Company Overview
Brainstorm Cell Therapeutics Inc. is a leading biotechnology company committed
to the development and commercialization of best-in-class autologous cellular
therapies for the treatment of neurodegenerative diseases, including:
Amyotrophic Lateral Sclerosis ("ALS", also known as Lou Gehrig's disease);
Progressive Multiple Sclerosis ("PMS"); Alzheimer's disease ("AD"); and other
neurodegenerative diseases. NurOwn®, our proprietary cell therapy platform,
leverages cell culture methods to induce autologous bone marrow-derived
mesenchymal stem cells (MSCs) to secrete high levels of neurotrophic factors
(NTFs), modulate neuroinflammatory and neurodegenerative disease processes,
promote neuronal survival and improve neurological function.
NurOwn® has completed its Phase 3 ALS and Phase 2 PMS clinical trials. On
November 17, 2020, we announced top-line data from our Phase 3 ALS trial. On
March 24, 2021, we announced positive top-line data from our Phase 2 trial
evaluating three repeated intrathecal administrations of NurOwn®, each given 2
months apart, as a treatment for PMS. On June 24, 2020, we announced a new
clinical program focused on the development of NurOwn® as a treatment for AD. We
are currently evaluating next steps based on emerging scientific insights and
the rapidly changing regulatory landscape for AD following the recent FDA
decision on Aducanumab.
Our wholly-owned Israeli subsidiary, Brainstorm Cell Therapeutics Ltd. ("Israeli
Subsidiary"), holds exclusive rights to commercialize NurOwn® technology through
a licensing agreement with Ramot ("Ramot"), the technology transfer company of
Tel Aviv University, Israel.
NurOwn® has a strong and comprehensive intellectual property portfolio and was
granted Fast Track designation by the U.S. Food and Drug Administration (FDA)
and Orphan Drug status by the FDA and the European Medicines Agency (EMA) for
ALS. For more information, visit Brainstorm's website at
www.brainstorm-cell.com.
Our human capital resource objectives include, as applicable, identifying,
recruiting, retaining, incentivizing, and integrating our existing and new
employees, advisors and consultants. The principal purposes of our equity and
cash incentive plans are to attract, retain and reward personnel through the
granting of stock-based and cash-based compensation awards, in order to increase
stockholder value and the success of our company by motivating such individuals
to perform to the best of their abilities and achieve our objectives. We
currently employ 43 employees in the United States and in Israel. Most of the
senior management team is based in the United States, and all of our clinical
trial sites for ALS and PMS are in the United States. Our R&D center is located
in Petach Tikva, Israel. In addition, we currently lease two GMP manufacturing
facilities in Jerusalem, Israel at Hadassah Medical Center and in Tel Aviv at
the Sourasky Medical Center to manufacture NurOwn®. These two facilities more
than doubled our capacity to manufacture and ship NurOwn® into the EU and local
Israeli markets.
Continuing concerns resulting from the pandemic caused by the novel strain of
coronavirus, SARS-CoV 2 (COVID-19) disease, including the emergence of new
variants, has currently impacted and may continue to adversely impact our
business, including our preclinical studies and clinical trials. In December
2019, a novel strain of coronavirus, surfaced in Wuhan, China. Since then,
COVID-19 has spread worldwide, significantly impacting the United States, Europe
and Israel, where the Company conducts its operations, as well as its clinical
trials for NurOwn®. In response to the spread of COVID-19 and to ensure safety
of employees and continuity of business operations, we closed our offices, with
our administrative employees continuing their work remotely and limited the
number of staff in any given research and development laboratory. Our research
and development laboratory in Israel and manufacturing sites in U.S. and in
Israel remained open. Post vaccination, our administrative offices in Israel and
the U.S. are now open. The full extent to which the COVID-19 pandemic will
directly or indirectly impact our business, results of operations and financial
condition will depend on future developments that are highly uncertain and
cannot be accurately predicted at this time, including new information that may
emerge concerning COVID-19, the actions taken to contain it or treat its impact
and the economic impact on local, regional, national and international markets.
Our management team is actively monitoring this situation and the possible
effects on our financial condition, liquidity, operations, suppliers, industry,
and workforce. For additional information on risks posed by the COVID-19
pandemic, please see Part II, Item 1A - Risk Factors - Risks Related to the
COVID-19 Pandemic.
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Recent Highlights
On July 23, 2020, we announced the results of a groundbreaking pre-clinical
study of NurOwn® derived Exosome-based treatment for COVID-19 acute respiratory
distress syndrome (ARDS). Intratracheal administration of exosomes extracted
? from MSC-NTF cells (NurOwn®) resulted in statistically significant improvement
in multiple lung parameters in a mouse model. With this study, the Company
successfully completed its first milestone in developing an innovative
exosome-based platform-technology for the treatment of severe COVID-19 related
infection.
On November 17, 2020, we announced top-line data from our Phase 3 ALS trial in
the U.S. Results from the trial showed that NurOwn® was generally well
tolerated in the population of rapidly progressing ALS patients. While showing
a numerical improvement in the treated group compared to placebo across the
primary and key secondary efficacy endpoints, the trial did not reach
statistically significant results. In an important, pre-specified subgroup with
early disease based on the ALSFRS-R baseline total score of 35, we believe
NurOwn® demonstrated a clinically meaningful treatment response across the
primary and key secondary endpoints and remained consistent with our pre-trial,
data-derived assumption. In this subgroup, there were 34.6% responders who met
the primary endpoint definition on NurOwn® and 15.6% on Placebo (p=0.288), and
? the average change from baseline to week 28 in ALSFRS-R total score was -1.77
on NurOwn® and -3.78 on Placebo (p=0.198), an improvement of 2.01 ALSFRS-R
points favoring NurOwn®. No new safety concerns were identified. On February
22, 2021, we announced high-level FDA feedback on our NurOwn® ALS Clinical
Development Program. The FDA concluded from their initial review that the
current level of clinical data does not provide the threshold of substantial
evidence that FDA is seeking to support a Biologics License Application (BLA).
In addition, the FDA advised that this recommendation does not preclude
Brainstorm from proceeding with a BLA submission. We are in active consultation
with principal investigators, ALS experts, expert statisticians, regulatory
advisors, and ALS advocacy groups to assess the benefit/risk of a BLA
submission before making a final decision.
On January 20, 2021, we announced the peer-reviewed publication of a
preclinical study in the journal Stem Cell and Research Therapy. The study,
? entitled "MSC-NTF (NurOwn®) exosomes: a novel therapeutic modality in the mouse
LPS-induced ARDS model," evaluated the use of NurOwn® (MSC-NTF cell) derived
exosomes in a mouse model of acute respiratory distress syndrome (ARDS).
On February 9, 2021, we announced feedback from our Type-C Meeting with FDA to
? review specific aspects of our planned manufacturing modifications to support
the development of a semi-automated manufacturing process for NurOwn® (MSC-NTF
cells).
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On March 24, 2021, we announced positive top-line data in our Phase 2 Study
trial evaluating three repeated administrations of NurOwn®, each given 2 months
apart, as a treatment for PMS. The 28-week open-label Phase 2 clinical trial
enrolled 20 primary and secondary PMS patients based on the 2017 revised
McDonald Criteria, ages 18-65, with baseline Expanded Disability Status Scale
(EDSS) scores between 3-6.5, without evidence of relapse within 6 months of
enrollment, able to walk 25 feet in 60 seconds or less and were permitted to be
on a stable dose of disease modifying therapy. Of the 20 patients enrolled, 18
were treated and 16 (80%) completed the study. Two patients discontinued
related to procedure-related AEs. There were no study deaths or AEs related to
multiple sclerosis worsening. The mean age of study patients was 47, 56% were
female, and mean baseline EDSS score was 5.4. The clinical trial compared
clinical efficacy outcomes with a 48-patient matched clinical cohort from the
Comprehensive Longitudinal Investigations in MS at the Brigham & Woman's
Hospital (CLIMB Study). MS Function and Cognition measures in the top-line
results included the timed 25-foot walk (T25FW); 9-hole peg test (9-HPT); Low
Contrast Letter Acuity (LCLA); Symbol Digit Modality Test (SDMT); and the 12
item MS Walking Scale (MSWS-12). Prespecified response thresholds of 25%
improvement in the T25FW and 9-HPT from baseline to 28 weeks were observed in
14% and 13% of NurOwn® treated patients, respectively, and were observed in 0%
? of the pre-specified matched historical controls in the CLIMB registry. Thirty
eight percent of NurOwn® treated patients showed at least a 10-point
improvement in the MSWS-12 from baseline to week 28, a patient-reported outcome
that evaluates walking function. In addition, 47% of treated patients showed
at least an 8-letter improvement across 28 weeks in the LCLA, a visual function
test, and 67% showed at least a 3-point improvement in the SDMT, a measure of
cognitive processing. In addition, NurOwn® treated patients showed a mean
improvement from baseline of 10% in T25FW and a 4.8% improvement from baseline
on the 9-HPT dominant hand, compared to 1.8% and 1.4% worsening respectively in
matched historical controls from the CLIMB registry. Also, NurOwn® treated
patients showed a 6% improvement from baseline in MSWS-12. All results reported
are based on observed data. Cerebrospinal fluid (CSF) biomarkers were obtained
at 3 consecutive time points, just prior to each intrathecal administration of
NurOwn®. We observed increases in neuroprotective molecules (VEGF, HGF) and
decreases in neuroinflammatory biomarkers (MCP-1, and Osteopontin) in the CSF
samples. Additionally, we recently completed analyses of secondary efficacy
data, and detailed CSF and blood biomarker analyses. As described further,
below, we presented a detailed summary of the study outcomes at the 37th
Congress of the European Committee for Treatment and Research in Multiple
Sclerosis (ECTRIMS) on October 14, 2021 and intend to publish our findings in a
peer-reviewed journal. We are currently considering how best to advance NurOwn®
as an innovative treatment option in PMS.
On May 25, 2021, we presented preclinical data at the ISCT 2021 New Orleans
? Virtual Meeting demonstrating that intrathecal administration of NurOwn-derived
exosomes resulted in statistically significant improvements in multiple lung
parameters in a mouse model of acute respiratory distress syndrome (ARDS).
