Seeking Alpha
, stockmatusow (1,009 clicks)
Long/short equity, deep value, value, research analyst
Profile| Send Message|
( followers)  

BioLineRX (NASDAQ:BLRX) operates as a clinical-stage biopharmaceutical development company worldwide. Its clinical therapeutic candidates under development include BL-1020, a Phase IIb completed product for the treatment of schizophrenia; BL-1040, a Phase I/II clinical trial completed medical device developed for the prevention of cardiac remodeling in acute myocardial infarction patients; and BL-5010, a novel formulation under Phase I/II clinical trial for non surgical removal of skin lesions. The company's product pipeline under pre-clinical stage of development includes BL-1021 for neuropathic pain; BL-2030 for autoimmune diseases; BL-4010 for cancer tumors; BL-4040 for acute kidney failure; BL-5030 for thromboembolic diseases; BL-5040 for inflammatory diseases and pathological weight loss; BL-6010 for type II diabetes; BL-6020 for cancer cachexia; and BL-6030 for bacterial biofilm. It also operates a biotechnology incubator to evaluate and develop pre-clinical therapeutic candidates. The company was founded in 2003 and is based in Jerusalem, Israel.

The first thing I noticed about BioLine is that the company is located in Israel. Right off the bat this caught my eye because I know Israeli tech companies in general have a strong history of contribution in innovative technological advancement. Teva Pharma (NYSE:TEVA), one of the largest pharmas in the world, is also based in Israel, and they have done rather well in this area over the years.

Let's take a look at the BioLine pipeline and see if they might have some drugs that could be beneficial for society and make a ton of money for the company and investors;

Clinical Pipelined drugs:

  • BL-1020 Schizophrenia (Currently in Phase II/III trial)
  • BL-1040 AMI (Commencing CE Mark Registration Trial)
  • BL-5010 Skin lesions (Phase I/II complete)
  • BL-1021 Neuropathic Pain (Currently in Phase I trial)
  • BL-7040 Inflammatory Bowel Disease (Phase I complete)

The drug that sticks out to me is BL-1021, indicated for neuropathic pain. BL-7050 is a novel, orally-available molecule. The new molecule acts by inhibiting the activity of pain-transmitting neurons, using a novel mechanism of action. Pre-clinical trials in cell culture and in animal models of neuropathic and inflammatory pain have shown that the molecule is effective at reducing neuronal activity and pain levels. In addition, it has an improved safely profile. BL-7050 is based on a technology which was developed in the laboratory of Professor Bernard Attali from the Department of Physiology and Pharmacology, the Sackler Faculty of Medicine at Tel Aviv University.

BL-7050 is a new chemical entity based on the molecular structure of diclofenac (Voltaren), a well-known non-steroidal anti-inflammatory drug (NSAID) widely used in the treatment of nociceptive and inflammatory pain. However, BL-7050 operates via a novel mechanism of action, namely opening specific potassium channels in nerve cells. The opening of these channels reduces the activity of the nerve cells, thereby reducing or preventing pain signals.

Neuropathic pain is a complex, chronic state of pain that results from dysfunctional or injured nerve fibers. Neuropathic pain is associated with various conditions, including shingles, diabetes and cancer and is reported to affect 1% to 3% of the population. Patients describe the symptoms as burning, stabbing, electric shock or itching sensations, which can cause extreme discomfort for extended periods of time. A variety of medications are used to treat neuropathic pain, including antidepressants and anti-seizure medicines. However, these medications have significant side effects and are not always effective. In 2009 the neuropathic pain market was estimated to be $2.4 billion in the seven major markets (U.S., Japan, France, Germany, Italy, Spain and the U.K.), and it is projected to grow to $4.1 billion in 2018.

If this drug ultimately proves itself though all the phase clinical trials to be successful, I see it receiving possible Orphan drug status to be prescribed to patients suffering from extreme pain caused by such diseases as terminal late stage cancers and cystic fibrosis, for example. This means insurance companies are likely to pick up most of the higher price tag this drug is certain to have.

BL-1020 is a treatment for Schizophrenia It is a GABA enhanced antipsychotic that combines dopamine antagonism with GABAergic activity. BL-1020 is an orally available New Chemical Entity (NCE) that has demonstrated high efficacy and safety with minimal EPS and no metabolic side effects. Most importantly, BL-1020 may have the potential to improve cognition, which is a significant unmet medical need in schizophrenia.

It is good to see this drug is in phase 3, but I really do not think it has a good chance for FDA approval anytime soon. The Phase II/III CLARITY trial will be conducted at 14 sites in Romania and 18 sites in India on a total of up to 450 patients experiencing an acute exacerbation of schizophrenia. BioLine is going to need to do more testing with U.S patients to have a better shot for approval here.

