Brainstorm Cell Therapeutics Inc.
Q2 2017 Earnings Call Transcript

Published: 16 Aug 2017

[Operator:]

Good day and welcome to the BrainStorm Cell Therapeutics' Second Quarter 2017 Earnings Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Michael Woods. Please go ahead.

[Michael Wood:]

Thank you, Operator, and good morning everyone and thank you for participating in today's second quarter conference call for BrainStorm Cell Therapeutics. Leading the call today will be CEO, Chaim Lebovits; as well as Dr. Ralph Kern, Chief Medical and Chief Operating Officer and they are joined by Mary Kay Turner, VP of Patient Advocacy and Government Affairs. A press release with the Company's second quarter financial results became available on Monday August 14, and can be found on the Investor Page of the Company's website. Before we begin, I'd like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for the purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. BrainStorm cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated. Any forward-looking statements made on this conference call speak only as of today's date Wednesday, August 16, and the Company does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today's date. As a reminder this conference call is being recorded and it will be available for audio replay on the Company's website at brainstorm-cell.com. As the operator mentioned, all participants are currently in a listen-only mode and there will be brief Q&A session following the company's prepared remarks. With that, I'd now like to turn the call over to CEO of BrainStorm, Chaim Lebovits. Chaim, please go ahead.

[Chaim Lebovits:]

Thank you very much Michael. Good morning and good afternoon to our international investors listening in. This call is mainly meant to be a general update. We're using this opportunity of the quarter. This will not be a typical earnings call as you know. BrainStorm is not yet a revenue driven company, but I do want to assure you that we are fine with our current financials, our net working capital is about $7 million. Most of you have read it by now. And I'm sure you all know by now that BrainStorm received a non-dilutive grant by CIRM to finance the Phase 3 trial. Of course it's on top of the $7 million net working capital on hand. Therefore we are fine to do the trial with our financial. No pressure as I said previously in the previous calls, we raise money, we anticipated the CIRM grant and we are very grateful that we got the CIRM grant. This is a very serious spare of youth panel of 12 [indiscernible] scientists that reviewed our previous trials on data and this is a very important credible support and addition to the $16 million which of course allows us to finalize - to start and of course finalize the trial. With me here in our U.S. office today is our Chief Medical Officer and Chief Operating Officer, Dr. Ralph Kern, and also here with me as Michael mentioned is our newly appointed Vice President of Patient Advocacy and Government Affairs, Mary Kay Turner. I would like to just give you a general update of where the company is. We had said that at the beginning of the second half of the year we’ll start Phase 3 and some investors were asking us if we are late and the answer is no. Everything is on time, we are very happy of – how we are proceeding with our CRO and with the site. We announced today our agreements with three out of the six sites Mass General Hospital, CPMC, San Francisco and UCI and just outside Los Angeles, NurOwn and the other centers are all going to be enrolled in the coming weeks. Nothing is withholding us its only final Ts and Is and agreements and [defend their] agreements. There is also some technicalities each center have its on policies. You may have noticed we didn't yet submit to clinical.gov the protocol Phase 3. This will happen in the next few days and once that is done some of the IRBs already discussed some of the IRBs have it under agenda. We don't control the IRBs of the six centers but we’re happy that they’re moving very fast. Obviously the centers that were in the previous trials the IRBs they really know the product. They go faster but even some of the new centers are all anxious to start the trial and IRB team is very favorable in putting this upfront and proceeding. Without going into details I am welcoming Ralph who is back from a visit to few of the centers. Some of the centers are having pre-SIVs and those centers and all the centers really had SIVs. I said we’re not ready yet to announce officially we didn't announce officially but I do want to reassure to our investors that we are on time, I’ll make sure that we're even ahead of time. And we’re very happy with that part in where we are. In addition to that a major part of the trial is of course the manufacturing, so I do want to mention City of Hope. City of Hope is the center that we'll be providing NurOwn for all six centers that means for all patients treated in Phase 3 and we have a team led by our own Vice President Dr. Levy, the Manufacturing VP that is onsite for months now. I can tell you that we are through the first tech transfer successfully before treating first patient. We'll have to be down with three tech transfers, the second is on way. We don't foresee any issues. The team at City of Hope as you may assume is a very professional it’s an A team when it comes to cell therapy and they’re wonderful cleanrooms. And one our team is led by Dr. Joseph Gold and we have a wonderful collaboration with them and I believe that at the end of September beginning of October, we will be able to announce the finalization of tech transfer. Of course patients will be screened before as you may recall the design of our trial calls for three to four month screening of the patients before randomization – and we randomize some of them with all of them up for seven months to the next trial after three treatments versus the one treatment in previous trial. And just to refresh your memory this Phase 3 trial will be 200 patients one through our randomization. I will allow to welcome our new Vice President just to introduce herself for a moment and then Dr. Kern will have a comment or two on the general update where we are and then we will open the call for questions. Our main reason for this call is to allow shareholders to their questions as many of them had written to us and we thought it makes more sense to have a discussion with the shareholders. Mary?

[Mary Kay Turner:]

My name is Mary Kay Turner and I am honored to be here today to be part of BrainStorm. My background, I come from two decades of experience in the biopharma industry to see how policies as well as government affairs. Prior to this role I led the patient efficacy and communication for Mitsubishi Tanabe Pharma America for the commercialization for edaravone, as many of you know that was recently approved for ALS. From the outside and in my work I heard from patients every day about the promise of adult stem cell therapy and what that could mean to ALS and what BrainStorm was doing. So that's very much what attracted me to this role. On the inside I am even more impressed at the hope and promise of the data from trial based upon promising Phase 2 trial data which demonstrated real signals for improvement of ALS disease and the promise of a disease modifying agent hopefully the first time in the history of ALS. So I am honored to join BrainStorm to work with the ALS communities, the neurologists who have dedicated their lives. It is disorder as well as people living with ALS and caregivers living with ALS. I'm playing a strong patient voice in respect of - because that integral to the mission of BrainStorm. So thank you very much and I look forward to working with patient community.

[Chaim Lebovits:]

Thank you very much. Dr. Kern?

[Ralph Kern:]

Thanks Chaim. So thanks everybody for calling in today. I just want to let you know and reiterate what Chaim and Mary Kay have said that we are on track that we have a very clear plan that we are executing day-by-day. We made some very good progress in starting up the Phase 3 program and we're building on a very strong scientific platform of our understanding about how NurOwn can provide regenerative medicine solution for ALS. And we’re building on very strong Phase 2 data which I should mention will be entering the public domain shortly in terms of publications, and abstracts at meeting so stay tuned. We love to share that information with you. So I’ll turn it back to you Chaim. Thanks

[Chaim Lebovits:]

And operator we are open for questions.

[Operator:]

[Operator Instructions] And we will take our first question from Jason Kolbert from Maxim. Please go ahead.

[Jason Kolbert:]

Can you walk us through the next steps as you gear up to both initiate and then enroll the pivotal trial and give us some idea on how many sites you think you're going to need and what the velocity of the enrollment might look like and how long the process will take. And then in conjunction with that, can you also address kind of the dynamics of what it takes to actually receive the CIRM grant and congratulations. Thanks.

[Chaim Lebovits:]

So we will have six centers, we will enroll 200 patients. It will be one-to-one organization. Gradually once we have the commencement date which we will announce shortly, they will start screening patients. Since we are excluding slow progressors, we believe that 50% to 60% of patients will be after the screening they will stay in randomization and from site-to-site it won't be an exact same number every time. But within these six sites we are more than comfortable that we'll have more patients, we envision that we won't have an enrollment issue. We know even as we speak we didn't yet announce screening of the first patient. Yet there are hundreds and hundreds of patients enrolling and enroll in the sites checking in their database as when they can enroll. Now the question is how long the trial will take? And the answer to that is the true bottleneck is the manufacturing. So we’re very fortunate to have a very good manufacturing center City of Hope and they’re providing us more than one cleanroom, a few cleanrooms and based on again of how many bone marrow we were able to accept from the centers and how much we are able to manufacture and turnaround to the centers, you should recall Jason I know that - you know this better than others on the line as patients will be treated three treatments baseline two months after baseline and four months after baseline for treatment. So that’s quite a lot but we are very confident both in our team and the team of City and Hope that we will able to do that and that’s a very good prep for a company to prepare itself to be ready to manufacture once approved. I think we're getting better and better on a daily basis, and I am very proud of our manufacturing team. Under some grants there are milestones I know that some investors were a little bit nervous that some other company had a grant and it didn't happen because of enrollment problems. I think we will easily meet our enrollment milestone. And with that, we will announce our first grant payment of CIRM. We won’t announce every grant payment because on various milestones our patients are enrolled through the project and they give you upfront money et cetera. But we have very good report on the CIRM team as a very, very professional team. We have not seen another organization so professional with the grant like the – this is a good time really to thank them.

[Jason Kolbert:]

Can you talk just a little bit clinically about the endpoints in the trial and what your discussions with regulators mean and from a point of view of hitting a primary endpoint with good results from the pivotal trial, could we be in a scenario where will be a single trial towards approval? Thank you.

[Chaim Lebovits:]

As usual Jason you asked a good question, but I will give you an honest answer as I always give. The answer is if we compare to what was approved in ALS, everyone would say, yes, this should be a pivotal trial. We cannot be responsible then everyone of the agencies thinks that way and I assure you that not everyone thinks the same way. As you know, not everyone of the agency has the same view about all the products that were proved lately which I don’t want to mention. Our primary endpoint I think is, well accepted in the industry as a primary endpoint, that’s ALSFRS score and we're looking at the very high bar of over one point per month improvement, I think it's 1.25 per month improvement. And we are following the patient seven months after the first treatment. And so, we want to think and we believe - we didn't go for an FDA but we believe that if we are going to be able to replicate the results we had is the sub group in the previous trial, this should be a BLA. And I would like to Kern if you want to add something?

[Ralph Kern:]

I think I’ll just say a couple of things, one is that ALSFRS are the revised form of ALSFRS is an approvable endpoint. So the recent edaravone approval, essentially confirms that. The other thing is that, we believe that this is our fourth study in ALS, so we have three previous studies. I think the cumulative data from four studies along with an approvable endpoint and the recent discussions around the duration of the study. I think all point to the fact that positive outcome in the study would put us in a really good position for BLA. So, I think I’ll leave it at that and go on to the next.

[Operator:]

And we will take our next question from [Karl Gowaski from GD Energy]. Please go ahead.

[Unidentified Analyst:]

I'm interested to know as to where we - you announced in February and in March and where we are with a hospital extension, product application in Israel in the Health Canada early access pathway, authorization for distribution?

[Chaim Lebovits:]

I just have a question for you, if I may. You are an investor or a patient advocate or family member.

[Unidentified Analyst:]

Both, I am an investor NA, I get familiar with your company because I have a family member, my brother who is a physician there at ALS. I believe in your company. I put money in your company and I am trained that this will work.

[Chaim Lebovits:]

First of all we all pray to work and we are working very hard to work. Number one, we appreciate your support and also feel very sorry to hear you have a brother at ALS. I will answer your question of course, but before I just want to say general comments. This call and you are an investor, but I asked patients on the call to ready keep their questions when we have calls with patients, we just had a webinar in collaboration with NEALS. It went for over an hour. We had almost thousands patients on that call. And the patients that are underline that - I am sure most of your questions were answered at that webinar and it's still under NEALS site and also on BrainStorm site and you can go and listen there. With regard to your question about Israel hospital, we are very silent on that because we like to announce when we have something final. We don’t like to promote something that may not happen. Although, we are getting very close to that, we are not ready to announce yet. I can tell you that with our discussions with Ministry of Health, they are going in a pathway to allow us to do, first a few patients, three or four, see how it goes and then they will allow some other 50 or so patients. But we will announce when we have to announce something. And also then, it will not be in a press release, as we don't want to get patients hyped up. We have only a very few patients, even 50 patients is not a lot. We will put on our 8-K as the rules go for it, which will not be a press release. So, that's all I can comment at the moment on this Karl.

[Operator:]

[Operator Instructions] And we will take our next question from David Bautz from Zacks Investment Research.

[David Bautz:]

I think most of my questions were already asked. Chaim Lebovits generally is there be a way, I don't even know if there be a mechanism. But to speed up the enrollment by maybe, getting doctors to send the patients that they know are the ‘rapid progressers’ and kind of - is there a means to move those patients to the front of a line as far as getting them into the trial?

[Chaim Lebovits:]

I think that we are very fortunate to have some of the best centers in the states and believe me the principal investigators during the call, principal investigators understand really the design of the trail and they know what they are looking at. None of them are voicing any issues with finding the subgroup. I want to remind you that our subgroup was then 50% to 60% of ALS patient's community. It’s not a 7% to 10% subgroup.

[David Bautz:]

I might have missed this, but did you comment on how long do you think it will take to enroll?

[Chaim Lebovits:]

I think the entire trial should take 18 months up to topline results and that's includes seven month follow-up of the last few patients. So it may overall to 20 months, 21, as you know, but that’s ball game we think we're in. Again, it’s not under enrollment, David. It's more based on the manufacturing, and we are getting better and better and better. Bottoming the process, doing so many different products at the same time to personalize medicine and we are trying to have it as close as possible as an official one. I don't think it gets better than that.

[Operator:]

And we will take our next question from [Gary Bligh]. Please go ahead.

[Gary Bligh:]

I was going to ask about the early access opportunity in Canada.

[Chaim Lebovits:]

What was your name?

[Gary Bligh:]

Gary Bligh, B-L-I-G-H.

[Chaim Lebovits:]

So in Canada, we have this patients for the Canadian, Health Canada and we hesitantly we want to proceed there. We like to be in very good - with regulatory institutions in every country. But based on our conversations and they hear - questions on ALSFRS as an endpoint and things like that, so we're hesitating to want to proceed there. We are verifying in the states. We thought that, early access pathway is a easier pathway to get us faster to an approval. I think what it may take the same two years as our entire trial Phase 3, so we will be focusing more in our Phase 3 trial. That's our priority. Even though some in management do want us to proceed with [indiscernible] still will debating. We'll have a call with CCRM who is helping us out there in September to decide how we want to proceed with them. That’s why I can’t comment on this.

[Gary Bligh:]

Would any revenue be generated from either the ALS programs?

[Chaim Lebovits:]

It's really approval, after all, exempt pathway allows revenue. Once that happens, I think that in 2018, BrainStorm will be a company that has revenues. Again, these won't be hundreds of patients but we think 50, 60 patients.

[Gary Bligh:]

Are there any opportunities to collaborate with other pharmaceutical or cell therapy companies?

[Chaim Lebovits:]

There are more than one opportunity, but company is not prepared to comment on this at this time.

[Operator:]

And we will take our next question from [indiscernible]. Please go ahead.

[Unidentified Analyst:]

[Foreign Language]

[Chaim Lebovits:]

Even though you asked in Hebrew, I will answer in English. Most of those on the call speak English only and don’t speak Hebrew. And I would appreciate next time that you come on the call, you should ask in English, the question. I will replicate in short your question. When will we start the hospital in Israel, how much money in revenues do we expect and how would it help finance this Phase 3 trial? So I already I think I answered these questions, we are not going to give the price out today. I think there is going to be a nice revenue for the company. Cell therapy is not a cheap manufacturing cost, the manufacturing is very expensive. And we're not looking for a very high profit. I would have hoped that it will be a molecular, it will be better for the company. Or if not, we are trying to treat ALS with even our products so we're getting to more and more robust. And once we will start to treat patients with [indiscernible] we will, at least in the first quarter, you’ll be able to see what revenue we got. So you’ll be able to understand how much we’re charging them because the company has no other revenues for the time being.

[Operator:]

And we will take our next question from Jonathan [indiscernible]. Please go ahead.

[Unidentified Analyst:]

I just wanted to be clear about one thing. For the upcoming Phase 3 trial that you guys are starting, you said, you do not need to raise additional funds that the grant that you received and the cash on hand is enough to make your ways through that.

[Chaim Lebovits:]

Yes, we are not pressured to raise money. Nothing close. We may get some very good offers and we may even get additional grants. We're very hesitant to discuss as you may recall, in our previous call, I was pushed a lot about this and I told people that we don't need to raise money to finance the Phase 3 trial, but I didn’t tell them that we submitted a grant request or CIRM because we were conservative. Just imagine if we wouldn’t get the grant from CIRM we would have announced upfront. So even now, we’re hesitant, but we’re very fine and comfortable with our financial position. We have no issues to fund the Phase 3 trial this time, no.

[Operator:]

We will take our next question from [indiscernible], a Private Investor.

[Unidentified Analyst:]

A question about, as you look ahead to hospital exemption type treatments, will you be able to charge market pricing for those treatments or will they be limited to perhaps production cost plus some overhead? Any indication on where that stands now?

[Chaim Lebovits:]

I choose not to comment on this at the moment.

[Unidentified Analyst:]

Okay.

[Chaim Lebovits:]

I will tell you again there will be revenue to the company of course but I will not comment for various reasons I remind you that we didn't even announce the final approval of starting to treat patients without [indiscernible] so we got to be careful.

[Operator:]

[Operator Instructions] And it appears we have no further questions at this time.

[Chaim Lebovits:]

Okay we have no further questions, I’ll wait a few more seconds if you see another question I'll take it. The reason for me being so patient, we got some investors complaining that we’re not talking enough to investors, not explaining where we are. So we are very patient and we allowed everyone that had a question to comment and we give the answers. We didn’t screen anyone. If anyone has another question I’m happy to answer otherwise we will close this call within a minute. We wish you the best we have a lot of work in front of us even today a lot of sessions are going on. So many pieces that we have to close, the final process to start our Phase 3. So thanks everyone for participating here today and hope in the next call we will have more positive news with you.

[Operator:]

We do have one follow-up from Jason Kolbert.

[Jason Kolbert:]

Since there has been a lot of attention paid to the recent approval by the FDA of edaravone and my understanding is that the efficacy in this drug was really marginal, it's certainly has an adverse event profile that’s worthy of discussion and requires a detailed analysis that the risk versus benefit. I wondered if we could just get some comments from you on kind of what you see at the product profile of this drug and given what we know from the four clinical studies that have been conducted with NurOwn. How it compares let’s say in terms of the adverse event profile and what the difference is in the risk versus benefit decision-making that you might face at the agency versus the decision that the agency just made on this drug so that we can all understand kind of the competitive landscape? Thank you.

[Chaim Lebovits:]

That was a long question Jason but [indiscernible] you them very well. I think that asking the company to publicly compare is a little bit something we don't want to go into too much detail I can’t tell you, a tactical comparison at least. As you know the 138 patients trial edaravone was focused on very specific subgroup of ALS patients and according to publications and I believe on nature and editorial that’s in Neurology that it's only related to 7% of ALS patients. And still the agency was gradual enough and gave them across the board approval. We're very happy we’re not against that. I think it’s very good bar for NurOwn because NurOwn of course represents 50%, 60% our next subgroup that we are enrolling of the ALS patient. And also yes, if you look at the ALSFRS our score efficacy we're looking for and our trial design we’re looking three times higher than what edaravone found. So we’re looking for a very strong impact treatment which is hold and even reversal of the progression of the disease. In our previous trials the subgroup including the slow progressors we saw 1.5 improvement per month so if the typical patients decline between 0.7 to 1 point per month 1.5 is reversal so do your math. And I don't think that the other treatment showed that. I think they showed only 0.4 so per month improvement which others question how clinically meaningful it is but no one question from 1 point per month and ALSFRS score and over that if it clinically meaningful but of course it’s very clinically meaningful. So I think that the other approval is going to help us in a way to set the bar. So thank you for questions and I think I gave the maximum answer I can give. And I thank everyone for being with us here again today and probably we should - we have one more question - so we’ll close the call and wish everyone well. As I said hopefully on the next call, we’ll be on the same route of sharing with our investors very positive news. Thank you very much.

[Operator:]

And this concludes today's conference. Thank you for your participation and you may now disconnect.