Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI) Q4 2022 Earnings Call Transcript

Brainstorm Cell Therapeutics Inc. (NASDAQ:BCLI) Q4 2022 Earnings Call Transcript March 30, 2023

Operator: Greetings, and welcome to the Brainstorm Cell Therapeutics Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded. And I will now like to introduce your host for today’s call, Michael Wood of LifeSci Advisors. Mr. Wood, you may begin.

Michael Wood: Good morning and thank you for joining us. Earlier today, Brainstorm issued a press release with its financial results for the full-year 2022, including a corporate update. Before passing it off to the company management for prepared remarks, I’d like to remind listeners that this conference call and webcast 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 of neurodegenerative orders, such as ALS, the sufficiency 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’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 conference call and the company undertakes no obligation to publicly update any forward-looking statements. Joining us on the call today will be Mr. Chaim Lebovits President and CEO of Brainstorm; Dr. Stacy Lindborg, Co-Chief Executive Officer and Alla Patlis, Interim Chief Financial Officer. In addition, Dr. David Setboun, Executive VP and Chief Operating Officer are also on the call and will be available to answer your questions during the Q&A session.

I’d now like to turn the call over to Mr. Lebovits. Please go ahead.

Chaim Lebovits: Good morning. Thank you, Michael. I want to thank all of you that joined us to discuss our 2022 financial results and recent developments. Throughout 2022, Brainstorm had a number of important clinical and operational achievements, which we believe position the company for further success in the year ahead. Our priority in 2023 is to advance NurOwn through the regulatory process as expeditiously as possible. On this front, we were very excited to announce earlier this week that the FDA intends to hold an advisory committee meeting to discuss our BLA seeking NurOwn’s approval as a treatment for ALS. We held a conference call on Monday to discuss the planned ADCOM. But given the importance of this news, as well as some of the follow-up questions we have received since then, I think it’s worthwhile to summarize the content and emphasize a few key points.

First, the information we communicated on Monday is that NurOwn’s BLA is backed under review and the FDA has committed to an advisory committee meeting. The date of the ADCOM is unknown at this time, but we know the FDA is actively working on it. We will share with you once we receive it from the FDA. I want to emphasize a few additional points from our investor call from Monday. Point number one, relates to the review process for NurOwn’s filed the BLA. Now that the BLA is under review, the review process should be the same as any other regulatory mechanism we could have utilized to get to this point. We look forward to working with them as we work throughout additional steps in the review process, including the regulatory response. There will be an ADCOM guided by an agenda and a set of questions put forward by the FDA.

These questions or question will allow experts at FDA and Brainstorm to frame the efficacy and safety of NurOwn and ALS. Independent medical and statistical experts, members of the ALS community, and other key stakeholders will then have the opportunity to participate in an open discussion on the prospectus shared by the FDA and Brainstorm, as well as the need for new ALS therapies. The agency will then render a decision on the BLA by specified PDUFA date. We anticipate that we will have the date of the ADCOM soon, and when we receive that it will also have clarity on the PDUFA date. The next points I’ll emphasize relates to the regulatory mechanism we utilize, which is formerly known as the File Over Protest pathway. Despite its name, this mechanism is a standard regulatory procedure and is not inherently .

In fact, we collaborated constructively with the FDA before the agency provided us with several regulatory options that would reactivate the BLA in order to allow NurOwn to be discussed as an ADCOM. As mentioned on our call on Monday, this pathway was ultimately chosen over the other options, because this allows the fastest regulatory path to an ADCOM. This was the driving factor in our decision making, we recognize the urgency that patients deserves. Next, I’d like to remind those listening of the conference or the Reviews of The File letter we received from FDA late last year and speak about how we plan to address these points. The RTF letter included one item related to the trial not meeting the standard for substantial evidence of effectiveness or the primary endpoint statistical significance and the remaining items related to chemistry manufacturing and controls in short CMC.

Given our exemplary record of high quality manufacturing, we have full companies that will be able to re-immediate each of these points in a straightforward manner. In fact, we already have conducted much of the necessary work in a short time frame and submitted an amendment to the BLA on March 7, 2023, which responds to the majority of the manufacturing items raised in the letter. We work to respond to the few remaining manufacturing items is ongoing and would be complete in due time. The remaining items RTF letter and the only item related to our clinical data that will be the focus. That will be the key point of the discussion and our upcoming ADCOM. We view the opportunity to discuss NurOwn’s full data set in the public forum offered by the ADCOM, as an extremely positive development for Brainstorm and the entire ALS community.

