BioLineRX's CEO Discusses Q2 2013 Results - Earnings Call Transcript

Aug. 6.13 | About: BioLineRx Ltd. (BLRX)

BioLineRX Ltd. (NASDAQ:BLRX)

Q2 2013 Earnings Conference Call

August 06, 2013 10:00 AM ET

Executives

Garth Russell – Investor Relations

Kinneret Savitsky, PhD – Chief Executive Officer

Philip A. Serlin, CPA, MBA – Chief Financial officer and Chief Operating Officer

Analysts

Robert Hazlett – Roth Capital Partners, LLC

Robin Davidson – Edison Investment Research

Operator

Ladies and gentlemen, welcome to the BioLineRx Second Quarter 2013 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

I would now like to turn the conference over to Mr. Garth Russell of KCSA’s Strategic Communication. Sir, you may begin your conference.

Garth Russell

Thank you. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. All statements in this conference call other than historical facts are forward-looking statements. The words, anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions, typically are used to identify forward-looking statements.

These forward-looking statements are not guarantees of future performances and may involve and are risks and uncertainties and other factors that may affect BioLineRX’s business, financial conditions, and other operating results, which include, but not limited to the risk factors and other qualifications contained in BioLineRX’s annual report on form 20-F quarterly report that will be filled in a 6-K and other reports filed by BioLineRX with the SEC to which we’re attaching.

Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking segments. BioLine expressly disclaims any intent or obligation to update these forward-looking statements.

At this time, it is now my pleasure to turn the call over to Dr. Kinneret Savitsky, Chief Executive Officer of BioLineRX. Kinneret the floor is yours.

Kinneret Savitsky

Thank you, Garth. Welcome everyone, and thank you for joining our second quarter 2013 earnings conference call. Joining me on today’s call is Phil Serlin, our Chief Financial and Operating Officer. Today, we will give you an update of the progress of our therapeutic pipeline.

After our prepared remarks, Phil and I will be happy to answer any questions you may have. With that said, let’s get started.

Over the past couple of months, we have continued to enrich and advance our broad and promising portfolio of compounds. Today, I will highlight another of our clinical stage [assets], with two of them already in advance clinical stages. We believe that each of these diverse programs offer significant opportunities for the Company to deliver on its goal of bringing viable compounds into the market.

To start, our late stage out-license program with Ikaria Inc., BL-1040 now known as Bioabsorbable Cardiac Matrix or (NYSEARCA:BCM) is being developed as first-in-class myocardial implant for the prevention of cardiac remodeling following AMI. At present BL-1040, is deeply in the midst of a pivotal CE-Mark registration trial, the PRESERVATION I Study for European approval. This Placebo controlled 306 patients study which includes a six months follow-up is progressing at full stream and results are expected in to 2014.

Ikaria’s recruitment efforts are on track with 36 active sites across nine countries including, seven leading sites in the U.S. based on its unique mechanism of action and the successful pre-clinical and clinical trials to-date. We believe that BL-1040 has the potential to become a breakthrough treatment for AMI and part of the standards of care.

Our next key access is BL-5010, a novel formulation for the non-surgical removal of skin lesions. This unique formula consisting of two assets is in Dallas within BL-5010P, a pen-like applicator. The device allows the easy removal of benign skin lesions, such as seborrheic keratosis. The Novel BL-5010 formulation has already demonstrated outstanding results in the treatment of benign skin lesions in a 60 patient clinical study conducted in Germany and in Holland.

In this trial, a single application of BL-5010 achieved lesion removal in almost 97% of the cases. Now we intend to perform a pivotal bridging study on the final product known as BL-5010P, which as I mentioned, consists of both the novel formulation and the unique state-of-the-art applicator. Both the formulation and the applicator has been designated as a device by the Regulatory Authorities in Europe which has allowed us to shorten the development pack considerably.

Last week we announced filling of the necessary regulatory submission to commence a pivotal CE-Mark registration trial in Europe. These 20 patient bridging trial is expected to begin in the fourth quarter of this year. The primary objective of the study is to assess the efficacy of a single application of BL-5010P for the removal of seborrheic keratosis also known as SK lesions.

