Brainstorm Cell Therapeutics - Earnings Call - Q1 2025

Executive Summary

• BCLI reported Q1 2025 net loss of $(2.86)M and diluted EPS of $(0.45), improving year over year from $(3.40)M and $(0.75) as lower warrant fair value losses offset higher operating expenses.
• EPS materially beat thin Wall Street consensus (n=1): -$0.45 vs -$0.97, a +$0.52 surprise; revenue remained $0 as a pre-revenue biotech (est $0) [Q1 2025 estimates from S&P Global]*.
• Operationally, the FDA cleared BCLI to initiate its Phase 3b ENDURANCE trial under an SPA; management is finalizing site CTAs (~15 U.S. centers), scaling manufacturing (Tel Aviv Sourasky; tech transfer to Pluri; new LOI with Minaris in NJ) and awaits potential non‑dilutive funding (a $15M grant under review).
• Near-term stock catalysts: site activations and first‑patient‑in, non‑dilutive grant decision(s), Minaris/Pluri manufacturing milestones, and any partnership/financing updates that de‑risk enrollment and timeline.

What Went Well and What Went Wrong

What Went Well

• FDA clearance to initiate Phase 3b under SPA, materially de‑risking regulatory pathway and enabling site activation and patient enrollment.
• Manufacturing network strengthened: initial production at Tel Aviv Sourasky; tech transfer to Pluri; new LOI with Minaris to add U.S. capacity (Allendale, NJ).
• EPS outperformed consensus as warrant fair value impact moderated YoY (-$0.18M vs -$0.94M), improving net loss despite higher OpEx.
• Management tone confident on trial readiness: “This regulatory clearance marks a significant milestone, bringing us closer to commencing patient enrollment” (CEO).

What Went Wrong

• Liquidity remains tight: cash & equivalents of $1.64M and restricted cash $0.18M at quarter‑end; current liabilities rose QoQ (short‑term loans $1.20M vs $0.30M).
• Funding is the gating factor to enrollment pace; management highlighted need for robust funding and is pursuing grants/partnerships, with a $15M non‑dilutive grant under review.
• OpEx rose YoY as execution ramped (R&D $1.304M vs $0.961M; G&A $1.785M vs $1.513M) while still no revenue, extending reliance on external financing.

Transcript

Operator (participant)

Greetings and welcome to the BrainStorm Cell Therapeutics first quarter 2025 conference call. At this time, all 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, Joyce Lonergan of LifeSci Advisors. Joyce, you may begin.

Joyce Lonergan (Managing Director)

Thank you, Holly. Good morning and thank you for joining us today. Before passing the call to 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 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 their 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 its SEC filings.

The company's results may differ materially from those projected on today's call. The company undertakes no obligation to publicly update any forward-looking statements. Joining us on the call today will be Chaim Lebovits, President and Chief Executive Officer of BrainStorm; Dr. Haro Hartounian, Executive Vice President and Chief Operating Officer; Dr. Bob Dagher, Executive Vice President and Chief Medical Officer; and Dr. Netta Blondheim-Shraga, Senior Vice President of Research and Development. I would now like to turn the call over to Mr. Lebovits. Please go ahead.

Chaim Lebovits (President and CEO)

Thank you, Joyce. Good morning or good afternoon, everyone. Thank you for joining us today. We appreciate your continued interest and support in BrainStorm. We published our Q1 2025 earnings release after the market closed last Thursday, and my colleagues and I are pleased to provide a corporate update today. Our unwavering primary focus remains the execution of the clinical development plan for NurOwn and the initiation of our pivotal phase III-B trial designed to confirm its therapeutic benefit for individuals in the early stages of ALS. Hopefully, you will have seen the press release we released this morning announcing that U.S. FDA has cleared us to initiate the trial. This follows the amendments we submitted to our investigational new drug application, which included comprehensive technical transfer documentation, robust quality assurance, and stringent quality control processes. This regulatory clearance marks a significant milestone, bringing us closer to commencing patient enrollment.

As previously disclosed, the trial design has been carefully agreed upon with the FDA under a special protocol assessment, or SPA. This SPA is a crucial element as we believe it substantially de-risks the regulatory pathway for NurOwn. It provides confirmation that the trial's endpoints and our statistical analysis plan are deemed appropriate for the FDA to potentially support approval contingent upon the trial meeting its pre-specified expectations. We also announced previously that in a face-to-face type C meeting, we had achieved alignment with the FDA and CMC, a particularly vital aspect for an advanced cell therapy like NurOwn. Our CMC team is always advancing its development and continues to work as regulatory guidance directs. To provide further detail on our operational readiness for the upcoming trial, I'd like to turn the call over to our Chief Operating Officer, Dr. Haro Hartounian. Haro?

