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

Good day, ladies and gentlemen, and welcome to the Brainstorm Cell Therapeutics Second Quarter 2021 Earnings Call. [Operator Instructions] It is now my pleasure to turn your host, [ Thomas Glatzy ]. Sir, the floor is yours.

Good morning, and thank you for joining us. Before we begin the opening remarks, we would like to remind listeners that this conference call contains numerous statements, descriptions, forecasts, and projections regarding Brainstorm Cell Therapeutics and its potential future business operations and performance; statements regarding the market potential for the treatment of neurogenerative disorders, such as ALS and MS, this sufficiency of the company's existing capital resources for continuing operations in 2021 and beyond, the safety and clinical effectiveness of the neuron technology platform, clinical trials of neuro and related clinical development program and the company's ability to develop strategic collaborations and partnerships to support their business planning efforts. Forward-looking statements are subject to numerous risks and uncertainties. Many of which are beyond Brainstorm's control, including the risks and uncertainties described from time to time in its SEC filings. The company's results may differ materially from those projected on today's call. The company undertakes no obligation to publicly update any forward-looking statements. Joining me on the call today will be Chaim Lebovits, President and CEO of Brainstorm; Dr. Ralph Kern, President and Chief Medical Officer; and Dr. Preetam Shah, Executive Vice President and CFO. In addition, Dr. Stacy Lindborg, Executive Vice President and Head of Global Clinical Research; and Dr. David Setboun, Executive Vice President and Chief Operating Officer are also on the call and will be available to answer your questions during the Q&A session. Now I would like to turn the call over to Mr. Lebovits. Please go ahead.

Thank you, [ Tom ]. Thanks to all listening for joining us to discuss our second quarter financial results and corporate highlights. There are several important business developments at Brainstorm I would like to cover today, but let me begin with a brief review of the congressional hearing on neurodegenerative diseases, which took place last week. At Thursday, July 29, the U.S. Health, Energy and Commerce Subcommittee on Health held a public hearing entitled the path forward, advancing treatments and cures for neurodegenerative diseases. The hearing featured testimony from several expert ALS neurologists, patient advocates, ALS patients, the FDA and NIH. Chairwoman, Eshoo, opened the hearing stating and I quote, "Our work today is to help create the fighting chance against these deadly diseases." I think every member of our committee has heard from ALS patients who are fed up with a lack of options. Two drugs, AMX0035 and neuron have captured retention and sparked a debate over whether the potential benefits of the drugs outweigh the risks. Everyone here shares the same goal. Full approval for effective drugs. The question before still stands, how do we best get there? And of course, the hearing represents a pivotal development for the ALS community and as a combination of the work of the entire ALS advocacy community, advocating for policy change. We were all reminded that there are real people and that there's an untold human suffering behind these exceptionally cruel diseases. This hearing is a clarion call for greater collaboration and urgency between industry government and advocacy to deliver treatments of neurodegenerative diseases. Patients and their families do not have time to wait. Based on it reinforced our sense of urgency to work with government and all stakeholders to make innovative treatments for neurodegenerative disease available to patients in need as quickly as possible. The hearings may prove to be a watershed moment in the history of ALS therapy development. While Brainstorm did not participate directly in the hearings, we, along with our consultants, follow them closely to understand what the likely implications are for us and the patients for desperately need of solutions. There were testimonies from a high respected ALS experts, who has been closely involved with NurOwn development, Dr. Merit Cudkowicz, the Chair of the Department of Neurology at Mass General Hospital and a principal investigator for neuron. Also from Dr. Jinsy Andrews, the Director of Neuromuscular Clinical Trials at Columbia University, a member of the ALS Association Board of Trustees and the culture of NEALS, the Northeast ALS Consortium. Dr. Cudkowicz delivered compelling testimony in which she explained how advances and understanding of brain disease and an expanding pipeline of potential treatments have already brought us to major therapeutic turning points for Therapeutics ALS. She calls for increased funding for ALS science, clinical trials of expanded access and very importantly, for new policies and processes that will accelerate the regulatory approval of new and innovative treatments to address the unmet medical need of ALS patients and their families. People with ALS and prescribing physicians, want drugs on the market, where we have reasonable confidence on both efficacy and safety. Dr. Andrew spoke elegantly of the need for transformational change in the ALS field, to acknowledge the challenges around making approval decisions for promising treatments as noted that people with ALS have made it clear to FDA and Congress that they are willing to accept greater risks and that any treatment that retains function and provides more time is meaningful. Most importantly, patients currently affected by ALS, can't wait for future solutions and need effective solutions to date. Dr. Cudkowicz also mentioned, of course, NurOwn and [ Amylyx ] by the name, but we don't want to go into further detail on this call. The full transcripts of these testimonies and archived hearings can be viewed on the website of the Energy and Commerce Committee in the House of Congress. We look forward to a continued and productive dialogue with ALS experts, patients, advocates and the FDA with the goal of agreeing and a viable path forward for neuron and ALS. In parallel with our ALS development program, we're also developing neuron as a treatment for progressive MS. At the end of March, we had announced very encouraging top line data from our Phase II study in this indication. I will ask of Dr. Ralph Kern, our President and Chief Medical Officer, to provide a brief update on where our progressive MS program stands today. Ralph?

