Brainstorm Cell Therapeutics Inc (BCLI) 2021 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to BrainStorm Cell Therapeutics' second-quarter 2021 earnings call. (Operator Instructions) It is my now my pleasure to turn the floor to your host, Thomas Galassi. Sir, the floor is yours.

Good morning, and thank you everyone for joining us. Before we begin the opening remarks, we would like to remind listeners that this conference call contains numerous statements, descriptions, forecasts, and projections regarding BrainStorm Cell Therapeutics and its potential future business operations and performance, statements regarding the market potential for the treatment of neurodegenerative diseases such as ALS and MS, the sufficiency of the company's existing capital resources for continuing operations in 2021 and beyond, the safety and clinical effectiveness of the NurOwn technology platform, clinical trials of NurOwn and related clinical development programs, and the company's ability to develop strategic collaborations and partnerships to support their business planning efforts.

Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond BrainStorm's control, including the risks and uncertainties described from time to time in the SEC filings. The company's results may differ materially from those presented on today's call. The company undertakes no obligation to publicly update any forward-looking statements.

Joining me on the call today will be Chaim Lebovits, President and CEO of BrainStorm; Dr. Ralph Kern, President and Chief Medical Officer; and Dr. Preetam Shah, Executive Vice President and CFO; in addition, Dr. Stacy Lindborg, Executive Vice President and Head of Global Clinical Research; and Dr. David Setboun, Executive Vice President and Chief Operating Officer are also on the call and will be available to answer your questions during the Q&A session.

Now I would like to turn the call over to Mr. Lebovits. Please go ahead.

Thank you, Tom. Thanks to all listening for joining us to discuss our second-quarter financial results and corporate highlights.

There were several important business developments that BrainStorm would like to cover today, but let me begin with a brief review of the congressional hearing on neurodegenerative diseases which took place last week. Last Thursday, July 29, the US House Energy and Commerce Subcommittee on Health held a public hearing entitled The Path Forward: Advancing Treatments and Cures for Neurodegenerative Diseases. The hearing featured testimony from several experts, ALS neurologists, patient advocates, ALS patients, the FDA, and NIH.

Chairwoman Ashu opened the hearing stating, and I quote, our work today is to help create the fighting chance against these deadly diseases. I think every member of our committee has heard from ALS patients who are fed up with a lack of options. Two drugs, AMX0035 and NurOwn, have captured the attention and sparked a debate over whether the potential benefits of the drug outweigh the risks. Everyone here share the same goal: full approval for effective drugs. But the question before us still stands, how do we best get there, end of quote.

[The virus] represent a pivotal development for the ALS community. And as a combination of the work of the entire ALS advocacy community, advocating for policy change. We were all reminded that there are real people, and that there is an untold human suffering from behind these exceptionally, cruel diseases.

This hearing is a clarion call for greater collaboration and urgency between industry government and advocacy to deliver treatments for neurodegenerative diseases. Patients and their families do not have time to wait.

From BrainStorm is reinforced our sense of urgency to work with government and all stakeholders, to make innovative treatments for neurodegenerative disease available to patients in need as quickly as possible. The hearings may prove to be a watershed moment in the history of ALS therapy development.

While BrainStorm did not participate directly in the hearings, we, along with our consultants, follow them closely to understand what the likely implications are for us and the patient so desperately need a solutions. There were testimonies from a high-respected ALS expert who has been closely involved with NurOwn development: Dr. Merit Cudkowicz, the Chair of the Department of Neurology at Mass General Hospital and a principal Investigator for NurOwn; also, from Dr. Jinsy Andrews, the Director of Neuromuscular Clinical Trials at Columbia University, a member of the ALS Association Board of Trustees, and the co-chair of NEALS, the Northeast ALS Consortium.

Dr. Cudkowicz quite delivered compelling testimony in which she explained how advances in understanding of brain disease and an expanding pipeline of potential treatments have already brought us to major therapeutic turning points for therapeutics ALS. She calls for increased funding for ALS science, clinical trials expands access, and very importantly, for new policies and processes that will accelerate the regulatory approval of new and innovative treatments to address the unmet medical need of ALS patients and their families.

