The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and related notes appearing elsewhere in this
Quarterly Report on Form 10-Q ("Quarterly Report") and with our audited
financial statements and the notes thereto included in our Annual Report on Form
10-K for the year ended December 31, 2021 ("Annual Report"), filed with the
Securities and Exchange Commission (the "SEC") on March 29, 2022. In addition,
you should read the "Risk Factors" and "Information Regarding Forward-Looking
Statements" sections of this Quarterly Report and our Annual Report for a
discussion of important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.

Unless the context indicates otherwise, references in this Quarterly Report to
the "Company," "Humacyte," "we," "us," "our" and similar terms refer to
Humacyte, Inc. (formerly known as Alpha Healthcare Acquisition Corp.) and its
consolidated subsidiaries (including Humacyte Global, Inc.) following the Merger
(defined below); references to "Legacy Humacyte" refer to Humacyte, Inc. prior
to the Merger; and references to "AHAC" refer to Alpha Healthcare Acquisition
Corp. prior to the Merger.

Overview

We are pioneering the development and manufacture of off-the-shelf, universally
implantable, bioengineered human tissues, advanced tissue constructs and organ
systems with the goal of improving the lives of patients and transforming the
practice of medicine. We believe our technology has the potential to overcome
limitations in existing standards of care and address the lack of significant
innovation in products that support tissue repair, reconstruction and
replacement. We are leveraging our novel, scalable technology platform to
develop proprietary product candidates for use in the treatment of diseases and
conditions across a range of anatomic locations in multiple therapeutic areas.

We are initially using our proprietary, scientific technology platform to
engineer and manufacture human, acellular vessels ("HAVs"). Our investigational
HAVs are designed to be easily implanted into any patient without inducing a
foreign body response or leading to immune rejection. We are developing a
portfolio, or "cabinet", of HAVs with varying diameters and lengths. The HAV
cabinet would initially target the vascular repair, reconstruction and
replacement market, including use in vascular trauma; arteriovenous ("AV")
access for hemodialysis, peripheral arterial disease ("PAD"); and coronary
artery bypass grafting ("CABG"). In addition, we are developing our HAVs for
pediatric heart surgery and the delivery of cellular therapies, including
pancreatic islet cell transplantation to treat Type 1 diabetes (our biovascular
pancreas). We will continue to explore the application of our technology across
a broad range of markets and indications, including the development of urinary
conduit, trachea, esophagus and other novel cell delivery systems.

We believe there is substantial clinical demand for safe and effective vascular
conduits to replace and repair blood vessels throughout the body. Vascular
injuries resulting from trauma are common in civilian and military populations,
frequently resulting in the loss of either life or limb. Existing treatment
options in the vascular repair, reconstruction and replacement market include
the use of autologous vessels and synthetic grafts, which we believe suffer from
significant limitations. For example, the use of autologous veins to repair
traumatic vascular injuries can lead to significant morbidity associated with
the surgical wounds created for vein harvest and prolonged times to restore
blood flow to injured limbs leading to an increased risk of amputation and
infection. Synthetic grafts are often contraindicated in the setting of vascular
trauma due to higher infection risk that can lead to prolonged hospitalization
and limb loss. Given the competitive advantages our HAVs are designed to have
over existing vascular substitutes, we believe that HAVs have the potential to
become the standard of care and lead to improved patient outcomes and lower
healthcare costs.

We are currently conducting Phase II and Phase III trials of our 6 millimeter
HAV across two therapeutic indications, vascular trauma and AV access for
hemodialysis, as well as continuing long-term follow up of patients in our Phase
II PAD studies. We were granted Fast Track designation by the FDA for our 6
millimeter HAV for use in AV access for hemodialysis in 2014. We also received
the first Regenerative Medicine Advanced Therapy ("RMAT") designation from the
FDA, for the creation of vascular access for performing hemodialysis, in March
2017. In addition, in 2018 our HAV product candidate was assigned a priority
designation by the Secretary of Defense under Public Law 115-92, enacted to
expedite the FDA's review of products that are intended to diagnose, treat or
prevent serious or life-threatening conditions facing American military
personnel. Upon completion of our Phase III trials, we intend to submit a
Biologics License Application ("BLA") to the FDA for an indication in vascular
trauma in mid-2023.

