10-Q

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

☐ 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, 28th 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, the number of shares outstanding of the registrant’s Common Stock, $0.00005 par value per share, was 31,567,592.

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 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. 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”).

2

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	22
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	37
Item 5.	Other Information	38
Item 6.	Exhibits	39
SIGNATURES		40

3

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2020

U.S. DOLLARS IN THOUSANDS

(Except share data and exercise prices)

(UNAUDITED)

4

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2020

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

5

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

(Except share data)

	September 30,		December 31,
	2020		2019
	U.S. $ in thousands
	Unaudited		Audited
ASSETS
Current Assets:
Cash and cash equivalents	$	24,770	$	536
Short-term deposit (Note 4)		4,038		33
Other accounts receivable		1,473		2,359
Prepaid expenses and other current assets (Note 5)		56		432
Total current assets		30,337		3,360
Long-Term Assets:
Prepaid expenses and other long-term assets		27		32
Operating lease right of use asset (Note 6)		1,377		2,182
Property and Equipment, Net		950		960
Total Long-Term Assets		2,354		3,174
Total assets	$	32,691	$	6,534
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	3,283	$	14,677
Accrued expenses		917		1,000
Operating lease liability (Note 6)		1,216		1,263
Other accounts payable		1,013		714
Total current liabilities		6,429		17,654
Long-Term Liabilities:
Operating lease liability (Note 6)		284		1,103
Total long-term liabilities		284		1,103
Total liabilities	$	6,713	$	18,757
Stockholders’ Equity (deficit):
Stock capital: (Note 7)		12		11
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.
Additional paid-in-capital		163,238		105,042
Accumulated deficit		(137,272)		(117,276)
Total stockholders’ equity (deficit)		25,978		(12,223)
Total liabilities and stockholders’ equity	$	32,691	$	6,534

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

6

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
	September 30,				September 30,
	2020		2019		2020		2019
	Unaudited				Unaudited
Operating expenses:
Research and development, net (Note 8)	$	13,509	$	11,018	$	1,867	$	4,008
General and administrative		6,684		4,318		2,618		1,543
Operating loss		(20,193)		(15,336)		(4,485)		(5,551)
Financial expenses (income), net		(197)		225		3		83
Net loss	$	(19,996)	$	(15,561)	$	(4,488)	$	(5,634)
Basic and diluted net loss per share from continuing operations	$	(0.70)	$	(0.72)	$	(0.14)	$	(0.25)
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

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

7

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

U.S. dollars in thousands

(Except share data)

				Additional		Receipts on				Total
	Common stock			paid-in		account of		Accumulated		stockholders’
	Number	Amount		capital		shares		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
Stock-based compensation related to stock and options granted to directors and employees	39,386		(*)		312		—		—		312
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	—		—		53		-		—		53
Exercise and reissuance of warrants	212,499		(*)		1,040		(1,040)		—		—
Exercise of options	5,333		(*)		5		—		—		5
Net loss	—		—		—		—		(4,900)		(4,900)
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)

*    Represents an amount less than $1.

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

8

BRAINSTORM CELL THERAPEUTICS INC. AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

U.S. dollars in thousands

(Except share data)

				Additional				Total
	Common stock			paid-in		Accumulated		stockholders’
	Number	Amount		capital		deficit		equity (deficit)
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	54,956		(*)		390		—		390
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
Exercise of options	9,333		(*)		29		—		29
Net loss	—		—		—		(8,114)		(8,114)
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

*    Represents an amount less than $1.

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

9

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
	September 30,				September 30,
	2020		2019		2020		2019
Cash flows from operating activities:
Net loss	$	(19,996)	$	(15,561)	$	(4,488)	$	(5,634)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		155		114		56		37
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
Changes in operating lease liability		(61)		187		(11)		49
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
Total net cash used in operating activities	$	(27,615)	$	(7,969)	$	(6,924)	$	(3,626)

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

10

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
	September 30,				September 30,
	2020		2019		2020		2019
Cash flows from investing activities:
Purchase of property and equipment		(145)		(127)		(88)		(102)
Changes in short-term deposit		(4,005)		6,088		2		1,541
Total net cash provided by (used in) investing activities	$	(4,150)	$	5,961	$	(86)	$	1,439
Cash flows from financing activities:
Proceeds from exercise of options		52		35		20		30
Proceeds from issuance of shares in at-the-market (ATM) offering (Note 7)		39,690		—		13,307		—
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		—		—		—
Total net cash provided by financing activities	$	55,999	$	3,161	$	19,627	$	3,156
Increase in cash and cash equivalents		24,234		1,153		12,617		969
Cash and cash equivalents at the beginning of the period	$	536	$	942	$	12,153	$	1,126
Cash and cash equivalents at end of the period	$	24,770	$	2,095	$	24,770	$	2,095

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

11

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

A. Brainstorm Cell Therapeutics, Inc. (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 subsidiary, Brainstorm Cell Therapeutics Ltd. (“BCT”) in Israel, which currently conducts all the research and development activities of the Company. BCT formed 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”.

B. 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. 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 at or near the site of damage, offering the hope of more effectively treating neurodegenerative diseases.

C. NurOwn® is in late-stage clinical development for the treatment of ALS. The Company has completed two single dose clinical trials of NurOwn® in Israel, a Phase 1/2 trial with 12 patients and a Phase 2a trial with additional 12 patients. In July 2016 the Company announced 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.

