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

Greetings, and welcome to the Brainstorm Cell Therapeutics Midyear 2024 Conference Call. [Operator Instructions] As a reminder, this call is being recorded. And I would now like to introduce your host for today's call, Joyce Lonergan of LifeSci Advisors. Ms. Lonergan, you may begin.

Thank you, Holly. Good morning, and thank you for joining us today. Before passing the call off to the company management for prepared remarks, I would like to remind listeners that this conference call will contain numerous statements, descriptions, forecasts and projections regarding Brainstorm Cell Therapeutics and its potential for future business operations and performance. Statements regarding the market potential for the treatment of neurodegenerative disorders such as ALS, the sufficiency of the company's existing capital resources for continuing operations in 2024 and beyond, the safety and clinical efficacy 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 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 us on the call today will be Chaim Lebovits, President and CEO of Brainstorm; Dr. Hartoun Hartounian, Chief Operating Officer; Dr. Bob Dagher, Chief Medical Officer, is also on the line and will be available for Q&A. I would now like to turn the call over to Mr. Lebovits. Please go ahead.

Thank you, Joyce. Thank you to all of you who have joined us this morning. I'd like to update you on a number of positive recent developments for Brainstorm and our NurOwn development program. Our priority is to initiate the Phase IIIb trial in ALS. On June 24, we had a face-to-face Type C meeting with the FDA to discuss the chemistry, manufacturing and controls aspects of the Phase III trial. I am pleased to say that this was a constructive meeting and that we are now aligned with the agency on resolving previously outstanding CMC questions raised. The FDA continues to be supportive, and we are grateful for their input and advice. As you may know, CMC is always part of an FDA review process. However, it requires special consideration for any cell therapy products, including NurOwn. These products have additional complexities. And in the manufacturing process, it's important that the FDA is involved at various steps during the regulatory process, including prior to initiating the trial. This in-person Type C meeting follows the SPA agreement granted by the FDA, which we announced in April. The SPA outlines important details of the planned Phase IIIb trial, including its overall objectives, design, endpoints, statistical analysis and other supportive clinical trial documents. Assuming the trial meets expectations, the agreement ensures that the data will be accepted by the FDA as a central part of a BLA for NurOwn. We have recently signed a contract with a leading clinical research organization, or CRO, to support the initiation and execution of the Phase IIIb trial. This CRO is internationally recognized for its expertise in ALS and in managing complex clinical trials, including in the field of cell therapy. They will provide us with a comprehensive and full range of services to fully execute in all aspects of the trial with the highest quality and speed. They have lined up a number of clinical sites for the study and are working on all project plans, systems and contact in order to proceed with dosing our first patient hopefully before the end of the year. We also announced last week that we entered into a transaction with a single institutional investor for the sale of common stock and warrants, raising gross proceeds of $4 million. We are mindful of our balance sheet and want to make sure the company is funded appropriately. This amount will not, of course, be sufficient to fund the entire Phase IIIb study, but it's expected to take us through important near-term milestones. We continue to explore other financing options, including non-dilutive grants as we have done in the past. The other important recent development was our appointment of Dr. Hartounian as our Chief Operating Officer. Haro brings a distinguished track record with over 32 years of experience in the biopharmaceutical industry with a particular focus on cell and gene therapy. Haro has been successful at achieving goals at large biopharmaceutical companies, contract development and manufacturing organizations, as well as startup biotechnology companies. His career highlights include founding a biocentric, a state-of-the-art cell gene therapy CDMO facility and he led that company through a successful acquisition in 2022. In his new role, Dr. Hartounian will oversee all operational aspects of Brainstorm, including CMC and commercialization. We are honored to have him join the company at this moment and he will have the opportunity to say a few introductory words on the call today. In summary, we are excited to move forward with our much-anticipated Phase IIIb trial. Our preparation has been thorough. We believe that these necessary steps I've described will ensure that the trial conducted to the highest scientific and regulatory standards. As always, we are deeply committed to the ALS patient community and will continue to work closely with patients, clinicians and advocacy groups to bring this much needed therapy to those in need. I'll now turn over the call to Dr. Hartounian for additional comments. Haro?

Thank you, Chaim. I'm honored to join Brainstorm at this important time for the company. I see NurOwn as a potential groundbreaking new treatment and I share commitment with Chaim, Dr. Dagher and other members of the team who help patients with ALS and other neurodegenerative diseases. I bring a considerable amount of relevant experience to Brainstorm, spanning CNS and specifically, cell and gene therapy product and process development and manufacturing. At my prior companies, I have led process development, manufacturing and operations teams. I have also managed R&D and established successful corporate partnerships. I played a leadership role in guiding the progression of 2 FDA-approved products from bench to market. Throughout my career, I have been driven by the goals of advancing medical science as well as creating value for various stakeholders. I'm impressed by the high standards of technical excellence at Brainstorm. I look forward to working closely with our talented team to execute the Phase III trial and prepare the company for success. I will turn the call back to Mr. Chaim Lebovits.

