BioRestorative Therapies, Inc. (BRTX) Earnings Call Transcript & Summary

Greetings. Welcome to the BioRestorative Therapies BRTX-100 program update call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Stephen Kilmer, Investor Relations. You may begin.

Thank you. Good morning, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on BioRestorative Therapies' current beliefs, assumptions and expectations and such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed. For details on factors, among others, that could affect expectations, see Part 1, Item 1A of our annual report on Form 10-K for the year-ended December 31, 2023, as amended, and Part 2, Item 1A of our quarterly report on Form 10-Q for the period ended September 30, 2024, filed with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. BioRestorative undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, other than as required by law. On the call today representing the company are Lance Alstodt, BioRestorative's Chairman and Chief Executive Officer; Francisco Silva, its Vice President of Research and Development; and Robert Kristal, the company's Chief Financial Officer. With that said, I'll now turn the call over to Lance.

Steve, and good morning, everyone, and welcome. On behalf of the management team and everyone here at BioRestorative, I'd like to thank you for your interest in our company. And for those of you who are existing shareholders, we appreciate your support as always. As you can see from the press release that we issued a little earlier today, the FDA has cleared our investigational new drug application for a Phase II clinical trial for BRTX-100 for the treatment of chronic cervical discogenic pain, or cCDP. As a result, BioRestorative is now the first and only stem cell product candidate in the world cleared by the FDA to be evaluated in the cervical degenerative disc disease setting. So through leveraging our data related to our lumbar trial, we can now avoid having to perform animal studies and a Phase I before initiating a Phase II cervical study. Again, let me repeat that. We can now avoid having to perform the animal studies or a Phase I before initiating this Phase II cervical study. As it follows that, being cleared by the FDA to go directly into this Phase II will be in a position to evaluate both the safety and efficacy of this product in the cervical disc, saving tens of millions of dollars and 3 to 5 years of clinical trials to get to this point. This allows us to be the only company in the world able to leverage our technology platform across both neck and lower back musculoskeletal indications. This is a true testament to our team. As we mentioned in today's press release, clearance of this IND for BRTX-100 represents a significant catalyst and milestone for our company and is a testament to the devotion and hard work of our talented scientific team. And since the FDA's clearance of the IND for a Phase II trial of BRTX-100 in cervical was based at least partly on the safety data from our ongoing Phase II study of BRTX-100 in lumbar, we believe it also potentially bodes well for the future as we work toward BLA approval to bring this important and novel stem cell therapy to many millions of patients waiting for effective pain relief and functional improvement. This significant unmet medical needs in the treatment of pain from damage discs and/or the lower back resulting from ineffective conservative nonsurgical approaches like opioids or failed surgical interventions are staggering and quite frankly, unacceptable. Approximately 1.7 billion people have musculoskeletal conditions worldwide and the leading contributor ability worldwide with lower back pain being the single leading cause of disability in over 160 countries. In the U.S. alone, at least 80% of adults experienced at least 1 episode of lower back pain during their [Technical Difficulty]. Lower back pain is the most common cause of disability among Americans between 40 and 65 years of age, highest economic burden on the U.S. health care system. [Technical Difficulty] for chronic cervical pain are no less astounding. It represents a considerable public health burden that accounts for one of the top 5 chronic pain conditions. Cervical discogenic pain syndrome is a common source of neck pain with a reported prevalence between 16% to 41%. As a first line of defense, patients generally pursue what we describe as ineffective conservative approaches such as opioids and anti-inflammatories. With respect to surgical intervention, the surgical fusion market was valued at $6 billion in 2023. This is expected [Technical Difficulty] $9 billion in 2032. And the cervical disc replacement market, which is motion preservation devices, a little bit more advanced instrumentation in the neck is projected to grow [Technical Difficulty] in 2023 to about $8.5 billion in 2032. These numbers clearly equate to a very large and growing potential commercial opportunity for BioRestorative. We believe with the introduction of a commercialized therapy such as BRTX-100, we could capture much of this population that would otherwise undergo conservative care or surgical intervention. With that, I'll turn the call over to Francisco to provide some details about the IND clearance for cervical as well as some context around something that we're really excited about, which is the recently granted FDA Fast Track designation for BRTX-100 in chronic lumbar disc disease as we think that our know-how and our communication with the FDA has implications as it pertains to both of our clinical trials. Francisco?

