Greetings, and welcome to the Brainstorm Cell Therapeutics Second Quarter 2024 Conference 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, everyone, and thank you for joining us today. Before passing it off to company management for prepared remarks, I would 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 disorders such as ALS, the sufficiency of the company's existing capital resources for continuing operations in 2024 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, and many of these 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 this morning will be Chaim Lebovits, President and CEO of Brainstorm and Alla Patlis, Interim Chief Financial Officer. In addition, Dr. Haro Hartounian, Chief Operating Officer; and Dr. Bob Dagher, Chief Medical Officer are also on the line and will be available to answer questions during the Q&A session. So I'd now like to turn the call over to Mr. Lebovits. Please go ahead.

Hi. Thank you, Mike. Good morning and afternoon to everyone. Thank you for joining us today. We appreciate your continued interest and support in Brainstorm. We're making substantial progress in our preparations for the Phase 3b trial for NurOwn in ALS. Importantly, NurOwn is now a derisked asset having secured a written SPA agreement from the FDA. This significant milestone, which we announced earlier in the year, underscores the agency's recognition of the unmet need that exists in ALS. The FDA continues to be supportive, and we are grateful for their input and advice. In addition to the FDA, during the second quarter, we reached alignment with FDA on CMC aspects of the Phase 3 trial. In June, we participated in a very constructive face-to-face Type C meeting and have now resolved previously outstanding CMC questions. Cell therapy products have certain additional complexities in the manufacturing process. Therefore, it's important that the FDA is involved at various steps during the regulatory process, including prior to initiating a pivotal trial. Our collaboration with the CRO has been instrumental in advancing key trial protocols. We have selected a leading CRO and are diligently building a network of over 12 leading clinical centers across diverse geographic regions to ensure broad patient access and representation. The manufacturing processes are well-advanced and I believe on track to meet production timelines. We remain committed to initiating the trial by the end of 2024 or the first quarter of 2025. To bolster our financial position, we're actively pursuing non-dilutive funding, including a promising grant application with the potential to secure up to $15 million. ALS is a devastating disease with limited treatment options. The potential impact of a successful Phase 3b trial cannot be overstated. It could represent a significant breakthrough for patients and their families. We are committed to transparent communication and providing regular updates about our progress. We are grateful for the support and collaboration of the entire ALS community as we continue this important work. I want to address the items in our proxy statement and the upcoming shareholder meeting. NASDAQ has notified us that we must maintain a $1 share price for 10 consecutive trading days by October 28 or risk delisting. Additionally, we need to achieve a $35 million market cap. To address these challenges and provide the company with maximum flexibility, we've scheduled an earlier-than-usual annual shareholders meeting. A key item on the agenda is seeking shareholder approval to authorize the Board of Directors to affect the reverse stock split if deemed necessary to maintain our NASDAQ listing. It's important to understand that approving this proposal does not automatically trigger a stock split. It simply grants the Board the discretion to implement if it becomes necessary to comply with NASDAQ listing requirements. While we'll exhaust all possibilities to avoid a reverse split, including driving up the share price with good news, we believe it's essential to have this option available to protect shareholder value and maintain our NASDAQ listing. The Board will carefully consider all options, including a potential reverse split or transition to the OTCQB. If we opt for the OTCQB, we'll work diligently to regain NASDAQ compliance without resorting to a stock split. Our ultimate goal is to maximize shareholder value. We are confident in our ability to navigate these challenges and deliver value to shareholders. Your support in approving the proxy is crucial to ensuring we have the flexibility to make the best decisions for the company. Thank you for your continued support.

Thank you, Chaim. Cash, cash equivalents and restricted cash were approximately $3.65 million as of June 30, 2024 compared to $0.75 million as of June 30, 2023. Research and development expenses for the three months ended June 30, 2024 and 2023 were approximately $0.9 million and $2.8 million respectively. General and administrative expenses for the three months ended June 30, 2024 and 2023 were approximately $2 million and $2.7 million respectively. Net loss for the three months ended June 30, 2024, was approximately $2.5 million as compared to a net loss of approximately $5.3 million for the three months ended June 30, 2023. Net loss per share for the three months ended June 30, 2024 and 2023 was $4.13 respectively. I'll turn it back to Chaim to close the call.

Thank you so much, Alla. I'll now open the call for the written questions. Please, Mike, can you please go forward with the written questions?

Yes. First question, can you please elaborate on the key milestones that investors should be looking forward to in the near term?

Thank you, Mike. Absolutely, we're very enthusiastic about the potential catalysts that should drive significant shareholder value. In the near term, we are focused on several key milestones. Firstly, securing the first few trial site agreements is a crucial step. This demonstrates our ability to execute on the clinical trial timeline efficiently. Secondly, we're actively pursuing additional non-dilutive funding through grants and strategic partnerships. Successful acquisition of these funds will significantly strengthen our financial position and accelerate our development timeline. And of course, trial initiation and enrolling the first patient in the study are major milestones that will mark significant progress. We believe we can successfully execute on these milestones and deliver substantial value for our shareholders.