On June 15, 2021, we announced the expansion of our IP Portfolio with the grant
and allowance of multiple patents and applications in major markets. These
? included EU patent No. 2880151, Hong-Kong patent No. HK1209453, Israel patent
application No. 246943, Canadian patent application No. 2,937,305, U.S. patent
No. 10,869,899, U.S. patent application No. 16/047,129. For more details,
please refer to our "Intellectual Property" section below.
On July 27, 2021, we announced approval of GMP certification by the Israel
Ministry of Health (MOH) for three state-of-the-art cleanrooms leased by the
? Company at the Tel Aviv Sourasky Medical Center ("Sourasky Hospital"). The GMP
approval confirms that these cleanrooms are compliant with Israeli GMPs, which
are aligned with European Union (EU) GMPs, and more than doubles the Company's
capacity to manufacture and ship NurOwn® into the EU and local Israeli markets.
On August 9, 2021, the Company entered into an Amended and Restated
Distribution Agreement (the "New Distribution Agreement") with the Agents
pursuant to which the Company may sell from time to time, through the Agents,
shares of Common Stock, having an aggregate offering price of up to
$100,000,000 (the "August 9, 2021, ATM"). Sales under the August 9, 2021, ATM
are to be made by any method permitted by law that is deemed to be an "at the
? market" offering as defined in Rule 415 promulgated under the Securities Act,
including, without limitation, sales made directly on the Nasdaq Capital
Market, on any other existing trading market for the Shares, through a market
maker or as otherwise agreed by the Company and the Agents. In connection with
the New Distribution Agreement, the Company terminated the previous
Distribution Agreement and the September 25, 2020, ATM. During the quarter
ended December 31, 2021, the Company did not sell any shares of its Common
Stock pursuant to the August 9, 2021, ATM.
On October 8, 2021, Dr. James Berry, Winthrop Family Scholar in ALS Sciences,
Director of the Massachusetts General Hospital (MGH) multidisciplinary ALS
? clinic and Chief of the Division of ALS and Motor Neuron Diseases and principal
investigator on the Phase 3 trial of NurOwn® in ALS, presented a poster titled
"CSF biomarker correlations with primary outcome in NurOwn® Phase 3 clinical
trial" at the 2021 Northeast Amyotrophic Lateral Sclerosis Consortium® (NEALS)
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conference. The presentation highlighted changes in CSF biomarkers that
demonstrate high accuracy in predicting the primary clinical outcome using an
unbiased stepwise logistic regression analysis.
On October 14, 2021, Dr. Jeffery Cohen, Director of Experimental Therapeutics
at the Cleveland Clinic Mellen Center for Multiple Sclerosis, presented
findings from the Phase 2 PMS study as an oral presentation at the fully
digital 37th Congress of the ECTRIMS. Data from the study showed that it
? achieved the primary endpoint of safety and tolerability. The data also showed
a reduction of neuroinflammatory biomarkers and an increase in neuroprotective
biomarkers in the CSF and consistent improvement across multiple sclerosis
functional outcome measures, including measures of walking, upper extremity
function, vision and cognition, with NurOwn® treatment.
On November 30, 2021, Dr. Jonathan Katz, principal investigator on the Phase 3
trial of NurOwn® in ALS, Chair of the Neurology Department and Director of the
Forbes Norris ALS Clinic at the California Pacific Medical Center, presented
? new analyses from the trial at the 4th Annual ALS ONE Research Symposia.
Pre-specified and post hoc analyses leveraging the published ENCALS model
demonstrated a potential NurOwn-induced treatment effect on ALS disease
progression in trial participants with less severe disease and showed that this
effect was protected by randomization.
On December 7, 2021, Dr. Robert Brown, Director of the Program in
Neurotherapeutics at the University of Massachusetts Medical School, and
principal investigator in the Phase 3 trial of NurOwn® in ALS, presented at the
? 32nd International Symposium on ALS/MND. The presentation, titled "NurOwn®
targets multiple disease pathways in ALS Phase 3 Trial" focused on biomarker
data that suggest that NurOwn® drives significant changes in biomarkers across
ALS disease pathways which may be important for achieving clinical outcomes.
On December 7, 2021, we finalized the technology transfer for NurOwn®
? manufacturing to Catalent, which allows for continuous supply of NurOwn® for
future clinical trials and initial commercialization, if approved.
On December 13, 2021, we announced the peer reviewed publication of Phase 3
clinical data in Muscle and Nerve. The paper, entitled "A Randomized
Placebo-Controlled Phase 3 Study of Mesenchymal Stem Cells Induced to Secrete
High Levels of Neurotrophic Factors in Amyotrophic Lateral Sclerosis," reported
data from the randomized, double-blind, placebo-controlled, Phase 3 trial
? evaluating the safety and efficacy of repeat doses of NurOwn® in patients with
ALS. Although previously announced results showed that the trial did not reach
statistical significance on the primary or secondary endpoints, pre-specified
and post hoc analyses featured in the publication show a greater NurOwn-induced
treatment effect across primary and secondary efficacy outcomes in trial
participants with less advanced disease.
On December 27, 2021, the FDA recommended that Brainstorm submit an Expanded
? Access Protocol amendment to provide additional dosing of NurOwn® for these
participants.
On January 27, 2022, Dr. Ralph Kern, President and Chief Medical Officer at
? Brainstorm Cell Therapeutics, gave a presentation titled "NurOwn® Phase 3 ALS
Clinical Trial Update" at the Virtual 12th Annual California ALS Research
Summit.
On March 16, 2022, Dr. Merit Cudkowicz, Chief of Neurology at Massachusetts
General Hospital, Julieanne Dorn Professor of Neurology at Harvard Medical
School, Director of the Sean M. Healey & AMG Center for ALS at Massachusetts
General Hospital and principal investigator in the Phase 3 trial of NurOwn® in
? ALS, delivered a late breaking oral presentation at the 2022 Muscular Dystrophy
and Association Clinical and Scientific Conference. The presentation, titled
"Relationship UNC13A Single-Nucleotide Polymorphisms to Clinical Outcomes in
NurOwn® Phase 3 ALS Clinical Trial" focused on pre-specified genetic analyses
from the NurOwn® Phase 3 trial in ALS which suggests that NurOwn® treatment may
influence disease progression in patients who possess the UNC13A risk allele.
On April 24-26, 2022, Dr. James Berry, Winthrop Family Scholar in ALS Sciences,
Director of the Massachusetts General Hospital (MGH) multidisciplinary ALS
? clinic and Chief of the Division of ALS and Motor Neuron Diseases, Boston MA,
presented a scientific abstract titled "CSF Biomarkers Evaluated by Principal
Component Analysis in a NurOwn® Phase 3 Clinical Trial" at the AAN 2022 Virtual
Congress.
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NurOwn® Proprietary Technology
NurOwn® technology is based on an innovative manufacturing protocol, which
induces the differentiation of purified and expanded bone marrow-derived
mesenchymal stem cells ("MSC") and consistently generates cells that release
high levels of multiple neurotrophic factors ("MSC-NTF" cells) to modulate
neuroinflammatory and neurodegenerative disease processes, promote neuronal
survival and improve neurological function. These factors are known to be
critical for the growth, survival and differentiation of neurons, including:
glial-derived neurotrophic factor ("GDNF"); brain-derived neurotrophic factor
("BDNF"); vascular endothelial growth factor ("VEGF"); and hepatocyte growth
factor ("HGF"), among others. VEGF is one of the most potent neuronal and motor
neuron survival factors and has demonstrated important neuroprotective effects
in ALS and several other neurodegenerative diseases.
NurOwn® manufacturing involves a multi-step process that includes the following:
harvesting and isolating undifferentiated stem cells from the patient's own bone
marrow; processing of cells at the manufacturing site; cryopreservation of MSC
to enable multiple treatments from a single bone marrow sample; and intrathecal
("IT") administration of MSC-NTF cells into the same patient by standard lumbar
puncture. This administration procedure does not require hospitalization and has
been shown to be generally well tolerated in multiple CNS clinical trials to
date. The completed NurOwn® U.S. Phase 3 ALS and the NurOwn® U.S. Phase 2 PMS
trials evaluated the therapeutic potential of repeated intrathecal MSC-NTF cell
administration (three doses at bi-monthly intervals). We are actively reviewing
the opportunity in Alzheimer's Disease and will consider the best course of
action based on recent scientific and regulatory insights.
The proprietary technology and manufacturing processing of NurOwn® (MSC-NTF
cells) for clinical use is conducted in full compliance with current Good
Manufacturing Practice ("cGMP"). The NurOwn® proprietary technology is fully
owned or developed by our Israeli Subsidiary. All granted patents related to
NurOwn® (MSC-NTF cells) manufacturing process are fully assigned to or owned by
our Israeli Subsidiary (please see Intellectual Property section for details).
The NurOwn® Transplantation Process
? Bone marrow aspiration from the patient;
? MSC Isolation and propagation;
? MSC Cryopreservation;
? MSC thawing and differentiation into neurotrophic-factor secreting (MSC-NTF;
NurOwn®) cells; and
? Intrathecal administration into the patient's cerebrospinal fluid by standard
lumbar puncture.
Differentiation before Transplantation
We believe that the ability to induce autologous adult mesenchymal stem cells
into differentiated MSC-NTF cells makes NurOwn® uniquely suited for the
treatment of neurodegenerative diseases.
The specialized MSC-NTF cells secrete multiple neurotrophic factors and
immunomodulatory cytokines that may result in:
? Protection of existing neurons;
? Promotion of neuronal repair;
? Neuronal functional improvement; and
? Immunomodulation and reduced neuroinflammation.
Autologous (Self-transplantation)
The NurOwn® technology platform is autologous, using the patient's own
bone-marrow derived stem cells for "self-transplantation." In autologous
cellular treatment, there is no introduction of unrelated donor antigens that
may lead to alloimmunity, no risk of rejection, and no need for treatment with
immunosuppressive agents, which can cause severe and/or long-term side effects.
In addition, the use of adult stem cells is free of several ethical concerns
associated with the use of embryonic-derived stem cells in some countries.
