Brainstorm Cell Therapeutics Inc.

Greetings. Welcome to Brainstorm Cell Therapeutics first quarter 2021 earnings call. At this time, all participants will be in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Michael Wood with LifeSci Advisors. Mr. Wood, you may begin.

Good morning, and thank you, everyone, for joining us. Before we begin the opening remarks, I'd 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 neurodegenerative diseases such as ALS and MS, the sufficiency of the company's existing capital resources for continuing operations in 2021 and beyond, safety and clinical effectiveness of the Neuron technology platform, clinical trials of Neuron and related clinical development programs, and the company's ability to develop strategic collaborations and partnerships to support the 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 the company's SEC filings. The company's results may differ materially from those projected on today's call, and Brainstorm undertakes no obligation to publicly update any forward-looking statements. Joining me on the call this morning will be Chaim Liebowitz, President and CEO of Brainstorm, Dr. Stacey Lindborg, Executive VP and Head of Global Clinical Research, Dr. Ralph Kern, President and Chief Medical Officer, Dr. Preetam Shah, Executive VP and Chief Financial Officer, and in addition, Dr. David Setbourn, Executive VP and Chief Operating Officer, will also be on the call and will be available to answer questions during the Q&A session. So now I'd like to turn the call over to Mr. Leibowitz. Please go ahead.

Thank you, Mike. Thanks to all listening and for joining us to discuss our first quarter financial results and corporate highlights. Sorry. On the call today, we will be discussing the current status of our ALS program, the very exciting and recently announced top-line data from our Phase II progressive MS trial our strategic plans for these programs, as well as our quarterly financial results. Starting with our ALS program, I'd first like to say that we remain confident in the strength of our data, the potential of Neuron as a treatment for ALS, and its broad potential as a technology platform in neurodegenerative disease. In parallel to regulatory interactions, we have been in active consultation with various experts, including principal investigators ALS physicians, statisticians, regulatory advisors, as well as the patient advocacy groups in the United States, as well as in other jurisdictions. Dr. Stacey Lindberg, our VP and Head of Global Clinical Research, will provide insight into how we are going about these interactions and gaining feedback on our programs. However, I want to stress that we plan to take all feedback into consideration as we assess the most efficient way to enable ALS patients access to Neuron, including a potential BLA submission and or other regulatory and business options. We are diligently working to define Neuron's path forward and are gaining scientific support. We can assure you this is a top priority. For us, and we intend to update the patient and investor communities as quickly as possible, but we must let additional developments play out before providing a more comprehensive update. Dr. Ralph Kern, our president and chief medical officer, will discuss our progressive MS program in a few minutes, but let me give you some of the highlights. In March, we announced positive top-line data from our open-label Phase II trial. These data showed that the study met its primary endpoint, with neuron being found to be safe and well-tolerated. We also observed consistent improvements in key secondary endpoints, spanning neurologic function, cognition, and biomarkers. Collectively, these promising results further support the utility of the neuron technology platform in neurodegenerative disease and provide additional proof of concept for intracerebral neuron therapy in progressive MS. We are now in consultation with our principal investigator to align our next steps for this program, including design of a face-to-be trial and regulatory pathway. We're also in discussions with potential strategic partners. As part of these efforts, we are also preparing scientific presentations and a peer-reviewed manuscript on our data, which will allow us to gain valuable feedback from the MS community as we work to determine the next steps in our clinical development strategy. Once this strategy is solidified, we'll be sure to provide an update to both investors and the broader MS community. Now, before I hand this off to Stacey, I want to take a moment to acknowledge that all the progress that we will discuss here today has only been possible with the dedication of our patients and caregivers, together with our employees, business partners, and clinical investigators. I'm extremely grateful to all of these individuals for the critical roles they have played in successfully advancing neurons' clinical development. With that, I'll now hand this call over to Stacey, our Executive Vice President, to discuss the status of our ALS program. Stacey.

