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

Hi, everyone. I'm Sumant Kulkarni, a senior biotechnology analyst here at Canaccord Genuity, and it's my pleasure to have BrainStorm Cell Therapeutics here with us today. They have a lot of interesting things going on, an exciting time for the company. And for the company, we have President and CMO, Ralph Kern. Thanks, Ralph, for joining us. And thank you, everyone, for tuning into the webcast as well. We're going to keep this interactive towards the end. Ralph is going to go through some slides for the first 20 minutes or so, and then we'll have the last 5 minutes for Q&A. We do have a web-based interface which you can use to send in questions, so please feel free to do that. And with that, I'll turn it over to Ralph. Thanks.

Great. Sumant, thanks so much, and thanks, everybody, for joining today. It's my pleasure to give you a company update and very much looking forward to any questions you might have at the end. So as you know, we're a publicly traded company. So here's our disclaimer and forward-looking statements. We've made a lot of progress at BrainStorm in the last year, in particular. We've advanced on several key clinical programs. We've built our manufacturing infrastructure and preclinical activities at the same time. Brought in key executives to drive our strategic objectives across a number of different areas. We've increased our cash position with very judicious use of at-the-market financing and other financial instruments. And as you can see, we've also increased our market cap substantially, reflecting the hope that we will have a good outcome this year as we complete our Phase III ALS trial. I'd like to just give you a brief overview of some of the additions that we've made to BrainStorm, including a couple of colleagues of mine that previously worked at Biogen: David Setboun, who was the President of Biogen France, a long experienced executive in biotechnology pharmaceuticals; also Stacy Lindborg, who was the Head of Data and Analytics at Biogen, who is now Executive Vice President and Head of Global Clinical Research. Along with all of my other colleagues, we were very proud of the accomplishments we've made this year. But we have even more in store in the future, we hope that we can share with you today. One thing I'd like to begin with is what is at our core, which is our technology. We believe that NurOwn is a unique cell therapy product for a number of reasons. It combines the safety and cell persistence advantages of an autologous cell therapy with off-the-shelf convenience. In other words, we cryopreserve an off-the-shelf product. We create a cell bank for each person, which then can be drawn from for many years to produce repeat dosing. Thus, a single bone marrow harvest can create several years of therapy. We've shortened the cycle time from -- to 7 days from thawing the product to final production and injection in the clinic. Our manufacturing is remarkable. It's consistent, it's reliable. We don't use animal proteins in our manufacturing process. There are no use of antibiotics, viral vectors, genetic modifications, thus simplifying and greatly streamlining our manufacturing. The product that we deliver to patients is culture-rescued, creating very high cell viability and consistent performance characteristics. These are very important features. One of the ways that we confirm that is by using a cell potency criteria in our release. We have what we believe is a platform technology. And the reason that we believe that is that there's very consistent read-through from the preclinical in vitro characteristics of our cells; the performance of our cellular therapy product in animal models, in other words, in vivo. And finally, confirmed in-humans and proof-of-concept experiments, showing that the disease pathways are impacted by the cargo delivered by the cells and that the pharmacodynamic effects of our treatment are thus confirmed. We also believe that by having a consistent safety profile across clinical trials in a given disease and across different diseases, we create what is, in essence, a platform technology. And I'll go through that in more detail with you today in terms of how we think that plays out. The other -- the next point I want to make is that we've really focused tremendously on neurodegenerative diseases. By doing so, we have developed in-house expertise for these diseases that is really at the level of any of the best biotechnology companies. And we partner with the best experts so that we know that the results that we have are of the highest quality. We have robust IP protection, and we have a strong global presence with a senior seasoned executive team. Our Phase III ALS trial is fully dosed, and we expect top line data shortly, so in the fourth quarter. We announced recently that, that will be by the end of November, which is really a pivotal moment both for BrainStorm, for the ALS community, but also for the type of technology that we have advanced just so successfully over the years. Our Phase II trial provided proof of concept, as I mentioned, and we've had very good discussions with the FDA on pathways towards data analysis, pathways during the BLA process and afterwards. The Phase II progressive MS trial is now fully enrolled, and we expect that to be completed and fully dosed by the end of the year. We've had very good DSMB readouts from both the ALS and MS trials. And recently, we have extended our reach by initiating a Phase II program in Alzheimer's disease in Europe. We have other designs in Europe that we can touch on later. But I think that beginning of trial in Alzheimer's disease with the top centers is a really important next step