Brainstorm Cell Therapeutics Inc (BCLI) 2020 Q4 法說會逐字稿

Greetings and welcome to the BrainStorm Cell Therapeutics' fiscal year-end 2020 earnings call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host, Mr. Michael Wood of LifeSci Advisors. Mr. Wood, you may begin.

Thank you, and good morning, everyone. Thank you for joining the BrainStorm Cell Therapeutics call. Before we begin the opening remarks, we'd 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 disorders such as ALS and MS, sufficiency of the company's existing capital resources for continuing operations in 2021 and beyond, the [findings to date] regarding the tolerability and full potential 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 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 company's 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 of these forward-looking statements.

Joining me on the call this morning is Chaim Lebovits, President and CEO of BrainStorm; Dr. Ralph Kern, President and Chief Medical Officer; and Dr. Preetam Shah, Executive VP and CFO. In addition, Dr. Stacy Lindborg, Executive VP and Head of Global Clinical Research, is also on the call and will be available to answer your questions during the Q&A session.

So now, I would now like to turn the call over to Mr. Lebovits. Chaim, please go ahead.

Thank you, Michael. Welcome to BrainStorm's fourth-quarter and year-end 2020 earnings call. Thank you, everyone, for joining us. On the call today, I want to discuss our plans for the year ahead. The past year was challenging year for all of us as we navigated through the COVID-19 global pandemic. Our commitment as a company is to make NurOwn available to patients with ALS as well as to patients with other neurodegenerative disease through our progressive MS and Alzheimer's diseases trial.

I'm incredibly proud of our employees, the business partners, and clinical investigators for their commitment and collaboration. We're working together to advance our clinical programs. I would also like to acknowledge our patients and caregivers who showed great dedication to our clinical trial despite the pandemic. 2020 was truly a year of great learnings and community building.

Our number one priority right now is to seek a path forward for potential regulatory approval of NurOwn in ALS. We have met with the FDA and have put forward a compelling set of data. The FDA is now reviewing the data we shared. We are waiting for their feedback. You will appreciate that this is a sensitive period that we are in and we need to let conversations play out between BrainStorm and the FDA before we can report a detailed plans.

I will say that the FDA has been very collaborative and willing to review and discuss the Phase 3 data with us. We will try to respond to the questions from investor while respecting the FDA and the process. Therefore, at this time, we cannot speculate on the timing of that feedback or the likely outcome of the ongoing FDA discussions.

Since the Phase 3 readout, our whole team has been laser focused on gaining a sound understanding of the data. The process of meeting with the FDA and other important partners has generated even greater understanding, confidence, and support from the ALS community. We have proactively provided the FDA with data and analysis that were discussed in our review of the study.

Since our last investors call, we have continued to learn from the BCT-002 Phase 3 trial and with each step our confidence in the study results have continued to increase. Please know we are operating with great urgency. We have tremendous support from leading ALS physicians and statisticians as we have sought to gain objectivity around the evidence generated. We continue to have high conviction in the efficacy of NurOwn and our single greatest motivation as a company is to make NurOwn available to patients with ALS.

In addition to our clinical data review, we're also in active dialogue with the FDA around the chemistry, manufacturing, and controls portion of NurOwn's regulatory review. We recently conducted a Type C meeting with agency to discuss future CMC plans for NurOwn in support of a commercial ramp-up and have sought guidance on the requirements necessary to move forward with our plans for converting to a semi-automated manufacturing process. We will provide a further update on the topic in the near future.

We have initiated an expanded access program to provide NurOwn treatments for ALS patients who completed the Phase 3 trial and meet specific eligibility requirements. This EAP was developed in partnership with the FDA and will take place at the six clinical centers of excellence that participated in the trial.

Initiating the expanded access program immediately after the Phase 3 trial, completion speaks to the promise of NurOwn's Phase 3 clinical data, the urgent unmet medical needs for ALS patients, and our unwavering commitment to patients. The ALS physician, advocacy, and patient community feedback on the EAP has been extremely positive.

At this point, I would like to invite Dr. Ralph Kern, our Chief Medical Officer, and Dr. Stacy Lindborg, our Head of Global Clinical Research, to comment on the ALS program. Ralph?

Thank you, Chaim, and good morning everyone. I want to express my deep appreciation to ALS patients and their families, to all the investigators, and their teams who conducted the highest quality clinical trials through the COVID pandemic bringing us to this important moment.