D. 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 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. 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.

E. 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.

F. 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.

12

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 (Cont.):

G. 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.

H. 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 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 COVID-19 pandemic may continue to adversely disrupt the Company's operations, including the ability to complete the ongoing clinical trials 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.

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 Company currently has sufficient cash to complete its ongoing Phase 3 ALS, Phase 2 PMS 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 for other indications. If the Company is not able to raise additional capital for these purposes, management may need to slow the pace of commercialization or the Company may not be able to continue to function as a going concern. The Company's consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

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.

13

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.):

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

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 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 will have a significant impact on the 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:

a) 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

b) 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.

NOTE 4 - SHORT TERM DEPOSITS

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

14

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 of Hope’s Center for Biomedicine 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.

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, the Company’s ROU assets and lease liabilities for operating leases totaled $1,377 and $1,500, 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

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

	Operating Leases
Remainder of 2020	$	328
2021		1,252
Total future lease payments		1,580
Less imputed interest		(80)
Total lease liability balance	$	1,500

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.

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

15

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.

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.

16

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"), 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 11, 2019 ATM") in an "at the 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 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 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.

17

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.

Since its inception and as of September 30, 2020 the Company raised approximately $121 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, 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 shares of Common Stock available for issuance.

As of September 30, 2020, 1,232,613 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.

18

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.):

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 stock options to purchase 698,666 shares during the nine 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

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

	For the Nine months ended
	September 30, 2020
		Weighted
		average	Aggregate
	Amount of	exercise	intrinsic
	options *	price	value
		$	$
Outstanding at December 31, 2019	1,293,007	3.0142
Granted	698,666	7.1448
Exercised	(17,646)	2.9267
Cancelled	(4,000)	3.7500
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

*    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, 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.

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 months ended September 30, 2020 and 2019 amounted to $2,198 and $582, respectively.

19

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
			Remaining
	Number of Shares	Weighted Average	Contractual
	of Restricted	Grant Date Fair	Term
	Stock	Value	(Years)
Nonvested as of December 31, 2019	201,385	4.00	1.95
Granted	180,410	8.47
Vested	109,781	4.93
Nonvested as of September 30, 2020	272,015	6.58	1.30

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, 2020 amounted to $441.

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

NOTE 8 - RESEARCH AND DEVELOPMENT, NET

Composition:

	Nine months ended
	September 30,
	2020	2019
Research and development	17,146	17,397
Less: Participation by CIRM	(1,862)	(3,290)
Less: Participation by Israeli Hospital Exemption regulatory pathway	(816)	(2,412)
Less: Participation by the Israel Innovation Authorities	(885)	(618)
Less: Participation by other grants	(74)	(59)
	13,509	11,018

20

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.

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.

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.

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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.

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

The Outbreak of the novel strain of coronavirus, 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 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 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.

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.

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.

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 generate 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 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.

23

● 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 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 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’.

● 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 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 40 participants with prodromal to mild AD. 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.

● 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.

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● 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 a groundbreaking pre-clinical study of NurOwn® derived Exosome-based treatment for COVID-19 ARDS. Intratracheal administration of exosomes extracted from MSC’s using NurOwn® technology 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 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 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 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.

● On September 29, 2020, we announced the appointment of William K. White as Senior Vice President, Head of Market Access and Pricing. Mr. White has more than 25 years' experience in leading successful product commercialization and securing market access for innovative new medicines. Mr. White was most recently Vice President of Patient 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 implementing the market access strategy for AVXS-101/Zolgensma® helped to expedite delivery of a novel new treatment to an underserved patient population and helped the company transition to the commercial stage.

● On September 30, 2020, we announced the presentation of a poster titled, "Advancing NurOwn® for ALS: Phase 3 Clinical Trial Design" at the Annual Northeast ALS (NEALS) Virtual Meeting.

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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 is one of the most potent survival factors for peripheral motor neurons and have demonstrated important neuroprotective effects in ALS, MS, AD and 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: 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 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 well tolerated in multiple CNS clinical trials to date. The fully dosed NurOwn® U.S. Phase 3 ALS study, 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 the therapeutic potential of 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”). All granted patents related to NurOwn® (MSC-NTF cells) manufacturing process are fully assigned to or owned by BrainStorm Cell Therapeutics Ltd. (see Intellectual Property section for details).

The NurOwn® Transplantation Process

● Bone marrow aspiration from the patient;

● MSC Isolation and propagation;

● MSC Cryopreservation;

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

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

Differentiation before Transplantation

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, 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.

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NurOwn® ALS Clinical Program

NurOwn® is currently in a Phase 3 late stage clinical development program for the treatment of ALS. It has 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 the potential for an extended period of exclusivity.

Phase 1/2 ALS Open Label Trials

The company has 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”). 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”), 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.

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, entitled “NurOwn®, Phase 2, Randomized, Clinical Trial in Patients With ALS: Safety, Clinical, and Biomarker Results”.

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).

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● 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.

Phase 3 ALS Clinical Trial

Following successful completion of the Phase 2 study, the Company is currently conducting a Phase 3 trial (a multi-dose double-blind, placebo-controlled, multicenter trial protocol) that has been designed to generate data to support a Biologic License Application (“BLA”) for NurOwn® in ALS. The clinical trial has completed enrolment and dosing 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 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.

