Brainstorm Cell Therapeutics - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 was a financing-and-execution quarter: management reiterated readiness to initiate the Phase IIIb ALS trial under an FDA Special Protocol Assessment (SPA), with manufacturing and CRO partners in place; cash at year-end was ~$0.19M, and a ~$1.64M warrant inducement closed around April 1, 2025.
• EPS and revenue remained negative/zero; versus S&P Global consensus, Q4 EPS missed (actual -$0.52 vs -$0.27; FY 2024 -$2.31 vs -$2.10) driven by ongoing R&D and SG&A with no product revenue; revenue was $0 and in line with consensus [GetEstimates]*.
• Annual opex fell markedly YoY: R&D declined to $4.7M (from $10.7M), G&A to $7.0M (from $10.7M), cutting the net loss to $11.6M (from $17.2M); however, liquidity tightened (cash ~$0.4M vs ~$1.5M).
• Near-term stock reaction catalysts: IND model submission, FDA clearance to proceed, first Clinical Trial Agreement (CTA) signatures, and first-patient-in; management framed annual trial funding needs at ~$20–$30M (later clarified at ~$23M) with nondilutive grants and partnerships targeted.

What Went Well and What Went Wrong

• What Went Well

  • FDA alignment: SPA secured and CMC alignment achieved, materially de-risking the regulatory path for the Phase IIIb trial.
  • Operational readiness: CRO partnership (IQVIA) and manufacturing arrangements (Pluri; plus planned U.S. facility) established to support consistent clinical supply.
  • Cost discipline: YoY reductions in R&D ($4.7M vs $10.7M) and G&A ($7.0M vs $10.7M), narrowing net loss ($11.6M vs $17.2M); “salary reductions” and senior leadership working without remuneration highlighted.
  • Quote: “We secured a Special Protocol Assessment… We’re also aligned with the FDA on Chemistry, Manufacturing and Controls…”. “We have contracted with Pluri Inc. … and plan to bring an additional U.S.-based manufacturing center online”.

• What Went Wrong

  • Liquidity constraints: year-end cash ~$0.4M, requiring continued external financing; accounts payable rose to ~$6.1M.
  • Timing concerns: investors questioned perceived delays; management cited IND technical transfer/QA/QC work and multi-site CTA negotiations as time-consuming.
  • Estimate miss: Q4 EPS missed S&P consensus (no revenue to offset fixed costs), reflecting ongoing operating losses [GetEstimates]*.
  • Analyst concerns: skepticism around efficacy and resubmission strategy; management emphasized definitive evidence via Phase IIIb and pooling prior data in early-stage ALS.

Transcript

Operator (participant)

Good morning, everyone, and welcome to BrainStorm Cell Therapeutics' fourth quarter 2024 earnings call. At this time, all participants are in a listen-only mode, and if anyone should require operator assistance during this conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Michael Wood. Michael, the floor is yours.

Michael Wood (Head of Investor Relations)

Thank you, operator. Good morning, and thank you for joining us. Before passing it off to company management for prepared remarks, I would like to remind listeners on this conference call that it 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 of the treatment for 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 the company's SEC filings.

The company's results may differ materially from those projected on today's call, and they undertake no obligation to publicly update any of these forward-looking statements. Joining us on the call today will be Mr. Chaim Lebovits, President and CEO of BrainStorm, and Alla Patlis, Interim Chief Financial Officer. In addition, Dr. Haro Hartounian, EVP and Chief Operating Officer, and Dr. Bob Dagher, EVP and Chief Medical Officer, are also on the line, and they will be available for the Q&A. With that, I'd like to turn the call over to Mr. Lebovits. Please go ahead.

Chaim Lebovits (CEO)

Thank you, Michael. Good morning, good afternoon to everyone. Thank you for joining us today. We appreciate your continued interest and support in BrainStorm. 2024 was a year of foundational work, positioning us for the critical Phase 3b trial of NurOwn, our investigational treatment for ALS. Our team, in close collaboration with leading ALS experts and regulatory authorities, has carefully designed a trial aimed at confirming NurOwn's potential to significantly slow disease progression in early-stage patients, thus generating the robust data necessary for successful Biologics License Application. Our primary focus for 2025 is fair and unwavering execution. We're now advancing preparations to initiate the trial and begin patient enrollment, driven by our strong belief that NurOwn, if approved, can make a meaningful difference in the lives of ALS patients. I want to address today three key areas critical to our progress: regulatory, clinical, and trial execution and manufacturing.