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We have generated no product revenue and incurred operating losses and negative
cash flows from operations in each year since our inception in 2004. As of
September 30, 2022 and December 31, 2021, we had an accumulated deficit of
$422.8 million and $414.6 million, respectively, and working capital of $156.7
million and $218.3 million, respectively. Our operating losses were
approximately $23.5 million and $63.8 million for the three and nine months
ended September 30, 2022, respectively, and $20.5 million and $59.6 million for
the three and nine months ended September 30, 2021, respectively. Net cash flows
used in operating activities were $52.2 million and $59.7 million during the
nine months ended September 30, 2022 and 2021, respectively. Substantially all
of our operating losses resulted from costs incurred in connection with our
research and development programs and from general and administrative costs
associated with our operations. We expect to incur substantial operating losses
and negative cash flows from operations for the foreseeable future as we advance
our product candidates.

As of September 30, 2022, we had cash and cash equivalents and short-term
investments of $171.7 million. We believe our cash and cash equivalents and
short-term investments on hand will be sufficient to fund operations, including
clinical trial expenses and capital expenditure requirements, for at least 12
months from the date of this Quarterly Report. See Note 1 - Organization and
Description of Business in the notes to our unaudited condensed consolidated
financial statements included elsewhere in this Quarterly Report for additional
information regarding this assessment.

Our need for additional capital will depend in part on the scope and costs of
our development and commercial manufacturing activities. To date, we have not
generated any revenue from the sale of commercialized products. Our ability to
generate product revenue will depend on the successful development and eventual
commercialization of one or more of our product candidates. Until such time, if
ever, we expect to finance our operations through the use of existing cash and
cash equivalents and short-term investments, the sale of equity or debt,
borrowings under credit facilities, or through potential collaborations, other
strategic transactions or government and other grants. Adequate capital may not
be available to us when needed or on acceptable terms. If we are unable to raise
capital, we could be forced to delay, reduce, suspend or cease our research and
development programs or any future commercialization efforts, which would have a
negative impact on our business, prospects, operating results and financial
condition. See "Risk Factors" for additional information.

We expect to continue to incur significant expenses and to increase operating
losses for at least the next several years. We anticipate that our expenses will
increase substantially as we seek to:

•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").

Merger and Public Company Costs



On August 26, 2021 (the "Closing Date"), Legacy Humacyte and AHAC consummated a
merger pursuant to that certain Business Combination Agreement, dated as of
February 17, 2021 (the "Merger Agreement"), by and among 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 (the "Merger").
On the Closing Date, AHAC changed its name to Humacyte, Inc. and Legacy Humacyte
changed its name to Humacyte Global, Inc. Operations prior to the Merger
included in this Quarterly Report are those of Legacy Humacyte.

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Pursuant to the terms of the Merger Agreement, at the effective time of the
Merger (the "Effective Time"), (1) each outstanding share of common stock of
Legacy Humacyte ("Legacy Humacyte common stock") was cancelled and converted
into the right to receive approximately 0.26260 shares of the Company's common
stock, par value $0.0001 per share ("Common Stock"), and (2) each outstanding
share of preferred stock of Legacy Humacyte ("Legacy Humacyte preferred stock")
was cancelled and converted into the aggregate number of shares of 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, resulting in the issuance
of a total of 75,656,935 shares of Common Stock. Prior holders of shares of
Legacy Humacyte common stock and Legacy Humacyte preferred stock also received
the contingent right to receive certain Contingent Earnout Shares (as defined
below), for each share owned by each such Legacy Humacyte stockholder that was
outstanding immediately prior to the closing of the Merger (the "Closing"). In
addition, certain investors purchased an aggregate of 17,500,000 shares of
Common Stock (such investors, the "PIPE Investors") in a private placement that
closed concurrently with the Closing for an aggregate purchase price of $175
million (the "PIPE Financing"). Additionally, at the Closing, 2,500,000 shares
of AHAC's Class B common stock ("Founder Shares") automatically converted into
shares of Common Stock on a one-for-one basis.

Following the Closing Date, former holders of Legacy Humacyte common stock and
Legacy Humacyte preferred stock may receive up to 15,000,000 additional shares
of Common Stock ("Contingent Earnout Shares") in the aggregate in two equal
tranches if the volume-weighted average closing sale price of our Common Stock
is greater than or equal to $15.00 and $20.00, respectively, for any 20 trading
days within any 30 consecutive trading day period.

Unless otherwise noted, the Company has retroactively adjusted all common and
preferred share and related price information to give effect to the exchange
ratio established in the Merger Agreement.

