Brainstorm Cell Therapeutics Inc (BCLI) 2014 Q4 法說會逐字稿

Good day, welcome to today's BrainStorm Cell Therapeutics fourth-quarter and full-year 2014 financial results call. As a reminder, today's call is being recorded. At this time I would like to turn the conference over to Mr. Michael Wood. Please go ahead, sir.

Thank you, operator, and good morning. This morning BrainStorm announced financial results for fiscal year 2014. If you have not yet received this news release or if you would like to be added to BrainStorm's distribution list, please visit the Investor Relations section of BrainStorm's website at BrainStorm-cell.com.

Before turning the call over to the management team let me remind you that some of the information contained in this call includes forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties. The Company's actual results could differ materially from those discussed on the call.

Factors that could contribute to such differences include, but are not limited to, those items noted and included in the Company's SEC filings including the Company's annual report on Form 10-K and quarterly reports on Forms 10-Q.

The forward-looking information that is provided by the Company in this call represents the Company's outlook as of today and the Company does not undertake any obligation to update forward-looking statements made on this call. Subsequent events and developments may cause the Company's outlook to change.

At this time it is my pleasure to turn over the call to Dr. Tony Fiorino, Chief Executive Officer of BrainStorm Cell Therapeutics. Tony, please go ahead.

Thank you, Michael, and a warm welcome to everyone joining us live today on this call. Joining me from Israel is Liat Sossover, our Chief Financial Officer. Although we are already well into the first quarter of 2015, I would like to begin by highlighting some of BrainStorm's 2014 accomplishments as we report our 2014 financial results and provide an update on some recent activities and outlook for the rest of 2015.

2014 was a year of many accomplishments for BrainStorm; I would say transformative accomplishments, in fact. Over the course of 2014 we completed the transfer of our NurOwn manufacturing process from Israel to two champion clean rooms in the US, a key step that allowed us to launch our randomized double-blind placebo-controlled Phase 2 trial in ALS at three prestigious sites in the US. And we gained fast-track status for NurOwn in ALS from the FDA.

We began building out a US team with my joining the Company in June and we completed our open label Phase 2a ALS study that was run at Hadassah. In June we raised $10.5 million with a group of institutional healthcare investors and subsequently executed a reverse split and uplisted to the NASDAQ.

We ended 2014 in great shape with the US Phase 2 trial enrolling smoothly, our Phase 2a data in the capable hands of our statisticians and in a solid financial position. And we did not miss a step heading into 2015 announcing final top-line data from the Phase 2a study, our first and positive Data Safety Monitoring Board review of the US study and excellent preclinical results from a new indication, autism.

We also brought about $15 million in new funds into the Company in the first quarter after securing another $1.1 million grant from Israel's Chief Scientist office. Beyond this we continue to work on a number of research and manufacturing initiatives, some of which I will mention later on in the call.

I would like to now provide a status update on our lead program, NurOwn, to treat ALS. Enrollment in the US study, which began at Mass General in June of 2014, has been moving along as planned. We have screened 42 subjects and enrolled 26, 15 have received treatment with cells or placebo.

Although two subjects discontinued the study prior to bone marrow aspiration, none have discontinued the study owing to treatment-related adverse events. We announced a positive safety update early in the year after the first Data Safety Monitoring Board meeting. The DSMB reviewed safety data collected through a cutoff date in January and did not find any lab abnormalities, adverse events or significant protocol deviations that would be a cause for concern.

If we continue to see this small number of site discontinuations we expect to complete enrollment of this trial around midyear. Since subjects are on study for approximately 9 months we would expect the last subject's last visit to occur around the end of the first quarter or the beginning of the second quarter next year. Thus we would expect top-line results sometime after that, perhaps around midyear after the statisticians have locked the database and analyzed the results.

I will remind the listeners that the primary endpoint of this study is safety as per our discussions with the FDA and this study was not powered to detect a specific treatment effect. Of course we are measuring ALS functional rating score, ALSFRS, lung function and grip strength as key secondary endpoints and looking for trends consistent with our previous observation.

In early January we shared final results of our Phase 2a trial of NurOwn in ALS conducted at Hadassah Medical Center. Comparing the three- and six-month periods after administration to the three-month run in period,

NurOwn produced large and clinically meaningful reductions in the rate of decline of the ALSFRS and forced vital capacity, which is a measure of lung function.

We will be presenting a poster detailing these exciting results at the 67th annual meeting of the American Academy of Neurology which will be held in Washington in April. We will also be presenting these and other data at the International Society for Cellular Therapy meeting, which will be held in May.