Regulatory, we maintain a strong collaborative relationship with the FDA. In 2024, we secured a Special Protocol Assessment, significantly de-risking the regulatory pathway. We're also aligned with the FDA on Chemistry, Manufacturing, and Controls, a crucial aspect for a complex cell therapy like NurOwn. I want to emphasize that we have been diligently updating and submitting modules to our IND application, including detailed technical transfer documentation, quality assurance, and quality control processes. While these processes require attention and time, they are essential for regulatory compliance and trial integrity. We anticipate announcing the submission of these modules shortly. Clinical, we are in active negotiations for clinical trial agreements with approximately 15 leading clinical centers across the United States, leveraging our established relationship with many of these institutions. The strong interest from renowned ALS clinicians and researchers underscores their belief in NurOwn's potential. We will announce these agreements as they are finalized.

The trial execution and manufacturing to ensure the efficient execution of our Phase 3b trial, we have partnered with IQVIA, a leading clinical research organization specializing in cell and gene therapy trials. IQVIA's expertise in ALS trials, regulatory compliance, and comprehensive capabilities will be crucial in managing key aspects of the clinical trial. For the clinical manufacturing of NurOwn, we have contracted with Pluri Inc., leveraging their expertise in GMP-compliant production. This arrangement complements our leased facility at Sourasky Medical Center in Tel Aviv. Furthermore, we're planning to bring an additional U.S.-based manufacturing center online to support broader production needs as we advance through clinical trial. Our financial position and strategic outlook. I want to address the financial realities and strategic direction of BrainStorm Cell Therapeutics. We are committed to securing the necessary funding, execute the Phase 3b trial, and build a sustainable future.

We're actively pursuing multiple funding avenues, including what we announced today, including licensing non-core assets for near-term capital and exploring non-dilutive financing opportunities such as grant funding. I understand that investors, and even more so the patient community, are eager for rapid progress. We are acutely aware of the urgency. I want to acknowledge the extraordinary dedication of our staff, who work tirelessly under significant financial constraints, including salary reductions, to advance this trial. The time required for regulatory submissions, including the intricate technical transfer and QA/QC processes inherent in a pioneering stem cell therapy, is not indicative of financial delays. I also want to address the expectations regarding immediate financial financing announcements and trial milestones. We're committed to transparency, but we must adhere to rigorous regulatory processes. We are pioneering in a space where we know there is skepticism, and we must provide robust data to validate NurOwn's efficacy.

The Phase 3b trial involves rolling enrollment based on manufacturing capabilities for an autologous stem cell therapy, and we anticipate needing approximately $20-30 million annually to see the trial to its conclusion. Given our current market capitalization and the challenging market for non-revenue biotech, raising this amount of cash upfront is not practical, but we believe that as we achieve key milestones—IND module submission, FDA clearance to proceed, signing CTAs, and enrolling the first patient—we will see a corresponding increase in our market valuation, especially when combined with strategic partnerships and non-dilutive grants. We are fully committed to this mission. Myself, our Chief Medical Officer, our Chief Operating Officer, our Chief Business Officer, and other senior officers are at times working without remuneration, and most of our other employees have taken significant reductions in compensation. Many of our talented team members have also made sacrifices.

They are driven by a shared commitment to proving NurOwn's potential and ultimately helping ALS patients and for other neurodegenerative diseases. We are deeply grateful for their dedication and want to ensure they are recognized and rewarded for their contributions. ALS is a devastating disease. We are committed to providing a therapeutic solution. We are confident in the foundation we have built and the progress we are making. We will continue to provide updates as we advance through the Phase 3b trial. We are committed to doing all we can to make this happen. Thank you for your continued support. I'll now turn the call over to Alla Patlis to review the financials.