Thanks, Chaim, and good morning to all. As we previously communicated, there are compelling reasons to advance our program in progressive MS and we're in the process of preparing a manuscript for peer reviewed publication, and we plan to present the data at an upcoming scientific congress. We also believe that consistent evidence in MS and ALS confirms that neuron by simultaneously targeting inflammation and neurodegeneration is truly a platform technology, and we're learning much from the progressive MS study in that regard. There's a quick roof of pressure, we designed the progressive MS study to optimally identify functional gains over 28 weeks by studying progressive patients without recent relapses and by comparing this group, to a prior match progressive MS -- group of MS patients from the client study at the Brigham and Women's Hospital in Boston. We focused on evaluating validated and objective measures of walking, arm function, cognition, vision as well as patients' own evaluation of their walking impairments. We also obtained CSF and serum biomarkers known to be important in MS to confirm neuron's mechanism of action. At the end of the study, we were able to demonstrate safety and consistent changes with neuron across all functional measures with a number of participants meeting criteria for clinical improvements. This is a unique observation in progressive MS, a disease where the natural history is one of gradual and relentless deterioration. We also observed consistent changes across biomarkers supporting the proposed mechanism of action in progressive MS. Following the study conclusion, we had the opportunity to present and discuss the data with our study principal investigators with a wide range of external MS experts and with the leadership of MS advocacy organizations, and I must say that we've received very strong support and encouragement to take next steps. At this point, we plan to review the Phase II data with the FDA. And based on these discussions, we will carefully consider and announce next steps. Chaim, back to you.

Thank you so much, Ralph. We also had important news on our manufacturing. We announced last week that we have received GMP approval from the Israel Ministry of Health for 3 state-of-the-art clean rooms at Sourasky Hospital's Institute for Advanced Cellular Therapies. The GMP approval confirms that these clean rooms are compliant with the ready GMP and importantly, these are also aligned with European Union's GMP. Approval of this new facility more than doubles our capacity to manufacture and ship NurOwn into the EU and local Israeli markets if approved in this market. Finally, we recently provided an update on our IP portfolio and announced that a series of patent and patent applications have been granted will allow in territories, including United States, the EU, Canada, Israel and Hong Kong in 2020 and 2021. The claims of these patents are a result of our world-class expertise and applying cell therapy to treat neurodegenerative disorders and the patents has further strengthened our overall IP position in these markets. I'll now turn over the call to Dr. Preetam Shah, our Chief Financial Officer, to provide a financial update. Preetam?

