Brainstorm Cell Therapeutics Inc. (BCLI) Earnings Call Transcript & Summary

Wonderful. Thank you very much. Well, it's a real privilege to be here. I know I'm competing with lunch, so I know that's a tall order. Hopefully you can last for another half hour before you have your lunch. My name is Ralph Kern. I'm the Chief Operating Officer and Chief Medical Officer of BrainStorm Cell Therapeutics. We're a publicly traded company. We trade on NASDAQ as BCLI. This is our disclosure as a publicly traded company. First of all, I want to give you a bit of an introduction to our company. Some of you already know us. Some of you aren't that familiar with what we do. So I wanted to give you a view from 40,000 feet. We're a clinical-stage biotechnology company. We have the potential to be first-in-class as a company that develops and commercializes a cellular therapy for neurodegenerative disease. And I'll go through the technology in a few slides to give you a bit more depth. But the basic principle is we're using cells not as a cell replacement strategy, but as Nature's own drug delivery system. So we deliver the cells as a living factory, which is very similar to how biologics are made in bioreactors, but we allow the cells to manufacture the biologics continuously after administration. We're focused on ALS and other neurodegenerative diseases. We have a very experienced U.S. management team. We have a very strong and well-established R&D team and center in Israel. And our technology emanates from very important and well-known Israeli academic institutions. Our technology is well protected, both in terms of composition of matter and method of preparation and use. We -- as I said, we're an advanced stage biotechnology company. We have a Phase III clinical trial in ALS operating in the United States that is fully enrolled and will yield top line data at the end of this year. We have a Phase II clinical trial in progressive MS that is about half enrolled. And we have a lot of experience in the preclinical sphere in other neurodegenerative disease, and I'll go through that in a minute. The addressable market for our technology is very high. In ALS, there are approximately 30,000 individuals affected with the disease at this time. There's about 5,000 or 6,000 per year who developed the disease and who also succumb to the disease almost every year. It's interesting to note that the incidence of -- sorry, the prevalence of MS and progressive MS is about 10 or 20x higher. So for example, at the present time, there are about 500,000 individuals with progressive MS in the United States, and you can imagine the size of that market. We expect neurodegenerative diseases to increase as the population ages because one of the risk factors for neurodegenerative disease is aging. As I mentioned, our pipeline is quite broad. We have preclinical experience with our technology in Parkinson's disease, that's essentially where the journey began. And all the diseases that we've looked at, we see a few core principles: One is that there's preservation of brain tissue; secondly, there is reduction of inflammation; and thirdly, there are behavioral or functional improvements. Those are the core properties of our technology that we want to play out in our clinical trials. As I mentioned, our most advanced programs are in ALS and progressive MS. One of the questions you might ask is how -- what is the technology and how is it made? And I'd like to go through this with you for a few minutes. We use people's own cells. So these are autologous cells as opposed to allogeneic cells or from a universal donor. There are advantages to using autologous cells on the safety -- from the safety perspective in the sense that there is no need for immunosuppression and no concern about alloimmunity, in other words producing antibodies or reactions against another cell. The key component to our technology is the cryopreservation of an intermediate product. And by doing so, we take an autologous cell product and we make it as convenient as an allogeneic product. Because for each person, we create an off-the-shelf cryopreserved product, that can then after 7 days of a second phase of manufacturing, produce a fresh product that can be administered in the clinic. So this is the core technology. We use mesenchymal stem cells. These are cells that are derived from the bone marrow. And the cells, like other stem cells, have the properties of being able to propagate at very high numbers and, at the same time, maintain their ability to differentiate into another cell. And the second part of our process, the differentiation process, is unique among all the cell therapies that are currently being developed. And I'll go through that with you in a moment. As I mentioned, we have a 3-step process. We acquire the cells from the patient in a very simple outpatient procedure. We produce an intermediate product as cryopreserved. And then we produce a differentiated product that is then administered back to the same person, and it allows for repeated administration based on a single acquisition of the cells. The first part of the process relies on the identity of the cells. In other words, these are MSCs or mesenchymal stem cells, and there are cell surface markers that are well described to determine the cell identity. In the second part of the process, again, consistent with the idea that the cells are a living factory for delivering repair molecules and immunomodulatory molecules, we're able to measure the fold increase of the various neurotrophic factors that are produced by the cells. And we're able to demonstrate in vitro that the process increases this five to tenfold. We're also able to show that the cells have immunomodulatory properties. There's different ways to measure this. You can measure cell-cell interactions. You can measure production of inflammatory cytokines. The other way you can do it is by measuring immunomodulatory molecules or immunomodulatory cells, in this case, T regulatory cells. So we have a very consistent scientific story in vitro, in vivo and more recently, we've been able to show the same effect in people. This is where we are in the journey. It's been a long journey. But it's a very typical journey for the development of a biologic in a human disease. As you can see, the preclinical work was done beginning in 2007. We went through the requisite open-label trials to look at dose and to look at the way to design the study. We completed those and then proceeded to, in 2014, to a Phase II, double-blind, placebo-controlled trial. There are many Phase II trials that don't have