BioLineRx Ltd. (NASDAQ:BLRX)
Q4 2013 Earnings Conference Call
March 17, 2014, 10:00 AM ET
Josh Drumm - IR, Tiberend Strategic Advisors
Phil Serlin - Chief Financial and Operating Officer
Kinneret Savitsky - Chief Executive Officer
Bert Hazlett - Roth Capital Partners
Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx Fourth Quarter and Year-End 2013 Conference Call. (Operator Instructions) I would now like to turn the call over to Josh Drumm of Tiberend Strategic Advisors to read the Safe Harbor statement. Josh, please go ahead.
Thank you, Nancy. 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 indeed forward-looking statements. The words anticipate, believe, estimate, expect, intend, guidance, confidence, target, project, and other similar expressions are used typically to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performances and may involve and are subject to certain risks and uncertainties and other factors that may affect BioLine's business, financial condition and other operating results. These include, but are not limited to, the risk factors and other qualifications contained in BioLineRX's annual report on Form 20-F, quarterly reports that we filed in a 6-K and other reports filed by BioLineRX with the SEC to which your attention is directed. Actual outcomes and results may differ materially from what is expressed or implied by these forward-looking segments. BioLineRx 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. Phil Serlin, Chief Financial and Operating Officer of BioLineRx. Phil, please go ahead.
Thank you, Josh. I'd just like to point out to everyone on this call that our quarterly call is in the form of a presentation. And you can find the presentation on the EDGAR website that was filed 15 minutes ago, as well as on BioLine's corporate website in the Investor page under Events.
Now I'd like to turn to Slide 3 in the presentation. It's our pipeline slide. One of the things that I think you'll notice is our pipeline slide has changed over the last year and we are now showing specifically two lead development programs, BL-8040 that's indicated for AML and stem cell mobilization. Our AML program is in the Phase 2 at the moment. And stem cell mobilization, we should be starting a Phase 1 some time in the next few months. And also BL-7010 for celiac disease, which is currently in the Phase 1/2, and Kinneret will speak about those momentarily.
We also have three additional development programs. These are programs that we are moving forward, but our lead development programs where we're spending the vast majority of our development spend. We also have four programs that are partnered or in co-development, the most important of which is BL-1040 for – to prevent ventricular remodeling post-AMI and that's partnered with Bellerophon, which formerly was Ikaria. And that's in a phase - a pivotal study for CE Mark registration.
I'd now like to turn the call over to Kinneret who will go more specifically, more deeply into our pipeline.
Thank you, Phil. Today we would like to give a brief summary of how our 2013 major events and I'm turning to Slide 5. Let me start with where we are today. Our current pipeline is focused on oncology and immunology. We have two lead programs in our portfolio, BL-8040 for AML, stem cell mobilization and other hematological indications; and BL-7010 for celiac disease.
We are very well financed to achieve our major milestones, especially for these two compounds. Besides the programs, we also have found several partnerships besides BL-1040, the agreement with Bellerophon that as Phil mentioned formerly known as Ikaria. In 2013, we signed three collaboration agreements and I will elaborate on this in a minute.
We have two new Board members, Dr. B.J. Bormann and Dr. Sandra Panem, who will give us significant value. Both of them are bringing strategic business development and capital market expertise and it shows our commitment to the US market.
I will now turn to Slide 6. In 2013, we moved our key programs. BL-8040, we reported our partial results for the Phase 2, and we also achieved orphan designation by the FDA. Regarding the stem cell mobilization, we've made the regulatory submission for the Phase 1, and we expect to start this study in the next month or two. For this indication, we also achieved an orphan designation from the FDA.
Regarding the celiac program, BL-7010, we started the Phase 1/2 study. And a week ago, we announced the completion of a single administration stage. We are now moving to the repeated administration and I will elaborate on this in a few minutes. And regarding the skin lesion projects, BL-5010, we received regulatory approval to commence the pivotal CE Mark registration study. This is a small study of 20 patients [as it relates to the participation] [ph]. And this study is expected to start in very soon and the results are expected this year as well.
As I mentioned before, we signed several collaboration agreements, and I'll start with the BL-9020. This is Type 1 diabetes program. This collaboration we've signed with JHL Biotech for China and Southeast Asia. I have to say that JHL is a promising company for protein production. They have top tier shareholders. Their facilities were designed and built with GE Health.