Thanks, Haim. As Haim just previewed a few minutes ago, we remain confident in the potential of Neuron in ALS and are currently consulting with a wide range of people, including principal investigators, ALS experts, statisticians, regulatory advisors, and patient advocacy groups. These discussions have provided important feedback which has been very positive. They've also allowed us to gain new insight from our data, as well as a lot of support and encouragement from the groups that we've discussed our clinical trial data with. We now have a very mature draft of our manuscript of the study prepared, and we expect to submit for publication shortly. Throughout the writing process, we've had an excellent partnership with the study principal investigators who are all authors. Timely publication of the manuscript will be important as it will allow us to share our data with and collect additional feedback from the broader ALS community. Given that we are still collecting feedback from experts and that our regulatory interactions need to remain confidential at this time, it would be premature for us to share more specific next steps in ALS today. However, we are very pleased with the progress we have been making behind the scenes and look forward to providing an update. I'll now hand the call over to Ralph to speak about our MS program.

Thank you, Stacey. As Chaim mentioned, we recently announced positive top-line data from our open-label Phase II trial in progressive MS. We pursued this trial based on the growing confidence in our proprietary cellular technology platform, the well-defined unmet need in progressive MS, and our belief that repeated intrathecal administration of neuron has the potential to simultaneously address neuroinflammation and neurodegeneration and improve functional outcomes in progressive MS patients. The clinical trial was conducted at four leading MS centers of excellence in the United States and enrolled 20 progressive MS patients who had stable disease. In other words, they had not relapsed or required rescue medications within the six months prior to study enrollment. Participants in this trial received three repeated intrathecal administrations of Neuron, each given two months apart, and were followed for 28 weeks after their first treatment. This was a Phase II clinical trial, and the primary objective was to assess the safety and tolerability of treatment. Importantly, we included multiple secondary endpoints designed to evaluate the preliminary efficacy of Neuron in progressive MS. These included several well-validated clinical endpoints of disability and function, cerebrospinal fluid and serum biomarker analyses, and a validated patient-reported outcome to confirm improvements in walking function. To ensure a robust analysis of our data, we set pre-specified response criteria for clinical improvements in key clinical efficacy endpoints using benchmarks that are well accepted by the MS scientific community. Additionally, we were careful to enroll a patient population that was very similar to other progressive MS studies in terms of demographics, disability, and functional measures, which allowed for further comparisons. This allowed us to make meaningful comparisons to a 48-patient matched clinical cohort from the comprehensive longitudinal investigations in MS cohort that are followed at the Brigham and Women's Hospital, also known as the CLIMB study. The key findings from our progressive MS study were as follows. First of all, the trial met its primary endpoint, as Neuron was demonstrated to be safe and well-tolerated in progressive MS patients. Procedure-related adverse events observed in the study were similar to our experience in ALS. In terms of efficacy, Our pre-specified responder analysis showed consistent improvements across all functional measures, including walking, vision, and cognition. Such improvements were notably not observed in any of the matched CLIMB patients, suggesting that they were due to the clinical benefit of Neuron, a truly compelling finding. We also observed consistent increase in delivered neurotrophic factors and a reduction across key inflammatory biomarkers, further confirming neurons' therapeutic mechanism of action. So what does this mean? Collectively, these data provide proof of concept for neuron in progressive MS and strongly support its potential to address the intrathecal central nervous system inflammation and progressive loss of neural function that drive the relentless clinical progression of this disease. When discussing the data with our principal investigators and the patient advocacy community, we have received extremely positive feedback and a great deal of encouragement to take next steps. As was discussed earlier, we've begun collaborating with experts to design a potential Phase IIb trial, and we are preparing a peer-reviewed manuscript and scientific presentations to effectively communicate our results to the broader MS community. We will certainly take all feedback into account as we consider potential next steps, which will include regulatory review and or discussion with potential strategic partners. We look forward to providing everyone with an update once our plans have been solidified. I'll now turn the call over to Preetam to discuss the financials.