As this forum offers an open conversation among agency reviewers, Brainstorm’s experts, clinical program investigators, and all other relevant stakeholders can take place. Each of these groups has its own expertise, experience, and points of view to contribute and it’s critical that all voices are heard given the complex scientific and policy issues that have. Finally, I want to once again thank the FDA for their collaboration throughout this process that led them to this decision. Given our data set and the currently urgent need for novel therapies that can improve the lives of individuals living with ALS, who believe an advisory committee meeting is the most prudent and appropriate next step in NurOwn’s regulatory path. With this, I’ll now turn the call over to my colleague, Dr. Stacy Lindborg.

Stacy Lindborg: Thank you, Chaim. Once again, I want to make the point that securing an ADCOM has been central to our strategy, because we have a robust and compelling data set that will benefit from a deep and thoughtful discussion at this public meeting. While our Phase 3 trial NurOwn and ALS did not reach statistical significance on the primary endpoint, we firmly believe that the totality of evidence from the trial will ultimately support approval. This belief has only grown as we’ve continued to analyze the trial results and discuss our learnings with leading experts in the ALS community. Along these lines, I’d like to highlight a presentation that was made at the Annual Muscular Dystrophy and Association Clinical and Scientific meeting, which was held in Dallas last week.

As we’ve explained before we now understand that the results from our Phase 3 trial were influenced by participants, who entered the trial with advanced ALS and who fell victim to the floor effect of the ALS functional rating scale. A floor effect is observed when scale items reach zero and ongoing progression cannot be measured on the queried items. The rate of the ALSFSR decline appears to slow and plateau in many patients. Despite further deterioration of the participant’s function and health. While the floor effect is certainly a limitation of the ALS functional rating scale, the good news is its presence can be objectively measured, demonstrated and accounted for, this is what we’ve done with various techniques, including with the new analyses presented at MDA last week.

Photo by Info MyCellHub on Unsplash

This analysis focused on trial participants, who were not impacted by the floor effect at baseline or in other words participants who did not have a zero on any item of the ALS functional rating scale at baseline, which means that the scale was able to measure a decline that occurred in participants across the entire scale. The number of participants with no evidence of the floor effect at baseline in this trial was 106 out of 189 or just over half the participants in the trial. When looking at these participants, there was a significantly higher response rate with NurOwn, compared to placebo on the primary endpoint with 41% of NurOwn participants reaching this substantial definition of clinical response versus 23% of placebo or difference of 18% and this had a significant p-value of 0.035.

Additionally, in these participants with no evidence of floor effect, we see significantly less disease progression on the endpoint average change from baseline in the ALSFSR to week 28. There was a difference of 2.31 with a p-value of 0.04, a copy of this presentation is on the events and presentation section of our website, and I would encourage those interested to read it. These important findings not only give us more confidence in our clinical data, but also address an area where there appears to be a misconception among some observers. There’s a perception that the Phase 3 trial had a higher-than-expected placebo effect with approximately 28% of placebo participants responding on the primary endpoint at week 28. While it’s true that we expected only 15% of placebo participants to be classified as responders on the primary endpoint, which is based on numerous post hoc sensitivity analyses we can objectively say that this was a floor effect that impacted the primary endpoint and not a placebo effect.

While the ALSFSR floor effect impacts all analyses that leverage the ALSFSR scale data. In the primary endpoint when the floor effect occurs, it results in a misclassification of clinical response. The plateau also occurs due to the inability to measure further decline on impacted items. Results and also results in a difference from the pre-treatment rate of decline and participants meeting the definition of a response. Thus, this is a scaled phenomenal and not a whole thing of clinical symptoms. In fact, in the same trial participants, who has the highest rate of floor effect in the study, driving their ALSFSR scores to meet the criteria on the primary endpoint of clinical response. These same participants had the lowest SBC scores, the highest rates of pre-treatment decline and the lowest baseline ALSFSR scores.

And while I’m focusing on these analyses that control for the floor effect, which include these new analyses presented last week, let’s not forget that in a pre-specified group of participants with the ALSFSR score above 35, there was a larger treatment effect across all endpoints with NurOwn, compared to placebo with a statistically significant difference on a key endpoint to the average change from baseline in the ALSFSR. Lastly, in addition to these pre-specified insensitivity analyses, Biomarker data collected during the trial also demonstrate the importance of accounting for the ALSFSR floor effects when evaluating clinical endpoints. These data showed NurOwn positively affected multiple pathways and are intimately involved in ALS. Including those that were related to neurodegeneration, neuroinflammation, and neuroprotection.

