Microbot Medical Inc (MBOT) 2015 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to StemCells, Inc., Q2 2015 earnings conference call. (Operator Instructions). Do note, today's program is being recorded for the webcast.

I would like to now introduce our host for today's program Mr. Greg Schiffman, Chief Financial Officer. Sir, please begin.

Welcome everyone and thank you for joining us. With me today are Martin McGlynn, our Chief Executive Officer; Dr. Ian Massey, our President and Chief Operating Officer; and Dr. Joel Naor, Vice President of Clinical Development for Ophthalmology.

Before we proceed, I would like to remind everyone that during today's call we will be making some forward-looking statements which reflect our current views and are based upon certain assumptions that may or may not ultimately proven valid. We assume no obligation to update these forward-looking statements anytime in the future and our actual results may differ materially from anything projected during today's call due to risks and uncertainties to which we are subject.

These risks and uncertainties are described in our public filings with the Securities and Exchange Commission and at the end of our earnings release which you are encouraged to consult.

Let me quickly review our financial results for Q2 2015 following which I will turn the call over to Martin.

Operating expenses for Q2 2015 were up from Q2 2014 by approximately 17% or about $1.3 million, almost all of which was associated with R&D. Approximately $900,000 or 60% of this increase is related to non-cash stock compensation. The remaining approximately $400,000 are primarily related to increased clinical trial activity. General and administrative costs have remained consistent year-over-year.

Our loss from continuing operations decreased by approximately 30% or approximately $3.7 million year-over-year. The delta between our growth in operating expenses of approximately $1.3 million and the decrease in loss from continuing operations of approximately $3.7 million was primarily due to a non-cash change in the fair value of our outstanding warrants.

We are reporting a non-GAAP loss adjusting for the major non-cash charges including stock-based compensation, depreciation and amortization, impairment of intangible assets and changes in the fair value of our warrant liability because we believe that this metric provides useful information to investors. We have included a reconciliation table for these adjustments in our press release issued earlier today.

For Q2 2015, the Company had a non-GAAP net loss of approximately $7.8 million compared to a non-GAAP net loss for Q2 2014 of approximately $7.6 million.

Our cash usage for Q2 2015 was approximately $9.2 million and our cash balance at the end of Q2 was approximately $29.9 million. For the first half of the year, we have used approximately $16.5 million net cash to fund our operating activities which includes all operating expenses, capital purchases and working capital. We would expect to see spending in the second half of the year fairly consistent.

As you are aware, the Company received a notification from NASDAQ on May 14 that the closing price for the company's common stock had been below $1.00 per share for the previous 30 consecutive business days and therefore the Company was no longer in compliance with the requirements for continued listing on the exchange. The Company was given 180 calendar days or until November 10 to regain compliance with this minimum bid requirement. However, if the share price does not exceed $1.00 by November 10, the Company will submit a plan to NASDAQ to regain compliance.

After this, we would expect to have at least another 180 days to discuss the specifics of our plan with NASDAQ. So there is no impending likelihood of being delisted. We will provide details of the plan once we have reached agreement with the Exchange.

Before I turn the call over to our CEO, if you are not already on the webcast link, I would encourage you to sign on now as we will be showing some additional data related to the topline results from our Phase 1/2a and b trial later in this webcast.

With that let me introduce Martin McGlynn.

Thanks, Greg. If you've followed StemCells Inc. over the last decade you know that I am always excited to report on our clinical achievements which have been both numerous and steady since we safely performed the first ever transplant of our patented neuro stem cells into a patient in 2006. I'm proud to report that in the second quarter of 2015, we continue to make solid progress with Phase 2 clinical trials in two major indications in the central nervous system, spinal cord injury and dry age-related macular degeneration.

Both of these debilitating conditions have large patient populations with significant unmet medical needs and no effective treatments available today. In May, we presented topline results from our Phase 1/2 clinical trials in thoracic spinal cord injury at the joint meeting of ISCoS and ASIA, marking the one-year post transplant anniversary for the 12 patients who participated in the study.