Thank you, Ralph. It is my pleasure now to walk you through our first quarter 2021 financial performance. Research and development expenses net for the three months ended March 31, 2021 were $4.34 million compared to $5.95 million net for the three months ended March 31, 2020. This decrease of 1.61 million year-over-year was primarily due to decrease in expenses related to our Phase III and Phase II clinical trials and a decrease in expenses in connection with stock-based compensation, materials, travel, rent, and other activities. The decrease in expenses was partially offset by an increase in costs related to payroll, patents, preclinical R&D activities, and consultants. and a decrease in proceeds received in connection with the treatment of patients under the hospital exemption regulatory pathway and a decrease in grant participation by the Israel Innovation Authority or IIA. Excluding participation from IIA and other grants and proceeds received under the hospital exemption regulatory pathway, research and development expenses decreased by 2.33 million from 7.14 million in the first quarter of 2020 to $4.81 million in the first quarter of 2021. General and administrative expenses for the three months ended March 31, 2021 were $2.59 million compared to $2.36 million in the three months ended March 31, 2020. This increase of $228,000 year-over-year was primarily due to increasing payroll, stock-based compensation, consultants, rent and other costs, partially offset by a decrease in PR and travel related expenses. Net loss for the three months ended March 31, 2021 was 6.66 million or 19 cents per share as compared to a net loss of 8.11 million or 32 cents per share for the three months ended March 31, 2020. Cash. Cash equivalents, including short-term bank deposits, were approximately $40 million as of March 31, 2021, compared to approximately $42 million as of December 31, 2020. Our total available funding as of March 31, 2021 was approximately $57 million. This includes cash, cash equivalents, and short-term bank deposits, as well as remaining non-dilutive grants which amounts to approximately $41 million. In addition, we have approximately $16 million available to us in untapped ATM capacity. For further details on our financials, please refer to our Form 10-Q filed with the SEC today. Back to you, operator.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 from your telephone keypad And a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And once again, that's star 1.

Thank you. Our first question is from the line of David Voss with SAC Small Cap Research.

Please proceed with your question.

Hey, good morning, everybody. Good morning. For the ALS data that we're going to be seeing in the publication, will that include any data from the expanded access program or hospital exemption programs?

No, that will not be included, David.

Okay. In looking at the MS results, Dr. Kern, I'm curious if you could talk about which of those data that you're most excited about?

Ralph? Yeah, no, David, good morning. I think we're most excited about the overall consistency of the functional improvements. There have been MS studies in the past that have shown inconsistent changes across different endpoints. What really struck us was that we saw improvements across all functional measures, and these include walking, as measured by the time 25-foot walk, the nine-hole PEG test measuring upper extremity function, vision. It's a test called the low contrast letter acuity. And what was most striking were the cognitive changes. There was quite a significant improvement in cognitive processing speed. So these were the very striking findings. And they were, I think, reinforced by the consistent biomarker changes that we saw in this study between neuroprotective and neuroinflammatory biomarkers that paralleled what we saw in ALS. So, very positive proof of concept study.

Okay.

And lastly, in regards to the next trial for MS, I know you probably can't go into details, Typically late stage MS trials are at least one year in length. And I'm just curious how you're thinking about dosing since you're just doing three doses right now. Would you want to increase the number of doses for those patients if the trial does go for at least a year?

Yeah, it's a very good question. I think it's premature for us to give more detail because we're still in discussion with some of the experts that are giving us valuable feedback. I think the direction that you're going in is directionally correct in the sense that a longer study will be needed and also additional doses. But how many and what the interval will be is something that we're still discussing internally and also with experts. So thanks for the question.

Okay. Thank you very much.

Thank you, David. Operator, we have a The Q&A that investors sent in earlier would ask Mike Wood if he can read the queues and we'll give the answers.

Thank you.

Then we'll go back to the live.

Thank you. There are a number of pre-submitted questions, so I'll start with this one. First of all, what are your plans for ALS going forward? Do you intend to conduct another trial?