Alla Patlis (CFO)

Thank you, Chaim. Research and development expenditures net for the year ended December 31, 2024, were $4.7 million. This compared to $10.7 million for the year ended December 31, 2023. General and administrative expenses for the 12 months ended December 31, 2024, were approximately $7 million, compared with $10.7 million in 2023. Net loss for the 12 months ended December 31, 2024, was approximately $11.6 million, or $2.31 per share. This compares with a net loss of approximately $17.2 million, or $6 per share for the 12 months ended December 31, 2023. Cash equivalents and restricted cash were approximately $0.44 million as of the end of December 2024, compared to $1.5 million as of the end of December 2023. The company is announcing today that they have entered into a warrant inducement agreement, pursuant to which they expect to raise approximately $1.64 million in gross proceeds.

This agreement is expected to close on or about April 1, 2025. I will now turn the call back to Chaim.

Chaim Lebovits (CEO)

Thank you, Alla. Michael, do we want to read the questions, the prepared questions?

Yes. First question here. Some investors are concerned about the delays initiating the Phase 3b trial. Can you please provide more clarity on the timeline and the reasons for the perceived delays?

Thank you, Michael. As I said, we understand the urgency and frustration regarding the trial timeline. We share that frustration, but while we are moving as quickly as possible, pioneering a complex cell therapy like NurOwn requires stringent adherence to regulatory processes. The perceived delays are primarily due to the intricate and time-consuming nature of updating and submitting the necessary modules to the IND. That includes technical transfer, quality assurance, quality control documentation. These are not simply administrative tasks. They involve complex scientific and manufacturing processes that require rigorous validation. Additionally, the negotiation and finalization of clinical trial agreements with multiple sites take time. The period between our Nasdaq non-compliance announcements and the grant of the extension also created the challenging financial environment. We are now focused on finalizing these agreements and initiating patient enrollment as quickly as possible.

We anticipate announcing the IND module submissions shortly, which will be an important milestone.

Next question. Can you elaborate on the financial situation and how you plan to secure the necessary funding for the trial?

Yes. Thank you, Michael, for that one. We're actively pursuing multiple funding avenues to ensure the successful execution of our Phase 3b trial. This morning, we announced a significant step in bolstering our financial position, raising approximately $1.64 million through warrant inducement, demonstrating investor confidence in our strategy. As mentioned, we're also exploring the licensing of non-core assets for near-term capital. We're also focusing on securing non-dilutive financing through grant opportunities, a strategy that has proven successful for us in the past. Notably, we received a CIRM grant of approximately $60 million for our Phase 3 trial. We anticipate needing approximately $20-30 million annually for the trial. Given the current market conditions, particularly for non-revenue biotech companies, as I said in my remarks, raising all funds upfront is not realistic.

We are confident that as we achieve key milestones such as the IND module submissions, CTA signings, and enrollment of the first patient, our market valuation will improve, making it easier to secure additional funding. We're also open to pursuing strategic partnerships that can provide financial and operational support. Thank you.

Next question. Some analysts and investors are skeptical about the efficacy of NurOwn. How do you plan to address these concerns?

Yeah. Thank you. Bob, would you take this question?

Bob Dagher (EVP and Chief Medical Officer)

Sure. Thank you for the question. As we all know, there has been a lot of thought and progress and design changes and agreements with the FDA on the next path for NurOwn. Under the Special Protocol Assessment Agreement, we have made it clear that we are pursuing the right population that is targeted for our therapy with the most success and data generated from previous trials. The choice of the endpoints, the duration of the trial, the critical design elements of this have de-risked our program significantly, and hence, we feel strongly about our probability of success this next time around with this landmark Phase 3b trial that we are embarking on initiating and completing. This trial is designed to provide definitive evidence of NurOwn's efficacy, and I emphasize definitive.

We are really focused on what it's going to take to make sure that we demonstrate the therapeutic effect of NurOwn under the regulatory constraints and all the elements in place needed, provided that the data comes positive, that we will be filing our BLA and support approval for our therapy. It's also important to note that many of the leading key opinion leaders in ALS that we consult with them all the time, we're constantly in contact with them, and many have served as principal investigators of previous Phase 3 trials, strongly believe in NurOwn's potential, having seen and having been close to the data and worked with patients who were given our therapy in the past.

Particularly, I emphasize in the early stage of the patient population, this disease, we have to basically put in place all the parameters to enroll the population that will benefit most from this treatment, and the evidence is there, so we feel very strong about that. Also, we have received very strong support from many neurologists, scientists, advocacy groups, the patients themselves. Yeah, the skepticism, we acknowledge it exists, but we're committing to providing the data, the sets of data that will basically speak for itself at the end of the day. Thank you, Michael.