Regarding our two HCV programs, as you probably all know, the HCV's pace changed to lot in the last 12 months or so. And we made a strategic decision in order to reduce risk to find partners for our two HCV programs. The first one was BL-8030. This was a preclinical stage program. And our decision was to try and introduce this into China, especially since China is a very big market for HCV on one hand. And on the other hand, the patients there cannot bear the cost of the new medication. Meaning that we believe that if we identify a local company in China our product can find a market there for HCV. And therefore, we identified CTTQ, which is the leading liver disease company in China, and they received the rights for China and Hong Kong.
Regarding the BL-8020 program, which is the second HCV program, this compound is a unique mechanism of action, it works on the host and not on the virus and therefore it is relevant to many more viruses. Therefore, we decided to sign a deal with Genoscience and Panmed, and they will continue the development of this program not just for HCV, but also for other viral indications.
Let's move to Slide 8. I will now present the lead programs. So before I get into the list of major events regarding the BL-8040, I would like to underline the fact that BL-8040 is a short peptide that antagonizes CXCR4, which is a validated target. CXCR4 is a validated target. Having said that, besides the mobilization activity, which is common with other blockers of CXCR4, our compound is also inducing apoptosis and acts as an inverse agonist, which is unique. And therefore, we all believe that this is a unique program.
Now we are now running two separate studies, one for AML and the second one for stem cell mobilization. I'll start with the AML program. In December, we reported partial results from this Phase 2 study. So far, there was no dose-limiting toxicity. And based on the protocol, we potentially have two more doses to go till we move to the next phase of the study. Besides the safety, we also saw robust mobilization activity, and I'm talking here in the range of six to eight-fold increase in mobilization. Other compounds that are blocking CXCR4 are showing about 2 to 2.5-fold increase in mobilization. And therefore it's very significant.
And also, we had evidence for apoptosis and this is the first time that we have evidence for apoptosis from clinical data. The apoptosis was seen in several patients and this is a very unique activity, as I mentioned before. We plan to issue a PR when we complete the dose escalation phase, which is expected around mid-2014. Topline results of this study are expected by the end of this year or early 2015.
Regarding the second study, the stem cell mobilization, we submitted all the documents for this Phase 1 study, which is going to be conducted in Hadassah Medical Center in Israel. We will start the study probably in the next month or two, and we expect the results of this study by the end of this year probably around Q3 to Q4.
On the IP front, we had two patents that were granted in 2013 by the USPTO. Just a week ago or so, we mentioned that we received another patent from the USPTO, and this is part of the effort that we are doing in order to strengthen our IP portfolio. We also published three scientific papers on the various clinical aspects regarding BL-8040, including CML, non-Hodgkin lymphoma and thrombocytopenia.
I'm turning to next slide, which is Slide number 9. I will continue now with the second lead program, BL-7010 for celiac. We are now running a Phase 1/2 study in a world's leading site in Finland for celiac. This study consists of two stages or two parts, single administration and repeated administration. We announced the data or information that we completed the single administration stage, which included six cohorts. We didn't see any limiting toxicity in this part. We are now advancing to the repeated administration. It will be a 14-day repeated administration three times per day.
Topline results from this study are expected around mid-2014. And if everything goes smoothly, we expect to start the next study, which is going to be a randomized controlled efficacy study by the end of 2014. During 2013, we also gave five oral presentations to support our central role in the celiac space. Some of this presentation were in leading scientific conferences.
We also mentioned, I believe, in the last call that we see an increased interest in the celiac space and this is probably supported by some of the events that were in our industry. I mentioned the AbbVie's Alvine option deal. Actually AbbVie paid an upfront of $70 million for an option deal from the product that Alvine is developing and now running the Phase 2b. Besides this agreement, Alba just two or three weeks ago announced the positive results from the Phase 2 that they were running Cephalon as an option for the Alba product, which is now actually Teva. And few months ago, also GSK and Avalon formed a newco, which will look for new treatment for celiac based on compounds that will inhibit the TG2 enzyme.
So we do see more and more activity in this space and we do feel the eyes around the celiac field.