Haro Hartounian (EVP and COO)

Thank you, Chaim. As previously discussed, we plan to initiate our initial manufacturing for the phase III-B trial at the Tel Aviv Sourasky Medical Center. To scale up our manufacturing capabilities, we'll then proceed with a technology transfer to PLURI, which will provide additional cleanroom facilities. We have signed a letter of intent with PLURI and anticipate moving forward to a definitive contract soon. Furthermore, the team and I have secured a leading U.S. clinical site that has successfully passed FDA inspection. We are in the process of finalizing an LOI and will be announcing the details of this important site shortly. We are all very excited about the progress and remain hopeful that we can begin treating patients soon. Back to you, Chaim.

Chaim Lebovits (President and CEO)

Thank you, Haro, for that important update on our manufacturing and site selection progress. Currently, we're actively engaged in negotiations for the clinical trial agreements with approximately 15 leading clinical centers across the United States. Each point is to serve as a site for our phase III-B trial. The strong interest we are getting from numerous renowned ALS clinicians and researchers underscores their conviction in the potential of NurOwn. We will make announcements regarding these agreements as they are finalized. As noted in our earnings press release, the details of the trial, which we are calling ENDURANCE, have now been posted on clinicaltrials.gov. On this website, you will see the study plan, including primary and secondary endpoints, as well as a list of clinical sites that we expect will participate.

Publication of these details is important for transparency and allows the medical community and mainly ALS patients who are interested in participating, as well as caregivers, to review the structure of the study. We fully recognize the urgency felt by patients and clinicians for innovative therapeutic options in ALS. Our commitment is absolute in executing this trial with the highest level of scientific rigor. With the limited treatment options currently available for ALS patients, we firmly believe that NurOwn, if successful in the study and subsequently approved, holds the promise of becoming a significant and valuable treatment. In parallel with our dedicated NurOwn development efforts, our scientific team remains actively engaged with the academic community and our industry peers, sharing the latest data and insights.

Last week, we participated in the annual ALS Drug Development Summit in Boston, a crucial gathering that brought together over 200 scientific leaders to address the most pressing challenges in the therapeutic development for this devastating disease. The discussions at this year's meeting were centered on critical areas such as target validation, effective utilization of biomarkers, and optimization of clinical trial design. I want to take a moment to speak about our incredible team at BrainStorm. Despite facing significant financial constraints, a reality for many small biotech companies in the current environment, their dedication and tireless efforts are truly remarkable. We heard a very powerful message at the ALS Summit from Wendy, a courageous individual living with ALS, who eloquently referred to every ALS patient as a warrior.

At BrainStorm, we see it as part of our mission to join the ranks of these warriors, working every single day to advance preparations for the critical trial. We are succeeding in making substantial progress with the limited financial resources we currently have, thanks in large part to the outstanding support of our dedicated partners. This positions us to move forward with significant agility once we secure a strategic funding deal, which remains our priority. We understand that members of the investment community and the ALS community are eager to know precisely when the first patient will be enrolled. Please know that our focus remains squarely on diligently completing the necessary steps, including securing adequate funding as we are working to advance various funding opportunities that include potential strategic investments and non-dilutive grants.

We are simultaneously proceeding on many fronts to be able to initiate the trial as swiftly and responsibly as possible. We are deeply committed to this endeavor, and we will continue to provide updates as they become available. I'll now turn the call over to Dr. Bob Dagher, BrainStorm's Chief Medical Officer, who will give a brief summary of his presentation at the ALS Summit last week. Bob?

Bob Dagher (EVP and Chief Medical Officer)

Thank you, Chaim. Hi, everyone. As part of my presentation last week, I provided a detailed overview of the design of our planned phase III-B trial and explained the significant changes we made versus our prior phase III trial in order to increase the probability of success. As we have previously disclosed, the new trial will be conducted in two parts. Part A is a 24-week double-blind period, which will be followed by Part B, a 24-week open-label extension designed to evaluate long-term effects on survival and biomarkers. We have set the entry criteria to enroll patients who have early-stage ALS, in other words, those with less advanced levels of functional decline. The primary endpoint will be the change from baseline to week 24, so at the end of Part A, in the ALS FRSR total score, which is now considered the gold standard in recent registrational trials.

