Brainstorm Cell Therapeutics Inc. Q2 FY2025 Earnings Call

Greetings, and welcome to the Brainstorm Cell Therapeutics Second Quarter 2025 Conference Call. 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.

Thank you, Kelly. Good morning, everyone, and thank you for joining us this morning. Before passing it off to the company management for prepared remarks, I would like to remind listeners that this conference call will contain numerous statements, descriptions, forecasts, and projections regarding Brainstorm Cell Therapeutics and its potential 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 2025 and beyond, the safety, 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 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, Dr. Bob Dagher, Executive Vice President and Chief Medical Officer; Hartoun Hartounian, Executive Vice President and Chief Operating Officer; and Alla Patlis, Interim Chief Financial Officer. So I'd now like to turn the call over to Mr. Lebovits. Please go ahead.

Thank you, Mike. Good morning, everyone, thank you for joining us today. We appreciate your continued interest and support in Brainstorm. I want to reaffirm that our top priority is advancing NurOwn into our planned Phase IIIb clinical trial. This trial, called ENDURANCE, is designed to confirm its therapeutic benefit in patients with early-stage ALS. As we previously disclosed, we reached a key milestone in May this year with the U.S. FDA granting clearance to initiate this pivotal trial. This allows us to move forward with patient enrollment, and we are preparing to begin that process. The trial for ENDURANCE has been reviewed and agreed upon with the FDA under a Special Protocol Assessment, or SPA, which confirms that the study's endpoints and statistical methods will be appropriate to support a future Biologics License Application (BLA), assuming the data meets expectations. The SPA provides us with regulatory clarity and a strong foundation, and we believe it derisks this program. An important part of the trial preparations is to ensure we have a robust manufacturing network to supply product for the trial. We announced during the second quarter that we secured a partnership with Minaris Advanced Therapies, a global contract development and manufacturing organization that specializes in cell and gene therapies. We have initiated the technology transfer in preparation for clinical trial manufacturing at Minaris' state-of-the-art facility in Allendale, New Jersey. This partnership enhances Brainstorm's U.S.-based manufacturing capabilities and will complement our previously announced collaboration with Pluri Inc. in Israel, which will also contribute to the production of clinical trial materials. I want to spend a few minutes talking about a recent important regulatory development, and that is the filing of the citizens petition with the FDA requesting a de novo review of the data supporting NurOwn. This petition was filed by a coalition of ALS patients and family members. As a reminder, a citizens petition filed under the Federal Food, Drug and Cosmetic Act is a formal process allowing any interested party to request FDA action, and this includes reviewing data or issuing new guidance. Although Brainstorm was not directly involved in drafting or submitting this petition or its contents, we, of course, welcome the FDA's willingness to reevaluate existing data. We have consistently stood by the integrity and scientific validity of the NurOwn data, and we support exploration of potential regulatory pathways that may allow appropriate access to this potentially valuable treatment for patients with ALS. We believe a comprehensive review of all evidence is essential, and this is even more important today as the regulatory landscape for rare diseases with unmet needs continues to evolve. The Citizens petition is a 309-page document that incorporates a decade of data, including the results of completed NurOwn trials as well as extensive real-world evidence such as new findings from the expanded access program. The new evidence is supported by testimony from top ALS neurologists who served as principal investigators in the prior Phase III trial. Brainstorm is committed to continuing alignment with the FDA, and we intend to proceed with the Phase IIIb ENDURANCE trial, as I explained earlier. As previously announced, Brainstorm's common stock recently transitioned from the NASDAQ Capital Market to the OTCQB. The listing is a result of the company's noncompliance with NASDAQ Listing Rule 550(b)(1) pertaining to its minimum shareholder equity requirement. While this was a challenging outcome, I want to be clear that it has no impact on our business operations, our ongoing R&D programs, or our commitments to execute on our strategic priorities. We remain fully committed to advancing NurOwn for patients living with ALS and to progressing our clinical initiatives, including the planned Phase IIIb trial. Our vision for the company and focus have not changed. The work being conducted by our team continues, and our dedication to serving both our patients and our shareholders remains steadfast. Brainstorm remains a reporting company under the Securities Exchange Act of 1934, and we'll continue to provide regular updates on our operational progress and financial position in full compliance with applicable SEC regulations. We intend to keep stockholders informed of all material developments as we assess our options for relisting on the NASDAQ.