Thank you, Chaim, and good morning to all. It is my pleasure now to walk you through our second quarter 2021 financial performance. Research and development expenses net for the 3 months ended June 30, 2021, and were $3.59 million compared to $5.69 million net for the 3 months ended June 30, 2020. This decrease of approximately $2.1 million year-over-year was primarily due to a decrease in expenses related to our Phase III and Phase II clinical trials and a decrease in expenses in connection with stock-based compensation expenses, materials, rent and other activities. The decrease in expenses was partially offset by an increase in costs related to patents, preclinical R&D activities, travel and consultants, and a decrease in grant participation by the Israel Innovation Authority, or IIA. Excluding participation from IIA and other brands, research and development expenses decreased by $2.2 million from $6.01 million in the second quarter of 2020 to $3.81 million in the second quarter of 2021. General and administrative expenses for the 3 months ended June 30, 2021, were $2.52 million compared to $1.71 million in the 3 months ended June 30, 2020. This increase of approximately $816,000 year-over-year was primarily due to an increase in payroll, stock-based compensation, consultants, rent and other costs, partially offset by a decrease in PR and travel expenses. Net loss for the 3 months ended June 30, 2021, was $6.27 million, or $0.17 per share, compared to a net gross of $7.39 million, or $0.25 per share, for the 3 months ended June 30, 2020. Cash, cash equivalents and short-term bank deposits were approximately $35 million as of June 30, 2021, compared to approximately $40 million on March 31, 2021. During the quarter ended June 30, 2021, the company did not raise any capital under the September 25, 2020, ATM and since inception, has raised gross proceeds of approximately $29.1 million under this facility. For further details on our financials, please refer to our Form 10-Q filed with the SEC today. Back to you, Chaim.

[ Tom ]?

Thanks, Preetam. I'll now -- this is [ Tom ]. And I'll now read questions that were submitted from investors. So our first submission actually contains 2 questions. They start by saying, Brainstorm previously communicated that it will first consult with principal investigators, ALS experts, expert statisticians, regulatory advisers and ALS advocacy group to assess the benefit risk of BLA submission before making a final decision regarding next step following advisory from the FDA. What was the consensus regarding a BLA submission based off your discussions with ALS experts, advocacy groups and regulatory advisers? And when do you plan submitting your BLA? And they also are asking, regarding Phase III clinical testing for ALS, have you continued testing? And are you achieving results that should be acceptable to the FDA for approval?

Thank you. Very good question. Stacy, would you take this?

Sure. There's a lot in that. So first, I want to start with, our ultimate goal remains to secure the approval of neuron in ALS, and we remain confident in the effectiveness of safety of neuron. Our near-term priority remains to publish the Phase III data in a peer review journal and the manuscript is currently moving through the review process. Since our last earnings call and the update that this question referenced, we've continued to hold meetings with ALS experts and key opinion leaders in addition to consortium leadership group, none of which were part of the trial and do not have first-hand experience with neuron. We've shared our data and receive feedback. In fact, we received invaluable insights from these conversations and very positive feedback from world-renowned ALS experts. I would actually summarize that there's widespread agreement from the experts that we've spoken to that are data to support advancing neuron as a treatment for ALS. We are gathering new data from participants in our expanded access program, all of whom completed the Phase II trials and met certain eligibility criteria that the protocol outlined. We share the urgency of ALS patients around the world who deserve rapid access to potentially promising treatments, and we will make a decision regarding the filing of a BLA based on what and win, we believe, will provide the best opportunity to reach patients as quickly as possible.

Thank you.

Thank you. I'll now move on to the next question. This also -- this submission also included multiple questions saying, you recently more than doubled your capacity to supply neuron to ALS patients across Israel and Europe. Will there be a clinical trial in Europe before it will be accessible for patients in Europe? Or is it possible to use the existing data from your previous trial to have it go through the approval process in Europe? And additionally, is there already an indication when neuron will be shipped to Europe and be available to ALS patients?

Stacy, do you want to take this one, too?

Sure. were sensitive to the patient need for access outside of the U.S. could we continue potential opportunities in geographies that are outside the U.S. and are evaluating the relevant regulatory strategy and pathways. We'll provide details on these strategies and once they've been finalized, which will be subject to discussions with pertinent government agencies. In parallel, we'll continue to assess, as we've already stated, our FDA strategy. So very important need across the world that we certainly will be reflecting.

Thank you.

Okay. Moving on to our next submission. This person would like to know when BLA submissions could be expected as well as the time frame for peer review.

