BrainStorm Cell Therapeutics Inc (BCLI)

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Brainstorm Cell Therapeutics: What's Left After Recent Trial Failure

Jan. 18, 2021 3:38 PM ETBrainstorm Cell Therapeutics Inc.
(BCLI)8 Comments6 Likes

https://seekingalpha.com/article/4399543-brainstorm-cell-therapeutics-left-after-recent-trial-failure

Summary

Today, we revisit Brainstorm Cell Therapeutics for the first time since December of 2019.
The company's main drug candidate recently had disappointing trial results for treating amyotrophic lateral sclerosis.
This caused the stock to fall by two thirds after the news broke. So, what is the company left with after its recent study disappointment?
We circle back on this off the radar small cap concern to attempt to answer that question in the paragraphs below.
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Today, we are going to revisit a small cap name that I get asked about at least once a month but have not done an in depth article on since 2019 came to a close. Therefore, we are going to circle back on this off the radar name and update our analysis on it to account for recent events in the paragraphs below.

Company Overview
Brainstorm Cell Therapeutics (BCLI) is a 'Tier 4' biotech concern based in New York. The company is focused on utilizing the patients' own bone marrow stem cells to generate neuron-like cells that may provide an effective treatment initially for amyotrophic lateral sclerosis, Parkinson’s disease, multiple sclerosis and spinal cord injury. It develops these therapies with this proprietary platform it calls NurOwn. The shares trade just above $5.00 apiece and have an approximate market cap of $160 million.

Source: February Company Presentation

Recent News

The biggest news around Brainstorm in recent months involved its most advanced trial as on November 17th, the company announced that its Phase 3 trial evaluating NurOwn for the treatment for Amyotrophic lateral sclerosis or ALS did not reach statistically significant results. Notably, NurOwn in this trial did demonstrate a clinically meaningful treatment response across the primary and key secondary endpoints of the study.

Source: February Company Presentation

This trial news caused the stock to implode as it lost over two thirds of its value directly after results were posted. It is easy to see why as this was easily the company's most advance effort to commercialize NurOwn. It is now left with an early mid-stage effort to treat Progressive Multiple Sclerosis. It completed dosing in a Phase II trial for this indication one month ago. The company also has several pre-clinical targets for NurOwn (see above). The recent trial failure most likely pushes out the timeline on any successful commercialization prospects for NurOwn by years, so it is understandable why BCLI had such a sharp sell-off.


Analyst Commentary & Balance Sheet
The company gets next to no coverage from Wall Street. The only analyst rating I can find on this name over the past year is Maxim Group downgrading Brainstorm to a Hold on November 17th right after Phase 3 trial results evaluating NurOwn as a treatment for Amyotrophic lateral sclerosis hit. The company ended the third quarter with just under $30 million of cash on the balance sheet. Brainstorm is burning through approximately $5 million of cash a quarter.

Verdict

Source: February Company Presentation

So should investors buy the recent massive dip in the stock of Brainstorm? Even with the recent trial failure targeting ALS, NurOwn is targeting some potentially lucrative niches (above). However, it is years and probably more than one additional capital raise away from any potential commercialization.

One encouraging note is the company's COO and a director bought nearly $700,000 worth of new shares in BCLI in mid-July, four months before the latest trial results came out. There also has been no insider selling in the stock over the past six months.

There are options against this equity and liquidity in them is okay, so a covered call strategy is available for those willing to take an initial stake in BCLI while having considerable downside protection doing so. Personally, I am going to pass on even doing that right now on Brainstorm. Once the company does a capital raise to address its funding needs AND full Phase 2 results come out on the Phase II trial for Progressive MS (top-line results should be out at end of the first quarter); we may revisit Brainstorm once again at that time.

Bret Jensen is the Founder of and authors articles for the Biotech Forum, Busted IPO Forum, and Insiders Forum


Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.