Importantly, the changes observed were consistent regardless of participant levels of disease progression at baseline with positive effects seen in trial participants with less advanced ALS, and with those with more advanced ALS disease at baseline. One of the reasons we’ve been able to drive such valuable learnings from our trials Biomarker data is because we employed an extensive specimen collection protocol in the study. This protocol, which called for the matched collection of up to 7 serum in CSF samples from trial participants, over a 20-week period is to the best of our knowledge the largest longitudinal specimen collection protocol ever employed in an ALS trial. To maximize the value of these samples for the ALS community, we partnered earlier this year with NEALS to provide the public with access to samples from placebo treated trial participants.

This was done in connection with a $500,000 grant previously awarded to Brainstorm by the ALS Association and IMALS to support biomarker research in the Phase 3 trial. By providing the ALS community with access to these clinical samples, we hope to drive additional research that will facilitate the discovery of new breakthroughs for patients with ALS. I’ll now turn the call over to Alla to discuss our financials.

Alla Patlis: Thank you, Stacy. It is my pleasure now to walk you through our full-year 2022 financial results. Brainstorm’s cash, cash equivalents and short-term bank deposits were approximately $3 million as of December 31, 2022, this compares with approximately $22 million on December 31, 2021. Our research and development expenditures net in the year ended December 31, 2022 were $14 million, compared to $15.2 million for the year ended December 31, 2021. General and administrative expenses for the years 2022 and 20 21, respectively were $10.9 million and $9.3 million. Net loss for the year ended December 31, 2022, was $24.3 million or $0.66 per share, as compared to a net loss of $24.5 million or $0.68 per share for the year ended December 31, 2021. Now, I’ll turn it back to Chaim to close the call.

Chaim Lebovits: No, so for Q&A, but thank you very much, Alla. And Michael Wood, please can you read the — please specify the questions we have. Before we will open the call for callers Q&A. Michael?

Operator:

A – Michael Wood: First question, can you tell us about the Biomarker response to the trial versus what happened in the in the Expanded Access Program?

Chaim Lebovits: Very good questions. Stacy, that’s for you.

Stacy Lindborg: Sure. Let me start by summarizing what we’ve collected in the Expanded Access Program, so we collected both clinical data and CSF samples and collected them on a schedule that was similar to the Phase 3 randomized clinical trial. As a matter of update, the second period of the EAP has been completed, which now completes the EAP and we’ve begun to analyse the clinical data. The final Biomarker samples need to be collected from the sites and then samples from all of the EAP participants will be sent to labs, the same labs that were used in the Phase 3 trial for analysis. And we will present the data in scientific forum like we do with all new data.

Michael Wood: Thanks. As a follow-up question, have you submitted your Biomarker data to a public academic journal yet?

Chaim Lebovits: Yes, Stacy.

Stacy Lindborg: The manuscript is fully written and it’s in its final stages of review with authors prior to submission. We’re really looking forward to getting it under review and generating what we believe will be an important publication for the ALS community in the near future?

Chaim Lebovits: Thanks, Stacy.

Michael Wood: Regarding the timeline on the PDUFA date and the advisory committee. Brainstorm ask for a received six-month priority review.

Chaim Lebovits: Thank you. We are waiting for the FDA to provide us this information and that said, we will communicate when we have this information.

Michael Wood: And then regardless if you’re on a six or a 10-month review timeline. Can you clarify when the clock started running? Does this happen at the time of the refuse of the file date or is it running a new as of last Wednesday notice regarding from the FDA?

Chaim Lebovits: Good question. Thank you, so the BLA is back under review, it had to be back under review for the FDA to grant an ADCOM. The timeline read the date of RTF as follows: February 6, 2023, Brainstorm notify the FDA of the decision to request the FDA to file NurOwn BLA for our ALS over . And the following day on February 7, we received confirmation from FDA that the BLA had been re-filed. Therefore, February 7 is the date that the review timeline became active again. We made this point during our prepared remarks, but it’s worth reiterating, we chose the procedure of File Over Protest, because it allowed for the quickest path to an ADCOM and started the clock again. The only other regulatory pathway we seriously considered was to revise the BLA and resubmit.