Secondary objectives include safety and tolerability assessments of the cosmetic outcomes as evaluated by both patients and investigators, and the ability to preserve the treated SK lesions for histopathological diagnosis. So far three sites in Germany and Sierro has already been selected for the trial. Success in this study should enable us to immediately apply for CE-Mark registration of the product, which could be ready for the European market by the second half of 2014.

Future development plans include extension to additional therapeutic indication including actinic keratosis known as AK a pre-cancerous skin condition. The total AK and SK market is estimated at over $500 million to worldwide. We continue to notice increasing amount of interest for these products when speaking with potential partners. Even prior to a CE-Mark study initiation BL-5010 is generating interest and talks with potential partners are progressing rapidly.

The simplicity of use and low cost of this product should facilitate entry into this market. We are also in the process of expanding the product’s geographical reach to other parts of the globe, such as Australia which is a major market with highest incidence of AK in the world.

Moving to our key compound in the oncology space, we recently announced that our BL-8040 compound for the treatment of acute myeloid leukemia has enrolled its first patient in a Phase II trial.

This multi-center open-label study is being conducted to evaluate the safety and efficacy of repeated doses of BL-8040 in adult subjects suffering from relapsed or refractory AML. The primary end point of the study are the safety and tolerability of BL-8040, secondary end points include the Pharmacokinetics profile of this drug and an efficacy evaluation as [effect by various biometrics], such as the response rates via biopsy of the bone marrow.

BL-8040 is a shortcut type that functions as the high-affinity antagonist for CXCR4, a chemokine receptor directly involved in tumor progression and metastasis. BL-8040 has significant characteristics that differentiate it from other treatments targeting the CXCR4 receptor, such as Mozobil which is marketed by Sanofi.

Pre-clinical studies have shown that BL-8040s Stem Cell Mobilization capabilities are greatly superior to Mozobil. In addition BL-8040 is a direct anti-caner [apoptosis] effects which Mozobil does not have. Based on this mechanism of action we expect BL-8040 shows the potential mobilization of cancer cells from the bone marrow, thereby sensitizing this cell for chemotherapy and bio-based anti-cancer therapy.

We also expect to see direct of apoptosis of the cancer cell. In June, the first patient was enrolled at the MD Anderson Cancer Center in Houstan, following approval from the U.S. Regulatory Authorities. We are very excited to have begun the Phase II trial at a cancer research center as respected and renowned as MD Anderson and they’ve just added another world leading research center in the U.S., Northwestern University Memorial Hospital in Chicago.

In parallel, we also received regulatory approvals from the Israeli Ministry of Health to conduct the BL-8040 Phase II trial in Israel in four additional leading Israeli sites has been initiated [at the end of our] recruiting. We expect up to 50 patients to be enrolled in the study at eight sites in total. We are anticipating preliminary results by Q4, 2013 and final results in the second half of 2014.

Another exciting program ready to enter the clinic by the end of this year is BL-7010 a unique polymer for treatment of celiac disease. BL-7010 is a significant opportunity for us considering there are no pharmaceutical agents approved for this treatment for celiac and BL-7010 is one of only four clinical stage program in the world currently being develop for this diseases.

Celiac has becoming increasing problematic condition with 1% of the world’s current population suffering from this disease. The incidence of celiac is also expected to increase substantially in the future with increased awareness and improved diagnostic tools. Despite market projection for the celiac state of approximately $8 billion by 2019 the only current treatment is lifelong adherence to a gluten-free diet, which is extremely difficult to maintain.

Statistics show that over 50% of patient on a gluten-free diet are still symptomatic. Therefore we are seeing increased interest in this market by big Pharma companies. For example, AbbVie recently acquires a right for a Phase II asset from Alvine in an option deal with $70 million upfront payment. BL-7010 is a non-absorbable polymer with a high affinity to gliadins, the immunogenic peptides contained in gluten. It does not allow absorption of the gliadins in the small intestine, thereby preventing pathological damage by helping to preserve the structure of intestinal mucosa and reduce inflation. It is non-absorbable, non-toxic and has no effect on weight.