Thank you very much. Our ultimate goal remains to secure approval for Neuron and ALS, and we remain confident in the effectiveness and safety of Neuron. Our current priority is to publish the full Phase III data in a peer-reviewed journal, as we are also meeting with ALS experts and key opinion leaders who are not part of the trial and do not have first-hand experience with Neuron to share the data and receive their feedback. We are receiving invaluable insight and positive feedback from these world-renowned ALS experts. There is widespread agreement among the experts we have spoken with that the data support advancing Neuron as a treatment for ALS So to sum this up, it's not a question if, it's a question when and how. Next question, please, Mike.

Will you be submitting a drug approval submission for neuron in ALS in Health Canada or the EU? And as a follow-up to that, are you considering bypassing the FDA and getting approval for neuron in other territories?

While we're not considering to bypass, we are considering other geographies while we're still assessing our exact strategy with the FDA. Next.

The next question. Can you comment on the public statement that the FDA released about Neuron? The statement was somewhat unusual.

Stacy.

Yes, it was unusual for the FDA to issue such a statement. The FDA did not reach out to us prior to issuing the statement, but did prioritize a call with us quickly following its issuance. And what we learned is that they were not operating out of concern based on actions of Brainstorm. And I guess to kind of round it back, as FDA indicated in their preliminary assessments, while not recommended by them, we're not precluded from submitting a BLA.

Thank you very much. Mike.

Next question, does Brainstorm intend to submit a BLA to the FDA following phase three of Neuron? If not, RADICAVA was granted FDA approval without very exceptional clinical data. You know, what is the downside of submitting a BLA at this point?

Stacy would take this one, please.

Sure. As a company, Brainstorm is continuing to weigh the option of a BLA submission. Our current priorities, as we stated, are publishing the Phase III data in a peer-reviewed journal and meeting with ALS experts and key opinion leaders. It's important, and we're prioritizing people that are outside of the clinical trial ecosystem to share our data with and to receive feedback. Our goal is to secure an approval for Neuron as a treatment for ALS, and if after consulting with key opinion leaders and after the data is published, if we determine that the most rapid way to achieve this goal is to submit a BLA following our phased-through data, we will pursue this path. In other words, there may not be a downside to submitting a BLE at this time, and that's exactly what we're working to determine.

Next question, please, Mike.

Can you talk about the revenue-generating opportunity for Neuron in the international ALS marketplace?

David, do you want to take this one?

Sure. So there is a lot of patients suffering from ALS outside of the U.S., And this is a critical need in the U.S. and beyond. So there is a very strong international business opportunity. As a reminder, I mean, outside of the U.S., the ADS worldwide prevalence is higher than 400,000 patients.

Thank you. Next question, please.

The next question is regarding the patient advocacy group IMALS. IMALS is calling for a congressional hearing on ALS. How are you working with them, and what is your strategy here?

Thank you. So we are fully engaged working with the ALS advocacy community, including IMALS. IMALS did advise us of this meeting. There's a growing awareness of the critical unmet need in ALS and limited treatment options. We're certainly open to discussing practical options across a range of stakeholders, including government. Next question, please.

Next question relates to hospital exemption. This investor said they've heard that there are patients being treated in Israel on an open label. How many patients? What were the results? And why doesn't the company share them with the public? And is this facility still open for treatment?

Yeah, very good question. Thank you. And this will probably answer part of what David asked before. And Stacey, you want to take this one?

Sure. At the present time, we don't have additional outcomes to share from this trial. And it's really for a couple of reasons. First, COVID-19 travel restrictions have severely limited this program and the ability to continue to collect the longitudinal data in the program. And second, you know, the question references that this is an open-label study. While data can be accessed during the conduct of the study, many of the established clinical endpoints in ALS are subjective in nature. And thus, it's an industry practice to not discuss ongoing trials to avoid bringing bias into the trial. And referencing back to the question that David asked at the beginning about the study, our publication from our phase three study will be a readout of and a publication of that trial and therefore won't won't contain additional data from other studies.