A manuscript detailing these results, as well as detailing these results, as well as the results of our earlier Phase 1 study, is in preparation and we expect to be submitting this to a neurology journal for publication shortly.

I want to take this opportunity to highlight some important aspects of NurOwn that have emerged from our clinical studies to date which I think distinguish us from other cell therapies in development for ALS.

First, I must point out that the different cell therapies being developed in ALS have distinct mechanisms of action that in some cases could be complementary. Because NurOwn is an autologous mesenchymal stem cell-based product administered intramuscularly or intrathecaly we have high expectations with regard to its safety profile. And so far these have been met in our Israeli and US clinical trial experiences.

To date we have not seen treatment associated serious adverse events. And we have also not seen any signs of meaningful acceleration of disease progression after treatment. In fact, of all the subjects with six months of follow-up, the fastest post-treatment progression rate was a decline of 2.8 ALSFRS points per month and that was in a subject who had received only IM administration.

With regard to efficacy, I would point out that the aggregate treatment effect that we have observed in the Israeli studies well exceeds what ALS physicians have reported as a clinically meaningful reduction in disease progression as measured by the slope of ALSFRS over time.

In a 2010 publication in which ALS treating neurologists were surveyed, 93% indicated that a 20% reduction in the rate of disease progression would be at least somewhat clinically meaningful and virtually all agreed that a 35% or greater reduction in the rate of disease progression would be very clinically meaningful.

Therefore, we are quite confident that if the treatment effect observed in the prior studies is confirmed in larger trials that we will have a very strong package to bring to the FDA and other regulators.

The results we have obtained to date have featured a single administration of NurOwn. We are currently planning for a multi-dose study to start later this year in Israel.

Clearly, one of the important goals of this study will be to extend the safety and efficacy observations that we have made in studies featuring a single dose of NurOwn. However, this study will also incorporate some keep manufacturing developments such as the use of cryopreserved mesenchymal stem cells to produce multiple doses of NurOwn and a production cycle that has been shortened in duration by approximately 25%.

Our manufacturing team is working extremely hard to complete the validation work on the process improvement. These represent very important steps forward in our manufacturing as we seek to implement improvements to the scale and efficiency of the process.

We have ongoing additional manufacturing initiatives relating to stability, efficiency and automation among others. In parallel with these projects we have an ongoing collaboration with Octane, a Canadian biotechnology company, to develop a self-contained bioreactor using their Cocoon system.

I had the opportunity to visit Octane last month and I was very impressed with what I saw. The Cocoon is a truly cutting edge, self-contained cell culture system and Octane has made great strides in the current prototype of the custom cartridge that will be used in the Cocoon system.

There are still plenty of technical hurdles to be crossed in growing our cells in a three-dimensional bioreactor, but I am very encouraged by the progress and look forward to BrainStorm receiving the next prototype later this year.

With regard to the pipeline, we are continuing to review our options for future indications for NurOwn. We recently expanded the research team in Israel in order to support our broadened preclinical focus. Earlier this quarter we announced excellent preclinical [results] in the BTBR mouse model of autism in studies conducted by Professor Dani Offen of Tel Aviv University, Chief Scientific Advisor to BrainStorm.

What was particularly notable about these results was the ability of NurOwn cells to reduce certain stereotypical repetitive behaviors, improve social interactions and reduce cognitive rigidity, in some cases to the levels seen in normal mice tested in parallel. We are (inaudible) receive some additional data from this study and have been in discussion with autism experts about next steps.

With that update I would like to turn the call over to Liat for the financials.

Thank you, Tony, and thank you to our investors and others who have joined us on this call today. I will present the fourth-quarter financials followed by full-year numbers.

Net R&D expenses for the fourth quarter of 2014 were $1.6 million compared with approximately $850,000 for the fourth quarter of 2013. The increase was primarily the result of increased US clinical trial expenses.

General and administrative expenses for 2014 totaled $1 million compared with approximately $550,000 in 2013. This was driven by increased stock-based compensation, fees associated with uplisting to NASDAQ and increased payroll.

Financial expenses were approximately $64,000 in the fourth quarter compared with income of $165,000 in the fourth quarter of 2013. Net loss was $2.7 million versus $1.2 million in 2013.

And now the full-year financials. R&D gross expenses for the year totaled $6.1 million compared with $4 million for 2013, primarily the result of increased US clinical trial costs, including commencement of the Phase 2 trial, partially offset by reduced cost in Israel. In both years these expenses were partially offset by support from Israeli Office of the Chief Scientist.

