BioLineRx Ltd. (NASDAQ:BLRX)
Q3 2016 Results Earnings Conference Call
November 22, 2016 10:00 a.m. ET
Philip Serlin - Chief Executive Officer
David Malek - Chief Business Officer
Mali Zeevi - Chief Financial Officer
Vivian Cervantes - PCG Advisory
Jason McCarthy - Maxim Group
Joe Pantginis - ROTH Capital Partners
Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx Third Quarter 2016 Results Conference Call. All participants are at present in listen-only mode. Following the management's formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions]
I would now like to hand the call over to Ms. Vivian Cervantes of PCG Advisory to read the Safe Harbor statement. Vivian, please go ahead.
Thank you, operator. 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, believes, 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 performance and may involve and are subject to certain risks and uncertainties and other factors that may affect BioLineRx'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 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 statements. 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 Mr. Phil Serlin, Chief Executive Officer of BioLineRx.
Thank you, Vivian, and good morning, everyone. Thank you for joining us on our third quarter earnings conference call. Earlier this morning we issued detailed results of our quarter. You will also find a copy of the press release in the investor relations section of our Web site.
The third quarter marked several key milestones for the company as we continued to execute on our clinical program collaboration activities and business development initiatives. Our agenda this morning is to go over advancements made in our lead oncology platform, BL-8040, including our immunotherapy collaborations with Genentech and Merck and then focus on our long-standing relationship with Novartis. We will then shortly review our financial results for the quarter, enumerate our major target milestones for the remainder of the year and into 2017 and then open up the call to your questions.
Joining me on today's call are David Malek, BioLine's Chief Business Officer and Mali Zeevi, BioLine's Chief Financial Officer.
During the third quarter we made several key announcements on our BL-8040 program. This included continued advancements on the clinical programs in addition to new collaborations with major pharmaceuticals and industry participants in the high value fields of immunotherapy. As BL-8040 continues to be featured in key medical and scientific conferences, I will begin with a short review of the data we will present at the upcoming ASH meeting and then turn to discuss the various combination therapy trials for our lead oncology asset in the field of cancer immunotherapy.
Following the presentation of successful final results of BL-8040s Phase 2a clinical trial in relapsed and refractory AML at the annual SOHO meeting two months ago, we are now poised for oral and poster presentation at the upcoming ASH conference in San Diego, California, taking place next month. At ASH, we will report the final correlative results from our Phase 2a trial in relapsed and refractory AML. In addition to the results of treatment with BL-8040 in combination with [ARC] [ph], which showed a composite response rate of approximately 40%, double that of historical response rates using [ARC] [ph] alone. BL-8040 monotherapy was shown to have a substantial therapeutic effect.
Treatment with BL-8040 as a single agent triggered robust mobilization of AML blasts from the bone marrow to the peripheral blood stream and the expected mobilization was correlated with a positive response to treatment. In addition, BL-8040 monotherapy resulted in a 40% increase in AML blast apoptosis and induction of granulocytic differentiation of immature leukemia progenitors. Also, in an oral presentation at ASH, we will report detailed data on the mechanism of action by which BL-8040 directly induces apoptosis of AML cells. Results of preclinical studies show that BL-8040 increases the expression and activity of a special class of microRNA precursors. These microRNA molecules have been previously linked to cancer and shown to suppress the activity of several tumor-related pro-survival proteins. Therefore, by increasing the expression of these molecules, BL-8040 decreases the expression of tumor-survival proteins and promotes tumor cell death.
All in all, we believe these results are promising and continue to support and validate the robust mobilization, episodic and terminal cell differentiation effects of BL-8040. To that end, we continue to advance our BL-8040 program in three main areas of focus. AML, where we are running a large Phase 2b study in consolidation AML. Stem cell mobilization, where we are running a Phase 2 study in allogeneic stem cell mobilization for transplantation purposes, and immuno-oncology where we are involved in multiple studies under several significant collaborations.
