Stock Warrants (both the Public Warrants and the Private Placement Warrants) would be entitled to receive cash for all of their Common Stock Warrants. As the Company has a single class of Common Stock, a qualifying cash tender offer of more than 50% of the Company’s Common Stock will always result in a change in control and would not preclude permanent equity classification of the Public Warrants. Based on this evaluation, the Company concluded that the Public Warrants meet the criteria to be classified within stockholders’ equity. The Public Warrants were initially recognized as equity on the Closing Date at a fair value of $2.80 per share.

The agreement governing the Common Stock Warrants includes a provision, the application of which could result in a different settlement value for the Private Placement Warrants depending on their holder. Because the holder of an instrument is not an input into the pricing of a fixed-for-fixed option on the Company’s ordinary shares, the Private Placement Warrants are not considered to be “indexed to the Company’s own stock” and therefore are not classified in stockholders’ equity. As the Private Placement Warrants meet the definition of a derivative, the Company recorded these warrants as liabilities on the condensed consolidated balance sheet at fair value, with subsequent changes in their respective fair values recognized in the condensed consolidated statements of operations and comprehensive income (loss) at each reporting date.

			June 30, 2022						December 31, 2021
Market price of public stock			$	3.21					$	7.25
Exercise price			$	11.50					$	11.50
Expected term (years)			4.16						4.65
Expected share price volatility			79.0		%				61.0		%
Risk-free interest rate			3.00		%				1.21		%
Estimated dividend yield			0		%				0		%

			June 30, 2022						December 31, 2021
Current stock price			$	3.21					$	7.25
Expected share price volatility			89.2		%				85.8		%
Risk-free interest rate			2.98		%				1.52		%
Estimated dividend yield			0.0		%				0		%
Expected term (years)			10.00						10.00

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Estimated dividend yield			0		%				0		%				0		%				0		%
Expected share price volatility (weighted average and range, if applicable)			93.9% (89.0% to 99.8%)						91.0		%				95.5% (89.0% to 100.0%)						91.4% (91.0% to 92.1%)
Risk-free interest rate (weighted average and range, if applicable)			2.86% (2.53% to 3.23%)						0.99% (0.98% to 1.02%)						2.61% (1.89% to 3.23%)						0.68% (0.62% to 1.02%)
Expected term of options (in years)			6.25						6.00						6.25						6.00

•Fair Value of Common Stock. Prior to the Merger, as the Company’s common stock was not publicly traded, the fair value of the shares of its common stock underlying the options was determined by the Company’s board of directors with input from management, after considering independent third-party valuation reports. Subsequent to the Merger, the fair value of the Common Stock has been determined based on the closing price of the shares on the Nasdaq market.

•Expected Term. The expected term represents the period that stock options are expected to be outstanding. The Company calculated the expected term using the simplified method for options, which is available where there is insufficient historical data about exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting-tranches, the times from grant until the mid-points for each of the tranches may be averaged to provide an overall expected term.

•Expected Volatility. The expected volatility was based on the historical share volatility of several publicly traded peer companies over a period of time equal to the expected term of the options, as the Company has a limited trading history to use the volatility of its Common Stock. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size and financial leverage of potential comparable companies.

•Risk-Free Interest Rate. The risk-free interest rate was based on the yields of U.S. Treasury zero-coupon securities with maturities similar in duration to the expected term of the options.

•Expected Dividend Yield. The Company has not paid dividends on its Common Stock nor does it expect to pay dividends in the foreseeable future. Accordingly, the Company has estimated the dividend yield to be zero.

