BioRestorative Therapies (BRTX) 13 Nov 242024 Q3 Earnings call transcript

Greetings. Welcome to the BioRestorative Third Quarter 2024 Results and New additional Preliminary BRTX-100 Phase II Study Data Review Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Stephen Kilmer, Investor Relations.

You may begin.

Thank you. Good afternoon, everyone.

Let me start by pointing out that this conference call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are based on BioRestorative Therapies' current beliefs, assumptions and expectations and such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. No forward-looking statement can be guaranteed.

For details on factors, among others, that could affect expectations, see Part 1, Item 1A of our annual report on Form 10-K for the year ended December 31, 2023, as amended, and Part 2, Item 1A of our quarterly report on Form 10-Q for the period ended September 30, 2024, filed with the Securities and Exchange Commission. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this conference call. BioRestorative undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.

On the call representing the company are Lance Alstodt, BioRestorative's Chairman and Chief Executive Officer; Francisco Silva, its Vice President of Research and Development; and Robert Kristal, the company's Chief Financial Officer. With that said, I'll now turn the call over to Lance.

Thanks, Steve, and good afternoon, everyone. Welcome to the call. On behalf of the management team and everyone here at BioRestorative, I'd like to thank you for your interest in our company. And for those of you who are shareholders, we obviously appreciate your support.

As you can see from the press release that we issued earlier today, we continue to execute very well across all areas of our business in the third quarter.

As excited as we are about our financial and operating performance this quarter and the progress that we're making in our ThermoStem program, it was really the preliminary Phase II BRTX-100 data that we announced this morning that is most exciting with very encouraging data for 10 patients at 26 weeks and 4 patients at a year. Accordingly, we're going to break with [ tradition ] a little here. And rather than review our financial results, I'm going to ask Francisco to jump right into delivering the same BRTX-100 preliminary data slides that he gave today at the ORS PSRS 7th International Spine Research Symposium.

Of course, if you have any questions about the third quarter financial results, our ThermoStem brown fat program or our commercial bio-cosmeceuticals business, we'll be happy to answer them during the call's Q&A session as well. I'll turn it over to Francisco now.

Great. Thank you, Lance, and good afternoon, everyone.

So our lead cell therapy candidate is BRTX-100. It's a novel cell-based therapeutic engineered to target areas of the body that have little blood flow and oxygen content. The product is formulated using autologous or your own cultured mesenchymal stem cells collected from the patient's bone marrow as well as platelet lysate that's collected from the patient's blood. We intend that the product will be used for the non-surgical treatment of painful lumbosacral disc disorders or a complementary therapeutic to a surgical procedure. The safety and efficacy data of BRTX-100 in treating chronic lumbar disc disease or CLDD, is being evaluated in an ongoing Phase II prospective randomized, double-blinded and sham-controlled study. A total of up to 99 eligible subjects will be enrolled at up to 16 clinical sites across the United States and subjects included in the trial will be randomized 2:1 to receive either BRTX or placebo which is sham-controlled.

As Lance mentioned, I'm pleased to review the same slides that I discussed earlier today at a podium presentation at the ORS Spine meeting.

And so to go through the slide deck, I'm just going to quickly jump through some of the slides. Obviously, we have our [indiscernible] forward-looking statements. And on Slide 3, I just want to quickly review the disc microenvironment, which is really important in understanding the impact of the product the way it's been designed and engineered because it's really targeting the harsh microenvironment that's found within the disc. It has a very high osmolarity. It's low glucose. It has very low oxygen tension of about 2%; lactate levels are also low and pH, which is extremely detrimental to cells.

So this is important because when you're developing a biologic and you're trying to remodel the disc, especially within the nucleus pulposus, if you put cells in there that are not acclimated to this harsh environment, you're going to have a lot of cell death that could potentially cause the patient to experience worsening symptoms of the treatment or the treatment might not work at all because the cells need to be alive for them to actually perform their anti-inflammatory activities.

So really understanding the microenvironment is critical when developing a product, and that's what we have done over the last couple of years in developing our BRTX-100 product.

So in the microenvironment, as a healthy disc degenerates -- let me go back, sorry.

As a healthy disc degenerates -- something -- sorry, guys, but this is moving a little bit different.