The DSMB 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. The DSMB indicated that the trial should continue without any modifications to the study protocol, and the DSMB chair indicated that they did not identify any significant safety concerns.

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

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Special meeting with 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) 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 announced that it recently 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) leadership and several leading U.S. ALS experts, the FDA confirmed that the 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 BrainStorm to identify a regulatory pathway forward, including opportunities to expedite statistical review of data from the Phase 3 trial.

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) from the European Medicine Agency (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 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.

NurOwn® in Progressive Multiple Sclerosis

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 (www.clinicaltrials.gov Identifier NCT03799718). 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)’ 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 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 November 14, 2019 the Company received 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.

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NurOwn® in Alzheimer’s Disease

The Company is designing a multi-national Phase 2 clinical trial to evaluate the safety, preliminary efficacy and pharmacodynamics of NurOwn® treatment in patients with prodromal to mild Alzheimer's disease (AD). The 52-week study is expected to enroll 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.

The Phase 2 clinical trial will evaluate safety, preliminary efficacy and pharmacodynamics 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, 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 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 received $12,550,000 of the CIRM grant from 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 received an additional $2,200,000 from CIRM for achieving its pre-determined milestones. With the receipt of this grant, the Company has now received $14,750,000 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 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 received $321,965 out of the $495,330 awarded.

On April 3, 2020, the Company announced that its 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 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 received $658,000 out of the $1.5 million awarded.

On June 9, 2020, the Company announced that The ALS Association and I AM ALS have awarded the Company 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 in BrainStorm's ongoing Phase 3 clinical trial of its NurOwn® treatment, and to further the understanding of critical biomarkers associated with treatment response for people with ALS.

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On July 1, 2020, the Company received a non-dilutive bonus payment of $700,000 from CIRM for treating more California participants than originally proposed in its Phase 3 ALS trial.

Intellectual Property

A key element of the Company’s 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 15 granted patents 4 allowed patents and 22 patent applications in the United States, 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 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.

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 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 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).

Patents protecting NurOwn® have been issued in the United States, 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.

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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 the potential for clinical development of NurOwn® in several neurodegenerative disorders and neurodegenerative eye disease. 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, 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.

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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:

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

b. 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 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) from the same donor.

For the ongoing 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 in Petach Tikva, Israel. We maintain an Internet website at http://www.brainstorm-cell.com. The information on our website is not incorporated into this Quarterly Report on Form 10-Q.

Results of Operations

For the period from inception (September 22, 2000) through September 30, 2020, 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 during the three months ended September 30, 2020 compared to $5,551,000 during the three months through September 30, 2019.

Research and Development Expenses:

Research and development expenses, net for the three months ended September 30, 2020 and 2019 were $1,867,000 and $4,008,000, respectively, representing a decrease of $2,141,000. This decrease is due to (i) a decrease of $2,313,000 in costs related to the Phase 3 and Phase 2 Clinical Trials from $4,100,000 in three months ended September, 2019 to $1,787,000 for the three months period ended September 30, 2020; (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 in connection with patents, travel and other activities. This decrease was partially offset by (i) an increase of $178,000 in material and other costs; (ii) an increase of $556,000 for costs related to payroll and stock-based compensation expenses and (iii) a decrease of $1,607,000 in proceeds received in connection with the treatment of patients under the hospital exemption regulatory pathway.

Excluding participation from IIA and CIRM under the grants and proceeds received under the hospital exemption regulatory pathway, research and development expenses decreased by $1,678,000 from $5,663,000 in the third quarter of 2019 to $3,985,000 in the third quarter of 2020.

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General and Administrative Expenses:

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

Other Income and Expenses:

Financial income for the three months ended September 30, 2020 was $3,000 as compared to financial expense of $83,000 for the three months ended September 30, 2019 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 was $4,488,000, as compared to a net loss of $5,634,000 for the three months ended September 30, 2019. Net loss per share for the three months ended September 30, 2020 and 2019 was $0.14 and $0.25, 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 was 31,154,101, compared to 22,254,993 for the three months ended September 30, 2019.

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 as of September 30, 2020.

Net cash used in operating activities was $6,924,000 for the three months ended September 30, 2020. 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 for the three months ended September 30, 2020, mainly representing net increase in short-term interest-bearing bank deposits. Net cash provided by financing activities was $19,627,000 for the three months ended September 30, 2020 and is attributable to the exercise of options and sales of shares under our ATM Program.

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 the June 11, 2019 ATM in an “at the 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.

On March 6, 2020, the Company entered into 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 the Agent. 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.

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On September 25, 2020, the Company entered  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 “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.

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. 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.

Recent Sales of Unregistered Securities:

Exercises of 2018 Amended Warrants: On June 6, 2018 the Company entered into Warrant Exercise Agreements with certain holders (“2018 Warrant Holders”), pursuant to which holders were issued warrants to purchase an aggregate 2,458,201 unregistered shares of Common Stock, at an exercise price of $9 per share, 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”).

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.

The 2018 Warrants have not been registered under the Securities Act of 1933, as amended (the Securities Act), or state securities laws. The 2018 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 2018 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 Warrant Exercise Agreements with certain 2018 Warrant Holders (“2019 Warrant Holders”), pursuant to which holders were issued warrants 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 “2019 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.

The 2019 Warrants have not been registered under the Securities Act, or state securities laws. The 2019 Exercised Shares have been registered for resale on the Company’s registration statement on Form S-3 (File No. 333-233349).  The issuance of the 2019 Exercised Shares 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.