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NurOwn® ALS Clinical Program
We announced top-line data from the Phase 3 clinical trial of NurOwn® in ALS on
November 17, 2020. We have been granted Fast Track designation by the U.S. Food
and Drug Administration ("FDA") for this indication, and have been granted
Orphan Drug Status, in the U.S. and Europe, which provides us the potential for
an extended period of exclusivity.
Phase 1/2 ALS Open Label Trials
We have completed two early stage Phase 1/2 and 2 open-label clinical trials of
NurOwn® in patients with ALS at the Hadassah Medical Center ("Hadassah") in
Jerusalem, Israel, as well as a Phase 2 double-blind, placebo-controlled,
multicenter clinical trial at three prestigious U.S. Medical centers - the
Massachusetts General Hospital (MGH) in Boston, Massachusetts Memorial Hospital
in Worcester, Massachusetts, and the Mayo Clinic in Rochester, Minnesota - all
highly experienced in the management and investigation of ALS.
The first two open-label trials were approved by the Israeli MoH. The
first-in-human trial, a Phase 1 safety and efficacy trial of NurOwn®
administered either intramuscularly or intrathecally in 12 ALS patients, was
initiated in June 2011. In the Phase 2 dose-escalating study, 14 ALS patients
were administered NurOwn® by a combined route of intramuscular and intrathecal
administration. These studies demonstrated the safety of NurOwn® by both routes
of administration and showed preliminary signs of efficacy.
In January 2016, the results of the two completed Phase 1/2 study and Phase 2
open label trials were published in JAMA Neurology. The results demonstrated a
slower rate of disease progression following MSC-NTF cell transplantation as
measured by the ALSFRS-R, the gold standard for the evaluation of ALS functional
status, and Forced Vital Capacity ("FVC"), a measure of pulmonary function, as
well as positive trends in the rate of decline of muscle volume and the compound
motor axon potential ("CMAPs"). This was the first published clinical data using
autologous mesenchymal stem cells, induced under culture conditions to produce
NTFs, with the potential to deliver a combined neuroprotective and
immunomodulatory therapeutic effect in ALS and potentially modify the course of
this disease.
Phase 2 ALS Randomized Trial
The Phase 2 U.S. study was conducted under an FDA Investigational New Drug
("IND") application. This randomized, double-blind, placebo-controlled
multi-center U.S. Phase 2 clinical trial evaluating NurOwn® in ALS patients was
conducted at three clinical sites: (i) the Massachusetts General Hospital (MGH)
in Boston, (ii) Massachusetts Memorial Hospital in Worcester, Massachusetts, and
(iii) the Mayo Clinic in Rochester, Minnesota. For this trial, NurOwn® was
manufactured at the Connell and O'Reilly Cell Manipulation Core Facility at the
Dana Farber Cancer Institute in Boston and at the Human Cellular Therapy Lab at
the Mayo Clinic. In this study, 48 patients were randomized 3:1 to receive
NurOwn® or placebo.
Results of this Phase 2 Study were published in the peer reviewed Journal
'Neurology'. The publication entitled "NurOwn, Phase 2, Randomized, Clinical
Trial in Patients with ALS: Safety, Clinical, and Biomarker Results" was
published in December 2019.
Key findings from the trial were as follows:
The study achieved its primary objective, demonstrating that NurOwn®
transplantation was well-tolerated. There were no discontinuations from the
trial due to AEs and there were no deaths in the study. The most common adverse
events (mild or moderate severity), were transient procedure-related AEs such as
headache, back pain, pyrexia arthralgia and injection-site discomfort, which
were more commonly seen in the NurOwn®-treated participants compared to placebo.
NurOwn® achieved multiple secondary efficacy endpoints, showing evidence of a
clinically meaningful benefit. Notably, response rates in the ALS functional
rating scale (48-point ALSFRS-R outcome measure) were higher in NurOwn®-treated
participants, compared to placebo, at all study timepoints over 24 weeks.
A pre-specified responder analysis examined percentage improvements in the post
treatment ALSFRS-R slope (in points change per month) compared to pre-treatment
slope and demonstrated that a higher proportion of NurOwn® treated participants
achieved a 100% improvement in the post-treatment vs. pre-treatment slope,
compared to the placebo group. This analysis also demonstrated that a higher
proportion of the NurOwn® treated participants achieved a 1.5 point per month or
greater improvement in the post-treatment vs. pre-treatment ALSFRS-R slope,
compared to the placebo group.
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The treatment effects were greater in the rapid progressor subgroup (in which
pretreatment ALSFRS-R declined by 2 or more points in the three months
pre-treatment).
As an important confirmation of NurOwn®'s mechanism of action, levels of
neurotrophic factors and inflammatory markers were measured in the cerebrospinal
fluid ("CSF") samples collected from participants pre and two weeks post
treatment. In the samples of those participants treated with NurOwn®,
statistically significant increases in levels of neurotrophic factors VEGF, HGF
and LIF and a statistically significant reduction in inflammatory markers MCP-1,
SDF-1 and CHIT-1 were observed post-treatment. Furthermore, the observed
reduction in inflammatory markers correlated with ALS functional improvements.
These clinical-biomarker correlations were not seen in placebo-treated
participants, consistent with the proposed combined neuroprotective and
immunomodulatory mechanism of action of NurOwn® in ALS.
In summary, a higher proportion of NurOwn® treated participants, particularly
those with more rapid disease progression, experienced stabilization or
improvement in ALS function, as measured by the post-treatment vs. pre-treatment
ALSFRS-R slope change.
Phase 3 ALS Clinical Trial
Following successful completion of the Phase 2 study, we conducted a Phase 3
trial (a multi-dose double-blind, placebo-controlled, multicenter trial
protocol) that was designed to generate data to potentially support a Biologic
License Application ("BLA") submission in the U.S. for NurOwn® in ALS. In
October 2019, the clinical trial completed enrollment of an enriched patient
population of rapid progressors based on superior outcomes observed in the
Phase-2 pre-specified sub-group. The study is registered at
www.clinicaltrials.gov (ClinicalTrials.gov Identifier: NCT03280056).
We announced top-line data from our Phase 3 ALS trial on November 17, 2020.
Results from the trial showed that NurOwn® was generally well tolerated in the
population of rapidly progressing ALS patients. However, the trial did not reach
statistically significant results. No new safety concerns were identified. On
February 9, 2021, we announced feedback from our Type-C Meeting with FDA to
review specific aspects of our planned manufacturing modifications to support
the development of a semi-automated commercial manufacturing process for NurOwn®
(MSC-NTF cell). On February 22, 2021, we announced high-level FDA feedback on
NurOwn® ALS clinical development program. The FDA concluded from their initial
review that the clinical data provided at the time did not provide the threshold
of substantial evidence that FDA seeks to support a BLA. In addition, the FDA
advised that this recommendation does not preclude the Company from proceeding
with a BLA submission. We are in active consultation with principal
investigators, ALS experts, expert statisticians, regulatory advisors, and ALS
advocacy groups to assess the benefit/risk of a BLA submission before making a
final decision.
Key findings from the trial were as follows:
? NurOwn® was generally well tolerated in this population of rapidly progressing
ALS patients.
While showing a numerical improvement in the treated group compared to placebo
? across the primary and key secondary efficacy endpoints, the trial did not
reach statistically significant results.
The primary efficacy endpoint, a responder analysis evaluating the proportion
of participants who experienced a 1.25 points per month improvement in the
post-treatment ALSFRS-R slope compared to pre-treatment, was powered on assumed
treatment response rates of 35% on NurOwn® versus 15% on Placebo. These
? estimates were based on available historical clinical trial data and the
NurOwn® Phase 2 data. The primary endpoint was achieved in 32.6% of NurOwn®
participants versus 27.7% for Placebo (p=0.453). Therefore, the trial met the
expected ~35% NurOwn® treatment group efficacy response assumption, however the
high placebo response exceeded the placebo response expected based on
contemporary ALS trials.
The secondary efficacy endpoint measuring average change in ALSFRS-R total
? score from baseline to Week 28, was -5.52 with NurOwn® versus -5.88 on Placebo,
a difference of 0.36 (p= 0.693).
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In an important, pre-specified subgroup early in the disease course based on
ALSFRS-R baseline score greater than 35, NurOwn® demonstrated a clinically
meaningful treatment response across the primary and key secondary endpoints
? and remained consistent with our pre-trial, data-derived assumptions. In this
subgroup, there were 34.6% responders who met the primary endpoint definition
on NurOwn® and 15.6% on Placebo (p=0.288), and the average change from baseline
to week 28 in ALSFRS-R total score was -1.77 on NurOwn® and -3.78 on Placebo
(p=0.198), an improvement of 2.01 ALSFRS-R points favoring NurOwn®.
The NurOwn® Phase 3 trial enrolled a broad set of participants, including some
with advanced ALS disease (ALSFRS-R?25), making this trial subject to the
impact of floor effects and reduced ALSFRS-R sensitivity. A post-hoc analysis
was done using participants with baseline ALSFRS-R>25 for the primary endpoint
and the % response for NurOwn® was 34.7% and 20.5% for Placebo, p=0.053. This
? analysis suggests a treatment effect with NurOwn® in participants with less
advanced disease. Cerebrospinal fluid (CSF) biomarker analyses confirmed that
treatment with NurOwn® resulted in a statistically significant increase of
neurotrophic factors (VEGF) and reduction in neurodegenerative (neurofilament)
and neuroinflammatory biomarkers (MCP-1) that was not observed in the placebo
treatment group.
Pre-specified statistical modeling designed to predict clinical response with
? high sensitivity and specificity based on ALS biomarkers and ALS Function
confirmed that NurOwn® treatment outcomes could be predicted by baseline ALS
function as well as key CSF neurodegenerative and neuroinflammatory biomarkers.