						Three Months Ended June 30,												Six Months Ended June 30,
($ in thousands)						2022						2021						2022						2021
Research and development						$	185					$	715					$	466					$	1,351
General and administrative						1,306						2,215						2,572						4,107
Total						$	1,491					$	2,930					$	3,038					$	5,458

($ in thousands)						June 30, 2022						December 31, 2021
Unrecognized share-based compensation cost						$	10,974					$	13,346
Expected weighted average period compensation costs to be recognized (years)						2.1						2.3

			Number of Shares						Weighted Average Exercise Price Per Share						Weighted Average Remaining Contractual Term (years)						Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2021			6,711,192						$	7.48					5.3						$	8,276
Granted			432,577						$	5.56
Exercised			(3,157)						$	3.67
Forfeited			(240,617)						$	9.34
Options outstanding at June 30, 2022			6,899,995						$	7.29					5.0						$	1,471
Vested and exercisable, June 30, 2022			4,754,151						$	6.39					3.2						$	1,471
Vested and expected to vest, June 30, 2022			6,899,995						$	7.29					5.0						$	1,471

In March 2006, the Company entered into a license agreement with Duke University (“Duke”), which was subsequently amended in 2011, 2014, 2015, 2018, 2019 and January 2022. Under this license agreement, Duke granted the Company a worldwide, exclusive, sublicensable license to certain patents related to decellularized tissue engineering, referred to as the patent rights, as well as a non-exclusive license to use and practice certain know-how related to the patent rights. The relevant licensed patent on decellularization of tissue expired in 2021. The Company has agreed to use commercially reasonable efforts to develop, register, market and sell products utilizing the patent rights, referred to as the licensed products. Any services provided to a third party utilizing licensed products are referred to as licensed services. The Company has also agreed to meet certain benchmarks in its development efforts, including as to development events, clinical trials, regulatory submissions and marketing approval, within specified timeframes. Under the license agreement, Duke retains the right to use the patent rights for its own educational and research purposes, and to provide the patent rights to other non-profit, governmental or higher-learning institutions for non-commercial purposes without paying royalties or other fees.

•a low single-digit percentage royalty on eligible sales of licensed products and licensed services, plus a low double-digit percentage of any sublicensing revenue;

•an annual minimum royalty beginning in 2012, which increases in the calendar year immediately following the first commercial sale of licensed products or licensed services (whichever occurs first); and

•an additional amount in license fees, as certain milestones are met.

The license agreement remains effective until the later of (i) the last of the patent rights expires or (ii) four years after the Company’s first commercial sale, unless terminated earlier. Either party may terminate the agreement for fraud, willful misconduct or illegal conduct, or uncured material breach. Duke may terminate the agreement if the Company becomes insolvent. Duke may also terminate the license, convert the license into a non-exclusive license or seek assignment of any sublicense if the Company fails to reach diligence milestones within the applicable time period. If the Company abandons any claim, patent or patent application, its rights under the license with respect to such patent rights will be terminated in the territory in which the Company abandons such rights. The Company may terminate the license agreement unilaterally upon three months’ prior notice to Duke. The Company agrees to indemnify Duke against certain third-party claims. Payments to Duke under the license agreement were immaterial during the periods presented.

In February 2014, the Company entered into a license agreement with Yale University (“Yale”) that granted the Company a worldwide license to the patents related to coatings for small-diameter vessels to inhibit clotting. The license granted under the agreement is exclusive in the field of engineered vascular tissues and tissues and extracellular matrix-based implants used for vascular repair, reconstruction and replacement (provided that all uses are vascular tissues within the range of 1 – 12mm in diameter), except that it is subject to Yale’s non-exclusive right, on behalf of itself and all other non-profit academic institutions, to use the licensed products for research, teaching, and other non-commercial purposes. The Company has agreed to pay to Yale an annual maintenance fee, increasing between the first and fourth anniversaries of the agreement up to a maximum of less than $0.1 million per year for this license.

•annual maintenance fees, increasing between the first anniversary of the agreement until the fifth anniversary for the coating and BVP licenses and until the fourth anniversary for the tubular prostheses license up to a maximum of less than $0.1 million per year;

•milestone payments upon achievement of certain regulatory and commercial milestones of $0.2 million and $0.6 million, respectively;

•a low single-digit percentage royalty on worldwide net sales, subject to reductions for third-party license fees; and

•a low double-digit percentage of sublicensing income.