Impact of COVID-19



The COVID-19 pandemic, which began in December 2019 and has spread worldwide,
has caused many governments to implement measures to slow the spread of the
outbreak, including shelter-in-place orders and the mandatory shutdown of
certain businesses. The outbreak and government measures taken in response have
had a significant impact, both direct and indirect, on our business, as supply
chains have been disrupted, and facilities and production have been suspended.
The future progression of the COVID-19 pandemic, including any existing or
potential variants of the virus which causes COVID-19, and its effects on our
business and operations are uncertain. The COVID-19 pandemic may affect our
ability to initiate and complete preclinical studies, delay our clinical trials
or future clinical trials, disrupt regulatory activities, or have other adverse
effects on our business and operations. The pandemic has already caused
significant disruptions in the financial markets and may continue to cause such
disruptions, which could impact our ability to raise additional funds to support
our operations. Moreover, the pandemic has significantly impacted economies
worldwide and could result in adverse effects on our business and operations.

To date, the COVID-19 pandemic has not resulted in material financial impacts or
impairment losses in the carrying values of our assets and we are not aware of
any specific related event or circumstance that would require us to revise the
estimates reflected in our financial statements. The extent to which the
COVID-19 pandemic will directly or indirectly impact our business, results of
operations and financial condition, including current and future clinical trials
and research and development costs, will depend on future developments that are
highly uncertain, including as a result of new information that may emerge
concerning COVID-19, the actions taken to contain or treat it, the emergence of
new virus variants, and the duration and intensity of the related economic
impact of the COVID-19 pandemic.

Components of Results of Operations

Revenue



To date, we have not generated revenue from the sale of any products. All of our
revenue has been derived from government and other grants. Since inception we
have been awarded grants from the California Institute of Regenerative Medicine
("CIRM"), the National Institutes of Health ("NIH"), and the Department of
Defense ("DoD"), to support our development, production scaling and clinical
trials of our product candidates. We may generate revenue in the future from
government and other grants, payments from future license or collaboration
agreements and, if any of our product candidates receive marketing approval,
from product sales. We expect that any revenue we generate will fluctuate from
quarter to quarter. If we fail to complete the development of, or obtain
marketing approval for, our product candidates in a timely manner, our ability
to generate future revenue, and our results of operations and financial
position, would be materially adversely affected.

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Research and Development Expenses



Since our inception, we have focused our resources on our research and
development activities, including conducting preclinical studies and clinical
trials, developing our manufacturing process and activities related to
regulatory filings for our product candidates. We recognize research and
development expenses as they are incurred. Our research and development expenses
consist primarily of:

•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 majority of our research and development resources are currently focused on
our Phase II and III clinical trials for our 6 millimeter HAV and other work
needed to obtain marketing approval for our 6 millimeter HAV for use for
vascular repair, reconstruction and replacement, including vascular trauma and
AV access in hemodialysis in the United States. We have incurred and expect to
continue to incur significant expenses in connection with these and our other
clinical development efforts, including expenses related to regulatory filings,
trial enrollment and conduct, data analysis, patient follow up and study report
generation for our Phase II and Phase III clinical trials. We do not allocate
all of our costs by each research and development program for which we are
developing our cabinet of HAVs, as a significant amount of our development
activities broadly support multiple programs that use our technology platform.
We plan to further increase our research and development expenses for the
foreseeable future as we continue the development of our proprietary scientific
technology platform and our novel manufacturing paradigm.

The successful development of our preclinical and clinical product candidates is
highly uncertain. At this time, we cannot estimate with any reasonable certainty
the nature, timing or costs of the efforts that will be necessary to complete
the remainder of the development of any of our preclinical or clinical product
candidates or the period, if any, in which material net cash inflows from these
product candidates may commence. This is due to the numerous risks and
uncertainties associated with the development of our product candidates,
including:

•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;


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•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.



A change in the outcome of any of these variables could lead to significant
changes in the costs and timing associated with the development of our product
candidates. For example, if the FDA or another regulatory authority were to
require us to conduct clinical trials beyond those that we currently anticipate
being required to conduct in order to complete the clinical development of any
of our product candidates, or if we experience significant delays in the
enrollment or the conduct of any of our clinical trials, we could be required to
expend significant additional financial resources and time on the completion of
clinical development.

General and Administrative Expenses



General and administrative expenses consist primarily of salaries and related
costs for employees in executive, finance, human resources, commercialization,
and administrative support functions, which also include stock-based
compensation expenses and benefits for such employees. Other significant general
and administrative expenses include facilities costs, professional fees for
accounting and legal services and expenses associated with obtaining and
maintaining patents.

We expect our general and administrative expenses will continue to increase for
the foreseeable future to support our expanded infrastructure and increased
costs of operating as a public company and as we prepare for our anticipated
commercial launch of the HAV. These increases are expected to include increased
employee-related expenses, increased sales and marketing expenses, and increased
director and officer insurance premiums, audit and legal fees, and expenses for
compliance with public company reporting requirements under the Exchange Act and
rules implemented by the SEC, as well as Nasdaq rules.

