Good afternoon, everyone, and welcome to the BioRestorative Therapies Q1 Business Update Conference Call. At this time, all participants are in a listen-only mode, and we will open for questions following the presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Steve Kilmer, Investor Relations. Steve, the floor is yours.

Thank you, Jenny. Good afternoon, everyone. Let me start by pointing out that this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on BioRestorative's current beliefs, assumptions, and expectations, and such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed. For details on factors, among others, that could affect expectations, see Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on these forward-looking statements. We speak only as of the date of this conference call. BioRestorative undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than as required by law. On the call representing the company are Lance Alstodt, BioRestorative's Chief Executive Officer; Francisco Silva, our Vice President of Research and Development; and Robert Kristal, the company's Chief Financial Officer. With that said, I'll now turn the call over to Lance.

Thank you, Steve, and good afternoon, everyone, and welcome to our inaugural quarterly conference call. On behalf of the management team and everyone at BioRestorative, I'd like to thank you for your interest in our company and for those of you who are shareholders and analysts, we appreciate your support. We as a company, we've come a long way since our very beginnings now with two active programs in development and a commercial line of business that is very well positioned for growth and on the verge of really making an impact on our operations. With that, I'd like to ask Francisco Silva, VP of Research and Development, to provide an overview and an update on our business lines.

Thanks, Lance. For the benefit of those who are new to the BioRestorative story and since this is our first ever quarterly investor call, I would like to take a moment to briefly describe our clinical BRTX program and our preclinical ThermoStem as well as our pipeline programs. Our lead cell therapy candidate, BRTX-100, is a novel cell-based therapeutic that's engineered to target areas of the body that have little blood flow. The product is formulated from autologous or a person's own cultured mesenchymal stem cells that are collected from the patient's bone marrow. We intend for the product to be used for the non-surgical treatment of painful lower back pain disc disorder or as a complementary therapeutic to potentially surgical procedures. The safety and efficacy of BRTX-100 in treating chronic lumbar disc disease, or CLDD, is being evaluated in an ongoing Phase 2 prospective, randomized, double-blinded, and controlled study, wherein a total of 99 eligible patients or subjects will be enrolled at up to 16 clinical sites in the United States. Subjects included in the trial will be randomized two to one to receive either BRTX-100 or placebo, which is a sham injection. In our core preclinical metabolic program, ThermoStem, we are developing a cell-based therapy candidate to target obesity and metabolic disorders using brown adipose tissue, or fat. These fat-derived stem cells, or BADSCs, are used to generate brown adipose tissue, or BAT, as well as exosomes secreted from the BADSC. BAT is intended to mimic naturally occurring brown adipose depots that regulate metabolic homeostasis in humans and is involved in weight loss. Previously published, peer-reviewed preclinical data from a study conducted in collaboration with the University of Utah School of Medicine demonstrated that functional brown adipose-derived stem cells formulated using our patented ThermoStem platform produced significant reductions in weight, consistent with the losses observed and achieved by GLP-1 drugs and decreased blood glucose levels in diet-induced obesity models in mice. Importantly, although further work is needed to fully understand the mechanism of action of ThermoStem and its impact on weight loss, we have not seen, nor do we expect the same negative secondary effects of GLP-1 pharmaceuticals, such as a loss of muscle mass and negative cardiovascular effects. We have achieved significant milestones in both of these core development programs over the past few weeks. With respect to BRTX-100, the first of those was a presentation describing preliminary 26 and 52-week blinded data from our ongoing Phase 2 clinical trial at the Orthopedic Research Society annual meeting this past February. Again, although the data is blinded, we have observed a very positive trend when patients who have already completed 52 weeks post-treatment have not experienced adverse or severe events, adverse events that significantly impact our dosing or overall study design. In addition, at 52 weeks post-treatment, we have observed subjects who have already met the threshold of 30% improvement in function and a 30% reduction in pain. This is quite exciting and positive. We are confident that in addition to meeting our primary safety endpoints, we will also meet our secondary efficacy targets. More recently, in April, the FDA cleared an important amendment to our Phase 2 study protocol which removes the saline injection in the control arm of the study and replaces it with a sham injection. Controlled patients will now have a needle placed in close proximity to the target disc, but the disc will not be pierced nor will any saline injected into it. We believe this change brings additional safety to our subject participants and helps preclude the possibility of transient clinical outcomes in the control groups, which can impact the end-of-study readouts in trials like this. It is well established that saline can rehydrate the disc and create a change in the disc microenvironment. This change, although transient, may result in short-term pain relief. We are very pleased that the FDA has agreed to this amendment, as when we release the final trial results of our Phase 2 trial, the data will be a true comparison of patients who have received BRTX-100 and those who have not. Clinical trials are very complex and study design is critical, and traditional pharmaceutical models for drug approval are well established and integrated well within the capital market timelines. However, this isn't always true for cell-based therapies. With that in mind, we have been carefully gauging our risk-reward and have diligently taken steps to ensure timely enrollment without compromising data that impacts our product approval. We have KOLs across the United States participating in our trial and along with our patient recruitment group targeting social media outreach, we are confident we will be able to fully enroll before the end of 2024 without compromising our study design and results. Shifting now to our patented ThermoStem platform, we are pleased to announce just a week of development of a novel exosome-based biologic program targeting obesity. Exosomes are small extracellular vesicles secreted by various cells, including stem cells. They are understood to be important mediators in intracellular communication and have been found to play a role in adipose metabolism by transporting cargo such as non-coding RNAs, proteins, and other factors that may impact weight loss. This new therapeutic candidate has potential to serve as an adjuvant to existing weight loss drugs, potentially allowing for lower dosing as well as the prevention or minimization of possible loss of muscle mass and negative cardiovascular effects. Importantly, our ThermoStem platform has a comprehensive portfolio of issued patents that cover both U.S. and international markets. We believe this broad intellectual property portfolio can be leveraged across drugs that are currently approved and marketed for weight loss, potentially opening the door to future big pharma partnerships for the company. We currently anticipate initiating a formal FDA process for this ThermoStem-based therapeutic candidate by filing a drug master file in the third quarter of 2024, and we currently aim to initiate first-in-human clinical studies before the end of the year. Our planned DMF is strategic in that it gives us a basis for others interested in leveraging our platform technology to initiate human clinical studies or pursue straight-to-market opportunities. There are a number of countries in which cell-based therapies have been approved and are currently in commercial phase. We have begun initial conversations for partnership and license activities which may accelerate the commercialization of our technology pipeline. To summarize, we are committed to and diligently prosecuting our Phase 2 trial for BRTX-100, our lead clinical candidate targeting chronic lumbar disc disease. We have added a new therapeutic candidate targeting obesity through our ThermoStem platform, and we have commercialized our technology with an agreement with our partner Cartessa in the BioCosmeceuticals markets. We expect that our next phase will be to explore the commercialization of our pipeline in international markets.