In addition to the safety and tolerability reported for our cells and for the transplantation procedure, analysis of the 12-month data also showed sustained improvements involving multiple sensory pathways in seven patients which persisted through the end of the study. And most unexpectedly, two of the patients progressed from the most severe classification known as ASIA A to the lesser degree of injury known as ASIA B.

With the commencement of our Phase 2 PATHWAY study in cervical spinal cord injury, StemCells Inc. has once again made medical history. Not only is this the first clinical trial to evaluate human neuro stem cells as a potential therapy for cervical spinal cord injury, we have now successfully transplanted more neuro stem cells into the human spinal cord than has ever been done before. In April, we completed transplantation of the study's first cohort which was designed to confirm the dose to be used for the remainder of the study.

In June, we advanced to enrollment and transplantation of the second of these studies three planned cohorts which is a randomized controlled, single blind study comprising 40 subjects. Half the patients will receive the cells, the other half will serve as a control.

Eight sites literally spanning the US from coast to coast are actively enrolling patients and we are working diligently to initiate additional sites. In Q2 of this year, we also received approval from Health Canada to extend this study to Canadian sites which we believe will further expedite enrollment.

The cervical region of the spinal cord is responsible for transmitting neuro signals to and from the brain to control motor function of the hands, arms, wrists and elbows. This clinical proof of concept study is designed to show a clinically meaningful improvement in upper extremity motor score as measured by an objective and quantitative scale. The definitive data will emerge from the second cohort which should be powered with a sufficient number of patients to afford a statistically significant outcome.

Our goal is to complete enrollment in this cohort sometime next year with topline final study results available in 2017. But as soon as Q4 of this year, we will have interim six month post transplant results for the first cohort. For patients with cervical injury even a modest change in arm, wrist or hand strength would translate into better quality of life and greater independence.

Our other lead clinical program targeting geographic atrophy, the most advanced form of dry AMD, has also progressed to a Phase 2 trial which we are calling the RADIANT study. Last month we enrolled our first Phase 2 patient in this randomized proof of concept trial which is designed as a fellow eye controlled study. We are actively working to get a number of sites up and running expecting to reach approximately 20 sites in the US and we are seeing strong interest in this study from the medical community.

All patients enrolled in the study must exhibit geographic atrophy in both eyes. They will receive sub retinal transplantation of cells into one eye with the untreated eye serving as a control. Patients will be followed for one year post transplant. We plan to complete enrollment in 2016 with topline final study results available in 2017.

The objective of the trial is to show that our cells slow the rate of disease progression and as such, we are collecting several clinically meaningful metrics which may determine the best design for a follow-on Phase 3 study. Success would represent both a major medical breakthrough and a sizable commercial opportunity for StemCells Inc.

A year has passed since we completed the first ever transplant of neuro stem cells into the human eye in our Phase 1/2 clinical in geographic atrophy of age related macular degeneration. On June 26, topline outcomes of this study were reported at the ISSCR annual meeting in Stockholm. The data overall showed a positive safety profile as well as favorable preliminary data related to visual acuity, contrast sensitivity and anatomic assessment of the retina.

In a few minutes we will be sharing further insights into the results from this study.

As you can see, we continue to make remarkable progress in the clinical development of our proprietary human neuro stem cell platform.

So I have never been more excited about the Company's potential to realize our promise of delivering breakthrough medicine. We have completed four Phase 1/2 studies covering all three components of the central nervous system, two in the brain, one in the spine and one in the eye. We have strong evidence that our cells engraft, self replicate, migrate and survive long-term without the need for an ongoing regimen of immunosuppression.

We have demonstrated the safety for our cells and for the transplantation procedure and we have even seen early signs of clinical efficacy in each of the components of the central nervous system. We have two controlled Phase 2 clinical trials underway and these are the most advanced studies being executed using human neuro stem cells.

