Brainstorm Cell Therapeutics(BCLI) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited interim financial statements show a net loss of $5.8 million and substantial doubt about its ability to continue as a going concern Interim Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows total assets of $2.6 million and a total stockholders' deficit of $6.1 million Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $824 | $187 | | Total current assets | $1,515 | $385 | | Total assets | $2,566 | $1,832 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $8,528 | $8,978 | | Total liabilities | $8,623 | $9,596 | | Accumulated deficit | $(232,403) | $(226,636) | | Total stockholders' deficit | $(6,057) | $(7,764) | Interim Condensed Consolidated Statements of Comprehensive Loss The company recorded a net loss of $5.77 million for the six months ended June 30, 2025, a slight decrease from the prior year Statement of Comprehensive Loss (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research and development, net | $2,424 | $1,883 | $1,120 | $922 | | General and administrative | $3,238 | $3,573 | $1,453 | $2,060 | | Operating loss | $(5,662) | $(5,456) | $(2,573) | $(2,982) | | Net loss | $(5,767) | $(5,942) | $(2,903) | $(2,541) | | Basic and diluted net loss per share | $(0.77) | $(1.35) | $(0.34) | $(0.60) | Interim Condensed Consolidated Statements of Cash Flows Net cash used in operations was $5.1 million, offset by $5.8 million raised from financing activities during the first half of 2025 Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,133) | $(4,746) | | Net cash provided by financing activities | $5,787 | $6,909 | | Increase (decrease) in cash, cash equivalents and restricted cash | $654 | $2,163 | | Cash, cash equivalents and restricted cash at end of the period | $1,025 | $3,648 | Notes to Interim Condensed Consolidated Financial Statements Key notes highlight the company's delisting to the OTCQB market, substantial doubt about its going concern status, and recent capital-raising activities - The company's common stock was delisted from The Nasdaq Capital Market and began trading on the OTCQB Venture Market on July 18, 2025, due to failure to meet the minimum shareholder equity requirement[38][39][82] - The company has incurred operating losses since inception, with an accumulated deficit of approximately $232 million as of June 30, 2025, raising substantial doubts about its ability to continue as a going concern[40][41] - During the six months ended June 30, 2025, the company sold 2,311,940 shares for gross proceeds of approximately $4.15 million under its At-the-Market (ATM) offering[54] - In March 2025, the company entered into a warrant inducement agreement, raising approximately $1.64 million and issuing new warrants to purchase additional shares[57] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the regulatory pathway for its NurOwn® cell therapy, its precarious financial condition, and reliance on equity financing Company Overview and Recent Highlights Recent highlights include the delisting from Nasdaq, FDA clearance for a Phase 3b trial for NurOwn® in ALS, and a new manufacturing agreement - The company's common stock was delisted from Nasdaq and began trading on the OTCQB market on July 18, 2025, due to non-compliance with the minimum shareholder equity requirement[90] - On May 19, 2025, the company announced that the FDA cleared the initiation of its Phase 3b clinical trial of NurOwn® for the treatment of ALS[90] - The company signed a Letter of Intent with Minaris Advanced Therapies on May 27, 2025, to manufacture NurOwn® for its upcoming clinical trial[97] NurOwn® Clinical Program The company withdrew its BLA for NurOwn® in ALS but subsequently secured an FDA Special Protocol Assessment for a new Phase 3b trial - The company withdrew its Biologics License Application (BLA) for NurOwn® in ALS on November 3, 2023, after an Advisory Committee voted against its effectiveness[100][123] - In April 2024, the company received written agreement from the FDA under a Special Protocol Assessment (SPA) for the design of a new Phase 3b trial of NurOwn® in ALS[86][100][123] - The Phase 2 trial for NurOwn® in Progressive Multiple Sclerosis (PMS) showed positive top-line data, with 38% of patients showing improvement in walking function[146] Research and Development R&D efforts are focused on NurOwn® and its derivative, MSC-NTF derived Exosomes, for various neurodegenerative disorders - R&D efforts are focused on MSC-NTF derived Exosomes, which are nano-vesicles that can cross the blood-brain barrier and may treat multiple neurodegenerative diseases[161] - A preclinical study showed that intratracheal administration of NurOwn® derived exosomes resulted in a statistically significant improvement in multiple lung parameters in a mouse model of ARDS[166] Results of Operations The company generated no revenue and incurred a net loss of $5.8 million for the first six months of 2025, with R&D expenses increasing by 28.7% Comparison of Operating Results (in thousands) | Expense Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and Development, net | $2,424 | $1,883 | $541 | +28.7% | | General and Administrative | $3,238 | $3,573 | $(335) | -9.4% | | Operating Loss | $5,662 | $5,456 | $206 | +3.8% | | Net Loss | $5,767 | $5,942 | $(175) | -2.9% | - The increase in R&D expenses for the first six months of 2025 was primarily due to a $387,000 increase in payroll and a $294,000 increase in clinical activities[180] - The decrease in G&A expenses for the first six months of 2025 was mainly due to lower costs for payroll, PR activities, rent, and consultants[182] Liquidity and Capital Resources The company's ability to continue as a going concern is in doubt, as it requires substantial additional funding which may be hampered by its delisting - As of June 30, 2025, the company had cash, cash equivalents, and restricted cash of $1,025,000[190] - For the six months ended June 30, 2025, the company raised $5.8 million from financing activities, including approximately $4.1 million from its ATM stock offering[192][193] - The company anticipates needing to raise substantial additional financing to fund operations and the planned Phase 3b trial, but its ability to do so is uncertain[187][189][205] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is omitted as the company qualifies as a smaller reporting company - The company is a smaller reporting company and is not required to provide the information under this item[211] Item 4. Controls and Procedures Management concluded that disclosure controls were not effective due to a material weakness in internal controls over short-term loans - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[213] - The material weakness was related to controls over the initiation, review, authorization, and execution of short-term loans but did not result in a misstatement[216] - A remediation plan has been adopted to address the material weakness, though the weakness is not yet considered fully remediated[217] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in several lawsuits, including a securities class action and shareholder derivative actions related to FDA communications - A putative securities class action was filed against the company, alleging violations related to communications with the FDA about NurOwn® for ALS[220][221] - Four shareholder derivative actions have been filed, asserting claims for breach of fiduciary duty and unjust enrichment against officers and directors[222] - 3D Communications, LLC filed a breach of contract lawsuit against the company in November 2024, alleging non-payment for consulting services[223] Item 1A. Risk Factors Key risks include the consequences of delisting from Nasdaq, adverse macroeconomic conditions, and a material weakness in internal controls - The delisting from Nasdaq could lead to limited liquidity, reduced trading activity, less analyst coverage, and a decreased ability to raise future financing[228][229] - The company faces risks from adverse macroeconomic conditions, including inflation and rising interest rates, which could impair its ability to raise additional funding[232] - The company has incurred unsecured short-term debt, which increases financial obligations and could adversely affect its financial condition[234] - The identified material weakness in internal controls, if not remediated, could result in material misstatements in future financial statements[235][236] Item 5. Other Information No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement during the quarter - No directors or officers adopted, terminated, or modified a Rule 10b5-1 trading plan during the second quarter of 2025[240] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL data files