Thanks, Stacy. Very helpful. Next question, please.

And the next question is regarding the exosome platform. Does treating a patient's cells with Neuron enhance the ability of the exosomes to fight disease, or is it the quality of the message that exosomes are carrying that provide the needed support for Neuron to slow down a disease progression?

Thank you. Ralph?

Sure. It's our belief that, similar to Neuron, the potential therapeutic benefits of exosomes is mediated through the delivery of biological molecules that reduce inflammation, provide tissue support, and promote repair. So to answer this question directly, it's the quality of the message or cargo that exosomes are carrying that determine the outcome. Exosomes also provide a practical option that allows for easier formulation logistics and may have better tissue delivery. In other ways, they're also potentially less immunogenic, supporting what we believe is a very high potential off-the-shelf allogeneic cell source treatment option. Thank you very much.

Next question.

What are the plans to partner Neuron in ALS? Are you currently speaking with partners or acquisitors for Neuron?

Thank you, David. We are open to collaborate and in fact we are in continuous discussion with various partners for all the different programs in our portfolio. So for New Learning ALS Indication as well as Progressive ALS. We are as well speaking with partners interested in our XSM platform and ARDS Indication. We are actively engaged in discussion. But for confidentiality reasons, we cannot provide details at this point. Thank you.

And we have one remaining question, and this is on the Alzheimer's program. At this point, why not start a clinical trial for Alzheimer's disease? Could Neuron potentially help or improve a person's condition with Alzheimer's?

David. We are in the process of finalizing regulatory discussion regarding the Alzheimer clinical trial. The rationale for neurone in Alzheimer's disease is strong, given the evidence that neuroinflammation plays an important role, that specific neurotrophic support system in Alzheimer's disease are deficient, and that specific cargo delivered by neuron, including certain neurotrophic factors and microRNA molecules, are known to have a beneficial effect in Alzheimer's clinical models.

Thanks very much. Ralph, you want to elaborate a little bit on this?

Yeah, I can just say that there's a tremendous interest in using cellular therapy to modify the environment of Alzheimer's disease, which includes, obviously, inflammation and I think our recent findings in MS, the cognitive changes in our MS, progressive MS patients, may be an important indicator that Alzheimer's is a very good next indication. So that's what I'd like to add today.

Thank you very much, Rob. Rob, you can now reopen for a few more questions from the audience.

Thank you. The next question is from the line of Neil Farkas with Maxim Group.

I think it's Jason McCarthy.

Hi, Jason. Good morning.

Maybe my name's Neil, too. I don't know. That's very bizarre that they came up that way. Good morning. So a couple of questions. First, on ALS, and I think this question is geared towards Stacey, because I'm kind of calling on your experience with Biogen. How do you think about The upcoming PDUFA for adecanumab in Alzheimer's, it's completely unrelated, obviously, to what you're doing in ALS here, but the unmet need, there's a parallel there. And the FDA may look at a drug like that as it might have missed in its trial, but it did something good, and it's safe, and Alzheimer's needs something. And can you look at Neuron and ALS? through a similar lens where it's definitely doing something to the good for these patients. It may have missed on its primary in the Phase III trial, but there's something there, and would regulators maybe look at it kind of like they're, it seems like they're looking at out-of-cannabin.

Well, that was a good and tricky question, but Stacey, I'll let you do that.

Yeah, I'm happy to get that added. I'm just curious as to how do you make that, abstractly think about how you position Neuron now. Oh, totally understood. Sure.

