DEF 14A: Brainstorm Cell Therapeutics Seeks Stockholder Approval for Key Proposals at 2024 Annual Meeting

Brainstorm Cell Therapeutics is holding its 2024 Annual Meeting of Stockholders on September 16, 2024, to vote on several proposals, including the election of directors, ratification of the accounting firm, and amendments to the Certificate of Incorporation and stock incentive plans.

Summary

• Brainstorm Cell Therapeutics Inc. will hold its 2024 Annual Meeting of Stockholders on September 16, 2024, virtually.
• Stockholders will vote on the election of seven directors, including Dr. Irit Arbel, Dr. Menghisteab Bairu, Dr. Jacob Frenkel, Nir Naor, Dr. Anthony Polverino, Uri Yablonka, and Dr. Stacy Lindborg.
• The meeting will also include a vote to ratify the appointment of Brightman Almagor Zohar & Co. as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024.
• Stockholders will vote on a proposal to amend the Certificate of Incorporation to increase the number of authorized shares of common stock from 100,000,000 to 250,000,000.
• Another proposal involves amending the company's 2014 Stock Incentive Plan and the 2014 Global Share Option to increase the shared pool of shares available for issuance by 8,000,000 shares, from 5,600,000 to 13,600,000 shares, and extend the terms of the plans by ten years each.
• Stockholders will also vote to authorize the Board of Directors to amend the Certificate of Incorporation to effect a reverse stock split of the company's issued and outstanding shares of Common Stock by a ratio between 1-for-5 and 1-for-15, inclusive.
• There will be a non-binding advisory vote on the frequency of holding future advisory votes regarding the compensation of the company's named executive officers, with options for every year, every two years, or every three years.
• Finally, stockholders will vote on a non-binding advisory basis on the compensation of the company's named executive officers.
• The record date for determining stockholders eligible to vote at the meeting was August 12, 2024.
• As of July 31, 2024, there were 79,734,091 shares of common stock outstanding and entitled to vote.

Sentiment

Score: 6

Explanation: The document is primarily informational, outlining proposals for stockholder vote. While there are potential benefits to the proposals, such as increased flexibility and compliance with listing requirements, there are also risks, such as dilution and potential negative impacts on some stockholders. The sentiment is neutral to slightly positive.

Positives

• The proposed increase in authorized shares provides the company with greater flexibility for future financing, acquisitions, and employee incentives.
• Extending the 2014 Stock Incentive Plan and 2014 Global Share Option allows the company to continue attracting and retaining key personnel through equity-based compensation.
• Authorizing a reverse stock split could help the company regain compliance with Nasdaq listing requirements and attract a broader range of investors.
• The company is actively seeking stockholder input on executive compensation and corporate governance matters.

Negatives

• A reverse stock split could negatively impact some stockholders who may end up owning less than one hundred shares, leading to higher trading costs.
• The issuance of additional shares may dilute earnings per share and stockholders' equity and voting rights.
• The company has been notified of non-compliance with Nasdaq listing rules.

Risks

• Failure to obtain stockholder approval for the proposed amendments could limit the company's ability to raise capital and incentivize employees.
• The reverse stock split may not be successful in increasing the stock price or maintaining Nasdaq listing.
• The company is involved in securities litigation, which could result in significant legal expenses and potential liabilities.
• The company's ongoing legal proceedings could have a material adverse effect.

Future Outlook

The company anticipates issuing additional shares of Common Stock in the future in connection with equity incentive plans, financing transactions, licenses, partnerships, collaborations and other similar transactions, strategic investments and transactions, and other corporate purposes that have not yet been identified.

Management Comments

• On behalf of the Board of Directors, we would like to express our appreciation for your continued interest in our company.
• Our Board believes that it is in our best interests to increase the number of authorized shares of Common Stock in order to give us greater flexibility in considering and planning for potential business needs.
• Our Board believes that extending our 2014 Plans and adding an additional 8,000,000 shares to the shared pool of shares available for issuance under the 2014 Plans will provide sufficient shares for us to continue to grant meaningful long term incentive compensation to our current and future employees, directors and consultants through approximately 2028.

Industry Context

The document reflects common corporate governance practices, including seeking stockholder approval for key decisions such as director elections, auditor ratification, and changes to authorized share capital and equity compensation plans. The potential reverse stock split is a strategy often employed by companies facing delisting from major exchanges to regain compliance with minimum share price requirements.

Comparison to Industry Standards

• Increasing authorized shares is a common practice among publicly traded companies to provide flexibility for future capital raising and strategic transactions; comparable companies such as Pluristem Therapeutics (now Pluri Inc.) have also sought similar increases.
• Equity compensation plans are standard for attracting and retaining talent in the biotechnology industry; companies like Biogen and Eli Lilly, where some of Brainstorm's executives previously worked, utilize similar plans.
• Reverse stock splits are often used by companies facing delisting from exchanges like Nasdaq; other companies in the biotech sector, such as Celsion Corporation (now Imunon, Inc.), have implemented reverse stock splits to maintain listing compliance.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in a securities class action lawsuit, Sporn v. Brainstorm Cell Therapeutics Inc., et al., Case No. 1:23-cv-09630, in the U.S. District Court for the Southern District of New York.
• The company is also involved in a consolidated derivative action, In Re Brainstorm Cell Therapeutics, Inc. Derivative Litigation, Case No. 1:24-cv-01095-DEH, in the U.S. District Court for the Southern District of New York.

Related Party Transactions

• The company has a Research and License Agreement with Ramot, the technology transfer group within Tel Aviv University.
• The company is party to a subscription agreement with ACCBT, a company under the control of Mr. Chaim Lebovits, the company's President and Chief Executive Officer.

Stakeholder Impact

• Stockholders: The proposals could impact the value of their shares, voting rights, and ability to trade shares.
• Employees: The stock incentive plan amendments could impact their compensation and incentives.
• Company: The proposals could impact the company's ability to raise capital, maintain Nasdaq listing, and attract and retain talent.

Next Steps

• Stockholders to vote on the proposals at the Annual Meeting on September 16, 2024.
• Board of Directors to decide whether to implement the reverse stock split if approved by stockholders.
• Company to file a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware if the amendment to increase authorized shares is approved.

Key Dates

Keywords

annual meeting, proxy statement, stockholders, directors, reverse stock split, executive compensation, stock incentive plan, authorized shares, Brightman Almagor Zohar, corporate governance, Brainstorm Cell Therapeutics