As the...

Francisco, I'm sorry, it's Lance.

I think based on the investor profile on this call, it may be better to go right to kind of Slide 17 and get to the punchline of the data.

I think a lot of people understand the environment as well as the product candidate.

Let's talk about the results. That's really the most exciting part of it.

Sure.

Okay. Yes. No problem, Lance. Yes.

So let's go to Slide #17. And in Slide #17 is the total of 10 patients that are treated using the product, BRTX-100. And in this particular group of patients that have been treated, you could see a direct correlation that at 26 weeks, 70% of the patients -- again, this is blinded, but very, very encouraging, 70% of the patients had an improvement in both pain as well as function measured by the VAS and the ODI.

So 7 of the 10 improved and 3 of the patients did not hit the benchmark of 30% improvement, which is dictated by the FDA as being efficacious.

So that's very encouraging from the point of view of seeing that the data is falling in line within the randomization of the patients treated. And we expect that this trend will continue to grow as the patients move on from the 26-week endpoint to the 52-week endpoint. And again, this is true as you review some of the other scales that we use for patient-reported outcomes, which is -- another one is the RMDQ which is also showing a decrease in time in patients that have been treated or treated with the clinical protocol in terms of either being in the sham or the treatment group as well as the FRI, which is another scale that is used to determine efficacy.

You see very similar trends in terms of the patient profile decreasing once the patients are enrolled in the trial.

So to summarize, what we found is that very early, we're seeing very strong safety signals.

So we have not experienced to date any severe adverse event or dose-limiting toxicity, our current dose of 40 million cells injected intradiscally.

So this is very, very encouraging, and this is our primary endpoint in terms of safety.

So we feel very strong that this is going to continue throughout the trial.

More importantly is the efficacy, which is we're starting to see very strong trends emerge in both the VAS and the ODI, showing significance compared to baseline. And there's a responder rate that is also beginning to form now with the additional data that we're seeing that 7 of the 10 patients met the preliminary efficacy endpoints of improving by about 30% in pain and function.

Another item that we're very encouraged about because we're starting to see a lot of this positive data emerge is that we're contemplating a 26-week preliminary efficacy endpoint interim analysis.

So that's something that's on the horizon for us.

In addition to that, we're looking to expand the product profile and indication of BRTX-100 to include cervical indications. Thank you.

Thank you, Francisco.

So as you can see from what Francisco just reviewed, the blinded preliminary clinical data of safety and efficacy endpoints from the ongoing Phase II clinical trial for the treatment of chronic lumbar disc disease are very encouraging with patient-reported pain and function outcomes demonstrating a very clear and positive trend.

So to summarize, at 26 weeks, like Francisco mentioned, 70% of the first 10 patients in the study reported a greater than 30% increase in function and a more than 30% decrease in pain.

Now I want to highlight that while the 30% increase in function and decrease in pain have been set forth by the FDA as preliminary endpoints for efficacy, we find those to be somewhat low, and we have demonstrated the ability to do far greater than those hurdles of 30%.

So if you look at each of these patients, individually, those that responded, they responded far better than the 30%, some going as high as close to 90% improvement in pain and function and others circling around that sort of geography.

So we're very pleased. We're very optimistic about these results. It really puts us in a position to continue with our enrollment, which we continue to progress well, and we expect to complete before the end of 2024. We know that if the data continues with this trend, we're confident that we will hit our efficacy endpoints for the Phase II trial. And we will intend to present more of this data from the trial with an even larger patient population in the coming months. I expect to be somewhere early next year, January and February with a larger group, both out to 52 weeks and 26 weeks.

Finally, from a financial perspective, I'd be remiss by not mentioning that we ended the third quarter in a very strong position with cash, cash equivalents and investments held in marketable securities, $13.1 million with no outstanding debt. That, combined with our steadily improving financial performance provides us with additional financial flexibility and puts us on a path to profitability.

So thank you very much for listening in. That is -- those are our concluding remarks as it pertains to our prepared script, and we're happy to take any questions that you may have.

[Operator Instructions] First question comes from Jonathan Aschoff with ROTH Capital.

Congrats and thanks for sharing that data. How many patients are enrolled thus far? Is it -- are you only comfortable saying some number north of 10?