Thank you, Lance. Good morning, everyone. Our lead cell therapy candidate, BRTX-100, is a novel cell-based therapeutic engineered to target areas of the body that have little or no blood flow. The product is formulated using your autologous or your person's own cultured mesenchymal stem cells collected from the patient's bone marrow. We intend that the product will be used for nonsurgical treatment of painful lumbar lumbosacral and cervical disc disorders or as a complementary therapeutic to be aligned with a surgical procedure. The safety and efficacy of BRTX-100 in treating chronic lumbar disc disease is being currently evaluated in our ongoing Phase II prospective randomized, double-blinded and sham-controlled study. A total up to 99 subjects will be enrolled at 16 clinical sites across the United States. Subjects included in the trial will be randomized 2:1 and received either BRTX or the sham -- undergo the sham procedure. With the IND clearance announced today, we are also now beginning to lay plans to evaluate the safety and preliminary efficacy of intradiscally injected BRTX for patients with cervical disease pain in a separate double-blinded sham-controlled randomized Phase II study, which we plan to initiate shortly or as soon as practical. While I don't want to steal our thunder by providing too many details on the cervical Phase II plans today, I can point out that it is expected to include roughly half the number of subjects, but maintain a 2:1 randomization. One of the reasons that we can aim to enroll fewer subjects as opposed to our Phase II lumbar study is, as Lance mentioned, the FDA reviewed the preliminary safety data from the chronic lumbar disc disease trials when clearing the new IND. Switching gears for a moment. This was the second major FDA update we've issued this month. On February 20, we announced that the agency had granted Fast Track designation for our BRTX-100 chronic lumbar disc disease program. The FDA's Fast Track program is aimed to facilitate the development and expedite the review of investigational treatments that are designed to treat serious conditions and have the potential to address significant unmet medical needs. Benefits of the program include early and frequent interactions with the agency during the clinical development process and stem cell product candidates with Fast Track designations may also be eligible for priority review and accelerated BLA approval. Achieving Fast Track designation is an important milestone for BioRestorative. We look forward to working more closely with the FDA as we continue to advance our lead BRTX-100 clinical platform. Now I will turn the call back over to Lance.

Thanks, Francisco. And sorry, this is a brief call, but I just wanted to summarize. So the FDA cleared our IND application for a Phase II trial of our lead therapeutic product candidate, BRTX-100 now in cervical. I think our relationship with the FDA is getting much stronger. Not that it was ever not strong, but the level of communication has picked up quite a bit, and I am very encouraged by what that means going forward. We intend to provide more details on the planned cervical trial in the future. In the meantime, we don't expect the IND approval to have any material impact on our operational focus or our cash burn. The FDA IND clearance for BRTX-100 in cervical came on the heels of the FDA granting important Fast Track designation for the lumbar program. And finally, the Fast Track designation may also lead to, as Francisco mentioned, a priority review, an accelerated BLA approval for BioRestorative Therapies and BRTX-100. And that will be through careful discussion and mandated meetings with the agency. So we're really happy about all of these announcements. It happened to all come within a short period of time. Again, we have the cash that we need in order to prosecute our strategic goals. So this will not be a burn on cash. This will also not be a burn on our corporate focus on our goals in front of us. And I want to thank you all. Those are our concluding remarks. We're happy to take a few questions as it's kind of in the middle of the day now, we're going to all need to get on with our daily meetings, but we're happy to take a few calls. So I'll turn it over to the operator at this point.

[Operator Instructions] Your first question for today is from Jonathan Aschoff with ROTH Capital.

Congrats on the cervical IND. I have 2 questions. One is related to this. The other one is just not. The first one is, why would you have expected to have to do any Phase I work with this product already in Phase II? And getting similarly administered to the cervical patients as they are presently to the back patients? And the second question is just, is the potential Thermostem licensing deal announced back in June, is that still in the cards?