Thank you, Haro. We'll open the call for the questions. Joyce?

The first question is why was the 10-Q call delayed?

Thank you. We strategically postponed the call to provide a more comprehensive update on our financing in the upcoming Phase IIIb trial for NurOwn for ALS. We wanted to ensure we had the latest developments to share with investors. Next question please.

When will the Phase IIIb trial for NurOwn for ALS begin?

Bob, do you want to take that?

Yes. Thank you for the question. We are excited to announce that we are moving forward with the trial initiation in the next few months. The successful FDA SPA agreement was granted in April and the in-person meeting with the FDA, the Type C meeting that we had in the last week of June, have been instrumental in aligning us on the trial design and the CMC requirements. These strong foundations will translate now to an agreed-upon trial design and efficacy endpoints and combined with a more robust product, now we'll have a potential BLA filing down the line.

Next question is, can you elaborate on the current stage of the trial preparation?

It goes to you, too, Bob.

Sure, yes, happy to take that as well. We are currently finalizing the details with our new CRO to enroll the trial sites. Simultaneously, we will be signing with the commercial manufacturer while conducting the technology transfer to the manufacturing sites. Previously, we were awaiting the Type C meeting to proceed with manufacturing activities and finalize the agreement.

Next question is, how will the recent fundraising impact the trial?

Thank you, Joyce. I'll take that one. As you may be aware that we announced last week that we raised the $4 million in gross proceeds through the sale of common stock and warrants. We acknowledge, as previously said, that we'll need to further raise funds to finance the 200-patient double-blinded trial. While this financing is a significant step forward, the current market cap may not fully reflect the potential of the Phase IIIb ready company in the market. Therefore, we strategically raised enough funds to initiate the trial and achieved key milestones while we continue to explore additional funding options, including non-dilutive grants as we have successfully done in the past. Our strong belief is that initiating the trial and achieving positive results will lead to a reevaluation of our company's value allowing for future financing opportunities on more favorable terms.

The next question is you mentioned the importance of shareholder value, can you elaborate on your strategy to avoid a reverse stock split in the future?

Sure. Thank you very much. Absolutely. Creating long-term shareholder value is a core focus for Brainstorm. The recent financing provided us with the resources to initiate the NurOwn Phase IIIb trial and achieve key milestones such as signing on the trial centers, finalizing the manufacturing agreement. We believe that meeting these important milestones will significantly add value to the company by demonstrating our progress towards commercialization. We're also exploring additional funding options, including the non-dilutive grants, to potentially fully finance the trial. We believe that positive data from the trial should significantly enhance our company's value, opening up opportunities for future financing on more favorable terms. This, in turn, would mitigate the need for a reverse stock split and ensure long-term shareholder value.

The next question is, what's the significance of having a commercial manufacturing site on board before filing a BLA?

Thank you. Haro, would you take that?

Yes. Thank you so much for the question. Securing commercial manufacturing partners early offers several advantages: Number one, BLA filing readiness. By having a commercial manufacturing site up and running, we can be prepared to file a BLA much faster if the trial results are positive. The FDA will need to inspect the manufacturing facility as part of the BLA approval process and having a qualified site on board streamlines this process significantly. Number two, to reduce time to market. If the trial is successful and the BLA is approved, a preestablished manufacturing capability allows us to launch the product quicker, bringing NurOwn patients sooner.

The final written question is with the very positive biomarker data from Phase III and the early access program, why have you not refiled the BLA that was pulled without prejudice? Will you be refiling it?