I have to say that our ALS Phase 3 data demonstrates a clinically meaningful slowing of ALS disease progression and our biomarker analyses suggest that targeting multiple ALS pathways is essentially required to achieve this important clinical outcome. As an ALS neurologist, I truly believe we're at a point where NurOwn can benefit ALS patients and will continue to learn from our trial to advance the science of ALS.

I'd like to hand it off to my colleague, Dr. Stacy Lindborg, now.

Thanks, Ralph, and good morning. The recently completed Phase 3 trial on ALS was our company's first pivotal trial. This was a big step for our company and while -- and through it, we've generated a rich set of data from a well-run and high-quality trial. The evidence generated from clinical endpoints as well as a robust biomarker data has allowed us to engage in meaningful discussions with FDA and as we've carried out all of our pre-specified analyses and have worked to address new questions from the FDA, we've been able to demonstrate a consistent and meaningful treatment effect.

My own view of the data, as a drug developer of 25 years and as a statistician, is that the evidence clearly suggests that NurOwn is effective in ALS. I'm proud of what we'll be able to deliver to the ALS community in light of the new insights into this disease through this trial and it is my earnest hope that we can provide hope and improve the lives of ALS patients with NurOwn.

I'll turn it back to you, Chaim.

Thank you, Stacy. Aside from NurOwn development in ALS, we have many exciting elements in our business plan that we are progressing in parallel. We're focused on areas of high unmet medical needs where we believe our focused scientific approach has the potential to have meaningful clinical benefit. We have made excellent progress in our NurOwn clinical program and progressive MS despite some delays in clinical trial enrollment due to COVID-19 healthcare restrictions.

We completed all dosing in our study participants this past December. As a reminder, the trial is looking for a relationship between spinal fluid biomarkers, specific brain and spinal cord MRI measures, and observed functional improvements in progressive MS patients. We're anticipating topline data by the end of the first quarter of 2021 and look forward to sharing our findings with you once they can be communicated.

We're in the process of initiating a new clinical program focused on the development of NurOwn as a potential treatment for Alzheimer's disease. While many Alzheimer's therapies are focused on a single target such as the well-known targets of tau or beta amyloid, NurOwn has the capability to simultaneously target multiple relevant biological pathways to bring a comprehensive approach to this complex and multifactorial disease.

Our plan for Alzheimer's will begin with a multinational Phase 2 clinical trial in Europe to evaluate the safety and preliminary efficacy of NurOwn treatment in patients with prodromal to mild disease who also have specific baseline biomarker characteristics. This will be a 52-week open label proof-of-concept clinical trial to evaluate NurOwn on 40 participants and we will focus on key biomarkers and clinical outcomes. We're actively working with the regulatory agencies to finalize the trial design and we will begin clinical trial enrollment once we receive final approvals.

Lastly, we're excited to have recently announced the peer-reviewed publication of preclinical study of a journal of stem cell and research therapy that highlighted the potential of a NurOwn-derived exosome based treatment for COVID-19, an acute respiratory distress syndrome or ARDS. Results from the study showed that intratracheal administration of exosomes left a statistically significant reduction in lung disease, severity score, and improvements of several additional clinical relevant-induced ARDS markers.

We are excited about the publication of the proof-of-concept data and we're actively assessing next steps to determine our path forward. This includes discussions with possible partners for development opportunities for the exosome technology.

I will now turn the call over to Preetam to discuss the financials. Preetam?

Thank you, Chaim and good morning, everyone. It is my pleasure now to walk you through our 2020 financial results. Research and development expenses net for the year ended December 31, 2020, were $22.3 million compared to $17.2 million net for the year ended December 31, 2019. Included in these amounts are R&D grants from the Israel Innovation Authority or IIA and California Institute of Regenerative Medicine or CERM as well as proceeds received from the Israeli Hospital Exemption pathway which are recorded as an offset to the expense.

This increase of approximately $5.1 million in research and development expense net year over year was primarily due to increase of approximately $2.1 million in expenses in connection with materials, consultants, depreciation, payroll, and stock-based compensation expenses and other activities.

A decrease of $1.5 million in proceeds received in connection with treatment of patients under the hospital exemption regulatory pathway, a decrease of approximately $2.6 million in participation of IIA and CERM in 2020 under various awarded grants, and an increase of approximately $269,000 for costs related to travel, patents, and other costs.

