BioRestorative Therapies - Earnings Call - Q1 2025

Transcript

Operator (participant)

Please note this conference is being recorded. I will now turn the conference over to your host, Stephen Kilmer, Investor Relations. Stephen, the floor is yours.

Stephen Kilmer (Head of Investor Relations)

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 Therapies' current beliefs, assumptions, and expectations. 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, 2024, filed with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call.

BioRestorative undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, other than as required by law. On the call today, representing the company, are Lance Alstodt, BioRestorative's Chairman and Chief Executive Officer, Francisco Silva, 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.

Lance Alstodt (Chairman and CEO)

Thank you, Stephen. Good afternoon, everyone. Welcome to our first-quarter conference call. On behalf of BioRestorative Therapies, I'd like to thank you for your interest in our company and for those of you who are shareholders. As always, we appreciate your support. As you can see from the press release we issued just a short time ago, we have continued to execute well across all areas of our business since the start of 2024. We have a lot of exciting things to look forward to as we move throughout the year. With that said, I'm going to ask Rob to provide a brief overview of our first-quarter financial results.

Robert Kristal (CFO)

Thanks, Lance. Good afternoon, everyone. To streamline the presentation of the financial results, all of the numbers I will refer to have been rounded, so they are approximate. For the first quarter 2025, revenues were $25,000 compared to $35,000 in the same period last year. First quarter 2025 deferred revenues were $150,000 compared to nil in the first quarter of 2024. I point this number out because it represents a timing difference on when we booked revenue versus when we received such revenue. We are encouraged with the momentum in the underlying fundamentals of this revenue line. The company's first quarter 2025 loss from operations was $4.8 million compared to $4.1 million for the comparable period 2024. The company's first quarter 2025 net loss was $5.3 million, or $0.64 per share, compared to a net loss of $2.2 million, or $0.33 per share for the first quarter of 2024.

The change was primarily due to a gain on the exchange of warrants in Q1 2024. Cash used in operating activities in the first quarter of 2024 was $2.8 million, and the company ended the quarter in a strong financial position with cash, cash equivalents, and marketable securities of $9.1 million and no outstanding debt. With that, I'll turn the call over to Francisco.

Francisco Silva (VP of Research and Development)

Thanks, Rob. For the benefit of those who are new to the BioRestorative story, I would like to take a moment to summarize our developmental programs. Our lead clinical stage candidate, BRTX-100, is a novel cell-based therapeutic engineered to target areas of the body that have little or no blood flow. The product is formulated using autologous or a person's own cultured mesenchymal stem cells collected from the patient's bone marrow. The safety and efficacy of BRTX-100 in treating chronic lumbar disc disease, or CLDD, is being evaluated in an ongoing phase II prospective randomized double-blinded and controlled study. A total of up to 99 eligible subjects will be enrolled at up to 16 clinical sites across the United States. Subjects included in the trial will be randomized two to one to receive either BRTX or sham or placebo.

In a podium presentation that I gave in February in 2025 at the Orthopedic Research Society annual meeting, I reviewed 26-52 week blinded data from the first 15 subjects with CLDD enrolled in this study. No serious adverse events were reported, and there was no dose-limiting toxicity at 26-52 weeks. Preliminary blinded visual analog scale, or VAS, and Oswestry Disability Index, or ODI, data collected at weeks 26 and 52 post-injection demonstrated an exceptionally positive trend compared to baseline. We were also really excited to see that at 52-week comparison of MRI images compared to baseline, there appears to demonstrate morphological changes that potentially demonstrate disc microenvironment remodeling. More recently, just last week, in fact, I presented preliminary 26, 52, and 104-week blinded preliminary phase II BRTX-100 data from the same 15 subjects at the International Society for Cell and Gene Therapy 2025 annual meeting.

The longer-term preliminary blinded data continues to trend positively compared to baseline. If these trends continue, we believe that the phase II trial will meet its primary and secondary endpoints. Partly based on the preliminary data, we have achieved two important FDA milestones since the beginning of 2025. The first of those was the FDA granting fast-track designation for our BRTX-100 CLDD program. The FDA's fast-track program is aimed to facilitate the development and expedite the review of investigational treatments that are designed to treat serious conditions and have the potential to address significant unmet medical needs. Benefits of the program include early and frequent interaction with the FDA during the clinical development process, and stem cell product candidates with fast-track designation may also be eligible for priority review and accelerated BLA Biologics License Application approval.