The agreements expire on a country-by-country basis on the date on which the last of the patents in such country expires, lapses or is declared invalid. Yale may terminate the agreements if the Company fails to (i) provide written diligence reports, (ii) provide commercially reasonable diligence plans, (iii) implement the plans in accordance with the obligations under the agreements, or (iv) reach certain research and development milestones within the scheduled timeframe set forth in the agreements; however, any such termination right would be limited in scope to the country to which such failure relates. Yale may also terminate for the Company’s non-payment, uncured material breach, failure to obtain adequate insurance, bringing or assisting in bringing of a patent challenge against Yale, abandonment of the research and development of the Company’s products or insolvency. The Company may terminate the license agreements (i) on 90 days’ prior written notice to Yale, provided the Company is not in breach of the license agreements and has made all required payments to Yale thereunder and (ii) on written notice to Yale following an uncured material breach. With respect to the license agreements related to small-diameter vessels and BVP, the Company’s rights under the license agreements will also terminate automatically with respect to a patent application or patent within the licensed patents in a specified country if, upon receipt of written notice from Yale, the Company does not agree to pay the patent filing, prosecution and maintenance fees incurred by Yale for such patent applications or patents in the specified country. Under certain circumstances, Yale may, at its option, convert the exclusive licenses to non-exclusive licenses if the Company declines to initiate certain infringement or interference proceedings with respect to the licensed patents. The Company has agreed to indemnify Yale against certain third-party claims. Payments to Yale under the license agreement were immaterial during the periods presented.

The distribution agreement will generally continue on a country-by-country basis until the later of (a) the tenth anniversary of the launch date of the distribution product in the relevant country or (b) the expiration of the last-to-expire valid claim of specified patents in such country. Each party is permitted to terminate the distribution agreement for insolvency of, or, under certain circumstances, including various cure periods, material breach by the other party. Subject to a cure period, Fresenius Medical Care may also terminate the distribution agreement in its entirety or on a country-by-country basis (i) for certain withdrawals of regulatory approval or (ii) for termination or expiration of any of our in-licenses that is necessary for the exercise of Fresenius Medical Care’s rights, or the satisfaction of its obligations, under the distribution agreement. In addition, Fresenius Medical Care may terminate the distribution agreement for convenience on a country-by-country basis upon not less than 12 months’ written notice to the Company, although Fresenius Medical Care is not permitted to give such notice prior to the end of the second year following launch of the distribution product in such country. Each party is required to indemnify one another for certain third-party claims.

The Company’s President and Chief Executive Officer, Laura Niklason M.D., PhD., serves as an Adjunct Professor in Anesthesia at Yale University. As of June 30, 2022 and December 31, 2021, the Company was a party to license agreements with Yale University as described in Note 11 — Commitments and Contingencies, above.

			Three Months Ended June 30,												Six Months Ended June 30,
($ in thousands)			2022						2021						2022						2021
License expenses			$	—					$	35					$	50					$	85
Other			6						46						8						81
Total			6						81						58						166

•obtain marketing approval for our 6 millimeter HAV for vascular repair, reconstruction and replacement, including for vascular trauma and AV access for hemodialysis;

•commercialize the HAV via U.S. market launches in vascular trauma and hemodialysis AV access;

•scale out our manufacturing facility to the extent required to satisfy potential demand following any receipt of marketing approval;

•continue our preclinical and clinical development efforts;

•maintain, expand and protect our intellectual property portfolio;

•add operational, financial and management information systems and personnel to support, among other things, our product development and commercialization efforts and operations; and

•continue operating as a public company, which includes higher costs associated with hiring additional personnel, director and officer insurance premiums, audit and legal fees, and expenses for compliance with public company reporting requirements under the Securities Exchange Act of 1934 (the “Exchange Act”) and rules implemented by the SEC and The Nasdaq Stock Market LLC (“Nasdaq”).