for BrainStorm and also confirms the technology platform characteristics of our technology. This is an overview of our pipeline. Again, I mentioned the ALS and progressive MS trials are the most advanced. We've recently also advanced some preclinical work in using exosomes derived from our cell therapy. We did a proof of biology experiment in ARDS, and we presented some data recently at our earnings call. Happy to answer questions about that later. Just to get back to the technology. Again, it's -- the cells are harvested from the bone marrow with a single outpatient procedure that takes about 30 minutes. The cells are then isolated and expanded. We have cryopreserved intermediate product. It takes 12 days to make the intermediate product. From that point, the cells are then creating -- essentially create a bank of cells that are available for use. Following thawing, we then have a 7-day process to injection in the patient. And the cells are administered intrathecally. So in other words, they're delivered by lumbar puncture directly into the cerebrospinal fluid. And we believe that there are important biological advantages of delivering a biologic therapy directly to the brain compartment. Happy to answer questions about that later as well. One characteristic of ourselves is that in addition to their cell of origin immunomodulatory capabilities, which are legendary and well described, we convince the cells and we adapt the cells and culture to release very high levels of repair molecules that are important for brain disease. And this is essentially a group of molecules that are able to repair, restore function and are known to be very important in ALS, Alzheimer's disease, progressive MS and other neurodegenerative diseases for a couple of reasons. First of all, these molecules are deficient in these diseases. They're known to be reduced, they're known to be inadequate, and they reflect the loss of astrocyte supportive for the neurons. Secondly, in animal experiments and also in some human experiments, there is some evidence that restoring or delivering these factors back when they're deficient can have therapeutic advantages. We've shown immunomodulation in vitro, but we've also shown the -- we've also shown this in humans. This is our Phase I/IIa open-label studies where we looked at T regulatory cells. So we gated for CD4 and CD25 cells, and we showed that these were increased up to a month after a single treatment. We show in vitro that the CD25 and FoxP3 expression is increased when the cells are cocultured with NurOwn. So in other words, we're able to show that the biological effect in vitro is also demonstrated in vivo in humans. We did some recent work also showing that B regulatory cells are increased along with IL-10 expression. And there's a very important effect of our cells on modulating abnormal immune responses in various diseases that I think we can leverage in our experiments. So to put into a nutshell, we believe that we attack 3 components of neurodegenerative diseases: neuronal degeneration, loss of the neurotrophic support and neuro inflammation. And we've confirmed this both in our in vitro studies and also in the biomarkers that we've demonstrated in our Phase II trial, and I'll go through that in more detail in a moment. So what about our ALS program? As you know, ALS has a huge unmet need. Currently, there's only 2 approved therapies, riluzole and edaravone, that have some effect, but definitely, there's a need for better treatments. We know that there are 30,000 ALS patients in the United States, about 450,000 worldwide. In the U.S., every year, there are 6,000 new patients. And essentially every minute, a new ALS patient is diagnosed. The work that we've been doing is not overnight. We've been developing NurOwn for over 10 years. We completed the requisite early open-label Phase I and IIa trials. They were published in JAMA Neurology. They gave us information about dosing, about route of administration, about what kind of effect we would see on function. We then completed a Phase II randomized placebo-controlled trial at 3 sites in the United States, Mayo Clinic, University of Massachusetts and Massachusetts General Hospital. That study essentially provided proof-of-concept because we were able to show with biomarker analysis that the clinical improvements were linked to effects on those important biomarkers. And just recently, we have fully dosed our Phase III 200-patient 1:1 randomized Phase -- ALS trial at 6 sites in the U.S., we will have top line data by the end of November. The ALS Functional Rating Scale is the measure of success currently and for the foreseeable future. It is a validated and regulatory accepted outcome measure of ALS function. It's essentially measuring function across 4 domains with a full score of 48. Patients lose about 1 point per month in ALS. And we have looked in -- we have looked at this in a number of ways. In our Phase II trial, we looked at the change in the rate of disease progression, and I'll show you that data in a moment. And we looked at how that changed at up to 24 weeks after the first treatment. And in Phase II, we only did a single treatment. In Phase III, we're using a responder analysis. In other words, what proportion of patients achieved the change in this ALSFRS-R score change to 28 weeks. And I'd like to go through our Phase II study design and then a little bit of data and then talk to you about our Phase III design now. So in our Phase II trial, we used a run-in period of 3 months. We calculated this rate of decline during that period. There was a randomization event where there were -- patients were randomized 3:1 to treatment versus placebo. The total duration of follow-up