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

Greetings, and welcome to the Brainstorm Cell Therapeutics First Quarter 2023 Earnings Call. [Operator Instructions] I would now like to introduce your host for today's call, Michael Wood of LifeSci Advisors. Mr. Wood, you may begin.

Good morning, and thank you for joining us. Earlier today, BrainStorm issued a press release with its financial results for the first quarter of 2023, including a corporate update. Before passing it over to the company management for prepared remarks, I want to remind listeners that this conference call will contain 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 dose neurodegenerative diseases such as ALS, efficiency of the company's existing capital resources for continuing operations in 2023 and beyond, the safety and clinical effectiveness of the NurOwn technology platform, clinical trials of NurOwn and related clinical development programs and the company's ability to develop strategic collaborations and partnerships to support its business planning efforts. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond BrainStorm control, including the risks and uncertainties described from time to time in the company's SEC filings. The company's results may differ materially from those projected on today's call, and the company undertakes no obligation to publicly update any forward-looking statements. Joining us on the call this morning will be Chaim Lebovits, President and CEO of BrainStorm, Dr. Stacy Lindborg, Co-Chief Executive Officer; and Alla Patlis, Interim Chief Financial Officer. In addition, the company's Executive VP and Chief Medical Officer, Dr. Kirk Taylor, is also on the call and will be available to answer your questions during the Q&A session. So with that, I would like to turn the call over to Mr. Lebowitz. Please go ahead.

Thank you, Michael. Good morning, and thank you to all who have joined us to discuss our Q1 2023 financial results and recent progress. The most important recent development for Brainstorm was that the FDA notified us that there will be an advisory committee to discuss our BLA. We'll announce the date as soon as we know it. We remain confident that holding an outcome will be the fastest and most appropriate way to fulfill our regulatory obligations and commitment to patients. It will ensure a full and publicly accessible discussion that includes FDA reviewers, companies experts, investigators who conducted the clinical program and input from all relevant stakeholders in the ALS community based on their respective expertise, experience and point of view. BrainStorm firmly believes our data support regulatory approval of NurOwn. A thorough analysis of NurOwn Phase III data show evidence of clinically meaningful effectiveness, and we are further encouraged by the strong and consistent biomarker data, which are predictive. Sorry, we had a glitch, which are predictive of clinical response to trials pan pathways that are important to ALS. Neuroinflammation , Neurodegeneration, Neuroprotection and along with NurOwn's mechanism of actions. I'll now turn the call over to Dr. Stacey Lindborg for a more detailed review of the NurOwn data set and a highlight of our actions to support the BLA. This morning, we are fortunate to be sitting in the same room, myself or Dr. Lindborg and with Dr. Kirk Taylor. Thank you. Stacy, it's yours.