The results from Part A at 24 weeks, if they meet our expectations, should be sufficient to support a new BLA. This is covered specifically in our SPA agreement with the FDA. In the phase III-B trial, we eliminated the three-month running period from the previous study and also shortened the screening period from 20 weeks to now nine weeks to minimize changes between screening and baseline. I will now turn the call over to my colleague, Dr. Blondheim-Shraga, to discuss the ALS biomarkers analysis. Netta?

Netta Blondheim-Shraga (SVP of Research and Development)

Thank you, Bob. My presentation at the ALS Summit focused on biomarkers in ALS and specifically how the experiments we have conducted with biomarkers support the potential multimodal mechanism of action of NurOwn. There is currently no established universal marker for ALS, as it is a complex disease that may require combinations of biomarkers for accurate assessment. We hypothesize that NurOwn exerts its biological effects across multiple pathways. Analysis of CSF samples from patients who participated in the prior phase III-B or phase III-A study provided us with valuable insight into how NurOwn may be exerting its effect. CSF samples were collected at seven time points from all participants in the study, and analysis of these samples showed significant changes in biomarkers that are relevant to ALS pathology. Treatment with NurOwn was associated with a reduction in neuroinflammatory and neurodegenerative biomarkers and with an increase in anti-inflammatory and neuroprotective biomarkers.

At the ALS Summit, we presented the results from three sets of preclinical experiments to investigate the immunomodulation, neuroprotectant, and neurodegenerative properties of NurOwn. The first of these was an in vitro experimental model of immune-activated peripheral blood mononuclear cells, or PBMCs, that were co-cultured with NurOwn cells. We demonstrated that NurOwn inhibits the secretion of pro-inflammatory cytokines and decreases the proliferation of certain types of T cells, CD4 cells, and CD8 cells that are involved in the inflammatory process. The second was an in vitro hypoxia model that examined the effect of NurOwn on a motor neuron cell line that had been subjected to hypoxic stress in a low-oxygen environment and resulted in about one in three cells dying.

We showed here that when these cells were co-cultured with conditioned media collected from NurOwn cell cultures, viability was restored to 96.5% of normoxic conditions, or 96.5% of normal, providing evidence of a neuroprotective effect. Finally, we studied an experimental neurite outgrowth model in which human neuroblastoma cells were co-cultured in a no-contact transwell system with NurOwn cells. We showed that NurOwn enhanced growth of neurites, supporting a neurodegenerative role for NurOwn. As disclosed previously, we reviewed the clinical utility of neurofilament light, or NFL, as a biomarker of disease progression and treatment monitoring in ALS. Ten patients who completed the prior phase III trial enrolled in an open-label expanded access program that spanned two 28-week periods. We showed that early treatment with NurOwn resulted in greater reductions in NFL levels.

Among the six participants who received NurOwn in both phase III and the EAP, a continual group-level reduction in NFL was observed. In contrast, for the four patients who received placebo in the phase III, the group median NFL change was higher at the end of the study, indicating worsening neurodegeneration. After these patients switched to NurOwn in the EAP, the majority showed a stabilization in NFL levels. As these results were from a very small group, we view them as hypothesis-generating and will continue to explore long-term effects of treatment in our upcoming phase III-B study. At the conference, we also shared results from a genetic sub-study conducted during our phase III study. We have examined the underlying genetics of ALS and how it may determine the clinical response to NurOwn. We are particularly interested in a gene called UNC13A, which has been widely studied in ALS.

Patients who were enrolled in the prior phase III trial had the option to participate in a genetic sub-study, and 124 consented. We showed in these patients that the UNC13A genotype appeared to influence the response to NurOwn therapy. Patients who were heterozygous carriers of a risk allele had a statistically significant response rate to NurOwn treatment compared with placebo, supporting further investigation of the UNC13A and other genetic factors and their correlation to treatment effect of NurOwn in our next trial. I will now turn the call back to Chaim for closing comments.

Chaim Lebovits (President and CEO)

Thank you, Netta. For the details on BrainStorm's financials for the quarter ended March 31, 2025, I would refer you to the press release we issued on Thursday and also to our 10-Q filing with the SEC. We're now ready for the Q&A, Joyce.