In 2017, we plan to have definitive results on the capabilities of this platform in two indications with large unmet medical needs.

Yet despite all of these achievements and the success they portend, StemCells Inc. is trading at a valuation lower than the Company has seen in years.

So I would now like to share some of my thoughts regarding this disconnect. Clearly three announcements in the second quarter have negatively impacted our stock value and I will quickly sum up my reflection on each of these.

First, the opinion of the judge in our patent infringement suit against neuro stem precluded our proceeding to trial and the case was dismissed. I would like to reiterate the key points we communicated in our detailed press release. This case was primarily about the defendant's ability to pursue their own agenda. The decision does not affect StemCells, Inc.'s intellectual property portfolio beyond the Weiss & Reynolds family of litigated patents.

Our sales and platform technology are protected by multiple patent families as well as by the Company's proprietary expertise. Most importantly, the court's decision in no way affects our ability to execute our business plan.

Secondly, we disclosed the financing that brought $25 million into our coffers to strengthen our balance sheet. We fully recognize the markets frustration with dilutive financing. However, it is critical to be able to fund the clinical programs and there are times when you have no other options. However, as we have now successfully advanced to Phase 2 testing, we are actively seeking non-dilutive sources of capital to reduce our reliance on the capital markets as the primary resource to fund our clinical activities.

Thirdly, we reported that we were investigating disparities between two independent analyses of lesion progression associated with geographic atrophy in our Phase 1/2 GA AMD study.

I think it is important to point out that the primary objective of any Phase 1 study which is required in order to progress into a Phase 2 study is to demonstrate the safety of the treatment regimen. When a treatment regimen is being used in a particular patient population for the very first time, enrollment criteria typically encompasses very severe and/or advanced cases, thereby minimizing the risk of further exacerbating the condition that we are targeting.

The prospective analysis of all 15 patients from the Company's Phase 1/2 study in AMD show geographic atrophy growth rates in the study eyes that were lower overall than those seen the control eyes.

However, an independent post-hoc analysis did not indicate any trend in the data either in favor of the study eye or the controlled eye. We have found that these differences were mostly due to the challenges inherent in measuring the very large and complex lesions presented by 10 of the 15 patients in the study. Notably, these 10 patients would not have met the criteria for enrollment in our Phase 2 study where the focus switches to efficacy.

When we studied results from the five subjects with lesion characteristics that would meet enrollment criteria for our Phase 2 RADIANT study, we found the data from both analyses supports our Phase 2 trial design.

In my view these Phase 1/2 results strongly suggests that we are on the right track. We have carefully defined the characteristics of the GA lesion types that are appropriate for enrollment into our RADIANT study and we are proceeding confidently with this Phase 2 proof of concept trial.

So I would now like to turn the call over to Dr. Naor to review our AMD data including this new information from our Phase 1/2 study in AMD. Joel?

Thank you, Martin. We are very pleased with the emerging safety profile of our cellular platform as a potential treatment for dry AMD. The functional assessments reported for the majority of the patients in our Phase 1/2 study including best corrected visual acuity and contrast sensitivity either improved or remained stable in the treated eye.

One of the anatomic measures, optical coherent stenography or OCT, showed increases in central subfield thickness and in macular volume in the treated eye relative to the untreated eye. These changes could be reflective of retinal integrity. We are intrigued by these findings and will be closely monitoring measurement in the ongoing Phase 2 RADIANT study.

We also analyzed the anatomic outcome of the area of geographic atrophy, 12 months post transplant via two independent analyses. We have now completed a detailed comparative review of these prospective and post-hoc analyses. As Martin had already stated, this review revealed that 10 of the 15 patients in the Phase 1/2 trial had lesions that were outside the size range to qualify for entry into the current Phase 2 trial. This is because the Phase 1/2 study was designed primarily to test for safety and as such, the enrollment criteria permitted a wide range of geographic atrophy lesions.

