Greetings, and welcome to the BrainStorm Cell Therapeutics Third Quarter 2023 Earnings Call. At this time, participants are in a listen-only mode. As a reminder, this call is being recorded. And 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 everybody for joining us. Earlier today, BrainStorm issued a press release with its financial results for the third quarter of 2023, 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 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 disorders, 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 NurOwn technology platform, clinical trials of NurOwn and related clinical development programs, as well as 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 call and the company undertakes no obligation to publicly update any forward-looking statements. Joining us on the call today are Mr. Chaim Lebovits, President and CEO of BrainStorm; Dr. Stacy Lindborg, Co-Chief Executive Officer; and Alla Patlis, Interim Chief Financial Officer. So I'd now like to turn the call over to Mr. Lebovits. Please go ahead, Chaim.

Thank you, Michael. Thanks to all who have joined us to discuss our Q3 2023 financial results and ongoing progress. We are committed to our goal of making NurOwn available to the ALS community. Our priority now is to work with the FDA and do everything in our power to align on a path forward. As announced previously, we made the decision to withdraw the BLA for NurOwn from FDA review. This decision was made following the outcome of the Advisory Committee that took place to review NurOwn in September. This action was coordinated with the FDA and is considered by the FDA as a withdrawal without prejudice. The next important step will be for us to conduct a meeting with the FDA. We submitted the official request just a few days ago. We will use the opportunity to discuss next steps, including the design for the confirmatory Phase 3b study in ALS, which we intend to conduct at that meeting. As part of our regulatory strategy, we intend to seek a Special Protocol Assessment with the FDA before continuing with the planned registration trial. The SPA indicates agreement with the agency on the adequacy and critical elements of the trial design, including items such as patient entry criteria, endpoints, and planned analyses. We believe that having an SPA in place will reduce the regulatory risks associated with our ALS program. We believe the process will likely take one or two meetings with the FDA. We will provide an update once we have clarity on the path forward. In parallel with these regulatory activities, our management team and Board are clarifying how to finance the company and ensure we have the resources to fund the planned safety trial and position ourselves for future success. We're actively exploring various options to raise capital, including non-dilutive grants, as well as capitalizing on certain non-core assets, such as our exosome technology. In October, we announced a strategic realignment to prioritize and conserve resources. This involved several steps, including streamlining our clean room operations as well as a targeted reduction in headcount of approximately 30%. Importantly, positions that are most critical to managing the planned Phase 3b trial and regulatory submission will be retained. We estimate that overall the strategic realignment will cut total resource consumption by approximately 50%. Many of us, including all senior management, took a 30% cut in our wages. As for myself, I took over a 90% cut for now. These were difficult but necessary decisions. We're very thankful for the hard work and commitment of all our colleagues at BrainStorm for their contributions in advancing NurOwn. I'll now turn the call over to Dr. Stacy Lindborg for additional comments.

Thank you, Chaim. There remains an urgent need for new treatments for ALS, treatments that are safe and effective. Every day, patients and their families confront the harrowing reality of this terrible disease. We've assembled a considerable body of data on NurOwn in ALS participants and we continue to believe that if approved, this product has the potential to be a valuable new treatment option for people living with this disease. We are motivated by the courage of ALS patients and we're driven by the opportunity to bring a product to market that we believe can improve their lives. We look forward to continuing to engage with the FDA and conducting a confirmatory Phase 3b trial as efficiently as possible. Chaim?

Thank you so much, Stacy. I'll now ask Alla to discuss our financials. Alla?

Thank you, Chaim. Cash, cash equivalents, and short-term bank deposits were approximately $1.4 million as of September 30, 2023, compared to $3 million as of December 31, 2022. In July 2023, the company raised net proceeds of approximately $7 million in the registered direct offering. Research and development expenses for the three months ended September 30, 2023 and 2022 were approximately $3.3 million and $3.8 million, respectively. General and administrative expenses for the three months ended September 30, 2023 and 2022 were approximately $2.7 million and $3.1 million, respectively. Net loss for the three months ended September 30, 2023 was approximately $1.2 million or $0.03 per share compared to a net loss of approximately $6.9 million or $0.19 per share for the three months ended September 30, 2022. I'll turn it back to Chaim.

Thank you very much, Alla. Michael Wood from LifeSci will now read some questions we have received from investors. Michael, are you there?

Sorry, I was on mute. Yes. Thank you, Chaim. Is it possible that even with the ADCOM decision around NurOwn, the FDA could grant limited approval for early-stage ALS patients where there has been an observable positive response?

Stacy, do you want to take this?

Sure. We firmly believe that generating additional data in the form of the Phase 3b trial that we've been discussing is the only path forward that will gain regulatory approval of NurOwn. We would have never withdrawn the BLA if we weren't convinced that we would not be successful with the current data alone. Therefore, it's in our best interest to move forward as quickly as we can to get the trial started.

Thanks, Stacy. Next question, how long before you know more about your funding plans? And as a follow-up to that, when are you hoping to start the Phase 3b? And are you waiting for funding or grants to come in before you can commence the study?