35

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

Our material cash needs for the next 24 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 Phase 2 AD trials in Europe will include (i) costs of the clinical trial in the U.S. and Europe, (ii) employee salaries, (iii) payments for rent and operation of the GMP facilities, and (iv) fees to our consultants and legal advisors, patents, and fees for facilities to be used in our research and development.

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 Company currently has sufficient cash to complete its ongoing Phase 3 ALS, Phase 2 PMS 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 for other indications. If the Company is not be able to raise additional capital for these purposes, management may need to slow the pace of commercialization or the Company may not be able to continue to function as a going concern. Our ability to fund these future capital requirements will depend on many factors, including the following:

●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 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;

●the effect of competition and market developments; and

●future pre-clinical and clinical trial results.

The full extent to which the 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, 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.

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. 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.

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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 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.

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

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, 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 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.

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

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

The Outbreak of the novel strain of coronavirus, 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 has spread to multiple countries, including the United States and Israel, where the Company conducts its operations, as well as its clinical trials of NurOwn®. In response to the spread of COVID-19, 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 in Israel and our manufacturing sites in the U.S. and 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.

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.

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 disruptions and the effectiveness of actions taken to contain and treat the disease.

Item 5. Other Information.

During the quarter ended September 30, 2020, 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

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.

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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

39

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	By:	/s/ Preetam Shah
		Name: Preetam Shah
		Title: EVP, Chief Financial Officer (Principal Financial Officer)

40

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, Chaim Lebovits, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of BrainStorm Cell Therapeutics Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 15, 2020	/s/ Chaim Lebovits
	Name: Chaim Lebovits
	Title: Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, Preetam Shah, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q of BrainStorm Cell Therapeutics Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 15, 2020	/s/ Preetam Shah
	Name: Preetam Shah
	Title: EVP, Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In connection with the accompanying Quarterly Report on Form 10-Q of BrainStorm Cell Therapeutics Inc. for the period ended September 30, 2020, the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1)    the Quarterly Report on Form 10-Q for the period ended September 30, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    the information contained in the Quarterly Report on Form 10-Q for the period ended September 30, 2020 fairly presents, in all material respects, the financial condition and results of operations.

October 15, 2020	/s/ Chaim Lebovits
	Name: Chaim Lebovits
	Title: Chief Executive Officer
	(Principal Executive Officer)

The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), and is not to be incorporated by reference into any filing of BrainStorm Cell Therapeutics Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In connection with the accompanying Quarterly Report on Form 10-Q of BrainStorm Cell Therapeutics Inc. for the period ended September 30, 2020, the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1)    the Quarterly Report on Form 10-Q for the period ended September 30, 2020 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)    the information contained in the Quarterly Report on Form 10-Q for the period ended September 30, 2020 fairly presents, in all material respects, the financial condition and results of operations.

October 15, 2020	/s/ Preetam Shah
	Name Preetam Shah
	Title: EVP, Chief Financial Officer
	(Principal Financial Officer)

The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), and is not to be incorporated by reference into any filing of BrainStorm Cell Therapeutics Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2020 shares
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2020
Entity File Number	001-36641
Entity Registrant Name	BRAINSTORM CELL THERAPEUTICS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-7273918
Entity Address, Address Line One	1325 Avenue of Americas, 28th Floor
Entity Address, City or Town	NY
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10019
City Area Code	201
Local Phone Number	488-0460
Title of 12(b) Security	Common Stock, $0.00005 par value
Trading Symbol	BCLI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	31,567,592
Entity Central Index Key	0001137883
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current Assets:
Cash and cash equivalents	$ 24,770	$ 536
Short-term deposit (Note 4)	4,038	33
Other accounts receivable	1,473	2,359
Prepaid expenses and other current assets (Note 5)	56	432
Total current assets	30,337	3,360
Long-Term Assets:
Prepaid expenses and other long-term assets	27	32
Operating lease right of use asset (Note 6)	1,377	2,182
Property and Equipment, Net	950	960
Total Long-Term Assets	2,354	3,174
Total assets	32,691	6,534
Current Liabilities:
Accounts payable	3,283	14,677
Accrued expenses	917	1,000
Operating lease liability (Note 6)	1,216	1,263
Other accounts payable	1,013	714
Total current liabilities	6,429	17,654
Long-Term Liabilities:
Operating lease liability (Note 6)	284	1,103
Total long-term liabilities	284	1,103
Total liabilities	6,713	18,757
Stockholders' Equity (deficit):
Stock capital: (Note 7) 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.	12	11
Additional paid-in-capital	163,238	105,042
Accumulated deficit	(137,272)	(117,276)
Total stockholders' equity (deficit)	25,978	(12,223)
Total liabilities and stockholders' equity	$ 32,691	$ 6,534

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INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.00005	$ 0.00005
Common stock, shares Authorized	100,000,000	100,000,000
Common stock, shares Issued	31,567,592	23,174,228
Common stock, shares outstanding	31,567,592	23,174,228