Thank you for the question about the BLA filing for NurOwn. It's an opportunity to respond to many asking us about this. After unblinding our Phase III trial and the data readout, we recognized that the data from the Phase III trial and the early access program, while promising, had limitations. On the other hand, we were aware of the FDA's flexibility guidance for ALS and the recent approvals for other ALS treatments with limited data. Additionally, we saw firsthand, and we continue to see firsthand the urgent need for treatment as expressed by patients and ALS advocates. Given these factors, we filed the BLA for NurOwn, while also committing to a Phase IV confirmatory trial. However, after the Advisory Committee Meeting and very careful consideration in consultation with many of the key opinion leaders and advocates who are very supportive of our decision to file the BLA, we concluded that appealing or refiling with the same data would not result in a near-term approval. We understand and recognize the need for a comprehensive data set that aligns with evolving expectations for ALS treatment approvals. Therefore, we made a strategic decision to conduct an additional Phase IIIb trial. This new trial aims to gather more robust data to definitively demonstrate NurOwn's effectiveness for ALS patients. The FDA's engagement with NurOwn's development has become increasingly productive. This is demonstrated by their actions such as the expedited SPA agreement for the new trial design and our recent productive in-person CMC meeting. These ongoing interactions demonstrate the FDA's commitment to finding a treatment for ALS, and we are confident, this new trial, if successful, will provide the data needed for a future BLA submission aligned with their requirements. While this additional trial means a longer time line for potential approval, it aligns with the FDA's evolving expectations and ultimately offers the most promising and fastest path forward in our opinion. This will lead to a stronger BLA filing and a faster path to bringing NurOwn to market for newly diagnosed and future ALS patients. We are transparent about the challenges and remain committed to developing NurOwn as a potential treatment for this devastating disease. Thank you. Holly, I will now ask you to allow if participants want to ask some questions. We'll take a few questions. Holly, please.

[Operator Instructions] Your first question for today is from Jason McCarthy with Maxim Group.

I'm glad you brought up that biomarker question at the end there, it's kind of a segue to my own. And maybe Dr. Hartounian can help out with this question. During the Ad Comm, something came up or there were comments on the levels of neurotrophic factors that were being secreted by the NurOwn cells. Did that come up during your meeting with the FDA in terms of any required potency for the cells? And also Dr. Hartounian, if you can comment on the rationale that cell therapy is far more complex than just neurotrophic factors being secreted. They're important, but there's a lot of other things that are happening that could be driving some of the positive aspects of NurOwn that we've seen in prior trials?

Thank you, Jason. Haro, please.

I tend to agree with you that cell therapy is a very complex and manufacturing specifically requires lots of challenges that we have to address. I think our manufacturing process is well defined. Our goal is to make sure that we have a facility that can manufacture a product, has commercial capabilities and have done this before. As far as your question about biomarkers, I think it's -- I would ask Dr. Dagher to address that question.

Bob here. Thanks, Haro. Thanks, Jason for the question. So yes, we discussed with the FDA at the Type C meeting these details, including the potency and the amounts of secrete neurotrophic factors and other constituents that we basically believe the technology we have is impacting the environment in the CSF and into the brain and spinal cord cells. In terms of release criteria, Haro mentioned, we have a process in place now, and we agreed with the FDA on the specifications needed for those criteria to release product during the clinical trial and moving into commercializations will be ready for that. I hope that answers your question.

Yes. I can add something that also the release of the product that's looking at the identity, sterility and potency as well as other biomarkers that we measure. So we have a solid plan in place and I think we can move forward with what Chaim said about our Phase IIIb clinical trials and establish own manufacturing, commercial manufacturing, I think we will be very successful.

As part of the Phase IIIb, will there be any inclusion or exclusion criteria for patients based on how quickly they seem to be progressing during the screening period that 6 to 9 weeks or it was 3 months in prior trials, is that going to be a part of this study as well?

Sure. Thank you. Bob, do you want to answer that?

Sure, yes. Happy to do that as well. So no, Jason, there will be a difference from the previous Phase III trial where there was a period up to 5 months to allow for that measurement of speed of progression. And this Phase IIIb trial, we will be shortening that screening period significantly. And for many reasons, one of them being that there will be a challenge to basically figure out exactly how to eliminate or how to position the trial for success with the most qualified patients that would respond to NurOwn. From the data to date, we understand that the patient's requirement to do that will be earlier in the stage of the disease. So we wanted to make sure that we put this potency criteria to allow us to capture patients at the early stage when the disease is mild and not too far progressed. And that -- in order to do that, we did not need to extend the screening period and measure the slope of progression.

So you'll be able to avoid, I remember in the prior trial, you had ALSFRS score at 25. Is that...

So Jason, 100%, I want to allow the doctors to speak first. As you can imagine, we are now making sure that we are focusing for the subgroup that we have seen the statistical significant result in the previous trial. So we are trying to focus on that subgroup. There are different ways within the criteria on how we set that up to make sure to get the earlier patients and not end up with more advanced patients, as you mentioned. So thank you very much for your questions this morning. Holly?

Your next question is from David Bautz with Zacks Small-Cap Research.

So I'm going to follow-up on Jason's question there, just to kind of dig a little deeper into the entry criteria. Can you quantify what that is? Is it a minimum ALSFRS score, is it a minimum time from when they were diagnosed? And then what happens to the patients that may be changed during that screening period?

Bob?