Yeah. Thank you, Bob. Next question. What is the status of the manufacturing facilities, and how will you ensure a consistent supply of NurOwn?

Chaim Lebovits (CEO)

Thank you. I will ask Haro to respond to that question, please.

Haro Hartounian (EVP and COO)

Thank you, Michael, for the question. As discussed in the prepared remarks, we have established a robust manufacturing strategy to support the Phase 3b trial and future commercialization. We have contracted with Pluri Inc. for clinical manufacturing, leveraging their expertise in GMP-compliant production. This complements our leased facility at Sourasky Medical Center in Tel Aviv. We are also planning to bring an additional U.S.-based manufacturing center online to support broader production needs. Our internal teams and partners remain focused on meeting all CMC requirements. This multifaceted approach will ensure a consistent and reliable supply of NurOwn for the trial and beyond.

Thank you, Haro. Next question. Given the current financial constraints, how is the company ensuring operational continuity and maintaining its commitment to starting the Phase 3b trial?

Chaim Lebovits (CEO)

Thank you, Michael. We understand the importance of maintaining operational continuity and delivering on our commitment to the Phase 3b trial. Despite the financial challenges, our team remains deeply dedicated and focused. We've implemented strategic cost-saving measures, including salary reductions for many and periods during which members of our senior leadership have worked without compensation to prioritize the trial's progress. Our staff consists of highly skilled and experienced professionals who are passionate about bringing NurOwn to ALS patients. Their dedication is a testament to their belief in the potential of this therapy. We're confident in our ability to navigate these challenges and advance the trial effectively. We are committed to ensuring that the team's dedication will be recognized and rewarded as we achieve our milestones.

Thank you. One final submitted question here. Why do you not just refile the original BLA?

Refiling the BLA at this time would not, in our best opinion, be the most strategic path forward. We are focused on generating robust data required by the FDA through the Phase 3b trial, according to our SPA agreement with the FDA. This trial is designed to address specific concerns raised and provide the evidence necessary to support a new BLA and a successful path to approval. We believe this approach will ultimately lead to a more definitive and sustainable path to bringing NurOwn to patients. Thank you. Operator, Jenny, do we have any questions on the line?

Operator (participant)

Yes, we do. I'm just going to read the instructions to the audience if anyone else would like to queue up. We will now be conducting our question-and-answer session via the phone lines. If you would like to ask a question, you can press Star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press Star 2 if you would 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 wait a moment whilst we poll for questions. Thank you. Your first question is coming from Jason McCarthy of Maxim Group. Jason, your line is live.

Good morning, Chaim and team. Thanks for the update. Can you speak, I guess, broadly about your thoughts on the changing environment in the cell therapy space, particularly unmodified cells like NurOwn? They're not genetically manipulated in any way. Since we've seen one approval in January, we're probably going to see another. While BrainStorm has done tremendous things in getting the SPA and alignment with FDA, the whole environment seems to have changed towards being more favorable to exactly what you're doing. I'm wondering if that opens up avenues of discussion with pharma partners or additional sources of non-dilutive capital through grants. Even we have an administration that, in their prior administration, put that Right to Try in place, and now there's somebody at HHS that is a big believer in stem cells. How do all these things shape the path forward for BrainStorm, Chaim?

Chaim Lebovits (CEO)

Thank you, Jason. It's a very good question. The truth is, we try to stay away from the political limelight. We want to stay very focused on the scientific data we want to provide. It's to be seen how these different staff changes will have an impact on how the FDA goes forward. I believe that all parties would support good scientific results. I think we timely were able to lock down with the FDA a very strong Special Protocol Assessment, which really says that they see merit in our early patient population and they want us to replicate that. That's where we are going. While it's a very tough funding atmosphere, you know how the market is better than me, Jason. You're an analyst, and biotech is not having it easy. I do believe that we are undervalued at the moment.