Thank you so much, Francisco. As we can see from what Francisco just reviewed, we have an exciting and productive start to the year and multiple potential value-enhancing inflection points ahead of us. I often describe this as a period of rich fundamental catalyst environment for the company. Not the least of that positive momentum should come from our entering into a transformative commercial agreement with Cartessa, a well-recognized and respected leader in the medical aesthetics technology space. This is an enormous and rapidly growing sector of the market in which we're developing a significant presence through this partnership. Francisco's team has done an amazing job in engineering this proprietary biologic serum to reduce the appearance of fine lines and wrinkles, as well as to bring forth other areas of cosmetic effectiveness. We won't get into the details of the financial impact of the partnership at this stage. However, we can say that the revenues are expected to be very significant and that the margin profile is consistent with a drug, which will combine to produce meaningful cash flow for operations. To summarize, the preliminary clinical data from our ongoing Phase 2 clinical trial of BRTX-100 in CLDD showed very meaningful signals in patients enrolled in the study and, importantly, no notable safety signals. The FDA has recently cleared an important amendment to the study protocol, replacing saline injection with a sham injection in the control arm. Patient recruitment in the study is going very well and we expect to complete enrollment before the end of 2024. We will present more data from this trial with a larger patient population throughout the year, so we should expect that, and we are very optimistic that this data will be consistent with the previous trends. Off the heels of a very strong data from our preclinical animal study in obesity, we have enhanced our preclinical metabolic program with a novel exosome-based therapeutic candidate targeting obesity, with plans to initiate a first-in-human study later this year. Our strategic agreement with Cartessa serves to validate our BioCosmaceutical platform and represents a transformative step toward our building a strong commercial engine capable of supporting profitable growth while also helping fund the continued advancement of BRTX-100 and ThermoStem for obesity. We ended this quarter in a very strong financial position with cash, cash equivalents, and marketable securities of $16.4 million as of March 31, 2024, and we look forward to what these programs will yield going forward. So thank you, and with that, we are happy to take any questions you may have.

Thank you very much. Your first question is coming from Michael Okunewitch of the Maxim Group. Michael, your line is live.

Hey, guys, thank you so much for taking my question, and congrats on some real great progress this quarter.

Thanks, Michael.

So, I guess to kick things off, I'd like to see if you could discuss some of the advantages in a bit more detail of using an exosome-based product for the obesity program as compared to the implantable brown adipose tissue stem cells?

Exosomes would potentially avoid that because there is no encapsulation needed. The exosomes are basically delivering the messages that the cell would make in order to communicate with other brown tissue or white adipose tissue or to other organisms that are involved in metabolic homeostasis. So essentially, the exosome kind of takes out the cell component to it. There are no known immune responses that can potentially occur by using the exosomes versus the cells. From a cost perspective, it's probably cheaper to make. There's less manufacturing, less downstream engineering, so there are significant advantages, and so we're pretty excited about the program that we have.