Yes, it's considerably more than 10.

We have not talked about that publicly.

So we'll continue to take that approach until we -- as we continue to navigate the FDA on strategies of Fast Track and RMAT, et cetera.

Okay.

So when was that data cut, the 2 weeks? Because when you show 2 weeks, it kind of makes someone think that there's not that many more than 10 because it's just 2-week old data.

So when was that cut?

This data is several months old in terms of the 2-week time point where some of the patients hit the 2-week point.

So yes, we have more than 10 patient data. Most of the patient data where it will be a lot more cumulative will be presented at ORS in February.

Okay.

So now I can see why you're still sticking with 99 by year-end '24. When will we see the first unblinded data? Do you intend to come out with additional 26- and 52-week data still on a blinded basis? Or will we see it unblinded the next time?

No, it will still be blinded. Again, this is an academic conference where we're presenting.

We have to be very careful how we present the data as well to maintain the blind.

So that's something -- even with the results are impressive and very encouraging from the point of view of the emerging responder rate. But this is where we are so encouraged by the positive results is where we're looking at the possibility of an interim analysis at 26 weeks for the patients. And I think that would be an appropriate time to have unblinded data where we have the sham versus the treatment group of BRTX.

And you can't postulate when that unblinded 26-week look -- interim look might occur, can you?

I mean, again, I mean, it's all -- we need to make sure we don't compromise the integrity of the trial. There's a lot of logistics in terms of releasing. But if we were to do an interim analysis, it would be early next year.

I would weigh in and commit to sometime in the first half of '25, but that's subject to further updates.

That's definitely helpful.

So do you think the fourth patient that behaved like the other 3 that back in February of this year, it was 3 versus 1, and that was the split you were talking about. Do you think that fourth patient, the saline they got just eventually started to work, and that's why you have 4 52 weeks versus the clear line between 3 and 4 last February.

Yes. And I think that's a great comment. And I mean that's the beauty of a clinical trial is that if it's well designed and the product is efficacious, you begin to see trends emerge. And that one subject is part of that group.

We have -- that was saline treated and it's very well known that saline does have therapeutic effects that are not long-term maintained, but they do impact the trial.

So we're very happy that we were able to amend our protocol to have now a sham group.

And so at the 26 weeks, this is where the sham patients are being recorded.

So we expect that presenting 52-week data of these particular patients, you'll have a better delta and a better view in terms of what's happening.

No, can we be confident that the 2 placebos to be represented 2 of the 6 extra patients that turned 4 into 10, did they both get shams or perhaps did they get sales as well?

Only 1 patient received a saline injection, everyone else got the sham. And then -- and just to further -- to answer that as well, as you look at the 52-week data with the 4 patients, now we don't know which one have received the sham injection versus the BRTX-100, but there's considerable separation in the results, while all of them 100% achieved the 30%, it appears that one only achieved 30%, while the others achieved results far more significant than 30%.

So we still see a separation there, and it's very possible that the placebo effect did take hold and the disc was further hydrated and lowered its pH and kind of maintained a healthier environment.

So we can expect that, I guess, from time to time. But to Francisco's point, the 26-week data, where we have the sham injection, those are a little bit more bifurcated between those that responded and those that did not, and it kind of matches up with the randomization of 2:1.

That's very helpful. Rob, how long do you think $13 million lasts?

Well, I'll speak for Rob here. He's in the background. But while we don't commit to timing, we don't anticipate having to do a financing anytime soon.

So we have all the cash that we need to achieve our strategic goals and get to an answer within this trial.

The next question comes from Michael Okunewitch with Maxim Group.

Congrats on the really interesting data. I guess to kick things off and just follow up a little bit on the point you were talking about just before on the 52-week data where you saw all 4 patients respond. Could you just give an idea of the magnitude of response for, I guess, patients 1 through 3 versus patient 4 because I believe that's how it broke down at the prior interim blinded look where you had patients 1, 2 and 3 responding significantly more than patient 4.

Yes. And that trend is continuing. Again, we have to be careful in terms of how we present this data. We don't want to unblind, but the trend is continuing with one patient having some effect based on the randomization, but the other 3 patients are significantly lower, which is, again, the numbers range, but they're greater than 60% improvement compared to baseline.

