Brainstorm Cell Therapeutics(BCLI) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements The company's Q1 2020 financial statements show improved equity from financing, despite increased net loss due to R&D, with going concern uncertainty noted Interim Condensed Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands USD) | Account | March 31, 2020 (Unaudited) | December 31, 2019 (Audited) | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $12,471 | $536 | +$11,935 | | Total current assets | $15,205 | $3,360 | +$11,845 | | Total assets | $18,071 | $6,534 | +$11,537 | | Liabilities & Equity | | | | | Accounts payable | $4,571 | $14,677 | -$10,106 | | Total current liabilities | $8,252 | $17,654 | -$9,402 | | Total liabilities | $9,060 | $18,757 | -$9,697 | | Total stockholders' equity (deficit) | $9,011 | $(12,223) | +$21,234 | - The company's financial position improved significantly, moving from a stockholders' deficit of $(12,223) thousand to an equity of $9,011 thousand, primarily due to capital raised from financing activities[9] Interim Condensed Consolidated Statements of Comprehensive Loss Statement of Comprehensive Loss (in thousands USD, except per share data) | Metric | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Research and development, net | $5,948 | $3,456 | | General and administrative | $2,360 | $1,472 | | Operating loss | $(8,308) | $(4,928) | | Net loss | $(8,114) | $(5,027) | | Basic and diluted net loss per share | $(0.32) | $(0.24) | - The net loss increased by 61% year-over-year, primarily driven by a 72% increase in research and development expenses related to ongoing clinical trials[10] Statements of Changes in Stockholders' Equity - Stockholders' equity increased from a deficit of $(12,223) thousand at the beginning of 2020 to a positive $9,011 thousand by March 31, 2020[13] - The significant improvement in equity was driven by capital raising activities, including $19.0 million from an at-the-market (ATM) offering and $10.0 million from a Registered Direct Offering during the quarter[13] Interim Condensed Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows Highlights (in thousands USD) | Cash Flow Activity | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,029) | $(835) | | Net cash provided by (used in) investing activities | $(1,994) | $3,131 | | Net cash provided by financing activities | $28,958 | $0 | | Increase in cash and cash equivalents | $11,935 | $2,296 | - The company generated $29.0 million in cash from financing activities, primarily from at-the-market (ATM) and registered direct offerings, which more than offset the $15.0 million cash used in operations[19] Notes to Interim Condensed Consolidated Financial Statements Notes detail NurOwn® therapy development, Q1 2020 capital raises, going concern uncertainty, and COVID-19 impacts on trials - The company is in the clinical development stage for its NurOwn® therapy, with a Phase 3 trial for ALS and a Phase 2 trial for Progressive Multiple Sclerosis (PMS)[25][27] - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and the need for additional funding to complete clinical trials and commercialization[32] - In Q1 2020, the company raised approximately $17.86 million from its June 2019 ATM, $1.76 million from its new March 2020 ATM, and $10.0 million from a Registered Direct Offering[51][53][55] - The COVID-19 pandemic has caused delays in the enrollment pace for the Phase 2 PMS clinical trial, though the Phase 3 ALS trial continues with modifications like telephone-based non-treatment visits[85][86] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses NurOwn® trials, Q1 2020 net loss increase from R&D, and improved liquidity from financing, with ongoing capital needs Company Overview and Recent Highlights - BrainStorm is a biotechnology company developing autologous cellular therapies, with its lead candidate NurOwn® in a Phase 3 trial for ALS and a Phase 2 trial for Progressive Multiple Sclerosis (PMS)[89][91] - The COVID-19 pandemic has caused enrollment delays in the Phase 2 PMS trial, but the Phase 3 ALS trial remains on track for top-line data in Q4 2020[91][97] - The company held a high-level meeting with the FDA, which confirmed the Phase 3 ALS trial is collecting relevant data and committed to working collaboratively to identify a regulatory pathway forward[100] - Significant financing was secured in Q1 2020, including completing a $20 million ATM, initiating a new $50 million