The increase in expenses was partially offset by a decrease of approximately $1.3 million in connection with the Phase 3 ALS clinical trial. Excluding participation from IIA and CERM under the grants and proceeds received under the hospital exemption regulatory pathway, the research and development expenses decreased by $133,000 from approximately $24.7 million in 2019 to approximately $24.6 million in 2020.

General and administrative expenses for the year ended December 31, 2020, and 2019 were approximately $9.4 million and $5.8 million respectively. This year-over-year increase of approximately $3.6 million in general and administrative expenses was primarily due to an increase of approximately $2.6 million in payroll and stock-based compensation expenses; an increase an approximately $1 million in rent, stock costs, consultants, cost of our investor relations, and public relations activity, and various other expenses. This increase was partially offset by a decrease of approximately $84,000 in travel costs.

Net loss for the year ended December 31, 2020, was $31.8 million or $1.07 per share as compared to a net loss of $23.3 million or $1.06 per share for the year ended December 31, 2019. Cash, cash equivalents, including short-term bank deposits were approximately $42 million at December 31, 2020, compared to approximately $0.6 million at December 31, 2019.

On September 25, 2020, we entered into an amended and restated ATM distribution agreement with SVB Leerink and Raymond James for up to $45 million. During the quarter ended December 31, 2020, we sold an aggregate of 3,564,385 shares of common stock pursuant to the September 25, 2020, ATM at an average price of $6.10 per share raising gross proceeds of approximately $21.8 million.

During the month of January 2021, we sold an aggregate of 679,443 additional shares of common stock pursuant to the September 25, 2020, ATM at an average price of $6.54 per share raising gross proceeds of approximately $4.45 million. With these capital raises, our cash and liquidity as of January 31, 2021, is approximately $45 million.

In addition, we still have approximately $19 million in available ATM capacity. For further details on our financials, please refer to our Form 10-K filed with the SEC today.

Back to you, Chaim.

Thank you very much, Preetam. Michael Wood from LifeSci will now read questions we have received from investors, and I will direct the questions. Michael?

Thank you, Chaim. First question. If NurOwn is granted FDA approval, do you see it being authorized for only a specific subset of patients or anyone with ALS -- no matter what their diagnosis stage, rate of progression, or current symptoms?

So as noted at the start of the meeting, I cannot speculate on whether or not NurOwn will be approved over the conditions of that potential future approval. I can say that our investigators have reviewed the data believe that the use should be -- should not be restricted. Next question, please.

Thank you. The next question is about the subgroup, which had clinically meaningful results of the Phase 3 trial. Does the quantity of the subgroup participants and the positive results good enough for conditional approval or will it take an additional trial focused on this subgroup of newly diagnosed patients? And what is the FDA stance now after your meetings with them? Is there a green light to submit for approval and how long will such approval take considering the fast track status?

Stacy?

Yes. We have presented new analyses to the FDA which evaluates the consistency of the effects observed in this pre-specified subgroup of patients with baseline scores greater than 35. The analyses which we hope to present at a KOL event shortly demonstrate consistency of a clinically meaningful effect across a much larger set of patients from the trial. As we've stated, we're in active dialogue with FDA around the regulatory path for NurOwn and I cannot comment or speculate further around the conditions of the approval.

Sure. Thank you, Mike?

The (inaudible) requirement for the Phase 3, as stated on clinicaltrials.gov was an ALSFRS score of 25 and above and yet when the data were presented for the first time, there was a high percentage of patients that were under 25 at baseline. Can you explain why this is? In the Phase 3 press release you stated, this clinical trial included more severely affected ALS population compared to other recent ALS clinical studies?

Thank you. Ralph?

Sure. Thank you. So as we mentioned earlier, the entry criteria in the study as listed on clinicaltrials.gov, as you referenced, was about 25 at screening and not at baseline. And I should point out that the screening was 20 weeks before baseline. So patients were randomized met the inclusion criteria as designed. So it's correct to say that BCT-002 or Phase 3 trial included a broader set of patients as measured by the baseline ALSFRS-R score, compared to, for example, studies in the PRO-ACT database where 97% of patients are over 25 at baseline.

Thank you. Mike?

Next question. Do you have an explanation for the high placebo rate that was seen in Phase 3 and do you think the running period of the trial was an issue with patients reporting what they thought they needed to get into the trial?

Stacy, please.

Yeah, we have reviewed patient level data closely, and we do not believe that the running period created an issue related to patients seeking to get into the trial. In terms of the placebo effect, it really could come from a combination of factors including the randomization of patients with more advanced disease. And then ultimately, we're not at liberty to provide any more details around this at this time.