We will now move on to discuss our immuno-therapy collaborations in particular. Let's start with our collaboration agreement with Merck. As announced, in January we made our first foray in to the immuno-oncology field with our collaboration agreement with Merck to conduct a Phase 2a trial of BL-8040 in combination with Merck's KEYTRUDA in the difficult to treat pancreatic cancer population. This collaboration seeks to evaluate the combination of BL-8040 with Merck's anti-PD1 immuno-therapy KEYTRUDA.
Advancing the program in June, we announced the regulatory submission to conduct the stage 2a trial, Named the Combat study. And as expected, we initiated the trial in the third quarter. So in September, we began the Phase 2a study which will be conducted in the U.S., Israel and additional countries. It is an open label, multi-center, single-arm trial designed to evaluate the safety and tolerability of the combination of BL-8040 and KEYTRUDA, as well as multiple pharmacodynamic parameters, including the ability to improve infiltration of T cells into the tumor and their reactivity in up to 30 subjects with metastatic pancreatic adenocarcinoma. Enrollment is ongoing.
Following in the heels of the Combat program, in August we announced the second Phase 2a collaboration study using BL-8040 with KEYTRUDA in pancreatic cancer. This time the collaboration counterparty is MD Anderson Cancer Center in Houston. We are excited that Merck and MD Anderson Cancer Center selected BL-8040 to be tested under the collaboration. And this second [indiscernible] study is further validation of the potential for combining KEYTRUDA and BL-8040 for the treatment of metastatic pancreatic cancer. The open-label, single center, single-arm Phase 2 study will focus on the mechanisms of action by which both drugs may synergize. In addition to assessing clinical response, the study will include multiple assessments to evaluate the biological anti-tumor effects induced by the combination. BioLine will supply BL-8040 for the study which is expected to commence by the end of 2016.
Building on our Merck and MD Anderson collaborations, we are also extremely excited with our immunotherapy collaboration with Genentech, which we announced in September. It is a robust program with several Phase 1b studies investigating BL-8040 in combination with Tecentriq, Genentech's anti-PDL1 cancer immunotherapy in multiple cancer indications. Under the agreement, Genentech will sponsor and conduct several Phase 1b trials in multiple solid cancer indications. The first group of studies including pancreatic cancer, gastric cancer and non-small cell lung cancer. And there is potential for Genentech to add up to three more indications under the collaboration for other solid and liquid tumors. In addition we will sponsor and conduct a Phase 1b study in maintenance AML patients under the collaboration. The studies are planned as open label, multicenter, single-arm trial designed to evaluate the safety and efficacy of the combination of BL-8040 and Tecentriq. Upon completion of the study, both parties will have the option to expand the collaboration to improve the pivotal registration study.
Let me now turn the call over to David Malek who leads our business development efforts, to further elaborate on our immunotherapy collaboration program and our successful multi-year collaboration with Novartis.
Thank you, Phil and good morning everyone. We are very excited that BioLineRx is in cooperation with two of the three leaders in immuno-oncology. And at the heart of this is our BL-8040 platform technology, a best in class CXCR4 antagonist which is being evaluated for its potential to improve the benefit of immuno-therapy in cancer types that are currently resistant to such treatment. These include, major indications such as pancreatic cancer, gastric cancer and non-small cell lung cancer. There is a significant unmet medical need in these cancer types and the belief is that there may be a significant potential advantage by combining BL-8040 with immune checkpoint inhibitors.
We believe that with BL-8040 we are well positioned to sustain a leadership position as currently there are very few clinical stage CXCR4 antagonists and none are currently investigated to the extent that BL-8040 is planned to be investigated. As noted in the past, BL-8040 has been shown in several clinical and pre-clinical studies to be a very robust mobilizer of immune cells and to be effective at inducing direct tumor cell death. Recent findings also suggest that CXCR4 antagonists such as BL-8040 may be effective in improving the infiltration of immune cells including T cells, into the tumor microenvironment. Therefore, when combined with PD1 antagonists such as Merck's KEYTRUDA for PDL1 antagonists such as Genentech's Atezolizumab which enabled the activation of anti-tumor immune T cells. BL-8040 has the potential to enable activated T cells to better reach tumor cells and to fight against cancer.