Other Income (Expense), Net



Total other income (expense), net consists of (i) the change in fair value of
the Contingent Earnout Liability that was accounted for as a liability as of the
date of the Merger, and is remeasured to fair value at each reporting period,
resulting in a non-cash gain or loss, (ii) interest income earned on our cash
and cash equivalents and short-term investments, (iii) interest expense incurred
on our Loan Agreement, finance leases, and our PPP loan during the periods each
were outstanding, (iv) a change in fair value of private placement common stock
warrant liabilities related to the Private Placement Warrants, which we assumed
in connection with the Merger, and which are subject to remeasurement to fair
value at each balance sheet date resulting in a non-cash gain or loss, (v) a
non-cash gain on PPP loan forgiveness during the nine months ended September 30,
2021, and (vi) during the nine months ended September 30, 2021, legal,
accounting, and underwriting fees and other costs directly related to the
consummation of the Merger that were associated with the aforementioned warrant
liabilities.

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Results of Operations

Comparison of the Three Months Ended September 30, 2022 and 2021



                                           Three Months Ended September 30,                    Change
($ in thousands)                               2022                2021                $                   %
Revenue                                    $       31          $     241          $    (210)                (87) %

Operating expenses:
Research and development                       17,337             15,386              1,951                  13  %
General and administrative                      6,188              5,398                790                  15  %
Total operating expenses                       23,525             20,784              2,741                  13  %
Loss from operations                          (23,494)           (20,543)            (2,951)                 14  %

Other income (expense), net
Change in fair value of Contingent Earnout
Liability                                        (962)            (9,768)             8,806                 (90) %
Interest expense                               (1,641)            (1,204)              (437)                 36  %

Other income (expense), net                       816                (48)               864                      *
Total other expense, net                       (1,787)           (11,020)             9,233                 (84) %
Net loss                                   $  (25,281)         $ (31,563)         $   6,282                 (20) %


* Not meaningful

Grant Revenue

For the three months ended September 30, 2022 and 2021, revenue was less than
$0.1 million and approximately $0.2 million, respectively, and related to our
grant from DoD. The decrease in revenue of $0.2 million, or 87%, relates to the
timing of reimbursement of certain allowable costs related to our grant from
DoD, currently estimated to total approximately $6.8 million over the life of
the grant.

Research and Development Expenses



The following table discloses the breakdown of research and development
expenses:

                                          Three Months Ended September 30,                    Change
($ in thousands)                              2022                2021                $                   %
External services                         $    4,542          $   3,801          $     741                  19  %
Materials and supplies                         3,131              2,947                184                   6  %
Payroll and personnel expenses                 6,448              5,775                673                  12  %
Other research and development expenses        3,216              2,863                353                  12  %
                                          $   17,337          $  15,386          $   1,951                  13  %


Research and development expenses increased by $2.0 million, or 13%, from $15.4
million for the three months ended September 30, 2021 to $17.3 million for the
three months ended September 30, 2022. The increase was primarily driven by
expenses to support our expanded research and development initiatives, including
(i) increased salaries and benefits of $0.9 million, (ii) a $0.7 million
increase in external services, (iii) a $0.4 million increase in other research
and development expenses including software costs, professional fees and
facility maintenance, and (iv) a $0.2 million increase in the purchase of
materials and supplies to be used in the development of our commercial-scale
manufacturing process and other research and development initiatives, partially
offset by a $0.3 million decrease in non-cash stock compensation expense.

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General and Administrative Expenses



General and administrative expenses were $6.2 million and $5.4 million for the
three months ended September 30, 2022 and 2021, respectively. The increase in
general and administrative expenses during this period of $0.8 million, or 15%,
was primarily driven by expenses associated with the transition to public
company status and company growth, including (i) a $0.4 million increase in
salaries and benefits due to higher headcount, including the initial members of
the planned commercial launch team, (ii) a $0.3 million increase in external
services and (iii) a $0.2 million increase in professional fees, partially
offset by a $0.1 million decrease in non-cash stock compensation expense.

Total Other Expense, net



Total other expense, net was $1.8 million and $11.0 million for the three months
ended September 30, 2022 and 2021, respectively. The decrease in expense of $9.2
million primarily resulted from a $8.8 million reduction in the non-cash loss
related to the remeasurement of the Contingent Earnout Liability as of
September 30, 2022 compared to September 30, 2021 and a $0.9 million increase in
interest income, partially offset by a $0.4 million increase in interest expense
primarily related to our loan facility with Silicon Valley Bank.