Thank you. Mike?

Can you discuss the biomarkers in the Phase 3 trial? And can you correlate the responders in the biomarker data? And then in your opinion, which biomarkers were the most important?

Thank you. Ralph, it's for you.

Yeah, thank you. This is an area that we're very proud of. As you know that our Phase 3 trial was unique and we collected seven serial samples of CSF biomarkers for each patient and this dataset will provide critically needed data for the ALS community and to support the mechanism of action of NurOwn.

Our main finding is that we observed consistent, highly robust, and statistically significant CSF biomarker changes, particularly in biomarkers related to neurotrophic factor delivery, in other words, the cargo that the cells deliver, inflammation, and neurodegeneration which ultimately is the cause of the motor neuron loss and disability in ALS.

So the changes in biomarkers appear to correlate with the clinical response and may be useful in predicting who will respond to treatment if approved. The specific biomarkers that we have focused on and continue to focus on in our analyses include VEGF also known as vascular endothelial growth factor, which is produced by a neuron, a neurofilament light or NfL which is a marker of neuroaxonal loss or neurodegeneration.

Also, phosphorylated neurofilament heavy which is a cousin of neurofilament light and MCP-1, which is a very important marker of inflammation. So we think that we have a very good path forward to understand both the mechanism of action and correlate it with the treatment effects.

Thank you. Mike?

If you've submitted the BLA for NurOwn to the FDA at this point, and if not, what is the anticipated approximate date that you intend to submit the NurOwn BLA?

So, no, we have not yet submitted a BLA. As we have already shared on this call, we have presented our data to the FDA and are in ongoing active dialogue with them around the regulatory pathway for NurOwn and that's all we can say now. Next question please, Mike?

When you do submit the NurOwn BLA, will it be to treat all ALS patients or only a subgroup such as those with the ALSFRS-R score of 35 or higher?

Ralph?

Thank you. So we do expect to submit the application for all patients. And of course, this is -- as Chaim mentioned, this is subject to feedback from the FDA, and we can't comment on that. But as we stated earlier in our call, our investigators believe strongly that ultimately all patients should be given access to NurOwn.

Thank you.

Next question, would you please provide an update on discussions with the FDA concerning the approval process for NurOwn and ALS? Will the company be required to do any additional trials when (inaudible) BLA be submitted? And given the priority review promised by the FDA about how long do you think it will take to receive an answer from the agency?

So as we already shared, we have presented our data to the FDA and are in active dialogue around the regulatory path for NurOwn. We're not at liberty to provide any additional details at this time. I must say that we are thankful to the FDA. They allow us to present our data and to provide ongoing updates as we have them. They are demonstrating through their actions that this is a priority for them too. Thank you.

Next question. Has the company analyzed the Phase 3 trial data in more depth? And are there, for example, any subgroups of patients in addition to those with an ALSFRS score greater than 35 that responded more closely to your expectation? And also have you learned what caused the high placebo effect? And how do you think the biomarker data strengthened the case for approval of NurOwn?

Stacy?

Yes, we absolutely have analyzed the data in depth and we have provided these data to the FDA covering a breadth of topics, including insights into the treatment effect between NurOwn and placebo through additional subgroup analyses. In addition to ALS clinical experts, we've also engaged external expert statisticians as we seek to draw highly credible conclusions about the treatment effect of NurOwn from this trial.

We're regularly sharing updates from the data with FDA to ensure that they have as transparent of an understanding of the data as possible and as we work with them to define the regulatory path for NurOwn. The biomarker data provides confirmation of NurOwn's mechanism of action, which really is behind the treatment effect that we've consistently observed. And as important as the NurOwn biomarker response and the relationship with efficacy data is the lack of biomarker response with placebo is equally important and provides really important context as a rigorous control for this Phase 3 trial.

Thank you.

Next question is regarding the expanded access program. Can you please provide an update on this program? When do you plan to start dosing? Who selects the patients and how are they notified? [NurOwn] (inaudible) being produced at Dana-Farber? And how many patients will you treat or do plan to treat in this program?

Ralph?

Yes, the protocol for the EAP was developed in very close partnership with the FDA to provide access to NurOwn for Phase 3 clinical trial participants who obviously meet specific eligibility criteria. Initially, patients less severely affected by ALS, as measured by the ALSFRS-R score, will be the first to receive treatment.

