UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2020~~March 31, 2021.


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number 001-36641

BRAINSTORM CELL THERAPEUTICS INC.

(Exact name of registrant as specified in its charter)


Delaware	20-7273918
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


1325 Avenue of Americas, 28^th Floor
New York, NY	10019
(Address of principal executive offices)	(Zip Code)

(201) 488-0460

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.00005 par value	BCLI	NASDAQ Stock Market LLC (Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻		Accelerated filer ⌧◻

Non-accelerated filer◻⌧		Smaller reporting company ☒

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~September 30, 2020,~~April 23, 2021 the number of shares outstanding of the registrant’s Common Stock, $0.00005 par value per share, was ~~31,567,592.~~

36,318,561.

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains numerous statements, descriptions, forecasts and projections, regarding BrainStorm Cell Therapeutics Inc. (together with its consolidated subsidiaries, the “Company,” “BrainStorm,” “we,” “us” or “our”) and its potential future business operations and performance, including financial results for the most recent fiscal quarter, statements regarding the market potential for treatment of neurodegenerative disorders such as ALS, the sufficiency of our existing capital resources for continuing operations in ~~2020~~2021 and beyond, the safety and clinical effectiveness of our NurOwn® technology, our clinical trials of NurOwn® and its related clinical development, and our ability to develop collaborations and partnerships to support our business plan. In some cases you can identify such “forward-looking statements” by the use of words like “may,” “will,” “should,” “could,” “expects,” “hopes,” “anticipates,” “believes,” “intends,” “plans,” “projects,” “targets,” “goals,” “estimates,” “predicts,” “likely,” “potential,” or “continue” or the negative of any of these terms or similar words. These statements, descriptions, forecasts and projections constitute “forward-looking statements,” and as such involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance and achievements to be materially different from any results, levels of activity, performance and achievements expressed or implied by any such “forward-looking statements.” These risks and uncertainties include, but are not limited to our need to raise additional capital, our ability to continue as a going concern, regulatory approval of our NurOwn® treatment candidate, the success of our product development programs and research, regulatory and personnel issues, development of a global market for our services, the ability to secure and maintain research institutions to conduct our clinical trials, the ability to generate significant revenue, the ability of our NurOwn® treatment candidate to achieve broad acceptance as a treatment option for ALS or other neurodegenerative diseases, our ability to manufacture and commercialize our NurOwn® treatment candidate, obtaining patents that provide meaningful protection, competition and market developments, our ability to protect our intellectual property from infringement by third parties, heath reform legislation, demand for our services, currency exchange rates and product liability claims and litigation, disruptions in our business due to the COVID-19 outbreak, including our clinical development activities, and other factors described under “Risk Factors” in this report and in our annual report on Form 10-K for the fiscal year ended December 31, ~~2019, as updated by our Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 2020 respectively.~~2020. These “forward-looking statements” are based on certain assumptions that we have made as of the date hereof. To the extent these assumptions are not valid, the associated “forward-looking statements” and projections will not be correct. Although we believe that the expectations reflected in these “forward-looking statements” are reasonable, we cannot guarantee any future results, levels of activity, performance, or achievements. It is routine for our internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations may change prior to the end of each quarter or the year. Although these expectations may change, we may not inform you if they do and we undertake no obligation to do so, except as required by applicable securities laws and regulations. We caution investors that our business and financial performance are subject to substantial risks and uncertainties. In evaluating our business, prospective investors should carefully consider the information set forth under the caption “Risk Factors” in this report and in our annual report on Form 10-K for the fiscal year ended December 31, ~~2019,as updated by our Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30,~~ 2020 ~~respectively,~~ in addition to the other information set forth herein and elsewhere in our other public filings with the Securities and Exchange Commission (“SEC”).

Table of Contents

TABLE OF CONTENTS

		Page Number
PART I – FINANCIAL INFORMATION		4

Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2221
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II – OTHER INFORMATION		37

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	3738
Item 5.	Other Information	38
Item 6.	Exhibits	39

SIGNATURES		40

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of ~~September 30, 2020~~March 31, 2021

U.S. DOLLARS IN THOUSANDS

(Except share data and exercise prices)

(UNAUDITED)

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of ~~September 30, 2020~~March 31, 2021

U.S. DOLLARS IN THOUSANDS

(Except share data and exercise prices)

(UNAUDITED)

INDEX


	Page

Interim Condensed Consolidated Balance Sheets	6

Interim Condensed Consolidated Statements of Comprehensive Loss	7

Interim Condensed Statements of Changes in Stockholders’ Equity	8

Interim Condensed Consolidated Statements of Cash Flows	10

Notes to Interim Condensed Consolidated Financial Statements	12

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

(Except share data)


	September 30,		December 31,		March 31,		December 31,
	2020		2019		2021		2020

	U.S. $ in thousands				U.S. $ in thousands
ASSETS
	Unaudited		Audited
ASSETS
Current Assets:
Cash and cash equivalents	$	24,770	$	536	$	35,933	$	37,829
Short-term deposit (Note 4)		4,038		33		4,114		4,107
Other accounts receivable		1,473		2,359		255		304
Prepaid expenses and other current assets (Note 5)		56		432		728		1,002
Total current assets		30,337		3,360		41,030		43,242

Long-Term Assets:
Prepaid expenses and other long-term assets		27		32		27		26
Operating lease right of use asset (Note 6)		1,377		2,182		6,426		6,872
Property and Equipment, Net		950		960		1,088		1,119
Total Long-Term Assets		2,354		3,174		7,541		8,017

Total assets	$	32,691	$	6,534	$	48,571	$	51,259

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable	$	3,283	$	14,677	$	2,552	$	5,417
Accrued expenses		917		1,000		1,748		1,261
Operating lease liability (Note 6)		1,216		1,263		2,299		2,655
Other accounts payable		1,013		714		1,592		1,900
Total current liabilities		6,429		17,654		8,191		11,233

Long-Term Liabilities:
Operating lease liability (Note 6)		284		1,103		4,179		4,562
Total long-term liabilities		284		1,103		4,179		4,562

Total liabilities	$	6,713	$	18,757	$	12,370	$	15,795

Stockholders’ Equity (deficit):
Stockholders’ Equity:
Stock capital: (Note 7)		12		11		12		12
Common Stock of $0.00005 par value - Authorized: 100,000,000 shares at September 30, 2020 and December 31, 2019 respectively; Issued and outstanding: 31,567,592 and 23,174,228 shares at September 30, 2020 and December 31, 2019 respectively.
Common Stock of $0.00005 par value - Authorized: 100,000,000 shares at March 31, 2021 and December 31, 2020 respectively; Issued and outstanding: 36,318,561 and 35,159,977 shares at March 31, 2021 and December 31, 2020 respectively.
Additional paid-in-capital		163,238		105,042		192,054		184,655
Treasury stocks						(116)		(116)
Accumulated deficit		(137,272)		(117,276)		(155,749)		(149,087)
Total stockholders’ equity (deficit)		25,978		(12,223)
Total stockholders’ equity						36,201		35,464

Total liabilities and stockholders’ equity	$	32,691	$	6,534	$	48,571	$	51,259

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

U.S. dollars in thousands

(Except share data)


	Nine months ended				Three months ended				Three months ended
	September 30,				September 30,				March 31,
	2020		2019		2020		2019		2021		2020

	Unaudited				Unaudited				Unaudited
Operating expenses:

Research and development, net (Note 8)	$	13,509	$	11,018	$	1,867	$	4,008	$	4,341	$	5,948
General and administrative		6,684		4,318		2,618		1,543		2,588		2,360

Operating loss		(20,193)		(15,336)		(4,485)		(5,551)		(6,929)		(8,308)

Financial expenses (income), net		(197)		225		3		83
Financial income, net										267		194

Net loss	$	(19,996)	$	(15,561)	$	(4,488)	$	(5,634)	$	(6,662)	$	(8,114)

Basic and diluted net loss per share from continuing operations	$	(0.70)	$	(0.72)	$	(0.14)	$	(0.25)	$	(0.19)	$	(0.32)

Weighted average number of shares outstanding used in computing basic and diluted net loss per share		28,695,540		21,630,007		31,154,101		22,254,993		35,791,309		28,423,837

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

U.S. dollars in thousands

(Except share data)


				Additional		Receipts on				Total					Additional				Total
	Common stock			paid-in		account of		Accumulated		stockholders’		Common stock			paid-in		Accumulated		stockholders’
	Number	Amount		capital		shares		Deficit		equity (deficit)		Number	Amount		capital		deficit		equity (deficit)
Balance as of January 1, 2019	20,757,816	$	11	$	94,620	$	4,408	$	(94,023)	$	5,016

Stock-based compensation related to warrants and stock granted to service providers	5,908		(*)		25		—		—		25
Balance as of January 1, 2020												23,174,228	$	11	$	105,042	$	(117,276)	$	(12,223)

Stock-based compensation related to stock and options granted to directors and employees	39,386		(*)		312		—		—		312	54,956		*		390		—		390
Exercise and reissuance of warrants	687,500		(*)		3,368		(3,368)		—		—
Net loss	—		—		—		—		(5,027)		(5,027)
Balance as of March 31, 2019	21,490,610		11		98,325		1,040		(99,050)		326
Stock-based compensation related to stock and options granted to directors and employees	0		0		53		-		0		53
Exercise and reissuance of warrants	212,499		(*)		1,040		(1,040)		—		—
Issuance of shares and warrants in Registered Direct Offering (Note 7)												1,250,000		*		9,957		—		9,957
Issuance of shares in at-the-market (ATM) offering (Note 7)												3,935,320		1		18,971		—		18,972
Exercise of options	5,333		(*)		5		—		—		5	9,333		*		29		—		29
Net loss	—		—		—		—		(4,900)		(4,900)	—		—		—		(8,114)		(8,114)
Balance as of June 30, 2019	21,708,442		11		99,423		—		(103,950)		(4,516)
Stock-based compensation related to stock and options granted to directors and employees	42,718		—		217		—		—		217
Exercise and reissuance of warrants	841,300		(*)		3,126		—		—		3,126
Exercise of options	13,332		(*)		30		—		—		30
Net loss	—		—		—		—		(5,634)		(5,634)
Balance as of September 30, 2019	22,605,792	$	11	$	102,796	$	—	$	(109,584)	$	(6,777)

Balance as of March 31, 2020												28,423,837		12		134,389		(125,390)		9,011

* Represents an amount less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

U.S. dollars in thousands

(Except share data)


				Additional				Total					Additional						Total
	Common stock			paid-in		Accumulated		stockholders’		Common stock			paid-in		Treasury		Accumulated		stockholders’
	Number	Amount		capital		deficit		equity (deficit)		Number	Amount		capital		stocks		deficit		equity
Balance as of January 1, 2020	23,174,228	$	11	$	105,042	$	(117,276)	$	(12,223)
Balance as of January 1, 2021										35,159,977		12		184,655		(116)		(149,087)		35,464

Stock-based compensation related to stock and options granted to directors and employees	54,956		(*)		390		0		390	—		*		290		0		0		290
Issuance of shares in at-the-market (ATM) offering (Note 7)	3,935,320		1		18,971		—		18,972
Issuance of shares and warrants in Registered Direct Offering (Note 7)	1,250,000		(*)		9,957		—		9,957
Issuance of shares in at-the-market (ATM) offering (Note 11)										1,156,897		*		7,104		—		—		7,104
Exercise of options	9,333		(*)		29		0		29	1,687		*		5		0		—		5
Net loss	—		—		—		(8,114)		(8,114)	—		—		—		—		(6,662)		(6,662)
Balance as of March 31, 2020	28,423,837		12		134,389		(125,390)		9,011
Stock-based compensation related to stock and options granted to directors and employees	79,491		(*)		791		—		791
Issuance of shares in at-the-market (ATM) offering (Note 7)	1,162,527		(*)		7,411		—		7,411
Exercise of options	4,000		(*)		3		—		3
Net loss	—		—		—		(7,394)		(7,394)
Balance as of June 30, 2020	29,669,855		12		142,594		(132,784)		9,822
Stock-based compensation related to stock and options granted to directors and employees	45,797		(*)		1,017		—		1,017
Issuance of shares in at-the-market (ATM) offering (Note 7)	947,627		(*)		13,307		—		13,307
Exercise of options	4,313		(*)		20		—		20
Exercise of warrants	900,000		(*)		6,300		—		6,300
Net loss	—		—		—		(4,488)		(4,488)
Balance as of September 30, 2020	31,567,592	$	12	$	163,238	$	(137,272)	$	25,978

Balance as of March 31, 2021										36,318,561		12		192,054		(116)		(155,749)		36,201

* Represents an amount less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. dollars in thousands


	Nine months ended				Three months ended				Three months ended
	September 30,				September 30,				March 31,
	2020		2019		2020		2019		2021		2020
Cash flows from operating activities:

Net loss	$	(19,996)	$	(15,561)	$	(4,488)	$	(5,634)	$	(6,662)	$	(8,144)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		155		114		56		37		61		49
Shares and options granted to service providers		—		25		—		—
Stock-based compensation related to options granted to employees and directors		2,198		582		1,017		217		290		390
Changes in operating lease liability		(61)		187		(11)		49		(293)		(85)
Decrease (increase) in other accounts receivable and prepaid expenses		1,267		938		(1,095)		290
Increase (decrease) in trade payables		(11,394)		4,596		(1,321)		379
Increase (decrease) in other accounts payable and accrued expenses		216		1,150		(1,082)		1,036
Decrease in other accounts receivable and prepaid expenses										322		2,078
Decrease in trade payables										(2,865)		(10,106)
Increase in other accounts payable and accrued expenses										179		759

Total net cash used in operating activities	$	(27,615)	$	(7,969)	$	(6,924)	$	(3,626)	$	(8,968)	$	(15,029)

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. dollars in thousands


	Nine months ended				Three months ended				Three months ended
	September 30,				September 30,				March 31,
	2020		2019		2020		2019		2021		2020
Cash flows from investing activities:

Purchase of property and equipment		(145)		(127)		(88)		(102)		(30)		(7)
Changes in short-term deposit		(4,005)		6,088		2		1,541		(7)		(1,987)
Total net cash provided by (used in) investing activities	$	(4,150)	$	5,961	$	(86)	$	1,439
Total net cash used in investing activities									$	(37)	$	(1,994)

Cash flows from financing activities:
Proceeds from exercise of options		52		35		20		30		5		29
Proceeds from issuance of shares in at-the-market (ATM) offering (Note 7)		39,690		—		13,307		—		7,104		18,972
Proceeds from exercise of warrants		6,300		—		6,300		—
Exercise and reissuance of warrants		—		3,126		—		3,126
Proceeds from issuance of shares and warrants in Registered Direct Offering (Note 7)		9,957		—		—		—		—		9,957
Total net cash provided by financing activities	$	55,999	$	3,161	$	19,627	$	3,156	$	7,109	$	28,958

Increase in cash and cash equivalents		24,234		1,153		12,617		969
Increase (decrease) in cash and cash equivalents										(1,896)		11,935

Cash and cash equivalents at the beginning of the period	$	536	$	942	$	12,153	$	1,126	$	37,829	$	536

Cash and cash equivalents at end of the period	$	24,770	$	2,095	$	24,770	$	2,095	$	35,933	$	12,471

Supplemental schedule of non-cash transactions
Right of use lease asset and liability									$	85	$	—

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 1 - GENERAL

~~Brainstorm Cell Therapeutics, Inc. (the “Company”)~~The Company was incorporated in the State of Delaware on November 15, 2006, and previously was incorporated in the State of Washington. In October 2004, the Company formed its ~~wholly owned~~wholly-owned subsidiary, Brainstorm Cell Therapeutics Ltd. (“BCT”) in Israel, which currently conducts all of the research and development activities of the Company. BCT formed ~~wholly owned~~wholly-owned subsidiaries Brainstorm Cell Therapeutics UK Ltd., in the United Kingdom on February 19, 2013 (currently inactive), Advanced Cell Therapies Ltd. in Israel on June 21, 2018 and Brainstorm Cell Therapeutics Limited in Ireland on October 1, 2019.

The ~~Company’s~~ Common Stock is publicly traded on the Nasdaq Capital Market under the symbol “BCLI”.

The Company, through BCT, holds rights to commercialize certain stem cell technology developed by Ramot of Tel Aviv University Ltd. ("Ramot"), (see Note 3). Using this technology, the Company has been developing novel adult stem cell therapies for debilitating neurodegenerative disorders such as Amyotrophic Lateral Sclerosis (ALS, also known as Lou Gehrig’s Disease), Progressive Multiple Sclerosis (PMS)~~, Alzheimer's disease (AD)~~ and ~~other neurodegenerative diseases.~~Parkinson’s disease. The Company developed a proprietary ~~manufacturing~~ process, called NurOwn®, for the propagation of ~~autologous (‘self’)~~ Mesenchymal Stem Cells and their differentiation into neurotrophic factor secreting cells. These cells are then ~~administered by intrathecal injection~~transplanted at or near the site of damage, offering the hope of more effectively treating neurodegenerative diseases. The process is currently autologous, or self-transplanted.