Joyce Lonergan (Managing Director)

Yes, thank you, Chaim. We have four written questions. The first one, can you start the trial without proper funding?

Chaim Lebovits (President and CEO)

Thank you. That's a very good question. While our financials over the past year and a half have reflected a very challenging environment, we have nonetheless been able to make significant strides in preparing for the trial, including technology transfer, FDA regulatory submissions, site selections, and CRO engagements. However, initiating and successfully executing a clinical trial of this nature demands a robust and sustainable cash flow. Therefore, while we have diligently progressed to this point with relatively limited resources, securing proper funding is essential to commence the trial. As communicated in our recent press release, we are actively pursuing multiple funding avenues to ensure the timely commencement of the trial. These efforts are in various stages, encompassing a promising $15 million non-dilutive grant currently under review, alongside ongoing negotiations for strategic partnerships. We are focusing on strategic partnerships.

Our priority is to secure the necessary capital through such partnerships to confidently initiate and complete this critical study. Thank you.

Joyce Lonergan (Managing Director)

Thank you, Chaim. We have a second question. We see you call the trial ENDURANCE. What's the meaning of that?

Chaim Lebovits (President and CEO)

Thank you for that. The name ENDURANCE was carefully chosen to deeply resonate with the ALS community. It stands as a tribute to the remarkable strength, tenacity, and unwavering spirit demonstrated by individuals living with ALS and their families. For BrainStorm, ENDURANCE also underscores our steadfast commitment to persevere in our scientific endeavors and generate the robust data required for regulatory approval of NurOwn. We believe that this trial embodies the collective resilience of patients and our determined mission to deliver a potentially meaningful therapeutic option for ALS. Thank you.

Joyce Lonergan (Managing Director)

Thank you for that, Chaim. The third question is, will the company also be producing in the U.S.?

Chaim Lebovits (President and CEO)

Thank you. Haro, you want to take that?

Haro Hartounian (EVP and COO)

Sure. Thank you so much for the question. Absolutely. Expanding our manufacturing footprint to the United States is a key strategic objective for us. We're pleased to share that we will be announcing a letter of intent in the coming days with a US-based facility that has a proven track record, having already successfully passed FDA inspection for the production of other products. This signifies an important step in our plans for future commercialization and supply chain security.

Chaim Lebovits (President and CEO)

Thank you.

Joyce Lonergan (Managing Director)

Thank you for that. Question four is, can you update on any advances in the Exosome Program, or are you not proceeding with that at this time?

Chaim Lebovits (President and CEO)

Thank you. Netta, please take that one.

Netta Blondheim-Shraga (SVP of Research and Development)

Sure. Thank you for this question. We are highly encouraged by the progress of our Exosome Program as the field of exosome-based therapeutics continues to show strong potential in the treatment of respiratory and inflammatory diseases. Our proprietary allogeneic exosome platform has yielded promising preclinical data demonstrating both therapeutic and preventative effects in models of lung disease. To support these findings, we are preparing a manuscript detailing the efficacy of our exosomes in a preclinical model of COPD, which would join our existing publication about the efficacy of exosomes in a model of ARDS. Together, these works outline the wide potential of our allogeneic exosome technology, which is derived from NurOwn cells. Briefly, our new findings demonstrate that early treatment with exosomes significantly reduces lung inflammation in response to bleomycin, a chemotherapy agent with known lung toxicity, and significantly reduced lung fibrosis two weeks later compared to untreated controls.

In light of these exciting new results, we are actively pursuing strategic partnerships to advance the Exosome Program towards clinical development. In parallel, we are expanding our global intellectual property portfolio and anticipate announcing the issuance of additional patents that will further strengthen the protection of our innovations.

Chaim Lebovits (President and CEO)

Thank you, Netta. Holly, would you open the line for one or two questions, which we'll take before 9:00?

Operator (participant)

Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from Jason McCarthy with Maxim Group.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Good morning, everybody. Thanks for taking the questions. If you can go back to the UNC13A discussion that you were having, have you had any communications with FDA in terms of being able to stratify by UNC13A in the upcoming phase III-B, or was that association that you've showed through the EAP more of an exploratory study? Kind of, are you locked in with the SPA? You don't really have a lot of wiggle room around the ALS FRSR to go for UNC13A stratification as well?

Chaim Lebovits (President and CEO)

Thank you very much for that question, Jason. In general, the U.S. FDA is not yet approving any biomarker as a surrogate, but I would like Bob to elaborate more on that. Bob?