People with ALS and prescribing physicians want job on the market, where we have reasonable confidence on both efficacy and safety. As Andrew spoke eloquently of the need for transformational change in the ALS field, she acknowledged the challenges around making approval decisions for promising treatments, of noted that people with ALS have made it clear to FDA and Congress that they are willing to accept greater risks and that any treatment that retains function and provide more time is meaningful. Most importantly, patients currently affected of ALS can't wait for future solutions. They need effective solutions today.

Dr. Cudkowicz also mentioned, of course, NurOwn and [AMX] by the name, but we don't want to go into further detail on this call. The full transcript for these testimonies and the archived hearings can be viewed on the website of the Energy and Commerce Committee in the House of Congress.

We look forward to a continued and productive dialogue with ALS experts, patient, advocates, and the FDA with a goal of agreeing on a viable path forward for NurOwn and ALS. In parallel, with our ALS development program, we're also developing NurOwn as a treatment for progressive MS. At the end of March, we had announced very encouraging topline data from our Phase 2 study [in this education].

I will ask of Dr. Ralph Kern, our President and Chief Medical Officer, to provide a brief update on where our progress of MS program stands today. Ralph?

Thanks, Chaim, and good morning to all. As we previously communicated there are compelling reasons to advance our program in progressive MS, and we're in the process to preparing a manuscript for peer-reviewed publication. And we plan to present the data at the upcoming Scientific Congress. We also believe that consistent evidence in MS and ALS confirms that NurOwn, by simultaneously targeting inflammation and neuro degeneration, is truly a platform technology, and we're learning much from the progressive MS study in that regard.

As a quick refresher, we designed the progressive MS study to optimally identify functional gains over 28 weeks by studying progressive patients without recent relapses and by comparing this group to a prior-match progressive group of MS patients from the client study at the Brigham and Women's Hospital in Boston. We focused on evaluating validated and objective measures of walking, arm function, cognition, vision, as well as patient's own evaluation of their walking impairments. We also obtained the CSF and serum biomarkers known to be important in MS to confirm neuron's mechanism of action.

At the end of the study, we were able to demonstrate safety and consistent changes with neuron across all functional measures, with a number of participants meeting criteria for clinical improvement. This is a unique observation in progressive MS, a disease where the natural history is one of gradual and relentless deterioration. We also observed consistent changes across biomarkers supporting the proposed mechanism of action in progressive MS.

Following the study conclusion, we had the opportunity to present and discuss the data with our study's principal investigators with a wide range of external MS experts and with the leadership of MS advocacy organizations. And I must say that we've received very strong support and encouragement to take next steps.

At this point, we plan to review the Phase 2 data with the FDA. And based on these discussions, we will carefully consider an announced next steps. Chaim, back to you.

Thank you so much, Ralph. We also had important news on our manufacturing. We announced of last week that we have received GMP approval from the Israeli Ministry of Health for three state-of-the-art cleanrooms at Sourasky Hospital's Institute for Advanced Cellular Therapies.

The GMP approval confirmed that these cleanrooms are compliant with Israeli GMPs. And importantly, these are also aligned with European Union's GMPs. Approval of this new facility more than doubles our capacity to manufacture and ship NurOwn into the EU and local Israeli markets, if approved in these markets.

Finally, we recently provided an update on our R&D portfolio and announced that a series of patents and patent applications have been granted or allowed in territories, including the United States, the EU, Canada, Israel, and Hong Kong in 2020 and 2021. The claims of these patents are result of our world class expertise in applying cell therapy to treat neurodegenerative disorders as the patent further strengthen our overall IP position in these markets.

I'll now turn over the call to Dr. Preetam Shah, our Chief Financial Officer, to provide the financial update. Preetam.

Thank you, Chaim, and good morning to all. It is my pleasure now to walk you through our second-quarter 2021 financial performance.

Research and development expenses net for the three months ended June 30, 2021 were $3.59 million compared to $5.69 million net for the three months ended June 30, 2020. This decrease of approximately $2.1 million year over year was primarily due to a decrease in expenses related to our Phase 3 and Phase 2 clinical trials and a decrease in expenses in connection with stock-based compensation expenses, materials, rent, and other activities.