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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Operating expenses:
Research and development, net	$ 1,867	$ 4,008	$ 13,509	$ 11,018
General and administrative	2,618	1,543	6,684	4,318
Operating loss	(4,485)	(5,551)	(20,193)	(15,336)
Financial expenses (income), net	3	83	(197)	225
Net loss	$ (4,488)	$ (5,634)	$ (19,996)	$ (15,561)
Basic and diluted net loss per share from continuing operations	$ (0.14)	$ (0.25)	$ (0.70)	$ (0.72)
Weighted average number of shares outstanding used in computing basic and diluted net loss per share	31,154,101	22,254,993	28,695,540	21,630,007

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STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]		Additional paid-in capital [Member]	Receipts on account of shares [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2018	$ 11		$ 94,620	$ 4,408	$ (94,023)	$ 5,016
Balance (in shares) at Dec. 31, 2018	20,757,816
Stock-based compensation related to warrants and stock granted to service providers			25			25
Stock-based compensation related to warrants and stock granted to service providers (in shares)	5,908
Stock-based compensation related to stock and options granted to directors and employees			312			312
Stock-based compensation related to stock and options granted to directors and employees (in shares)	39,386
Exercise and reissuance of warrants			3,368	(3,368)
Exercise and reissuance of warrants (in shares)	687,500
Net loss					(5,027)	(5,027)
Balance at Mar. 31, 2019	$ 11	[1]	98,325	1,040	(99,050)	326
Balance (in shares) at Mar. 31, 2019	21,490,610
Balance at Dec. 31, 2018	$ 11		94,620	4,408	(94,023)	5,016
Balance (in shares) at Dec. 31, 2018	20,757,816
Net loss						(15,561)
Balance at Sep. 30, 2019	$ 11		102,796		(109,584)	(6,777)
Balance (in shares) at Sep. 30, 2019	22,605,792
Balance at Mar. 31, 2019	$ 11	[1]	98,325	1,040	(99,050)	326
Balance (in shares) at Mar. 31, 2019	21,490,610
Stock-based compensation related to stock and options granted to directors and employees	$ 0		53		0	53
Stock-based compensation related to stock and options granted to directors and employees (in shares)	0
Exercise and reissuance of warrants			1,040	$ (1,040)
Exercise and reissuance of warrants (in shares)	212,499
Exercise of options			5			5
Exercise of options (in shares)	5,333
Net loss					(4,900)	(4,900)
Balance at Jun. 30, 2019	$ 11		99,423		(103,950)	(4,516)
Balance (in shares) at Jun. 30, 2019	21,708,442
Stock-based compensation related to stock and options granted to directors and employees			217			217
Stock-based compensation related to stock and options granted to directors and employees (in shares)	42,718
Exercise and reissuance of warrants			3,126			3,126
Exercise and reissuance of warrants (in shares)	841,300
Exercise of options			30			30
Exercise of options (in shares)	13,332
Net loss					(5,634)	(5,634)
Balance at Sep. 30, 2019	$ 11		102,796		(109,584)	(6,777)
Balance (in shares) at Sep. 30, 2019	22,605,792
Balance at Dec. 31, 2019	$ 11		105,042		(117,276)	(12,223)
Balance (in shares) at Dec. 31, 2019	23,174,228
Stock-based compensation related to stock and options granted to directors and employees			390		0	390
Stock-based compensation related to stock and options granted to directors and employees (in shares)	54,956
Issuance of shares in at-the-market (ATM) offering (Note 7)	$ 1		18,971			18,972
Issuance of shares in at-the-market (ATM) offering (Note 7) (in shares)	3,935,320
Issuance of shares and warrants in Registered Direct Offering (Note 7)			9,957			9,957
Issuance of shares and warrants in Registered Direct Offering (Note 7) (in shares)	1,250,000
Exercise of options			29		0	29
Exercise of options (in shares)	9,333
Net loss					(8,114)	(8,114)
Balance at Mar. 31, 2020	$ 12		134,389		(125,390)	9,011
Balance (in shares) at Mar. 31, 2020	28,423,837
Balance at Dec. 31, 2019	$ 11		105,042		(117,276)	(12,223)
Balance (in shares) at Dec. 31, 2019	23,174,228
Net loss						(19,996)
Balance at Sep. 30, 2020	$ 12		163,238		(137,272)	25,978
Balance (in shares) at Sep. 30, 2020	31,567,592
Balance at Mar. 31, 2020	$ 12		134,389		(125,390)	9,011
Balance (in shares) at Mar. 31, 2020	28,423,837
Stock-based compensation related to stock and options granted to directors and employees			791			791
Stock-based compensation related to stock and options granted to directors and employees (in shares)	79,491
Issuance of shares in at-the-market (ATM) offering (Note 7)			7,411			7,411
Issuance of shares in at-the-market (ATM) offering (Note 7) (in shares)	1,162,527
Exercise of options			3			3
Exercise of options (in shares)	4,000
Net loss					(7,394)	(7,394)
Balance at Jun. 30, 2020	$ 12		142,594		(132,784)	9,822
Balance (in shares) at Jun. 30, 2020	29,669,855
Stock-based compensation related to stock and options granted to directors and employees			1,017			1,017
Stock-based compensation related to stock and options granted to directors and employees (in shares)	45,797
Issuance of shares in at-the-market (ATM) offering (Note 7)			13,307			13,307
Issuance of shares in at-the-market (ATM) offering (Note 7) (in shares)	947,627
Exercise of options			20			20
Exercise of options (in shares)	4,313
Exercise of warrants			6,300			6,300
Exercise of warrants (in shares)	900,000
Net loss					(4,488)	(4,488)
Balance at Sep. 30, 2020	$ 12		$ 163,238		$ (137,272)	$ 25,978
Balance (in shares) at Sep. 30, 2020	31,567,592

[1] Represents an amount less than $1.