Thank you. We're working with banks who have been successful, including very recently, raising funds for biotech companies like BrainStorm, and they are confident in our ability to raise the funds needed to run this trial. We will first work to secure a bridge to ensure stability as a company while we work in parallel to secure funding for the Phase 3b trial. As we shared in our prepared remarks, we are exploring a variety of avenues including partnerships and grants. Although there's always the chance of a large infusion of funds, we expect to raise money for the trial in stages. We also do not intend to wait to start the trial until we have raised the full amount needed. We'll be thoughtful about starting the trial, but patients deserve more urgency than this.

Thank you. Next question, are you working on the new trial parameters with the FDA?

Stacy?

Yes, that's correct. As I mentioned in the prepared remarks, we've requested an expedited face-to-face meeting very recently, and this meeting will allow us to discuss the next steps for NurOwn, which will focus on the core design elements of the Phase 3b trial that we've been working on with a scientific advisory panel and a group from the ALS community, including those living with the disease. We intend to seek a special protocol assessment from the FDA, which, as many of you will know, is an opportunity to reach an agreement with the FDA before the study starts on the design of a clinical trial. And this trial, of course, is intended to serve as the primary basis for an efficacy claim and a BLA. We view this as beneficial and a valuable tool to accelerate the Phase 3b trial for NurOwn and potentially reduce the regulatory aspects of the program.

Thank you. And one final question. Why don't you partner with big pharma?

Thank you. So we are seeking to partner. In fact, we're in contact with a few companies. Although ALS is a relatively rare disease, the commercial opportunity is still compelling. And we know there's interest from companies who would like to have a successful product. You have to remember, though, that cell therapy is still an emerging modality, especially in neurodegeneration. There are very few approved cell therapy products, and R&D products are largely focused on oncology and genetic disease. Presumably, a major approval in the cell therapy space will bring investment, and until then, some will remain cautious. As you may know, it took many years to develop CAR-T cell therapy for various cancer treatments, and innovation came from smaller companies before developing partnerships. Just a few examples: Kite Pharma went alone until after approval and then was bought out by Gilead. Juno Pharma did the same and was also acquired after FDA approval by Celgene, while Bluebird wasn't acquired and remains independent today. We have a derisked Phase 3 asset which will have an attractive upside for the right company. So we will pursue a partnership as a promising avenue. NurOwn as a technology represents a strategic approach, and therefore we would welcome a partnership. But until that comes, we're willing to do all we can to proceed with the funds we are able to raise.

Jenny, would you like to open the call for any additional questions?

Of course. Right now, the floor is open for your questions. Thank you. Your first question is coming from David Bautz of Zacks Small-Cap Research. David, your line is live.

Hi. Good morning, everyone. Thanks for the update this morning. So Chaim or Stacy, I was wondering if you could talk a little bit more about the SPA and basically what differentiates that from saying, 'coming to an agreement with the FDA about a trial design?'

Stacy?

Yes. David, I think that the SPA pathway and the opportunity to formally recognize and use a pathway that the FDA offers really just gives the platform to come together and to align, but to have a formal agreement that's documented. I think it's a constructive way to approach this and it’s something that I think will be positive for BrainStorm while ensuring that the discussion and the work we do ultimately culminate in a successful trial, which we expect would lead to an approval. So it really is about a formal engagement and interaction and it's a pathway that's well established and leveraged.

Okay. And as far as that goes, go ahead, sorry.

I was just going to add on that. Of course, I just want to emphasize. The FDA is discussing with us an expedited pathway for SPA. So that's just additional information for your question. What we're looking for is an expedited SPA. As you know, if those companies are able to have a SPA with the FDA, there's a far higher chance for approval at the end of the day. But many choose not to pursue this because it can take a year or two years just to get to an agreed upon SPA. This pathway is discussing an expedited SPA process. We look forward to that. Go on, David, you had another question please.

Yes. Actually, I was going to key off what you just said, and basically kind of looking at the timeline. So normally the SPA process would take a year or two, you're looking at less than a year probably then for an expedited SPA?

Well, I don't want to put any words in the FDA's mouth here. So I want to be very cautious. But I do foresee a first meeting occurring very soon. After that meeting, we will be, by the way, sharing the outcome of the meetings with the investor community, because this is our number one priority right now: to see if we can come to an agreed upon SPA. We'll learn from this meeting, which should be very soon, and we'll announce when that meeting is.

Okay. Now I understand you probably won't be able to get into specifics. But do you first see the primary outcome for the next Phase 3 trial being the same as it was for the previous one?

We're going to have to have a discussion with the agency at that meeting. So let's keep it for that. We will share once those meetings are completed, and we come to an agreement, what the trial will entail.

Okay, alright. Thanks for taking the questions.

Sure.

Thank you very much. Your next question is coming from William Barr from Tedium Adventures. William, your line is live.