At this point we are planning two clinical studies during 2013 and 2014 a Phase I/II safety study, which we expect to commence in Q4 of this year in Europe and an efficacy study which we hope to commence in the second half of 2014.

GLP toxicology’s top chronic studies are currently underway and we are deeply into the process of preparing submission to the Regulatory Authorities. We have already selected the CRO and the treatment sites. As mentioned, we anticipate beginning the Phase I/II study by the end of this year. Earlier this quarter, we presented this project at two leading international conferences, the U.S. Celiac Disease Foundation’s Annual Conference and 2013 Digestive Disease Week. Our participation in these events further enforces our excitement for these assets. And we believe it has tremendous potential.

Turing to the [BD] front, we recently announced a partnering deal on one of our two HCV programs BL-8030, a second generation NS3 protease inhibitors. The collaboration we’ve signed with CTTQ, the leading Chinese pharmaceutical company in the liver disease space for the development and commercialization of BL-8030 in China and Hong Kong.

While this program is still in pre-clinical stages, we believe there is significant value in this potent and selective inhibitor and we are considering other traditional deals for these asset. (inaudible) this comment as reflected the positive outlook we have for the second half of this year and for the next year. The next 12 to 18 months holds many significant catalysts for the Company, and we look forward to executing our operating plans towards their achievements.

Now I would like to pass the call over to Philip.

Philip A. Serlin

Thank you, Kinneret. As Kinneret previously mentioned, I’m also very excited by the positive momentum within our pipeline, and look forward to the potential achievement of our key milestones over the 12 to 18 months.

Now I would like to turn your attention to the financials for the six months ended June 30, 2013. Although our primary reporting currency is the Israeli shekel, for the convenience of the listeners on this call, the analysis will be done on a dollar-basis only. The translation to dollar has been done at the representative rate of exchange as of June 30th, 2013 of ILS3.618 to the dollar.

Research and development expenses for the six months ended June 30th, 2013 were $8.7 million, an increase of $0.2 million were 3% compared to $8.5 million for the comparable 2012th period. With our goal to a $1.7 million one time reversal that announced previously accrued to the Israeli Office of Chief Scientist with respect to BL-1020, research and development expenses increased by $1.9 million.

The increase resulted primarily from significantly higher expenses in the 2013 period associated with the CLARITY clinical trial, as well as the ramp in spending on other clinical stage projects introduced 2012.

Sales and marketing expenses for the six month that ended June 30, 2013, as well as the comparable 2012 period were stable at $0.5 million. General and administrative expenses for the six months that ended June 30th, 2013 were $2.0 million, an increase of $0.2 million or 10% compared to $1.8 million for the comparable 2012 period. The increase resulted primarily from a one time expense for professional services incurred in the 2013 period.

As a result of these differences, the company operating loss for the six months ended June 30, 2013 amounted to $11.2 million compared with an operating loss of $10.7 million for the comparable period in 2012. Net non-operating income amounts to $3.8 million for the six months that ended June 30, 2013. An increase of $2.3 million compared to net non-operating income of $1.5 million for the comparable 2012 period.

Non-operating income for both periods primarily relates to fair value adjustments of liabilities on account of the warrants issued in the private and direct placements that we conducted in February 2012 and 2013. Net financial expense amounted to $0.5 million for the six months ended June 30, 2013, a change of $1.6 million compared to net financial income of $1.1 million for the comparable 2012 period.

Net financial income and expense rose up primarily from changes in the average exchange rate of the dollar in relation to the shekel during the respective periods, which have a direct effect on the Company’s net assets denominated in dollars. The Company’s net loss for the six months ended June 30, 2013 amounted to $7.9 million compared with a net loss of $8.1 million for the comparable period in 2012.

Now let’s turn to the cash flow statement. Net cash used in operating activities were $11.5 million from the six months ended, June 30, 2013, compared with net cash used in operating activities of $10.1 million for the comparable 2012 period. The $1.4 million increase in net cash used in operating activities was primarily the result of increased research and development spending.