On October 6, 2021, we announced that a scientific abstract titled "CSF
biomarker correlations with primary outcome in NurOwn® Phase 3 clinical trial"
would be presented as a scientific poster at the fully digital 2021 Northeast
Amyotrophic Lateral Sclerosis Consortium® (NEALS) conference. The presentation
was delivered October 6 by James Berry, M.D. MPH, Winthrop Family Scholar in ALS
Sciences, Director of the Massachusetts General Hospital (MGH) multidisciplinary
ALS clinic and Chief of the Division of ALS and Motor Neuron Diseases, Boston
MA. The presentation highlighted CSF biomarkers that demonstrate high accuracy
in predicting the primary clinical outcome using an unbiased stepwise logistic
regression analysis.
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NurOwn® Clinical Manufacturing
We have developed a validated cryopreservation process for the long-term storage
of MSC, that allows multiple doses of NurOwn® to be created from a single bone
marrow harvest procedure in the multi-dose clinical trials and to avoid the need
for patients to undergo repeated bone marrow aspiration. A validation study was
conducted in 2017 comparing NurOwn® derived from fresh MSC to those derived from
cryopreserved MSC. Company scientists were successful in showing that the MSC
can be stored in the vapor phase of liquid nitrogen for prolonged periods of
time, while maintaining their characteristics. Cryopreserved MSC are capable of
differentiating into NurOwn®, similar to the NurOwn® derived from fresh MSC from
the same patient/donor, prior to cryopreservation and maintain their key
functional properties including immunomodulation and neurotrophic factor
secretion.
We contracted with City of Hope's Center for Biomedicine and Genetics to
manufacture clinical supplies of NurOwn® adult stem cells for our Phase 3
clinical study. City of Hope supported the manufacturing of NurOwn® and placebo
for the participants treated in the Phase 3 study. The Connell and O'Reilly Cell
Manipulation Core Facility at the Dana Farber Cancer Institute (DFCI) in Boston
was also contracted to manufacture NurOwn® and placebo for our Phase 3 ALS
clinical study participants and commenced manufacturing in October 2018. DFCI
core manufacturing facility also supplied NurOwn® for our Phase 2 PMS study.
On October 22, 2020, we announced a partnership with Catalent, the leading
global provider of advanced delivery technologies, to manufacture NurOwn®, which
has been evaluated for the treatment of ALS in our Phase 3 clinical trial. If we
decide to file a BLA and are granted approval, Catalent will be our partner for
manufacturing commercial quantities of NurOwn® to treat patients with ALS. Our
technology transfer to Catalent has been successfully completed and will allow
for continuous supply of NurOwn® for the Expanded Access program and for future
clinical trials. Our partnership with R&D to help us establish in-house
manufacturing capabilities will accelerate once a regulatory pathway is clear.
We currently lease two GMP manufacturing facilities in Jerusalem, Israel at
Hadassah Medical Center and in Tel Aviv at the Sourasky Medical Center to
manufacture NurOwn®. These two facilities more than doubled our capacity to
manufacture and ship NurOwn® into the EU and local Israeli markets. In
addition, we currently lease a GMP certified manufacturing facility in
Jerusalem, Israel. On July 27, 2021, we announced the approval of GMP
certification for a second production site in Israel from the Israel Ministry of
Health (MOH) for three state-of-the-art cleanrooms leased by us at the Tel Aviv
Sourasky Medical Center ("Sourasky Hospital"). The GMP approval confirms that
these cleanrooms are compliant with Israeli GMPs, which are aligned with
European Union (EU) GMPs, and more than doubles the Company's capacity to
manufacture and ship NurOwn® into the EU and local Israeli markets. These
partnerships will ensure an ongoing cGMP clinical supply of NurOwn® and enable
us to provide rapid treatment access to patients if we obtain regulatory
approval.
On December 7th, 2021, we and Catalent announced completion of technology
transfer for NurOwn® manufacturing at the Catalent's cell therapy facility in
Houston, Texas.
Catalent Houston is currently manufacturing NurOwn® for the Expanded Access
Program. As of March 31, 2022, the first two participants have been treated with
NurOwn® that was manufactured at Catalent.
Meetings with the FDA and FDA Senior Management
In July 2019, the Brainstorm management team was invited to participate in a
special in-person, high-level meeting with the senior management of the FDA Drug
and Biologics Centers and, 'I AM ALS', a grassroots ALS advocacy group
advocating for an ALS cure. FDA's Dr. Peter Marks, Director of the Center for
Biologics Evaluation and Research (CBER) and Dr. Janet Woodcock Director of the
Center for Drug Evaluation and Research (CDER) were in attendance with senior
FDA staff. Brainstorm's Phase 3 ALS principal Investigators Dr. Robert Brown
(Massachusetts Memorial Hospital, Worcester, Massachusetts) and Dr. Merit
Cudkowicz (Massachusetts General Hospital, Boston) joined by teleconference. The
meeting's purpose was to discuss Brainstorm's ongoing Phase 3 ALS clinical trial
as well as efforts to speed treatment access to the ALS patient community. The
meeting enabled an open and effective dialogue between the FDA and Brainstorm,
setting the stage for future meetings to explore practical options to quickly
bring our investigational treatment to those living with ALS.
On February 11, 2020, we announced that we held a high-level meeting with the
FDA to discuss potential NurOwn® regulatory pathways for approval in ALS. In the
planned meeting with senior CBER leadership and several leading U.S. ALS
experts, the FDA confirmed that the Phase 3 ALS trial was collecting relevant
data critical to the assessment of NurOwn® efficacy. The FDA indicated that they
would look at the "totality of the evidence" in the expected Phase 3 clinical
trial data.
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On February 9, 2021, we announced feedback on a Type-C Meeting with FDA on
future NurOwn® manufacturing plans and to review specific aspects of our planned
manufacturing modifications to support the development of a semi-automated
commercial manufacturing process for NurOwn® (MSC-NTF cell). The meeting
included a detailed review of the requirements for comparability testing to
support future modifications along with geographic considerations in the
sourcing of starting materials and future manufacturing production. We plan to
incorporate feedback from the FDA meeting and our experience from Phase 3
manufacturing to finalize a robust comparability plan that could enable
semiautomatic manufacturing to be introduced at the appropriate time in the
future. We also plan to finalize the remaining steps necessary to proceed with
running NurOwn® validation batches. The FDA also provided comments on several
key aspects of the current manufacturing process, which we will use as we
continue our work to enable operations at our commercial manufacturing partner,
Catalent.
On February 22, 2021, we announced high-level FDA feedback on NurOwn® ALS
Clinical Development Program. The FDA concluded from their initial review that
the current level of clinical data does not provide the threshold of substantial
evidence that FDA is seeking to support a BLA. In addition, the FDA advised that
this recommendation does not preclude the Company from proceeding with a BLA
submission. We are in active consultation with principal investigators, ALS
experts, expert statisticians, regulatory advisors, and ALS advocacy groups to
find the best path forward to provide NurOwn® for ALS patients.
ALS Expanded Access Program
On December 14, 2020, we announced the NurOwn® Expanded Access Program (EAP)
through which NurOwn® will be made available for ALS patients who completed all
Phase 3 scheduled treatments and follow-up assessments and meet specific
eligibility criteria.
The protocol for the EAP was developed in partnership with the FDA to provide
access to NurOwn® for Phase 3 clinical trial participants who meet specific
eligibility criteria. Initially, patients less severely affected by ALS, as
measured by ALSFRS-R, will be the first to receive treatment. This approach is
informed by recently announced top-line data from the Company's Phase 3 clinical
trial. According to the FDA, EAPs, alternatively known as "compassionate use"
programs, provide a pathway for patients to receive an investigational medicine
for a serious disease or condition outside of a clinical trial.
Through the EAP, the six clinical centers participating in the Phase 3 NurOwn®
trial each had the opportunity to treat ALS patients who completed the trial.
These six centers are: University of California, Irvine; Cedars-Sinai Medical
Center; California Pacific Medical Center; Massachusetts General Hospital;
University of Massachusetts Medical School; and the Mayo Clinic. EAP treatment
of ALS patients who have completed the Phase 3 clinical trial will not interfere
with data or regulatory timelines. The Cell Manipulation Core Facility (CMCF) at
the Dana Farber Cancer Institute manufactured the investigational therapy,
assisted by on-site Brainstorm personnel.
In the course of 2021, 10 eligible patients that had completed the Phase 3
study, were enrolled in the EAP at the six participating medical centers to
receive three additional doses of NurOwn® eight weeks apart. Eight patients
completed the program receiving all three treatment doses. Two participants
withdrew consent after receiving two treatment doses. There were no serious
adverse events (SAEs) in the treated participants.
On December 27, 2021, we announced plans for a dosing extension of NurOwn® for
participants who completed the Expanded Access Protocol. The FDA recommended
that Brainstorm submit an EAP protocol amendment to provide additional dosing
for these participants. Under the original EAP protocol, participants who had
completed the Phase 3 NurOwn® trial and who met specific eligibility criteria
had the opportunity to receive 3 doses of NurOwn®. Under the amended EAP
protocol, these eligible participants will receive up to 3 additional doses.
Data collected from the original EAP treatments informed the decision to move
forward with additional doses for participants who completed it. Eligible
participants are currently enrolling. As of May 31, 2022, the first two patients
have been treated with NurOwn® manufactured at the Catalent Houston
manufacturing site.
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Patient Access Programs (ALS)
The Company, had worked collaboratively with the Tel Aviv Sourasky Medical
Center (Ichilov Hospital), to treat ALS patients with NurOwn®, under the Israel
Hospital Exemption (HE) regulatory pathway for Advanced Therapy Medicinal
Products (ATMP), which was adopted by the Israeli MoH from the EMA regulation.
Between Q1, 2019 and Q1, 2022, the Company enrolled and treated 12 ALS patients
with NurOwn®, under the HE pathway. Thus far, the Company has received $3.4
million in gross proceeds in connection with the treatment of the aforementioned
patients.
NurOwn® in Progressive Multiple Sclerosis (PMS)
On December 15, 2018, the FDA approved the Company's IND to conduct a Phase 2
open-label trial of repeated intrathecal administration of NurOwn® in PMS
(www.clinicaltrials.gov Identifier NCT03799718). The study entitled "A Phase 2,
open-label, multicenter study to evaluate the safety and efficacy of repeated
administration of NurOwn® (Autologous Mesenchymal Stem Cells Secreting
Neurotrophic Factors; MSC-NTF cells) in participants with Progressive Multiple
Sclerosis (PMS)" was designed to recruit 20 PMS participants at 5 leading U.S.