All right. And then just, I guess, more broadly, right, given what we have seen from the FDA seeming to be a bit more supportive of others in the cell therapy space, like we've seen with Capricor, Mesoblast, would it be possible that if you are able to achieve both pain and function in this study, could that be something that you could file for accelerated approval?

We believe so. I mean, it's something that it's -- again, I mean, this is 10 patients, but the data is very encouraging considering what's been out there with either other clinical trials in the disc space or investigator-initiated studies.

So we're very encouraged that this data, if it continues to show these effects that we could potentially use this data for pivotal, which would really help us and accelerate the commercialization of the product, which is, I think, really needed in terms of the overall market in the U.S. in getting cell-based therapies approved, especially when you're looking at these musculoskeletal disorders, which are tremendous.

So there's a huge market for it, and we're very confident with our product.

All right. And then one last one for me, and I'll hop back in the queue.

Michael, I'll also mention that because of what you just mentioned and the temperature at the FDA in terms of its [ more pro ] cell therapy view, we've changed some of our strategy to consider looking at this data as pivotal data perhaps and trying to accelerate that study as appropriate.

So we do appreciate that comment, and we do believe that the FDA has taken a much more positive view of the sector in general.

Yes. Actually, that does lead somewhat into my next question. I just wanted to ask you a little bit about some of the secondaries that you would be looking at in the final unblinded data. And in particular, whether you will be looking at how the percent change from baseline varies between groups.

Can you repeat the question? I'm sorry, I didn't understand it.

Just for the actual final unblinded data in terms of secondary endpoints is something that you'll be looking at the percent change from baseline on both the pain and function scales for the different groups in addition to the responder analysis?

Right.

So the FDA has guided that it's a 30% change, is their MCID that they've put into our protocol. We feel that we can exceed that based on the trending data points that are coming out.

So we feel very strongly that we're going to not only hit the MCID in terms of efficacy, but we will be able to exceed that. We're also looking at radiographic endpoints and a whole host of other measures that we think would be just good general information for people to have to demonstrate that it's not just a subjective issue, but if we can demonstrate that there's radiographic improvement in the disc, that's a very powerful set of data.

Yes. And just to add to that, that's really important here is that keep in mind that we have not disclosed or released any MRI images of any of these patients.

So that's something that's something to look forward to in terms of additional evidence of the remodeling that's happening within the disc.

And once again, congrats on the compelling data here.

The next question comes from Elemer Piros with Rodman.

What I'd like to ask, Lance, if you could remind us whether the pain improvement and the functional improvement are these co-primary endpoints? And if that is so, would you have to demonstrate it at the group level or would you have to demonstrate it within the same patient that they both would have to improve at least 30% on the VAS and at least 30% on the ODI for them to be called the responder? Thank you for verifying that.

Yes, they have to both respond in both the VAS as well as the ODI to be labeled a responder.

So in the current study, you see Francisco that the 7 out of 10 is the 7 that responded in pain improvement...

And Elemer, thank you for your question.

I think I know where you're going because there has been a bit of a change in thought within the agency and people are now looking at just pain as opposed to function as well. It leaves us open strategically as we think about amending protocols as we go through this to really increase our probability of success by limiting it perhaps to just one factor such as pain because we do believe that there's precedent for that out there now.

So it's something that we are discussing. But as of now, the protocol is written for both pain and function. And the good news for us is the responder group does clear that what we think is a minimal bar of 30% in both disciplines.

Yes. I mean at the end of the day, if you were successful in both, that would make for a stronger argument for the product would...

While also be showing some changes radiographically and improvement in the physics of the disc would be also very interesting and compelling, which we intend to do.

We have no further questions in queue. I'd like to turn the floor back to management for any closing remarks.

I would just say, this is Lance. On behalf of our team, we really appreciate you following us and spending the time to get further clarity on our quarterly accomplishments and certainly your interest in our clinical data.

We will continue to update everyone as appropriate on new developments within our company and we intend to have more data available in the January, February time frame.

So stay tuned. We're really excited to share with what we're working on.

So have a great night, and thanks again for your interest.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.