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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net loss	$ (4,488)	$ (5,634)	$ (19,996)	$ (15,561)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	56	37	155	114
Shares and options granted to service providers				25
Stock-based compensation related to options granted to employees and directors	1,017	217	2,198	582
Changes in operating lease liability	(11)	49	(61)	187
Decrease (increase) in other accounts receivable and prepaid expenses	(1,095)	290	1,267	938
Increase (decrease) in trade payables	(1,321)	379	(11,394)	4,596
Increase (decrease) in other accounts payable and accrued expenses	(1,082)	1,036	216	1,150
Total net cash used in operating activities	(6,924)	(3,626)	(27,615)	(7,969)
Cash flows from investing activities:
Purchase of property and equipment	(88)	(102)	(145)	(127)
Changes in short-term deposit	2	1,541	(4,005)	6,088
Total net cash provided by (used in) investing activities	(86)	1,439	(4,150)	5,961
Cash flows from financing activities:
Proceeds from exercise of options	20	30	52	35
Proceeds from issuance of shares in at-the-market (ATM) offering (Note 7)	13,307		39,690
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
Total net cash provided by financing activities	19,627	3,156	55,999	3,161
Increase in cash and cash equivalents	12,617	969	24,234	1,153
Cash and cash equivalents at the beginning of the period	12,153	1,126	536	942
Cash and cash equivalents at end of the period	$ 24,770	$ 2,095	$ 24,770	$ 2,095

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GENERAL

9 Months Ended

Sep. 30, 2020

GENERAL

GENERAL

NOTE 1 - GENERAL

A. Brainstorm Cell Therapeutics, Inc. (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 subsidiary, Brainstorm Cell Therapeutics Ltd. (“BCT”) in Israel, which currently conducts all the research and development activities of the Company. BCT formed 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”.

B. 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. 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 at or near the site of damage, offering the hope of more effectively treating neurodegenerative diseases.

C. NurOwn® is in late-stage clinical development for the treatment of ALS. The Company has completed two single dose clinical trials of NurOwn® in Israel, a Phase 1/2 trial with 12 patients and a Phase 2a trial with additional 12 patients. In July 2016 the Company announced 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.

D. 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 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. 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.

E. 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.

F. 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.

NOTE 1 – GENERAL (Cont.):

G. 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.

H. 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 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 COVID-19 pandemic may continue to adversely disrupt the Company's operations, including the ability to complete the ongoing clinical trials 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.

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 Company currently has sufficient cash to complete its ongoing Phase 3 ALS, Phase 2 PMS 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 for other indications. If the Company is not able to raise additional capital for these purposes, management may need to slow the pace of commercialization or the Company may not be able to continue to function as a going concern. The Company's consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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.

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

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

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 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 will have a significant impact on the 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.

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RESEARCH AND LICENSE AGREEMENT

9 Months Ended

Sep. 30, 2020

RESEARCH AND LICENSE AGREEMENT

RESEARCH AND LICENSE AGREEMENT

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:

a) 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

b) 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.

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SHORT TERM DEPOSITS

9 Months Ended

Sep. 30, 2020

SHORT TERM DEPOSITS

SHORT TERM DEPOSITS

NOTE 4 - SHORT TERM DEPOSITS

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

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PREPAID EXPENSES

9 Months Ended

Sep. 30, 2020

PREPAID EXPENSES

PREPAID EXPENSES

NOTE 5 - PREPAID EXPENSES

In November 2017 the Company contracted with City of Hope’s Center for Biomedicine 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.

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LEASES

9 Months Ended

Sep. 30, 2020

LEASES

LEASES

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, the Company’s ROU assets and lease liabilities for operating leases totaled $1,377 and $1,500, 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

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

	Operating Leases
Remainder of 2020	$	328
2021		1,252
Total future lease payments		1,580
Less imputed interest		(80)
Total lease liability balance	$	1,500

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STOCK CAPITAL

9 Months Ended

Sep. 30, 2020

STOCK CAPITAL

STOCK CAPITAL

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.

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

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.

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.

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"), 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 11, 2019 ATM") in an "at the 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 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 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.

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.

Since its inception and as of September 30, 2020 the Company raised approximately $121 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, 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 shares of Common Stock available for issuance.

As of September 30, 2020, 1,232,613 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.

NOTE 7 - STOCK CAPITAL (Cont.):

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 stock options to purchase 698,666 shares during the nine 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

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

	For the Nine months ended
	September 30, 2020
		Weighted
		average	Aggregate
	Amount of	exercise	intrinsic
	options *	price	value
		$	$
Outstanding at December 31, 2019	1,293,007	3.0142
Granted	698,666	7.1448
Exercised	(17,646)	2.9267
Cancelled	(4,000)	3.7500
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

*    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, 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.

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 months ended September 30, 2020 and 2019 amounted to $2,198 and $582, respectively.

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
			Remaining
	Number of Shares	Weighted Average	Contractual
	of Restricted	Grant Date Fair	Term
	Stock	Value	(Years)
Nonvested as of December 31, 2019	201,385	4.00	1.95
Granted	180,410	8.47
Vested	109,781	4.93
Nonvested as of September 30, 2020	272,015	6.58	1.30

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, 2020 amounted to $441.