Happy to take that. Thanks, David, for the question. So we did put out a poster with the entry criteria a few months back in April. To summarize, we will be looking at patients coming in within 2 years of their first symptom onset with preserved respiratory functions, particularly with the slow vital capacity above 65%. We'll be looking to measure every item on the ALSFRS 12-item scale at screening and ensure that every item did not reach a 0 or 1, want everybody to have 2, 3 or 4, and we will shorten, as I mentioned earlier, the screening period to about 8 weeks. So by the time we had 1 week from screening to do bone marrow expiration and start producing neuron, by the time baseline comes which is very important, we have modeled the simulation of this type of data using the PRO-ACT large database, and we are confident that the baseline total ALSFRS score will be higher, much higher than 25. So we are confident that we will be capturing that exact mild to moderate early population.

Okay. And in the case of patients who do say change during that screening period, is there -- are they going to still be included? I guess, how are you going to deal with those patients?

Sure. Yes. As I mentioned earlier, basically, we will not import a slope measurement. But as we know, there is heterogeneity in the disease and everybody coming in at screening, we appreciate from simulations, it's going to be around 40 to 45, perhaps let's say, around 40 as the total score. The 8 weeks or the 2 months time progression will allow them to drop, but far above the 25 cut off as you asked earlier. So we feel that everybody will be in a trial, will be adequately screened and all eligible patients will enter the trial, and we don't feel that we will have too fast progress, they'll progress in many, many points in a 2-month period. So we're very confident about which population will end up starting at baseline. And everybody screened on bone narrow will be in the trial.

Okay. Great. I appreciate the extra detail there. And then lastly, I know this is hard to project, but how quickly are you anticipating the trial enrolling? Basically, do you have a bolus of patients out there who are ready to go essentially?

I was going to answer quickly that basically, we are very confident of fast enrollment. We also are increasing the number of sites. We use 6 sites in the Phase III trial with the same number of patients. Now we're growing higher. We already have been in conversations with many, many sites and patients have informed us as well. Basically, they are waiting for the trial to start in order to get going. So we're confident about the enrollment being fast.

Okay, one more last question and is there's any other questions, Holly?

Your next question is from Daniel Walker, a private investor.

Yes. Dr. Hartounian, I was just curious, you've been doing cell and gene manufacturing for some time. You obviously are an expert in this field. Can you talk a little bit about what maybe differentiates NurOwn and maybe perhaps what excites you about NurOwn so much?

Thank you. Great question. I've been doing cell therapy manufacturing and processing for almost 20 years. And what excites me about NurOwn manufacturing is really the novel way of producing, taking the MSCs from the patient's bone marrow and growing them. And then the next step, differentiating them to cells that can produce material that can help the patients. So it's a very novel unique way of manufacturing. It's novel. And I believe that we have all the tools and the team that we have, we can actually have a successful manufacturing process and commercial manufacturing and launching the product.

Great. And then Dr. Dagher, can you just talk a little bit about post-Ad Comm? I mean, obviously, the Phase III biomarker data has not been released yet, has not been published in Muscle & Nerve along with the EAP data had not been released yet. There's also been a number of folks that have been...

I don't understand what you're saying. The Phase IIIb biomarker trials was published in Muscle & Nerve.

Yes, correct. That's right. And I was just curious from...

Is that what you said?

Yes, correct. Yes. And I was just curious from Dr. Dagher, how that maybe gives him further confidence the biomarker data along with the EAP data, how that gives him further confidence about NurOwn?

Sure. Thanks, Daniel for the question. We have to understand that when you work with the neurodegenerative disease and the heterogenous population like in ALS, there are a lot of paths that biology takes and multiple factors are involved in the disease and the cohort is unique for each patient. So when you dig deeper at the data and try to understand a cell therapy complex such as NurOwn and its place in the treatment paradigm, we all understand that there is a need to act early to attack the inflammatory process, as well as to halt and block the dual degeneration NurOwn of that. In order to do that, you have in diseases like we understand, in Alzheimer's, particularly you have to act very early, in Parkinson's, multiple sclerosis diseases. We now do have data when you interrogate it deeply to give us confidence that this technology works best early in the disease course where you get a population that started to experience the inflammatory bouts and then some neuronal deaths had generated first symptoms or the early symptoms that the patients experienced. And when you capture that and try to refine as possible entry criteria, we feel that the measurement tool that we have, which is the primary end point based on the ALSFRS-R, we'll be able to basically detect these functional changes that happen in that disease population, unlike when you reach very advanced level of below 25, let's say, and then many of the items on the score are already too advanced to further detect any further declines. Here, we will be positioned properly to hopefully give the trial that shot at success. I hope this answered your question.

Thank you very much. Holly, I think that brings the call to a conclusion.

There are no further questions in queue. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.