Multiple Sclerosis centers.
On December 18, 2019, the clinical trial independent Data Safety Monitoring
Board (DSMB) for the U.S. Phase 2 PMS study completed the first, pre-specified
interim analysis, of safety outcomes for the first 9 participants enrolled in
the study. After careful review of all available clinical trial data, the DSMB
unanimously concluded "the study should continue as planned without any protocol
modification".
In August 2021, the clinical trial independent Data Safety Monitoring Board
(DSMB) for the U.S. Phase 2 PMS study issued an end-of-study statement
concluding that, based on the data, the procedures and treatment involved in
BCT-101-US were relatively safe and tolerable. Given that the study was
"open-label" with no active comparator arm(s), it was not possible to evaluate
efficacy, except through comparison to non-contemporaneous natural history data
sets or to prior clinical trials of similar populations. Therefore, no
evaluation of potential risk/benefit could be done.
Phase 2 PMS Clinical Trial
On March 24, 2021, the Company announced positive top-line data in the Phase 2
study evaluating three repeated administrations of NurOwn®, each given 2 months
apart, as a treatment for PMS. The 28-week open-label Phase 2 clinical trial
enrolled 20 primary and secondary progressive MS patients based on the 2017
revised McDonald Criteria, ages 18-65, with baseline Expanded Disability Status
Scale (EDSS) scores between 3-6.5, without evidence of relapse within 6 months
of enrollment, able to walk 25 feet in 60 seconds or less and were permitted to
be on a stable dose of disease modifying therapy. Of the 20 patients enrolled,
18 were treated and 16 (80%) completed the study. Two patients discontinued
related to procedure-related AEs. There were no study deaths or AEs related to
multiple sclerosis worsening. The mean age of study patients was 47, 56% were
female, and mean baseline EDSS score was 5.4. The clinical trial compared
clinical efficacy outcomes with a 48-patient matched clinical cohort from the
Comprehensive Longitudinal Investigations in MS at the Brigham & Woman's
Hospital (CLIMB Study). MS Function and Cognition measures in the top-line
results included the timed 25-foot walk (T25FW); 9-hole peg test (9-HPT); Low
Contrast Letter Acuity (LCLA); Symbol Digit Modality Test (SDMT); and the 12
item MS Walking Scale (MSWS-12).
Key findings from the trial were as follows:
Prespecified 25% improvements in the timed T25FW and 9-HPT (combined average)
from baseline to 28 weeks were observed in 14% and 13% of NurOwn® treated
? patients, respectively, and improvement in 9-HPT (combined average) was
observed in 0% of the pre-specified matched historical controls in the CLIMB
registry.
38% of NurOwn® treated patients showed at least a 10-point improvement in the
? MSWS-12 from baseline to week 28, a patient reported outcome that evaluates
walking function.
47% of NurOwn® treated patients showed at least an 8-letter improvement across
? 28 weeks in the LCLA binocular 1.25%, a visual function test. Additionally, 27%
of NurOwn® treated patients showed at least an 8-letter improvement across 28
weeks in the LCLA binocular 2.5%,
? 67% of NurOwn® treated patients showed at least a 3-point improvement in the
SDMT, a measure of cognitive processing.
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NurOwn® treated patients showed a mean improvement from baseline of 10% in
? T25FW and a 4.8% improvement from baseline on the 9-HPT dominant hand, compared
to 1.8% and 1.4% worsening respectively in matched historical controls from the
CLIMB registry.
? NurOwn® treated patients showed a 6% improvement from baseline in MSWS-12.
All results reported are based on observed data. Cerebrospinal fluid (CSF)
biomarkers were obtained at 3 consecutive time points, just prior to each
intrathecal administration of NurOwn®. We observed increases in neuroprotective
molecules (VEGF, HGF) and decreases in neuroinflammatory biomarkers (MCP-1, and
Osteopontin).
Additionally, we completed secondary efficacy data and detailed CSF and blood
biomarker analyses. We presented a detailed summary of the study outcomes at the
37th Congress of the ECTRIMS on October 14, 2021 and expect to publish our
findings in a peer reviewed journal and consider how best to advance NurOwn® as
an innovative treatment option in PMS.
On November 14, 2019, we received a $495,330 grant from the National Multiple
Sclerosis Society, through its Fast Forward program, to advance Brainstorm's
Phase 2 open-label, multicenter clinical trial of repeated intrathecal
administration of NurOwn® in participants with progressive Multiple Sclerosis.
As of March 31, 2022, we received $396,264 on account of the grant.
NurOwn® in Alzheimer's Disease (AD)
On June 24, 2020, we announced a new clinical program focused on the development
of NurOwn® as a treatment for Alzheimer's disease, or AD. We are currently
evaluating next steps based on emerging scientific insights and the changing
regulatory landscape for AD following the recent FDA decision on Aducanumab.
While many Alzheimer's therapies have focused on a single target such as tau or
beta-amyloid, we believe NurOwn® has the capability to simultaneously target
multiple relevant biological pathways and bring a comprehensive approach to this
multifactorial disease. Importantly, NurOwn®'s mechanism of action may allow the
therapy to enable synergistic combinations with anti-tau or anti-beta-amyloid
treatments, further underscoring its potential to address critical unmet needs
in AD. In such a complex disease, addressing inflammation and neuroprotection is
an innovative approach and a first in the world for this technology.
Non-Dilutive Funding
In July 2017, we were awarded a grant in the amount of $15,912,390 from the
California Institute for Regenerative Medicine (CIRM) to aid in funding the
Company's pivotal Phase 3 study of NurOwn®, for the treatment of ALS. We
received $12,550,000 of the CIRM grant from 2017 2019: $9,050,000 from 2017
through 2018, and an additional $3,500,000 in 2019. On March 16, 2020, we
received $2,200,000 from CIRM for achieving our pre-determined milestones. In
July 2020, we received an additional $700,000 for making further progress in our
Phase 3 study. On December 1, 2020, we received our final payment of $462,390.
We have now received in full the total amount of the $15,912,390 grant funding
awarded by CIRM. The grant does not bear a royalty payment commitment nor is the
grant otherwise refundable.
On November 14, 2019, we were awarded a $495,330 grant from the National
Multiple Sclerosis Society (NMSS), through its Fast Forward program, for serum
and CSF biomarkers analysis in Brainstorm's Phase 2 open-label, multicenter
clinical trial of repeated intrathecal administration of NurOwn® in participants
with PMS. As of March 31, 2022, we have received $396,264 out of the $495,330
awarded.
On April 3, 2020, we announced that our wholly owned subsidiary, Brainstorm Cell
Therapeutics Ltd., has been awarded a new non-dilutive grant of approximately
$1.5 million by the Israel Innovation Authority ("IIA"). The grant enables the
Company to continue development of advanced cellular manufacturing capabilities,
furthers development of MSC-NTF derived exosomes as a novel therapeutic
platform, and will ultimately enable Brainstorm to expand the therapeutic
pipeline in neurodegenerative disorders. As of March 31, 2022, we have received
$1.3 million out of the $1.5 million awarded.
On June 9, 2020, we announced that The ALS Association and I AM ALS have awarded
us a combined grant of $500,000 to support an ALS biomarker research study. The
grant will be used to draw insights from data and samples collected from
patients who participated in Brainstorm's Phase 3 clinical trial and treated
with NurOwn®, and to further the understanding of critical biomarkers associated
with treatment response for people with ALS. As of March 31, 2022, we have
received $200,000 out of $500,000 awarded.
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Intellectual Property
A key element of our overall strategy is to establish a broad portfolio of
patents and other methods described below to protect its proprietary
technologies and products. Brainstorm is the sole licensee or assignee of 27
granted patents, and 23 patent applications in the United States, Canada,
Europe, Israel and Brazil, as well as in additional countries worldwide,
including countries in the Far East and South America (in calculating the number
of granted patents and patent applications, each European patent validated in
multiple jurisdictions was counted as a single patent).
On February 18, 2020, the U.S. Patent and Trademark Office (USPTO) issued U.S.
Patent No. 10,564,149 titled 'Populations of Mesenchymal Stem Cells That Secrete
Neurotrophic Factors'. The allowed claims cover a pharmaceutical composition for
MSC-NTF cells secreting neurotrophic factors (NurOwn®) comprising a culture
medium as a carrier and an isolated population of differentiated bone
marrow-derived MSCs that secrete neurotrophic factors.
On June 3, 2020, the European Patent Office (EPO) granted European patent No.
2880151 titled 'Methods of Generating Mesenchymal Stem Cells which secrete
Neurotrophic Factors'. The allowed claims cover the method for manufacturing
MSC-NTF cells (NurOwn®).
On September 1, 2020, the Israeli Patent Office issued Israeli Patent No. 246943
titled 'Method of Qualifying Cells'. The granted claims cover a method of
qualifying whether a cell population is a suitable therapeutic for treating
Amyotrophic Lateral Sclerosis (ALS) and an isolated population of cells that
secrete neurotrophic factors which are qualified useful as a therapeutic for
treating ALS.
On September 16, 2020, the Company announced that the Japanese Patent Office
(JPO) has granted Brainstorm's Japanese Patent No. 6,753,887, titled: "Methods
of Generating Mesenchymal Stem Cells Which Secrete Neurotrophic Factors". The
allowed claims cover a method of generating cells which secrete neurotrophic
factors from human undifferentiated mesenchymal stem cells (MSCs) derived from
the bone marrow of a single donor. The said neurotrophic factors includes: brain
derived neurotrophic factor (BDNF); glial derived neurotrophic factor (GDNF);
hepatocyte growth factor (HGF); and vascular endothelial growth factor (VEGF).
On December 15, 2020, the Canadian Patent office sealed Patent No. 2,937,305
titled 'Pharmaceutical composition comprising bone-marrow derived mesenchymal
stem cells'. The granted claims include a pharmaceutical composition for NurOwn®
(MSC-NTF cells, Mesenchymal Stem Cells secreting Neurotrophic Factors),
comprising a culture medium as a carrier and an isolated population of
differentiated bone marrow-derived MSCs that secrete neurotrophic factors
On December 22, 2020 the U.S. Patent and Trademark Office (USPTO) issued U.S.