Thank you. Next question. With the proposed increase in the authorized shares from 100 million to 250 million there's a possibility that existing shareholders would be significantly diluted. What is your plan for equity raises over the next several quarters?

Thank you for this question. Very good so we can clarify this. Of course, we understand the concern regarding potential dilution. What's important to emphasize, that an increase in authorized shares does not equate to immediate dilution. This action only provides us with the flexibility to pursue strategic opportunities without resorting to dilutive financing. Our primary focus is non-dilutive funding sources such as grants and other strategic collaborations. We have a successful track record of securing non-dilutive funding, demonstrating our ability to execute on this strategy. Brainstorm Cell Therapeutics has a 15-year history of efficient capital management, issuing less than 100 million shares while raising close to $200 million. This demonstrates our commitment to maximizing shareholder value. The proposed increase in authorized shares is a strategic long term decision to ensure we have the flexibility to capitalize on future growth opportunities without unnecessary dilution. We will continue to explore all avenues to optimize capital allocation and minimize dilution.

Thanks, Chaim. And a related question, what non-equity funding sources currently have a good probability of transacting before initiation of the Phase 3b trial? Can you speak to grants, partnerships, or the potential outsourcing of intellectual property?

Thank you. So we're actively pursuing multiple non-equity funding revenues. Our previous grant award from the California Institute for Regenerative Medicine was a good example of our efforts. It was a $16 million non-dilutive grant that supported our Phase 3 trial. We're also exploring partnerships with pharmaceutical companies and other industry stakeholders. These collaborations can provide both financial support and strategic advantages. Outsourcing of intellectual property is not currently on the table. We believe that maintaining control over our core technology is essential for long-term success. However, we're open to strategic partnerships that involve technology sharing or licensing on mutually beneficial terms. Thanks.

The next question regarding the planned clinical trial. Is there a take a peak provision that would allow interim analysis of early signs of efficacy?

Thank you. So an independent Data Safety Monitoring Board is being established for the Phase 3b trial design. The Board members and their charter are currently under finalization but the DSMB will be responsible for periodic safety evaluations to monitor patients' safety and well-being. Thank you.

Next question, is the ALS FRS at enrollment higher than in the prior Phase 3 study?

Yes. Thanks, Chaim. Based on properly conducted simulation, the total score of the ALS FRS is expected to be higher than in the previous trial and we're looking forward to executing the trial based on those assumptions. Thank you.

And also on the trial, will there be more trial sites than in the prior Phase 3, thus allowing the trial slots to be filled more quickly?

Yeah, thanks. I'll take that question as well. Yeah, we are planning to add a higher number of sites for the Phase 3b trial than it was conducted in Phase 3 for the same, roughly number of patients, about 200 patients in the trial. We expect that this will increase the rate of enrollment and will also speed the timelines of the trial. Thank you.

And has a commercial manufacturing partner been locked down at this point?

Thank you, Chaim, for the question. We're planning for multiple manufacturing sites for this trial and simultaneously are engaged in advanced discussions with highly qualified potential commercial manufacturing partners. While we cannot disclose specific details until a contract is signed, we are confident in our ability to secure a suitable partner in a timely manner to support the commercial launch of our product if and when approved. Thank you.

Is the Phase 3b inclusion criteria more stringent than the prior Phase 3 study, thus ensuring a healthier pool of patients or trial participants?

Thank you. Bob, you want to take that?

Yeah, sure. Thanks for the question as well. Yeah, we designed the inclusion criteria for the Phase 3b trial to be more refined, focusing on patients that are earlier in their disease course. The goal is to enroll patients with a higher likelihood of showing benefits from our treatment, which we believe will also be strengthened by having an overall robust data set. Thank you.

Thank you very much. I think that concludes the written questions we received. Can we open the call for any additional questions from any investors on the line?

Thank you, sir. Ladies and gentlemen, the floor is now open for questions.

Hi. This is Joanne Lee on the call for Jason McCarthy. Thanks for taking the question and congratulations on the progress made this quarter. Just regarding the CMC alignment, does the company need to implement any new actions or adjustments on the CMC front to reach the alignment with the FDA?

Thank you very much. We did. We reached alignment to be able to initiate the trial. That was very important. Thank you for that clarifying question.

Got it. And just regarding the upcoming study, could you briefly remind us of the changes made to the ALS FRS entry criteria and how these adjustments may impact the upcoming Phase 3b? And just as a follow-up, if you could provide a mechanistic rationale for why an effect might be more easily identifiable under the new ALS FRS criteria?