Comparison of the Nine Months Ended September 30, 2022 and 2021



                                              Nine Months Ended September 30,                       Change
($ in thousands)                                  2022                  2021                $                   %
Revenue                                    $         1,565          $   1,086                479                   44  %

Operating expenses:
Research and development                            48,303             45,091              3,212                    7  %
General and administrative                          17,050             15,576              1,474                    9  %
Total operating expenses                            65,353             60,667              4,686                    8  %
Loss from operations                               (63,788)           (59,581)            (4,207)                   7  %
Other income (expense), net:
Change in fair value of Contingent Earnout
Liability                                           58,649             (9,768)            68,417                       *
Interest expense                                    (4,561)            (2,952)            (1,609)                  55  %
Gain on PPP loan forgiveness                             -              3,284             (3,284)                (100) %
Other income (expense), net                          1,455                (45)             1,500                       *
Total other income (expense), net                   55,543             (9,481)            65,024                       *
Net loss                                   $        (8,245)         $ (69,062)         $  60,817                  (88) %


* Not meaningful

Grant Revenue

For the nine months ended September 30, 2022 and 2021, revenue was approximately
$1.6 million and $1.1 million, respectively, and related to our grant from DoD.
The increase in revenue of $0.5 million, or 44%, relates to the timing of
reimbursement of certain allowable costs related to our grant from DoD,
currently estimated to total approximately $6.8 million over the life of the
grant.

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Research and Development Expenses



The following table discloses the breakdown of research and development expenses
for the periods indicated:

                                          Nine Months Ended September 30,                     Change
($ in thousands)                              2022                2021                $                   %
External services                         $   12,202          $  11,534          $     668                   6  %
Materials and supplies                         8,706              8,141                565                   7  %
Payroll and personnel expenses                18,000             17,003                997                   6  %
Other research and development expenses        9,395              8,413                982                  12  %
                                          $   48,303          $  45,091          $   3,212                   7  %


Research and development expenses increased from $45.1 million for the nine
months ended September 30, 2021 to $48.3 million for the nine months ended
September 30, 2022. The increase of $3.2 million, or 7%, was primarily driven by
expenses to support our expanded research and development initiatives, including
(i) increased salaries and benefits of $2.2 million, (ii) a $1.0 million
increase in other research and development expenses including facility
maintenance, travel and software costs, (iii) a $0.7 million increase in
external services including the support of clinical studies, and (iv) a $0.6
million increase in the purchase of materials and supplies to be used in the
development of our commercial-scale manufacturing process and other research and
development initiatives, partially offset by a $1.2 million decrease in non-cash
stock compensation expense.

General and Administrative Expenses



General and administrative expenses were $17.1 million and $15.6 million for the
nine months ended September 30, 2022 and 2021, respectively. The increase in
general and administrative expenses during this period of $1.5 million, or 9%,
was primarily driven by expenses associated with the transition to public
company status and company growth, including (i) a $1.2 million increase in
salaries and benefits and recruiting costs primarily due to higher headcount,
including the initial members of the planned commercial launch team, (ii)
increased professional fees of $0.7 million primarily related to increased legal
and audit fees, (iii) a $0.5 million increase in insurance costs, (iv) a $0.4
million increase in external services, and (v) a $0.3 million increase in other
general and administrative expenses, partially offset by a $1.7 million decrease
in non-cash stock compensation expense primarily due to higher costs in 2021
resulting from restructuring of the management team to accommodate the
transition to being a public company.

Total Other Income (Expense), net



Total other income, net was $55.5 million for the nine months ended
September 30, 2022, compared to total other expense, net of $9.5 million for the
nine months ended September 30, 2021. The increase in income of $65.0 million
primarily resulted from (i) a $58.6 million non-cash gain related to the
remeasurement of the Contingent Earnout Liability as of September 30, 2022,
compared to a $9.8 million non-cash loss during the nine months ended September
30, 2021, (ii) a $1.2 million increase in interest income, and (iii) a $0.2
million non-cash gain related to the remeasurement of our private placement
warrant liability, partially offset by (i) a $3.3 million gain on PPP loan
forgiveness we recognized during the nine months ended September 30, 2021 and
(ii) a $1.6 million increase in interest expense primarily related to our loan
facility with Silicon Valley Bank, which commenced in March 2021.

Liquidity and Capital Resources

Sources of Liquidity



To date, we have financed our operations primarily through the sale of equity
securities and convertible debt, proceeds from the Merger and related PIPE
Financing, borrowings under loan facilities and, to a lesser extent, through
grants from governmental and other agencies. Since our inception, we have
incurred significant operating losses and negative cash flows. As of
September 30, 2022 and December 31, 2021, we had an accumulated deficit of
$422.8 million and $414.6 million, respectively.