Because the Phase 2 study is designed primarily to test for efficacy, the enrollment criteria specifies lesion sizes within a tighter range which is consistent with industry practice for an efficacy study.

I am now showing a graph that clocks the change in geographic atrophy growth in the study eye versus the fellow eye for the five Phase 1/2 subjects who would meet the eligibility criteria for our Phase 2 study. This clock is consistent with the way we have previously presented the geographic atrophy area growth. We have included the data points from both analyses so that you can see the differences. The horizontal axis shows the change in lesion size for the untreated eye and the vertical axis indicates the change in lesion size for the treated eye.

The units for these axis are square millimeters. We have drawn a line that runs at the 45 degree angle, points that fall on this line would represent equal growth of GA in both eyes. A data point above the diagonal line represents greater lesion growth in the treated eye compared to the untreated eye which would indicate an unfavorable clinical outcome. The data points below the diagonal line represents greater lesion growth in the untreated eye compared to the treated eye such as in a favorable clinical outcome.

The graph shows two data points for each patient, one based on the prospective analysis and one based on the post-hoc analysis. As you can see, in general there is good agreement between the two data points for each patient in this sub group. You will also notice that the majority of points from both the prospective analysis and the post hoc analysis fall in the region of the graph that corresponds to a lower change in the geographic atrophy in the treated versus the non-treated eye representing a favorable clinical outcome.

While this is a small dataset, we are encouraged by these results especially when you include the other clinical metrics we discussed earlier.

Our phase 2 trial targets the same patient population seen in the Phase 1/2 subset that we just discussed. We strongly believe that our Phase 2 study design will allow us to effectively assess the impact of cells on the rate of disease progression in geographic atrophy.

With that key takeaway, I would like to hand the call back over to Martin.

Thank you, Joel. The bottom line is this. We are committed to advancing this extraordinary technology through the clinical process. If even one of these current clinical programs proves successful, we will have validated an approach to treating CNS disorders using our proprietary platform and we will be well on our way to bringing a truly disruptive new platform technology to market with the potential to not only dramatically improve quality of life for patients with CNS disorders but also to generate meaningful returns to our shareholders.

In the interim, we will be seeing the first indications as to whether these cells may improve motor function in individuals with cervical spinal cord injury in just a few months.

Let me now turn the call over to the operator for questions.

(Operator Instructions). Keay Nakae, Chardan Capital Markets.

Marty, with respect to the latest analysis you had of the Phase 1/2 data for dry AMD, was there also a correlation, positive correlation, with the other measurements of best visual acuity correction and contrast sensitivity with the five patients who showed consistent benefit in the treated eye?

That is a good question. Quite frankly we have been focused on the geographic atrophy metric because that is where we observed the disparity. I don't think we have evaluated specifically to address that question but it is an interesting question and one that we will be taking a look at.

Okay. As it pertains to the first six patients in the cervical study, can you tell us how you are going to present that data in Q4? Will that simply be a press release or are you looking to perhaps target that for release or presentation at a conference if there is one that is appropriate?

Sure, on that one, we definitely want to get the information out in a timely fashion. Optimally you would see that there is a conference or other means to be able to line it, I do not know if there will be. If not, it will be a press release and potentially a call. We will see depending upon the data.

Okay. Just doing the simple math from the last patient enrollment would suggest November is the window there. Is that about what we should expect?

That is probably the likely timeframe. We will get data theoretically October but it takes a while to be able to compile and analyze. So I think November is a reasonable timeframe to assume that we would be able to release information.

Okay. Then just one final question. With respect to the two Phase 2 studies, I know you have enrolled the first patient in the second cohort in spine and the first patient in dry AMD but have there been others that have been enrolled?