Patent No. 10,869,899 titled: Isolated cells and populations comprising same for
the treatment of CNS diseases. Granted claims cover an isolated cell population
secreting GDNF, a pharmaceutical composition comprising the isolated cells, and
a device comprising the pharmaceutical composition, including a device that is
adapted for administration of the isolated cell population into the spinal cord
On February 19, 2021, the Hong Kong patent office sealed Patent No. HK1209453
titled 'Methods of Generating Mesenchymal Stem Cells which secrete Neurotrophic
Factors'. Allowed claims cover the method for manufacturing MSC-NTF cells
(NurOwn®).
On November 30, 2021, the US Patent and Trademark Office (USPTO) issued US
Patent No. 11,185,572 titled 'Mesenchymal stem cells for the treatment of CNS
diseases'. The granted claims are for a method of treating a disease selected
from the group consisting of Parkinson's disease, amyotrophic lateral sclerosis
(ALS), Alzheimer's disease, stroke and Huntington's disease using MSC-NTF cells
(NurOwn).
On February 15, 2022, we announced that the Brazilian Patent Office granted
patent application BR112015001435-6 titled: "A method of generating cells which
secrete Brain Derived Neurotrophic Factor (BDNF), Glial Derived Neurotrophic
Factor (GDNF), Hepatocyte Growth Factor (HGF) And Vascular Endothelial Growth
Factor (VEGF), wherein said cells do not Secrete Nerve Growth Factor (NGF)." The
granted claims cover a method of manufacturing MSC-NTF cells (NurOwn®).
Patents protecting NurOwn® have been issued in the United States, Canada, Japan,
Europe, Hong Kong, Brazil and Israel.
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Recent Scientific and Industry Presentations
Between October 12-16, 2020, Dr. Stacy Lindborg, Ph.D., delivered an on-demand
webinar at the 2020 Cell & Gene Meeting on the Mesa, held virtually.
On October 20, 2020, the Company presented a poster titled, "MSC-NTF (NurOwn®)
Exosomes: A Novel Therapeutic Modality in the Mouse LPS-induced ARDS model
Analysis" at the NYSCF Conference Meeting, being held virtually.
On December 9, 2020, the Company presented results from the Company's placebo
controlled, randomized, double-blind Phase 3 trial evaluating NurOwn® (MSC-NTF
cells) as a treatment for ALS at the 31st International Symposium on ALS/MND
virtual symposium.
On January 21, 2021, Dr. Ralph Kern, MD MHSc presented results from the
Company's placebo controlled, randomized, double-blind Phase 3 trial evaluating
NurOwn® (MSC-NTF cells) as a treatment for ALS at the California ALS Research
Summit.
On February 26, 2021, Dr. Stacy Lindborg, PhD, presented at the SVB Leerink 10th
Global Healthcare Conference.
On May 25, 2021, we presented a poster titled, "Molecular Mechanisms Underlying
MSC-NTF (NurOwn®) Exosome Benefits in a Mouse LPS-induced ARDS Model" at the
ISCT 2021 New Orleans Virtual Meeting.
On October 6, 2021 we announced that a scientific abstract titled "CSF biomarker
correlations with primary outcome in NurOwn® Phase 3 clinical trial" was
presented as a scientific poster at the fully digital 2021 Northeast Amyotrophic
Lateral Sclerosis Consortium® (NEALS) conference.
Between October 12-14, and October 19-20, 2021 Stacy Lindborg, Ph.D. delivered a
presentation (which was made available via virtual platform) at the 2021 Cell &
Gene Meeting on the Mesa, which was held as a hybrid conference. Dr. Lindborg's
presentation highlighted the expansion of Brainstorm's technology portfolio to
include autologous and allogeneic product candidates, covering multiple
neurological diseases. The most progressed clinical development program, which
includes a completed Phase 3 trial of NurOwn® in ALS patients, remains the
highest priority for Brainstorm. Dr. Lindborg emphasized that Brainstorm is
committed to pursuing the best and most expeditious path forward to enable
patients to access NurOwn®.
On October 14, 2021 the findings from the Phase 2 PMS study were presented by
Dr. Jeffrey Cohen, Director of Experimental Therapeutics at the Cleveland Clinic
Mellen Center for Multiple Sclerosis, as an oral presentation at the fully
digital 37th Congress of the ECTRIMS. The study achieved the primary endpoint of
safety and tolerability. It demonstrated a reduction of neuroinflammatory
biomarkers and an increase in neuroprotective biomarkers in the cerebrospinal
fluid (CSF) and consistent improvement across Multiple Sclerosis functional
outcome measures, including measures of walking, upper extremity function,
vision and cognition.
On October 18, 2021, we announced the presentation of the poster titled,
"Therapeutic Benefits of MSC-NTF (NurOwn®) Exosomes in Acute Lung Injury Models"
at the NYSCF 2021 VIRTUAL Meeting. Results in both LPS and Bleomycin mouse
models of acute lung injury showed that the beneficial effects of intratracheal
administration of NurOwn-derived exosomes were superior to those of exosomes
isolated from naïve mesenchymal stem cells in multiple parameters, including
increase in blood oxygen saturation and reduction in lung pathology,
inflammatory infiltration and levels of proinflammatory cytokines in
bronchoalveolar lavage fluid (BALF), in addition to reduction of lung fibrosis
in the Bleomycin model.
On November 30, 2021, Dr. Jonathan Katz, principal investigator on the Phase 3
trial of NurOwn® in ALS, Chair of the Neurology Department and Director of the
Forbes Norris ALS Clinic at the California Pacific Medical Center, presented new
analyses from the trial at the 4th Annual ALS ONE Research Symposia.
Pre-specified and post hoc analyses leveraging the published ENCALS model
demonstrated a potential NurOwn-induced treatment effect on ALS disease
progression in trial participants with less severe disease and showed that this
effect was protected by randomization.
On December 7, 2021, Dr. Robert Brown, Director of the Program in
Neurotherapeutics at the University of Massachusetts Medical School, and
principal investigator in the Phase 3 trial of NurOwn® in ALS, presented at the
32nd International Symposium on ALS/MND. The presentation, titled "NurOwn®
targets multiple disease pathways in ALS Phase 3 Trial" focused on biomarker
data that suggest that NurOwn® drives significant changes in biomarkers across
ALS disease pathways which may be important for achieving clinical outcomes.
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On January 27, 2022, Dr. Ralph Kern, President and Chief Medical Officer at
Brainstorm Cell Therapeutics, gave a presentation titled "NurOwn® Phase 3 ALS
Clinical Trial Update" at the virtual 12th Annual California ALS Research
Summit.
On March 16, 2022, Dr. Merit Cudkowicz, Chief of Neurology at Massachusetts
General Hospital, Julieanne Dorn Professor of Neurology at Harvard Medical
School, Director of the Sean M. Healey & AMG Center for ALS at Massachusetts
General Hospital and principal investigator in the Phase 3 trial of NurOwn® in
ALS, delivered a late breaking oral presentation at the 2022 Muscular Dystrophy
and Association Clinical and Scientific Conference. The presentation, titled
"Relationship UNC13A Single-Nucleotide Polymorphisms to Clinical Outcomes in
NurOwn® Phase 3 ALS Clinical Trial" focused on pre-specified genetic analyses
from the NurOwn® Phase 3 trial in ALS which suggests that NurOwn® treatment may
influence disease progression in patients who possess the UNC13A risk allele.
On April 24-26, 2022, Dr. James Berry, Winthrop Family Scholar in ALS Sciences,
Director of the Massachusetts General Hospital (MGH) multidisciplinary ALS
clinic and Chief of the Division of ALS and Motor Neuron Diseases, Boston MA,
presented a scientific abstract titled "CSF Biomarkers Evaluated by Principal
Component Analysis in a NurOwn® Phase 3 Clinical Trial" at the AAN 2022 Virtual
Congress.
Research and Development
We are actively engaged in research and development 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). MSC-NTF derived Exosomes are an example of ongoing
research in additional specialized derivative cell products. Exosomes are
extracellular nano-vesicles (secreted by the cells) that carry various molecular
components of their cell of origin, including nucleic acids, proteins and
lipids. Exosomes can transfer molecules from one cell to another, thereby
mediating cell-to-cell communication, ultimately regulating many cell processes,
which are suitable for clinical applications in multiple neurodegenerative
diseases. NurOwn® derived exosomes may possess unique features for the enhanced
delivery of therapeutics to the brain, due to their ability to cross the blood
brain barrier and to penetrate the brain and spinal cord.
The exosome research efforts are primarily focused on manufacturing of MSC-NTF
exosomes from bone marrow derived MSC:
1. Developing and optimizing large scale cell culture processes using
bioreactors, to generate exosomes.
2. Developing advanced scalable purification GMP methods that can be applied to
commercial use.
3. Quantification, characterization of phenotype and exosome cargo.
4. Assessment of MSC-NTF exosomes potency and stability.
5. Establishment of a method for exosomes modification.
6. Preclinical experiments in neurodegenerative and lung injury models.
NurOwn® derived exosomes have the potential to treat acute respiratory distress
syndrome (ARDS) due to their ability to penetrate deep tissues and decrease the
inflammatory response. ARDS is a type of respiratory failure associated with
widespread inflammation and lung damage mediated by dysregulated cytokine
production and is one of the severe features of COVID-19.
MSC exosomes may be delivered intravenously or directly into the lungs via
intratracheal administration have several practical advantages over cellular
therapy including ease of storage, stability, formulation and low
immunogenicity.
In a preclinical study, we evaluated MSCs and NurOwn® derived exosomes in an LPS
ARDS-mouse model, relevant to severe acute lung injury. The results from the
study showed that intratracheal administration of NurOwn® derived exosomes
resulted in a statistically significant improvement in multiple lung parameters.