I know many CEOs say that, but really, we are after the negative outcome we had. People are skeptical if we're able to pull this off. I think we're just now on the verge of pulling it off a few weeks later than we had announced and thought. We are very close to signing for a CTA, getting all these models to FDA, and the feedback from them. We are in contact with them on a daily basis when needed, and they want us to try to start as well. The rest, we will have to follow and see. I do recognize the fact that the FDA in December approved the first-ever mesenchymal stem cells for GVHD. That is very good because we are pioneering, and pioneering has many challenges.

It was good that another company went through the challenge and got the first mesenchymal cell therapy approved, and I hope that we're going to be the second.

Right. Thank you. Prior to these approvals, I know BrainStorm the year before went through the AdCom, went through a whole series of events. What has changed, as you know, between then and now, I think, is how FDA views data sets related to stem cells, obviously far more favorable. I know the prior question that you had was, "Why don't you just resubmit the BLA?" I understand that you can't. It's not the best path forward. Given FDA's view of these data sets now, from what we've seen, should the prior Phase 3 data be used to support the Phase 3b if you're able to complete that trial and file a BLA?

Yeah. Definitely, we'll support. That's part of the pipeline that we'll take into consideration, the previous data. As we said, we want to replicate the early patient population results of the Phase 3 trial. Bob, you may want to add some comments to that.

Haro Hartounian (EVP and COO)

Yeah. Thanks. Jason, this is a very important question for us, obviously. As everyone knows, the main reason why we are all here today is because we believe in that data that was generated specifically in the early disease population. There was a pre-specified analysis for the population that had a baseline score above 35, panning out to be positive, as well as many post-hoc analyses in early disease. All of that data from the previous Phase 3 trial will support the next Phase 3b trial specifically in that population. It'll be pooling of data. It'll be basically strong support. We totally agree with you. This is the path that we're taking.

Got it. Last question. I think I heard earlier there's an ongoing effort to open a manufacturing facility here in the U.S. Is that accurate? Two, what would be kind of the size and capacity of that center? Third part, is the discussion with potential investors, is there hang-up on manufacturing that it's overseas versus not being here in the States? If so, does this mitigate some of those concerns and reopen those discussions?

Chaim Lebovits (CEO)

That was quite a few questions. Thank you for that, Jason. The answer is that it's quite clear that towards the end of a trial, you want to have a site that's ready for inspection of the FDA to get commercialized ASAP if you are successful in the primary results of the trial. No, there's no concern from the FDA on the center that we are providing to start the trial. On the other hand, we do want to have ready a site that's ready for inspection. Haro and the team are rigorously working, and we will be announcing something very soon. The sites that we are looking forward to partner with in the United States. I hope that answers your question.

Yes. Great. Thank you, Chaim.

Operator (participant)

Thank you very much.

Chaim Lebovits (CEO)

Thank you very much.

Operator (participant)

We have time for one more question.

Chaim Lebovits (CEO)

Thank you.

Operator (participant)

Thank you. Yep. Your next question is coming from David Bautz of Zacks Small Cap Research. David, your line is live.

Hey. Good morning, everyone. Thanks for the overview this morning. I just got a couple of follow-up financial questions. Chaim, what percentage—I do not know if you can quantitate completely—but what percentage of financing do you want to have in place before you are comfortable with getting the trial started? How quickly after that funding is in place do you think the first patient can be enrolled?

Chaim Lebovits (CEO)

That's a very good question. The answer is we are working very close with our partners, and we're having those discussions. The partners are giving us a lot of leeway, which is very outstanding, and we are very grateful for those partners. It's not something that's typical. I think our partners see the upside of this product, and it's almost like a mission to get this product into patients. There's no one else that's going to do the trial if not BrainStorm. Those partners are really partnering with us in an outstanding way. Having said that, in addition to what we wrote in today, just to be able to start finalizing the preparations, we are having, of course, other fundings in the pipeline, which we cannot discuss at this day. I think once we announce that, everyone will be comfortable with our plan going forward.

That is in addition to non-dilutive grant, which is also in the pipeline for the fall.

Okay. Thanks for taking the question.

Operator (participant)

Thank you very much. We appear to have reached the end of our question-and-answer session. I will now hand back over to Chaim for any closing comments.

Chaim Lebovits (CEO)

I just want to thank everyone for joining us today. We are looking forward to the next update. Hopefully, it will be after the first patient in and in a different environment for our financial situation as well. Thank you very, very much.

Operator (participant)

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