that level of scientific rigor and I think we're very fortunate that we did. The other thing that was done in the Phase II trial was there was a very strong focus on biomarkers. Because it's very hard to demonstrate the presence of cells, you can measure their fingerprint as opposed to the cells themselves. And the biomarkers showed us that the cells were delivering their cargo and also modifying disease processes, and we're able -- I'll be able to show you that in a minute. The Phase II trial was a single dose. The Phase III trial that we're doing now is repeated dosing. So when you look at the results from the Phase II trial, bear in mind that this was from a single administration of the cells. The cells are delivered into the spinal fluid. And you might ask, why the spinal fluid? Well, there's something called the blood-brain barrier that really is impervious to almost every therapy. And by delivering the cells into the spinal fluid, it allows the cells and their products to migrate freely through that system. And the brain has a very effective system of spinal fluid flowing up through the brain and back out, and it's essentially "brain washing" system where the spinal fluid then travels through and it's nature's best drug delivery system for brain disease. And there are many, many treatments that are being developed now that utilize the same route of administration. And you can imagine that the ability to impact biological pathways is much more profound if you can deliver the treatment directly to the site of injury as opposed to -- into a vein somewhere or as an oral therapy. We published our Phase II trial in December of last year in the Journal of Neurology. It's a very prestigious journal. It's the most widely read journal by neurologists in the United States. And as a neurologist myself, it's affectionately known as the green journal. The study was a 48-patient trial, where we randomized 3:1 to treatment or placebo. And we had a very high retention of individuals in the trial, which helped us with the robustness of the data. This was the study design. We had a run-in period where we evaluated patients prior to their treatment. During the run-in period, we acquired the cells from the bone marrow, in something called the Bone Marrow Aspirate or BMA. We obtained CSF before and after the treatment to look at changes in biomarkers. And patients were evaluated at monthly intervals by experts in the field. The study was performed at Mass General, University of Massachusetts and Mayo Clinic. And as you know, those are the top centers -- some of the top centers for ALS in the country. And the study end was 24 weeks after the first treatment. Like all good studies, the patients were balanced across the various endpoints. The most important criteria are the score at start, the age, gender, and these are all very important in ALS, also the duration of the disease. Most of the patients were within the first 1 to 2 years of disease. And for ALS, that's very important. The earlier the treatment can be applied, obviously, the more likely it is to produce an outcome that's desirable. This is a summary of our efficacy data, and I'm going to take my time walking you through this. And we're going to go one row at a time, I think that's the best way to do this. The top row looks at slope change. And it's very important to realize what we're measuring. We're measuring a functional score, called the ALS functional rating scale. And because we have a run-in period, we measure the change in the run-in period, measure the change in the score afterwards. And we subtract the difference to see if there's a positive effect on the outcome. So anything above 0 is a positive impact on the rate of decline. As you can see on the top, in the total population and similar to other ALS trials, there are a lot of patients who have different types of courses. And you can see a treatment effect that is initially present and then wears off. In the rapid progressors which is about half of the ALS population, which now forms the patients we've selected for Phase III, you can see a much higher signal. And you can imagine that if you have 10% of ALS patients who don't decline, they would dilute the effect on any treatment sample. So if someone is not changing and has stable disease, it would be very hard to show a treatment effect. The bottom part of the graph shows a responder analysis. Here we ask the question as, what proportion of patients improved by 1.5 points per month after treatment compared to before treatment? And as you can see, there's a treatment effect in the whole population. There's a much more profound effect in rapid progressors. And again, this is the type of outcome that we'd like to see in our Phase III trial. Now the Phase II trial was not powered for efficacy, but these are very promising efficacy signals that obviously need to be confirmed in our Phase III trial. We asked a question then, what about the delivery mechanism? What about the mechanism of action of the treatment? Here, you can see on the top row treated individuals and on the bottom those who received placebo, and you can see that the important delivery biological molecules that are delivered by the cells, such as vascular endothelial growth factor, hepatocyte growth factor and leukemia inhibitory factor are greatly increased after treatment, which means that the cells are present, that they're delivering their cargo long after they've been administered. So in other words, this confirms the mechanism of action of the treatment. The other way to look at biomarkers is to say what impact does the treatment have on markers of disease? And one marker of disease is inflammation. So these are inflammatory biomarkers. The top row are the treated, the bottom are placebo. You can see there's no effect of placebo on the inflammatory markers. You can see that MCP-1, which is basically a chemokine, it's a molecule that attracts inflammatory cells into the nervous system; STF-1, which is also a chemokine; and chitotriosidase-1 were all significantly reduced after treatment. You can ask the question of what's the percent reduction. You can see that the MCP-1 levels were reduced by 40% after treatment. We also looked at a third type of biomarker, which is markers of cell injury. So the Caspase-1, which is a protein that's released when cells die, they go through program cell death and Caspase-3 is something that can be measured. We measured it in the spinal fluid, and it also was reduced by 40%. We presented some data at the American Academy of Neurology a couple of years ago, where we showed that