These included the clinically relevant factors: functional lung recovery,
reduction in pro-inflammatory cytokines and most importantly, attenuation of
lung damage. Moreover, MSC-NTF cell derived exosomes exhibited a superior effect
when compared to treatment with exosomes derived from naïve MSCs from the same
donor. On January 20, 2021, we announced the peer-reviewed publication of this
preclinical study in the journal Stem Cell and Research Therapy.
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The study, entitled "MSC-NTF (NurOwn®) exosomes: a novel therapeutic modality in
the mouse LPS-induced ARDS model," evaluated the use of NurOwn® (MSC-NTF cell)
derived exosomes in a mouse model of acute respiratory distress syndrome (ARDS).
On May 25, 2021, we made a scientific presentation of NurOwn® Exosome
preclinical ARDS data at the ISCT 2021 New Orleans Virtual Meeting demonstrating
that intrathecal administration of NurOwn-derived exosomes resulted in
statistically significant improvements in multiple lung parameters in a mouse
model of acute respiratory distress syndrome (ARDS).
A poster titled, "Therapeutic Benefits of MSC-NTF (NurOwn®) Exosomes in Acute
Lung Injury Models" was presented on October 19, 2021 at the NYSCF 2021 Virtual
Meeting, which was held on October 19-20, 2021. Results in two different acute
lung injury models showed that the beneficial effects of intratracheal
administration of Exo MSC-NTF (MSC-NTF derived exosomes) were more active than
Exo MSC (MSC-derived Exosomes) in multiple parameters, including increase in
blood oxygen saturation and reduction in lung pathology, inflammatory
infiltration and levels of proinflammatory cytokines in bronchoalveolar lavage
fluid (BALF), in addition to reduction of lung fibrosis in the Bleomycin model.
The observed positive preclinical results suggest that intratracheal
administration of Exo MSC-NTF may have clinical potential as a therapy for acute
lung related pathologies and has the potential to modify physiological,
pathological, and biochemical outcomes with greater activity than sEVs isolated
from naïve MSCs.
For the completed multidose clinical studies in ALS and PMS, the Company has
improved the efficiency of NurOwn® production and improved its stability,
allowing manufacturing to take place at centralized clean room facilities from
which NurOwn® is distributed to the clinical trial sites, where the cells are
then administered to patients. The Company is also engaged in several research
initiatives to further improve and scale-up manufacturing capacity and extend
the shelf life of NurOwn®.
Corporate Information
We are incorporated under the laws of the State of Delaware. Our principal
executive offices are located at 1325 Avenue of Americas, 28th Floor, New York,
NY 10019, and our telephone number is (201) 488-0460. We also maintain an office
in Petach Tikva, Israel. We maintain a website at
http://www.brainstorm-cell.com. The information on our website is not
incorporated into this Quarterly Report on Form 10-Q.
Results of Operations
For the period from inception (September 22, 2000) until March 31, 2022, we did
not generate any revenues from operations. In addition, we incurred operating
costs and expenses of approximately $5,475,000 during the three months ended
March 31, 2022, compared to $6,929,000 during the three months ended March 31,
2021.
Research and Development, net
Our business model calls for significant investments in research and
development. Our research and development expenditures, net in the three months
ended March 31, 2022 were $2,616,000, a decrease of $1,725,000 compared to
$4,341,000 for the three months ended in March 31, 2021.
This decrease is due to: (i) a decrease of $2,539,000 in costs related to the
Phase 3 and Phase 2 Clinical Trials from $3,063,000 in three months ended March
31, 2021 to $524,000 for the three months period ended March 31, 2022 and (ii) a
decrease of $57,000 in connection with consultants, patents and other
activities. This decrease was partially offset by (i) a decrease of $467,000 in
participation of the Israel Innovation Authority ("IIA") and under various
awarded grants in 2021 and (ii) an increase of $404,000 for costs related to
stock-based compensation expenses and payroll, travel, depreciation, rent and
other costs. Excluding participation from IIA and other grants, research and
development expenses in the three months ended March 31, 2022 were $2,616,000, a
decrease of $2,191,000 compared to $4,807,000 for the three months ended in
March 31, 2021.
General and Administrative
General and administrative expenses for the three months ended March 31, 2022
and 2021 were $2,859,000 and $2,588,000, respectively. The increase in general
and administrative expenses of $271,000 is primarily due to an increase in
stock-based compensation, consultants, rent, public relations and other costs.
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Financial Expenses
Financial income for the three months ended March 31, 2022 was $115,000 as
compared to financial income of $267,000 for the three months ended March 31,
2021 as a result of interest earned on our cash, cash equivalents and short-term
deposits and due to conversion exchange rates.
Net Loss
Net loss for the three months ended on March 31, 2022 was $5,360,000, as
compared to a net loss of $6,662,000 for the three months ended March 31, 2021.
Net loss per share for the three months ended March 31, 2022 and 2021 was $0.15
and $0.19, respectively.
The weighted average number of shares of Common Stock used in computing basic
and diluted net loss per share for the three months ended March 31, 2022 was
36,436,882, compared to 35,791,309 for the three months ended March 31, 2021.
Additional funding will be required to begin the commercialization efforts and
to achieve a level of sales adequate to support the Company's cost structure.
To meet its capital needs, the Company is considering multiple alternatives,
including, but not limited to, additional public and private sales of its Common
Stock and warrants, the exercise of warrants, the issuance of convertible
promissory notes, sales of Common Stock via its August 9, 2021 ATM program and
other funding transactions. While the Company has been successful in raising
financing recently and in the past, there can be no assurance that it will be
able to do so in the future on a timely basis on terms acceptable to the
Company, or at all.
Continuing concerns resulting from the COVID-19 pandemic, including the
emergence of new variants, may continue to adversely disrupt the Company's
operations, including the ability to complete the ongoing clinical trials and
may have other adverse effects on Company's business and operations. In
addition, this pandemic has caused substantial disruption in the financial
markets and may adversely impact economies worldwide, both of which could result
in adverse effects on Company's business, operations and ability to raise
capital.
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. The Company has completed its Phase 3 ALS
clinical trial. The Company currently has sufficient cash to complete its
ongoing activities. Over the longer term, if the Company is granted a BLA
approval, additional capital raise will be needed in connection with strategic
partnerships and to commercialize NurOwn® for ALS, and to conduct additional
trials for other indications. If the Company is not able to raise additional
capital for these purposes, management may need to slow the pace of
commercialization or the Company may not be able to continue to function as a
going concern. The Company's consolidated financial statements do not reflect
any adjustments that might result from the outcome of this uncertainty.
Liquidity and Capital Resources
Since inception, the Company has financed its operations primarily through
public and private sales of its Common Stock and warrants, the exercise of
warrants, the issuance of convertible promissory notes, sales via the ATM
programs and through various grants. At March 31, 2022 cash, cash equivalents
and short-term bank deposits amounted to $18,397,000.
Net cash used in operating activities for the three months ended March 31, 2022
was $3,688,000. Cash used for operating activities was primarily attributed to
cost of clinical trials, rent of clean rooms and materials for clinical trials,
payroll costs, rent, outside legal fee expenses and public relations expenses.
Net cash used in investing activities for the three months ended March 31, 2022
was $17,000 representing net increase in short-term interest-bearing bank
deposits and purchase of property and equipment.
On August 9, 2021, the Company entered into an Amended and Restated Distribution
Agreement (the "New Distribution Agreement") with the Agents pursuant to which
the Company may sell from time to time, through the Agents, shares of Common
Stock, having an aggregate offering price of up to $100,000,000 (the "August 9,
2021, ATM"). Sales under the August 9, 2021, ATM are to be made by any method
permitted by law that is deemed to be an "at the market" offering as defined in
Rule 415 promulgated under the Securities Act, including, without limitation,
sales made directly on the Nasdaq Capital Market, on any other existing trading
market for
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the Shares, through a market maker or as otherwise agreed by the Company and the
Agents. During the three months ended March 31, 2022, the Company did not sell
any shares of its Common Stock pursuant to the August 9, 2021, ATM.
At-the-market (ATM) Offerings:
On June 11, 2019, the Company entered into a distribution agreement with Raymond
James & Associates, Inc. ("Raymond James"), pursuant to which the Company sold,
through the Raymond James, shares of Common Stock having an aggregate offering
amount of $20,000,000 (the "June 11, 2019 ATM") in an "at the market" offering
as defined in Rule 415 promulgated under the Securities Act, including, without
limitation, by sales made directly on the Nasdaq Capital Market, on any other
existing trading market for the Shares, through a market maker or as otherwise
agreed by the Company and Raymond James.
On March 6, 2020, the Company entered into a new distribution agreement with
Raymond James (the "Agent"), pursuant to which the Company was able to sell from
time to time, through the Agent, shares of Common Stock, having an aggregate
offering price of up to $50,000,000 (the "March 6, 2020, ATM"). Sales under the
March 6, 2020. ATM were made by any method permitted by law that is deemed to be
an "at the market" offering as defined in Rule 415 promulgated under the
Securities Act, including, without limitation, sales made directly on the Nasdaq
Capital Market, on any other existing trading market for the Shares, through a
market maker or as otherwise agreed by the Company and Raymond James. Under the
March 6, 2020, ATM, the Company sold an aggregate of 2,446,641 shares of Common
Stock at an average price of $9.45 per share, raising gross proceeds of
approximately $23.11 million.
On September 25, 2020, the Company entered into an Amended and Restated
Distribution Agreement (the "Distribution Agreement") with SVB Leerink LLC
("Leerink") and Raymond James & Associates (together with Leerink, the "Agents")
pursuant to which the Company may sell from time to time, through the Agents,
shares of Common Stock, having an aggregate offering price of up to $45,000,000,
which aggregate amount includes amount unsold pursuant to the March 6, 2020, ATM
(the "September 25, 2020, ATM"). Sales under the September 25, 2020, ATM are to
be made by any method permitted by law that is deemed to be an "at the market"
offering as defined in Rule 415 promulgated under the Securities Act, including,
without limitation, sales made directly on the Nasdaq Capital Market, on any
other existing trading market for the Shares, through a market maker or as
otherwise agreed by the Company and the Agents. The Distribution Agreement
amends and restates in its entirety the Company's prior agreement with Raymond
James entered into on March 6, 2020 (the "March 6, 2020, ATM"). The Company
previously sold 2,446,641 shares of Common Stock for gross proceeds of
approximately $23.11 million of Common Stock under the March 6, 2020, ATM.