•salaries and related overhead expenses for personnel in research and development functions, including stock-based compensation and benefits;

•fees paid to consultants and clinical research organizations (“CROs”), including in connection with our clinical trials, and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work and statistical compilation and analysis;

•allocation of facility lease and maintenance costs;

•depreciation of leasehold improvements, laboratory equipment and computers;

•costs related to purchasing raw materials and producing our product candidates for clinical trials;

•costs related to compliance with regulatory requirements;

•costs related to our manufacturing development and expanded-capabilities initiatives; and

•license fees related to in-licensed technologies.

•the scope, rate of progress, expense and results of our preclinical development activities, our ongoing clinical trials and any additional clinical trials that we may conduct, and other research and development activities;

•successful patient enrollment in and the initiation and completion of clinical trials;

•the timing, receipt and terms of any marketing approvals from applicable regulatory authorities including the U.S. Food and Drug Administration (“FDA”) and non-U.S. regulators;

•the extent of any required post-marketing approval commitments to applicable regulatory authorities;

•development of clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that it or its third-party manufacturers are able to successfully manufacture our product;

•obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;

•significant and changing government regulations;

•launching commercial sales of our product candidates, if approved, whether alone or in collaboration with others;

•the degree of market acceptance of any product candidates that obtain marketing approval; and

•maintaining a continued acceptable safety profile following approval, if any, of our product candidates.

			Three Months Ended June 30,												Change
($ in thousands)			2022						2021						$						%
Revenue			$	1,301					$	690					$	611					89		%
Operating expenses:
Research and development			14,652						14,568						84						1		%
General and administrative			5,180						5,391						(211)						(4)		%
Total operating expenses			19,832						19,959						(127)						(1)		%
Loss from operations			(18,531)						(19,269)						738						(4)		%
Other income (expense), net
Change in fair value of contingent earnout liability			56,353						—						56,353						100		%
Interest expense			(1,488)						(1,215)						(273)						22		%
Gain on PPP loan forgiveness			—						3,284						(3,284)						(100)
Other income			534						2						532						*
Total other income, net			55,399						2,071						53,328						*
Net income (loss)			$	36,868					$	(17,198)					$	54,066					(314)		%

			Three Months Ended June 30,												Change
($ in thousands)			2022						2021						$						%
External services			$	3,810					$	3,881					$	(71)					(2)		%
Materials and supplies			1,838						1,993						(155)						(8)		%
Payroll and personnel expenses			5,911						5,907						4						—		%
Other research and development expenses			3,093						2,787						306						11		%
			$	14,652					$	14,568					$	84					1		%

			Six Months Ended June 30,												Change
($ in thousands)			2022						2021						$						%
Revenue			$	1,534					$	845					689						82		%
Operating expenses:
Research and development			30,966						29,705						1,261						4		%
General and administrative			10,862						10,178						684						7		%
Total operating expenses			41,828						39,883						1,945						5		%
Loss from operations			(40,294)						(39,038)						(1,256)						3		%
Other income (expense), net:
Change in fair value of contingent earnout liability			59,611						—						59,611						100		%
Interest expense			(2,920)						(1,748)						(1,172)						67		%
Gain on PPP loan forgiveness			—						3,284						(3,284)						(100)		%
Other income, net			639						3						636						*
Total other income, net			57,330						1,539						55,791						*
Net income (loss)			$	17,036					$	(37,499)					$	54,535					(145)		%

			Six Months Ended June 30,												Change
($ in thousands)			2022						2021						$						%
External services			$	7,660					$	7,733					$	(73)					(1)		%
Materials and supplies			5,575						5,194						381						7		%
Payroll and personnel expenses			11,552						11,228						324						3		%
Other research and development expenses			6,179						5,550						629						11		%
			$	30,966					$	29,705					$	1,261					4		%

As of June 30, 2022 and December 31, 2021, we had working capital of $182.0 million and $218.3 million, respectively. As of June 30, 2022, we had $30.0 million outstanding principal and $20.0 million of contingent borrowing capacity under our Loan Agreement. We do not currently have any committed external source of funds beyond the Loan Agreement.