Schizophrenia is a brain disease that can often times be hard to diagnose. Schizophrenic patients are known for ditching their medications when not properly supervised. This one is going to be a hard sell for The FDA.

BL-5010 is a novel formulation composed of approved components for non-surgical removal of benign skin lesions such as Seborrheic Keratosis. BL-5010 offers an alternative to painful, invasive and expensive removal treatments including surgery, cryotherapy or laser treatment. Because the treatment is non-invasive, it poses minimal infection risk and eliminates the need for anesthesia or bandaging.

Their recent Phase II has shown that for almost all the patients (96.7%) the lesion sloughed off within 30 days of a single application of BL-5010. Furthermore, the results show that BL-5010 has a good safety profile, as no persistent irreversible adverse effects were observed at the treated site.

This drug has a good chance to see approval by The FDA one day.

BioLine has several other drugs in pre-clinical as well, so it will be interesting to see how this company does with those in the years ahead.

Let's take a look at some company fundamentals;

EBITDA (TTM): -20.46M
Net Income Avl to Common : -15.60M
Diluted EPS : -1.25
Qtrly Earnings Growth (yoy): N/A

Total Cash (mrq): 30.22M
Total Cash Per Share (mrq): 2.28
Total Debt (mrq): 133.82K
Total Debt/Equity (mrq): 0.50
Current Ratio (mrq): 4.63
Book Value Per Share (mrq): 1.99

Like most developmental bio-Pharma companies BioLine is not making money. The good news is that they have no debt and 30 million in cash on hand.

Cash Flow Statement
Operating Cash Flow : N/A
Levered Free Cash Flow :

The bad news is that I cannot find their levered free and operating cash flow statement, as there is only 1 SEC filing, so I do not know their cash burn rate.

08/22/2011 N/A S-8 Registration Statement

BioLine is a newer listing on The Nasdaq.


(Click to enlarge)

The MACD has been bullish lately on BioLine. The rest of the chart is hard for me to get a read on because it is all over the place! The best I can see, a very wide wedge in a longer term down channel. We can see that huge jump a few days ago, rather impressive.

Avg Vol (3 month): 157,095
Avg Vol (10 day): 1,190,840
Shares Outstanding: 13.23M
Float: 11.77M
% Held by Insiders: N/A
% Held by Institutions: N/A
Shares Short (as of Jan 13, 2012): 1.20K
Short Ratio (as of Jan 13, 2012): 0.10
Short % of Float (as of Jan 13, 2012): N/A
Shares Short (prior month): 1.32K

Note the volume here with the low float. This stock at the very least could end up being a great trading stock.

Beta: 1.51
52-Week Change: N/A
S&P500 52-Week Change: 1.12%
52-Week High (Jan 24, 2012): 6.87
52-Week Low (Oct 3, 2011): 2.53
50-Day Moving Average: 3.40
200-Day Moving Average: 3.57

The stock is currently trading above both the 50 and 200 DMA.

BioLine might be a good acquisition for a the following bio-pharmas looking a new innovative drug for neuropathic pain, like BL-1021. I have listed in bold, the neuropathic pain drugs these companies feature;

  • gabapentin, marketed by Pfizer (NYSE:PFE) as Neurontin, the gold-standard drug used in over 50 percent of cases and originally developed to treat depression;
  • lidocaine, marketed by Endo Pharmaceuticals (NASDAQ:ENDP) as Lidoderm, a local anesthetic;
  • carbamazepine, originally marketed by Novartis (NYSE:NVS) as Tegretol, an anti-convulsant;
  • duloxetine, an anti-depressant marketed as Cymbalta by Eli Lilly (NYSE:LLY).
  • pregabalin, also marketed by Pfizer as Lyrica, another anti-depressant.
  • Neurontin recently lost its patent protection in the United States, and a number of generic versions are now available.

Most of these drugs need to be taken four times a day, opening a space for a pharmaceutical that requires less from the patient. BioLine's BL-1021 fits the bill rather well for this.

I think someone at one or all of these companies might want to know about BioLine's BL-1021.

If BL-1021 proves to be successful, BioLine will be sitting on a virtual goldmine.

My final thoughts on BioLine is that it seems like a very strong speculative buy, especially at its current price level of $4 a share. The float is very low, so any kind of positive catalyst, and this stock can move very high, very fast. Here is a perfect example of this;

On 1/24/11, BioLinRx was trading up from $3.45, or 104%, to $6.75 after announcing the licensing deal for hepatitis C drug BL-8020, developed by the privately held French firm Genoscience. Almost 5 million BioLineRx shares have traded hands Tuesday already, blowing away the stock's average daily volume of a miniscule 3,600 shares.

I recommend people consider doing very deep due diligence on BioLine and keep a close eye on this one!

Source: BioLineRx: Strong Speculation Bio-Pharma, Strong Acquisition Target