During the quarter ended September 30, 2021, the Company did not sell any
additional shares of its Common Stock pursuant to the September 25, 2020, ATM.
Since inception and as of September 30, 2021, the Company has sold 4,721,282
shares of Common Stock for gross proceeds of approximately $29.1 million under
the September 25, 2020, ATM.
The Company has no obligation under the September 25, 2020, ATM to sell any
shares and may at any time suspend sales or terminate the September 25, 2020,
ATM in accordance with its terms. Subject to the terms and conditions of the
Distribution Agreement, the Agents will use their commercially reasonable
efforts to sell on the Company's behalf, from time to time consistent with its
normal sales and trading practices, such Shares based upon instructions from the
Company (including any price, time or size limits or other customary parameters
or conditions the Company may impose). The Company has provided the Agents with
customary indemnification rights, and the Agents will be entitled to a fixed
commission of 3.0% of the aggregate gross proceeds from the Shares sold. The
Distribution Agreement contains customary representations and warranties, and
the Company is required to deliver customary closing documents and certificates
in connection with sales of the Shares. Shares sold under the ATMs are issued
pursuant to the Company's existing Shelf Registration Statement, and the
Prospectus Supplement to the Registration Statements filed June 11, 2019, March
6, 2020, and September 25, 2020, respectively.
On August 9, 2021, the Company entered into an Amended and Restated Distribution
Agreement (the "New Distribution Agreement") with the Agents pursuant to which
the Company may sell from time to time, through the Agents, shares of Common
Stock, having an aggregate offering price of up to $100,000,000 (the "August 9,
2021, ATM"). Sales under the August 9, 2021, ATM are to be made by any method
permitted by law that is deemed to be an "at the market" offering as defined in
Rule 415 promulgated under the Securities Act, including, without limitation,
sales made directly on the Nasdaq Capital Market, on any other existing trading
market for the Shares, through a market maker or as otherwise agreed by the
Company and the Agents. In connection with the New Distribution Agreement, the
Company terminated the previous Distribution Agreement and the September 25,
2020, ATM. During the three months ended March 31, 2022, the Company did not
sell any shares of its Common Stock pursuant to the August 9, 2021, ATM.
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Registered Direct Offering:
On March 6, 2020, the Company entered into and closed a $10.0 million registered
direct offering of 1,250,000 shares of Common Stock at a per share purchase
price equal to $8.00. Purchaser also received a three-year warrant to purchase
up to 250,000 shares of Common Stock at an exercise price of $15.00 per share.
Recent Sales of Unregistered Securities:
Exercises of 2018 Amended Warrants:
On June 6, 2018 the Company entered into Warrant Exercise Agreements with
certain holders ("2018 Warrant Holders"), pursuant to which holders were issued
warrants to purchase an aggregate 2,458,201 unregistered shares of Common Stock,
at an exercise price of $9 per share, with an expiration date of December 31,
2020 (the "2018 Warrants"). In connection with the issuance of the 2019
Warrants (described below), certain 2018 Warrants were amended on August 2, 2019
to reduce the exercise price to $7.00 per share and to extend the expiration
date to December 31, 2021 (the "Amended 2018 Warrants").
Between July 20, 2020 and July 24, 2020, 2018 Warrant Holders exercised an
aggregate of 280,000 shares of the Amended 2018 Warrants (the "2018 Exercised
Shares"), which exercises generated gross cash proceeds to the Company of $1.96
million.
The 2018 Warrants have not been registered under the Securities Act of 1933, as
amended (the Securities Act), or state securities laws. The 2018 Exercised
Shares have been registered for resale on the Company's registration statement
on Form S-3 (File No. 333-225995). The issuance of the 2018 Exercised Shares and
2018 Warrants was exempt from the registration requirements of the Securities
Act pursuant to the exemption for transactions by an issuer not involving any
public offering under Section 4(a)(2) of the Securities Act and Rule 506 of
Regulation D promulgated under the Securities Act. The Company made this
determination based on the representations that each party is an "accredited
investor" within the meaning of Rule 501 of Regulation D. The Company expects to
use cash received from exercises for general corporate and working capital
purposes.
Exercises of 2019 Warrants:
On August 2, 2019, the Company entered into Warrant Exercise Agreements with
certain 2018 Warrant Holders ("2019 Warrant Holders"), pursuant to which holders
were issued warrants to purchase an aggregate 842,000 shares of Common Stock
(the "2019 Warrants"), at an exercise price of $7.00, with an expiration date of
December 31, 2021 (the "2019 Warrants").
Between July 15, 2020 and July 24, 2020, 2019 Warrant Holders exercised an
aggregate of 620,000 shares of the 2019 Warrants (the "2019 Exercised Shares"),
which exercises generated gross cash proceeds to the Company of $4.34 million.
The 2019 Warrants have not been registered under the Securities Act, or state
securities laws. The 2019 Exercised Shares have been registered for resale on
the Company's registration statement on Form S-3 (File No. 333-233349). The
issuance of the 2019 Exercised Shares and 2019 Warrants is exempt from the
registration requirements of the Securities Act pursuant to the exemption for
transactions by an issuer not involving any public offering under Section
4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the
Securities Act. The Company made this determination based on the
representations that each party is an "accredited investor" within the meaning
of Rule 501 of Regulation D. The Company expects to use cash received from
exercises for general corporate and working capital purposes.
With the recent warrant exercises in July 2020, the Company has reduced its
outstanding warrants shares to non-affiliates by approximately 37% and reduced
its overall warrants shares outstanding by approximately 19%. In total, 900,000
of the 4,724,868 Company warrant shares outstanding were exercised between July
15 and July 24, 2020. 2,266,667 of the remaining 3,824,868 outstanding warrants
shares are owned by affiliates of the Company.
Our material cash needs for the next 12 months, assuming we do not expand our
clinical trials beyond our completed Phase 2 PMS trial in the United States,
will include (i) costs of the clinical trial in the U.S. and Europe, (ii)
employee salaries, (iii) payments for rent and operation of the GMP facilities
and manufacturing of NurOwn®, and (iv) fees to our consultants and legal
advisors, patents, and fees for facilities to be used in our research and
development.
We believe our existing cash will be sufficient to fund our anticipated
operating cash requirements for at least twelve months following the date of
this filing. We currently have sufficient cash to execute on our operating
activities. We expect that we will continue
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to generate losses from the clinical development and regulatory activities,
which will result in a negative cash flow from operating activity. If we are
granted a BLA approval, additional capital raise will be needed to commercialize
NurOwn® for ALS, and to conduct additional trials that may be needed for other
indications. The actual amount of cash that the Company will need to operate is
subject to many factors, including, but not limited to, the timing, design and
conduct of clinical trials for our product candidates along with cost to
commercialize these product candidates.
We anticipate that we will need to raise substantial additional financing in the
future to fund our operations. In order to meet these additional cash
requirements, we may incur debt, license certain intellectual property, and seek
to sell additional equity or convertible securities that may result in dilution
to our stockholders. If we raise additional funds through the issuance of equity
or convertible securities, these securities could have rights or preferences
senior to those of our common stock and could contain covenants that restrict
our operations. There can be no assurance that we will be able to obtain
additional equity or debt financing on terms acceptable to us, if at all. Our
future capital requirements will depend on many factors, including:
*our ability to obtain funding from third parties, including any future
collaborative partners;
*the scope, rate of progress and cost of our clinical trials and other research
and development programs;
*the time and costs required to gain regulatory approvals;
*the terms and timing of any collaborative, licensing and other arrangements
that we may establish;
*the costs of filing, prosecuting, defending and enforcing patents, patent
applications, patent claims, trademarks and other intellectual property rights;
*any product liability or other lawsuits related to our product candidates;
*the expenses needed to attract and retain skilled personnel;
*the costs and timing of future commercialization activities, including product
manufacturing, marketing, sales, and distribution, for any of our product
candidates for which we receive marketing approval;
*the revenue, if any, received from commercial sales of our product candidates
for which we receive marketing approval;
*the general and administrative expenses related to being a public company;
*the effect of competition and market developments; and
*future pre-clinical and clinical trial results.
The full extent to which continuing concerns resulting from the COVID-19
pandemic will directly or indirectly impact our business, results of operations,
financial condition, liquidity and capital resources will depend on future
developments that are highly uncertain and cannot be accurately predicted at
this time, including new information that may emerge concerning COVID-19, the
actions taken to contain it or treat its impact and the economic impact on
local, regional, national and international markets. Our management team is
actively monitoring this situation and the possible effects on our financial
condition and liquidity.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the U.S. The preparation of our consolidated
financial statements and disclosures requires us to make judgments, estimates,
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported revenue and expenses during the reporting
periods. We base our estimates on historical experience, known trends and events
and various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. We evaluate our estimates and assumptions on an ongoing basis.
Our actual results may differ from these estimates under different assumptions
and conditions.
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While our significant accounting policies are described in more detail in the
notes to our audited consolidated financial statements appearing elsewhere in
this Quarterly Report on Form 10-Q we believe that the following accounting
policies are those most critical to the judgments and estimates used in the
preparation of our consolidated financial statements.
Accounting for stock-based compensation:
We grant equity-based awards under share-based compensation plans. We estimate
the fair value of share-based payment awards using the Black-Scholes option
valuation model. This fair value is then amortized over the requisite service
periods of the awards. The Black-Scholes option valuation model requires the
input of subjective assumptions, including price volatility of the underlying
stock, risk-free interest rate, dividend yield, and expected life of the option.
Share-based compensation expense is based on awards ultimately expected to vest,
and therefore is reduced by expected forfeitures. Changes in assumptions used
under the Black-Scholes option valuation model could materially affect our net
loss and net loss per share.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future material effect on our financial condition, changes in
financial condition, revenue or expenses, results of operations, liquidity,
capital expenditures, or capital resources.
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BRAINSTORM CELL THERAPEUTICS INC. 