Achieving fast-track designation was an important milestone for BioRestorative, and we look forward to working more closely with the FDA as we continue to advance our lead BRTX-100 clinical program. The second milestone achieved since the start of 2025 was the FDA clearing our investigational drug application for a phase II clinical trial for BRTX-100 in chronic cervical discogenic pain, or CCDP. As a result, BRTX-100 is now the first and only stem cell-based product candidate in the world cleared by the FDA to be evaluated in the cervical degeneration disc disease setting. Moving to our core preclinical metabolic program, ThermoStem, we are developing cell-based therapy candidates to treat target obesity and metabolic disorders using brown adipose or fat-derived stem cells, or BADSCs, to generate brown adipose tissue, or BAT, as well as exosomes secreted by the BAT asse.

BAT is intended to mimic naturally occurring brown adipose depots that regulate metabolic homeostasis in humans and is involved in weight loss. While further work is needed to fully understand the mechanism of action of ThermoStem and its impact on weight loss and metabolism, we have not seen, nor do we expect, the same negative secondary effects of GLP-1 pharmaceuticals, such as loss of muscle mass and negative cardiovascular effects. As awareness of the promise that our ThermoStem-based stem cells hold for the treatment of obesity and related metabolic disorders continues to grow, it is important that this potentially game-changing opportunity is well protected, both for us and any current and our future potential licensing partners. Accordingly, we have methodically built a comprehensive patent portfolio of issued patents that cover both the U.S. and international markets.

We are pleased to see that our already formidable IP estate expanded again in the first quarter. On a final note, our previously reported substantial discussions with an undisclosed commercial stage regenerative medicine company with regard to a potential license agreement for our ThermoStem metabolic disease programs are continuing. While we cannot provide interim progress updates nor provide any assurances that we will come to a mutually acceptable agreement, we are committing to closing the loop on this as soon as practical. With that, I will turn the call over back to Lance.

Lance Alstodt (Chairman and CEO)

Thank you, Francisco. As you can see from what Francisco and Rob just reviewed, we've had an exciting and productive beginning of 2025. While that progress continues, we're carefully managing all of our resources as we advance our two core clinical development programs, BRTX-100 and, of course, ThermoStem. To summarize, we're making exceptionally good progress with our phase II trial for BRTX-100. While the data is still blinded, the initial trends continue to be very encouraging. Reflecting the positive preliminary phase II trial data seen to date, the FDA has granted fast-track designation to the program. We intend to present more data from this trial with a larger patient population very soon, and we remain very optimistic that this data will be consistent with the previous trends.

We have now also expanded our advanced clinical pipeline for BRTX-100 to include the treatment of both chronic lower back pain and neck pain via the FDA clearance of our IND for a phase II trial in cervical. As you know, we skipped the phase I, and we did not have to do any preclinical work within that program. This was a function of our data associated with our lumbar trial and very solid conversations with the FDA. We are continuing to proactively expand the already formidable ThermoStem intellectual property estate to help ensure long-term market exclusivity. We continue to be in substantive discussions with regard to a potential license of the ThermoStem metabolic IP and other assets that we possess from a technology perspective.

Finally, we ended the quarter in a very strong financial position with cash, cash equivalents, and marketable securities of $9.1 million as of March 31, 2025. We will continue to efficiently manage our cash reserves while executing upon our strategic goals. Thank you. With that, concluding our introductory remarks, we're happy to take any questions you may have.

Operator (participant)

Thank you very much. We will now be conducting our question and answer session. If you would like to ask a question, you can press star one on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For any participants using speaker equipment, it might 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 Jonathan Aschoff of Roth. Jonathan, your line is live.

Jonathan Aschoff (Analyst)

Thank you. Congrats on the progress, guys. I had a question. You call the endpoint, the efficacy endpoint of greater than or equal to 30% improvements, a preliminary endpoint. I've never really heard of an endpoint called preliminary data, yes, but not an endpoint. You are showing us greater than 50% improvements in this last week's presentation. Is that some kind of foreshadowing that the endpoint that you're going to have to hit is no longer going to be greater than or equal to 30% and more like greater than or equal to 50%?

