After providing the public with less-than-stellar results last month from the high-profile phase II/III CLARITY trial, the pharmaceutical company Bioline RX (NASDAQ: BLRX) dropped to a new 52-week low of $1.60/share and remains at this approximate level even now. Note that there is more than one CLARITY trial out there, and the one that is associated with BioLine is the randomized, double-blind study comparing CYP-1020 to the Risperidone. Risperidone (trade name Risperdal) is an antipsychotic drug that was originally developed by Johnson & Johnson (NYSE: JNJ) although it's now a generic compound. CYP-1020 is the same thing as BL-1020, and is (or was) BioLine's flagship drug.
CYP-1020 and Risperidone are both potent dopamine antagonists, and were compared directly in the CLARITY trial for antipsychotic efficacy and safety (specifically in schizophrenia patients). The primary endpoint of the trial was based on the cognitive benefits in patients after six weeks of treatment, and secondary endpoints which tested long-term benefits as of 12 and 24 weeks.
The trial was never fully completed, although the DMC (Data Monitoring Commmittee) that was evaluating the CLARITY trial recommended that the trial be halted after the trial had interim data based on 230 patients that were already enrolled in the trial. Based on the analysis, there was no change - BioLine was going to reach the primary cognition-based endpoint given what was gathered up to that point.
Since the trial was completely halted we'll never know exactly how CYP-1020 (BL-1020) fared against risperidone in the treatment of schizophrenia patients. The two drugs operate on the same basic mechanisms, but it appears that the "edge" that CYP-1020 was supposed to have over risperidone based on its GABAergic activity never really materialized in clinical trial data.
Since the drug was not being developed for any additional indications, we can assume that CYP-1020 is a dead development program and that we have to value/trade BLRX based the remainder of its pipeline.
This includes a medical device known as BL-1040 which is a myocardial implant that has been licensed to Ikaria. This development program provides a decent amount of revenue potential based on the $115 million in remaining developmental and regulatory milestones, $150 million in commercial milestones and 11-15% in sales royalties although the market opportunity for the device seems a bit stretched.
Two other notable compounds in Bioline's arsenal include BL-5010 and BL-7040 for the treatment of skin lesions and inflammatory bowel disease (IBD) respectively. Of the two, I think that BL-7040 could prove more interesting due to its novel and unique mechanism of action for a relatively common disease.
BL-7040 is an oral synthetic oligonucleotide that has an agonist effect on a receptor known as TLR-9 (Toll-Like Receptor 9), which is involved in inflammatory reactions by the immune system. It also acts as a suppressor of acetylcholinesterase, an enzyme that interacts with the neurotransmitter acetylcholine. This dual mechanism may be able to suppress the inflammation in IBD patients significantly, and might be especially efficacious if bundled with other drugs to create a more well-rounded IBD treatment regimen.
The market isn't quick to forgive companies with flagship drugs that fail phase III trials, although the market's attention on CYP-1020 will start to fade over time as more emphasis is placed on the remaining pipeline compounds. BL-7040, the IBD drug mentioned just a moment ago, should also see more interest after Bioline releases proof-of-concept Phase IIA trial data in Q2 2013. If Bioline sticks to its schedule, this means that we should see some results before the end of June 2013.
I'm not sure if this would be enough to repair the damage done to BLRX stock following the disappointing data release in March 2013, although it should at least help.