Net net, our collaboration has to been facilitate exploration of drug combinations that we believe could significantly increase the value and probabilities of success. This includes BL-8040 combinations with PD1 and PDL1 antagonists and the resulting impact of such combinations in both solid and liquid tumors. Finally, we note that our collaboration agreements relating to BL-8040 have no exclusivity which means that we fully retain our commercialization flexibility regarding the compound.
We will now turn the discussion to our strategic co-operation with Novartis. We are very pleased to note that after a period of extensive asset sourcing and new dosage reviews, we have announced the in-licensing of three promising programs under this partnership and we expect several more to enter our pipeline in 2017. Let me take this opportunity to give a quick review of the three programs recently licensed under the cooperation.
In August, we announced our first project which was in-licensed from Hadasit, the Technology Transfer Company of Hadassah Medical Center in Jerusalem, in the exciting area of liver fibrosis treatment and in particular, non-alcoholic steatohepatitis or NASH. The drug candidate BL-1210 offers a novel mechanism for controlling liver fibrosis through modulation of the immune system. With this pre-clinical project, BioLineRx will address the novel drug target that will modulate the immune system to ultimately reduce the liver fibrogenesis and therefore reduce liver scarring. By limiting fibrosis process this way the goal is to potentially control the disease progression. We look forward to providing you with updates on this project.
In September 2016, we signed our second project under this alliance. An exclusive worldwide agreement with BGN Technologies, the Technology Transfer Company of Ben-Gurion University the Negev, and Hadasit, for the in-licensing of a novel treatment for various liver failure conditions such as end-stage liver disease or ESLD, and for conditions potentially leading to liver failure such as NASH. This treatment, BL-1220 is an orally administered, novel composition of sodium alginate. Pre-clinical results obtained in animal models of liver impairment suggest that BL-1220 has strong hepato-protective effects. Collectively, the data demonstrate that BL-1220 can restore liver function. This technology could be directed towards the rapid regeneration of normal liver function in both acute and chronic conditions of liver injury.
And more recently, yesterday, we announced our third project under the Novartis alliance. An exclusive worldwide agreement with Yissum Research Development Company, the technology transfer company of the Hebrew University of Jerusalem, for the in-licensing of a novel anti-inflammatory treatment for Dry Eye Syndrome . This project, BL-1230, is a potent and selective cannabinoid receptor type 2 or CB2R agonist. The involvement of CB2R in immune modulation is well established, and pre-clinical studies in three ocular inflammation models have demonstrated that BL-1230 eye drops have significant anti-inflammatory activity, which attenuates the pathology and improves histological outcomes. In addition, we intend to explore the potential use of this compound in systemic inflammatory conditions.
We remain actively engaged in this collaboration and continue to jointly screen and evaluate promising pre-clinical and clinical [indiscernible]. We look forward to additional announcements in months ahead. Let me turn the call back to Phil.
Thank you, David. Now turning to milestones as the busy 2016 draws to a close and as 2017 approaches, we draw your attention to the following upcoming corporate milestones over the next six to 12 months.
First of all, we expect our first milestone to be partial results from our stem-cell mobilization Phase 2 study which we expect to report by the first quarter of next year. We also expect to initiate a number of Phase 1b immuno-oncology studies for BL-8040 in combination with Genentech's Tecentriq, in multiple solid tumor indications as well as in AML during 2017. In addition, we expect to announce the partial results in our Phase 2a immuno-oncology study in pancreatic cancer for BL-8040 in combination with Merck's KEYTRUDA by the second half of 2017.
Lastly, we continue to screen and review innovative projects under our Novartis strategic collaboration as well as outside of the collaboration, both for our own pipeline as well as for our joint venture in China and we eagerly anticipate the in-licensing of several value-add novel compounds during 2017. Before turning to our discussion of our financial results for the third quarter, I would like to reaffirm that our global access to cutting edge assets and capabilities is solidly in place.
We ended the third quarter with around $39 million in cash and we believe we have the resources to leverage these opportunities as well as support and development in growth efforts. I would now like to turn the call over to Mali Zeevi, our CFO, who will give a brief overview of our key financial statements items.