Bob Dagher (EVP and Chief Medical Officer)

Sure. Yeah, thank you. Thank you, Jason, for the question. Under the Special Protocol Assessment Agreement with the U.S. FDA, the protocol—I wouldn't use the word locked—but it's agreed on with all the details, including the population. It's not impossible or difficult to go and add and make changes. It will require, obviously, discussions. However, scientifically speaking, we're very excited with the larger ALS community about these new genetic discoveries and the UNC13A story is evolving. However, it remains exploratory and not definitive. At this stage in the game of the trial design innovations, etc., we are acutely aware of what's going on. I presented data on UNC13A two weeks ago in New Orleans at ISCT. It was very well received in oral presentation. It was chosen for that target audience as well.

Excitement is there, but not yet at the level where it arises to become a stratification point. However, we're going to be obviously exploring. We do post-hoc analyses, and we'll cut the populations in however many ways we need to to evaluate further the effect of NurOwn in the next study in the phase III-B. Thank you for your question. Really appreciate it.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Got it. Another, I guess, somewhat technical question. You had talked a bit about the hypoxic stress co-culture with NurOwn cells or the NurOwn media, if I caught that right. Did you say that it restored normoxic activity? If so, can that mechanism of action be used as part of a data package when you refile the BLA the next time around? I remember last time a lot of questions around growth factors and levels of this and levels of that came up, but is this more defining of the mechanism of action for NurOwn that would be supportive of the next BLA?

Chaim Lebovits (President and CEO)

A very good question.

Bob Dagher (EVP and Chief Medical Officer)

Yeah. Thank you.

Chaim Lebovits (President and CEO)

Yes. Netta can answer the first part, and Bob can answer the second part.

Netta Blondheim-Shraga (SVP of Research and Development)

Thank you. Yes, you're correct. What we saw was the media that was enriched by our cells had a protective effect and a rescue effect, really, on cells under hypoxic conditions. We stored them back to almost 100% of normoxic condition, so 96.5%. This is a cell culture, so it's a simplistic model. It's not a human live model. It's not a clinical model, but it is supportive, I think, and was included in our IND as well.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Got it. And just last question on the manufacturing. I know you're aiming to open up additional clean rooms, but currently, the Tel Aviv facility, how many—excuse me—therapies can it handle or produce?

Chaim Lebovits (President and CEO)

Yeah, it depends how many rooms we're using. It will be a rolling enrollment, as you know, with the phases taking of the CTA. It will serve us for the first few months, and then we'll start with Pluri, as Haro had specified before. I believe that next year we'll have the U.S. site also up and running.

Jason McCarthy (Senior Managing Director and Head of Biotechnology Research)

Got it. Thanks for taking the question, Chaim.

Chaim Lebovits (President and CEO)

You're very welcome. We have time for one more question, Holly.

Operator (participant)

Your next question is from David Bautz with Zacks Small Cap.

David Bautz (Seinor Analyst)

Hey, good morning, everyone. Thanks for the update this morning. Chaim, I just want to make sure I heard correctly that you guys are looking to open up—is it 15 clinical trial sites? For each of those sites, obviously, financing aside, what needs to occur to try to get those sites up and running so that they can enroll patients? Lastly, do you have any estimation of how many patients you can enroll, say, per month, just based on manufacturing capacity?

Chaim Lebovits (President and CEO)

Yeah. Thank you very much for that question. On clinicaltrials.gov, you will see a listing of the sites. It's out there, but we didn't yet sign the CTAs. We'll be announcing very soon, gradually, after we sign CTAs. Yeah, as I just mentioned, we'll start to grow site by site based on a GANT of patient population that we're going to be enrolling based on the manufacturing. We're working at the final steps of that GANT, so I can't share exact numbers now. The plan is, as you know, the 200-patient trial within two to three years to have everyone enrolled and everyone treated. The first part, and we'll be deep into the second part as well. I want to remind you that the BLA would be filed if we have statistically significant results of the first part of the trial.

David Bautz (Seinor Analyst)

Okay. Great. Thanks. Thanks for taking the question.

Chaim Lebovits (President and CEO)

Yeah. Thank you very much. I want to thank everyone for being on the call today. We're hoping to close at 9:00. I see it's exactly 9:00. Thank you very much, and have a wonderful day.

Operator (participant)

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.