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. 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 on this conference call will contain numerous statements, descriptions, forecasts, projections regarding BrainStorm Cell Therapeutics, and its potential future business operation and performance. Statements regarding the market potential, 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 the 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 will be 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 viewed 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 a confirmatory phase IIIb study in ALS, which we intend to conduct at such meetings. As part of our regulatory strategy, we intend to seek a Special Protocol Assessment with the FDA before continuing with the planned registration trial. A SPA indicates agreement with the agency on the adequacy and acceptability of critical elements of the trial design, including items such as patient entry criteria, endpoints, and planned analysis. We believe that having a SPA in place will de-risk the regulatory aspect of our ALS programs. We believe the process will likely take one or two meetings with the FDA, and we'll provide an update once we have clarity on the path forward.
In parallel with these regulatory activities, our management team and board are giving serious thought to how to finance the company and ensure we have the resources to fund the planned phase III trial and position ourselves for success in the future. 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 a number of steps, including streamlining our clinical operations, as well as a targeted reduction in headcount of approximately 30%. Importantly, those positions that are most critical to managing the planned phase IIIb 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 their wages. As for myself, I took over a 90% cut for now. These were difficult but necessary decisions. We are very thankful for the hard work and commitment of all our colleagues here 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 IIIb 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 a 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, as 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? Michael, are you there?
Yeah, sorry, I was on mute. Yes. Thank you, Chaim. Is it possible that even with the Adcom decision around Europe, the FDA could grant limited approval for early-stage ALS patients, where there has been an observable positive response?
Stacy, you want to take this?
Sure. We firmly believe that generating additional data in the form of the phase IIIb 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 IIIb, and are you waiting for funding or grants to come in before you can commence the study?
Yeah, 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'll first work to secure a bridge to ensure stability as a company as we work in parallel to secure funding for the phase IIIb trial. As we shared in our prepared remarks, we're exploring a variety of avenues, including partnerships and grants. Although there is always the chance of a larger 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 Chaim 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 IIIb trial that we've been working on with a scientific advisory panel and a panel of people 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 IIIb trial for NurOwn and potentially de-risk the regulatory aspects of the program.
Thank you. 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, rare disease, the commercial opportunity is still compelling, and we know there's interest from companies who would like to have a successful product in this area and to be able to serve patients. We have to remember, though, that cell therapy is still an emerging modality, especially in neurodegeneration. There are very few approved cell therapy products. R&D products are largely focused on oncology and genetic disease. Presumably, a major approval in the cell therapy space will bring investments, 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 within 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 de-risked phase III 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 are 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. If you would like to ask a question, please press star one on your phone keypad now. A confirmation tone will indicate that your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please hold on a moment while we poll for questions. Thank you. Your first question is coming from David Bautz of Zacks Small Cap Research. David, your line is live.
Hey, good morning, everyone. Thanks for the update this morning. So, Chaim or Stacy, could I was wondering if you could talk a little bit more about the SPA, and basically what differentiates that from saying, you know, just quote, unquote, "Coming to an agreement with the FDA about a trial design?
Stacey?
Yeah, you know, 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 it will be positive for BrainStorm, but also really ensure that the discussion and the work that we do ahead ultimately nets out, you know, with the successful trial, really what we expect, which would be an approval. So, it really is about a formal engagement and an interaction, and it's a pathway that's well established and leveraged.
Okay, and as far as— Oh, go ahead.
Sorry. I was just going to add on that. Of course, I just want to emphasize, what the FDA is discussing with us is an expedited pathway for a SPA. So that's just additional answer to your question. What we're looking for, expedited SPA, as you know, that if companies that are able to have a SPA with the FDA, there's a far higher chance for an approval at the end of the day. But many choose not to do that, because usually it can take a year or two years just to get to an agreed-upon SPA. So this pathway is talking about an expedited SPA process, and we're looking forward for that. Go on, and if you had another question, please.
Yeah, actually, it's gonna key off of what you just said and basically kind of looking at the timeline. So would normally that process would be 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 into the FDA to quote them here, so I want to be very cautious. But I do see a first meeting very fast, and I think after that meeting, we'll be... We'll share that, by the way. We'll share what happened at the meetings with the investor community, because this is our number one priority just now, to see if we can come to an agreed-upon SPA. And we'll learn from this meeting that should be very soon, and we'll be announcing when that meeting is.
Okay. Now, I understand you probably won't be able to get into specifics, but do you foresee the primary outcome for the next phase III trial being the same as it was for the previous one?
You know, we're gonna 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 done and we come to an agreement, we'll share what the trial design looks like.
Okay, all right. Thanks for taking the questions.
Sure.
Thank you very much. Your next question is coming from William Barr from Tivim Adventures. William, your line is live.
Thank you. Thank you, Chaim, and thank you, Stacy, and thanks to everyone at BrainStorm. We've been following and we've been investors in the company for many years. So my question is, why is this time gonna be different? There are, like, those of us who know you guys have been fighting, how hard you've been working, and all of us, many of us are really so beyond grateful for everything that you've done and continue to do for ALS patients. We're finally starting to see that the Amylyx treatment is maybe not what some people thought it was, and we're finally starting to see, to see that, you know, some ALS chapters are maybe recognizing the issues at ALSON, and they're starting to break away. And we all saw what happened at the Adcom, and many of us believe that it was extraordinarily unfair....