It was included a little bit in the previous question, but we'll elaborate more. So our managed script for the Phase III ALS trial is written and currently moving through the review process. The time line associated with the review process and ultimately, publication of the managed group is not in our control. And thus, I can't remark on this. However, I can assure you that we are doing everything in our power to expedite the publication. We've not yet made a decision regarding when and if to file BLA. It remains an option that Brainstorm will use, if and when we believe that it's the most effective way to secure approval for neuron. There are many moving pieces as evidenced during the congressional hearings that took place last week, that could influence and would influence our strategy. We are carefully monitoring these and remain prepared to act accordingly. [ Tom ]?

Thanks. Now for our next submission, they ask, FDA discussions aside and in light of the decision on the Alzheimer's drug, Aduhelm, do you think there's enough evidence in the data already shared to utilize the prognostic biomarkers or patient-reported outcomes for use as a surrogate endpoint for accelerated approval?

Yes. Thank you. Ralph?

Yes. As we said during the call, we look forward to continued dialogue with ALS experts, the patient advocates and with the FDA with the ultimate goal of agreeing on a viable path forward for neuron and ALS. Our dataset must be viewed as a whole. And while we won't be publicly commenting on the specifics of our complete dataset until our manuscript has been published, I will emphasize a point that I made earlier and say that there's widespread agreement among the experts we have spoken with, that our data support advancing neuron is a treatment for ALS. So we look forward to our manuscript's publication so that the data can be more broadly shared and discussed with the community.

Thank you.

Our next submission would like to know, what are the next steps for progressive MS.

Well, that goes to Ralph, again. Thanks.

As I mentioned earlier, there are compelling reasons to advance our program in progressive MS based on our growing understanding of how neuron impacts MS Biology; truly, the remarkable results from our Phase II study and very strong support from MS experts in the MS advocacy community. At this point in time, we plan to publish a peer-reviewed manuscript; obviously, deliver scientific presentations at an upcoming Congress; and fully review the Phase II data with the FDA. Once these activities are completed, we'll announce next steps.

Thank you.

Thanks. So for our next submission, they're asking about expanded access. Saying, since the FDA's public statement in early March, we have had remarkable testimonies from patients in the expanded access program. In addition to other individuals from right to try coming forward with results highlighting that the trajectory of progression stabilize. With this additional supporting evidence, do you think it's accurate to say that the neuron benefit is left to chance?

Stacy?

I don't believe I would characterize our regulatory process as being left to chance. We've conducted a well-designed Phase III trial, which stands as a foundation, really, on top of the early clinical trials, which span 10 years of clinical experience with neuron. The creation of the expanded access program enables us to collect additional information about neuron. One example is that since all participants in the expanded access program completed the Phase III trial, the data collected as part of this program contains longer exposures of neuron and in fact, doubles the number of treatments studied in our trials. The time line of the expanded access program allows us to explore questions around durability from the initial treatments in the Phase III trial. And while the patient testimonies that this question references any evidence of what's been posted on social media are really remarkable. This will be supportive of the foundational evidence that will come from the well-designed trial data.

Thanks, Stacy.

And our next submission is a financial question asking, who paid for the expansion manufacturing capacity? Does the current company currently have any debt? And how much money does it currently have on hand?

Preetam?

Yes. Thanks, Chaim. So with respect to the first part of the question, who paid for expansion in the manufacturing capacity. So our recently announced increase in manufacturing capacity was due to the 3 state-of-the-art clean rooms that Brainstorm pays to lease at the Tel Aviv Sourasky Medical Center receiving GMP certification. With regards to the second part of the question on cash and debt, as I mentioned earlier on the call, our cash position as of the end of the second quarter was approximately $35 million, and the company currently has no debt on its balance sheet.

Thank you.

Thanks. So our next submission ask, what disease do you expect your next clinical trial to be in?

Top priority is, again, approval for neuron for the treatment of ALS and then aggressively pursue indications where the science indicates the probability of success is high. As we shared in this call, we have generated exciting clinical data and progressive MS, and we believe that neuron is a platform technology for neurodegenerative diseases. We'll provide additional updates on our future clinical plans as they become finalized.

Thanks, Chaim. For our last pre-submitted question we have, are you evaluating partnering opportunities and for which portfolio?

David?