Thank you, Chaim. Our research and development expenditures net for the quarter ended June 30, 2025, were $1.1 million. This compared to approximately $0.9 million for the quarter ended June 30, 2024. General and administrative expenses for the quarter ended June 30, 2025, were approximately $1.4 million compared with $2.1 million in the same period in 2024. Net loss for the quarter ended June 30, 2025, was approximately $2.9 million or $0.34 per share. This compares to a net loss of approximately $2.5 million or $0.60 per share for the quarter ended June 30, 2024. Cash, cash equivalents, and restricted cash were approximately $1 million as of June 30, 2025. I will now turn the call back to Chaim.

Michael, do you want to read the first question, please?

First question from the investor is, when do you intend to begin the Phase IIIb trial?

We have made significant progress to prepare for the trial. Our team, in partnership with one of the largest CROs, has diligently worked to advance the trial to the point of initiation. We're operationally ready. However, as many of you know, our ability to initiate the trial and remain listed on the NASDAQ was dependent on securing a significant round of funding. Just as we were closing in on that funding, the citizens petition was filed with the FDA. While the petition has the potential to be a powerful tool that could create an opportunity for our near-term accelerated approval while performing another trial, it has also created a new regulatory dynamic. This led many key investors to adopt a wait-and-see approach, and we were unable to close the financing required to both initiate the trial and meet NASDAQ's minimum shareholder equity requirements. We are now actively exploring alternative funding and remain ready to accelerate as soon as a signal is given.

Next question. What happened to the nondilutive funding that you shared you would be applying for?

Yes. So our outstanding team did an incredible amount of work to prepare the comprehensive application for nondilutive funding. Unfortunately, due to an unexpected pause in the submission timeline from the granting organization. By the time the submission window reopened, we were unable to demonstrate the sufficient co-funding required. The funding that we had planned to raise in June would have provided the necessary co-funding, but as we mentioned, we were unable to close that round at the time, and therefore, couldn't submit the application yet. The good news is that once we secure that co-funding, we will be able to resubmit the application. We're actively exploring new and alternative funding resources driven by the belief that our compelling data and the immense unmet medical need for our therapy will ultimately attract the right partners.

And one final question. Do you plan to regain compliance and uplift to NASDAQ?

Yes, regaining compliance and uplifting to NASDAQ remains a core strategic objective. However, our ultimate priority is to initiate the Phase IIIb trial and get NurOwn to patients as quickly as possible. We believe these two goals are linked. A positive conclusion from the FDA regarding the Citizens petition, particularly an announcement that our existing data supports our BLA submission conditioned on a confirmatory trial could be a game-changing event. Such an outcome would likely enable us to easily raise the funds needed for the Phase IIIb trial. This trial design has been granted by the FDA, the first ever SPA agreement for an ALS study, which is a powerful validation of its potential to meet FDA standards for approval. I would also like to remind everyone that NurOwn's potential extends well beyond ALS. It's a true platform product in the CNS space, with encouraging new survival data from our expanded access program and breakthrough pharmacogenomic data presented at the ISCT 2025 meeting. We've also shown very promising results in preclinical studies for other neurodegenerative diseases like progressive MS, Parkinson's, and Huntington's. These milestones along with the foundational science reinforce our long-term vision. There's real momentum building, and it's rewarding to be part of something with such strong potential to make a difference.

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

Good morning, everyone. Thanks for the update this morning. I'm curious if you could discuss what some of the potential outcomes are from the Citizens petition filing for the company that is.

I think I just mentioned the potential outcome would be that if the FDA would find the Citizens petition attractive and would allow or invite us to file a BLA, that would be a very exciting moment to have. We, as you know, from day one, believed. And therefore, we filed at the time that the BLA that this should be approved in conditions to a confirmatory trial and not important how you call it a Phase IV or Phase IIIb trial. And so if the FDA today would see that after rereading the Citizens petition, that would be a wonderful outcome.

Okay. One of the most significant pieces of information in the petition is the 5-year survival data from the EAP study. Could you provide some context about why this data is important? Additionally, I would like to know if this is simply related to the patients being in earlier stages of their disease, or if it reflects something special about the treatment they received.

Yes. So I will just begin, but I will let Bob in a moment, give you more detailed answers. It's in his court. But anyway you look at it, and we've spoken to many scientists, there's no question that seeing 10 out of 10 patients over 5 years and 6 out of 10 over 7 years without a tracheostomy is impressive, very impressive. But Bob, do you want to give a more detailed answer, my educated answer.

I'd love to. Thank you for the question. It's very important for us, and we've been thinking about it a lot. It's important to note two key aspects of the regulatory situation for Brainstorm right now. When we filed the BLA, it was based on a 6-month Phase III pivotal study that included data from a follow-up with an entire patient population, not just those with early disease. These are significant characteristics we have today. Currently, we know that 10 patients continued in the EAP, showing real-world evidence beyond 6 months. As Chaim mentioned, after 5 years, 10 out of 10 remained alive. Shortly after 5 years, one participant chose euthanasia, and now, 7 years later, we have survival data beyond that, which is unprecedented. We understand from the petition, although we don't have direct access to the data since that is closed now, that testimonies from patients and their families indicate this survival data is encouraging, showing no need for tracheostomy or invasive support and maintaining good respiratory function. This is very pivotal for us and we hope it is for the FDA's reviews as well. The second aspect is focusing on the subset of the population that began with early disease and did not progress to advanced disease by the time the baseline was established in that pivotal study. This distinction is crucial for the entry criteria for the upcoming Phase IIIb study we are preparing to start. This will be a key consideration and discussion point if the FDA requests us to resubmit our BLA. We will concentrate on those two aspects: long-term survival and early disease outcomes while aiming for an accelerated approval followed by a confirmatory study that we are committed to executing. Does that help address all the questions?

Yes. No, that was great. Really appreciate it.

Kelly, any additional questions?

Your next question is coming from Jason McCarthy with Maxim Group.

This is Joanne on the call for Jason McCarthy. So for the first one, could you just walk us through or just perhaps, I guess, remind everyone the distinction between Citizens petition and broader public support or demand for NurOwn approval? And then if you could just outline Brainstorm's plans that remain unchanged, mainly securing the SPA aligning manufacturing and initiating the Phase IIIb confirmatory study. Just from our perspective, I think it's important to underscore that the path for NurOwn has always been to advance through the full clinical development process and that can't be emphasized enough. So if you could just walk us through that, that would be appreciated.

Yes, Joanne. So to clarify your question, you were asking the difference of Citizens petition versus just a regular petition to the FDA?

Yes. Just like to the broader public support or is this like demand for NurOwn's approval?

Yes. Yes, Citizens petition is a regulatory pathway, not commonly used in this type of situation. And also you don't see Citizens petitions commonly lasting 309 pages. So I must comment that the group that did this competition put in a lot of work, months and months of work. It's almost as a work put up into filing a BLA. And they also have the possibility which a company doesn't have and Bob spoke that a moment ago, we can't follow up patients after the trial is over, the follow-up of the trial. They didn't view many people, and they are allowed to citizens and their families and they speak to each other. So they introduced a little bit more information than what we had, just like we mentioned before, on the EAP patients, we learn from reading the petition that for so many years after treatment patients are stable where they're breathing without having tracheostomies or anything like that. Yes. But Bob, do you want to comment on the second half of the question?

Yes. Yes, thank you for the question. I think the key important point here is that there is, should I use the word obligation or the FDA will respond and has to respond to a Citizens petition. So as I mentioned, it's a pathway established that is less commonly used. So the outcome from that is basically that the quality of the evidence presented in the over 300 pages will be met by reviewers at the FDA, who will have to make a determination of what to do next. And as was mentioned repeatedly, that will not change our plans, our clinical development plan is for us and for the patients, the community, and the clinicians that we want to know the benefits of NurOwn by minimizing all biases and by basically executing this special protocol assessment agreed protocol with FDA, which holds all the important aspects to have a clear determination of whether our therapy benefits patients, and what type of patients. We understand, and we share that earlier in the disease are the strongest signals on the Phase III study that we conducted, as well as the biomarker data and follow-up. This study will have a double-blind phase at six months followed by an open-label phase another six months, giving us one year of follow-up on survival and biomarker and other aspects. We're hoping that we will hear back from the FDA, as they will have to render their opinion and that will be the next step for us to meet with them and discuss the plan moving forward.

Got it. Appreciate the color. And you sort of touched on this, but just turning to the FDA. We're wondering if they're open to looking beyond ALSFRS scores as a gold standard endpoint just given its limitations with such heterogeneous patient population and just sort of considering other meaningful measures such as overall survival, time to ventilation, or even changes to quality of life as supportive of an approval pathway?

Thank you for your question. Bob has just returned from a conference where this may have been a topic of discussion. While we cannot speak on behalf of the FDA, your question reflects a concern shared by many. In our trial, the primary endpoint remains the ALSFRS-R score. Bob can provide more details about our conversations regarding the SPA agreement. It was made clear that the FDA still regards ALSFRS as the gold standard endpoint, while other measures are seen as exploratory. Additionally, at another conference I attended a few months ago, James Berry, the Co-Chair for NEALS, mentioned that despite discussions on various endpoints, he believes that ALSFRS will continue to be regarded as the primary endpoint in the next five to ten years. However, Bob, feel free to share any new insights you gained from the ALS Nexus conference.

Yes. Thanks for that. Today is the last day of the conference. And obviously, your question is very important, and the entire field is very interested in it. The key points are these: it is clear that under our SPA agreed protocol, the change from baseline ALS is the primary endpoint, and that will not change. To change that, we'll have to go back and rediscuss the protocol with the FDA and propose alternatives, which we don't have today. The field has been investigating this for a long time and does not have a replacement today. In the past 20 years ago, when riluzole was approved, it was based on a long study with survival as the endpoint. Unfortunately, we cannot do that today. Obviously, we cannot keep people on placebo for a very long time to assess survival and basically not be able to run two-, three-year studies to determine that. So the gold standard today of running six, maybe nine-month studies, short studies, the functional assessment remains the standard. However, there are many discussions about adding biomarkers and quality of life or, in our case here, we have the benefit of real-world evidence that we'll be discussing with the agency in those ten EAP patients that we can talk about. But again, it's not going to change the current plan for us without a confirmatory study using the ALSFRS as the primary endpoint.

Got it. Very helpful. And looking forward to hearing more updates on NurOwn as things progress.

Thank you very much, Joanne. Kelly, we have time for one more question as we're coming to the top of the hour.

Your next question is from Deborah Balena, a private investor.

My name is Deb Balena. My son was diagnosed with ALS at just 28 years old. After his diagnosis, Matt was unable to qualify for a clinical trial, and he sought to pass the right to Try law, which was named after him. Our family is encouraged by the FDA commissioner's commitment to honor the spirit and language of the right to Try law. Matt received seven doses of NurOwn under this law, and we were unaware of the Citizens petition, which I am very interested in. We fully support it. I read it thoroughly because the FDA never had a chance to evaluate Matt's real-world evidence as documented in his VA records. Notably, his NurOwn treatment was performed at the VA under the right to Try law. Matt's evidence offers unique data points for the FDA to consider. Importantly, he is the only person in the United States who has received six consecutive doses at two-month intervals. He seems to have the most significant and longest-lasting improvements. When he received NurOwn, Matt's baseline score was 21 to 48. He had already lost more than half of his function, according to the ALSFRS-R score. On NurOwn, he regained and maintained six points of function during that time. He stopped using a BiPAP to breathe and was able to stand up out of his wheelchair unassisted for the first time in two years, which has never happened in any other ALS trial that I know of. Based on the commissioner's common sense test, Matt's evidence shows that NurOwn works. As a mother, I have witnessed this change. I am also a Lean Six Sigma Black Belt, so everything I do is based on evidence. Matt, a Navy pilot, had ten times the risk of developing ALS due to his service to our country, which is why we support this Citizens position. We believe that Matt deserves to have his compelling evidence, which is well documented, considered by the FDA. Thank you for your time, and I appreciate this opportunity.

I don't know what to say, Deb. I was chuckling when they said private investor. Of course, we know you. And we're very, very proud that we were able to provide treatment to a Navy Colonel like your son, a very brave person, and it's the only exception we made to go with the right to try, even though there is some controversy, as you know, we went with it. It was in his name; he fought for that...

Yes. I'm not a private investor, by the way. I'm just a mother. So I just want to be sure everybody knows that I ended up in the queue this way, but here I am with our story, and he is still eating; he is still breathing on his own. And his last dose was five years ago this month.

Yes, Deb. As you know, we share your enthusiasm about our product, as you know. And we do thank everyone that's trying to create the FDA to have a second look into this. We all agree that we should attempt to do another Phase IIIb trial; it depends on funding. FDA allowing a refile BLA, allowing a pathway for accelerated approval would probably make it very easy to do this trial. So we're all on the same page here, Deb. Thank you for sharing. I know you did that in the panel a few months ago in a conference that I participated in; it was very moving. You had more time than what on a call with investors. But I appreciate you calling in this morning. I really appreciate that, and send our best to Matt.

Yes. And everyone wants to see the data; I have it. Thank you...

Thank you very much.

There are no questions in queue at this time, and the Q&A is concluded. I would now like to turn the floor back over to management for any closing remarks.

I just want to wish everyone a wonderful day, and hopefully in the next call, we're going to be after very good news. Thank you very much.

Thank you, everyone. This does conclude today's conference. You may disconnect your phone lines at this time. Thank you for your participation.