Great. So I'll answer the first question regarding the ability to go directly into the Phase II, which was granted by the FDA. So we -- when we submitted the IND, we were optimistic that we could potentially go directly into the Phase II. But one of the questions that the FDA required us to answer is looking at the volume, which is very different than the lumbar. So even though it's still spine, the anatomy is very different from the lumbar to cervical, even the way you inject, even the way you get to the disc. So it still was considered a first-in-man study. So the FDA actually did push back. We were able to convince them in terms of how our approach was and the safety aspect of it, but it was a big win for us to get directly into the Phase II. Normally, they would have had a Phase I, maybe a safety run-in component to the trial, which is not included here. So it was pretty successful.

Okay. Let me actually ask some questions...

On the second question...

Lance, hold on one second. By volume, do you mean volume of the destination for the product or the volume of product you're injecting is different?

The volume of product injected because of the size of the disc and the dose-limiting toxicity issues related to it.

What is this new volume for the cervical area?

It's 0.5 cc. So what was -- the lumbar was 1.5 cc and the cervical is 0.5 cc.

And the answer to your second part of your question is yes, we are still very much engaged in what I would describe as advanced discussions with a strategic on licensing our brown fat program, as we indicated. These things are unpredictable in timing. People have a variety of focuses. I would say that the nature of the conversation started with brown fat, and we all got to look under each other's respective tents, which I think caused a lot of curiosity in a good way. And I would just say that those discussions have broadened, and it's giving us a little bit more of a global purview of the opportunity set. And I can't commit to timing, but I will tell you those discussions are robust and they -- those to what I would describe as an advanced level.

Okay. And lastly, could you please remind us of the Phase I exploration that was done with BRTX-100? I'm sifting through old notes, and I just can't seem to find an account of that.

Yes, so there was...

I know Francisco can answer in more detail.

Yes, so there was no [ Phase III ] accumulated data related to a 33-patient study that was done by investigator-initiated work in Colorado, 33 patients were treated. We also took some studies that were done using mesenchymal cells for lumbar injection. We pulled together a lot of this data using both an earlier version of our product as well as similar versions of our product done in other publications, and we presented it to the FDA and the FDA fast forwarded us again through an animal -- through a Phase I. But we did do animal work, and we then went directly into a Phase II.

Okay. So that was 33 patients given exactly BRTX-100 and some other data with somewhat similar cells, correct?

Yes, given other mesenchymal cells directly into the nucleus of the disc and the lumbar part of the spine.

Your next question for today is from Elemer Piros with Rodman.

Lance, I wondered if you would clarify that this cervical trial is depending on additional resources that you might gather in the future? Or how should we think about starting a trial in that setting?

I think from a human capital perspective, we have everything that we need in order to initiate the trial. I would say that we want to be somewhat opportunistic in terms of timing. I think our main focus right at the moment is our existing Phase II. We've estimated that the cost related to this cervical will be somewhat of a fraction of what the lumbar represents just given so much of the protocol will be similar and that we've already laid the right tracks with all of the historical amendments that will probably take a more evolved set, the primary investigators that are involved, the clinical sites, some of the know-how, I think, is going to be a big cost savings overall. And I think we will look at a variety of strategic options as it relates to the start time and how we allocate resources to it. I think the further we get on a lumbar trial enables our opportunity set to increase as it pertains to having strategic funding for cervical. So we -- I think we want to be very cautious, and we want to be very thoughtful and deliberate in terms of how and when we start it and the resources that we allocate.

And I think Francisco or you mentioned that you have 16 sites engaged in the lumber trial. Is that the maximum number? Or you still are hoping to engage with more sites? Or do you think it's sufficient?

I think it's sufficient. As we all know, this is a challenging trial to enroll just because of the strict criteria, the exclusion criteria, but we're very optimistic that based on some of the fast track designation and the powering and the discussions we've had with the FDA and given the safety profile and the signals that we see on a blinded basis, there are a variety of strategies that will enable us to reach the goal line, hopefully, a lot sooner. I don't think we need more sites. In fact, the protocol, I think, goes up to around 15. So what you want to do is be in and around that number, maybe a few above, a few below. After that, I think an amendment would be appropriate, but we're kind of right where we need to be.

