Failure of a company's lead product candidate in clinical trials is often catastrophic for existing shareholders of a development phase pharmaceutical company. I have first-hand experience with significant losses from multiple investments over the last decade in which I had foolishly held large holdings through such binary events believing that positive news or FDA approval was imminent. While existing shareholders may often be hard-pressed to recoup their losses for quite some time, I believe the oversold condition in these companies' common shares created by these lead-candidate failures can create potentially-lucrative entries for new shareholders with the foresight and knowledge to see past such disappointments.
BioLineRx (BLRX) experienced one such setback on March 20th of this year. The company had been developing what was its lead product candidate, BL-1020, in a phase II/III trial for the treatment of schizophrenia. In the pre-planned clinical analysis, the company had consulted with the independent Data Monitoring Committee (DCM) and been notified that the trial would not meet its primary efficacy endpoint. Shares that closed trading on March 19th at $3.81 closed on March 20th at $1.80 for a 47% loss on the day. While losing it lead product candidate, the company did provide a bit of news pertaining to its financials by noting that with the approximately $6-$7 million in savings as a result of the trial termination, it had funds sufficient to fund its expected operations into 2015. With solid funding for a development-phase company, I believe a deeper look at the company's remaining pipeline would be wise for investors looking for this type of investment with a much-reduced need of dilutive financing for the next 18 months.
On May 8th, BioLineRx reported Q1 2013 financials which provided a nice pipeline update and gave investors a view into the current progression and upcoming catalysts. The company's new lead product candidate, BL-1040, should provide for upcoming catalysts that will likely begin garnering shareholder attention in the coming weeks. On January 12, 2012, BioLineRx initiated enrollment in its CE mark registration trial evaluating BL-1040 for the prevention of cardiac remodeling following acute myocardial infarction (AMI). Such cardiac remodeling serves to cause cardiac muscles to further degrade and may lead to congestive heart failure. Construed as a medical device, BL-1040 is actually an injectable polymer that is delivered via bolus injection through the coronary artery during catheterization and flows into the damaged heart muscle where it creates a scaffold within the injured cardiac muscle. It is designed to enhance cardiac mechanical strength during the healing process and to prevent pathological ventricular dilation which can lead to an AMI. According to BioLineRx's 2012 10K, the trial continues to enroll rapidly with 15 sites recruiting in Australia, Belgium, Canada, Israel and Spain. Topline results from that trial are expected in 2014 according to the 10K, with the clinicaltrials.gov identifier NCT00557531 indicating a January 2014 completion date.
BL-5010 is also being developed and regulated as a medical device. The device is described as a "pen-like applicator" used to administer a formulation of two acids to be used for the non-surgical removal of skin lesions such as seborrheic keratosis (SK). The company has already completed a phase I/II single arm trial of 60 patients with SK with 96.7% of all treated patients experiencing lesion removal within 30 days after a single use of BL-5010. Focusing initially on the European markets, final registration trials for BL-5010 should begin in 2H 2013, with trial duration likely being fairly short due to the widespread incidence of the non-cancerous lesions. Studies indicate 30-50% of U.S. citizens have at least one SK on their body. As pertaining to the European pool of patients, a 2000 study denotes approximately 8.3% of male and 16.75% of the female population in the British population have a least one SK.
BioLineRx has completed one proof-of-concept trial evaluating BL-7040 for the treatment of irritable bowel disorder (NYSEARCA:IBD). The drug is an orally available, synthetic oligonucleotide that has a specific agonist effect on a receptor involved in the immune system and inflammatory reactions called toll-like receptor 9 (TLR-9). The company reported topline phase II data on April 17th with the trial meeting primary efficacy endpoint and was determined to be safe and well tolerated. Sixteen of twenty two patients enrolled completed the five-week treatment regimen and two-week follow up with 50% of patients meeting the primary efficacy endpoint. The 50% remaining patients experienced stable disease or minor improvement only. According to the data announcement press release, one in five hundred people in the world suffer from IBD - representing current drug sales of approximately $1.8 billion annually. In another report, I found this to be a vastly-understated value with worldwide sales in 2009 of over $5 billion. Regardless of actual value, in virtually all of my research I find the current treatment options for IBD to be lacking, with much improvement needed to fulfill the undermet need.
On June 6th, BioLineRx initiated enrollment in a phase II trial evaluating BL-8040 for the treatment of acute myeloid leukemia (AML). The drug is an antagonist that is designed to block CXCR4, a receptor that is directly involved in tumor progression, angiogenesis, metastasis and cell survival. Over-expressed in more than 70% of all cancers, its presence often correlates to disease severity. BL-8040 binds to the CXCR4 receptor on tumor cells and blocks its availability to the ligand CXCL12. This blocking of CXCL12 is thought to lead to programmed cell death and/or releases the tumor cells from their microenvironment which increases their exposure to chemotherapy and immunotherapy-based treatment regimen. The multi-center open-label study will enroll patients at three sites in the U.S. and five sites in Israel. According to Q1 results, interim results are expected in Q4 2013 and final results expected in 2H 2014. Although obviously focusing on the AML indication first, the drug has the potential to treat multiple cancers. Actual or perceived early stage success in the Q4 2013 interim data could quickly garner investor and large pharmaceutical support with implications of success in AML and other cancers.
With an already-busy 2013 underway, on April 29th BioLineRx initiated enrollment in a phase I/II trial evaluating yet another candidate, BL-8020, as a synergist to existing hepatitis C (HCV) inhibitors. BL-8020's mode of action, inhibition of HCV-induced autophagy, differs from the mode of action of currently-approved anti HCV drugs. This could substantially improve the other treatments' effects in the treatment of HCV infection, where it could be used synergistically (as an adjuvant) alongside these drugs. With over 3 million Americans affected by HCV, early stage success here in the large targeted market group could also quickly begin turning investor and large pharmaceuticals' heads. Similar to the BL-8040 timelines, the phase I/II BL-8020 HCV interim data are expected in Q4 with final data expected in 1H 2014.
With many catalysts ahead for 2013 and 2014, I believe investor interest will return to BioLineRx very quickly. With solid financials behind it and a growing pipeline with many opportunities for licensing and partnerships as clinicals progress, I believe the current $36.1 million market capitalization is a bargain. With a 52-week range of $1.55 to $5.10, I believe the risk/reward begs a resounding "buy" at current levels with no need for dilutive financing through the end of 2014 as noted earlier. Despite the impressive financial position, the company is opting to raise up to $20 million through an At-The-Market (ATM) offering agreement announced on May 17th. With such an agreement in place, I expect the company to sell shares via ATM on any major share price spikes over the next year or so with no pressure to sell at lower levels due to solid existing financials. Favorable for existing shareholders, this would allow for fund raising while minimizing the actual number of shares sold due to the likely higher share price and more liquid sell times for obtaining capital. With numerous indications targeted via a growing pipeline, some downside protection in the event of any poor upcoming clinical data is now in place. The already-depressed market capitalization due to the current "oversold" condition could provide for solid upside in the coming weeks as BioLineRx potentially returns to the investor spotlight in 2013 and beyond.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in BLRX over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.