the degree of reduction of Caspase-3 was greater in responders compared to nonresponders. If you remember in the previous slide that showed responders as defined as 1.5 point per month improvement, that group had a higher reduction in markers of cell death. We also showed a reduction in SDF-1, which is another inflammatory marker. So again, all good indicators. And then that really set us up well for a Phase III trial. We looked at other correlations. One was the correlation of the delivered survival molecules and the reduction in inflammatory markers. We saw a very nice correlation of MCP-1 with VEGF, so they inversely correlated. In other words, the cells are delivering their content and they're reducing the inflammatory markers. And at the bottom, we had a very exciting observation, which was when we looked at the biomarkers of inflammation after treatment, it correlated very nicely with the improvement scores. You can see the bottom in blue, the treated. And you can see there's no effect in red on placebo. So again, very nice translational medicine story of showing that the cells deliver their cargo, they reduce inflammation, they produce some clinical benefits. And the biomarkers are aligned with those observed clinical benefits, very exciting data to go into Phase III. So here we are. Now we're in a Phase III trial. We've very specific inclusion criteria that is informed by the Phase II. In other words, we're selecting rapid progressors. You saw we had better results there, as do others. We have certain exclusion criteria because we want to be able to measure the effect. So we can't have certain outcomes that are predetermined ahead of the trial. As you can see, the patients are randomized. They undergo a bone marrow aspiration. We collect the cells. We have a frozen set of cells that can then be repeatedly administered. And we are looking at a sample of 100 treated and 100 placebo patients, treated 3 times at week 0, 8 and 16. The outcomes are the standard ALS outcome measures of ALS functional rating scales for measuring function. We're measuring safety, change from baseline. We're measuring breathing capacity and also looking at survival. And of course, very informative look at biomarkers, 7 times for each person looking at the CSF and paired serum markers. Where are we with our Phase III trial? Well, we've had some exciting news lately. As you know, we completed enrollment in October. We had a DSMB, Data and Safety Monitoring Board review in October, and the decision was made that the trial should continue. There were no new safety signals identified and no protocol changes. So again, greenlight from the Data and Safety Monitoring Board. We had very high level and important meetings with the FDA. As you know, the public focus on ALS is tremendous right now at the -- at all government levels and social media. And you can imagine the kind of pressure that everyone's under. I think that the meetings we've had with the FDA are hugely important. They're unusual. I think that they're driven by the shared desire to find a solution for ALS. And we have essentially a shared view of the data package that would be needed to support an approval in ALS. And that we announced last week, and I think it really set us on a very good course towards the end of the study. Obviously, we always try to help shareholders with grant support, so we have additional efforts to look at ways of raising money that are non-dilutive. And as I mentioned, we'll have top line data in October or November of this year, so the fourth quarter. We have an MS trial that's going very, very well at no less important centers in the United States. Obviously, the leaders of MS are very interested in this approach to treat progressive MS, which at the present time affects 500,000 people in the U.S. and has no known treatment. We're using validated biomarkers, which are very important in MS. We're doing repeated dosing every 2 months in the MS patients. And as I mentioned, we have 5 of the top clinical trial sites in the United States. We've mentioned which ones previously, I won't go into that again. We had a DSMB safety review for our MS trial in December, and again that went very well. The trial, obviously, will continue as planned, no protocol changes. And we're expecting top line data roughly around the same time in our MS program as in our ALS program. We probably will perform an interim analysis, and we'll be able to give you more details tomorrow on our earnings call about that. Our company is very -- has a very experienced management team. I'll just mention a few of my colleagues. And obviously, I get to speak on behalf of very talented and capable people, and I'd like to recognize them now. So Chaim Lebovits is our CEO. Arturo Araya is our Chief Commercial Officer. He comes to us from the cell and gene therapy unit at Novartis, where he was the first commercial lead there. I come from Biogen, where I was the Senior Vice President; and Novartis and Genzyme, where I was the General Manager. Preetam Shah comes to us from Barclays Bank, where he was a health care analyst and banker for many years. Uri Yablonka is our Chief Business Officer. Revital Aricha is our Head of R&D. She comes to us from the Weizmann Institute. She has many years of experience, both in immunology and neuroscience, which is a tremendous asset for the work that we're doing. Yael Gothelf is our VP of Scientific and Regulatory Affairs. Yossef Levy, Head of Manufacturing. He developed this technology 14 years ago in his PH.D. thesis at Tel Aviv University, and he's never left the bench since then. Mary Kay Turner is our Head of Government Advocacy and Patient Advocacy and Government Affairs and very well-known in D.C., does tremendous work helping the ALS community advance the interests and hopefully find a cure. And Susan Ward comes to us from Pfizer and she's our Head of Clinical operations. She was the Head of Early Development at Pfizer. We have a very strong experienced Board of Directors. I won't mention all their names. And we also have a strong scientific advisory board, with Jerold Chun from the Sanford Burnham Prebys Institute in San Diego, previously was at Scripps. I worked with Jerold for many, many years. Stan Appel, who's an expert in ALS and one of the grandfathers of ALS in this country. And Amit Bar-Or, who's a very talented neuroimmunologist at Penn, who I had the privilege of working with at McGill University many years ago. So I will stop. Thank you for your attention. I hope this has been helpful and look forward to hopefully hearing from many of you during the day. Go ahead.