was 24 weeks. We had monthly in-person assessments where we looked at the ALS Functional Rating Scale and slow vital capacity. The remarkable outcome of the study was safety because there were no dropouts due to SAEs. There were no deaths during the trial, and there were no -- essentially, there were no surprises in terms of safety. What we did prespecify in the trial was we wanted to look at the effect of rate of progression on outcomes. And we prespecified rapid versus slow progressors based on a greater than 2-point decrease in the 3 months in the lead-in period of the ALS Functional Rating Scale. So we did a bifurcated analysis of looking at those who had a rate of decline more than 2 points per month in the run-in period and those who had a rate of decline less than 2 points per month in the run-in period. And that's a very important distinction when we look at the data. And essentially, this is what we saw. This is the change in the rate of decline. Anything positive, in other words, above the horizontal, is an improvement. And you can see that there is an improvement in the rate of decline in the total group, but particularly in the rapid progressors, that goes out to about 12 weeks. You can see that the red placebo patients are not responding. When we look at a responder analysis, in other words, when we define responder using a very high criteria of 1.5-point per month improvement in that rate of decline, we can see that there's an overall effect, but it's accentuated in rapid progressors in the 21 out of 46 who achieved more than 2 points per month decline in the run-in period. Other studies have also shown that rapid progressors improve the signal-to-noise ratio in the readout. Recently, there have been some other ALS trials that have looked at subgroups based on either identifying rapid progressors or editing out non-progressing patients. Ultimately, it comes out to the same. One wants to have an enriched patient population to show this. But we weren't happy just looking at clinical outcomes. We wanted to see a number of important biological questions in the study. The first question that we asked was, could the cargo be delivered? In other words, we're making cells that create high levels of repair molecules. Can we identify those repair molecules in the CSF of patients who have been treated? And the answer to that is yes. When you look at vascular endothelial growth factor, hepatocyte growth factor and leukemia inhibitory factor, there are highly significant increases in these repair molecules post treatment that were not present pretreatment and certainly not reflected in the placebo group. So these are true biomarker evidence of cargo delivery post treatment. And the post-treatment CSF was obtained 2 weeks after the treatment, so that's quite a long time. So it reflects that the cells are present, the cells are secreting molecules that they're supposed to be secreting and it helps us understand the mechanism of action. The other thing that we looked at and very important in ALS and other neurodegenerative diseases, particularly around a marker we've called MCP-1 or CCL2 is can we reduce inflammation in the CSF? And the answer to that is yes. We've reduced MCP-1 by 40%. We reduced SDF-1 by 22%. And we also showed that we reduced caspase-3, which is a marker program cell death by 40% as well. We saw that there were greater effects in responders compared to nonresponders. And a couple of more correlations that we looked at that are very important are on the top. First correlation was, is there a relationship between the cargo delivery and the level of the inflammatory marker after treatment? And the answer is yes. We see that lower levels of MCP-1 are associated with higher levels of VEGF post treatment. So there's a correlation in all the patients, this is not subgroup. This is all the patients. There's a correlation between cargo delivery and reduced levels of inflammatory factors. On the lower panel, we asked the question of, is there a correlation between the inflammatory markers post treatment and improvement scores in the ALS function? And the answer is yes. This is at 12 weeks, but we have the same correlation at all time points for 8, 12, 16 and 24, where we see that the lower MCP-1 levels are associated with higher improvement scores. So again, linking the mechanism of action with the functional improvements that we hope to confirm in our Phase III trial. This brings me on to the design of the Phase III trial. Because we so successfully used the run-in period in Phase II, we're continuing that model. We then have a randomization event, we randomized 1:1. This study is including 3 treatments rather than a single treatment. All the functional improvements that I talked about in the previous study were with a single treatment. This study will now effectively test repeat dosing. The study is a little bit longer. It's 28 weeks after the first dose. And again, we're looking at the same type of outcomes with ALS Functional Rating Scale looking at slope change after treatment, and looking at slow vital capacity, tracheostomy-free survival and 7 serial CSF samples. So in other words, a very heavily biomarker-enriched study so we'll have good explanatory power. I just want to go through how we're thinking about the outcomes for Phase III. On the top panel on the left, you can see a treated patient from our Phase II, where there's a pretreatment run-in. You can see the decline in the ALS Functional Rating Scale. If that were to continue, it would be the dotted line. In the patients who responded, you can see that the patients stabilized, and in fact, was able to restore some of the loss that was in the run-in period. This is one pattern