Net R&D expense for 2014 was $4.0 million versus $2.9 million in 2013. General and administrative expenses for 2014 totaled $2.7 million compared with $2.1 million in 2013. This was driven by an increase in stock-based compensation of $278,000 as well as by fees associated with uplisting to NASDAQ and increases in payroll.

Financial expenses for 2014 totaled $1.8 million compared to income of approximately $144,000 in 2013. The 2014 financial (technical difficulty) were non-cash items incurred as a result of [free] evaluation of certain warrants issued to investors in the August 2013 public offering.

BrainStorm's net loss for the year ended December 31, 2014 was $9.2 million or $0.68 per share compared with a net loss of $4.9 million or $0.46 per share for the year ended December 31, 2013.

The weighted average number of shares outstanding at year end 2014 was 13.7 million compared with 10.7 million shares at year end 2013, an increase driven mainly by the issuance of shares in the June 2014 financing.

We closed 2014 with $8.5 million in cash and equivalents and in short-term deposits, up from $3.5 million in 2013. Subsequently in January most holders of the warrants issued in June 2014 financing exercised their warrants at $5.22 per share, a 4% premium to the closing price on January 7.

For each warrant exercised we issued 1.5 new warrants to purchase unregistered shares of common stock at an exercise price of $6.50 resulting in the net issuance of half warrants. We raised approximately $13 million in this warrant exchange. Not only was this capital raise on terms quite favorable to the Company, but we believe it reflects the continued confidence of our investors in our (inaudible) and in our ability to execute our clinical programs as planned.

We believe the proceeds from this transaction combined with other (inaudible) received in the quarter through warrant exercises and a $1.1 million grant from the Office of the Chief Scientist provides sufficient funds to operate the Company well beyond the completion of our US clinical -- Phase 2 clinical trial in 2016, while allowing us to pursue our planned multi-dose study, additional clinical and preclinical indications as (inaudible) of our manufacturing to support the launch of a pivotal study after completing of the Phase 2 trial.

Thank you, Liat, for the finance update. So to recap, we are very pleased with the progress we made in 2014 and see a very exciting year ahead for us in 2015. We believe we have a unique living system for delivering multiple neurotrophic factors to the central and peripheral nervous system and continue to work hard moving the platform forward as quickly as possible in ALS, our lead indication, while bringing additional programs into preclinical and clinical development.

Over the course of 2015 we expect to achieve a number of important milestones. In the ALS program we will be presenting our exciting Phase 2 data at several prestigious medical conferences and hope to publish the results of both Israeli clinical trials as well. We should complete enrollment of the US Phase 2 study around midyear while launching a new multi-dose study in Israel thereafter.

We expect to implement a number of critical manufacturing improvements that will enable the production of multiple doses of NurOwn from a single bone marrow aspiration. In addition, we are working diligently on expanding the pipeline by moving NurOwn into new indications both in the clinic and in the lab.

I think this is one of the most exciting phases in BrainStorm's history and I look forward to providing future updates on our programs. With that I will turn the call over to questions. Operator?

(Operator Instructions). Jason Kolbert, Maxim Group.

Tony, actually it is Jason McCarthy this morning for Jason Kolbert. It sounds like everything is just continuing to go really well. Over here we are really believing that BrainStorm is beginning to set itself apart from other cell therapy companies for ALS, at least in the ALS space.

And I wondered if you could talk about, other trials have been reading out -- particularly one of note in the last month -- the differences between using a run-in period versus not using a run-in period and how that piece of data can help give a better signal for efficacy in your study versus other studies.

Thanks for the question. In both of our Israeli studies, and actually in the US study as well, we have a -- as you mentioned, a run-in period of three months during which we establish the baseline rate of disease progression. And in a single arm study what this allows us to do is to compare the rate of disease progression after the treatment to the run-in period -- the three-month run-in period prior to treatment.

So in the absence of being able to make a placebo comparison this provides us with some insight into whether or not there was an impact of administering the cells in comparing the post-treatment monthly changes in ALSFRS or lung function to the changes observed during the run-in period.

So that is the rationale behind the run-in period. And it does provide us with the ability to make the comparison not to a static snapshot of a single ALSFRS score at baseline, but to what the disease progression was like heading into treatment.

Great, great, thank you, all right, that kind of clears things up for me. And I am glad everything is going really well. Looking forward to the data coming or completion of enrollment.

(Operator Instructions). Jason Napodano, Zacks.

So just to kind of -- I know you guys are going to present a poster on the 2a data and I don't know how much more you are willing to share with us right now versus what was shared earlier in the year. But I am trying to get a sense of -- within the responder analysis I think you presented obviously the charts had the pooled data of all the patients.