Net cash used in investing activities for the six months ended June 30, 2013 was $5.9 million, compared to net cash provided by investing activities of $2.7 million for the comparable 2012 period. The cash flows relating to investing activities primarily stand from investments in and maturities of short-term bank deposits during the respective periods.

Net cash provided by financing activities for the six months ended June 30, 2013, was $12.7 million compared to net cash provided by financing activities of $14.5 million for the comparable 2012 period. The cash flows from financing activities primarily reflect the direct and private placements that we completed in February 2013 and 2012.

As of June 30, 2013, BioLine held $23.1 million in cash, cash equivalents and short-term bank deposits. We believe this is adequate capital to support our current clinical program and the company into mid-2015. Now I’d like to turn the call back over to Kinneret for some closing commentary.

Kinneret Savitsky

Thank you Phil, as we have tried to emphasize on this call, we have several meaningful milestones that will be reached towards the end of 2013 and during 2014. And we look forward to realizing the potential of these multiple opportunities in our pipeline.

Operator, we are now ready to open the call for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). The first question is from Bert Hazlett of Roth Capital Partners. Please go ahead.

Robert Hazlett – Roth Capital Partners, LLC

Yes. Thank you for taking the question. I appreciate it. A couple on 5010 and then the couple on your CXCR4 program, first on 5010, what type of structure would you potentially be considering just in broad terms for a licensing? And then it looks like this is very interesting asset in terms of what’s called efficient development towards pivotal trial? Is this an asset that you might consider holding on a bit longer in other geographies beyond Europe, I would love to hear your thoughts there.

Kinneret Savitsky

Thank you, Bert. So, BL-5010 was designated as a device in Europe, and therefore we believe that this type of deal that we will talk at the moment or the type of deals that we are discussing with potential partners right now is mainly regional deals, since the regulatory path is different between Europe and the U.S. I think said that, there are other regions that might get a designation of the device, for example, Australia, or similar or [accounted] with those similar regulatory path. Right now we are running and our strategies to continue with the device set route and leave the route of this drug to other partner. And this is what we are doing at the moment, so we already submitted all the documents that I mentioned before and once we receive the [grant], we will start this study, even if we are still under discussions with partners.

Robert Hazlett – Roth Capital Partners, LLC

And just, again a follow-up may be you touched on it, but may be a little bit more. In other geographies do you think you could – do you think you might be willing to hold on to this to develop it to further stages, on your own?

Kinneret Savitsky

So usually we are not conducting pivotal studies based on the current strategy, and although this is our strategy, we are considering enter this registration theme for this registration study. This is relatively small study, something that we can do even from operational point of view. And therefore, we are willing to take it on – as part of our effort in 2013 and 2014.

Robert Hazlett – Roth Capital Partners, LLC

Thank you for that color. And then with regard to 8040 and AML, could you just remind us just to the end points that of the study and again would you expect the data to be released at a medical meeting or around year end or is it something that would be more likely released in a press release. So 8040 AML study in particular the end points that might be relevant and might be meaningful looking from the – considered in this study.

Kinneret Savitsky

So the AML studies consist of two phases, one is the escalating those phase in the second – the phase where we will continue to recruit to the rest of the patients on optimal dose. This study we’re looking for safety, tolerability, but also for efficacy end points, we’re looking for the migration activity of the BL-8040 and also for the apoptotic effect. So, for example, we conduct fact analysis in which we are looking for different apoptotic biomarkers and of course for a complete and partial efficacy effect of the BL-8040.

Robert Hazlett – Roth Capital Partners, LLC

Thank you very much.

Operator

The next question is from Robin Davidson of Edison Investment Research. Please go ahead.

Robin Davidson – Edison Investment Research

Thank you.