I don't think we want to keep a rolling tally but yes, we have continued to enroll others in the studies and they are moving along. And I think in the case of AMD, the goal there is as we have indicated bringing additional sites on for spinal cord. We have quite a few sites already enrolling.

How many sites are currently evaluating patients in dry AMD?

The site that we brought on board, we are actively bringing others that but there was the first site that started and has treated or dosed the first subject and so we have one site active with AMD, quite a few that we are actively working with. And in spinal cord, we indicated we've got eight sites up and enrolling and still have several others including a couple up in Canada that we had worked with previously in the Phase 1/2 study.

Okay, that is all I have. Thanks.

Jason Kolbert, Maxim Group.

It is actually it is Jason McCarthy for Jason Kolbert. Just a couple of questions and starting I guess on the spinal cord injury side, really when you think about it, how important is benchmarking the amount of tissue-based scarring that occurs in each individual patient? Is it independent of the actual injury? Also, for this indication do you believe there could be an advantage to multidosing? I know it is an invasive procedure but do think that multidosing could ameliorate damage a little bit more than a single dose? Intuitively you'd just think that it would but I just wanted to hear your thoughts?

I will say on the multidosing, that was actually a topic at the Analyst Day that we hosted last year in December was raised by several individuals with a couple of the PIs there. And I think what the hypothesis that was sort of being put out was if you have been able to actually make improvements with putting cells in now where you have actually got more intact cells, would it sort of boost it or give a benefit? And the answer that it would be a very intriguing scientific question but there is no data that we have one way or the other. So I think it is one that we couldn't answer but clearly the PIs thought it was an interesting idea.

Martin, I don't know if you have any other comments there?

Jason, one of the characteristics and one of the benefits with our particular cell is that it not only engrafts and migrates but it also replicates. And we have seen this in all of the animal models and we have seen evidence in the human database as well. So all of the work that we have done and all of our projections in terms of the clinical pathway we are planning that this will be a one-time intervention and essentially building off the characteristics of the phenotype of the cell.

As to your question on baseline, baseline measurement of glial scar, I'm not quite too sure we understand the question. So could you perhaps ask it in a different way?

I guess it is kind of -- is there a way or do you consider measuring tissue aside from the actual spinal tissue scarring that is occurring around the injury, does that preclude the integration of neuro stem cells, could that be a factor I guess? That is my question, when you are selecting patients that you would enroll in the trial?

This is Ian Massey. As part of the entry criteria and screening of patients, we are conducting MRI to look at the actual lesion and there are various attributes of that lesion which are evaluated to enable a patient to be enrolled in the study. If there is extensive scarring, then that is certainly taken into consideration.

Unfortunately our expert, Stephen Huhn, is not here today and I'm sure he would be able to give you a much more detailed response to your question.

Only thing I would add to that is when we looked at the results from the first study -- and I won't say specifically glial scar but severity of injury based on the MRI, we did see a correlation in terms of benefit that those individuals that had less severe injuries did see a greater benefit.

Okay, great. Thank you very much, guys.

Ed Woo, Ascendiant Capital.

When do you think we may get interim results for the dry AMD study?

This 63 patient study is a fellow eye controlled study and is blinded and we have no plans to produce interim results from that study.

Great, and then I had a question or I guess a clarification. You mentioned obviously you did the capital raise, you have a bunch more cash on the balance sheet. How long do you think that should last and also you mentioned about non-dilutive financing, can you clarify that a little bit?

Sure. So in terms of the cash balance, we had approximately $30 million cash on our balance sheet. If you looked last year I think cash from operations, we used a little over $30 million the first half of the year it was around $16 million cash used to fund operations. So we clearly have a cash balance that will allow us and enable us to continue funding our clinical activities for quite a while.

I think Martin, on the second component?

Remind me of the second component to the question, Ed?

Sure. I know you mentioned that you had the three idle points about possibly a negative impact on your stock and then you mentioned raising the cash and then you said I think you said you are possibly exploring other non-dilutive financing opportunities. Did I hear that correct?