I'm trying to get a sense of the difference between the responders and the non-responders and whether or not when you looked at the response of the non-responders, whether there was anything concerning there in terms of an acceleration in decline in either ALS score or the forced vital capacity?

Thanks for the question, Jason. So we have looked at that and we don't see anything that would be -- for us of any concern. I think I mentioned that the most rapid rate of decline that we saw in the two studies for the post-treatment period was about 2.6 or 2.7 ALSFRS points per month and that was in an IM subject.

In fact, the three most rapid progressors post-treatment were in subjects who received only IM administration which was used in the Phase 1 study. And we know that we don't really see much systemic benefit or systemic effect from IM treatment alone. So particularly within the IT treated subjects between the two studies we really are not seeing any signs of acceleration of disease.

And, Tony, when you look at the PRO-ACT database -- and my associate and I have spent probably way too much time digging through PRO-ACT and looking at the various outcomes for placebo patients over periods of time. The one thing that kind of strikes us is you can get a good sense of what the mean or median decline is for your average placebo patient, but when you try to do a standard deviation of those declines you get a rather large number.

I mean you have patients that -- some patients at six months show no decline and other patients show a pretty precipitous decline. The Phase 2 trial that you are doing right now you will look at data at six months. I am wondering is -- obviously this is a safety study, but how far out do you need to go in terms of time before you can truly get a sense of whether or not your cells are having a therapeutic effect?

Is six months long enough? If six months is not long enough then how far out do you really need to go before you can claim we have got a statistically significant separation here?

Well, so in terms of statistical significance, that will be driven a lot by the number of subjects that one looks at in a study. In the Phase 2 trial, which, as you point out, is a safety study, they are receiving a single dose of cells and then we are following for six months afterwards.

And I think that certainly within BrainStorm we don't really have an expectation that as moving forward in the clinical development program that a single dose is going to be the way to maximize the efficacy of NurOwn, which is of course why we are planning a multi-dose study currently.

When I think about what a future trial might look like, if I think about for instance what -- how I might look at a pivotal study design, I think we would probably look for treating for a year. And make a comparison between treated and placebo subjects at the end of that year where subjects have had the opportunity to be on NurOwn for an entire year. And I think that that certainly should be I think enough time for a clear separation between treated and placebo subjects.

That is very helpful. Are you still following the patients from that Phase 2a study? And will we see further endpoints on those patients beyond the six months that was already reported?

No, they were followed for six months and then that was the study end. One of the things that we are definitely contemplating in the multi-dose study is bringing them back for 9- and 12-month visits. It is not always easy with these patients, as you can imagine, because of the disease and it is hard for them to get around as the disease progresses. But it is important to try to get those later time points.

Yes, I agree. Last question. In terms of moving the next indication into the clinic, do you have a timeline on when we might see a Phase -- I guess a Phase 1 trial start in autism? And what needs to be done before you can do that? Are there additional INDs that need to be filed? Or give us a sense of the preclinical work that needs to be kind of completed before we will see you guys moving to the clinic with a new indication.

Right. So, we are continuing the process of reviewing both the autism data and other preclinical proven concept data that we have and discussing with some clinical experts what the right next steps might be.

I am not prepared today to -- I don't want to put a timeline on it, but we are engaged in very, very active discussions in determining what if anything additionally needs to be done on the preclinical side, what is the right location for a next study, which is also in part related to manufacturing capacity, and who are the right investigators to work with? But I appreciate the question. This is very much a top of mind issue for us that we are quite engaged with.

All right, guys, congrats on the data and looking forward to seeing your poster at AAN.

Thanks.

(Operator Instructions). Aaron Martin, [i-Investment] (sic) Partners.

Hi, good morning, it is Aaron Martin from AIGH. I've got a quick question for Liat. How much of the expenses in Q4 and for 2014 were non-cash expenses?

Thank you for the question. I will have to have a look and, if you will give me a few minutes, then I will return to you with that. If we have quite a lot you can see it break down as the stock-based compensation and it's separated in the financials and in the press release that we issued. I can return to you with that answer, please.

Okay. Okay, thanks.

(Operator Instructions). It looks like we have no further questions at this time. I would like to turn it back over to our speakers for any additional or closing remarks.

Thank you very much, everyone on the call, for your participation and for your interest in BrainStorm. We remain incredibly upbeat about the potential for NurOwn in ALS and in other neurodegenerative diseases.

We are working hard on multiple fronts, clinical, preclinical and manufacturing to be able to move this therapy forward and provide it to patients who are suffering from these debilitating diseases. Thank you again for your interest and for your participation. And we look forward to catching up next quarter.

That does conclude today's conference. We thank everyone for their participation.