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As of September 30, 2022 and December 31, 2021, we had cash and cash equivalents
and short-term investments of $171.7 million and $225.5 million, respectively.
We believe our cash and cash equivalents and short-term investments will be
sufficient to fund operations, including clinical trial expenses and capital
expenditure requirements for at least 12 months from the date of this Quarterly
Report. See Note 1 - Organization and Description of Business to our
accompanying unaudited condensed consolidated financial statements included
elsewhere in this Quarterly Report for additional information regarding our
assessment. We believe that our longer-term working capital, planned research
and development, capital expenditures and other general corporate funding
requirements will be satisfied through the sale of equity, debt, borrowings
under credit facilities or through potential collaborations with other
companies, other strategic transactions or government or other grants. Our
liquidity plans are subject to a number of risks and uncertainties, including
those described in the sections entitled "Forward-Looking Statements" and "Risk
Factors" in this Quarterly Report and our Annual Report.

As of September 30, 2022 and December 31, 2021, we had working capital of $156.7
million and $218.3 million, respectively. As of September 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.

Material Cash Requirements



Our known material cash requirements include: (1) the purchase of supplies and
services that are primarily for research and development; (2) debt repayments
(for additional information, see below and Note 7 - Debt to our unaudited
condensed consolidated financial statements contained elsewhere in this
Quarterly Report); (3) employee wages, benefits, and incentives; and (4)
financing and operating lease payments (for additional information see below).
We have also entered into contracts with CROs primarily for clinical trials.
These contracts generally provide for termination upon limited notice, and
therefore we believe that our non-cancellable obligations under these agreements
are not material. Moreover, we may be subject to additional material cash
requirements that are contingent upon the occurrence of certain events, for
example, legal contingencies, uncertain tax positions, and other matters.

As of September 30, 2022, we had non-cancellable purchase commitments of
$16.8 million for supplies and services that are primarily for research and
development. We have existing license agreements with Duke University and Yale
University and have a distribution agreement with Fresenius Medical Care. The
amount and timing of any potential milestone payments, license fee payments,
royalties and other payments that we may be required to make under these
agreements are unknown or uncertain at September 30, 2022. For additional
information regarding our agreement with Fresenius Medical Care, and our
agreements with Duke University and Yale University, see Note 12 - Related Party
Transactions and Note 11 - Commitments and Contingencies, respectively, to our
unaudited condensed consolidated financial statements contained elsewhere in
this Quarterly Report.

Debt

In March 2021, we entered into the Loan Agreement with Silicon Valley Bank and
SVB Innovation Credit Fund VIII, L.P., as amended in June and September 2021,
which provides a term loan facility of up to $50.0 million, with a maturity date
of March 1, 2025. The initial term loan tranche of $20.0 million was funded upon
the closing of the Loan Agreement, and on October 13, 2021, we borrowed an
additional $10.0 million under the Loan Agreement. The additional $20.0 million
becomes accessible in two tranches of $10.0 million each contingent on the
achievement of certain business and clinical development milestones. As a result
of the additional borrowing in October 2021, the commencement of repayment of
principal was deferred until no earlier than July 2023 and potentially later if
the remaining tranches are drawn. As of September 30, 2022, principal of $30.0
million was outstanding under the Loan Agreement and we were in compliance with
all covenants in all material respects. Assuming no additional borrowings under
the Loan Agreement, we expect to make interest payments of approximately
$5.3 million under the Loan Agreement from October 1, 2022 through March 1,
2025, approximately $3.1 million of which we expect to pay within one year of
September 30, 2022.

Our obligations under the Loan Agreement are secured by substantially all of our
assets, except for our intellectual property. The Loan Agreement contains
certain customary covenants, including, but not limited to, those relating to
additional indebtedness, liens, asset divestitures, and affiliate transactions.
We may use the proceeds of borrowings under the Loan Agreement as working
capital and to fund our general business requirements.

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Borrowings under the Loan Agreement bear interest at a rate of 7.5% or the sum
of the Wall Street Journal Prime Rate plus 4.25%, whichever is greater (10.50%
as of September 30, 2022). In addition, the lenders were granted warrants to
purchase common stock. Interest-only payments on the principal amount
outstanding are due monthly beginning in the first month after the loan is
dispersed. We are required to repay principal beginning on July 1, 2023, unless
we draw the remaining two loan tranches, in which case repayment of the
outstanding principal amount will begin no later than April 1, 2024.
Additionally, we are obligated to pay to the lenders a final payment fee of $1.5
million upon the maturity of the loan.