The decrease in expenses was partially offset by an increase in costs related to patents, preclinical R&D activities, travel and consultants, and a decrease in grant participation by the Israel Innovation Authority or IIA. Excluding participation from IIA and other grants, research and development expenses decreased by $2.2 million from $6.01 million in the second quarter of 2020 to $3.81 million in the second quarter of 2021.

General and administrative expenses for the three months ended June 30, 2021 were $2.52 million compared to $1.71 million in the three months ended June 30, 2020. This increase of approximately $816,000 year over year was primarily due to an increase in payroll, stock-based compensation, consultants, rent and other costs, partially offset by a decrease in PR and travel expenses.

Net loss for the three months ended June 30, 2021 was $6.27 million or $0.17 per share, compared to a net loss of $7.39 million or $0.25 per share for the three months ended June 30, 2020. Cash, cash equivalents, and short-term bank deposits were approximately $35 million as of June 30, 2021 compared to approximately $40 million on March 31, 2021.

During the quarter ended June 30, 2021, the company did not raise any capital under the September 25, 2020 ATM and since inception has raised gross proceeds of approximately $29.1 million under this facility. For further details on our financials, please refer to our form 10-Q filed with the SEC today.

Back to you, Chaim.

Thanks, Preetam. This is Tom. And I'll now read questions that were submitted from investors.

So our first submission actually contains two questions. They start by saying, BrainStorm previously communicated that it will first consult with principal Investigators, ALS experts, expert statisticians, regulatory advisors, and ALS advocacy groups to assess the benefit/risk of BLA submission before making a final decision regarding next steps following advisory from the FDA. What was the consensus regarding BLA submission based off your discussions with ALS experts, advocacy groups, and regulatory advisors? And when do you plan on submitting your BLA?

And they also are asking, regarding Phase 3 clinical testing for ALS, have you continued testing and are you achieving results that should be acceptable to the FDA for approval?

Thank you, very good question. Stacy, would you take this?

Sure. There's a lot in that. So first, I want to start with, our ultimate goal remains to secure the approval of NurOwn in ALS, and we remain confident in the effectiveness and safety of NurOwn. Our near-term priority remains to publish the Phase 3 data in a peer-reviewed journal, and the manuscript is currently moving through the review process.

Since our last earnings call and the update on this question reference, we've continued to hold meetings with ALS experts and key opinion leaders in addition to consortium leadership group, none of which were part of the trial and do not have firsthand experience with NurOwn. We've shared our data and received feedback. In fact, we've received invaluable insights from these conversations and very positive feedback from world-renowned ALS experts.

I would actually summarize that there's widespread agreement from the experts that we've spoken to, that our data support advancing NurOwn as a treatment for ALS. We are gathering new data from participants in our Expanded Access Program, all of whom completed the Phase 2 trial and met certain eligibility criteria in the protocol outlines.

We share the urgency of ALS patients around the world who deserve rapid access to potentially promising treatments. And we will make a decision regarding the filing of a BLA based on what and when we believe will provide the best opportunity to reach patients as quickly as possible.

Thank you.

Thank you. I'll now move on to the next question.

So this submission also included multiple questions saying, you received -- you recently more than doubled your capacity to supply NurOwn to ALS patients across Israel and Europe. Will there be a clinical trial in Europe before it will be accessible for patients in Europe? Or is it possible to use the existing data from your previous trial to have a go through the approval process in Europe? And additionally, is there already an indication when NurOwn will be shipped to Europe and be available to ALS patients?

Stacy, you want to take this one?

Sure. We're sensitive to the patient's need for access outside of the US. And we continue potential opportunities in geographies that are outside the US and are evaluating the relevant regulatory strategies and pathways.

We'll provide details on these strategies and once they've been finalized, which will be subject to discussions with pertinent government agencies. In parallel, we'll continue to assess as we've already stated our FDA strategy. So very important need across the world that we certainly will be reflecting on.

Thank you.

Okay, moving on to our next submission. This person would like to know when BLA submission will be expected as well as the timeframe for peer review.

It was included in the previous question, but we'll elaborate more. So our manuscript for the Phase 3 ALS trial is written and currently moving through the review process.

The timeline associated with the review process and, ultimately, the publication of the manuscript is not in our control. And also, I can't remark on this. However, I can assure you that we are doing everything in our power to expedite the publication.