I'm now moving to Slide 10. I just want to give you an update on our BL-1040 program, although it's not part of the leading compounds in the slide that Phil just showed the pipeline slide. BL-1040 is a leading program and we just put it in a partnering section and it was already outlicensed. BL-1040 is a medical device, which prevent the remodeling of the heart's post-acute myocardial infarction. Now it's under the development of Bellerophon. They call this product BCM. They are now running the pivotal study. It's a CE Mark registration study. That's the last study that is needed for European approval for the CE. And this study consists of over 75 sites running in nine countries around the world, including the US.
It is a placebo arm. It's about a 300-patient study with a six-month follow-up. The endpoint is a composite endpoint, which consists of end diastolic volume, quality of life questionnaire and six-minute walk. The results are expected, as we said, before or toward the end of 2014.
I will now hand it over to Phil. Phil?
Thanks, Kinneret. I'm on Slide 12. So as many of you know, we can see the significant financing. In the last few weeks, we raised a gross amount of $24.1 million in an underwritten public offering of American Depository Shares. Roth Capital was the lead book runner on the deal and the Maxim Group was co-manager. It included $1.3 million in ADSs to cover an over-allotment option. It was also significantly oversubscribed.
The financing broadened significantly our US institutional investor base. The ADSs were purchased by high caliber institutions and US investors now hold about two-thirds of our total shares outstanding. This financing puts us in a very good position. It provides us with at least three years of operational capital, and the proceeds will be used primarily to advance our lead programs, BL-8040 and BL-7010 to meaningful inflection points.
Now on Slide 13 with a financial overview, this analysis is in US dollars at the December 31, 2013, exchange rate. Our R&D expenses in 2013 decreased from 2012 by $5.8 million. This decrease includes a $1.7 million one-time reversal of a liability of the Office of the Chief Scientist in Israel. So on a normalized basis, our R&D spend decreased by about $4 million. And this decrease primarily resulted from lower expenses in 2013 associated with the CLARITY trial for BL-1020, which as you know we terminated in March 2013. So the expenses in 2012 were much more significant than 2013. And these lower expenses were partially offset by a significant increase in spending on our two lead programs, BL-8040 and BL-7010.
Sales and marketing expenses increased by about $300,000 in 2013. This primarily results from increased business development activities and also expenses associated with our JHL collaboration agreement, which Kinneret earlier mentioned.
I'm on Slide 14, G&A. It decreased by about $200,000 from 2012. And this small decrease resulted primarily from some one-time expenses for professional services in 2012. Non-operating income increased by about $100,000, and it resulted primarily from a fair value adjustment mark-to-market to our warrant liability. And financial income and expenses which were $1.2 million in 2013 were compared to net financial income of $400,000 in 2012. And this results primarily from changes in the exchange rate of the Israeli shekel to the US dollars, as the Israeli shekels substantially strengthened during 2013 and since we hold net assets in US dollars, this resulted in a financial expense on our P&L.
I am on Slide 15 from our cash and burn rate perspective, our cash and short-term deposits were $18.2 million at the end of December. Net proceeds from our financing in March 2014 were approximately $22.5 million. Our net burn rate is about $12 million to $13 million per year. And as I mentioned, that should provide us with about three years of operational capital.
Our analyst coverage, we have Roth Capital Partners' Bert Hazlett from Roth, Ram Selvaraju from Aegis Capital and Robin Davidson and Jason Zhang from Edison Investment Research who are still covering the company.
The last slide, Slide 16, shows all of our major milestones in 2014, and I'd like to go through that quickly, because it really I think sums up what BioLine is all about. So if you look on the top-left, we announced our BL-9020, our Type 1 diabetes collaboration with JHL. And as Kinneret mentioned, this is an infrastructure for future development in the area of biologics. If you look on the bottom-right, towards the bottom, dark blue, is BL-1040, the pivotal CE Mark study results will be occurring hopefully by the end of 2014.
If you look on the right side again, in beige, in the middle of the page, we have our partial Phase 2 results on the AML study which are expected in the middle of the year. And at the bottom, we expect topline results on the Phase 2 study by the end of the year or the beginning of next year. Also on the right side, sort of a light red or orange is BL-8040's Phase 1 for stem cell mobilization. We hope to initiate that in the second quarter of this year with Phase 1 topline results by, as Kinneret mentioned, by Q3/Q4 of this year.