~~NurOwn®~~Since its inception, the Company has devoted substantially all of its efforts to research and development. The Company is still in ~~late-stage~~its development and clinical ~~development for the treatment of ALS.~~stage and has not yet generated revenues. The Company has ~~completed two single dose clinical trials~~incurred operating losses since its inception and expects to continue to incur operating losses for the near-term. The extent of ~~NurOwn® in Israel, a Phase 1/2 trial with 12 patients~~the Company's future operating losses and ~~a Phase 2a trial with additional 12 patients. In July 2016~~the timing of becoming profitable are uncertain. As of March 31, 2021, the Company ~~announced~~had an accumulated deficit of approximately $156 million. The extent of the ~~results of its Phase 2 trial which was conducted in three major medical centers in the US. This single dose trial included 48 patients randomized in a 3:1 ratio to receive NurOwn® or placebo.~~

The Company has made significant progress in the past 12 months advancing NurOwn®, its late stage differentiated autologous mesenchymal stem cell therapy, into a 200 patient Phase 3 trial for the treatment of ALS. Enrollment in this randomized, double-blind, placebo-controlled, multi-dose clinical trial of NurOwn® for ALS was completed in October 2019Company's future operating losses and the ~~trial continued to provide necessary treatments to study participants despite severe constraints in the affected healthcare institutions due to COVID-19. As~~timing of July 2, 2020, the study completed dosing of all participants in the Phase 3 ALS trial. Topline data from this trial is expected by the end of November this year. This Phase 3 trial builds upon the promising efficacy seen in prior trials including the randomized Phase 2 trial conducted in the U.S.

The Phase 3 ALS trial pre-specified interim safety analysis by an independent Data Safety Monitoring Board (DSMB) was successfully completed in August 2018. The DSMB successfully completed its second pre-specified interim analysis of safety outcomes for 106 participants treated with NurOwn® in the Phase 3 ALS trial on October 28, 2019.

On December 15, 2018, the Company was granted FDA clearance for its NurOwn® IND Application for Progressive Multiple Sclerosis (PMS) indication (ClinicalTrials.gov Identifier NCT03799718). The U.S. Phase 2 PMS trial faced slight delays in enrollment due to the COVID-19 pandemic. Scheduled March and April 2020 new participant enrollments were deferred to May 2020 due to site closures related to COVID-19. As of June 2020, all the trial sites were back on track to continue with the trial. All 20 study participants have been enrolled in the study. The Company is currently completing the collection of clinical and biomarker data from treated patients as specified in the protocol. Dosing of all participants is expected to be completed in the fourth quarter of 2020.becoming profitable are uncertain.

~~BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES~~

~~U.S. dollars in thousands~~

~~(Except share data~~The Company’s primary sources of cash have been proceeds from the issuance and ~~exercise prices)~~

~~Notes to the Interim Condensed Consolidated Financial Statements~~

~~NOTE 1 – GENERAL (Cont.):~~

On June 24, 2020, the Company announced a new clinical program focused on the development of NurOwn® as a treatment for AD. As part of the newly announced program, the Company is planning a multi-national Phase 2 clinical trial in Europe to evaluate the safety and preliminary efficacy of NurOwn® treatment in patients with prodromal to mild AD.

The Company received Good Manufacturing Practice (GMP) approval from the Israel Ministry of Health (MoH) for our Israeli contract manufacturing facility at the Hadassah Medical Center in Jerusalem. The GMP certificate confirms the Company's manufacturing site compliance with Israeli GMPs which are recognized as equivalent to EU standards.

~~GOING CONCERN:~~

Since its inception, the Company has devoted substantially all of its efforts to research and development. The Company is still in its development and clinical stage and has not yet generated revenues. The extent of the Company's future operating losses and the timing of becoming profitable are uncertain.

~~Additional funding will be required to begin the commercialization efforts and to achieve a level of sales adequate to support the Company's cost structure.~~

~~To meet its capital needs, the Company is considering multiple alternatives, including, but not limited to, additional public and private sales~~sale of its Common Stock and warrants, the exercise of warrants, ~~the issuance of convertible promissory notes,~~ sales of Common Stock via its ATM program and other funding transactions. While the Company has been successful in raising financing recently and in the past, there can be no assurance that it will be able to do so in the future on a timely basis on terms acceptable to the Company, or at all. The Company has not yet commercialized any of its product candidates. Even if the Company commercializes one or more of its product candidates, it may not become profitable in the near-term. The Company’s ability to achieve profitability depends on a number of factors, including its ability to obtain regulatory approval for its product candidates, successfully complete any post-approval regulatory obligations and successfully commercialize its product candidates alone or in partnership.

The ~~COVID-19 pandemic may continue~~Company believes its existing cash will be sufficient to ~~adversely disrupt~~fund its anticipated operating cash requirements for at least twelve months following the ~~Company's operations, including the ability~~date of this filing. The Company currently has sufficient cash to ~~complete the ongoing~~execute on its Phase 2 AD clinical ~~trials~~trial and may have other adverse effects on Company's business and operations. In addition, this pandemic has caused substantial disruption in the financial markets and may adversely impact economies worldwide, both of which could result in adverse effects on Company's business, operations and ability to raise capital.

support its operating activities. Management expects that the Company will continue to generate losses from the clinical development and regulatory activities, which will result in a negative cash flow from operating activity. ~~The~~If the Company ~~currently has sufficient cash~~decides to ~~complete~~file a BLA for its ~~ongoing Phase 3~~ ALS ~~Phase 2 PMS~~program and ~~Phase 2 AD clinical trials. Over the longer term, if the Company~~ is granted a BLA approval, additional capital raise will be needed ~~in connection with strategic partnerships and~~ to commercialize Nurown® for ALS, and to conduct additional trials that may be needed for other indications. IfThe actual amount of cash that the Company ~~is not able to raise additional capital for these purposes, management may~~will need to ~~slow~~operate is subject to many factors, including, but not limited to, the ~~pace~~timing, design and conduct of ~~commercialization or~~clinical trials for its product candidates along with cost to commercialize these product candidates.

In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company considered the impact of COVID-19 on its operations and determined that there were no material adverse impacts on the Company’s results of operations and financial position as of March 31, 2021. These estimates may ~~not be able to continue to function~~change, as ~~a going concern. The Company's consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.~~new events occur and additional information is obtained.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

A. Unaudited Interim Financial Statements

The accompanying unaudited interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~

~~BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES~~

~~U.S. dollars in thousands~~

~~(Except share data and exercise prices)~~

~~Notes to the Interim Condensed Consolidated Financial Statements~~

~~NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES~~ ~~(Cont.):~~2020.

Operating results for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021.

B. Significant Accounting Policies

The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.

C. Recent Accounting Standards

~~The Company reviews new~~Management does not believe that any recently issued, but not yet effective, accounting standards, as issued. Although some of these accounting standards issued or effective after the end of the Company's previous fiscal year may be applicable, the Company has not identified any standards that the Company believes merit further discussion. The Company believes that none of the new standards willif currently adopted, would have a ~~significant impact~~material effect on the Company’s condensed financial statements.

D. Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

NOTE 3 - RESEARCH AND LICENSE AGREEMENT

In 2004, the Company entered into a Research and License Agreement, as amended and restated, with Ramot (the “License Agreement”). Pursuant to the remuneration terms of the License Agreement, the Company has agreed to pay Ramot royalties on Net Sales of the Licensed Product as follows:

So long as the making, producing, manufacturing, using, marketing, selling, importing or exporting (collectively, the “Commercialization”) of such Licensed Product is covered by a Valid Claim or is covered by Orphan Drug Status, the Company shall pay Ramot a royalty of 5% of the Net Sales received by the Company and resulting from such Commercialization; and

In the event the Commercialization of the Licensed Product is neither covered by a Valid Claim nor by Orphan Drug status, the Company shall pay Ramot a royalty of 3% of the Net Sales received by the Company resulting from such Commercialization. This royalty shall be paid from the First Commercial Sale of the Licensed Product and for a period of fifteen (15) years thereafter.

Capitalized terms set forth above which are not defined shall have the meanings attributed to them under the License Agreement.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 4 - SHORT TERM DEPOSITS

Short term deposits on ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 include bank deposits bearing annual interest rates varying from 0.15%to ~~1.75%~~0.83%, with maturities of up to 12 months as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

~~BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES~~

~~U.S. dollars in thousands~~

~~(Except share data and exercise prices)~~

~~Notes to the Interim Condensed Consolidated Financial Statements~~

NOTE 5 - PREPAID EXPENSES

~~In November 2017 the Company contracted with City~~As of ~~Hope’s Center for Biomedicine~~March 31, 2021 and Genetics ("COH") to produce clinical supplies of NurOwn® adult stem cells for the Company’s ongoing Phase 3 clinical study. In 2017 the Company paid COH $2,665 in an advance payment. The advance was recorded as ~~prepaid expense and is amortized over the term of the agreement. As~~ of December 31, ~~2019, $276 were recorded as current prepaid expense. As of September 30,~~ 2020, ~~the~~ prepaid expenses ~~from COH advance payment were fully reduced.~~include directors insurance of $656 and $984, respectively.

NOTE 6 - LEASES

On January 1, 2019 the Company adopted ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) using the modified retrospective approach for all lease arrangements at the beginning of the period of adoption. ~~Leases existing for the reporting period beginning January 1, 2019 are presented under ASU 2016-02.~~ The Company leases facilities, clinical research rooms, and vehicles under operating leases. ~~At September 30, 2020,~~

As of March 31, 2021, the Company’s ROU assets and lease liabilities for operating leases totaled ~~$1,377~~$6,426 and ~~$1,500,~~$6,478, respectively. The impact of adopting the new lease standard was not material to the Company’s condensed consolidated statement of operations for the periods presented.

Supplemental cash flow information related to operating leases was as follows (unaudited):

Nine Months Ended

September 30,

2020
Cash payments for operating leases

$
979
New operating lease assets obtained in exchange for operating lease liabilities

$
1,377


	Three Months Ended
	March 31,
	2021
Cash payments for operating leases	$	684
New operating lease assets obtained in exchange for operating lease liabilities	$	85

As of ~~September 30, 2020,~~March 31, 2021, the Company’s operating leases had a weighted average remaining lease term of ~~1.24~~3.78 years and a weighted average discount rate of ~~8.25%~~6.94%. Future lease payments under operating leases as of ~~September 30, 2020~~March 31, 2021 were as ~~follows (unaudited):~~follows:

			Operating
	Operating Leases		Leases
Remainder of 2020	$	328
2021		1,252
Remainder of 2021				2,379
2022				1,301
2023				1,381
2024				1,345
2025				887
Total future lease payments		1,580		7,293
Less imputed interest		(80)		(815)
Total lease liability balance	$	1,500		6,478

NOTE 7 -– STOCK CAPITAL

The rights of Common Stock are as follows:

Holders of the Company’s Common Stock have the right to receive notice to participate and vote in general meetings of the Company, the right to a share in the excess of assets upon liquidation of the Company and the right to receive dividends, if declared.

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 7 – STOCK CAPITAL (Cont.):

Private placements and public offerings:

2018 Warrant Exercise Agreement:

On June 6, 2018, the Company entered into a Warrant Exercise Agreement (the “2018 Warrant Exercise Agreement”) with certain holders (the “2018 Warrant Holders”) of warrants (the “2015 Warrants”) to purchase Common Stock. The 2015 Warrants were originally issued in the Company’s January 8, 2015 private placement. Pursuant to the 2018 Warrant Exercise Agreement, the 2018 Warrant Holders exercised their 2015 Warrants for a total of 2,458,201 shares of Common Stock at an amended exercise price of $5 per share. The warrant exercises generated gross cash proceeds to the Company of $12.3 million. In addition, the Company issued new warrants to the 2018 Warrant Holders to purchase an aggregate 2,458,201 unregistered shares of Common Stock, at an exercise price of $9.00, with an expiration date of December 31, 2020 (the “2018

~~BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES~~

~~U.S. dollars in thousands~~

~~(Except share data and exercise prices)~~

~~Notes to the Interim Condensed Consolidated Financial Statements~~

~~NOTE 7 - STOCK CAPITAL (Cont.):~~

Warrants”). In connection with the issuance of the 2019 Warrants (described below), certain 2018 Warrants were amended on August 2, 2019 to reduce the exercise price to $7.00 per share and to extend the expiration date to December 31, 2021 (the “Amended 2018 Warrants”).

Between July 20, 2020 and July 24, 2020, 2018 Warrant Holders exercised an aggregate of 280,000 shares of the Amended 2018 Warrants (the “2018 Exercised Shares”), which exercises generated gross cash proceeds to the Company of ~~$1.96 million.~~$1,960,000.

The 2018 Warrants have not been registered under the Securities Act of 1933, as amended (the Securities Act), or state securities laws. The shares issuable upon exercise of the Amended 2018 Warrants have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-225995). The exercised shares have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-201704). The issuance of the exercised shares and 2018 Warrants was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. The Company made this determination based on the representations that each party is an “accredited investor” within the meaning of Rule 501 of Regulation D.

2019 Warrant Exercise Agreement:

On August 2, 2019, the Company entered into a Warrant Exercise Agreement which generated gross cash proceeds to the Company of approximately $3.3 million. Pursuant to the agreement, certain holders (the “2019 Warrant Holders”) of the 2018 Warrants agreed to exercise 842,000 shares of Common Stock of their 2018 Warrants, at an amended exercise price of $3.90 per share, and the Company agreed to issue new warrant shares to the Holders to purchase 842,000 shares of Common Stock (the “2019 Warrants”), at an exercise price of $7.00, with an expiration date of December 31, 2021. The 2018 Warrants held by the 2019 Warrant Holders, to the extent not exercised, were also amended to reduce the exercise price to $7.00 per share and to extend the expiration date to December 31, 2021 (the “Amended 2018 Warrants”).

Between July 15, 2020 and July 24, 2020, 2019 Warrant Holders exercised an aggregate of 620,000 shares of the 2019 Warrants (the “2019 Exercised Shares”), which exercises generated gross cash proceeds to the Company of $ ~~4.34 million.~~4,340,000.

1615

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 7 -– STOCK CAPITAL (Cont.):

The Amended 2018 Warrants and 2019 Warrants have not been registered under the Securities Act of 1933, as amended (the Securities Act), or state securities laws. The shares issuable upon exercise of the 2019 Warrants have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-233349), and the shares issuable upon exercise of the Amended 2018 Warrants have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-225995). The exercised shares have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-225995). The issuance of the exercised shares, Amended 2018 Warrants and 2019 Warrants is exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. The Company made this determination based on the representations that each party is an “accredited investor” within the meaning of Rule 501 of Regulation D.

At-the-market (ATM) Offerings:

On June 11, 2019, the Company entered into a distribution agreement with Raymond James & Associates, Inc. ("(“Raymond ~~James"~~James”), pursuant to which the Company sold, through the Raymond James, shares of Common Stock having an aggregate offering amount of $20,000,000 (the ~~"June~~“June 11, 2019 ~~ATM"~~ATM”) in an ~~"at~~“at the ~~market"~~market” offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, by sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and Raymond James.

On March 6, 2020, the Company entered into a new distribution agreement with Raymond James (the “Agent”), pursuant to which the Company was able to sell from time to time, through the Agent, shares of Common Stock, having an aggregate offering price of up to $50,000,000 (the “March 6, 2020 ATM”). Sales under the March 6, 2020 ATM were made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and Raymond ~~James. During~~James.Under the ~~quarter ended September 30,~~March 6, 2020 ATM, the Company sold an aggregate of ~~947,627~~2,446,641 shares of Common Stock ~~pursuant to the March 6, 2020 ATM~~ at an average price of ~~$14.48~~$9.45 per share, raising gross proceeds of approximately ~~$13.71~~$23.11 million.

On September 25, 2020, the Company entered into an Amended and Restated Distribution Agreement (the “Distribution Agreement”) with SVB Leerink LLC (“Leerink”) and Raymond James & Associates (together with Leerink, the “Agents”) pursuant to which the Company may sell from time to time, through the Agents, shares of Common Stock, having an aggregate offering price of up to $45,000,000, which aggregate amount includes amount unsold pursuant to the March 6, 2020 ATM (the “September 25, 2020 ATM”). Sales under the September 25, 2020 ATM are to be made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and the Agents. The Distribution Agreement amends and restates in its entirety the Company’s prior agreement with Raymond James entered on March 6, 2020 (the “March 6, 2020 ATM”). The Company previously sold 2,446,641 shares of Common Stock for gross proceeds of approximately $23.11 million of Common Stock under the March 6, 2020 ATM. During the quarter ended March 31, 2021, the Company sold an aggregate of 1,156,897 shares of Common Stock pursuant to the September 25, 2020 ATM at an average price of $6.33 per share, raising gross proceeds of approximately $7.3 million. Since inception and as of March 31, 2021, the Company has sold 4,721,282 shares of Common Stock for gross proceeds of approximately $29.1 million under the September 25, 2020 ATM.

1716

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 7 -– STOCK CAPITAL (Cont.):

The Company has no obligation under the September 25, 2020 ATM to sell any shares and may at any time suspend sales or terminate the September 25, 2020 ATM in accordance with its terms. Subject to the terms and conditions of the Distribution Agreement, the Agents will use their commercially reasonable efforts to sell on the Company’s behalf, from time to time consistent with its normal sales and trading practices, such Shares based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company has provided the Agents with customary indemnification rights, and the Agents will be entitled to a fixed commission of 3.0% of the aggregate gross proceeds from the Shares sold. The Distribution Agreement contains customary representations and warranties, and the Company is required to deliver customary closing documents and certificates in connection with sales of the Shares. Shares sold under the ATMs are issued pursuant to the Company’s existing Shelf Registration Statement, and the Prospectus Supplement to the Registration Statements filed June 11, 2019, March 6, 2020 and September 25, 2020, respectively.