We not yet made a decision regarding when and if to file a BLA. It remains an that BrainStorm will use, if and when we believe that it's the most effective way to secure approval for NurOwn.

There are many moving pieces as evidence during the congressional hearings that took place last week that could influence and would influenced our strategy. We are carefully monitoring these and remain prepared to act accordingly. Tom?

Thanks. Now for our next submission they asked, FDA discussions aside and in light of the decision on the Alzheimer's drug Aduhelm, do you think there's enough evidence in the data already shared to utilize the prognostic biomarkers or patient-reported outcomes for use as a surrogate endpoint for accelerated approval?

Yes, thank you, Ralph.

Yes. As we said during the call, we look forward to continued dialogue with ALS experts, the patient advocates, and with the FDA with the ultimate goal of agreeing on a viable path forward for NurOwn and ALS.

Our data set must be viewed as a whole. And while we won't be publicly commenting on the specifics of our complete data set until our manuscript has been published, I will emphasize a point that I made earlier and say that there's widespread agreements among the experts we have spoken with that our data support advancing neuron as a treatment for ALS. So we look forward to our manuscripts publication so that the data can be more broadly shared and discussed with the community.

Thank you.

Our next submission would like to know, what are the next step form progressive MS?

That goes to Ralph again, thanks.

As I mentioned earlier, there are compelling reasons to advance our program and progressive MS based on our growing understanding of how NurOwn impacts MS biology: truly, the remarkable results from our Phase 2 study and very strong support from MS experts in the MS advocacy community. At this point in time, we plan to publish a peer-reviewed manuscript, obviously deliver scientific presentations at an upcoming Congress, and fully review the Phase 2 data with the FDA. Once these activities are completed, we'll announce next steps.

Thank you.

Thanks. So for our next submission, they're asking about Expanded Access, saying, since the FDA-public statement early March, we've had remarkable testimonies from patients in the Expanded Access Program. In addition to other individuals from right to try coming forward, was the results highlighting that the trajectory of progression stabilize? With this additional supporting evidence, do you think it's accurate to say that the NurOwn benefit has left to chance?

Stacy.

I don't believe I would characterize our regulatory processes being left to chance. We've conducted a well designed Phase 3 trial, which stands as a foundation, really on top of the early clinical trials which span 10 years of clinical experience with NurOwn.

The creation of the Expanded Access Program enables us to collect additional information about NurOwn. One example is that, since all participants in the Expanded Access Program completed the Phase 3 trial, the data collected as part of this program contains longer exposures of NurOwn and in fact doubles the number of treatments studied in our trial.

The timeline of the Expanded Access Program allows us to explore questions around durability from the initial treatments in the Phase 3 trial. And while the patient testimonies that this question references and the evidence of what's been posted on social media are really remarkable. This will be supportive of the foundational evidence that will come from the well-designed trial data.

Thanks, Stacy.

And our next submission is a financial question asking, who paid for the expansion manufacturing capacity? Does the current company currently have any debt? And how much money does it currently have on hand?

Preetam?

Yeah. Thanks, Chaim.

So with respect to the first part of the question, who paid for expansion in manufacturing capacity? So our recently announced increase in manufacturing capacity was due to the three state-of-the cleanrooms that BrainStorm pays to lease at the Tel Aviv Sourasky Medical Center, receiving GMP certification.

With regards to the second part of the question on cash and debt, as I mentioned earlier on the call, our cash position as of the end of the second quarter was approximately $35 million. And the company currently has no debt on its balance sheet.

Thank you.

Thanks. So our next submission asks, what disease do you expect your next clinical trial to be in?

Top priority to get approval for NurOwn for the treatment of ALS, and then aggressively pursue indications where the signs indicate the probability of success is high. As we shared in this call, we have generated exciting clinical data on progressive MS, and we believe that NurOwn with the platform technology for neurodegenerative diseases. We'll provide additional updates on our future clinical plans as they become finalized.

Thanks, Chaim. For our last pre-submitted question, we have, are you evaluating partnering opportunities, and for which portfolio?

David?

Sure. So we're receiving interest from partners, and we're having continuous discussion with a wide set of partners that have shown interest in the different parts of our pipeline. We obviously are leveraging the readout in MS and in ALS, as well as the data that come from the exosome technology. Thanks.