Kinneret Savitsky

Can I just complete my answer to Bert, Mr. Bert? Sorry. If we will have already the partial results of several course from the escalading dose phase, we will try and present the data at the ASH Conference, but it depends on the phase of the study that we will be in at the time, and also I just wanted to mention that although this is the place where all our PIs are going to be, or participate in this conference, we do not want to push it just because of the timing, we want to be – to fill that we have the right data to present at the ASH Conference. So it depends where we will stand.

Operator

The next question is from Robin Davidson of Edison Investment Research. Please go ahead.

Robin Davidson – Edison Investment Research

Thank you. Hello there, I would like to ask a couple of questions on BL-1040, first of all. This is really the studies on the clinical trials book is due to report in March 2014, which given it has a six months primary end point, with just – that it must be at this point be very close to full enrollment if not having achieved that. Is that your understanding of the situation from your partner first of all?

Kinneret Savitsky

And so, as you mentioned in clinical trials goal which is mentioned at first quarter of 2014, as we stated in our reports, we think this is going to be in 2014, not particular in the end of Q – or in the first of Q1. Although right now our feeling is that it’s going to be around mid 2014.

Robin Davidson – Edison Investment Research

Okay, but I don’t have a lot of – well I think there are clinical data, (inaudible) pre-clinical data on that program, but I want to – do you know or are you aware whether the step study has passed in into analysis for (inaudible) I mean that might be normal in a pivotal study?

Kinneret Savitsky

Now there are no interim data also not for fertility analysis, but I have to say that from safety point of view the FDA required data on the safety profile and tolerability for every 30 patients. So this was conducted several times already.

Robin Davidson – Edison Investment Research

Okay, fine. And on the speaking on BL-5010, I just wanted – if you had an idea how quickly you thought you might be able to conduct that, sorry I would imagine it can be done relatively quickly and approximately what would be the size, is it started to be in the same order of 60 patients that you did before or larger?

Kinneret Savitsky

So probably this study is going to be smaller probably around 20 patients. We still – its still on a [debate] we are waiting to receive some information, also we submitted the package, but since it’s a bridging study, with the new applicator with the BL-5010 the pen-like applicator, we believe that we can conduct small study also based on the discussions we had with the study patients, we believe it will be a 20 patients study, we can show a very nice effect. And we have six months follow-up, therefore, we believe that we’re going to have the results around mid 2014.

Robin Davidson – Edison Investment Research

Thank you. Another one on actually BL-1020, you haven’t really mentioned and I wondered – are you still conducting the sort of further analysis of a CLARITY study data, or have you determined that there’s no merit in doing that.

Kinneret Savitsky

We’re still waiting to see the unblinded data; we will probably see it in the next few weeks, probably during August. So I cannot right now comment on where this stands and no new data that we saw, there’s no new – nothing new in this field or in this program.

Robin Davidson – Edison Investment Research

Okay. All right, that’s fair enough. Just a final one perhaps for Phil. Just on your guidance in terms of the cash reach of the company to mid-2016, I wonder if that assumes any – the recite of any milestone from well presumably BL-5010 – BL-1040, for example?

Philip A. Serlin

No it doesn’t. Our burn rate has dropped considerably since the termination of the BL-1020 study and its below $12 million a year. So you know based on what we have now with cash in the bank, et cetera, we think that the cash will last until into Q2 2015.

Robin Davidson – Edison Investment Research

Right excellent. Okay thanks so much.

Kinneret Savitsky

Thank you.

Operator

(Operator Instructions). There are no further questions at this time. Before I ask Dr. Kinneret Savitsky to go ahead with her closing statement, I would like to remind participants that a replay of this call is scheduled to begin two hours after the conference. In the U.S., please call 1 888-782-4291. In Israel, please call 03925-5927. Internationally, please call 972-3925-5927.

Dr. Savitsky would you like to make your concluding statements?

Kinneret Savitsky

Yeah. Thank you all for joining us today. We are excited about the Company’s continued advancement and development of its program. We appreciate your support and commitment to BioLine. And we will continue to update you of our progress. Thank you and bye-bye.

Operator

Thank you. This concludes the BioLineRx second quarter 2013 conference call. Thank you for your participation. You may go ahead and disconnect.

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