ATM, and closing a $10 million registered direct offering[102][103][104] NurOwn® Proprietary Technology and Clinical Program - NurOwn® technology induces a patient's own bone marrow-derived mesenchymal stem cells (MSCs) to secrete high levels of neurotrophic factors, which may protect neurons and reduce neuroinflammation[110][114] - The ongoing Phase 3 ALS trial has completed enrollment of 200 patients and is a multi-dose, double-blind, placebo-controlled study designed to support a Biologic License Application (BLA). Top-line data is expected in Q4 2020[25][127][131] - The Phase 2 trial in Progressive Multiple Sclerosis (PMS) is an open-label study recruiting 20 patients across 5 U.S. centers. Enrollment has been delayed by COVID-19, but top-line results may still be possible in Q4 2020[139][142] - The company has received non-dilutive funding, including a total of $14.75 million to date from a $15.91 million CIRM grant for the ALS trial and a new $1.5 million grant from the Israel Innovation Authority (IIA)[144][145] Results of Operations Comparison of Operating Results (in thousands USD) | Expense Category | Three months ended March 31, 2020 | Three months ended March 31, 2019 | Change | | :--- | :--- | :--- | :--- | | Research and Development Expenses, net | $5,948 | $3,456 | +$2,492 | | General and Administrative Expenses | $2,360 | $1,472 | +$888 | | Operating Loss | $8,308 | $4,928 | +$3,380 | | Net Loss | $8,114 | $5,027 | +$3,087 | - The increase in R&D expenses was primarily due to costs associated with the ongoing Phase 3 ALS and Phase 2 PMS clinical trials[161] - General and administrative expenses rose mainly due to increased payroll, stock-based compensation, and public/investor relations costs[163] Liquidity and Capital Resources - As of March 31, 2020, the company had approximately $14.5 million in cash, cash equivalents, and short-term bank deposits[165] - Net cash used in operating activities was $15.0 million for the quarter, while net cash provided by financing activities was $29.0 million[166] - The company raised gross proceeds of approximately $17.86 million from its June 2019 ATM, $1.76 million from its March 2020 ATM, and $10.0 million from a registered direct offering during the quarter[168][169][171] - The company will require substantial additional capital to complete the commercialization of its products and has stated that if it cannot raise more funds, it may not be able to continue as a going concern[173] Quantitative and Qualitative Disclosures About Market Risk This section has been omitted as the company qualifies as a smaller reporting company - Information regarding market risk is omitted because the company qualifies as a smaller reporting company[179] Controls and Procedures The CEO and CFO concluded the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2020[180] - No material changes to the company's internal control over financial reporting occurred during the quarter ended March 31, 2020[181] PART II – OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings that would adversely affect its business, financial condition, or results of operations - As of the report date, the company is not involved in any material legal proceedings[182] Risk Factors This section highlights COVID-19 related risks, including delays in the Phase 2 PMS trial and potential future impacts on clinical activities and capital raising - A new risk factor has been added concerning the business disruptions caused by the COVID-19 pandemic[183][185] - The pandemic has already caused delays in the enrollment for the Phase 2 PMS clinical trial due to restricted access to healthcare sites[187] - Future impacts of COVID-19 are highly uncertain and could severely affect clinical trial activities, participant enrollment, study timelines, and the company's ability to raise capital[189][190] Other Information No material changes were made to the procedures for stockholders to recommend board nominees during the quarter ended March 31, 2020 - No material changes were made to the procedures for stockholders to recommend board nominees during the quarter[192] Exhibits This section lists documents filed as exhibits to the Form 10-Q, including distribution and securities purchase agreements, warrants, and various certifications - The report includes several exhibits, such as the March 6, 2020 Distribution Agreement with Raymond James and the Securities Purchase Agreement with Abbhi Investments, LLC[193]