Our contractual obligations under the Loan Agreement as of September 30, 2022
include $4.3 million of cash payments related to principal within one year and
$25.7 million of principal payments within one to three years.

In April 2020, we received loan proceeds in the amount of approximately $3.3
million under the PPP. The loan and accrued interest were forgivable after a
24-week period as long as we used the loan proceeds for eligible purposes,
including payroll, benefits, rent and utilities, and maintained our payroll
levels. On May 25, 2021, the Small Business Administration approved the
forgiveness of the outstanding amount of the PPP loan and we recognized a gain
from loan extinguishment in the amount of $3.3 million during the three months
ended June 30, 2021.

Leases

Our finance lease relates to our headquarters facility containing our
manufacturing, research and development and general and administrative
functions, which was substantially completed in June 2018 and leased through May
2033, and our operating lease relates to the land lease associated with our
headquarters. Our future contractual obligations under our lease agreements as
of September 30, 2022 are as follows:

                                    Less than                                           More than
($ in thousands)       Total          1 year        1 - 3 years       3 - 5 years        5 years
Finance leases       $ 30,107      $    3,941      $      8,181      $      7,433      $  10,552
Operating leases        1,021             105               211               211            494


ATM Facility

On September 1, 2022, the Company entered into an agreement for the sale from
time to time up to $80.0 million of shares of Common Stock pursuant to a sales
agreement (the "ATM Facility"). As of September 30, 2022, the Company has not
conducted any sales of Common Stock under the ATM Facility.

Future Funding Requirements



We expect to incur significant expenses in connection with our ongoing
activities as we seek to (i) continue clinical development of our 6 millimeter
HAV for use in vascular trauma and hemodialysis AV access and submit biologics
license applications for FDA approval, (ii) if marketing approval is obtained,
to launch and commercialize our HAVs for hemodialysis AV access and vascular
repair in the U.S. market, including subsequent launches in key international
markets, (iii) advance our pipeline in major markets, including PAD Phase III
trials and continue preclinical development and advance to planned clinical
studies in CABG and biovascular pancreas for diabetes, and (iv) scale out our
manufacturing facility as required to satisfy potential demand if our HAVs
receive marketing approval. We will need additional funding in connection with
these activities.

Our future funding requirements, both short-term and long-term, will depend on many factors, including:

•the progress and results of our clinical trials and interpretation of those results by the FDA and other regulatory authorities;

•the cost, timing and outcome of regulatory review of our product candidates, particularly for marketing approval of our HAVs in the United States;

•the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our additional product candidates;



•the cost and timing of our future commercialization activities, including
product manufacturing, marketing and distribution for our HAVs if approved by
the FDA, and any other product candidate for which we receive marketing approval
in the future;

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•the amount and timing of revenues, if any, that we receive from commercial sales of any product candidates for which we receive marketing approval;



•the costs and timing of preparing, filing and prosecuting patent applications,
maintaining and enforcing our intellectual property rights and defending any
intellectual property-related claims; and

•the costs of operating as a public company, including hiring additional personnel as well as increased director and officer insurance premiums, audit and legal fees, and expenses for compliance with public company reporting requirements under the Exchange Act and rules implemented by the SEC and Nasdaq.



Until such time, if ever, as we are able to successfully develop and
commercialize one or more of our product candidates, we expect to continue
financing our operations through the sale of equity, debt, borrowings under
credit facilities or through potential collaborations with other companies,
other strategic transactions or government or other grants. Adequate capital may
not be available to us when needed or on acceptable terms. We do not currently
have any committed external source of funds beyond the Loan Agreement. To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, the ownership interest of our stockholders will be
diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect the rights of stockholders. Debt financing and
preferred equity financing, if available, may involve agreements that include
covenants limiting or restricting our ability to take specific actions, such as
incurring additional debt, making acquisitions or capital expenditures. Debt
financing would also result in fixed payment obligations. If we are unable to
raise capital, we could be forced to delay, reduce, suspend or cease our
research and development programs or any future commercialization efforts, which
would have a negative impact on our business, prospects, operating results and
financial condition.

Our principal use of cash in recent periods has been primarily to fund our
operations, including the clinical and preclinical development of our product
candidates. Our future capital requirements, both short-term and long-term, will
depend on many factors, including the progress and results of our clinical
trials and preclinical development, timing and extent of spending to support
development efforts, cost and timing of future commercialization activities, and
the amount and timing of revenues, if any, that we receive from commercial
sales.

See the section of this Quarterly Report entitled "Risk Factors" for additional risks associated with our substantial capital requirements.