Sure. So we're receiving interest from partners, and we're having continuous discussion. With a wide set of partners that have shown interest in a different part of our pipeline, we, obviously, are leveraging the readout in MS and in ALS as well as the data that comes from the Exosomes technology. Thanks.

Thank you. Oli, I will turn it now to questions and answers from the listeners.

[Operator Instructions] Your first question for today is coming from Jason McCarthy.

This is Michael Okunewitch on the line for Jason McCarthy from Maxim Group. So I wanted to ask just on the -- kind of on the path forward in ALS, it seems like across cell therapy, pretty much across the board cell therapies seem to be more effective in the earlier stage patients where there's more function to preserve. So would a potential second study in that specific subgroup, be a potential direction you could go for ALS in the future?

Thank you. Stacy?

Yes, Michael. I think that we've seen across lots of diseases, neurodegenerative diseases, including Alzheimer's, that you can have more effective treatments, more effective results in trials when patients have not progressed thus far. So I think your statement is certainly, I think, very valid. And as we've shared in the public domain, we do see in prespecified subgroups, patients that aren't as progressed responding more substantially. I don't want to speculate on trial design for the future. We're, obviously, really laser-focused on gaining approval from our trial that's completed. But I think the logic that you're expressing is -- very much matches, I think, what the scientific community has been viewing with these horrible diseases.

Next question, please, operator.

Your next question is coming from David Bautz.

This is David Bautz from Zacks Small Cap Research. I'm curious if you've had any additional interactions with the FDA since the last call. And do you plan on having any more interactions with them before potentially filing a BLA?

I'm not sure we're ready to answer these questions. The interactions between us and the agency, we want them to respect the -- to respect us, and we want to respect them as well. A good question, though, David. Good try.

All right. Understood. Is the hospital exemption program still active in Israel? And will you be able to use any of that data in a potential BLA filing?

Very good question. So definitely, we will use the totality of the data if and when we will submit for approval. In addition to that, the hospital exemption program is not ongoing now, but we are in discussions with the Israeli ministry at the time for different regulatory paths as well. Oli, next question, please.

Your next question is coming from Brian Schneider.

Brian Schneider from Morgan Stanley Wealth. Quick question. When you are looking at the biomarkers and knowing that there are different diseases and that the biomarkers may be different. When you look at what the original Phase II study was for ALS versus what the readouts were on the MS Phase II as far as what the biomarkers look like, how would you compare what you're seeing in efficacy of neuron in the early ALS study versus the current MS Phase II?

Thank you so much. A very good question, Ralph?

Yes. Brian, thank you for the question. I think there's 2 parts to the question. One is what was the consistency in biomarker changes from our Phase II to our Phase III trial. And then second part would be how do we see this translate across ALS and MS. So I'll start with the first part. In our Phase II trial, we did a single treatment, and then we measured biomarkers before and two weeks after. In our Phase III trial, we had 3 treatments and we had 7 serial CSF biomarkers, which is really a unique dataset. Having said that, we saw very consistent changes in both studies in inflammatory biomarkers and also markers of neuronal injury and neuroprotective biomarkers. So that part was quite consistent across studies. We did see, when we looked at the Phase III study that the magnitude of the change, probably because there's -- 3 treatments was -- in some of the biomarkers was greater. And when we look at the comparison between ALS and MS, we see similar consistencies. So for example, we see reductions in inflammatory biomarkers, increases in neuroprotective biomarkers and then modifications of neurodegenerative biomarkers. So our net conclusions that we've drawn so far, and I can only go so far today because we do have some publications that are pending is that we truly believe that neuron is a platform technology in neurodegenerative diseases where inflammation plays an important role and that the changes in neuroprotective, neurodegenerative and inflammatory biomarkers are very consistent in several -- across studies within the disease, such as ALS and between diseases such as ALS and progressive MS. So we're very encouraged by this, and we plan to share more information as it becomes available.

Thank you so much, Ralph. Any other questions or we will conclude, operator?

There are no questions in queue.

So thank you very, very much, and I thank everyone for listening in, all of those listening on the phone and all of those listening through the web. And hopefully, we will have better news, stronger news in the next quarter. Thank you all.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation