10-Q: Brainstorm Cell Therapeutics Reports Third Quarter 2024 Results, Provides Update on NurOwn Development

Brainstorm Cell Therapeutics reported its third quarter 2024 results, highlighting a decrease in operating expenses and progress in its NurOwn clinical program, while also addressing ongoing financial and legal challenges.

Summary

• Brainstorm Cell Therapeutics reported a net loss of $2.7 million for the three months ended September 30, 2024, and a net loss of $8.65 million for the nine months ended September 30, 2024.
• The company's operating expenses decreased to $3.048 million for the quarter and $8.504 million for the nine-month period, compared to $6.035 million and $16.635 million respectively in the same periods of 2023.
• Research and development expenses decreased significantly due to reduced costs related to the Phase 3 clinical trial and other activities.
• General and administrative expenses also decreased due to lower payroll, stock-based compensation, and other costs.
• The company's cash balance stood at $349,000 as of September 30, 2024.
• Brainstorm has been actively working on its NurOwn program, securing a Special Protocol Assessment (SPA) agreement with the FDA for a Phase 3b trial in ALS and aligning with the FDA on Chemistry, Manufacturing, and Controls (CMC) aspects.
• The company has raised approximately $178 million gross in cash since inception through September 30, 2024, from the issuance of common stock and warrants.
• Brainstorm is facing ongoing legal challenges, including a securities class action and derivative lawsuits, and is also working to maintain its Nasdaq listing.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are positive developments in the clinical program and cost management, the company's financial situation and ongoing legal challenges raise significant concerns. The need for additional capital and the risk of delisting from Nasdaq contribute to a negative sentiment.

Positives

• Operating expenses have decreased significantly, indicating improved cost management.
• The SPA agreement with the FDA for the Phase 3b trial of NurOwn in ALS validates the clinical trial protocol and statistical analysis.
• Alignment with the FDA on CMC aspects of the Phase 3b trial is a positive step towards regulatory approval.
• The company has successfully raised capital through ATM offerings and private placements.
• The company has regained compliance with the Nasdaq minimum bid price requirement.
• The company has a strong intellectual property portfolio with 27 granted patents and 23 patent applications.

Negatives

• The company continues to incur net losses, with a net loss of $8.65 million for the nine months ended September 30, 2024.
• The company's cash balance is low at $349,000 as of September 30, 2024.
• The company is facing ongoing legal challenges, including a securities class action and derivative lawsuits.
• The company received a notice from Nasdaq regarding non-compliance with the minimum market value of listed securities requirement and has until January 14, 2025 to regain compliance.
• The company has not yet generated any revenue from operations.

Risks

• The company's ability to continue as a going concern is dependent on its ability to raise additional capital.
• Failure to regain compliance with Nasdaq's minimum market value requirement could lead to delisting.
• Ongoing legal proceedings could result in substantial costs and a diversion of management's attention.
• The company's product candidates are subject to regulatory approval, and there is no guarantee that they will be approved.
• The company faces competition from other biotechnology companies.
• The company's intellectual property may be infringed upon by third parties.
• The company's business and financial performance are subject to substantial risks and uncertainties.

Future Outlook

The company plans to focus on the Phase 3b clinical trial for NurOwn in ALS, and is exploring the next steps in support of NurOwn, including publication of emerging clinical data and development of a protocol for an additional clinical study. The company will also continue to evaluate the potential for clinical development of NurOwn and MSC-NTF derived Exosomes in various neurodegenerative disorders, neurodegenerative eye disease and acute respiratory distress syndrome (ARDS).

Management Comments

• Management expects that the Company will continue to generate losses from the clinical development and regulatory activities, which will result in a negative cash flow from operating activity.
• Management's plan includes raising funds from outside potential investors via its ATM program and other potential funds as mentioned.
• The company intends to actively monitor the company's MVLS between now and the Compliance Date and will take all reasonable measures available to the company to regain compliance with the MVLS Requirement.

Industry Context

The company is operating in the competitive biotechnology industry, focusing on developing cell therapies for neurodegenerative diseases. The company's progress with NurOwn is being closely watched by the ALS community and investors. The company's ability to secure regulatory approvals and commercialize its products will be critical for its success.

Comparison to Industry Standards

• Brainstorm's approach of using autologous MSCs to secrete neurotrophic factors is a unique approach in the cell therapy space, differentiating it from companies using allogeneic or gene-edited cell therapies.
• The company's focus on ALS, PMS, and AD aligns with the industry's growing interest in addressing neurodegenerative diseases, which have a high unmet medical need.
• The company's Phase 3 trial results for ALS, while not statistically significant on the primary endpoint, showed clinically meaningful improvements in certain subgroups, which is similar to other companies that have had to refine their clinical trial designs based on initial results.
• The company's ability to secure an SPA agreement with the FDA is a positive sign, as it indicates that the FDA agrees with the company's clinical trial design and statistical analysis plan, which is a key step in the regulatory process.
• The company's financial situation is similar to many other clinical-stage biotech companies, which are dependent on raising capital to fund their operations and clinical trials.

Management Changes

Corporate Governance

Legal Proceedings

• The company is facing a securities class action lawsuit, Sporn v. Brainstorm Cell Therapeutics Inc., et al., alleging violations of Sections 10(b) of the Exchange Act and Rule 10b-5.
• The company is also facing multiple derivative lawsuits, consolidated into In Re Brainstorm Cell Therapeutics, Inc. Derivative Litigation, alleging breach of fiduciary duty and unjust enrichment against certain officers and directors.
• All substantive deadlines in the Consolidated Derivative Action are currently stayed pending the court's decision on the motion to dismiss in the Securities Action.

Stakeholder Impact

• Shareholders are impacted by the company's financial performance, legal proceedings, and the risk of delisting from Nasdaq.
• Employees are impacted by the company's financial stability and the potential for job security.
• Patients with ALS are impacted by the company's progress in developing NurOwn and the potential for a new treatment option.
• Creditors are impacted by the company's ability to repay its debts.
• Suppliers are impacted by the company's ability to pay for goods and services.

Next Steps

• The company will focus on the Phase 3b clinical trial for NurOwn in ALS.
• The company will continue to work with the FDA on the regulatory path forward for NurOwn.
• The company will explore the potential for clinical development of NurOwn and MSC-NTF derived Exosomes in various neurodegenerative disorders, neurodegenerative eye disease and acute respiratory distress syndrome (ARDS).
• The company will actively monitor the company's MVLS between now and the Compliance Date and will take all reasonable measures available to the company to regain compliance with the MVLS Requirement.

Key Dates

Keywords

NurOwn, ALS, amyotrophic lateral sclerosis, cell therapy, clinical trial, FDA, SPA, biotechnology, neurodegenerative diseases, MSC-NTF, reverse stock split, capital raise, warrants, stock offering, biomarkers