Thank you, Chaim. As Chaim just highlighted, one of the reasons an ADCOM remains a critical step towards our goal of fulfilling our commitment to ALS patients relates to the complex scientific issues that need to be discussed and addressed. We have assembled a robust data set that will benefit from a deep and thoughtful discussion. The process for approval of any BLA will be determined primarily by the body of evidence generated. And on this front, we firmly believe that NurOwn's data package is strong enough to support regulatory approval. We are grateful to the FDA for the opportunity to review the full body of clinical evidence with all key stakeholders in the open and transparent setting provided by an ADCOM. Since we first announced the top line data from NurOwn Phase III trial, we have conducted a number of additional focused analyses. These analyses provide valuable insights into the trial outcomes and have helped us better understand NurOwn's treatment effect. As disclosed previously, the Phase III trial did not reach statistical significance on the primary and secondary endpoints. However, in a prespecified group of participants with less advanced disease at baseline, there was a clinically meaningful treatment response on the primary and secondary endpoints with NurOwn compared to placebo. On the secondary endpoint, which was favored by the FDA, the average change from baseline to week 28 and the ALS Functional Rating Scale. The treatment difference was statistically significant at the level of p=0.05. These findings are important as looking at this prespecified subgroup enabled us to focus on data that is not as impacted by the floor effect in the scale. Furthermore, Post-tox sensitivity analysis of participants across baseline thresholds of 27 to 35 on the same secondary endpoint showed that NurOwn treated participants retain on average 2 points of function more compared to those who were on placebo. This is a clinically meaningful result, which represents important preservation of function and quality of life for people living with ALS as well as their loved ones. Additional post-tox analyses, which account for the floor effect in different ways have been presented at scientific meetings, and each have demonstrated similar findings and an important treatment effect with NurOwn across study endpoints. All of these -- one of these analyses presented this year, in fact, very recently at the Muscular Dystrophy Association Clinical and Scientific Conference focused on participants with no evidence of a floor effect at baseline. The defining feature of this analysis was the ability for the scale to measure ongoing decline in all scale items at baseline rather than focusing on participants baseline values. This analysis hits at the heart of the problem based on the trial, which is a scale measurement issue. And the results from this analysis first, they included more than half of the participants in the trial, and these participants had baseline scores ranging from 25 up through 46. On the primary endpoint, the clinical response analysis, we observed a difference of 18% between treatments with a 41% response rate with NurOwn and a 23% response rate and a p-value of 0.35. On the secondary endpoint, average change from baseline to week 28, NurOwn treated participants retained on average 2.3 points of function compared to placebo. Again, with a significant p-value of 0.04. The last piece of evidence that I'll comment on relates to our strong and consistent biomarker data generated in our Phase III trial. NurOwn's clinical program has the distinction of being the largest CSF biomarker study ever conducted in ALS. We identified biomarkers relevant to ALS pathology and rigorously analyze them. resulting in 3 important observations. Number one, treatment with NurOwn impacts 3 pathways important to ALS. Across these pathways, NurOwn treated participants have significant increases in markers of neuroprotection and decreases in markers of neuroinflammation and neurodegeneration over time compared to placebo. This means we achieved target engagement and confirm the mechanism of action of NurOwn in Phase III. Number two, we observed biological activity with NurOwn across these pathways, important to ALS in all NurOwn participants, including those with advanced ALS, where the ALS functional rating scale demonstrated measurement challenges. Number three, statistical modeling identified CSF biomarkers predictive of clinical outcomes observed in the Phase III trial following treatment with NurOwn using baseline and data following treatment with baseline with NurOwn. This was not true for placebo. So in summary, we can objectively show that the ALS functional rating scale was unable to measure ongoing decline in participants with the most advanced ALS who were enrolled in the trial, a unique sample of trial participants relative to other approved products. Based on the data I've just walked you through, we have clinical and biomarker data that demonstrate evidence of significantly better outcomes in participants treated with NurOwn and we have amassed efficacy and safety data that we believe supports a positive benefit of risk evaluation of NurOwn. Lastly, we continue in our efforts to engage with neurologists, other important scientists and with the patient advocacy community as we continue through the regulatory process. During the first quarter, I had the opportunity to present our NurOwn at the MDA Clinical & Scientific Meeting and at the Annual California and Annual ALS Research Summit. We also continue to receive requests from organizations dedicated to ALS requesting we present our data as they prepare to participate in our upcoming advisory committee meeting. I share these examples so that you know that we are doing everything we can to engage with different parts of the ALS ecosystem. Now I'll turn the call back to Tim for some additional comments.

Thank you, Stacy. Based on our confidence in NurOwn'S clinical data and ALS, and the urgency at which broad access to new ALS therapy is needed. We recently began a targeted capability build to expand our medical, regulatory and advocacy teams in preparation for anticipated growth. We want to be able to move quickly through the coming months is that if we are successful in achieving approval for NurOwn, the wait for patients and families to gain access will be as short as possible. On May 1, we appointed Dr. Kirk Taylor as Executive Vice President and Chief Medical Officer. Kirk has more than 26 years of experience in global drug development programs from Phase I through post-approval studies and across multiple therapeutic areas, including neurology and rare diseases. Joining BrainStorm from EMD Serono, whereas Senior VP, North American Medical Affairs he led the efforts of the medical team there and played an instrumental role in the launch of 3 new treatments. At BrainStorm, Kirk will lead the global medical affairs function and launch activities, including planned product launches, post-approval commercialization efforts and deepening relationships with the medical community. We're very pleased to have someone with Kirk's capabilities and experience joining the team. I want to take this opportunity to formally welcome him to BrainStorm. He's joining us here on the call today for the Q&A session. There are also 2 additional hires I want to highlight. The first is the recent appointment of Antonio Trejo as VP, Regulatory Affairs and Robin Wallace, as Vice President, Global Clinical Operations. Each of them bring approximately 25 years of relevant experience. Antonio is recognized specifically for global regulatory expertise in specialty products, including in the areas of CNS, Oncology and rare diseases as the regulatory agencies in the U.S. Canada, Japan and Israel, in addition to continue to countries across Latin America. Robin has a demonstrated track record of clinic operations leadership across biologic and device programs, both at large companies, including Novartis, Merck and Amgen as well as smaller biotech companies. I'm excited to expand our team with these talented individuals and know they share our excitement around NurOwn's prospects. We believe having them in their new roles will prepare BrainStorm for the exciting future ahead. Finally, there's one other topic I want to cover briefly and that is the granting by FDA of accelerated approval of Tofersen for the treatment of ALS in April. This is the second new drug to be approved for ALS in the space of 7 months, the other being Amylyx RELYVRIO in 2022. We're obviously watching these developments with great interest and applaud the efforts of both sponsoring companies to bring new treatments to the ALS community. We are heartened by the regulatory flexibility that the FDA has shown by approving both of these new products for the treatment of ALS. I'll now turn the call to Alla to discuss our financials. Alla?