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

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RESEARCH AND DEVELOPMENT, NET

9 Months Ended

Sep. 30, 2020

RESEARCH AND DEVELOPMENT, NET

RESEARCH AND DEVELOPMENT, NET

NOTE 8 - RESEARCH AND DEVELOPMENT, NET

Composition:

	Nine months ended
	September 30,
	2020	2019
Research and development	17,146	17,397
Less: Participation by CIRM	(1,862)	(3,290)
Less: Participation by Israeli Hospital Exemption regulatory pathway	(816)	(2,412)
Less: Participation by the Israel Innovation Authorities	(885)	(618)
Less: Participation by other grants	(74)	(59)
	13,509	11,018

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2020

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

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.

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.

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.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial Statements

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.

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

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

Significant Accounting Policies

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.

Recent Accounting Standards

C.      Recent Accounting Standards

The Company reviews new 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 will have a significant impact on the financial statements.

Use of estimates

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.

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LEASES (Tables)

9 Months Ended

Sep. 30, 2020

LEASES

Schedule of supplemental cash flow information related to operating leases

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

Schedule of future lease payments under operating leases

	Operating Leases
Remainder of 2020	$	328
2021		1,252
Total future lease payments		1,580
Less imputed interest		(80)
Total lease liability balance	$	1,500

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STOCK CAPITAL (Tables)

9 Months Ended

Sep. 30, 2020

STOCK CAPITAL

Schedule of fair value assumptions used for the stock options granted

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

Summary of the Company's option activity

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

	For the Nine months ended
	September 30, 2020
		Weighted
		average	Aggregate
	Amount of	exercise	intrinsic
	options *	price	value
		$	$
Outstanding at December 31, 2019	1,293,007	3.0142
Granted	698,666	7.1448
Exercised	(17,646)	2.9267
Cancelled	(4,000)	3.7500
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

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

Schedule of compensation expense for restricted stock is based on fair market value at the grant date

			Weighted Average
			Remaining
	Number of Shares	Weighted Average	Contractual
	of Restricted	Grant Date Fair	Term
	Stock	Value	(Years)
Nonvested as of December 31, 2019	201,385	4.00	1.95
Granted	180,410	8.47
Vested	109,781	4.93
Nonvested as of September 30, 2020	272,015	6.58	1.30

Schedule of 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

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RESEARCH AND DEVELOPMENT, NET (Tables)

9 Months Ended

Sep. 30, 2020

RESEARCH AND DEVELOPMENT, NET

Schedule of Research and development, Net

	Nine months ended
	September 30,
	2020	2019
Research and development	17,146	17,397
Less: Participation by CIRM	(1,862)	(3,290)
Less: Participation by Israeli Hospital Exemption regulatory pathway	(816)	(2,412)
Less: Participation by the Israel Innovation Authorities	(885)	(618)
Less: Participation by other grants	(74)	(59)
	13,509	11,018

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RESEARCH AND LICENSE AGREEMENT (Details)	9 Months Ended
	Sep. 30, 2020
RESEARCH AND LICENSE AGREEMENT
Percentage Of Royalty Payment If Licensed Product Covered By Valid Claim Or Orphan Drug Status	5.00%
Percentage Of Royalty Payment If Licensed Product Not Covered By Valid Claim Or Orphan Drug Status	3.00%
Validity Of Royalty Payment Not Covered By Valid Claim Or Orphan Drug Status	15 years

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SHORT TERM DEPOSITS (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Cash and Cash Equivalents [Line Items]
Maturity of short term deposits	12 months	12 months
Minimum
Cash and Cash Equivalents [Line Items]
Annual interest rate on bank deposits	0.15%	0.15%
Maximum
Cash and Cash Equivalents [Line Items]
Annual interest rate on bank deposits	1.75%	1.75%

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PREPAID EXPENSES (Details) - USD ($) $ in Thousands	1 Months Ended
	Nov. 30, 2017	Dec. 31, 2019
Prepaid Expense, Current		$ 276
City of Hope
Payments to Suppliers	$ 2,665

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LEASES - Supplemental cash flow information related to operating leases (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
LEASES
Cash payments for operating leases	$ 979
New operating lease assets obtained in exchange for operating lease liabilities	$ 1,377

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LEASES - Future lease payments under operating leases (Details) $ in Thousands	Sep. 30, 2020 USD ($)
LEASES
Remainder of 2020	$ 328
2021	1,252
Total future lease payments	1,580
Less imputed interest	(80)
Total lease liability balance	$ 1,500

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LEASES - Additional information (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
LEASES
Operating Lease, Right-of-Use Asset	$ 1,377	$ 2,182
Operating Lease, Liability	$ 1,500
Operating Lease, Weighted Average Remaining Lease Term	1 year 2 months 26 days
Operating Lease, Weighted Average Discount Rate, Percent	8.25%

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STOCK CAPITAL - Stock option fair value assumptions (Details)	9 Months Ended
	Sep. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option life (years)	10 years
Risk free interest rate(max)	1.73%
Dividend yield	0.00%
Expected volatility(min)	58.00%
Expected volatility(max)	63.00%
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk free interest rate(min)	0.33%
Expected life (years)	5 years 14 days
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	5 years 6 months