that would be considered a responder. On the lower panel, in red, you can see what happens to placebo patient. There is a continuing decline of ALS Functional Rating Scale scores post treatment. This translates into a slope change that is below the level of 1.5. And in this case, 1.25 points per month that we have selected for Phase III. And obviously, we're looking at a very sophisticated set of sensitivity analysis using covariates that are known in the literature, such as treatment with riluzole, baseline ALSFRS, duration of disease, site of onset and the pretreatment slope. And we have a very well-characterized set of analyses that will accompany the top line data. And we're looking forward to receiving that before the end of November. I just want to, for a moment, recognize 2 sites of manufacturing, City of Hope and Dana-Farber, 2 of the top technology centers in the U.S. for the manufacture of cell therapies. And also the wonderful investigators in our Phase III trial. And also, I want to recognize the support -- the funding support we received from California Institute for Regenerative Medicine. I'm going to switch gears, talk briefly about MS and Alzheimer's disease, and then I'm going to hand it back to our moderator for some questions. We believe that there's a biological unmet need in progressive MS. It enters a degenerative phase. It isn't responsive to even the best therapies. There's compartmentalized inflammation in the brain, and there's also a loss of neurotrophic support to neurons due to loss of astrocyte and oligodendrocyte function. Remyelination is obviously an important consideration in progressive MS. Our progressive MS trial is an open-label study that uses a matched historical cohort. We just have done a number of analyses using the data from the Brigham and Women's CLIMB study to match patients to our Phase II study. There's -- it's an open-label treatment allocation. There's 3 treatments. As you can see, we collect CSF for biomarkers. And we're looking at very important MS outcomes, including timed 25-foot walk, 9-hole peg test, number of key biomarkers including quantitative MRI. And we'll be comparing that to the natural history of the disease. We have recently completed enrollment of this study. We'll complete all dosing before the end of the year, and we look forward to sharing results once we have them. We've initiated a trial in Alzheimer's disease. I'll be very brief. Everyone knows that Alzheimer's disease has a huge unmet need. One of the reasons why we were very motivated to do this is we see important parallels in the type of biological action that our cells produce. And they're known to occur both in vitro, in vivo and in human biomarker studies. On the left side, there's a very interesting correlation of AD biomarkers interacting with levels of MCP-1 in the CSF. And you can see that the rate of decline of cognitive function is amplified as inflammation increases with the same level of Alzheimer's biomarkers, in other words, tau and amyloid. On the right side, you can see that there's a very good correlation of MCP-1 in the CSF and the rate of annual decline of cognition in Alzheimer's disease. And as you recall, I mentioned earlier that we reduced MCP-1 by 40% in the CSF of patients with ALS. There's also other important correlations of some of the microRNAs that our cells create. One of them is miR-132. We saw on the right side that miR-132 was increased post treatment, and it was higher in responders. In Alzheimer's disease, the level of miR-132 is decreased and circulating neuronal exosomes that can be identified in the serum. And there's also a very nice correlation of miR-132 expression with the severity of cognitive dysfunction in Alzheimer's disease. So we believe that we have a number of shots on goal that might actually work both in terms of neurotrophic support, reduced inflammation and microRNA delivery. So one thing about our Phase II Alzheimer's study is that we're using biomarker-selected population. You can see on the right that when you -- in the red that if you select patients who have specific levels in the CSF of tau, phospho-tau and amyloid beta, A beta 42, you can see that the rate of cognitive decline in red is much more predictable. And we believe that by selecting early Alzheimer's patients who have a best chance of responding but also selecting patients who have a biomarker-predicted course that we can optimize our clinical trial design. We believe, again, as I mentioned, that the principles that I have described to you operate in Alzheimer's disease as they do in ALS because there's a lot of overlap in the disease mechanisms. And I just want to say that we are very fortunate to be working with Professor Philip Scheltens and Bruno Dubois from Amsterdam and Paris, respectively, who are leading the country efforts in our Alzheimer's trial. We're currently in regulatory discussions, and we hope to start dosing the trial before the end of the year. The study will be open label, as we described. It will be 40 patients who will then be followed for a total of 52 weeks, but 42 weeks after the first treatment. We will have 3 treatments, collect CSF at each treatment. And we'd be looking at a very sophisticated group of both cognitive function and paired CSF and serum biomarkers, looking at tau, amyloid, markers of inflammation, markers of synaptic function and also vascular integrity. And we believe that this is a very advanced clinical trial that has a very high probability of success given its design and also because of the great centers that we're working with. So with that, I will take a deep breath and I'll hand it back to Sumant. And I hope there's time for questions. Thank you very much.