Thank you. All the -- I would turn it now to questions and answers from the listeners.

Ladies and gentlemen, the floor is now open for questions. (Operator Instructions) Jason McCarthy.

Hi, this is Michael Okunewitch on the line for Jason McCarthy from Maxim Group. Thanks for taking my question. So I wanted to ask this on the kind of on the path forward in ALS.

Seems like across cell therapy -- pretty much across the board cell therapies seem to be more effective in the earlier stage patients where there's more function to preserve. So would a potential second study in that specific subgroup, the potential direction you could go for ALS in the future?

Thank you. Stacy?

Yeah. Michael, I think that we've seen across lots of diseases, neurodegenerative diseases, including Alzheimer's that you can have more effective treatments, more effective results in trials when patients have not progressed as far. So I think your statement is certainly, I think, very valid.

And again, as we've shared in the public domain, we do see, in pre-specified subgroups, patients that aren't as progressed, responding more substantially. I -- we don't want to speculate on trial designs for the future. We're obviously really laser focused on gaining approval from our trial that's completed. But I think the logic that you're expressing is very much match as, I think, with the scientific community has been viewing with these horrible diseases.

Thank you so much.

Next question, please, operator.

David Bautz.

Hey, good morning, everyone. This is David Bautz from Zacks Small-Cap Research. I'm curious if you've had any additional interaction with the FDA since the last call, and do you plan on having any more interactions with them before potentially filing a BLA?

I'm not sure we're ready to answer these questions, you know, the interactions between us and agency. We want them to respect us, and we want to respect them as well. Good question though, David. Good try.

All right, understood. Is the hospital exemption program still active in Israel? And will you be able to use any of that data in a potential BLA filing?

Very good question. So definitely, we will use the totality of the data, if and when we will submit for approval. In addition to that, the hospital exemption program is not ongoing now, but we are in discussions with Israeli Ministry at the time for different regulatory paths as well.

All right, great. Thanks for the update this morning, and thanks for taking the questions.

Thank you so much for joining. Polly, next question, please.

Brian Snyder.

Hi, thanks for taking my question, Brian Snyder from Morgan Stanley Wealth. Quick question. When you -- are you looking at the biomarkers? In knowing that there's different diseases and that the biomarkers may be different, when you look at what the original Phase 2 study was for ALS versus what the readouts were on the MS Phase 2 as far as what the biomarkers look like, how would you compare what you're seeing in efficacy of NurOwn in the early ALS study versus the current MS Phase 2?

Thank you so much. It's a very good question. Ralph?

Yeah. Hey, good morning, Brian. Thank you for the question.

I think there's two parts of the question. One is what was the consistency in biomarker changes from our Phase 2 to our Phase 3 trial, and then second part would be -- how do we see this translate across ALS and MS.

So I will start with the first part. In our Phase 2 trial, we did single treatment, and then we measured biomarkers before and two weeks after. In our Phase 3 trial, we had three treatments, and we had seven serial CSF biomarkers, which is really a unique data set.

Having said that, we saw a very consistent changes in both studies in inflammatory biomarkers and also markers of neuronal injury and neuroprotective biomarkers. So that part was quite consistent across studies. We did see, when we looked at the Phase 3 study, that the magnitude of the change, probably because there's three treatments was -- in some of the biomarkers was greater.

And when we look at the comparison between ALS and MS, we see similar consistencies. So for example, we see reductions in inflammatory biomarkers, increases in neuroprotective biomarkers, and then modifications of neurodegenerative biomarkers.

So our net conclusions that we've drawn so far, and I can only go so far today because we do have some publications that are pending, is that we truly believe that NurOwn is a platform technology in neurodegenerative diseases where inflammation plays an important role; and that the changes in neuroprotective, neurodegenerative, and inflammatory biomarkers are very consistent in several -- across studies within a disease such as ALS, and between diseases such as ALS and progressive MS. So we're very encouraged by this. And we plan to share more information as it becomes available.

Thank you so much Ralph. Any other questions, or we will conclude, operator?

There are no questions in queue.

So thank you very, very much. And I thank everyone for listening in, all those listening on the phone, all those listening on through the web. And hopefully, we will have better news, stronger news in the next quarter. Thank you all.

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.