Registered Direct Offering:

On March 6, 2020, the Company entered into and closed a $10.0 million registered direct offering of 1,250,000 shares of common stock at a per share purchase price equal to $8.00. The purchaser also received a three-year warrant to purchase up to 250,000 shares of Common Stock at any exercise price of $15.00 per share.

Capital Raised Since Inception:

Since its inception ~~and as of September 30, 2020~~through March 31, 2021, the Company has raised approximately ~~$121~~$151 million gross in cash in consideration for issuances of Common Stock and warrants in private placements and public offerings as well as proceeds from warrants exercises.

Stock Plans:

~~As of September 30,~~During the fiscal year ended December 31, 2020, the Company had outstanding awards for stock options under four stockholder approved plans: (i) the 2004 Global Stock Option Plan and the Israeli Appendix thereto (the “2004 Global Plan”) (ii) the 2005 U.S. Stock Option and Incentive Plan (the “2005 U.S. Plan,” and together with the 2004 Global Plan, the “Prior Plans”); (iii) the 2014 Global Share Option Plan and the Israeli Appendix thereto (which applies solely to participants who are residents of Israel) (the “2014 Global Plan”); and (iv) the 2014 Stock Incentive Plan (the “2014 U.S. Plan” and together with the 2014 Global Plan, the “2014 Plans”).

The 2004 Global Plan and 2005 U.S. Plan expired on November 25, 2014 and March 28, 2015, respectively. Grants that were made under the Prior Plans remain outstanding pursuant to their terms. The 2014 Plans were approved by the stockholders on August 14, 2014 (at which time the Company ceased to issue awards under each of the 2005 U.S. Plan and 2004 Global Plan) and amended on June 21, 2016 and November 29, 2018. Unless otherwise stated, option grants prior to August 14, 2014 were made pursuant to the Company’s Prior Plans, and grants issued on or after August 14, 2014 were made pursuant to the Company’s 2014 Plans, and expire on the tenth anniversary of the grant date. The 2014 Plans have a shared pool of ~~4,000,000~~5,600,000 shares of Common Stock available for issuance.

As of ~~September 30, 2020, 1,232,613~~March 31, 2021, 3,193,413 shares were available for future issuances under the 2014 Plans. The exercise price of the options granted under the 2014 Plans may not be less than the nominal value of the shares into which such options are exercised. Any options under the 2014 Plans that are canceled or forfeited before expiration become available for future grants. The Governance, Nominating and Compensation Committee (the “GNC Committee”) of the Board of Directors of the Company administers the Company’s stock incentive compensation and equity-based plans.

~~Share-based compensation to employees and to directors:~~

Under the 2014 Plans, the Company may award stock options to certain employees, officers, directors, and/or service providers. The stock options vest in accordance with such conditions and restrictions determined by the GNC Committee.

1817

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 7 -– STOCK CAPITAL (Cont.):

Share-based compensation to employees and to directors:

These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified period. Stock options awarded are valued based upon the Black-Scholes option pricing model and the Company recognizes this value as stock compensation expense over the periods in which the options vest. Use of the Black Scholes option-pricing model requires that the Company make certain assumptions, including expected volatility, risk-free interest rate, expected dividend yield, and the expected life of the options. The Company ~~granted~~did not grant stock options ~~to purchase 698,666 shares~~ during the ~~nine~~three months ended ~~September 30, 2020.~~

~~Stock options fair value assumptions for the stock options granted during the nine months ended September 30, 2020 are as follows:~~


	~~For the Nine~~
	~~months ended~~
	~~September 30,~~
	~~2020~~
~~Option life (years)~~	10
~~Risk free interest rate~~	~~0.33%-1.73%~~
~~Dividend yield~~	0
~~Expected volatility~~	~~58%-63%~~
~~Expected life (years)~~	~~5.04 -5.50~~	~~years~~

March 31, 2021.

A summary of the Company's option activity related to options to employees and directors, and related information as of ~~September 30, 2020~~March 31, 2021 is as follows:


	For the Nine months ended			For the Three months ended
	September 30, 2020			March 31, 2021
		Weighted			Weighted
		average	Aggregate		average	Aggregate
	Amount��of	exercise	intrinsic	Amount of	exercise	intrinsic
	options *	price	value	options *	price	value
		$	$		$	$
Outstanding at December 31, 2019	1,293,007	3.0142
Outstanding at December 31, 2020				1,754,894	4.8869
Granted	698,666	7.1448		0	0
Exercised	(17,646)	2.9267		(1,687)	2.700
Cancelled	(4,000)	3.7500		(140,000)	8.9929
Outstanding at September 30, 2020	1,970,027	3.9676	25,516,661
Exercisable at September 30, 2020	829,027	1.7226	12,599,092
Outstanding at March 31, 2021				1,613,207	4.5328	1,601,815
Exercisable at March 31, 2021				981,840	2.3868	1,588,981

* Represents Employee Stock Options only (not including RSUs).

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the fair market value of the Company's shares on ~~September 30, 2020,~~March 31, 2021, multiplied by the number of in-the-money options on those dates) that would have been received by the option holders had all option holders exercised their options on those dates.

As of March 31, 2021, there was $2,386 of total unrecognized compensation cost related to non-vested options under the Plan. The cost is expected to be recognized over a weighted average period of 1.88 years. Compensation expense recorded by the Company in respect of its stock-based employees and directors compensation awards in accordance with ASC 718-10 for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ amounted to ~~$2,198~~$290 and ~~$582,~~$390 respectively.

1918

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 7 - STOCK CAPITAL (Cont.):

Restricted Stock:

The Company awards stock and restricted stock to certain employees, officers, directors, and/or service providers. The restricted stock vests in accordance with such conditions and restrictions determined by the GNC Committee. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified restricted period. The purchase price (if any) of shares of restricted stock is determined by the GNC Committee. If the performance goals and other restrictions are not attained, the grantee will automatically forfeit their unvested awards of restricted stock to the Company. Compensation expense for restricted stock is based on fair market value at the grant date.


			Weighted Average			Weighted Average
			Remaining			Remaining
	Number of Shares	Weighted Average	Contractual	Number of Shares	Weighted Average	Contractual
	of Restricted	Grant Date Fair	Term	of Restricted	Grant Date Fair	Term
	Stock	Value	(Years)	Stock	Value	(Years)
Nonvested as of December 31, 2019	201,385	4.00	1.95
Nonvested as of December 31, 2020				288,081	7.71	1.10
Granted	180,410	8.47		—	—
Vested	109,781	4.93		37,561	4.93
Nonvested as of September 30, 2020	272,015	6.58	1.30
Nonvested as of March 31, 2021				250,520	8.13	0.99

Compensation expense recorded by the Company in respect of its stock and restricted stock awards to certain employees, officers, directors, and/or service providers for the three months ended ~~September 30,~~March 31, 2021 and March 31, 2020 amounted to ~~$441.~~$66 and $122, respectively.

As of March 31, 2021, there was $1,211 of total unrecognized compensation cost related to non-vested restricted stock under the Plan. The cost is expected to be recognized over a weighted average period of 1.52 years.

Total Stock-Based Compensation Expense

The total stock-based compensation expense, related to shares, options and warrants granted to employees, directors and service providers was comprised, at each period, as follows:

Nine months ended

September 30,

2020

2019
Research and development

1,065

91
General and administrative

1,133

516
Total stock-based compensation expense

2,198

607


	Three months ended
	March 31,
	2021		2020
Research and development		(65)		105
General and administrative		355		285
Total stock-based compensation expense		290		390

NOTE 8 - RESEARCH AND DEVELOPMENT, NET

Composition:


	Nine months ended		Three months ended
	September 30,		March 31,
	2020	2019	2021		2020
Research and development	17,146	17,397		4,807		7,135
Less: Participation by CIRM	(1,862)	(3,290)
Less: Participation by Israeli Hospital Exemption regulatory pathway	(816)	(2,412)		—		(900)
Less: Participation by the Israel Innovation Authorities	(885)	(618)
Less : Participation by the Israel Innovation Authorities				—		(287)
Less: Participation by other grants	(74)	(59)		(466)		—
	13,509	11,018		4,341		5,948

2019

Table of Contents

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

U.S. dollars in thousands

(Except share data and exercise prices)

Notes to the Interim Condensed Consolidated Financial Statements

NOTE 9 – SUBSEQUENT EVENTS

In December 2019, a novel strain of coronavirus, surfaced in Wuhan, China. Since then, COVID-19 has spread to multiple countries, including the United States, Europe and Israel, where the Company conducts its operations, as well as its clinical trials for NurOwn®. In response to the spread of COVID-19 and to ensure safety of employees and continuity of business operations, we closed our offices, with our administrative employees continuing their work remotely and limited the number of staff in any given research and development laboratory. Our research and development laboratory in Israel and manufacturing sites in the U.S. and in Israel remain open.

As of June 20, 2020, all the trial sites for the Company’s U.S. Phase 2 PMS trial were back on track to continue with the trial. All 20 study participants have been enrolled in the study. The Company is currently completing the collection of clinical and biomarker data from treated patients as specified in the protocol. Dosing of all participants is expected to be completed in the fourth quarter of 2020.

The Phase 3 ALS clinical trial continued to provide necessary treatments to study participants despite severe constraints in the affected healthcare institutions due to COVID-19. As of July 2, 2020, the study completed dosing of all the participants in the Phase 3 ALS trial. The Phase 3 ALS trial is expected to generate top-line data by the end of November this year.

From September 25, 2020 through October 14, 2020, the Company sold an aggregate of 294,723 additional shares of Common Stock pursuant to the September 25, 2020 ATM, at an average price of $17.21 per share, raising gross proceeds of approximately $5.07 million.

Because of the COVID-19 outbreak, the Company may, in the future, experience disruptions that could severely impact its business, including clinical trial activities; participant enrollment; or any currently unforeseen delays in completion of study timelines. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted at this time, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. The Company's management team is actively monitoring this situation and the possible effects on the financial condition, liquidity, operations, suppliers, industry, and workforce.

In accordance with ASC 855 “Subsequent Events” the Company evaluated subsequent events through the date the condensed consolidated financial statements were issued. The Company concluded that no other subsequent events have occurred that would require recognition or disclosure in the condensed consolidated financial statements.

2120

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Company Overview

●

BrainStorm Cell Therapeutics Inc. is a leading biotechnology company committed to the development and commercialization of best-in-class autologous cellular therapies for the treatment of neurodegenerative diseases including: Amyotrophic Lateral Sclerosis (“ALS”, also known as Lou Gehrig’s disease); Progressive Multiple Sclerosis (“PMS”); Alzheimer's disease (AD); and other neurodegenerative diseases.

●

NurOwn® leverages innovative and proprietary cell culture methods to induce autologous bone marrow-derived mesenchymal stem cells (MSCs) to secrete high levels of neurotrophic factors (NTFs), modulate neuroinflammatory and neurodegenerative disease processes, promote neuronal survival and improve neurological function.

●

NurOwn® is currently being evaluated in Phase 3 ALS, Phase 2 PMS and Phase 2 AD clinical trials. Enrollment for the U.S. Phase 3 ALS trial was completed in October 2019 and the trial continued to provide necessary treatments to study participants despite severe constraints in the affected healthcare institutions due to COVID-19. As of July 2, 2020, the study completed dosing of all participants in the Phase 3 ALS trial. The Phase 3 ALS trial is expected to generate top-line data by the end of November this year. The U.S. Phase 2 PMS trial faced slight delays in enrollment due to the COVID-19 pandemic. Scheduled March and April 2020 new participant enrollments were deferred to May 2020 due to site closures related to COVID-19. As of June 2020, all the trial sites were back on track to continue with the trial. All 20 study participants have been enrolled in the study. The Company is currently completing the collection of clinical and biomarker data from treated patients as specified in the protocol. Dosing of all participants is expected to be completed in the fourth quarter of 2020. On June 24, 2020, the Company announced a new clinical program focused on the development of NurOwn® as a treatment for AD. As part of the newly announced program, the Company is planning a multi-national Phase 2 clinical trial in Europe to evaluate the safety and preliminary efficacy of NurOwn® treatment in patients with prodromal to mild AD.

●

Our wholly owned Israeli subsidiary, BrainStorm Cell Therapeutics Ltd. (“Israeli Subsidiary”), holds exclusive rights to commercialize NurOwn® technology through a licensing agreement with Ramot (“Ramot”), the technology transfer company of Tel Aviv University, Israel.

●

~~The Israeli Subsidiary was granted approval by the Israeli Ministry of Health (“MoH”) to treat ALS patients with NurOwn® under the Hospital Exemption Pathway (“HE”).~~

●

~~NurOwn® has a strong and comprehensive intellectual property portfolio.~~

●

NurOwn® was granted Fast Track designation by the U.S. Food and Drug Administration (FDA) and Orphan Drug status by the FDA and the European Medicines Agency (EMA) for ALS. For more information, visit BrainStorm’s website at ~~www.brainstorm-cell.com~~.

●

~~The Company has been granted Small and Medium-Sized Enterprise (SME) status by the European Medicines Agency's (EMA) Micro, Small and Medium-Sized Enterprise (SME) office.~~

●

BrainStorm Cell Therapeutics Inc. currently employs 44 employees in the United States and in Israel. Most of the senior management team is based in the United States, and all of BrainStorm’s ongoing clinical trial sites for ALS and PMS are in the United States. The clinical trial sites for BrainStorm's AD trial will be in Europe. BrainStorm’s R&D center is located in Petach Tikva, Israel. In addition, the Company currently leases a GMP certified manufacturing facility in Jerusalem, Israel and has won a public tender to lease a new cleanroom facility, which includes three state-of-the-art cleanrooms, at the Tel Aviv Sourasky Medical Center to manufacture NurOwn® mainly for expanding the company's production capacity into The European Union (EU) and the local Israeli market.

22BrainStorm Cell Therapeutics Inc. is a leading biotechnology company committed to the development and commercialization of best-in-class autologous cellular therapies for the treatment of neurodegenerative diseases including: Amyotrophic Lateral Sclerosis (“ALS”, also known as Lou Gehrig’s disease); Progressive Multiple Sclerosis (“PMS”); Alzheimer's disease (AD); and other neurodegenerative diseases. NurOwn®, our proprietary platform, leverages cell culture methods to induce autologous bone marrow-derived mesenchymal stem cells (MSCs) to secrete high levels of neurotrophic factors (NTFs), modulate neuroinflammatory and neurodegenerative disease processes, promote neuronal survival and improve neurological function.

NurOwn® has been evaluated in a Phase 3 ALS and a Phase 2 PMS clinical trial and is planned to be evaluated in a Phase 2 AD clinical trial. We announced top-line data from our Phase 3 ALS trial on November 17, 2020. The U.S. Phase 2 PMS trial had faced slight delays in enrollment due to the COVID- 19 pandemic, but as of June 2020, all the trial sites were back on track to continue with the trial. On March 24, 2021, we announced positive topline data from our Phase 2 trial evaluating three repeated administrations of NurOwn®, each given 2 months apart, as a treatment for PMS. On June 24, 2020, we announced a new clinical program focused on the development of NurOwn® as a treatment for AD. As part of the newly announced program, we are planning a multi-national Phase 2 clinical trial in Europe to evaluate biomarkers and safety of NurOwn® treatment in patients with prodromal to mild AD.

●

~~The Outbreak of the novel strain of coronavirus, SARS-CoV-2 (COVID-19) disease and Its Impact:~~

Our wholly-owned Israeli subsidiary, BrainStorm Cell Therapeutics Ltd. (“Israeli Subsidiary”), holds exclusive rights to commercialize NurOwn® technology through a licensing agreement with Ramot (“Ramot”), the technology transfer company of Tel Aviv University, Israel. Our Israeli Subsidiary was granted approval by the Israeli Ministry of Health (“MoH”) to treat ALS patients with NurOwn® under the Hospital Exemption Pathway (“HE”).

NurOwn® has a strong and comprehensive intellectual property portfolio and was granted Fast Track designation by the U.S. Food and Drug Administration (FDA) and Orphan Drug status by the FDA and the European Medicines Agency (EMA) for ALS. For more information, visit BrainStorm’s website at www.brainstorm-cell.com.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. The principal purposes of our equity and cash incentive plans are to attract, retainand reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives. We currently employ 39 employees in the United States and in Israel. Most of the senior management team is based in the United States, and all of our clinical trial sites for ALS and PMS are in the United States. The clinical trial sites for our planned AD trial will be in Europe. Our R&D center is located in Petach Tikva, Israel. In addition, we currently lease a GMP certified manufacturing facility in Jerusalem, Israel, and have recently leased a new cleanroom facility, which includes three state-of-the-art cleanrooms, at the Tel Aviv Sourasky Medical Center to manufacture NurOwn® mainly for expanding our production capacity into The European Union (EU) and the local Israeli market.

The ~~Outbreak of~~pandemic caused by the novel strain of coronavirus, ~~SARS-CoV-2~~SARS-CoV 2 (COVID-19) disease has currently impacted and may continue to adversely impact our business, including our preclinical studies and clinical trials. In December 2019, a novel strain of coronavirus, surfaced in Wuhan, China. Since then, ~~COVID-19~~COVID- 19 has spread ~~to multiple countries, including~~worldwide, significantly impacting the United States, Europe and Israel, where the Company conducts its operations, as well as its clinical trials for NurOwn®. In response to the spread of COVID-19 and to ensure safety of employees and continuity of business operations, we closed our offices, with our administrative employees continuing their work remotely and limited the number of staff in any given research and development laboratory. Our research and development laboratory in Israel and manufacturing sites in U.S. and in Israel remain open.