A lot of investors want BrainStorm to sue the FDA, and instead, you guys are basically embracing the FDA. And we know you want a treatment for ALS as quickly as possible, and we know that you guys have really done everything in your power to try to effectuate that. So why is this time going to be different?
Thank you. It's a very good question. So first, allow me, I can't-- I wouldn't want to comment on other treatments or, or the organizations. We are looking to have everyone supporting us, all the organizations and all the advocates, and we're going to work on that as well. We're going to reach out once we have a trial design and share it with them, listen to their inputs and going forward. What I think will be different, as you have heard in our opening statements, we're trying to come to an agreement with the SPA, and I want to share with you, it is proposed by the FDA to do that, to have an expedited SPA. So again, we should see how they will treat us different going forward.
We should acknowledge that even though some see the outcome as being overly negative to NurOwn, but, what we are being explained, and I want to be cautious what I'm saying, but that many don't disagree with what we are saying. They just feel we need to have more data to prove that. So therefore, they want to align on a, on a readout on a trial to provide that data, and therefore, that discussion together with them is very important to see what are they seeking in addition to what we provided. And so we should align on what should be provided, what should be sufficient for an approval. That's what a SPA means. So going into that meeting, I think we are going to get an expedited meeting. We are getting the indication from the agency that they want to have this meeting very fast.
So they're showing interest and supporting us, being able to have another trial very soon, to start another trial very soon. I'll ask Stacy also to, to comment. Stacy?
Yeah, William, I thank you for the comment and your question. And I think, you know, when we step back and we look at what we have before us, certainly, when we brought forward our product, we believe, and we still believe in our data, and we believe that there was a discussion that should happen 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 and the things that we can do is we can execute on a trial design, leveraging the learnings that have occurred, and we can read out a trial that meets its endpoints. And so what you see us doing is really doubling down. We understand our product.
We have a lot of information that we believe gives us a lot of confidence in our ability to deliver this trial. So what we're focused on is bringing forward a product that's straightforward in this next trial, that makes the regulatory process, you know, certainly more conventional and the next time around, certainly much more streamlined and smooth. So that's what I think of when I think about what's different next time. And you know, drug development is incredibly complicated. We always learn things in our endeavors when we're tackling very tough diseases.
I think in the setting of this last phase III, last phase III program, certainly there were things that the community did not appreciate and did not understand, and we now have those as learnings that we take forward to this next trial design.
Thank you. 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, and thank you for fighting the good fight for us.
No, thank you for your ongoing support many years. We really appreciate that.
Thank you very much.
Next question, please, Jess.
Your next question is-
We have time for one more. Yes, please.
Daniel Walker. He's a private investor. Daniel, your line is live. Apologies there.
Comment on manufacturing. You mentioned at the recent BrainStorm town hall meeting that BrainStorm had successfully manufactured 500 potent products. But I think there have been some questions about BrainStorm's ability to manufacture. Can you just comment on that? And then also, moving forward, you know, how will the clean rooms be managed? Will it be Catalent? Will it be the academic centers? Maybe you could just comment a little bit on that.
Yeah. Thank you very much, Daniel, for this question. So, we did have quite a few centers where we already produced, as you know, for the phase II and phase III trials, at different academic centers and commercial centers, only for the EAP. Going forward, it's first a financial question. You know, the academic centers are cheaper than the commercial centers to operate. And on the other hand, you do want to have a site that, once you're successful with the trial, you should have a commercial site ready. So we're going to balance that timing-wise to see. Maybe we'll start with academic and then, for the second part of the trial, do a commercial site, so we can gain from the cheaper cost earlier and then but simultaneously be able to have a commercial site ready once the trial is done.
Does that answer your question?
That does. And I guess with the SPA, I mean, how do you ensure that this go around? Because the FDA was quite critical of the manufacturing at the outcome. How do you ensure moving forward, though, that there is alignment, not, you know, only on the SPA, but also in addition to the manufacturing, so that at the time you resubmit the BLA, you know, they feel confident in the manufacturing? Because obviously there's a difference between manufacturing, you know, at the trial level, compared to, you know, actually, at the time of commercialization.
Thank you. That's very helpful. You clarified the question even more. So the answer is, FDA agreed to have discussions with us while we do the trial on the CMC issues to come to alignment. And as I've said previously, we have come to alignment on many of the CMC issues, if not most, but some of them, it takes longer to do those qualification tests, which we are continuing to do those that are critical. But yeah, FDA will have with us separate conversations with the CMC team and separately from the clinical team.
Excellent. Thank you so much. And then just lastly, I was wondering if you could just expand on the exosome technology. I know you're working on capitalizing that. Can you or Stacy just comment very briefly on what is that technology and, you know, why that might be interesting and compelling to pharma or biotech?
Yeah, you mentioned Stacy, so I'll allow Stacy to talk to that, of course, and if I need, I'll allow that. Stacy?
Sure. Daniel, this is, you know, an additional technology that we have been developing and certainly have thought of as an interesting and exciting part of our portfolio. And, you know, what's interesting about exosomes is, of course, that it allows us to move into and explore different diseases that can carry cargo and can penetrate different parts of human bodies and therefore bring... you know, brings different advantages. But we, we've done a number of preclinical studies, some of which we've published.
And we think there's a lot of excitement in this technology platform, which again, offers a wide array of diseases that there's a great unmet need and that these nanoscale particles, you know, really would be able to open possible 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.