On the left side in purple or light purple, we already publicized the Phase 1/2 study update recently a few weeks ago on the celiac disease after the dose escalation phase. We should have topline results by mid-year. And as Kinneret mentioned, we hope to start a pivotal occupancy study by the end of this year. And finally, our skin lesion product, BL-5010, we expect to start a pivotal EU study for seborrheic keratosis within the next month or two with the results from that probably in Q3. And we also hope to start an additional study either in actinic keratosis or skin warts by the end of the year as well.
I think that concludes the formal part of our presentation. I'd like now to turn the call back to the operator if anyone has any questions.
(Operator Instructions) The first question is from Bert Hazlett of Roth Capital Partners.
Bert Hazlett - Roth Capital Partners
I have a couple of questions regarding 8040, the CXCR4 program and just one on 5010. First, on 8040, you'll get the initial stem cell mobilization results sometime relatively shortly in the 2014, as you mentioned. Given the data you already have in hand, some of the data with the stem cell mobilization, is there an ability to move rapidly with that specific indication maybe more rapidly than in AML and just a little color on that?
We have clinical data on stem cell mobilization from the multiple myeloma studies. With the Phase 1/2 study, that was conducted still by Biokine, the company that we end licensed the product from. Based on this study, they showed robust mobilization in the highest dose that was tested in this study. In one [authorization] [ph], they collected enough stem cells that are needed for the transplantation. So this was encouraging. But right now, the study that we're planning to run is in healthy volunteers, and this is the first time that we are going to check the activity of BL-8040 in healthy volunteers for allogeneic transplantation. And we don't know this activity and it's something that we still need to learn.
But of course, we're planning to look for autology and also allogeneic activity of stem cell mobilization. But we believe that we can go and maybe have a [inaudible] development path, but it also depends on the agencies. And since AML is a difficult disease with no medications, new medications in the last three decades or so, we believe that maybe it will be able to seek for a conditional approval. So we still are to know which one will have a faster track.
Bert Hazlett - Roth Capital Partners
I guess shifting to 7010, the gliadin polymer for celiac disease, you'll get data with regard to the systemic absorption or the systemic availability of that compound. How important do you think that's going to be in terms of licensing that program ultimately?
So in the Phase 1/2 study that we're running in Finland, as you mentioned, we are going to check the systemic absorption, we're going to collect and we are collecting also in the single administration stage urine and blood samples. We believe that based on previous discussions which we had with an (inaudible) body and also with the Finnish authorities, Valvira, that if we show no absorption or limited absorption, we might receive a device designation, meaning that it's a bit different regulatory path, and we believe that this might bring the product earlier to the market, at least in Europe. This designation is unique for the European authorities and we are planning to start also and move toward the US market as well. And our idea is to go to a pre-[IND] [ph] meeting with FDA in Q3 after we have the safety from this study.
Now, the chemists are producing the product. So although it can be defined maybe as a device in Europe, we still believe that the companies that are relevant for this product are global drug companies. And therefore, I don't think this matters. And what matters is that since we might see a different regulatory path, we might reach the market earlier and this would count I believe.
Bert Hazlett - Roth Capital Partners
And then just a brief one on 5010. You do get pivotal results in seborrheic keratosis. I know you have the additional studies upcoming. But could you just give us a status update with regard to partnering of 5010? Thank you.
In the report, we mentioned that we are in meaningful discussions with the companies on this program. I cannot disclose much more about these discussions. They are taking time and it's not something that you are signing in a month or so. But we decided not to wait and till the agreement will be signed, we decided to continue with our development plans and we are going to enter this study as soon as we are ready for this [inaudible].
(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 US, please call 1888-269-0005. In Israel, please call, 039-255-938. Internationally, please call 9723-925-5938. Dr. Savitsky, would you like to make your concluding statement?
Yes, thank you. I would like to emphasize the fact that 2014 is a significant year for us. We have important studies that will reach significant milestones in the next 12 months. This includes AML, the stem cell mobilization, the celiac and the acute myocardial infarction studies. In addition, we will stay focused on our oncology and immunology indications. We have the funding and expertise to support our lead programs in order to make sure that we can leverage the deals and position BioLine as an important player in this industry. So thank you very much for your time.
Thank you. This concludes the BioLineRX fourth quarter and year-end 2013 conference call. Thank you for your participation. You may go ahead and disconnect.
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