Thank you. Bob, you want to take this question?

Sure. I'm happy to do that. Thank you for your question. So basically, there are a number of differences from the previous trial. The main criteria regarding the ALS FRS is to ensure that every item, the score is made up of 12 items. Every item on the score is scored at a 2, 3, or 4. Recall, each item can be scored from 0 to 4, with 0 being the worst. So we are not allowing any 0 or any 1 to enter on each one of the 12 items. That's number one. Number two, we are also not allowing the ALS Total score to be either 46, 47, or 48. 48 is the maximum, but once you start noticing your first symptom, you drop from 48 typically to 47 or lower. The reason for that is we didn't want an allowance of the two years since the first symptom for someone two years later to remain without really showing signs of progression by more than 1 or 2 points. So the score allows people to enter the trial at 45 or less. Number three, we are looking closely at associated entry criteria, such as a typical two-year term symptom onset, ensuring we document the first symptoms accurately and getting patients quickly after they are diagnosed with ALS. We are also looking to get their respiratory function to be relatively stable, targeting a low vital capacity above 65%, which is on the healthy side. Combining all of these together and simulating the entry criteria I mentioned on large databases, one of them being the ProAct database, we have a total score that puts us at confidence higher than what was conducted in the previous Phase 3 and in line with modern ALS clinical trials conducted in recent years. So we have high confidence that these criteria will allow us to target patients who are earlier in their disease course and thus benefit more from NurOwn. I hope this answers your question.

Thank you so much, Bob.

Thank you for the questions.

Yeah. That was very helpful. Thanks again. Looking forward to further updates on the launch of the study. Thank you.

Thank you so much for being on the call today. Thank you.

Hey, good morning, everybody. So in regards to the upcoming Phase 3 trial, it looks like it will have a 24-week double-blind period and a 24-week open-label extension. Regarding potentially filing the BLA, assuming positive results from the double-blind portion, could the BLA be filed essentially immediately after that, or will the data from the open-label extension be required for the BLA?

No, we would be able to file the BLA after the first half of the double-blinded period. Thank you for that question.

Okay. And I was wondering if you could comment on the general sense of how patient advocacy groups, maybe even patients or physicians, feel about their enthusiasm still for NurOwn? You've already commented about potentially seeking non-dilutive funding, but I was going to ask whether the patient advocacy groups would potentially have any type of grants or funding available for the Phase 3 trial?

Thank you very much for that question. We are working diligently with many patient advocacy groups and I can tell you that we're seeing even more excitement than in the previous trial. Hopefully, we will see that publicly and also in ways of grants, but I can tell you across the board, patient advocacy groups are very supportive of this Phase 3b trial. As you know, some of them felt that we didn't have sufficient data in the Phase 3, but they're very supportive of the Phase 3b trial. They want to have a clear answer on NurOwn, and they think that the patient population we are now focusing on, as Bob described repeatedly, is the patient population that has the best chance to show efficacy. So we're receiving a lot of support, and I believe we are getting substantially stronger support from different groups compared to the past. Okay, Operator, we have time for one more question, please.

Understood, sir. We have a question from Christopher Nicholson, a research analyst at ACF Equity Research. Your line is live.

Hi. Good morning, everybody. I'm not a private investor; I'm a research analyst at ACF Equity Research. I wondered if you are in a position to give any color on the cost of the trial at this point, either on a per head basis or overall? And as a follow-up, are you able to give us any further color on the likely costs of production of each course of treatment at this time?

Thank you so much for these questions. So the answer is that we are still not in a position now to share more exact costs for the trial. The reason for that is the main cost of the trial, the manufacturing costs, and we're still in the phase of finalizing contracts with different manufacturing centers from different geographies, which will have varying prices. Therefore, we're not able to provide details yet. The previous trial cost us about $50 million with 200 patients only for six months and this time it's for a longer period, but we will provide numbers at a later stage. We're also focused on trying to reduce product costs. It's very important in gene and cell therapy, and we're working hard on that as well.

Thank you. If I could just follow up slightly on that one, is it your experience that the current technological innovations in manufacturing and therapy development play well into your space? Is it the expectation that you could see costs reducing, or is it somewhat the opposite because you're very innovative?

Thank you very much for that question. If we can get a validated automated product, definitely it will dramatically decrease costs. But even in the manual process, we are seeing many positive developments to make the product cheaper. I think even in this trial, we may have a significantly lower price per product than previously, hopefully. We're still evaluating things and are working hard, so you can expect updates on this in the upcoming quarters. Thank you very much. I want to thank everyone again for being on the call today. We are finishing just on time for the 9 a.m. We wanted to conclude this call. Thank you very much for joining us, and we appreciate your ongoing support. We're looking forward to additional updates next quarter, hopefully even after initiating a trial. Thank you very much.

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