Yeah. Yeah. And I guess what I would say is there are a lot of, there are similarities like you're pointing out, and there are also a lot of things that are quite different, including we're going to a different center of the FDA and obviously very different diseases. But I think what you're describing really is at the heart of what every biotech or pharmaceutical company is seeking in their research is we're here to produce meaningful medicines for patients. And trials sometimes result with a primary endpoint that is missed. And the job that we have been working to do, and really even information we've already shared in the public domain, is precisely we have been working to understand what have we learned and what can we conclude about Neuron. And we believe we've gained key insights Therefore, we reached the conclusion, which we've shared repeatedly even today, that we believe strongly in the efficacy of Neuron. So back to the similarities, I think that much like Biogen had to do, we have been forced with the results of this trial and the need to look very objectively and transparently at our data, to share that data also very transparently with regulators and with ALS experts, advocacy groups, to seek input that is removed from the company, and then to put forward the stuff that really serves the patient community and our investors as best we can. So it's a very interesting connection and analogy, and I think we're doing exactly the same thing in terms of trying to make the best next steps and put forward what we believe is the most objective and compelling evidence that speaks to Neuron.

Okay. So then how do you think about cell therapy just from its pure complexity? And we published this, which I'm sure you saw on Musoblast. They did miss a few phase three trials just on the primary. But the way you think about how complex cell therapies are, there's a lot of things happening that might not be captured by one snapshot of an endpoint. So how do you think about neurons going forward into progressive therapy? MS into your 2B, do you start to look at other things like MRI, white matter, free water, or brain swelling and kind of tying that to inflammation and inflammatory biomarkers versus the typical traditional MS-like trials on maybe relapse and remitting occurrences?

Very good question, Ralph. I'll let you take this.

Yeah, thanks, Jason. I'll try to be very brief. I think MS is a different disease in the sense that the outcome measures have a longer history and in some ways are more stable and easy to measure. Having said that, we believe very strongly that we can evaluate the cerebrospinal fluid as a source of biomarkers, and rather than look for new biomarkers, we believe on building upon our strength and what we've learned in the past. In other words, we're seeing very consistent biomarker changes in preclinical, in ALS in humans, and now in progressive MS that speaks to the mechanism of action. And as we have a very well-defined cellular product, similar to the CAR T world, we believe that the technology is very predictable. that the fingerprint or the biomarker changes related to the cells can be measured very accurately. And that's really the strength of our conviction that the technology platform can be tested very reliably in progressive MS. And we believe in Alzheimer's as well. So we're very confident in our technology and what we can measure and how we can draw legitimate conclusions from what we're doing.

So last question for Chaim. So are you planning to position Brainstorm in Alzheimer's disease strategically, meaning, you know, you have the Atacanum Epiduphus coming up, you have the Alzheimer's meeting over the summer, you know, where everybody's expecting Alzheimer's to suddenly be extremely busy. You do have your program. We didn't hear too much about today, but maybe kind of walk us through what you're thinking for Alzheimer's and positioning Brainstorm in that space?

Well, a very good question. So we have a lot to figure out in these few months, as you know. Our priorities are like this. The first thing is we're submitting very soon our manuscript for peer-reviewed publication. And, of course, we've got to figure out what's our next step for ALS. We're getting close to that. And then we have to figure out what's our next step for MS. It's going to be probably another trial with ourselves or with other partners We've got to figure that out also. The Alzheimer's, we were thinking maybe to lay off, but we have some very interesting biomarker data from the ALS and MS trials, which gives us strong support. We should continue for cognitive matters, which you'll see part of one of our publications. We're going to probably have a separate publication on the biomarker data for ALS only. So we are deciding now in the next quarter how to proceed with Alzheimer's. We're in conversation with the regulatory in Europe, and we'll see how that goes. We'll announce once we have something to announce final.

Great. Thank you all for taking the questions.

Sure. Thank you very much. Operator, any more questions? We have time for one or two more.

If you'd like to ask a question at this time, you may press star 1 from your telephone keypad. We'll pause a moment to assemble a queue.

We're going to start one to ask a question at this time. Thank you. Thank you. At this time, I will hand the floor back to management for any additional remarks. No, thank you very much.

And again, I want to thank everyone for being with us on this call this morning. And keep up with the faith we all have that this is going to come to an approval one day. Thank you very much.

Thank you to everyone joining us today. This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.