Thank you, Chaim. It is my pleasure now to walk you through our first quarter financial results. Brainstorm cash, cash equivalents and short-term bank deposits were approximately $2.2 million as of March 31, 2023. This compares to $3 million on December 31, 2022. Our research and development expenditures for the 3 months ended March 31, 2023 and 2022 or approximately $2.9 million and $2.6 million, respectively. General and administrative expenses for the 3 months ended March 1, 2023 and 2022 respectively, was $2.2 million and $2.9 million. Net loss for the 3 months ended March 31, 2023, was $5.1 million or $0.14 per share as compared to a net loss of approximately $5.4 million or $0.15 per share for the 3 months ended March 31, 2022. I'll turn it back to Chaim to close the call.

Thank you, Alla. Michael, please, if you can read the Q&A. And after you read the questions, and we will give answers. We will then open -- the operator, Jenny will then open the call for anyone on the line having additional questions. Thank you. Michael?

Yes. First question is do you have a firm date for the upcoming advisory committee.

No, we don't yet have a firm date. And once we will have we will share that with you.

Next question is regarding the Phase III study. why did brainstorm designed the Phase III to allow participants with advanced ALS and that's the inability to measure their progress during the study.

Stacy.

Yes. We've reflected on this question internally in addition with our esteemed clinicians who are PIs for the trial. The Phase III study design was being conceived in 2016 and was submitted to the FDA as part of our R&D in 2017. And the reality is the floor effect level associated with the ALS functional rating scale was not understood well by the industry at that time. In fact, even in the early days, following the database [ log ] when we were first understanding that the scale was not able to measure the decline in participants with the most advanced disease. When we looked in the literature to document this phenomena specifically with the ALS functional rating scale, we hardly could find any articles addressing it explicitly. We found articles that referenced an insensitivity at the lower end of the scale. But no one had ever had a large enough sample of participants with advanced ALS such that the floor confounded treatment estimates. So the level wasn't established. We know this is no longer the case. In fact, every trial being designed today is taking this into account and even ongoing trials are amending their analysis plans to include analysis to minimize the floor effect. In R&D, as a biotech industry, we know it's not for the faint of heart, and it requires the ability to constantly learn. It's not unusual to learn something new in a trial and the steps you need to go through when you do are well understood. First, you need to carry out all analyses as originally described and share them openly. Second, you define what was observed in the trial that was not anticipated. And third, you produce analyses that appropriately addressed for what was observed. We've done each of these steps. And I guess, in some sense, our learning the fact that our learning can very objectively be measured and displayed as a blessing. At the end of the day, what we are facing is a scale measurement problem which we can address and bring forward evidence of a positive benefit risk evaluation of NurOwn that we believe wants approval.

Thank you so much. Michael?

Next question, does Brainstorm believe that it must have a biomarker analysis published in order to be successful at the ADCOM? And then as a related question, you've been talking about the new biomarker manuscript for a long time now. What have been the challenges are going this published.

Thank you. Stacy?