I would also chime in that from a regulatory pathway, it may be less convoluted, just given that there isn't a third-party piece of equipment or scaffold, if you will, or device that would encapsulate the cells here. It would be the exosomes that would be directly implanted either through a variety of different mechanisms. So from a regulatory perspective, it could be a cleaner protocol, so to speak.

Can you talk a little bit about some of the mechanistic differences between a brown adipose-derived platform and the existing therapies we have out there in obesity? Specifically, what would position it to be effective as an adjuvant to those treatments?

GLP-1 pharmaceuticals, they also interact with the brown fat, and that's part of what's involved in the mechanism of action of losing weight and increasing your metabolism. So it does interact with actual brown fat tissue that's native to humans. What we could potentially do by working as an adjuvant is that it's been demonstrated that when you activate brown fat, secondary effects increase positive outcomes in terms of cardiac function or pulmonary function. This has been shown in significant studies in animal models where they've been documenting activation of brown fat and results in positive cardiovascular output. So the idea here would be to potentially lower the dosage of GLP-1 intake in the patient, combine it with our ThermoStem platform, thereby decreasing the potentially secondary negative effects that are observed at current dosages, which are loss of muscle mass and negative cardiovascular effects.

All right, thank you. And then just one more on the ongoing Phase 2 for BRTX-100. Do you have any thoughts on how long patients would need to be in the study for it to make sense for you to do a larger, I would assume, blinded read? Would you anticipate that you would be only showing patients after they've been on treatment for six months or longer, or would shorter duration still make sense?

Yes, I was going to say there's no hard and fast rule, but if you're asking if six months is too soon, I would say it is. And my feeling is, by the time we enroll all 99 patients, we're going to have a significant number of patients that have already been treated for a year. So we want to really understand how many of those patients are somewhere between six months to a year and see if it's worth exploring the possibility of sacrificing some alpha for an earlier reveal of the data and presenting it to the FDA. So it really, it’s a couple of different factors that are driving an ultimate decision. It's somewhere what's the timeframe of how many patients are between six months and a year, and what obviously do those results look like. But I think anything less than six months could potentially be a bit skewed. But now that we have the sham injection, I think what we're talking about is a shorter period of time could take hold in terms of getting to a cleaner result from a results perspective.

All right, thank you very much for taking my questions today.

Thanks, Michael.

Thanks, Michael.

Your next question is from Jonathan Aschoff. Jon, your line is live.

Thank you very much. Hey, there. I know that you don't want to talk about revenue from the cosmeceutical area, but I do have a question. Do you think that the purchase minimums with the clients could give you enough cash to fund the company to the final top-line Phase 2 data?

No. We're not talking about where that gets to because the margin is obviously something that we would need to reveal. But I would say that this is a significant revenue line in the millions of dollars we’re talking about without being specific, and we're looking at a margin profile that's consistent with pharma drugs from a gross margin perspective. So we think that's a significant offset relative to where we are today and the dependence that we've been required to access the capital markets. So we think this is going to provide us with a really good amount of financial flexibility.

Okay. And I know that you have said before that Northwell could be an enormous, if not the entirety of Phase 2 enrollment, just based on their capacity. Have they started enrolling into treating patients?

They have, and we're very pleased with the results coming from them in terms of the quality of patients and how well they know their patients. You have to be careful also not to depend on one particular facility, because we do want this sample of sites across the country, but we're very pleased with their output and working very closely with them. We think that's a relationship that goes well beyond the clinical work that we're doing, and we'll hopefully be in a position to talk about that down the road. But for now, we're very pleased with their output, and we have, as such, dedicated resources from a recruitment and marketing standpoint to those sites in order to give them the assistance that they need to be a big component of the recruitment process.

And can you remind us what fraction of the total sites these sites at Northwell represent?

Well, they're one of 16.

And lastly, what was your...

But within Northwell, Jonathan, just to be clear, within Northwell, they have a variety of different offices that all connect with their patient, their musculoskeletal, and orthopedic patients that they access across the platform. So we're talking about…

They still count as one site?

They still count as one site even though there are multiple offices.

Okay, so I was just curious about the Galen partnership. What was your expected enrollment pace with versus without them?

Well, I think once we cleared the DSMB and it became open, our hope would be just to accelerate, because the sooner, the better. Every month that goes by is obviously, we want to maximize relative to our capacity in the lab. So with being able to now triple the output in the formulation and manufacturing within our lab, we wanted to match that with the recruitment input. So we proactively reached out to Galen to help us with certain sites, not all sites because we want to really target who we think are some of the better sites in terms of the better clients who have a lower failure rate from a screening perspective, and really focus on bringing those patients in, and so far, so good. So without giving you specific numbers, I think that was a very good decision in order to get them involved and help that recruitment process.

Okay, that was it. Thank you, guys.

Thank you very much. Well, that appears to be the end of our question-and-answer session. I will now hand back over to the management team for any closing remarks.

Sure. Thank you very much. Of course, this is our first. We will be doing this on a quarterly basis going forward and providing you with more insight in terms of our programs. So thank you very much for participating and asking good questions, and we look forward to sharing more as we get into next quarter. Thank you.

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