Thanks, Ralph, for that great overview. We have a few seconds, so I'm going to squeeze a couple in. I have a bunch, but will be our [indiscernible] So the first one is on the ALS trial, assuming everything goes as planned, what are your next steps as an organization? What have you done to evolve to take those steps.

Yes. Well, we've been working very hard on the BLA and the commercialization plans. Obviously, we're not able to disclose details of that today. But we've both brought in people who are very knowledgeable about commercialization. We have detailed plans, which involve both internal and external efforts. And this is around the U.S. commercialization. We're also -- we've also announced that we're pursuing regulatory discussions in Europe. So we do have orphan drug status for NurOwn for ALs in Europe. We have received SME status. We're having further regulatory discussions as we speak. So we hope to be able to share some more details of that in the near future.

Okay. We've got a couple of questions from the web. I'll read them off here. So in the event of a single unfortunate death of a patient in a Phase III -- in the Phase III -- sorry, ALS trial, would that interrupt completion of that trial?

Well, so ALS has a known mortality rate. So in a trial such as ours, the annual mortality rate is roughly in the order of 7%. That's a given. So whether -- and obviously, we're blinded to treatment allocation. So we would expect that in a study of 200 individuals, with the kind of inclusion criteria that we have, that we might have anywhere from 10 to 20 deaths due to the disease progression itself. So that's -- that would occur in the background. So that would not influence the ability to execute a study. And as I mentioned earlier that we did have a very thorough DSMB review on 2 occasions, the most recent one was at the end of last year. And they're obviously looking at blinded data. So -- sorry, unblinded data that they would -- they have a very good view as to what's going on in our clinical trial. And their approval to continue with the trial and not modify the protocols is a good confirmation that we're on the right track.

Got it. And the last one, again, from the web. You have the NurOwn platform and you also have the exosomes platform now with ARDS. How do you see those 2 evolving separately? And what are the plans there?

Yes, there's a complementarity because we know that some of the actions of NurOwn are through released exosomes, so the neurotrophic factors are packaged in exosomes or microRNA. We know that -- and we shared publicly at various scientific meetings, that the exosomes derived from NurOwn have similar immunomodulatory effects. They also show superior neurite extension in vitro. So we know that the -- they pack a punch. The advantages of exosomes are the ability to formulate and store it. And there are some questions still. They're about how best to use exosomes in various diseases. We have some preliminary work that we've shared on ARDS. We have some other work in other diseases that we're not able to disclose just yet. But we think that they're complementary, and that it's very -- I think what is common to both is our CMC experience, our ability to manufacture both at scale, at high quality and GMP grade is really the way to industrialize both. And I think that the capabilities we have in manufacturing NurOwn are we're leveraging in our ability to manufacture exosomal products. So more to come down the road, I'm sure.

Got it. Thanks a lot, Ralph. And that's all we have time for us. So thank you, everyone, for tuning into the webcast as well.

Thanks, Sumant. Appreciate it. Take care.

You too.