Francisco Silva (VP of Research and Development)

No. No. Good question. No, we're not changing the endpoint. It's still both just a 30% improvement.

Jonathan Aschoff (Analyst)

What's the preliminary word for?

Francisco Silva (VP of Research and Development)

Because the primary endpoint is safety of the study. It's not efficacy. By the FDA, the target is the safety since it's a first-in-man study. The word preliminary is there as meaning that it's not the primary. The secondary endpoints are related to efficacy.

Jonathan Aschoff (Analyst)

Okay. I noticed in the second slide presentation last week's versus February, there was no more line about potential interim analysis at 26 weeks. So is that out, or will that still be performed?

Francisco Silva (VP of Research and Development)

We haven't determined that we're going to do an interim. It's a potential, and that's still something that's on the table as an option. We don't want to compromise the trial in terms of having an interim analysis that could impact the long-term development. Currently, right now, we're having strategy talks with our team internally, as well as preparing some FDA communications to see where we could take this trial within the phase III and potentially leverage this data to shorten the regulatory process for BLA approval. An interim analysis could impact that since we would have to unblind. That's, again, still something that's on the table, but we removed it from the presentation.

Lance Alstodt (Chairman and CEO)

Okay. Yeah. Jonathan, I think we need—Jonathan, just to add to that, I think we just need some more feedback from the FDA on that. Those discussions are ongoing. Appreciate that comment.

Jonathan Aschoff (Analyst)

Okay. The last one is the 45 subject data being presented in Hong Kong or China. Where are those 45 patients coming from?

Francisco Silva (VP of Research and Development)

From the current study. These are patients that have already been dosed and are at different time points within the visitation and the weeks. Some of it might be 26. Some of it might be 52.

Jonathan Aschoff (Analyst)

When is that presentation?

Francisco Silva (VP of Research and Development)

That's in June.

Jonathan Aschoff (Analyst)

June. Okay. The trial's a lot more along in enrollment than one would glean from yesterday's press release.

Francisco Silva (VP of Research and Development)

Yeah. Absolutely.

Lance Alstodt (Chairman and CEO)

Yeah. I just want to be clear. Yeah. The 15 patients is just to keep it sort of consistent with what we've shown in the past and trying to keep those same patients along a longer time period of looking at metrics. It doesn't represent the enrollment, and it doesn't represent how many patients have been dosed. That we would comfortably say is significantly higher.

Jonathan Aschoff (Analyst)

The 15, they made it to week 12 and not yet to week 26, correct?

Francisco Silva (VP of Research and Development)

The 15 patients at the presentation of the 15. It's the only way the percentages work out. Yeah.

Jonathan Aschoff (Analyst)

Correct. Like you had 13 at week 26. It looks like it's 2 out of 15 that give you that 13.3% for 12 weeks. All right. Thank you very much, guys.

Francisco Silva (VP of Research and Development)

Thank you, Jonathan.

Operator (participant)

Thank you very much. Your next question is coming from Jason McCarthy of Maxim Group. Jason, your line is live.

Jason McCarthy (Analyst)

Hey, guys. Thanks for taking the questions. Looks like you're making significant progress. In terms of speed of enrollment, I understand enrollment is much further along than the 15-patient update that we saw. Do you expect enrollment to continue at its current pace? Kind of what is that pace? As we head into summer, do you expect enrollment potentially to slow a little bit with people kind of taking holiday?

Lance Alstodt (Chairman and CEO)

No. Actually, I think just the reverse, actually. We're starting to see a real uptick in patients because of some of the strategies that we've been employed from a recruitment perspective. We've kind of opened up a whole host of new strategies that seem to be working better than what has been done in the past. As you know, this is a very difficult and challenging environment in order to find a single disc patient with discogenic pain. Given how strict the criteria is, we obviously believe in the criteria in order to have the cleanest and most valid data possible relative to other trials that are out there. We're going to continue to stay with the protocol. I think the enrollment is picking up.

Historically, we've seen a bit of a slowdown during the summer, but I think we'll counteract that with some of the new strategies that we've employed in terms of recruitment.