As of June 20, 2020, all the trial sites for our U.S. Phase 2 PMS trial were back on track to continue with the trial. All 20 study participants have been enrolled in the study. The Company is currently completing the collection of clinical and biomarker data from treated patients as specified in the protocol. Dosing of all participants is expected to be completed in the fourth quarter of 2020.

We recently announced a new clinical program focused on the development of NurOwn® as a treatment for AD. As part of the newly announced program, the Company is planning a multi-national Phase 2 clinical trial in Europe to evaluate the safety and preliminary efficacy of NurOwn® treatment in patients with prodromal to mild AD.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted at this time, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. Our management team is actively monitoring this situation and the possible effects on our financial condition, liquidity, operations, suppliers, industry, and workforce. For additional information on risks posed by the COVID-19 pandemic, please see Part II, Item 1A – Risk Factors – Risks Related to the COVID-19 Pandemic.

Table of Contents

Recent Highlights

●

We have made significant progress in the past 12 months advancing the NurOwn® ALS Phase 3 clinical trial at all 6 U.S. investigative sites (Mass General Hospital, UMass, Mayo Clinic, CPMC, Cedars Sinai and UC Irvine). This clinical trial builds upon promising efficacy seen in three prior early-stage ALS clinical trials, including a U.S. randomized placebo-controlled Phase 2 trial. Enrollment for NurOwn® ALS Phase 3 trial was completed in October 2019 and dosing of all participants in the trial was completed as of July 2, 2020. The trial is expected to generateannouncing top-line data ~~by the end of November this year to support an U.S. Food and Drug Administration (FDA) BLA filing.~~

●

~~On February 11, 2020, we announced that we recently held a high-level meeting with the FDA to discuss potential~~from our NurOwn® regulatory pathways for approval in ALS. In the planned meeting with senior Center for Biologics Evaluation and Research (CBER) leadership and several leading U.S. ALS experts, the FDA confirmed that the fully enrolled Phase 3 ALS trial is collecting relevant data critical to the assessment of NurOwn® efficacy. The FDA indicated that they would look at the "totality of the evidence" in the expected Phase 3 clinical trial data. Furthermore, based on their detailed data assessment, they are committed to working collaboratively with us to identify a regulatory pathway forward, including opportunities to expedite statistical review of the data from the Phase 3 trial.

●

We were granted FDA approval in December 2018 for the IND Application of NurOwn® in Progressive Multiple Sclerosis (PMS). The study entitled ‘A Phase 2, open-label, multicenter study to evaluate the safety and efficacy of repeated administration of NurOwn® (Autologous Mesenchymal Stem Cells Secreting Neurotrophic Factors; MSC-NTF cells) in participants with Progressive Multiple Sclerosis (PMS)’ is ongoing at 5 leading U.S. Multiple Sclerosis centers. The Phase 2 PMS trial faced slight delays in enrollment due to the COVID-19 pandemic. Scheduled March and April 2020 new patient enrollments were deferred to May 2020 due to site closures related to COVID-19. As of June 2020, all the trial sites were back on track to continue with the trial. All 20 study participants have been enrolledclinical trials in the study. The Company is currently completing the collection of clinical and biomarker data from treated patients as specified in the protocol. Dosing of all participants is expected to be completed in the fourth quarter of 2020.

●

On March 6, 2020, we entered into a distribution agreement with Raymond James & Associates, Inc., pursuant to which we were able to sell from time to time, through the Agent, shares of Common Stock, having an aggregate offering price of up to $50,000,000 (the “March 6, 2020 ATM”). Sales under the March 6, 2020 ATM were made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and Raymond James. During the quarter ended September 30, 2020, the Company sold an aggregate of 947,627 shares of Common Stock pursuant to the March 6, 2020 ATM at an average price of $14.48 per share, raising gross proceeds of approximately $13.71 million.

●

On March 7, 2019, the Israeli MoH approved our treatment of up to 13 ALS patients with NurOwn® under the Israeli Hospital Exemption (HE) regulatory pathway. This approval expired on March 7, 2020. Ichilov Hospital and the Company have since then received approval from the MoH for the extension of the program. Based on the approval, the Company has enrolled 12 out of the first 13 patients under the HE regulatory pathway as of September 30, 2020 and intends to enroll the maximum number of patients that have been approved. The Company is currently collecting clinical data for patients who have already received treatment at the Ichilov Hospital. Thus far, the Company has received $3.4 million in gross proceeds in connection with the treatment of the aforementioned patients.

●

On April 3, 2020, we announced that our wholly owned subsidiary, BrainStorm Cell Therapeutics Ltd., has been awarded a non-dilutive grant of approximately $1.5 million by the Israel Innovation Authority (IIA). The grant enables the Company to continue development of advanced cellular manufacturing capabilities, furthers the development of MSC-derived exosomes as a novel therapeutic platform, and will ultimately enable BrainStorm to expand its therapeutic pipeline in neurodegenerative disorders. As of September 30, 2020, the Company has received $658,000 out of the $1.5 million awarded.

●

~~On May 4, 2020, we announced new data highlighting the immunomodulatory effects of NurOwn® on B and T regulatory function in an online supplement to peer reviewed journal ‘Neurology’~~US (see details below).

●

On May 7, 2020, we announced we will be leasing of a new cleanroom facility, which includes three state-of-the-art cleanrooms, at the Tel Aviv Sourasky Medical Center to manufacture NurOwn® for The European Union (EU). The new facility will significantly increase our capacity to manufacture and ship its product into the EU and the local Israeli market. The cleanroom facility is part of Sourasky’s Institute for Advanced Cellular Therapies.

●

~~On June 9, 2020, we announced that The ALS Association and I AM ALS have awarded us a combined grant of $500,000 to support an ALS biomarker research study.~~

●

On June 15, 2020, we announced that we have been granted Small and Medium-Sized Enterprise (SME) status by the European Medicines Agency’s (EMA) Micro, Small and Medium-Sized Enterprise (SME) office.

●

On June 24, 2020, we announced a new clinical program focused on the development of NurOwn® as a treatment for AD. As part of the newly announced program, we are planning a multi-national Phase 2 clinical trial in Europe to evaluate ~~the~~biomarkers and safety ~~and preliminary efficacy~~ of NurOwn® treatment in patients with prodromal to mild AD. The 52-week, open-label, proof-of-concept clinical trial in Europe is designed to evaluate NurOwn® in up to 40 participants with prodromal to mild AD. It is currently expected to be conducted at the VU University Medical Center (Amsterdam), and Pitié-Salpêtrière Hospital (Paris), ~~and other~~with additional clinical trial sites in the Netherlands and ~~France.~~

●

~~On June 29, 2020, our Company’s shares joined the Russell 2000® Index and the broad-market Russell 3000® Index.~~

●

On July 1, 2020, we received a non-dilutive bonus payment of $700,000 from California Institute for Regenerative Medicine (CIRM) for treating more California participants than originally proposed in our Phase 3 ALS trial.

●

On July 8, 2020, we hosted a KOL webinar to discuss our NurOwn® Phase 2 AD Program. The webinar featured presentations by two lead investigators in our planned European Phase 2 trial: Philip Scheltens, M.D., Ph.D., Professor of Cognitive Neurology and Director of the Alzheimer Centre at the VU University Medical Center in Amsterdam, Netherlands; and Bruno Dubois, M.D., Ph.D., Professor of Neurology at the Neurological Institute of the Salpétrière University Hospital in Paris, France.

●

On July 23, 2020, we announced the results of a groundbreaking pre-clinical study of NurOwn® derived Exosome-based treatment for COVID-19 ~~ARDS.~~acute respiratory distress syndrome (ARDS). Intratracheal administration of exosomes extracted from ~~MSC’s using NurOwn® technology~~MSC-NTF cells (NurOwn®) resulted in statistically significant improvement in multiple lung parameters in a mouse model. With this study, the Company has successfully completed its first milestone in developing an innovative exosome-based platform-technology for the treatment of severe COVID-19 infection.

●

On August 19, 2020, we announced the publication of a Letter to the Editor titled, "Effects of MSC-NTF cells on T and B regulatory cell function in ALS" in the journal Amyotrophic Lateral Sclerosis and Frontotemporal Degeneration.

●

On August 25, 2020, we announced the acceptance of a clinical abstract documenting an association between magnetic resonance imaging (MRI) measures and functional improvement in a prospective natural history cohort of patients with progressive multiple sclerosis (PMS) matched to the NurOwn® Phase 2 inclusion criteria. The data was presented as a poster on September 11-13 at the eighth joint virtual meeting of the Americas Committee for Treatment and Research in Multiple Sclerosis (ACTRIMS) and the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) and will be important in the analysis of our Phase 2 outcomes.

●

On September 2, 2020, we announced the appointment of Anthony P. Waclawski, Ph.D. as Executive Vice President, Global Head of Regulatory Affairs to further strengthen its regulatory expertise and capabilities as our ALS Phase 3 clinical trial nears completion in Q4, 2020. Dr. Waclawski is an industry veteran and a recognized leader in regulatory affairs with over 35 years of multinational experience in the FDA regulatory approval process, including Biologics License Applications (BLAs), New Drug Applications (NDAs), and FDA Advisory Committees.

●

On September 16, 2020, we announced that the Japanese Patent Office (JPO) has granted Brainstorm's Japanese Patent, number: 6,753,887, titled: “Methods of Generating Mesenchymal Stem Cells Which Secrete Neurotrophic Factors”.

●

On September 25, 2020, we entered into an Amended and Restated Distribution Agreement (the “Distribution Agreement”) with SVB Leerink LLC (“Leerink”) and Raymond James & Associates, Inc. (“Raymond James” and, together with Leerink, the “Agents”) pursuant to which the Company may sell from time to time, through the Agents, shares of Common Stock, having an aggregate offering price of up to $45,000,000, which aggregate amount includes any amount unsold pursuant to the March 6, 2020 ATM (the “September 25, 2020 ATM”). Sales under the September 25, 2020 ATM are made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and the Agents. The Distribution Agreement amends and restates in its entirety the Company’s prior agreement in connection with ~~Raymond James entered on~~the March 6, 2020 ~~(the “March 6,~~ATM. During the quarter ended March 31, 2021, the Company sold an aggregate of 1,156,897 shares of Common Stock pursuant to the September 25, 2020 ~~ATM”). The~~ATM at an average price of $6.33 per share, raising gross proceeds of approximately $7.3 million. Since inception and as of March 31, 2021, the Company ~~previously~~has sold ~~2,446,641~~4,721,282 shares of Common Stock for gross proceeds of approximately ~~$23.11~~$29.1 million ~~of Common Stock~~ under the ~~March 6,~~September 25, 2020 ATM.

●

On ~~September 29,~~November 17, 2020, we announced top-line data from our Phase 3 ALS trial in the ~~appointment~~US. Results from the trial showed that NurOwn® was generally well tolerated in the population of ~~William K. White as Senior Vice President, Head~~rapidly progressing ALS patients. While showing a numerical improvement in the treated group compared to placebo across the primary and key secondary efficacy endpoints, the trial did not reach statistically significant results. In an important, pre-specified subgroup with early disease based on the ALSFRS-R baseline total score of ~~Market Access~~35, we believe NurOwn® demonstrated a clinically meaningful treatment response across the primary and ~~Pricing. Mr. White has more than 25 years' experience~~key secondary endpoints and remained consistent with our pre-trial, data-derived assumption. In this subgroup, there were 34.6% responders who met the primary endpoint definition on NurOwn and 15.6% on Placebo (p=0.288), and the average change from baseline to week 28 in ~~leading successful product commercialization~~ALSFRS-R total score was -1.77 on NurOwn and ~~securing market access for innovative~~-3.78 on Placebo (p=0.198), an improvement of 2.01 ALSFRS-R points favoring NurOwn®. No new ~~medicines. Mr. White was most recently Vice President~~safety concerns were identified. On February 22, 2021, we announced high-level FDA feedback on our NurOwn® ALS Clinical Development Program. The FDA concluded from their initial review that the current level of ~~Patient~~clinical data does not provide the threshold of substantial evidence that FDA is seeking to support a Biologics License Application (BLA). In addition, the FDA advised that this recommendation does not preclude Brainstorm from proceeding with a BLA submission. We are in active consultation with principal investigators, ALS experts, expert statisticians, regulatory advisors, and Market Access at Avexis, now Novartis Gene Therapies. While at Avexis, he led a large team responsible for securing reimbursement and developing patient support services with national and regional insurers and state Medicaid payers. His work in developing and implementingALS advocacy groups to assess the ~~market access strategy for AVXS-101/Zolgensma® helped to expedite delivery~~benefit/risk of a ~~novel new treatment to an underserved patient population and helped the company transition to the commercial stage.~~BLA submission before making a final decision.

●

On ~~September 30, 2020,~~January 20, 2021, we announced the ~~presentation~~peer-reviewed publication of a ~~poster titled, "Advancing~~preclinical study in the journal Stem Cell and Research Therapy. The study, entitled "MSC-NTF (NurOwn®) exosomes: a novel therapeutic modality in the mouse LPS-induced ARDS model," evaluated the use of NurOwn® ~~for ALS: Phase 3 Clinical Trial Design" at the Annual Northeast ALS (NEALS) Virtual Meeting.~~(MSC-NTF cell) derived exosomes in a mouse model of acute respiratory distress syndrome (ARDS).

●

On February 9, 2021, we announced feedback from our Type-C Meeting with FDA to review specific aspects of our planned manufacturing modifications to support the development of a semi-automated manufacturing process for NurOwn® (MSC-NTF cells).

2522

Table of Contents

●

On March 24, 2021, we announced positive topline data in our Phase 2 Study trial evaluating three repeated administrations of NurOwn®, each given 2 months apart, as a treatment for PMS. The 28-week open-label Phase 2 clinical trial enrolled 20 primary and secondary PMS patients based on the 2017 revised McDonald Criteria, ages 18-65, with baseline Expanded Disability Status Scale (EDSS) scores between 3-6.5, without evidence of relapse within 6 months of enrollment, able to walk 25 feet in 60 seconds or less and were permitted to be on a stable dose of disease modifying therapy. Of the 20 patients enrolled, 18 were treated and 16 (80%) completed the study. Two patients discontinued related to procedure-related AEs. There were no study deaths or AEs related to multiple sclerosis worsening. The mean age of study patients was 47, 56% were female, and mean baseline EDSS score was 5.4. The clinical trial compared clinical efficacy outcomes with a 48-patient matched clinical cohort from the Comprehensive Longitudinal Investigations in MS at the Brigham & Woman's Hospital (CLIMB Study). MS Function and Cognition measures in the top-line results included the timed 25-foot walk (T25FW); 9-hole peg test (9-HPT); Low Contrast Letter Acuity (LCLA); Symbol Digit Modality Test (SDMT); and the 12 item MS Walking Scale (MSWS-12). Prespecified response thresholds of 25% improvement in the T25FW and 9-HPT from baseline to 28 weeks were observed in 14% and 13% of NurOwn treated patients, respectively, and was observed in 0% of the pre-specified matched historical controls in the CLIMB registry. Thirty eight percent of NurOwn treated patients showed at least a 10-point improvement in the MSWS-12 from baseline to week 28, a patient-reported outcome that evaluates walking function. In addition, 47% of treated patients showed at least an 8-letter improvement across 28 weeks in the LCLA, a visual function test, and 67% showed at least a 3-point improvement in the SDMT, a measure of cognitive processing. In addition, NurOwn treated patients showed a mean improvement from baseline of 10% in T25FW and a 4.8% improvement from baseline on the 9-HPT dominant hand, compared to 1.8% and 1.4% worsening respectively in matched historical controls from the CLIMB registry. Also, NurOwn treated patients showed a 6% improvement from baseline in MSWS-12. All results reported are based on observed data. Cerebrospinal fluid (CSF) biomarkers were obtained at 3 consecutive time points, just prior to each intrathecal administration of NurOwn. We observed increases in neuroprotective molecules (VEGF, HGF) and decreases in neuroinflammatory biomarkers (MCP-1, and Osteopontin) in the CSF samples. Additional secondary efficacy data, and detailed CSF and blood biomarker analyses are currently underway. We plan to present a detailed summary of the study outcomes at an upcoming scientific meeting, publish our findings in a peer-reviewed journal and consider how best to advance NurOwn in PMS.

NurOwn® Proprietary Technology

NurOwn® technology is based on an innovative manufacturing protocol, which induces the differentiation of purified and expanded bone marrow-derived mesenchymal stem cells (“MSC”) and consistently generates cells that release high levels of multiple neurotrophic factors (“MSC-NTF” cells) to modulate neuroinflammatory and neurodegenerative disease processes, promote neuronal survival and improve neurological function. These factors are known to be critical for the growth, survival and differentiation of neurons, including: glial-derived neurotrophic factor (“GDNF”); brain-derived neurotrophic factor (“BDNF”); vascular endothelial growth factor (“VEGF”); and hepatocyte growth factor (“HGF”), among others. ~~GDNF~~VEGF is one of the most potent neuronal and motor neuron survival factors ~~for peripheral motor neurons~~ and ~~have~~has demonstrated important neuroprotective effects in ALS ~~MS, AD~~ and several other neurodegenerative ~~diseases as well as modulating neuroinflammation, a prominent, consistent and early feature of these~~ diseases.