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Cash Flows



The following table shows a summary of our cash flows for each of the periods
shown below:

                                                                      Nine Months Ended September 30,
($ in thousands)                                                         2022                   2021
Net loss                                                          $

(8,245) $ (69,062) Non-cash adjustments to reconcile net loss to net cash used in operating activities(1):

                                                   (47,034)             20,686
Payment of liabilities assumed in Merger                                         -             (12,363)
Changes in operating assets and liabilities:                                 3,109                 997
Net cash used in operating activities                                      (52,170)            (59,742)
Net cash used in investing activities                                         (367)               (175)
Net cash (used in) provided by financing activities                         (1,234)            260,437
Net (decrease) increase in cash and cash equivalents              $        (53,771)         $  200,520
Cash and cash equivalents at the beginning of the period          $        217,502          $   39,929
Cash and cash equivalents at the end of the period                $        163,731          $  240,449


___________________________

(1) Includes depreciation, amortization related to our leases and our debt discount, stock-based compensation expense, the change in fair value of our Contingent Earnout Liability and our common stock warrant liabilities, and in 2021 includes a gain on PPP loan forgiveness.

Cash Flow from Operating Activities



The decrease in net cash used in operating activities from the nine months ended
September 30, 2021 to the nine months ended September 30, 2022 was primarily due
to $12.4 million in payments of liabilities acquired in the Merger during the
nine months ended September 30, 2021, partially offset by increased spending on
pre-clinical, clinical and pre-commercial activities as well as payroll and
personnel expenses.

Cash Flow from Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2022 and 2021 primarily consisted of the purchases of laboratory equipment.

Cash Flow from Financing Activities



The decrease in net cash provided by financing activities for the nine months
ended September 30, 2022 was primarily due to $242.4 million of proceeds
received in August 2021 in connection with the Merger, including proceeds from
the trust account that we obtained in connection with the closing of the Merger,
as well as from the PIPE Financing, along with $19.7 million of net proceeds in
connection with draws under our loan facility with Silicon Valley Bank in March
2021.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in SEC rules and regulations.

Critical Accounting Estimates



Our discussion and analysis of our financial condition and results of operations
are based upon our unaudited condensed consolidated financial statements, which
have been prepared in accordance with U.S. generally accepted accounting
principles. The preparation of our unaudited condensed consolidated financial
statements requires us to make estimates, assumptions and judgments that affect
the reported amounts of assets, liabilities, revenues, and expenses, and
disclosure of contingent liabilities. We base our estimates and assumptions on
historical experience and other factors that we believe to be reasonable under
the circumstances. We evaluate our estimates and assumptions on an ongoing
basis. Although we believe that our estimates, assumptions, and judgments are
reasonable, they are based upon information presently available. Actual results
may differ significantly from these estimates based on different assumptions,
judgments, or conditions.

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An accounting estimate or assumption is considered critical if both (a) the
nature of the estimate or assumption involves a significant level of estimation
uncertainty, and (b) the impact within a reasonable range of outcomes of the
estimate and assumption is material to our financial condition. There have been
no material changes to our critical accounting policies and estimates as
compared to those disclosed in our audited consolidated financial statements as
of and for the years ended December 31, 2021 and 2020, included in our Annual
Report.

Emerging Growth Company and Smaller Reporting Company Status



We are an "emerging growth company" as defined in the Jumpstart our Business
Startups Act of 2012 (the "JOBS Act"), and may take advantage of certain
exemptions from various reporting requirements that are applicable to other
public companies that are not emerging growth companies until it is no longer an
emerging growth company. Section 107 of the JOBS Act provides that an emerging
growth company can take advantage of the extended transition period afforded by
the JOBS Act for the implementation of new or revised accounting standards. We
expect to use the extended transition period and, therefore, while we are an
emerging growth company we will not be subject to new or revised accounting
standards at the same time that they become applicable to other public companies
that are not emerging growth companies, unless we choose to early adopt a new or
revised accounting standard. This may make it difficult or impossible to compare
our financial results with the financial results of another public company
because of the potential differences in accounting standards used.

Additionally, we are a "smaller reporting company" as defined in Item 10(f)(1)
of Regulation S-K under the Exchange Act ("Regulation S-K"). Smaller reporting
companies may take advantage of certain reduced disclosure obligations,
including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company if (1) the market value
of Common Stock held by non-affiliates is less than $250 million as of the last
business day of the second fiscal quarter, or (2) our annual revenues in our
most recent fiscal year completed before the last business day of its second
fiscal quarter are less than $100 million and the market value of Common Stock
held by non-affiliates is less than $700 million as of the last business day of
the second fiscal quarter.

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