This approach is informed by the topline data from the Phase 3 clinical trial. NurOwn, for this EAP program, will be produced at the Dana-Farber Cancer Institute as this was a manufacturing site for our Phase 3, and we had a great experience there. The total number of patients for the EAP will be determined by the clinical sites assessments of those patients who meet the inclusion and exclusion criteria and have retained higher ALS function as determined by the ALSFRS-R score.

The clinical trial sites are responsible for screening and enrollment. As we mentioned, the EAP protocol specifies three doses of NurOwn, the same dosing as the Phase 3 clinical trial. Finally, I might add that the EAP program was initiated the first week of January, and we expect the first patients in this program to be dosed next week.

Wonderful, thank you. Mike?

Next question on switching gears relates to the program in progressive multiple sclerosis. What are your current expectations for announcing topline data from the Phase 2 progressive MS study? Will the trial provide data on both safety and efficacy? What are the endpoints in this study? And are the same biomarkers as you used in ALS being evaluated in this study?

Ralph?

Thank you. We expect Phase 2 MS topline data by the end of this quarter. The study will provide data on clinical efficacy, safety, and key CSF and plasma biomarkers, including many that were evaluated in our ALS trial. But in addition, we're looking at CSF and serum biomarkers that are unique and very important in progressive MS.

The key endpoints that we will be initially focusing on are obviously safety, changes from baseline, and a test called the Timed 25-Foot Walking test. Another test of upper extremity function called the Nine-Hole Peg Test, and as I mentioned, the very important biomarker assessment and we'll look at correlations between these important clinical and biomarker assessments.

Thank you.

And now we have a couple of questions on the Alzheimer's program. First, can you tell us if the Phase 3 Alzheimer's trial has begun in Europe? How many patients have been enrolled? And have you begun dosing these patients?

Stacy?

We're in the final steps of initiating our European Alzheimer's clinical trial. And we hope to provide more details soon. But there have been no patients dosed.

Next question. You hosted a KOL [of] Alzheimer's in 2020. But looking at your pipeline, this program is not listed even as preclinical. Can you help clarify this just because you've decided not to pursue it or for some other reason?

Okay, so we do continue to move forward as we just (technical difficulty) with our clinical development program for Alzheimer's in the EU and the pipeline on our website will be updated to reflect this. And thank you for that comment. Next question, please.

Okay, so one final question, and this relates to the COVID-19 ARDS program. This investor wanted to congratulate you on the publication of the preclinical results for NurOwn-derived exosomes to treat ARDS caused by COVID-19. And can you tell us -- provide more information and tell us if you've decided to conduct a clinical trial in this indication?

Stacy?

Well, thanks for the kind words. We're excited about the publication as well and we are in the process of reviewing the unmet need in ARDS. In addition to other related conditions and based on the very promising preclinical proof of biology results, we're considering the optimal business approach, including various partnership scenario.

Thank you very much. Hector, please open the lines for any additional questions.

Thank you. (Operator Instructions) David Bautz, Zacks Investment Research.

Hey, good morning, everybody. In regards to the MS trial, so assuming there are positive results, I'm curious if you could talk about what the next steps in that program would be. And if you foresee a possible path to going straight into a pivotal trial?

Very good question. Thank you. Ralph?

Thanks, David, and good morning. Yeah, that's a very good question. I think we'll be data driven. We'll have to see the totality of the evidence. In other words, the biomarker changes, how they correlate with clinical outcomes, and also we'll be looking at quantitative MRI correlations. We have pulled together probably the top MS experts in the United States in our trial [at these five] sites and I think we'll be having conversations with them.

Recently, there's been a lot of interest in cell therapy for MS and using different types of cells and different approaches realizing that the conventional treatments still leave a huge biological critical unmet need. So I think the interest is there. I think it'll be dependent on the strength of the data and we'll be happy to discuss that with you at a later date once we have the topline data, so look forward to seeing those results.

Okay, great. Appreciate the information and for taking the question.

Thank you. Hector, any additional questions?

(Operator Instructions) Ladies and gentlemen, we have reached the end of the question-and-answer session and I'd like to turn the call back to Mr. Chaim Lebovits, Chief Executive Officer, for closing remarks.

Yes, so just thank you very much. Not having questions, it looks like we had a very good call and we explained everything very well. Usually, we have many additional questions. So I want to thank my team who all prepared for the call. And thank you all for your support for ongoing support. Thank you very much. Have a wonderful day.

This concludes today's conference. Thank you for your participation.