NurOwn® manufacturing involves a multi-step process that ~~includes:~~includes the following: harvesting and isolating undifferentiated stem cells from the patient's own bone marrow; processing of cells at the manufacturing site; cryopreservation of MSC to enable multiple treatments from a single bone marrow sample; and intrathecal (“IT”) ~~injection~~administration of MSC-NTF cells into the same patient by standard lumbar puncture. This administration procedure does not require hospitalization and has been shown to be ~~safe and~~generally well tolerated in multiple CNS clinical trials to date. The ~~fully dosed~~completed NurOwn® U.S. Phase 3 ALS ~~study,~~and the ~~ongoing~~ NurOwn® U.S. Phase 2 PMS ~~study and the planned EU Phase 2 clinical trial in prodromal to mild AD are all evaluating~~trials evaluated the therapeutic potential of repeated intrathecal MSC-NTF cell administration (three doses at bi-monthly intervals). The planned EU Phase 2 clinical trial will evaluate biomarkers and safety of NurOwn® in prodromal to mild AD patients also using repeated intrathecal MSC-NTF cell administration (three doses at bi-monthly intervals).

The proprietary technology and manufacturing processing of NurOwn® (MSC-NTF cells) for clinical use is conducted in full compliance with current Good Manufacturing Practice (“cGMP”). The NurOwn® proprietary technology is fully owned to or developed by ~~BrainStorm Cell Therapeutics Ltd.,~~ our ~~wholly owned subsidiary (the “Israeli Subsidiary”).~~Israeli Subsidiary. All granted patents related to NurOwn® (MSC-NTF cells) manufacturing process are fully assigned to or owned by ~~BrainStorm Cell Therapeutics Ltd. (see~~our Israeli Subsidiary (please see Intellectual Property section for details).

The NurOwn® Transplantation Process

●

Bone marrow aspiration from the patient;

●

MSC Isolation and propagation;

Table of Contents

●

MSC Cryopreservation;

●

MSC thawing and differentiation into neurotrophic-factor secreting (MSC-NTF; NurOwn®) cells; and

●

~~Autologous transplantation~~Intrathecal administration into the patient’s cerebrospinal fluid by ~~IT injection (standard~~standard lumbar ~~puncture).~~puncture.

Differentiation before Transplantation

~~The~~We believe that the ability to induce autologous adult mesenchymal stem cells into differentiated MSC-NTF cells makes NurOwn® uniquely suited for the treatment of neurodegenerative diseases.

The specialized MSC-NTF cells secrete multiple neurotrophic factors and immunomodulatory cytokines that may result in:

●

Protection of existing neurons;

●

Promotion of neuronal repair;

●

Neuronal functional improvement; and

●

Immunomodulation and reduced neuroinflammation.

Autologous (Self-transplantation)

The NurOwn® technology platform is autologous, using the patient’s own bone-marrow derived stem cells for “self-transplantation.” In autologous ~~transplantation,~~cellular treatment, there is no introduction of unrelated donor antigens that may lead to alloimmunity, no risk of rejection and no need for treatment with immunosuppressive agents, which can cause severe and/or long-term side effects. In addition, the use of adult stem cells is free of several ethical concerns associated with the use of embryonic-derived stem cells in some countries.

NurOwn® ALS Clinical Program

~~NurOwn® is currently in a~~We announced top-line data from the Phase 3 ~~late stage~~ clinical ~~development program for the treatment~~trial of ~~ALS. It has~~NurOwn® in ALS on November 17, 2020. We have been granted Fast Track designation by the U.S. Food and Drug Administration (“FDA”) for this indication, and ~~has~~ been granted Orphan Drug Status, in the U.S. and Europe, which provides us the potential for an extended period of exclusivity.

Phase 1/2 ALS Open Label Trials

~~The company has~~We have completed two early stage Phase 1/2 and 2 open-label clinical trials of NurOwn® in patients with ALS at the Hadassah Medical Center (“Hadassah”) in Jerusalem, Israel, as well as a Phase 2 double-blind, placebo-controlled, multicenter clinical trial at three prestigious U.S. Medical centers - the Massachusetts General Hospital (MGH) in Boston, Massachusetts Memorial Hospital in Worcester, Massachusetts, and the Mayo Clinic in Rochester, Minnesota - all highly experienced in the management and investigation of ALS.

The first two open-label trials were approved by the Israeli ~~Ministry of Health (“MoH”).~~MoH. The first-in-human trial, a Phase 1 safety and efficacy trial of NurOwn® administered either intramuscularly or intrathecally in 12 ALS patients, was initiated in June 2011. In the Phase 2 dose-escalating study, 14 ALS patients were administered NurOwn® by a combined route of intramuscular and intrathecal administration. These studies demonstrated the safety of NurOwn® by both routes of administration and showed preliminary signs of efficacy.

In January 2016, the results of the two completed Phase 1/2 study and Phase 2 open label trials were published in JAMA Neurology. This demonstrated a slower rate of disease progression following MSC-NTF cell transplantation as measured by the ~~ALS Functional Rating Score (“ALSFRS-R”),~~ALSFRS-R, the gold standard for the evaluation of ALS functional status, and Forced Vital Capacity (“FVC”), a measure of pulmonary function, as well as positive trends in the rate of decline of muscle volume and the compound motor axon potential (“CMAPs”). This was the first published clinical data using autologous mesenchymal stem cells, induced under culture conditions to produce NTFs, with the potential to deliver a combined neuroprotective and immunomodulatory therapeutic effect in ALS and potentially modify the course of this disease.

Table of Contents

Phase 2 ALS Randomized Trial

The Phase 2 U.S. study was conducted under an FDA Investigational New Drug (“IND”) application. This randomized, double-blind, placebo-controlled multi-center U.S. Phase 2 clinical trial evaluating NurOwn® in ALS patients was conducted at three clinical sites: (i) the Massachusetts General Hospital (MGH) in Boston, (ii) Massachusetts Memorial Hospital in Worcester, Massachusetts, and (iii) the Mayo Clinic in Rochester, Minnesota. For this trial, NurOwn® was manufactured at the Connell and O’Reilly Cell Manipulation Core Facility at the Dana Farber Cancer Institute in Boston and at the Human Cellular Therapy Lab at the Mayo Clinic. In this study, 48 patients were randomized 3:1 to receive NurOwn® or placebo.

Results of this Phase 2 Study were published in the peer reviewed Journal ‘Neurology’ ~~in December 2019,~~. The publication entitled ~~“NurOwn®,~~“NurOwn, Phase 2, Randomized, Clinical Trial in Patients ~~With~~with ALS: Safety, Clinical, and Biomarker Results”. was published in December 2019.

Key findings from the trial were as follows:

●

The study achieved its primary objective, demonstrating that NurOwn® transplantation was safe and well-tolerated. There were no discontinuations from the trial due to AEs and there were no deaths in the study. The most common adverse events (of mild or moderate severity), were transient procedure-related AEs such as headache, back pain, pyrexia arthralgia and injection-site discomfort, which were more commonly seen in the NurOwn®-treated participants compared to placebo.

●

NurOwn® achieved multiple secondary efficacy endpoints, showing evidence of a clinically meaningful benefit. Notably, response rates in the ALS functional rating scale (48-point ALSFRS-R outcome measure) were higher in NurOwn®-treated participants, compared to placebo, at all study timepoints over 24 weeks.

●

A pre-specified responder analysis examined percentage improvements in the post treatment ALSFRS-R slope (change/month) compared to pre-treatment slope and demonstrated that a higher proportion of NurOwn® treated participants achieved a 100% improvement in the post-treatment vs. pre-treatment slope, compared to the placebo group. This analysis also demonstrated that a higher proportion of the NurOwn® treated participants achieved a 1.5 point per month or greater improvement in the post-treatment vs. pre-treatment ALSFRS-R slope, compared to the placebo group.

●

~~The beneficial treatment effects were greater in the rapid progressor subgroup (in which pretreatment ALSFRS-R declined by 2 or more points in the three months pre-treatment).~~

●

As an important confirmation of NurOwn®’s mechanism of action, levels of neurotrophic factors and inflammatory markers were measured in the cerebrospinal fluid (“CSF”) samples collected from participants pre and two weeks post treatment. In the CSF samples of those participants treated with NurOwn®, statistically significant increases in levels of neurotrophic factors VEGF, HGF and LIF and a statistically significant reduction in inflammatory markers MCP-1, SDF-1 and CHIT-1 were observed post-transplantation. Furthermore, the observed reduction in inflammatory markers correlated with ALS functional improvements. These clinical-biomarker correlations were not seen in placebo-treated participants, consistent with the proposed combined neuroprotective and immunomodulatory mechanism of action of NurOwn® in ALS.

●

In summary, a higher proportion of NurOwn® treated participants, particularly those with more rapid disease progression, experienced stabilization or improvement in ALS function, as measured by the post-treatment vs. pre-treatment ALSFRS-R slope change. ~~These are new and meaningful ALS clinical observations that are being evaluated in the ongoing Phase 3 study using repeat dosing in ALS rapid progressors.~~

The study achieved its primary objective, demonstrating that NurOwn® transplantation was well-tolerated. There were no discontinuations from the trial due to AEs and there were no deaths in the study. The most common adverse events (mild or moderate severity), were transient procedure-related AEs such as headache, back pain, pyrexia arthralgia and injection-site discomfort, which were more commonly seen in the NurOwn®-treated participants compared to placebo.

A pre-specified responder analysis examined percentage improvements in the post treatment ALSFRS-R slope (in points change per month) compared to pre-treatment slope and demonstrated that a higher proportion of NurOwn® treated participants achieved a 100% improvement in the post-treatment vs. pre-treatment slope, compared to the placebo group. This analysis also demonstrated that a higher proportion of the NurOwn® treated participants achieved a 1.5 point per month or greater improvement in the post-treatment vs. pre-treatment ALSFRS-R slope, compared to the placebo group.

The treatment effects were greater in the rapid progressor subgroup (in which pretreatment ALSFRS-R declined by 2 or more points in the three months pre-treatment).

As an important confirmation of NurOwn®’s mechanism of action, levels of neurotrophic factors and inflammatory markers were measured in the cerebrospinal fluid (“CSF”) samples collected from participants pre and two weeks post treatment. In the samples of those participants treated with NurOwn®, statistically significant increases in levels of neurotrophic factors VEGF, HGF and LIF and a statistically significant reduction in inflammatory markers MCP-1, SDF-1 and CHIT-1 were observed post-treatment. Furthermore, the observed reduction in inflammatory markers correlated with ALS functional improvements. These clinical-biomarker correlations were not seen in placebo-treated participants, consistent with the proposed combined neuroprotective and immunomodulatory mechanism of action of NurOwn® in ALS.

Phase 3 ALS Clinical Trial

Following successful completion of the Phase 2 study, ~~the Company is currently conducting~~we conducted a Phase 3 trial (a multi-dose double-blind, placebo-controlled, multicenter trial protocol) that ~~has been~~was designed to generate data to potentially support a Biologic License Application (“BLA”) submission in the U.S. for NurOwn® in ALS. The clinical trial ~~has~~ completed ~~enrolment and dosing~~enrollment in October 2019 of an enriched patient population of rapid progressors ~~(~50% of ALS patients)~~ based on superior outcomes observed in the Phase-2 pre-specified sub-group.

The primary clinical efficacy outcome measure is the ALSFRS-R score responder analysis, an outcome that evaluates the proportion of treated participants who achieve a prespecified level of improvement in the ALSFRS-R post-treatment slope. The Phase 3 trial expands biomarker evaluations to further understand their potential to predict ALS disease progression, treatment response and confirm the biology of NurOwn® in a larger study population. The study is being conducted at six leading U.S. medical centers, three of which participated in the prior Phase 2 study. Patient enrollment commenced in October 2017, at Massachusetts General Hospital followed by the other five study sites, including University of California Irvine Medical Center, University of Massachusetts Medical Center, Mayo Clinic in Rochester, Minnesota, the California Pacific Medical Center in San Francisco, and Cedars Sinai Medical Center in Los Angeles.

The Phase 3 ALS clinical trial completed enrollment in October 2019 and continued to provide necessary treatments to study participants despite severe constraints in the affected healthcare institutions due to COVID-19. Dosing of all participants in the trial was completed as of July 2, 2020. Top-line efficacy data is expected by the end of November this year. The study is registered at www.clinicaltrials.gov (ClinicalTrials.gov Identifier: NCT03280056).

~~The independent Data Safety Monitoring Board (“DSMB”) for the study completed its first pre-specified interim analysis~~25

Table of safety outcomes for the first 31 participants treated with NurOwn® in the Phase 3 trial in ALS (NCT03280056) in August 2018. The DSMB indicated there were no significant safety concerns and recommended that the trial continue, as planned without any modifications to the study protocol.Contents

~~The DSMB completed its second pre-specified interim analysis of safety outcomes for 106 participants treated with NurOwn® in the~~We announced top-line data from our Phase 3 ALS trial on ~~October 28, 2019.~~November 17, 2020. Results from the trial showed that NurOwn® was generally well tolerated in the population of rapidly progressing ALS patients. However, the trial did not reach statistically significant results. No new safety concerns were identified. On February 9, 2021, we announced feedback from our Type-C Meeting with FDA to review specific aspects of our planned manufacturing modifications to support the development of a semi-automated commercial manufacturing process for NurOwn® (MSC-NTF cell). On February 22, 2021, we announced high-level FDA feedback on NurOwn® ALS clinical development program. The ~~DSMB indicated~~FDA concluded from their initial review that the current level of clinical data does not provide the threshold of substantial evidence that FDA is seeking to support a BLA. In addition, the FDA advised that this recommendation does not preclude the Company from proceeding with a BLA submission. We are in active consultation with principal investigators, ALS experts, expert statisticians, regulatory advisors, and ALS advocacy groups to assess the benefit/risk of a BLA submission before making a final decision.

Key findings from the trial ~~should continue without any modifications~~were as follows:

●

NurOwn® was generally well tolerated in this population of rapidly progressing ALS patients.

●

While showing a numerical improvement in the treated group compared to placebo across the primary and key secondary efficacy endpoints, the trial did not reach statistically significant results.

●

The primary efficacy endpoint, a responder analysis evaluating the proportion of participants who experienced a 1.25 points per month improvement in the post-treatment ALSFRS-R slope compared to pre-treatment, was powered on assumed treatment response rates of 35% on NurOwn® versus 15% on Placebo. These estimates were based on available historical clinical trial data and the NurOwn® Phase 2 data. The primary endpoint was achieved in 34.7% of NurOwn® participants versus 27.7% for Placebo (p=0.453). Therefore, the trial met the expected 35% NurOwn® treatment group efficacy response assumption, however the high placebo response exceeded the placebo response expected based on contemporary ALS trials. When following the SAP to implement sensitivity to the primary endpoint, there is a slight change in the percentage of responders (32.6%), but no P value change.

●

The secondary efficacy endpoint measuring average change in ALSFRS-R total score from baseline to Week 28, was -5.52 with NurOwn® versus -5.88 on Placebo, a difference of 0.36 (p= 0.693).

●

In an important, pre-specified subgroup early in the disease course based on ALSFRS-R baseline score greater than 35, NurOwn® demonstrated a clinically meaningful treatment response across the primary and key secondary endpoints and remained consistent with our pre-trial, data-derived assumptions. In this subgroup, there were 34.6% responders who met the primary endpoint definition on NurOwn® and 15.6% on Placebo (p=0.288), and the average change from baseline to week 28 in ALSFRS-R total score was -1.77 on NurOwn® and -3.78 on Placebo (p=0.198), an improvement of 2.01 ALSFRS-R points favoring NurOwn®.

Cerebrospinal fluid (CSF) biomarker analyses confirmed that treatment with NurOwn® resulted in a statistically significant increase of neurotrophic factors (VEGF and HGF) and reduction in neurodegenerative (neurofilament) and neuroinflammatory biomarkers (MCP-1) that was not observed in the ~~study protocol, and the DSMB chair indicated that they did not identify any significant safety concerns.~~placebo treatment group.

●

Pre-specified statistical modeling designed to predict clinical response with high sensitivity and specificity based on ALS biomarkers and ALS Function confirmed that NurOwn® treatment outcomes could be predicted by baseline ALS function as well as key CSF neurodegenerative and neuroinflammatory biomarkers.

Table of Contents

NurOwn® Clinical Manufacturing

~~The Company has~~We have developed a validated cryopreservation process for the long-term storage of MSC, that allows multiple doses of NurOwn® to be created from a single bone marrow harvest procedure in the multi-dose clinical ~~trial~~trials and to avoid the need for patients to undergo repeated bone marrow aspiration. A validation study was conducted in 2017 comparing NurOwn® derived from fresh MSC to those derived from cryopreserved MSC. Company scientists were successful in showing that the MSC can be stored in the vapor phase of liquid nitrogen for prolonged periods of time, while maintaining their characteristics. Cryopreserved MSC are capable of differentiating into NurOwn®, similar to the NurOwn® derived from fresh MSC from the same patient/donor, prior to cryopreservation and maintain their key functional properties including immunomodulation and neurotrophic factor secretion.