And we did not select this pathway that could present substantial delays in the overall regulatory pathway. As exemplified by the Journeys of other sponsors, who experienced unexpected elements of the delays. Individual living with ALS, there’s a urgency that comes with a regulatory clock associated with the BLA filing and an ADCOM. So again, on February 7, it was reactivated the file, meaning the first two months already happened from the first date when we submitted September 9. And then it paused after the RTF letter and then the clock started to kick-in, in February 7. Thank you.

Michael Wood: And one last question, this is financial question. Has the company been active with its ATM in the last few days? And then what is the capacity of that ATM?

Chaim Lebovits: Thank you for that. So no, no, we’re not active of course in these prices, we have confidence that we’ll be able to activate the ATM for better return and less dilution. As we have disclosed, of course, we do have an ATM in place. Sponsored by Raymond James and Leerink. We did do a single cross investment made by a single institutional investor, but we are not activating and we don’t intend to activate the ATM on these current prices. Thank you for that.

Michael Wood: And the capacity of the ATM?

Chaim Lebovits: $100 million.

Michael Wood: Okay. That’s the final question.

Chaim Lebovits: Thank you. Now, Holly, would you open the call for any questions from any callers?

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Q&A Session

Operator: Certainly. At this time, we will be conducting a question-and-answer session. Your first question for today is coming from Jason McCarthy at Maxim Group.

Chaim Lebovits: Sure.

Jason McCarthy: Hi, all. Thanks for taking the questions. Just some clinical focused questions. First, did the floor effect impact the Biomarker changes in the total Phase 3 trial population? And if not, can the Biomarkers be used to show that while the floor effect impacted the ALSFRS score in the total population? Can you still see the impact of NurOwn just through the Biomarkers? In particular, the NFL Biomarker which came up as a big deal during the Biogen ADCOM as a therapeutic marker?

Chaim Lebovits: Jason, thanks so much. The short answer is yes, but I will let Stacy elaborate.

Stacy Lindborg: Yes, Jason, it’s a great question and it is a really important point every time we’ve talked about our Biomarker data, every presentation we’ve given in the public domain is focusing on all trial participants, so it’s everybody that was in the trial we see the same biological response with NurOwn across all patients in the trial. And importantly, we also see no changes as we would expect in these same biomarkers with participants treated with placebo. So, there is a very important finding that is brought to this overall study that comes from the Biomarker data. And it allows us to have even more confidence that the impact that we’re seeing in the ALS functional rating scale is in fact due to a limitation of the scale and does not reflect on something further about these participants in the trial.

We simply can’t measure the decline in participants that progress to advance of a stage of disease and to where the scale has zeros and can’t measure, can’t measure differences. So that’s a very important point. And we did very specifically look at the participants data, the Biomarker data from the thresholds that define participants that have a floor of the scale versus those that don’t and we see the same patterns across all of our biomarkers. So that will become very clear in our manuscript that will describe our Biomarker data very fully. The second question about — I’m sorry.

Jason McCarthy: No, no, sorry. Go ahead anything to interrupt.

Stacy Lindborg: You brought up neurofilament light, and I think there was a very broad and wonderful rich discussion at the top person ADCOM and a lot of confidence being displayed about the ability to and importance of this marker in a list of diseases, specifically with Tropicin, the mechanism of action with their products. What I would say is that when we look at our Biomarker data and we want to understand the relevance of these very large changes that we see across markers of neurodegeneration and neuroinflammation in addition to markers of neuroprotection, we wanted to understand and appreciate how important they were to the clinical response that’s observed. And this is something as a company, we certainly thought about well in advance, we knew it would be extremely important, we don’t want to just change biomarkers, we actually want to know that there’s a direct effect on the clinical outcomes.

And so, this was the subject of a second analysis plan that was submitted to the FDA before we outlined our trial, where we outlined the proper ways to actually explore these questions. And these models that were pre-specified identified three markers that the knowledge of the changes that were observed in the trial and where neuro participants were starting a baseline that they were very important to predicting the clinical response that was observed in the trial. And one of those markers actually was neurofilament light, so the changes and the knowledge of baseline values are important to understanding the clinical response, they’re very relevant to clinical response in addition to a marker of neuroinflammation and neuroprotection. So, it’s very important, we know that these three pathways are very central to our mechanism of action.