Yes, you did.

Is there any more details on that or is there something that we should -- that won't be a concern because you guys have a strong balance sheet right now?

I think the message here is that we are now at a stage where we have a building human clinical database and we are in Phase 2 trials so there are opportunities for us to explore and we are actively exploring ways and means that we can reduce our reliance on capital markets.

As I said, capital markets react negatively to dilutive financings and that is the case systemically. We have over the years been a very early stage story, now we have human clinical data and so we think this will help us in our endeavors to reduce our reliance on the capital markets.

Great. Thank you and I wish you guys good luck.

Caroline Corner, Cantor Fitzgerald.

Thanks for all the updates and I have a couple of questions I've been hopping between calls so apologies if some of them have been answered already.

Good to hear you make the commentary around the AMD data. As you have been parsing this data and looking at the patients from the Phase 1/2 and specifically those five patients that would have qualified for the RADIANT Phase 2 trial, is this helping you with getting sites on board? Are you relaying this information to them that those five patients would have potentially shown an efficacy result? Was that not a difficult process anyway as far as getting sites to be engaged?

So this is Ian Massey again. Certainly we have had a lot of enthusiasm from the sites that we have been talking to and a lot of enthusiasm from patients. The data that Dr. Naor showed today has recently only become available but we will be discussing it with sites and with the investigators as we go forward.

I do think that this data will be reassuring not just for the investigators but also to the patients who would contemplate enrolling in the study. It is certainly very reassuring for us.

Yes, I agree. And then the other question I have -- and apologies if you already addressed this again but the patent infringement case with Neuro Stem has been dismissed. Clearly the shares reacted kind of negatively around that. But can you just discuss how this affects your Company day to day when you are making forward projections for your market opportunity? Is there anything that we should be aware of or is this just something that now you've got this kind of weight lifted and you don't have to concentrate on that headache anymore?

As I said earlier, Caroline, you may have missed my remarks on that subject, this has never been about our ability to execute our business plan. This has been about what we believe was infringement of our intellectual property and it was about the ability or otherwise of another party to execute their business plan. So nothing in that lawsuit and nothing in that decision in any way, shape or form crimps our ability to execute our business plan.

Great. Thanks, that is all I have right now. Thanks very much, guys.

(inaudible), H.C. Wainwright.

Thank you for taking my call. I just had a couple of questions. A question about the GA lesion, is there a demarcation that of some line drawn that this was too large and this is the size that we want to accept? Also have you done the study on the patients that you accept so that you know definitively in that line you have drawn that you can measure all these lesions in the future?

Just as one more question, will you release the data on the 10 patients that have lesions that were too large so we can just understand what happened?

So in time we will make people study results available in time.

With regards to the lesion size for this study, we have an independent gatekeeper if you will who will be very carefully evaluating the lesion characteristics and lesion size and that same center will also be doing the blinded evaluation of the images.

I will let Dr. Naor address the question of specificity regarding lesion sizes.

Yes. Thank you, Martin. So in this study, we are prospectively employing a process of pre-eligibility determination meaning that patients will be enrolled in the study only if they meet certain criteria and importantly some of this criteria relates to the lesion characteristics and lesion size. So this almost ensures that all the patients who are going to be enrolled in the Phase 2 study will be within the range that we want them to be in terms of lesion size.

Okay, thank you.

I am showing no additional questions at this time. I would like to turn the program back over to Martin McGlynn for any concluding remarks.

So thank you very much and again I thank you everybody for joining us. I look forward to continuing to update you on our clinical progress as the year progresses. We are obviously all focused and looking forward to being able to discuss the six-month results on the patients in the first cohort of the PATHWAY study.

So once again thank you all for joining us.

Ladies and gentlemen, thank you very much for your participation. This does conclude the program. You may now disconnect. Everyone have a great day.