~~The Company has~~We contracted with ~~the~~ City of Hope's Center for Biomedicine and Genetics to ~~produce~~manufacture clinical supplies of NurOwn® adult stem cells for ~~the ongoing U.S.~~our Phase 3 ~~ALS~~ clinical study. City of Hope ~~is currently supporting~~supported the ~~production~~manufacturing of NurOwn® and placebo for the participants treated in the Phase 3 ~~trial.~~study. The Connell and O’Reilly Cell Manipulation Core Facility at the Dana Farber Cancer Institute (DFCI) in Boston ~~has~~was also ~~been~~ contracted to manufacture NurOwn® and placebo for ~~the~~our Phase 3 ALS clinical study participants and commenced manufacturing in October 2018. ~~As of March 2019, The~~ DFCI core manufacturing facility is also ~~supplying~~supplied NurOwn® for ~~the U.S.~~our Phase 2 PMS study.

28On October 22, 2020, we announced a partnership with Catalent, the leading global provider of advanced delivery technologies, to manufacture NurOwn®, which has been evaluated for the treatment of ALS in our Phase 3 clinical trial. If we decide to file a BLA and granted approval, Catalent will be our partner for manufacturing commercial quantities of NurOwn® to treat patients with ALS. Our tech transfer to Catalent has already been initiated and will allow for continuous supply of NurOwn® for future clinical trials. On October 26, 2020, we announced the selection of RR&D as our partner to expedite site selection and design services for a state-of-the-art manufacturing facility for NurOwn® (autologous MSC-NTF) in the U.S. Our partnership with RR&D to help us establish in-house manufacturing capabilities will accelerate once a regulatory pathway is clear. These partnerships will ensure an ongoing cGMP clinical supply of NurOwn® and enable us to provide rapid treatment access to patients if we obtain regulatory approval.

~~Special meeting~~Meetings with the FDA ~~senior management~~and FDA Senior Management

In July 2019, the BrainStorm management team was invited to participate in a special in-person, high-level meeting with the senior management of the ~~U.S. Food and Drug Administration’s (FDA)~~FDA Drug and Biologics Centers and, ‘I AM ALS’, a grassroots ALS advocacy group advocating for an ALS cure.

FDA’s Dr. Peter Marks, Director of the Center for Biologics Evaluation and Research (CBER) and Dr. Janet Woodcock Director of the Center for Drug Evaluation and Research (CDER) were in attendance with senior FDA staff. BrainStorm’s Phase 3 ALS principal Investigators Dr. Robert Brown (Massachusetts Memorial Hospital, Worcester, Massachusetts) and Dr. Merit Cudkowicz (Massachusetts General Hospital, Boston) joined by teleconference.

The meeting’s purpose was to discuss BrainStorm’s ongoing Phase 3 ALS clinical trial as well as efforts to speed treatment access to the ALS patient community. The meeting enabled an open and effective dialogue between the FDA and BrainStorm, setting the stage for future meetings to explore practical options to quickly bring our investigational treatment to those living with ALS.

On February 11, 2020, ~~the Company~~we announced that ~~it recently~~we held a high-level meeting with the FDA to discuss potential NurOwn® regulatory pathways for approval in ALS. In the planned meeting with senior ~~Center for Biologics Evaluation and Research (CBER)~~CBER leadership and several leading U.S. ALS experts, the FDA confirmed that the Phase 3 ALS trial iswas collecting relevant data critical to the assessment of NurOwn® efficacy. The FDA indicated that they would look at the "totality of the evidence" in the expected Phase 3 clinical trial data. ~~Furthermore, based~~

On February 9, 2021, we announced feedback on ~~their~~a Type-C Meeting with FDA on future NurOwn® manufacturing plans and to review specific aspects of our planned manufacturing modifications to support the development of a semi-automated commercial manufacturing process for NurOwn® (MSC-NTF cell). The meeting included a detailed ~~data assessment, they are committed to working collaboratively with BrainStorm to identify a regulatory pathway forward, including opportunities to expedite statistical~~ review of the requirements for comparability testing to support future modifications along with geographic considerations in the sourcing of starting materials and future manufacturing production. We plan to incorporate feedback from the FDA meeting and our experience from Phase 3 manufacturing to finalize a robust comparability plan that could enable semiautomatic manufacturing to be introduced at the appropriate time in the future. We also plan to finalize the remaining steps necessary to proceed with running NurOwn® conformance batches. The FDA also provided comments on several key aspects of the current manufacturing process, which we will use as we continue our work to enable operations at our commercial manufacturing partner, Catalent.

Table of Contents

On February 22, 2021, we announced high-level FDA feedback on NurOwn® ALS Clinical Development Program. The FDA concluded from their initial review that the current level of clinical data does not provide the threshold of substantial evidence that FDA is seeking to support a BLA. In addition, the FDA advised that this recommendation does not preclude the Company from proceeding with a BLA submission. We are in active consultation with principal investigators, ALS experts, expert statisticians, regulatory advisors, and ALS advocacy groups to assess the benefit/risk of a BLA submission before making a final decision.

ALS Expanded Access Program

On December 14, 2020, we announced the NurOwn® Expanded Access Program (EAP) through which NurOwn® will be made available for ALS patients who completed all Phase 3 scheduled treatments and follow-up assessments and meet specific eligibility criteria.

The protocol for the EAP was developed in partnership with the FDA to provide access to NurOwn® for Phase 3 clinical trial participants who meet specific eligibility criteria. Initially, patients less severely affected by ALS, as measured by ALSFRS-R, will be the first to receive treatment. This approach is informed by recently announced topline data from the Company's Phase 3 clinical trial. According to the FDA, EAPs, alternatively known as "compassionate use" programs, provide a pathway for patients to receive an investigational medicine for a serious disease or condition outside of a clinical trial.

Through the EAP, the six clinical centers participating in the Phase 3 NurOwn® trial will each have the opportunity to treat ALS patients who completed the trial. These six centers are: University of California, Irvine; Cedars-Sinai Medical Center; California Pacific Medical Center; Massachusetts General Hospital; University of Massachusetts Medical School; and Mayo Clinic. EAP treatment of ALS patients who have completed the Phase 3 clinical trial will not interfere with data or regulatory timelines. The Dana Farber Cancer Institute will manufacture the investigational therapy, assisted by on-site BrainStorm personnel.

Patient Access Programs (ALS)

The Company working collaboratively with the Tel Aviv Sourasky Medical Center (Ichilov Hospital), was approved on March 7, 2019 to treat up to 13 ALS patients with NurOwn®, under the Israel Hospital Exemption regulatory pathway for Advanced Therapy Medicinal Products (ATMP), which was adopted by the Israeli ~~Ministry of Health (MoH)~~MoH from the ~~European Medicine Agency (EMA)~~EMA regulation. This pathway enables the Company to make NurOwn® accessible to ALS patients in Israel, for a fee. This approval expired on March 7, 2020. Ichilov Hospital and the Company has since then received approval from the MoH for the extension of the program. Based on the approval, the Company has enrolled 12 out of the first 13 patients under the HE regulatory pathway as of ~~June 30, 2020~~March 31, 2021 and intends to enroll the maximum number of patients that have been approved. The Company is currently collecting clinical data for patients who have already received ~~treatment~~NurOwn® at the Ichilov Hospital. Thus far, the Company has received $3.4 million in gross proceeds in connection with the treatment of the aforementioned patients.

NurOwn® in Progressive Multiple Sclerosis (PMS)

On December 15, 2018, the FDA approved the Company's IND to conduct a Phase 2 open label trial of repeated intrathecal administration of NurOwn® in ~~Progressive Multiple Sclerosis~~PMS (www.clinicaltrials.gov Identifier NCT03799718). The study entitled ‘A“A Phase 2, open-label, multicenter study to evaluate the safety and efficacy of repeated administration of NurOwn® (Autologous Mesenchymal Stem Cells Secreting Neurotrophic Factors; MSC-NTF cells) in participants with Progressive Multiple Sclerosis (PMS)’” was designed to recruit 20 PMS participants at 5 leading US MS centers.

On December 18, 2019, the clinical trial independent Data Safety Monitoring Board (DSMB) for the U.S. Phase 2 PMS study completed the first, pre-specified interim analysis, of safety outcomes for the first 9 participants enrolled in the study. After careful review of all available clinical trial data, the DSMB unanimously concluded “the study should continue as planned without any protocol modification”.

~~The~~ 28

Table of Contents

Phase 2 PMS Clinical Trial

On March 24, 2021, the Company announced positive topline data in the Phase 2 study evaluating three repeated administrations of NurOwn®, each given 2 months apart, as a treatment for PMS. The 28-week open-label Phase 2 clinical trial ~~faced slight delays~~enrolled 20 primary and secondary progressive MS patients based on the 2017 revised McDonald Criteria, ages 18-65, with baseline Expanded Disability Status Scale (EDSS) scores between 3-6.5, without evidence of relapse within 6 months of enrollment, able to walk 25 feet in ~~enrollment due~~60 seconds or less and were permitted to be on a stable dose of disease modifying therapy. Of the ~~COVID-19 pandemic. Scheduled March~~20 patients enrolled, 18 were treated and ~~April 2020 new participant enrollments were deferred to May 2020 due to site closures~~16 (80%) completed the study. Two patients discontinued related to ~~COVID-19. As~~procedure-related AEs. There were no study deaths or AEs related to multiple sclerosis worsening. The mean age of ~~June 2020, all~~study patients was 47, 56% were female, and mean baseline EDSS score was 5.4. The clinical trial compared clinical efficacy outcomes with a 48- patient matched clinical cohort from the Comprehensive Longitudinal Investigations in MS at the Brigham & Woman's Hospital (CLIMB Study). MS Function and Cognition measures in the top-line results included the timed 25-foot walk (T25FW); 9-hole peg test (9-HPT); Low Contrast Letter Acuity (LCLA); Symbol Digit Modality Test (SDMT); and the 12 item MS Walking Scale (MSWS-12).

Key findings from the trial ~~sites~~ were ~~back~~as follows:

●

Prespecified 25% improvements in the timed T25FW and 9-HPT from baseline to 28 weeks were observed in 14% and 13% of NurOwn® treated patients, respectively, and was observed in 0% of the pre-specified matched historical controls in the CLIMB registry.

●

38% of NurOwn® treated patients showed at least a 10-point improvement in the MSWS-12 from baseline to week 28, a patient reported outcome that evaluates walking function.

●

47% of NurOwn® treated patients showed at least an 8-letter improvement across 28 weeks in the LCLA, a visual function test.

●

67% of NurOwn® treated patients showed at least a 3-point improvement in the SDMT, a measure of cognitive processing.

●

NurOwn treated patients showed a mean improvement from baseline of 10% in T25FW and a 4.8% improvement from baseline on the 9-HPT dominant hand, compared to 1.8% and 1.4% worsening respectively in matched historical controls from the CLIMB registry.

●

NurOwn treated patients showed a 6% improvement from baseline in MSWS-12.

All results reported are based on ~~track~~observed data. Cerebrospinal fluid (CSF) biomarkers were obtained at 3 consecutive time points, just prior to ~~continue with~~each intrathecal administration of NurOwn®. We observed increases in neuroprotective molecules (VEGF, HGF) and decreases in neuroinflammatory biomarkers (MCP-1, and Osteopontin).

Additional secondary efficacy data, and detailed CSF and blood biomarker analyses are currently underway. We plan to present a detailed summary of the ~~trial. All 20~~ study ~~participants have been enrolled~~outcomes at an upcoming scientific meeting, publish our findings in ~~the study. The Company is currently completing the collection of clinical~~a peer reviewed journal and ~~biomarker data from treated patients as specified~~consider how best to advance NurOwn in ~~the protocol. Dosing of all participants is expected to be completed in the fourth quarter of 2020.~~PMS.

On November 14, 2019, ~~the Company~~we received a $495,330 grant from the National Multiple Sclerosis Society, ~~(NMSS),~~ through its Fast Forward program, ~~for serum and CSF biomarkers analysis in~~to advance BrainStorm’s Phase 2 open-label, multicenter clinical trial of repeated intrathecal administration of NurOwn® in participants with ~~PMS.~~progressive Multiple Sclerosis. As of March 31, 2021, we received $321,965 on account of the grant.

NurOwn® in Alzheimer’s Disease (AD)

~~The Company is~~We are designing a multi-national Phase 2 clinical trial to evaluate ~~the~~biomarkers and safety ~~preliminary efficacy and pharmacodynamics~~ of NurOwn® treatment in patients with prodromal to mild ~~Alzheimer's disease (AD).~~AD. The 52-week study is expected to enroll up to 40 participants with prodromal to mild AD that will receive three intrathecal NurOwn® doses 8 weeks apart. Inclusion criteria include well-defined clinical criteria for prodromal to mild AD as well as CSF biomarker defined criteria for AD.

Table of Contents

The Phase 2 clinical trial will evaluate ~~safety, preliminary efficacy~~biomarkers and ~~pharmacodynamics~~safety of NurOwn®, including effects on inflammatory, Alzheimer’s-specific, neurodegenerative, and synaptic biomarkers, as well as a range of key clinical measures of cognition and function. It is currently expected to be conducted at the VU University Medical Center (Amsterdam), Pitié-Salpêtrière Hospital (Paris), and other clinical trial sites in the Netherlands and France.

The lead investigators for the trial are two world renowned clinical experts in AD: Prof. Philip Scheltens, M.D., Ph.D., and Prof. Bruno Dubois, M.D., Ph.D. Prof. Scheltens, the principal investigator (PI) of the study, is Professor of Cognitive Neurology and Director of the Alzheimer Centre at Amsterdam University Medical Center. He has extensive experience as a principal investigator in many international clinical trials in this field. Prof. Dubois, the French national coordinator of the study, is Professor of Neurology at the Neurological Institute of the Salpétrière University Hospital. He is the past President of the Scientific Committee of France-Alzheimer, President of IFRAD (International Fund Raising for Alzheimer's Disease) as well as a member of the European Alzheimer Disease Consortium (EADC).

While many Alzheimer's therapies have focused on a single target such as tau or beta-amyloid, we believe NurOwn® has the capability to simultaneously target multiple relevant biological pathways and bring a comprehensive approach to this multifactorial disease. Importantly, NurOwn®’s mechanism of action may allow the therapy to enable synergistic combinations with anti-tau or anti-beta-amyloid treatments, further underscoring its potential to address critical unmet needs in AD. In such a complex disease, addressing inflammation and neuroprotection is an innovative approach and a first in the world for this technology.

On July 8, 2020, the Company hosted a KOL webinar to discuss its NurOwn® Phase 2 AD Program. The webinar featured presentations from Prof. Scheltens and Prof. Dubois, the lead investigators in the trial. For more information on the KOL webinar and presentation, visit BrainStorm's website at www.brainstorm-cell.com.

Non-Dilutive Funding

In July 2017, ~~the Company was~~we were awarded a grant in the amount of $15,912,390 from the California Institute for Regenerative Medicine (CIRM) to aid in funding the Company’s pivotal Phase 3 study of NurOwn®, for the treatment of ALS. ~~The Company~~We received $12,550,000 of the CIRM grant from ~~2017-2019:~~2017 2019: $9,050,000 from 2017 through 2018, and an additional $3,500,000 in 2019. On March 16, 2020, ~~the Company announced that it had~~we received ~~an additional~~ $2,200,000 from CIRM for achieving ~~its~~our pre-determined milestones. ~~With the receipt~~In July 2020, we received an additional $700,000 for making further progress in our Phase 3 study. On December 1, 2020, we received our final payment of ~~this grant, the Company has~~$462,390. We have now received ~~$14,750,000~~in full the total amount of the ~~total available~~ $15,912,390 grant funding awarded by CIRM. The grant does not bear a royalty payment commitment nor is the grant otherwise refundable. The Company expects to receive approximately $1,162,390 in additional grant funding from CIRM during the fourth quarter of 2020 since the milestone was achieved. $1,162,390 was recorded as participation by CIRM in research and development expenses during the three months ended September 30, 2020.

On November 14, 2019, ~~the Company received~~we were awarded a $495,330 grant from the National Multiple Sclerosis Society (NMSS), through its Fast Forward program, for serum and CSF biomarkers analysis in BrainStorm’s Phase 2 open-label, multicenter clinical trial of repeated intrathecal administration of NurOwn® in participants with PMS. As of ~~September 30, 2020, the Company has~~March 31, 2021, we have received $321,965 out of the $495,330 awarded.

On April 3, 2020, ~~the Company~~we announced that ~~its~~our wholly owned subsidiary, BrainStorm Cell Therapeutics Ltd., has been awarded a new non-dilutive grant of approximately $1.5 million by the Israel Innovation Authority (“IIA”). The grant enables the Company to continue development of advanced cellular manufacturing capabilities, furthers development of ~~MSC-derived~~MSC-NTF derived exosomes as a novel therapeutic platform, and will ultimately enable BrainStorm to expand the therapeutic pipeline in neurodegenerative disorders. As of ~~September 30, 2020, the Company has~~March 31, 2021, we have received ~~$658,000~~$940,000 out of the $1.5 million awarded.

On June 9, 2020, ~~the Company~~we announced that The ALS Association and I AM ALS have awarded ~~the Company~~us a combined grant of $500,000 to support an ALS biomarker research study. The grant will be used to draw insights from data and samples collected from patients ~~enrolled~~who participated in BrainStorm's ~~ongoing~~ Phase 3 clinical trial ~~of its~~and treated with NurOwn® ~~treatment,~~, and to further the understanding of critical biomarkers associated with treatment response for people with ALS.