And at what point would you be able to update us on enrollment status of the trial?

I think we're going to -- we have a call coming up in March. We're going to take a look at where we are with some of our statisticians and where our PROs are coming out and again, some of our discussions with the FDA and see if that's an appropriate time to give more information around what the strategic steps will be from a regulatory pathway.

Your next question for today is from Michael Okunewitch with Maxim Group.

I would just like to see if you could talk a little bit about how common cervical spinal pain is versus lumbar and then whether this comes with a similar progression as lumbar with -- starting with conservative management, moving on to surgery with that risk of adjacent segment disease that makes a real unmet need for these kind of middle stage treatments.

Sure. I'm not sure if you...

Sure. Yes. So cervical is actually pretty common, right? So -- but the symptoms are different from the point of view of being lower back towards your neck area, which is going to generate potentially pain in your arms, also headaches. So the symptoms are very different and there -- the treatment process is obviously different in terms of how you target it and how you manage that pain. But it's a pretty prevalent disorder. And unlike at least with the lumbar, there's a little bit more options because it's easier to get to from a logistics point of view, whether it's conservative treatments or surgical treatments, it's a lot easier to target. versus the cervical, which is a lot more difficult. So in terms of unmet medical need, there's a huge gap there for patients suffering from this disorder, which is a great opportunity for our product because if it works in the lumbar, in theory, it should work for the cervical. So it should provide relief for the patients.

Yes. And Michael, it's a good question because it's not as large as lumbar. Obviously, the lumbar, 80% of adults experience at least one episode of lower back pain over the course of their life. And -- but I would say that cervical represents a very significant public health burden and is probably one of the top 5 chronic pain conditions out there. So in terms of neck pain, about just less than half of all neck pain is related to discogenic pain in the cervical space. So it's a -- on a relative basis, while it may be smaller than lumbar, it's still a huge market opportunity. And I would say that for us, it's even on a relative basis, a larger market opportunity because we're the only ones that are really approaching it right now because we think we have a very leverageable program and a very leverageable technology in BRTX-100. So while I think it will work very well throughout the spine, including the thoracic area, I believe that it's going to work very well in all a vascular zones, whether that be hips, knees, shoulders, joints, wrists, et cetera, because we're seeing some of this data coming in outside of the U.S., albeit not under the auspices of the FDA, but still many patients that have been treated. So we know that these types of cells work. I think the way in which we manufacture ourselves with the quality control and the very deliberate way in which we transport these cells and deliver them. I'm very bullish on what I think we will see in terms of pain reduction and increase of function.

And then just -- I do want to follow up on one thing that I'm not sure if that's what you were implying. But is there any difference in the microenvironment of the cervical spine versus lumbar that might make it more favorable for BRTX-100?

Yes. I think it's -- and it goes back to the volume. The space is smaller. So there's -- it's a lot easier to keep the cells in one place versus 1.5 cc is very different than 0.5 cc or 0.25. So that does impact the microenvironment in terms of the cell placement, making sure that they stay there. So I think it's actually more favorable for the product being that's a smaller environment.

Yes. So I mean, we'll have to -- this is what we're going to be studying, but the ability for that product then to -- in that smaller residents to scaffold and proliferate in a much more controlled environment along with its autologous platelet lysate, which, as you know, has that sort of an adjuvant, not just a carrier, but has that the nutrients and the gelling effect, we think will be a much more compact and potentially a very effective resolution.

We have reached the end of the question-and-answer session. And I will now turn the call over to Lance for closing remarks.

Sure. Look, I just want to thank everybody for being on the call and focusing on this very important matter for us, getting so many very positive updates from the FDA in a short period of time is rare, but we're very grateful to be the recipient of it, and it's really a testament to our team and all the hard work. So again, I think there's a lot more to come. I find that we're in a fairly robust catalyst environment for the company and a lot of really important strategic things ahead. So keep your -- keep focused, please, on our story. We think it's a really good one. And we're here to try to help save lives and eliminate chronic pain in a variety of different indications. And hopefully, we're going to make some really good progress this year. So thanks again, and we'll all talk soon.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.