So you mentioned the final meeting in the phase, with the FDA providing a regulatory pathway for approval. It seems like they're at least paying attention to the public outcry for this. What are the specifics of that, that you think you got involved there? Are there specific biomarkers, they're looking for additional? Are they intending to not wait until November and basically wanted to see something beforehand so that they will be able to greenlight this outcome?

Yes. I think what I can say is I can expand on what we had said in our press release, which was that the type of efficacy data set that we're collecting is aligned with their expectations for -- to assess, accurately assess the efficacy of something of a treatment in ALS. That's really where the focus is right now. There are obviously professional discussions about which statistical method one prefers. And I think that they're so committed to finding a solution for ALS that they really want to partner with companies like us to find the most expeditious way of concluding the study, putting the data together and reviewing it. So I think those are the comments that I can make.

Is there a usual [ PTA ] of amassing data in order to resubmit that you could talk about?

Yes, I think the FDA has expedited pathways in terms of the mechanism of reviewing statistical data. And I think that they're open to offering some of those opportunities to us, to consider. And we'll obviously get there -- we'll get to that point, and we'll look at partnering in many ways with them.

When would be the next meeting of DSMB or ALS?

So we don't have a planned DSMB meeting at this point. But as you know, all DSMBs continuously look at data.

So what are your commercial plans for ALS? How can you...

Yes. So I think we're out of time because the door is open, but we can talk afterwards. And also, I welcome you to join our earnings call tomorrow.

All right. Thank you.

Thank you.