~~On July 1, 2020, the Company~~ As of March 31, 2021, we have received ~~a non-dilutive bonus payment~~$200,000 out of ~~$700,000 from CIRM for treating more California participants than originally proposed in its Phase 3 ALS trial.~~$500,000 awarded.

Intellectual Property

A key element of ~~the Company’s~~our overall strategy is to establish a broad portfolio of patents and other methods described below to protect its proprietary technologies and products. BrainStorm is the sole licensee or assignee of 1523 granted patents 42 allowed patents and 22 patent applications in the United States, Canada, Europe, and Israel, as well as in additional countries worldwide, including countries in the Far East and South America (in calculating the number of granted patents, each European patent validated in multiple jurisdictions was counted as a single patent).

~~In March 2019, the European Patent Office ("EPO") granted a European-wide patent titled ‘Mesenchymal Stem Cells for the treatment~~30

Table of CNS Diseases.’ The European Patent Application published in the European Patent Bulletin 19/13 on March 27, 2019, under Patent No. 2620493. The allowed claims cover the isolated cells as well as their use in the manufacture of a medicament for treating a CNS disease or disorder, selected from the group consisting of: Parkinson’s, multiple sclerosis, epilepsy, amyotrophic lateral sclerosis, stroke, autoimmune encephalomyelitis, diabetic neuropathy, glaucomatous neuropathy, Alzheimer’s disease and Huntington’s disease.Contents

On August 27, 2019, the Canadian Intellectual Property Office granted Canadian Patent No. 2,877,223 entitled ‘Methods of Generating Mesenchymal Stem Cells which secrete Neurotrophic Factors’. The allowed claims cover the method for generating the Mesenchymal Stem Cells Secreting Neurotrophic Factors (MSC-NTF cells).

On September 16, 2019, the United States Patent and Trademark Office (USPTO) issued a Notice of Allowance for BrainStorm’s new US Patent Application, number: 15/113,105, titled: ‘Method of Qualifying Cells’. The allowed claims cover a pharmaceutical composition for MSC-NTF cells secreting neurotrophic factors (NurOwn®) comprising a culture medium as a carrier and an isolated population of differentiated bone marrow-derived MSCs that secrete neurotrophic factors.

On October 21, 2019, the Japan Patent Office (JPO) issued a decision to Grant Japanese Patent Application, number: 2016-548691, titled: ‘Method of Qualifying Cells.’ The patent covers cell populations which are therapeutic for the treatment of ALS and the method of qualifying the cells for therapeutic use.

~~On December 6, 2019, the Hong Kong Patent Office sealed patent No. HK1182133 titled ‘Mesenchymal Stem Cells for the treatment of CNS Diseases’.~~

On January 27, 2020, the Israeli patent Office allowed application number 246943 titled ‘Method of Qualifying Cells’. The allowed claims cover a method of qualifying whether a cell population is a suitable therapeutic for treating Amyotrophic Lateral Sclerosis (ALS) and an isolated population of cells that secrete neurotrophic factors which are qualified useful as a therapeutic for treating ALS.

On January 29, 2020, the European Patent Office (EPO) communicated its intention to grant a European patent titled ‘Methods of Generating Mesenchymal Stem Cells which secrete Neurotrophic Factors’. ~~Allowed~~The allowed claims cover the method for manufacturing MSC-NTF cells (NurOwn®).

On February 18, 2020, the US Patent and Trademark Office (USPTO) issued US Patent No. 10,564,149 titled ‘Populations of Mesenchymal Stem Cells That Secrete Neurotrophic Factors’. The allowed claims cover a pharmaceutical composition for MSC-NTF cells secreting neurotrophic factors (NurOwn®) comprising a culture medium as a carrier and an isolated population of differentiated bone marrow-derived MSCs that secrete neurotrophic factors.

On September 1, 2020, the Israeli Patent Office issued Israeli Patent No. 246943 titled ‘Method of Qualifying Cells’. The granted claims include a cell population that secretes neurotrophic factors which is qualified useful as a therapeutic for treating ALS, and a method for qualifying said population.

On September 16, 2020, the Company announced that the Japanese Patent Office (JPO) has granted Brainstorm's Japanese Patent, number: 6,753,887, titled: "Methods of Generating Mesenchymal Stem Cells Which Secrete Neurotrophic Factors". The allowed claims cover a method of generating cells which secrete neurotrophic factors from human undifferentiated mesenchymal stem cells (MSCs) derived from the bone marrow of a single donor. The said neurotrophic factors includes: brain derived neurotrophic factor (BDNF); glial derived neurotrophic factor (GDNF); hepatocyte growth factor (HGF); and vascular endothelial growth factor (VEGF).

On December 15, 2020, the Canadian Patent office sealed Patent no. 2,937,305 titled ‘Pharmaceutical composition comprising bone-marrow derived mesenchymal stem cells’. The granted claims include a pharmaceutical composition for NurOwn® (MSC-NTF cells, Mesenchymal Stem Cells secreting Neurotrophic Factors), comprising a culture medium as a carrier and an isolated population of differentiated bone marrow-derived MSCs that secrete neurotrophic factors

On February 19, 2021, the Hong Kong patent office sealed Patent No. HK1209453 titled 'Methods of Generating Mesenchymal Stem Cells which secrete Neurotrophic Factors'. Allowed claims cover the method for manufacturing MSC-NTF cells (NurOwn®).

Patents protecting NurOwn® have been issued in the United States, Canada, Japan, Europe, Hong Kong, and Israel.

For a complete list of our patent portfolio, please refer to the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Recent Scientific and Industry Presentations

Between October 12-16, 2020, Dr. Stacy Lindborg, Ph.D., delivered an on-demand webinar at the 2020 Cell & Gene Meeting on the Mesa, held virtually.

On October 20, 2020, the Company presented a poster titled, "MSC-NTF (NurOwn®) Exosomes: A Novel Therapeutic Modality in the Mouse LPS-induced ARDS model Analysis" at the NYSCF Conference Meeting, being held virtually.

On December 9, 2020, the Company presented results from the Company's placebo controlled, randomized, double-blind Phase 3 trial evaluating NurOwn® (MSC-NTF cells) as a treatment for ALS at the 31st International Symposium on ALS/MND virtual symposium.

On January 21, 2021, Dr. Ralph Kern, MD MHSc presented results from the Company's placebo controlled, randomized, double-blind Phase 3 trial evaluating NurOwn® (MSC-NTF cells) as a treatment for ALS at the California ALS Research Summit.

On February 26, 2021, Dr. Stacy Lindborg, PhD, presented at the SVB Leerink 10th Global Healthcare Conference.

Table of Contents

~~Scientific and Industry Presentations in 2020~~

~~On January 12, 2020, Mr. Chaim Lebovits presented at the 3rd Annual Neuroscience Innovation Forum at the Marines’ Memorial Club in San Francisco, California.~~

~~On January 12, 2020, Dr. Ralph Kern MD MHSc participated on a Rare & Orphan Diseases Panel at the 3rd Annual Neuroscience Innovation Forum at the Marines’ Memorial Club in San Francisco, California.~~

On January 24, 2020, Dr. Ralph Kern MD MHSc delivered a podium presentation entitled “CIRM funded Stem Cell Clinical Trials in California – Updates” at the 10th Annual California ALS Research Summit hosted at the Cedars-Sinai Medical Center, Los Angeles, California.

~~On February 11, 2020, Mr. Chaim Lebovits presented at BIO CEO and Investor Conference at the Marriott Marquis in New York City, New York.~~

~~On February 17, 2020, Dr. Ralph Kern MD MHSc presented at the Noble Capital Markets’ Sixteenth Annual Investor Conference at the Hard Rock Hotel and Casino, Hollywood, Florida.~~

~~On June 8, 2020, Dr. Ralph Kern MD MHSc provided a corporate overview at the BIO Digital 2020 Virtual Conference.~~

~~On June 18, 2020, Dr. Ralph Kern MD MHSc presented a corporate overview at the Raymond James Virtual Human Health Innovations Conference.~~

~~On August 13, 2020, Dr. Ralph Kern MD MHSc presented a corporate overview at the 40th Annual Canaccord Genuity Growth Conference.~~

On September 9, 2020, Dr. Ralph Kern MD MHSc made a presentation on "Stem Cells for neurological applications, clinical and stem cells-based product development" at the Advanced Therapies & Expo 2020 Virtual Conference.

On September 11, the Company presented a poster at the eighth joint virtual meeting of the Americas Committee for Treatment and Research in Multiple Sclerosis (ACTRIMS) and the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS).

~~On September 14, 2020, Dr. Ralph Kern MD MHSc participated in a panel discussion on neurodegenerative diseases at the 2020 CIRM Grantee Virtual Conference.~~

~~On September 24, 2020, Dr. Ralph Kern MD MHSc presented at the "WuXi Apptec - Collaborations That Transform Meeting (Multiple Sclerosis)" Virtual Conference.~~

~~On September 30, 2020, Dr. Stacy Lindborg, PhD presented a poster titled, "Advancing NurOwn® for ALS: Phase 3 Clinical Trial Design" at the Annual Northeast ALS (NEALS) Virtual Meeting.~~

Research and Development

~~The Company is reviewing~~We are actively engaged in research and development to evaluate the potential for clinical development of NurOwn® in ~~several~~ neurodegenerative disorders, ~~and~~ neurodegenerative eye ~~disease.~~disease and acute respiratory distress syndrome (ARDS). Research is currently ongoing to develop additional specialized derivative cell products such as MSC-NTF derived Exosomes. Exosomes are extracellular nano-vesicles (secreted by the cells) that carry various molecular components of their cell of origin, including nucleic acids, proteins and lipids. Exosomes can transfer molecules from one cell to another, thereby mediating cell-to-cell communication, ultimately regulating many cell processes, which are suitable for clinical applications in multiple neurodegenerative diseases. NurOwn® derived exosomes may possess unique features for the enhanced delivery of therapeutics to the brain, due to their ability to cross the blood brain barrier and to penetrate the brain and spinal cord.

~~In addition,~~ The exosomes research efforts are primarily focused on manufacturing of MSC-NTF exosomes from bone marrow derived MSC:

Developing and optimizing large scale cell culture processes using bioreactors, to generate exosomes.

Developing advanced scalable purification GMP methods that can be applied to commercial use.

Quantification, characterization of phenotype and exosome cargo.

Assessment of MSC-NTF exosomes potency and stability.

Establishment of a method for exosomes modification.

Preclinical experiments in neurodegenerative models.

NurOwn® derived exosomes have the potential to treat acute respiratory distress syndrome (ARDS) due to their ability to penetrate ~~into~~ deep tissues and decrease the inflammatory response. ARDS is a type of respiratory failure associated with widespread inflammation and lung damage mediated by dysregulated cytokine production and is one of the severe features of COVID-19.

MSC exosomes may be delivered intravenously or directly into the lungs via intratracheal administration have several practical advantages over cellular therapy including ease of storage, stability, formulation and low immunogenicity.

~~The exosomes research efforts are primarily focused on:~~

1.	~~Manufacturing of MSC-NTF exosomes from bone marrow derived MSC and umbilical cord derived MSC:~~

~~Developing and optimizing large scale cell culture processes using bioreactors, to generate exosomes.~~

~~Developing advanced scalable purification GMP methods that can be applied to commercial use.~~

2.	~~Quantification, characterization of phenotype and exosome cargo.~~

3.	~~Assessment of MSC-NTF exosomes potency and stability.~~

4.	~~Establishment of a method for exosomes modification.~~

In a ~~pre-clinical~~preclinical study, we evaluated MSCs and NurOwn® derived exosomes in an LPS ARDS-mouse model, relevant to severe acute lung injury. The results from the study showed that intratracheal administration of NurOwn® derived exosomes resulted in a statistically significant improvement in multiple lung parameters. These included the clinically relevant factors: functional lung recovery, reduction in pro-inflammatory cytokines and most importantly, attenuation of lung damage. Moreover, MSC-NTF cell derived exosomes exhibited a superior effect when compared to treatment with exosomes derived from naïve ~~mesenchymal stem cells (MSCs)~~MSCs from the same donor. On January 20, 2021 we announced the peer-reviewed publication of this preclinical study in the journal Stem Cell and Research Therapy. The study, entitled “MSC-NTF (NurOwn®) exosomes: a novel therapeutic modality in the mouse LPS-induced ARDS model,” evaluated the use of NurOwn® (MSC-NTF cell) derived exosomes in a mouse model of acute respiratory distress syndrome (ARDS).

For the ~~ongoing~~completed multidose clinical studies in ALS and PMS, the Company has improved the efficiency of NurOwn® production and improved its stability, allowing manufacturing to take place at centralized clean room facilities from which NurOwn® is distributed to the clinical trial sites, where the cells are then administered to patients. The Company is also engaged in several research initiatives to further improve and scale-up manufacturing capacity and extend the shelf life of NurOwn®.

Corporate Information

We are incorporated under the laws of the State of Delaware. Our principal executive offices are located at 1325 Avenue of Americas, 28th Floor, New York, NY 10019, and our telephone number is (201) 488-0460. We also maintain ~~offices at 12 N State Route 17, Suite 201, Paramus, NJ 07652, and~~an office in Petach Tikva, Israel. We maintain ~~an Internet~~a website at http://www.brainstorm-cell.com. The information on our website is not incorporated into this Quarterly Report on Form 10-Q.

Table of Contents

Results of Operations

For the period from inception (September 22, 2000) through ~~September 30, 2020,~~March 31, 2021, the Company has not earned any revenue from operations. The Company does not expect to earn revenue from operations in the near-term. The Company has incurred operating costs and other expenses of approximately ~~$4,485,000~~$6,929,000 during the three months ended ~~September 30, 2020~~March 31, 2021 compared to ~~$5,551,000~~$8,308,000 during the three months through ~~September 30, 2019.~~March 31, 2020.

Research and Development Expenses:

Research and development expenses, net for the three months ended ~~September 30,~~March 31, 2021 and 2020 were $4,341,000 and ~~2019 were $1,867,000 and $4,008,000,~~$5,948,000, respectively, representing a decrease of ~~$2,141,000.~~$1,607,000. This decrease is due to (i) a decrease of ~~$2,313,000~~$2,588,000 in costs related to the Phase 3 and Phase 2 Clinical Trials from ~~$4,100,000~~$5,651,000 in three months ended ~~September, 2019~~March 31, 2020 to ~~$1,787,000~~$3,063,000 for the three months period ended ~~September 30, 2020;~~March 31, 2021 and (ii) ~~an increase of $2,071,000 in participation of the Israel Innovation Authority (“IIA”) and CIRM, under various awarded grants and (iii)~~ a decrease of ~~$98,000~~$281,000 in connection with ~~patents,~~stock-based compensation expenses, materials, travel, rent and other activities. This decrease was partially offset by (i) an increase of ~~$178,000 in material and other costs;~~$163,000 for costs related to payroll; (ii) an increase of ~~$556,000~~$462,000 for costs related to ~~payroll~~patents, preclinical R&D activities and ~~stock-based compensation expenses~~consultants and (iii) a decrease of ~~$1,607,000~~$637,000 in proceeds received in connection with the treatment of patients under the hospital exemption regulatory ~~pathway.~~pathway and decrease in participation of the Israel Innovation Authority (“IIA”).

Excluding participation from IIA and ~~CIRM under the~~other grants and proceeds received under the hospital exemption regulatory pathway, research and development expenses decreased by ~~$1,678,000~~$2,328,000 from ~~$5,663,000~~$7,135,000 in the ~~third~~first quarter of ~~2019~~2020 to ~~$3,985,000~~$4,807,000 in the ~~third~~first quarter of ~~2020.~~2021.

General and Administrative Expenses:

General and administrative expenses for the three months ended ~~September 30,~~March 31, 2021 and 2020 were $2,588,000 and ~~2019 were $2,618,000 and $1,543,000,~~$2,360,000, respectively. The increase in general and administrative expenses of ~~$1,075,000~~$228,000 is primarily due to an increase of ~~$788,000~~$74,000 in payroll and stock-based compensation, and an increase of ~~$316,000~~$320,000 in ~~PR costs,~~ consultants, rent and other costs. This increase was partially offset by the decrease of ~~$29,000~~$166,000 in PR and travel costs.

Other Income and Expenses:

Financial income for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~$3,000~~$267,000 as compared to financial ~~expense~~income of ~~$83,000~~$194,000 for the three months ended ~~September 30, 2019~~March 31, 2020 as a result of the adoption of the Accounting Standard Update ASU 2016-02 “Leases” and due to conversion exchange rates.

Net Loss:

Net loss for the three months ended on ~~September 30, 2020~~March 31, 2021 was ~~$4,488,000,~~$6,662,000, as compared to a net loss of ~~$5,634,000~~$8,114,000 for the three months ended ~~September 30, 2019.~~March 31, 2020. Net loss per share for the three months ended ~~September 30,~~March 31, 2021 and 2020 was $0.19 and ~~2019 was $0.14 and $0.25,~~$0.32, respectively.

The weighted average number of shares of Common Stock used in computing basic and diluted net loss per share for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~31,154,101,~~35,791,309, compared to ~~22,254,993~~28,423,837 for the three months ended ~~September 30, 2019.~~March 31, 2020.

Liquidity and Capital Resources

The Company has financed its operations since inception primarily through public and private sales of its Common Stock and warrants, the exercise of warrants, the issuance of convertible promissory notes, sales via the ATM program and through various grants.