Thank you, Phil. Please note that we invite you to review our quarterly 6-K which contains our financials, operating and financial review and press release for additional information. I will only go over through significant items on this call, research and development expenses and cash.
Research and development expenses for the nine months ended September 30, 2016 were $8.2 million, a decrease of 5.1%, compared to $8.7 million in 2015. The decrease resulted primarily from lower expenditures for BL-7010 during the 2016 period and conclusion of one of the clinical trials for BL-8040 in 2015, partially offset by increased spending on a new project.
As far as cash is concerned, we ended the September quarter with almost $39 million in cash, cash equivalents and short-term bank deposits. This provides us a with a cash run rate to carry out our current operational plans through at least the beginning of 2019. With that, we have now concluded the formal part of our presentation. Operator, we are now opening up the call to questions.
[Operator Instructions] The first question is from Jason Kolbert of Maxim Group. Jason, please go ahead.
Jason McCarthy for Jason Kolbert. Just a question on the Tecentriq combination study that’s coming up. In pancreatic, lung or other tumors or cancer types like AML, have you seen increased expression of PDL1. Are you using that as a diagnostic criteria for enrolling patients and do you have any data that suggest that BL-8040 as a monotherapy is driving increased expression of PDL1 on different types of cancer. Thanks.
Thanks, Jason. It's good to speak to you. I just wanted to introduce in addition to David Malek, here we also have the following people on the call. We have Dr. Merril Gersten, our CSO. We have [ Dr. Abby Weinstein] our head of medical affairs, and [indiscernible] who is leading our BL-8040 project. I will ask Abby.
Unidentified Company Representative
About the design of the study and the assessment that we do before the recruitment of the patient, I am sorry but I cannot disclose. And mainly this trial in solid tumors are being done by Genentech. We are the provider for BL-8040 and we cannot disclose what are the details of this trial and that is not yet finalized neither.
Okay. Have you seen, in your AML studies, increased -- BL-8040 as a monotherapy, is it driving increased PDL1 expression. Have you observed that?
Unidentified Company Representative
We didn’t test PDL1 expression in AML.
Okay. Great. And as far as -- when do you expect that we can get an update or may be a timeline on the live fibrosis projects with the Novartis collaboration. It seems to me NASH is becoming a hotter and hotter topic [indiscernible] lately. I am curious and excited to see that biologic moving into this area.
You know, I have to tell you that these are preclinical stage projects. I have to say they are probably somewhere between two and three years before the clinic and so you know, I mean, I think that’s the most general idea that I can give you at this time.
The next question is from Joe Pantginis of ROTH Capital Partners. Please go ahead.
Could you provide a little more detail or maybe remind us a little about the protocols surrounding the 8040 KEYTRUDA studies but specifically the protocols around pre and post biopsies. When are you going to be testing these biopsies and what exactly are you going to be looking for, presumably through immunohistochemistry. Thanks.
Abby, can you answer that?
Unidentified Company Representative
I am really sorry but I think that they are details on the clinical protocol that I cannot disclose, I am sure, with you, but we are aiming to test the biopsies across the study. Cannot say when exactly but we have to have data that can support the mechanism of function of BL-8040 in this area.
[Operator Instructions] There are no further questions at this time. Before I ask Mr. Phil Serlin to go ahead with his 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 1-866-276-1485. In Israel, please call 03-925-5944. Internationally, please call 972-3-925-5944. Mr. Serlin, would you like to make your concluding statement?
Yes, thank you. I would like to thank all of you for joining us on today's call. We remain committed to making steady progress on our existing clinical program as well as the introduction of promising new programs and the signing of new collaborations. We remain well-funded to achieve all of the significant milestones we have mentioned and look forward to keeping you updated as we execute on our plans. Thank you again for joining us and for your continued support and we would like to wish you happy Thanksgiving to all of our U.S. investors.
Thank you. This concludes the BioLineRx third quarter 2015 results conference call. Thank you for participation. You may go ahead and disconnect.
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