Do we believe it needs to be published to be successful in ADCOM. No wee don't believe this is necessary. But we do think that the more data we publish the more informed the community will be. From a status perspective, the manuscript is in the hands of all the authors as we speak for a final review and then it will be submitted. What I can tell you is that it's a rigorous paper through which we've generated valuable insights into the pathology of ALS, that will aid in the development of future therapies, and we're optimistic it will be published in advance of ADCOM , but obviously, this is out of our control.

Next question, are you willing to partner with a large-cap biopharmaceutical company to accelerate clinical trials for ALS and for other indications?

Well, we're always willing to entertain partnerships that are in the best interest of the company and further our ability to accelerate development of treatments for patients and needs. Sure.

And one more question. This is actually for Dr. Kirk Taylor. This investor said he was pleased to read the press release announcing Kirk's hiring as Chief Medical Officer. Kirk, can you share some perspective on exactly what motivated you to join BrainStorm?

Thank you, Michael. Appreciate it. Yes, the unmet medical need and the possibility of bringing a new treatment to the ALS community were key motivators for me to join BrainStorm. Also, I'm honored to join the world-class team of researchers and biotech professionals that Chaim and Stacy have assembled on to great things. Thank you.

That concludes the inbound questions.

Thank you so much, Michael. Jenny, would you open the call for questions and also advise participants on the call, how they can ask.

[Operator Instructions] Your first question is coming from David Bautz of Zacks Small Cap. David.

Good morning, everybody. Quickly on the ADCOM and the potential date, how much lead time does the FDA usually give between announcing when the meeting is going to be and when it actually occurs.

David, It's a very good question. And I like this opportunity to dive in a little bit more to this. Many are asking this from us offline, not actually for this call only. So the FDA has a right to give this ADCOM between -- until it has to be before the PDUFA date, obviously. And we don't know yet to this be priority review or not a priority review. We do understand that when you -- the process we went through, that it may be somewhere in the middle. I can tell you that the FDA is actively working on an outcome date. They are discussing with us dates. So it's happening. It's just we are waiting to have the final confirmative date. And once we have that, we'll announce that. So I can tell you it's going to be in the next few months, it's quite clear.

Okay. Now at the ADCOM, there's always an open public hearing where essentially anyone can come and I guess we say testify. Does the company have any control over who gets to speak at that portion of the meeting?

Well, usually, no. everyone has the right to register for that meeting and speak. I'm sure you're familiar with it, David.

Okay. And lastly, what is the company's strategy for advancing our own and other jurisdictions and do you think that another clinical trial is going to be necessary to get approval outside the U.S.

Well, we look all the time at other jurisdictions. We now have an add-on and the team, as you heard with Antonio and he's also really working on that as well, has a lot of experience. But to be very clear, we're very focused now on the advisory committee meeting here. We're going to come as strong as we can, and we anticipate getting an approval here albeit with a confirmatory trial probably, but we'll be able to discuss that in a later time. David.

Your next question is coming from Dan McMichael, who is a private investor.

Can you address your finances with only $2.2 million of cash left at the end of March, you should be out of money by about now?

Well, we're not. Just if you can look at the end of December, we also had a similar number. We were able to bring in through some block deals -- institutional investors. They give us support. We just don't want to use the ATM at these prices. We are waiting for an opportunity where we will use the ATM. We have a $100 million facility with [indiscernible]. And we're just waiting opportunistically how to use that for the time being...

At the moment you're using debt?

No, we didn't use debt. We had institutional blocks coming in and we did it through the ATM do block share. Yes We have 0 debt, no convertibles, no debt on our books.

[Operator Instructions] Okay. We don't appear to have any more questions. I hand back over to...

Maybe wait one more second, Jenny.

Yes. we have a question in from Richard Robbins, who's a private investor. Richard.

I realize that the focus is on the upcoming AdCom, but in your press release this morning, you indicated that you're working on next-generation drugs. Could you please expand on that?

Definitely. So our research and development team are working on different products and in different diseases. As you all know, we have a pipeline even for NurOwn outside of ALS, for MS, Parkinson's, Huntington's and other diseases. At the same time, we have an access on product, which are working for other diseases as well. We will announce once we have that. But of course, we have a huge R&D team working on that.

[Operator Instructions] We don't have anybody else in the queue, Chaim.

No problem. Thank you very much, Jenny, for this call. Thanks, everyone, for being with us this morning. We are geared and fired up for the outcome, and we'll see you on the next Q. Hopefully, with very good news for you guys. Thank you very much.

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