Cash, Cash equivalents (including short-term bank deposits) amounted to approximately ~~$28,808,000~~$40,047,000 as of ~~September 30, 2020.~~March 31, 2021.

Net cash used in operating activities was ~~$6,924,000~~$8,968,000 for the three months ended ~~September 30, 2020.~~March 31, 2021. Cash used for operating activities was primarily attributed to reduction in outstanding trades payables, cost of payroll, materials for clinical trials, rent, legal expenses and PR expenses. Net cash used in investing activities was ~~$86,000~~$37,000 for the three months ended ~~September 30, 2020,~~March 31, 2021, mainly representing net increase in short-term interest-bearing bank deposits. Net cash provided by financing activities was ~~$19,627,000~~$7,109,000 for the three months ended ~~September 30,~~March 31, 2020 and is attributable to the exercise of options and sales of shares under our ATM Program.

Table of Contents

On June 8, 2018, we filed a shelf registration statement on Form S-3 (File No. 333-225517) (the “Shelf Registration Statement”), which was declared effective by the SEC on June 29, 2018, relating to Common Stock, warrants and units that we may sell from time to time in one or more offerings, up to a total dollar amount of $100,000,000. Other than the supplements filed on June 11, 2019, March 6, 2020 and on September 25, 2020 in connection with the ATM offerings discussed below, and the prospectus supplement filed on March 6, 2020 in connection with the registered direct offering discussed below, we have not filed any supplemental prospectus defining particular terms of securities to be offered under the shelf registration statement.

At-the-market (ATM) Offerings:

On June 11, 2019, the Company entered into a distribution agreement with Raymond James & Associates, Inc. ("Raymond James"), pursuant to which the ~~June~~Company sold, through the Raymond James, shares of Common Stock having an aggregate offering amount of $20,000,000 (the "June 11, 2019 ~~ATM~~ATM") in an ~~“at~~"at the ~~market”~~market" offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, by sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and the Agent. On February 21, 2020, the Company completed the sale of all remaining shares issuable under the June 11, 2019 ATM and exhausted its full ATM capacity. Under the June 11, 2019 ATM, the Company sold an aggregate of 4,141,569 shares of Common Stock at an average price of $4.83 per share, raising gross proceeds of approximately $20 million.Raymond James.

On March 6, 2020, the Company entered into a new distribution agreement with Raymond James (the “Agent”), pursuant to which the Company was able to sell from time to time, through the Agent, shares of Common Stock, having an aggregate offering price of up to $50,000,000 (the “March 6, 2020 ATM”). Sales under the March 6, 2020 ATM were ~~to be~~ made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and Raymond James. Under the ~~Agent. During the quarter ended September 30,~~March 6, 2020 ATM, the Company sold an aggregate of ~~947,627~~2,446,641 shares of Common Stock at an average price of $9.45 per share, raising gross proceeds of approximately $23.11 million.

~~On September 25, 2020, the Company entered the~~(the “September 25, 2020 ATM”). Sales under the September 25, 2020 ATM are to be made by any method permitted by law that is deemed to be an “at the market” offering as defined in Rule 415 promulgated under the Securities Act, including, without limitation, sales made directly on the Nasdaq Capital Market, on any other existing trading market for the Shares, through a market maker or as otherwise agreed by the Company and the Agents. The Distribution Agreement amends and restates in its entirety the Company’s prior agreement with Raymond James entered on March 6, 2020 (the “March 6, 2020 ~~ATM.~~ATM”). The Company previously sold 2,446,641 shares of Common Stock for gross proceeds of approximately $23.11 million of Common Stock under the March 6, 2020 ATM. During the quarter ended March 31, 2021, the Company sold an aggregate of 1,156,897 shares of Common Stock pursuant to the September 25, 2020 ATM at an average price of $6.33 per share, raising gross proceeds of approximately $7.3 million. Since inception and as of March 31, 2021, the Company has sold 4,721,282 shares of Common Stock for gross proceeds of approximately $29.1 million under the September 25, 2020 ATM.

Registered Direct Offering:

On March 6, 2020, the Company entered into and closed a $10.0 million registered direct offering of 1,250,000 shares of Common Stock at a per share purchase price equal to $8.00. Purchaser also received a three-year warrant to purchase up to 250,000 shares of Common Stock at any exercise price of $15.00 per share.

Table of Contents

Recent Sales of Unregistered Securities:

Exercises of 2018 Amended Warrants:

On June 6, 2018, the Company entered into a Warrant Exercise ~~Agreements~~Agreement (the “2018 Warrant Exercise Agreement”) with certain holders (“(the “2018 Warrant Holders”) of warrants (the “2015 Warrants”) to purchase Common Stock. The 2015 Warrants were originally issued in the Company’s January 8, 2015 private placement. Pursuant to the 2018 Warrant ~~Holders”), pursuant~~Exercise Agreement, the 2018 Warrant Holders exercised their 2015 Warrants for a total of 2,458,201 shares of Common Stock at an amended exercise price of $5 per share. The warrant exercises generated gross cash proceeds to ~~which holders were~~the Company of $12.3 million. In addition, the Company issued new warrants to the 2018 Warrant Holders to purchase an aggregate 2,458,201 unregistered shares of Common Stock, at an exercise price of ~~$9 per share,~~$9.00, with an expiration date of December 31, 2020 (the “2018 Warrants”). In connection with the issuance of the 2019 Warrants (described below), certain 2018 Warrants were amended on August 2, 2019 to reduce the exercise price to $7.00 per share and to extend the expiration date to December 31, 2021 (the “Amended 2018 Warrants”).

The 2018 Warrants have not been registered under the Securities Act of 1933, as amended (the Securities Act), or state securities laws. The shares issuable upon exercise of the Amended 2018 ~~Exercised Shares~~Warrants have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-225995). The exercised shares have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-201704). The issuance of the ~~2018 Exercised Shares~~exercised shares and 2018 Warrants was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. The Company made this determination based on the representations that each party is an “accredited investor” within the meaning of Rule 501 of Regulation D. ~~The Company expects to use cash received from exercises for general corporate and working capital purposes.~~

Exercises of 2019 Warrants:

On August 2, 2019, the Company entered into a Warrant Exercise ~~Agreements with~~Agreement which generated gross cash proceeds to the Company of approximately $3.3 million. Pursuant to the agreement, certain ~~2018 Warrant Holders (“2019~~holders (the “2019 Warrant Holders”)~~, pursuant~~ of the 2018 Warrants agreed to ~~which holders were issued warrants~~exercise 842,000 shares of Common Stock of their 2018 Warrants, at an amended exercise price of $3.90 per share, and the Company agreed to issue new warrant shares to the Holders to purchase ~~an aggregate~~ 842,000 shares of Common Stock (the “2019 Warrants”), at an exercise price of $7.00, with an expiration date of December 31, 2021. The 2018 Warrants held by the 2019 Warrant Holders, to the extent not exercised, were also amended to reduce the exercise price to $7.00 per share and to extend the expiration date to December 31, 2021 (the ~~“2019~~“Amended 2018 Warrants”).

The Amended 2018 Warrants and 2019 Warrants have not been registered under the Securities Act of 1933, as amended (the Securities Act), or state securities laws. The shares issuable upon exercise of the 2019 ~~Exercised Shares~~Warrants have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-233349), and the shares issuable upon exercise of the Amended 2018 Warrants have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-225995). The exercised shares have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-225995). The issuance of the ~~2019 Exercised Shares~~exercised shares, Amended 2018 Warrants and 2019 Warrants is exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated under the Securities Act. The Company made this determination based on the representations that each party is an “accredited investor” within the meaning of Rule 501 of Regulation D. ~~The Company expects to use cash received from exercises for general corporate and working capital purposes.~~

Table of Contents

With the recent warrant exercises in July 2020, the Company has reduced its outstanding warrants shares to non-affiliates by approximately 37% and reduced its overall warrants shares outstanding by approximately 19%. In total, 900,000 of the 4,724,868 Company warrant shares outstanding were exercised between July 15 and July 24, 2020. 2,266,667 of the remaining 3,824,868 outstanding warrants shares are owned by affiliates of the Company.

Company Cash Needs

We have recently completed our Phase 3 ALS and Phase 2 PMS trials in the US. Our material cash needs for the next 2412 months, assuming we do not expand our clinical trials beyond ~~the current Phase 3 ALS and Phase 2 PMS trials in the United States, and the~~our Phase 2 AD trials in Europe will include (i) costs of the clinical ~~trial in the U.S. and~~trials Europe, (ii) employee salaries, (iii) payments for rent and operation of the GMP facilities and manufacturing of NurOwn®, and (iv) fees to our consultants and legal advisors, patents, and fees for facilities to be used in our research and development.

~~Management expects~~We believe our existing cash will be sufficient to fund our anticipated operating cash requirements for at least twelve months following the date of this filing. We currently have sufficient cash to execute on our Phase 2 AD clinical trials and support our operating activities. We expect that ~~the Company~~we will continue to generate losses from the clinical development and regulatory activities, which will result in a negative cash flow from operating activity. ~~The Company currently has sufficient cash~~If we decide to ~~complete its ongoing Phase 3~~file a BLA for our ALS ~~Phase 2 PMS~~program and ~~Phase 2 AD clinical trials. Over the longer term, if the Company is~~ granted a BLA approval, additional capital raise will be needed ~~in connection with strategic partnerships and~~ to commercialize ~~Nurown®~~NurOwn® for ALS, and to conduct additional trials that may be needed for other indications. IfThe actual amount of cash that the Company will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of clinical trials for our product candidates along with cost to commercialize these product candidates.

We anticipate that we will need to raise substantial additional financing in the future to fund our operations. In order to meet these additional cash requirements, we may incur debt, license certain intellectual property, and seek to sell additional equity or convertible securities that may result in dilution to our stockholders. If we raise additional funds through the issuance of equity or convertible securities, these securities could have rights or preferences senior to those of our common stock and could contain covenants that restrict our operations. There can be no assurance that we will be able to ~~raise~~obtain additional ~~capital for these purposes, management may need~~equity or debt financing on terms acceptable to ~~slow the pace of commercialization or the Company may not be able to continue to function as a going concern.~~us, if at all. Our ~~ability to fund these~~ future capital requirements will depend on many factors, ~~including the following:~~including:

●our ability to obtain funding from third parties, including any future collaborative partners;

●the scope, rate of progress and cost of our clinical trials and other research and development programs;

●the time and costs required to ~~obtain~~gain regulatory approvals;

●the terms and timing of any collaborative, licensing and other arrangements that we may establish;

●the costs of filing, prosecuting, defending and enforcing patents, patent applications, patent claims, trademarks and other intellectual property rights;

●any product liability or other lawsuits related to our product candidates;

●the expenses needed to attract and retain skilled personnel;

●the costs and timing of future commercialization activities, including product manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval;

●the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

●the general and administrative expenses related to being a public company;

●the effect of competition and market developments; and

●future pre-clinical and clinical trial results.

The full extent to which the ~~COVID-19~~COVID 19 pandemic will directly or indirectly impact our business, results of operations, financial condition, liquidity and capital resources will depend on future developments that are highly uncertain and cannot be accurately predicted at this time, including new information that may emerge concerning ~~COVID-19,~~COVID 19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. Our management team is actively monitoring this situation and the possible effects on our financial condition and liquidity.

Table of Contents

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenue and expenses during the reporting periods. We continually evaluate our judgments, estimates and assumptions. We base our estimates on the terms of underlying agreements, our expected course of development, historical experience and other factors we believe are reasonable based on the circumstances, the results of which form our management’s basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There were no significant changes to our critical accounting policies during the quarter ended ~~September 30, 2020.~~March 31, 2021. For information about critical accounting policies, see the discussion of critical accounting policies in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

This information has been omitted as the Company qualifies as a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended ~~September 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in litigation relating to claims arising out of operations in the normal course of business, which we consider routine and incidental to our business. We currently are not a party to any material legal proceedings, the adverse outcome of which, in management’s opinion, would have a material adverse effect on our business, results of operation or financial condition.

Table of Contents

Item 1A. Risk Factors.

Other than the additional risk factor below, there have not been any material changes from the risk factors previously disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 and in this Quarterly Report on Form 10-Q, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Risks Related to Our Business ~~Operations and Commercialization of Stem Cell Therapies:~~Operations:

The coronavirus outbreak has ~~the potential~~caused disruptions to ~~cause disruptions in~~ our business, including our preclinical and clinical development activities.

The ~~Outbreak of~~pandemic caused by the novel strain of coronavirus, ~~SARS-CoV-2~~SARS-CoV 2 (COVID-19) disease has currently impacted and may continue to adversely impact our business, including our preclinical studies and clinical trials. In December 2019, a novel strain of coronavirus, surfaced in Wuhan, China. Since then, ~~COVID-19~~COVID- 19 has spread ~~to multiple countries, including~~worldwide, significantly impacting the United States, Europe and Israel, where the Company conducts its operations, as well as its clinical trials offor NurOwn®. In response to the spread of COVID-19 and to ensure ~~the~~ safety of ~~our~~ employees and continuity of business operations, we ~~have~~ closed our offices, with our administrative employees continuing their work remotely ~~restricted on-site staff,~~ and limited the number of staff in any given research and development laboratory. Our research and development ~~laboratories~~laboratory in Israel and ~~our~~ manufacturing sites in ~~the~~ U.S. and in Israel remain open.

The Phase 3 ALS clinical trial continued to provide necessary treatments to study participants despite severe constraints in the affected healthcare institutions due to COVID-19. As of July 2, 2020, the study completed dosing of all the participants in the Phase 3 ALS trial. Top-line efficacy data is expected by the end of November this year.

The Company recently announced a new clinical program focused on the development of NurOwn® as a treatment for AD. As part of the newly announced program, the Company is planning a multi-national Phase 2 clinical trial in Europe to evaluate the safety and preliminary efficacy of NurOwn® treatment in patients with prodromal to mild AD.

Because of the COVID-19 outbreak, we may in the future experience disruptions that could severely impact our business, including clinical trial activities; participant enrollment; or any currently unforeseen delays in completion of study timelines. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted at this time, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national and international markets. Because of the COVID-19 outbreak, we may in the future experience disruptions that could severely impact our business, including clinical trial activities; participant enrollment; or any currently unforeseen delays in completion of study timelines.

Two vaccines for COVID-19 were granted Emergency Use Authorization by the FDA in late 2020 and one in early 2021, and more are likely to be authorized in the coming months. The resultant demand for vaccines and potential for manufacturing facilities and materials to be commandeered under the Defense Production Act of 1950, or equivalent foreign legislation, may make it more difficult to obtain materials or manufacturing slots for the products needed for our clinical trials, which could lead to delays in these trials.

In addition, the trading prices for our Common Stock and other biotechnology companies have been highly volatile as a result of the COVID-19 epidemic. As a result, we may face difficulties raising capital through sales of our Common Stock or such sales may be on unfavorable terms.

The COVID-19 outbreak continues to rapidly evolve. The extent to which the outbreak may impact our business, preclinical studies and clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and actions to contain the outbreak or treat its impact, such as social distancing and quarantines or lock-downs, business closures or business disruptionsOur management team is actively monitoring this situation and the ~~effectiveness of actions taken to contain~~possible effects on our financial condition, liquidity, operations, suppliers, industry, and ~~treat the disease.~~workforce.

Item 5. Other Information.

During the quarter ended ~~September 30, 2020,~~March 31, 2021, we made no material changes to the procedures by which stockholders may recommend nominees to our Board of Directors, as described in our most recent proxy statement.

~~Recent Sales Under ATM Distribution Agreement~~

Table of Contents

Item 6. Exhibits.

The following documents are filed as exhibits to this report:


			Incorporated by Reference Herein
Exhibit Number	Description	Filed (or Furnished) with this Form 10-Q	Form	Exhibit & File No.	Date Filed

3.1	Certificate of Incorporation of Brainstorm Cell Therapeutics Inc.		Definitive Schedule 14A	Appendix B File No. 333-61610	November 20, 2006
3.2	Certificate of Amendment of Certificate of Incorporation of Brainstorm Cell Therapeutics Inc. dated September 15, 2014.		Form 8-K	Exhibit 3.1 File No. 000-54365	September 16, 2014
3.3	Certificate of Amendment of Certificate of Incorporation of Brainstorm Cell Therapeutics Inc. dated August 31, 2015.		Form 8-K	Exhibit 3.1 File No. 001-366641	September 4, 2015
3.4	ByLaws of Brainstorm Cell Therapeutics Inc.		Definitive Schedule 14A	Appendix C File No. 333-61610	November 20, 2
3.5	Amendment No. 1 to ByLaws of Brainstorm Cell Therapeutics Inc., dated as of March 21, 2007.		Form 8-K	Exhibit 3.1 File No. 333-61610	March 27, 2007
~~10.1~~	~~Offer Letter by and between Brainstorm Cell Therapeutics Inc. and Anthony Waclawski.~~		~~Form 8-K~~	~~Exhibit 10.1 File No. 001-36641~~	~~September 3, 2020~~
31.1	Certification by the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	*
31.2	Certification by the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	*
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	‡
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	‡
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	*
101.SCH	XBRL Taxonomy Extension Schema Document	*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	*

*Filed herewith

‡Furnished herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	BRAINSTORM CELL THERAPEUTICS INC.

Date: ~~October 15, 2020~~April 26, 2021	By:	/s/ Preetam Shah
		Name: Preetam Shah
		Title: EVP, Chief Financial Officer (Principal Financial Officer)