Thank you, Chaim. Thank you, Stacy, and thanks to everyone at BrainStorm. We have been following and investing in the company for many years. My question is, what makes this time different? Many of us recognize the hard work you have been putting in, and we are truly grateful for everything you continue to do for ALS patients. We are starting to see that the Amylyx treatment may not be what some people expected, and some ALS chapters are beginning to acknowledge the issues and are starting to break away. We witnessed the events at the ADCOM, and many believe it was incredibly unfair. A lot of investors are pushing for BrainStorm to take legal action against the FDA, yet you are choosing to engage positively with the agency. We understand your urgency to provide a treatment for ALS, and we know you have done everything possible to make that happen. So, what makes this time different?

Thank you for your question. I appreciate it. I want to clarify that I won't comment on other treatments or organizations. Our goal is to ensure all organizations and advocates support us. Once we have a trial design, we will reach out to share it and gather their feedback. As mentioned in our opening statements, we are working toward an agreement with the fund, and this is something the FDA has proposed for an expedited SPA. We'll see how their treatment of us evolves. While some may view the ADCOM as overly negative towards NurOwn, many actually agree with us but believe we need additional data to demonstrate our case. They want to collaborate on a trial that generates this data, so engaging in this discussion with them is essential to clarify what they require for approval. That's the essence of what an SPA entails. As we prepare for this meeting, we anticipate it will be expedited. The agency has indicated their willingness to meet soon, showing their interest in supporting us with another trial shortly. I would like Stacy to add her thoughts. Stacy?

Yes. William, thank you for the comment and your question. When we step back and look at what we have before us, certainly when we brought forward our product, we believed and still believe in our data and we believe that there was merit to the discussion around the efficacy and safety and the appropriateness, given regulatory flexibility. But at the end of the day, when we look forward, one of the strongest positions we can take is to execute on a trial design, leveraging the learnings that have occurred and ultimately read out a trial that meets its endpoints. We see ourselves doubling down with confidence in our ability to deliver this trial. Our focus is to bring forth a product that's straightforward in this next trial that makes the regulatory process much more conventional and the next time around, certainly streamlined and smooth. This is what I consider different this time. Drug development is incredibly complicated. We learn things on this journey when tackling tough diseases. I think in the context of the last Phase 3 program, there were aspects the community did not appreciate and currently do not understand. We now have those learnings that we will take into the next trial design.

Thank you very much. For those of us that have ALS patients in our lives, have lost family and friends, I just wanted to say thank you to both of you and thank you for fighting the good fight for us.

No, thank you for your ongoing support over the years; we really appreciate that.

Thank you very much. Next question please, Jenny. We have time for one more. Your next question is from Daniel Walker, who is a private investor. Daniel, your line is live.

On manufacturing, you mentioned at the recent BrainStorm Town Hall meeting that BrainStorm has successfully manufactured 500 potent products. However, I think there have been some questions about BrainStorm's ability to manufacture. Can you just comment on that? Additionally, moving forward, how will the clean rooms be managed? Will it be commercial or will it be the academic centers? Perhaps you could comment a little bit on that.

Thank you very much, Daniel, for this question. We did have quite a few centers where we produced for the Phase 2 and Phase 3 trials, given that the academic centers and the commercial centers are only for the Expanded Access Program (EAP). Going forward, it’s primarily a financial question. The academic centers are less expensive to operate than the commercial centers. However, once we're successful with the trial, we need to have a commercial site ready. So we'll balance the timing. Perhaps we’ll start with academic and then for the second part of the trial, launch a commercial site to utilize the cheaper costs earlier while simultaneously ensuring that the commercial site is ready once the trial is completed. Does that answer your question?

That does. And I guess with the SPA, how do you ensure that this time around, because the FDA was quite critical of the manufacturing at the ADCOM? How do you ensure alignment, not only on the SPA but also regarding manufacturing so that when you resubmit the BLA, they feel confident in the manufacturing? Obviously, there’s a fundamental difference between manufacturing at the trial level versus at the time of commercialization?

Thank you. That's very helpful. You've clarified the question even further. So the answer is, the FDA has agreed to have discussions with us while we conduct the trial to ensure alignment. As I've mentioned before, we have come to alignment on many of the same issues, if not most. Some take longer to conduct qualification tests, which we are continuing. The FDA will have separate conversations with the same team, distinct from the clinical team.

Excellent. Thank you so much. And then just lastly, I was wondering if you could expand on the exosome technology. I know you're working on capitalizing that. Can you or Stacy briefly comment on what that technology is and why it might be interesting and compelling to pharma or biotech?

Yes. You mentioned Stacy, so I'll ask her to talk about that, of course. If I am needed, I'll add on. Stacy?

Sure. Daniel, this is an additional technology that we have been developing and certainly consider an exciting part of our portfolio. What's interesting about exosomes is that they allow us to move into and explore different diseases that can carry cargo and penetrate various parts of the human body, therefore providing different advantages. We have conducted several preclinical studies, some of which we've published. We believe there's a lot of excitement around this technology platform that offers a wide array of diseases where there is significant unmet need, and nanoscale particles can open potential administration options that would be very effective for treatment.

Excellent. Thank you both so much. I really appreciate it.

Thank you.

Thank you very much. That appears to be the end of our question-and-answer session. I will now hand back over to Chaim for closing comments.

Thank you very much, and have a wonderful day. Thank you.

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

Thank you, Jenny.

Thank you.