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Monday, March 6, 2017

BrainStorm Strengthens Management Team, Expands Board

Over the past month, BrainStorm Cell Therapeutics (NASDAQ: BCLI) has made a significant effort to increase the credibility of the story to investors. On March 6, 2017, the company announced that Ralph Z. Kern, Senior Vice President and Head of Worldwide Medical at Biogen, will join the company as Chief Operating Officer (COO) and Chief Medical Officer (CMO). The hiring of Dr. Kern brings an instant credibility boost to BrainStorm. The news follows the announcement last month when BrianStorm appointed two new independent members to its Board

Credibility is one of my 5 C's of Biotech Investing™ and a major driver of investor confidence. I'm a fan of BrainStorm and its cell therapy platform for the treatment of neurodegenerative diseases. The company has a high Charisma score, which is my assessment of the technology platform and the market potential for leading product, NurOwn®. However, Credibility has been lacking and an issue for a well-known industry guru. These three new well-respected members of the BrainStorm team, along with positive commercial and logistical announcements on manufacturing and cryopreservation earlier in the year, are clearly moving BrianStorm in the right direction.

Ralph Kern - New COO/CMO

Dr. Ralph Kern joins BrainStorm from Biogen, where he served as Senior Vice President and Head of Worldwide Medical. He was previously Head of Neuroscience Medical Unit at Novartis and Global Medical Director of Personalized Genetic Health at Genzyme Corporation. Dr. Kern's experience in product development in the areas of Alzheimer's disease, multiple sclerosis, spinal muscular atrophy, Parkinson's, and other neurodegenerative diseases is an excellent fit for BrianStorm's long term goals with NurOwn.

His team executed the medical and strategic plan for fingolimod (Gilenya®, Novartis) currently administered to more than 150,000 MS patients worldwide. This will be instrumental as BrainStorm prepares to initiate its pivotal Phase 3 trial with NurOwn for the treatment of ALS later this year. The fact that Dr. Kern left Biogen, a $64 billion biotech company and global leader in the area of MS and neurodegenerative diseases, to come work for BrainStorm, speaks volumes.

Two New BOD Members

In late February 2017, BrainStorm announced the appointments of June S. Almenoff, M.D., Ph.D., FACP, and Arturo O. Araya, M.A., M.B.A. to its Board of Directors. Dr. June Almenoff is an accomplished executive with 20 years of experience in the pharmaceutical industry. She recently served as President and CMO of Furiex Pharmaceuticals, which was acquired by Actavis plc (now Allergan) for ~$1.2B. Furiex developed eluxadoline (Viberzi®, Allergan), which was recently approved in both the U.S. and EU for the treatment of irritable bowel syndrome with diarrhea. Dr. Almenoff also serves on the Boards of Nasdaq-listed Tigenix NV and Ohr Pharmaceutical, as well as on the advisory boards of several private companies and the investment advisory board of the Harrington Discovery Institute.

Arturo Araya, M.A., M.B.A, was formerly the Vice President and Head of Global Commercial for Novartis' Cell and Gene Therapies Unit, where he led a cross-functional team to globally commercialize a portfolio of cell and gene therapies. In his prior role as Global Brand Leader for CTL019, a CAR-T therapy, he was responsible for developing early launch plans, including worldwide and multiple indication forecasts and resource modeling. Prior to his tenure at Novartis, Mr. Araya was with Bristol-Myers Squibb Company, most recently as Associate Director of Marketing Intelligence, Business Development & Licensing.

Clearing Commercial & Logistical Hurdles

In January 2017, BrainStorm announced that is has validated its cryopreservation process for NurOwn. This is excellent news because cryopreservation helps BrainStorm bypass a logistical hurdle that might have limited commercial success of the cell therapy. In the previous U.S. Phase 2b study, NurOwn was administered only once to ALS patients. Following a single administration of NurOwn, the company witnessed an impressive improvement in ALSFRS-r score for patients receiving NurOwn compared to patients receiving placebo. However, the statistically significant separation only persisted for four weeks. By week eight, results were similar to the placebo.

This important data lead BrainStorm to design a "multi-dose" protocol for the upcoming Phase 3 study. Instead of one single administration, ALS patients will receive three injections every eight weeks. Validating the cryopreservation process allows management to obtain the patient's mesenchymal stem cells only once at the beginning of the study, eliminating the need for future repeated bone marrow aspirations. Cryopreservation allows BrainStorm to create a personalized, "off-the-shelf" cell therapy for ALS that meaningfully improves the manufacturing and commercial logistics of the product.

Speaking of manufacturing, in February 2017, the company announced that it will contract with City of Hope's Center for Biomedicine and Genetics to produce clinical supplies of NurOwn for the company's planned Phase 3 clinical study. City of Hope is located in Duarte, California, with community clinics throughout Southern California. It is ranked as one of "America's Best Hospitals" in cancer by U.S. News & World Report. City of Hope is expected to support all U.S. medical centers that will be participating in the Phase 3 trial.

Global Regulatory Strategy Taking Shape

The U.S. randomized, double-blind, multi-dose, Phase 3 study is expected to commence later this year. Outside the U.S., management is looking at the potential for early and expanded access programs. For example, last month the company announced it will collaborate with CCRM, a Toronto-based leader in developing and commercializing regenerative medicine technologies, and cell and gene therapies, to support the market authorization request for NurOwn in Canada.

BrainStorm and CCRM believe that NurOwn qualifies for early access in Canada under Health Canada's "Notice of Compliance with Conditions" (NOC/C) pathway, and if granted, it could be authorized for distribution in Canada in early 2018. NOC/C is designed to accelerate market authorization for new drugs targeting life-threatening or severely debilitating disease or condition for which there is promising evidence of clinical effectiveness. ALS is specifically noted by Health Canada as one of these conditions.

Zacks biotech analyst, David Bautz, believes that NurOwn is exactly the type of therapeutic that Health Canada had in mind when developing the NOC/C program. He stated shortly after the news that, "NurOwn has a very good chance of attaining regulatory approval under the NOC/c program. There are approximately 2,000 – 3,000 ALS patients in Canada (ALS Society of Canada), thus representing a meaningful opportunity for the company."

Just last week, the company announced that it signed a Memorandum of Understanding (MOU) with The Medical Research, Infrastructure, and Health Services Fund of the Tel Aviv Sourasky Medical Center (Ichilov Hospital) to explore the possibility of making NurOwn available to ALS patients under the provisions of Hospital Exemption regulation. The MOU sets forth the basic terms under which Brainstorm and Tel Aviv Sourasky Medical Center would work together to submit an application to the Israeli Ministry of Health that will allow patient access to NurOwn and is subject to a definitive agreement. The agreement is expected to be formalized in the first half of 2017.

Conclusion

BrainStorm’s next step in the development of NurOwn is to initiate a Phase 3 clinical study in the U.S. This will be a major milestone for the company and establish an important Catalyst for the shares once initiated. The company has current Cash to begin the study and an excellent track record of bringing in non-dilutive grants to keep shareholder dilution to a minimum. I'm pleased to see Dr. Kern join the company and believe that his presence will be incredibly helpful over the next few months while BrainStorm is advancing on the clinical and commercial front. The added credibility should also help the company secure long-term financing ahead of an exciting next 12 months.

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