Jason McCarthy (Analyst)

Got it. In terms of your interactions with FDA, has there been more emphasis from them on pain or function, or do they want to see both, reduction of pain with functional improvement?

Lance Alstodt (Chairman and CEO)

I will tell you that I think it's all open for discussion. We haven't had specific feedback that, for example, function would be dropped from the protocol. I know in some cases it has been in the past, but we continue to collect data on both of our secondary endpoints and our primary efficacy endpoints. We'll continue to work with the FDA and discuss a whole host of matters, including what they really want to focus on as we get closer to enrollment. I think what we can look forward to is certainly pain will be a very meaningful endpoint. Function, I think, is something that we have a little bit more flexibility in terms of discussing.

Jason McCarthy (Analyst)

Have you provided any additional enrollment or patient characteristics? Are the patients older, younger, middle-aged? Where do you think you're seeing the most response, potentially?

Francisco Silva (VP of Research and Development)

It has been ranging. We do have younger patients that are in their early 20s. Then again, we have older patients that are in their late 50s. It is blinded data, so we do not know who or who has not been dosed. We have to be careful in terms of how we report the data. From a very high level, it looks pretty consistent that trends are being formed across the demographics.

Jason McCarthy (Analyst)

Got it. Last question. Can you just give us a little bit more detail on you had mentioned morphological changes in response to the cells. Can you discuss a little bit more about what was observed?

Francisco Silva (VP of Research and Development)

Yeah. Again, this is still very, very early, but it's very encouraging to see these morphological changes. For example, in one subject—and again, it's more than just one that's experiencing this—but in one particular subject that was presented, at baseline, the patient had a protrusion and an annular tear as well. At 52 weeks, compared to baseline, using the same MRI magnet, we see that there's increased hydration. There's an increased T2 signal within the disc. There's a decrease in size of the protrusion. Really interesting is that you see a decrease in the annular tear signal. That is showing very aggressive morphological remodeling within the extracellular matrix, within the disc, and the annulus as well. In another patient, compared to baseline at 52 weeks, T2 signal begins to decrease, so there's less hydration. The protrusion appears to be notably worse than compared to baseline.

You could see an evolution of an extrusion within the disc lesion. In that case, the patient got worse as compared to the previous patient that I spoke about. The patient is actually improving.

Jason McCarthy (Analyst)

Got it. Thank you, guys, for taking the question.

Lance Alstodt (Chairman and CEO)

Wasn't there also—

Jason McCarthy (Analyst)

Oh, sorry.

Lance Alstodt (Chairman and CEO)

Wasn't there also a resolution of the annular tear in that patient that you're referring to?

Francisco Silva (VP of Research and Development)

Yeah. Yeah. I mentioned that there's a decrease in the signal that's apparent there at baseline where there is an annular tear. And then at 52 weeks, the annular tear is nearly resolved.

Jason McCarthy (Analyst)

Okay. Just as a follow-up to that, do you think with more mature morphological data that that could be supplemental in your data package to FDA ultimately and maybe even reduce the size of what could be a registration study next?

Francisco Silva (VP of Research and Development)

We believe so. I mean, that's one of the reasons we're very careful how we're managing the trial and the data because we really don't want to compromise how we could use this potential data going forward. Currently, right now, the environment for cell-based therapies, it's a little bit more positive than it has been ever. We definitely want to leverage the BRTX-100 product. It's autologous by nature. The safety profile that we're seeing—I mean, again, there's 45-patient data that's going to be presented in Hong Kong. Again, part of that is safety in addition to looking at the function and pain scales that are going to be presented. We're very encouraged. Hopefully, we have positive discussions going forward with the FDA.

Jason McCarthy (Analyst)

Great. Thank you, guys, for taking the questions.

Francisco Silva (VP of Research and Development)

Thank you, Jason.

Operator (participant)

Thank you very much. Just a little reminder, if anyone has any further questions, you can press star one on your telephone keypad now. Thank you very much. Okay. We do not appear to have any further questions. I'll now hand back over to the management team for any closing remarks.

Lance Alstodt (Chairman and CEO)

Okay. Great. Thank you very much. Appreciate everyone in attendance. We look forward to talking to you next quarter, if not sooner. Have a great day.

Operator (participant)

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