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STOCK CAPITAL - Employee Stock Option (Details) - Employee Stock Option [Member]	9 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amount of options, Outstanding at beginning of period | shares	1,293,007	[1]
Amount of options, Granted | shares	698,666	[1]
Amount of options, Exercised | shares	(17,646)	[1]
Amount of options, Cancelled | shares	(4,000)	[1]
Amount of options, Outstanding at end of period | shares	1,970,027	[1]
Amount of options, Vested and expected-to-vest at end of period | shares	829,027	[1]
Weighted average exercise price, Outstanding at beginning of period (in dollars per share) | $ / shares	$ 3.0142
Weighted average exercise price, Granted (in dollars per share) | $ / shares	7.1448
Weighted average exercise price, Exercised (in dollars per share) | $ / shares	2.9267
Weighted Average exercise Price, Cancelled (in dollars per share) | $ / shares	3.7500
Weighted average exercise price, Outstanding at end of period (in dollars per share) | $ / shares	3.9676
Weighted average exercise price, Vested and expected-to-vest at end of period (in dollars per share) | $ / shares	$ 1.7226
Aggregate intrinsic value, Outstanding at end of period (in dollars) | $	$ 25,516,661
Aggregate intrinsic value, Vested and expected-to-vest at end of period (in dollars) | $	$ 12,599,092

[1] Represents Employee Stock Options only (not including RSUs).

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STOCK CAPITAL - Restricted Stock (Details) - Restricted Stock [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Number of Shares of Restricted Stock, Nonvested at beginning of period	201,385
Granted	180,410
Vested	109,781
Number of Shares of Restricted Stock, Nonvested at end of period	272,015	201,385
Weighted Average Grant Date Fair Value, Nonvested at beginning of period	$ 4.00
Granted	8.47
Vested	4.93
Weighted Average Grant Date Fair Value, Nonvested at end of period	$ 6.58	$ 4.00
Weighted Average Remaining Contractual Term (Years), Nonvested	1 year 3 months 18 days	1 year 11 months 12 days

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STOCK CAPITAL - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 2,198	$ 607
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	1,065	91
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock-based compensation expense	$ 1,133	$ 516

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STOCK CAPITAL - Additional information (Details) - USD ($)									3 Months Ended				9 Months Ended
		Sep. 25, 2020	Jul. 24, 2020	Jul. 24, 2020	Mar. 06, 2020	Aug. 02, 2019	Jun. 11, 2019	Jun. 06, 2018	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate offering amount					$ 10,000,000.0						$ 9,957,000
Aggregate shares sold					1,250,000
Average Price					$ 8.00
Gross Proceeds													$ 121,000,000
Warrant term (in years)					3 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					250,000
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 15.00
Proceeds from Warrant Exercises													9,957,000
Proceeds from exercise of warrants									$ 6,300,000				$ 6,300,000
Common Stock, Capital Shares Reserved for Future Issuance									1,232,613				1,232,613
Stock or Unit Option Plan Expense									$ 1,017,000			$ 217,000	$ 2,198,000	$ 582,000
Share-based Compensation													$ 2,198,000	$ 607,000
2018 Warrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						842,000		2,458,201
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 5
Warrants Issued To Purchase Of Common Stock								2,458,201
Proceeds from Warrant Exercises								$ 12,300,000
2018 Amended Warrants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			280,000	280,000
Proceeds from Warrant Exercises			$ 1,960,000
2019 Warrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			620,000	620,000		842,000
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 7.00
Proceeds from Warrant Exercises				$ 4,340,000		$ 3,300,000
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted	[1]												698,666
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price													$ 7.1448
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period													180,410
Share-based Compensation									$ 441,000
Director [Member] | Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted													698,666
Global Share Option Plan 2014 And US Stock Option And Incentive Plan 2014 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock Issued During Period, Shares, Issued for Services													4,000,000
Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares sold											1,250,000
Issuance Of Share Value									947,627	1,162,527	3,935,320
Common Stock [Member] | 2018 Warrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights								9.00
Common Stock [Member] | 2019 Warrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 7.00		$ 3.90
At Market Offering [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate offering amount		$ 45,000,000			$ 50,000,000		$ 20,000,000
Aggregate shares sold					2,446,641				947,627
Average Price									$ 14.48				$ 14.48
Gross Proceeds					$ 23,110,000				$ 13,710,000
Fixed Commission Percentage					3.00%

[1] Represents Employee Stock Options only (not including RSUs).

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RESEARCH AND DEVELOPMENT, NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Research And Development Arrangement [Line Items]
Research and development	$ 17,146	$ 17,397	$ 17,146	$ 17,397
Research and Development Expense	$ 1,867	$ 4,008	13,509	11,018
CIRM
Research And Development Arrangement [Line Items]
Less : Participation			(1,862)	(3,290)
Israeli Hospital Exemption regulatory pathway
Research And Development Arrangement [Line Items]
Less : Participation			(816)	(2,412)
Israel Innovation Authorities
Research And Development Arrangement [Line Items]
Less : Participation			(885)	(618)
Other
Research And Development Arrangement [Line Items]
Less : Participation			$ (74)	$ (59)

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SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended
	Oct. 14, 2020	Mar. 06, 2020
Subsequent Event [Line Items]
Average Price		$ 8.00
Subsequent Event
Subsequent Event [Line Items]
Aggregate of additional shares of common stock	294,723
Average Price	$ 17.21
Gross proceeds	$ 5,070