BioLineRx Ltd. (BLRX) Q1 2017 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx First Quarter [Technical Difficulty]. 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 like to turn 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, 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 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 today on our first quarter March 31st 2017 earnings conference call. Earlier this morning, we issued our Q1 earnings results. You will find a copy of this press release in the Investor Relations section of our website. Results were filed in the 6-K this morning. I'd like to begin by highlighting that our activities this year have not only fueled significant excitement at BioLineRx, but also reinforced our position in the high value field of immuno-oncology. The announced our first acquisition of Agalimmune Ltd in March via which we expanded our therapeutic pipeline to include a second I/O compound AGI-134. And given the opportunity, we secured additional funding in April, bolstering our already strong cash position. With net proceeds of over $26 million, on top of over $30 million in cash at the end of March 31st, our pro forma Q1 cash position stands at almost $57 million, sufficient a fund and even accelerate our clinical programs for BL-8040 and AGI-134 in addition to supporting other development activities through late 2019. Importantly, these recent activities that strengthened our institutional ownership base as we continue to deliver on our mission to advance early oncology and immunology compound into valuable therapies for patients with high unmet needs. This includes focused development of our stem cell mobilization program with a Phase 3 pivotal study poised for initiation in the second half of 2017 and which we plan to potentially commercialize ourselves. Mozobil, a comparable drug used in this therapy reported 2016 revenue of around $150 million. Net-net we are strengthening our immuno-oncology platform, aggressively advancing our lead assets with valuable partnerships, and a clear regulatory pathway and obtaining increased participation from fundamental investors to fund our development and growth programs. We look forward to providing timely progress reports and our target milestones. Turning to our agenda this morning, we will provide a review of the key developments achieved during the first quarter and year-to-date 2017, we will then discuss our financial results, enumerate our major target milestones for 2017 and 2018, and then we will open up the call to your questions. Joining me on today's call are David Malek, BioLine's Chief Business Officer; Mali Zeevi, Chief Financial Officer; Abi Vainstein, Vice President, Clinical and Medical Affairs; and Ella Sorani, Vice President of Development. I would like to kick-off with a discussion of our immuno-oncology strategy and how our acquisition of Agalimmune has strengthened our position in this field. BioLineRx's immuno-oncology strategy is grounded on two separate concepts for our drug portfolio. One, to enhance the activity of immune checkpoint inhibitors with the potential for synergistic effects and combination treatment. And two, to elicit direct anti-cancer effects including tumors death and both a monotherapy setting, as well as in potential combination treatment. The unique characteristics and MLAs [ph] of our compound give rise to these factors. For example, BL-8040 as a best-in-class CXCR4 antagonist is a powerful mobilizer of immune cells increases infiltration of immune cells to tumors and modifies the microenvironment in a pro-inflammatory manner. As such we have secured collaboration activities with leading I/O entities as Genentech, Merck, and MD Anderson Cancer Center to evaluate BL-8040 as a combination therapy for various cancer indications. And now with AGI-134, we add a promising new program that facilitates the harnessing of the body's pre-existing anti-Gal antibodies, which are our most common natural antibodies to induce a systemic specific anti-tumor response to the patient's own cancer neo-antigens. The effect demonstrated is two-fold; first, it kills the tumor cells at the site of injection; and second, it brings about a durable follow-on systemic anti-tumor immune response. As we indicated in the past, while immuno-oncology is one of the most promising approaches for the treatment of cancer and a lot of current immunotherapies are receiving widespread attention, many solid tumors are still able to escape the surveillance of the immune system. This is because most immunotherapies work best in highly mutated tumors that are infiltrated with immune cells, termed hot tumors. Unfortunately, the overwhelming majority of human tumors are cold tumors. Therefore, transforming a cold tumor into a hot tumor is a major objective in cancer treatment. With AGI-134, which harnesses naturally occurring pre-existing anti-bodies to elicit a tumor-specific immune response, the resulting activation and clonal expansion of T-cells to the patient's own neo-antigens has the potential to transform cold tumors to hot, thereby significantly expanding treatment potential. AGI-134, therefore, has an extremely promising new therapeutic program to our immuno-oncology pipeline with a unique mechanism of action resulting not only in direct cytotoxicity of the injected tumor, but also cytotoxicity of distant existing metastases as well as the potential for long-term systemic anti-tumor immunity. And similar to our BL-8040 platform, we believe there are significant opportunities for combination treatments with other immunotherapies, especially, checkpoint inhibitors. We are eager to move this program forward. AGI-134 is less than a year away from a target first-in-man clinical study with discussions already having been held with both the FDA and U.K.'s regulatory body, the MHRA. We are currently actively discussing the types of indications which would be investigated with key opinion leaders, as the drug has potential applicability in multiple tumor types including melanoma, liver, head and neck, colorectal, lymphoma, and breast cancer. We look forward to initiating our Phase 1 immuno-oncology study for AGI-134 in multiple solid tumor indications in the first half of 2018. Turning to our BL-8040 program, we're pleased to report continued advancements in our three main areas of focus. Immuno-oncology, where we are involved in multiple studies under several significant collaborations including our recent announcement of the regulatory submission of first Phase Ib trial in combination with Genentech's Atezolizumab and AML which is scheduled to initiate in H2 2017. AML, where we're also running a large Phase 2b study in consolidation AML and stem-cell mobilization where we're running a Phase 2 study in stem cell mobilization for allogeneic transplantation and our poised to initiate a pivotal Phase 3 registrational study for autologous transplantation in the second half of this year. I will begin by reviewing our internal BL-8040 program and stem cell mobilization in AML. Following that, I will turn the call over to David Malek, who leads our Business Development efforts to elaborate on our BL-8040 immuno-oncology collaborations as well as our strategic multi-year partnership with Novartis. We have provided two recent updates on our stem cell mobilization program. In April, we announced plans to initiate a pivotal Phase 3 study for autologous bone marrow transplantation in the second half of this year following a successful meeting with the FDA, where we discussed the clinical development pathway towards registration. The randomized control study will investigate BL-8040 in combination with G-CSF against G-CSF alone for mobilization of stem cells from the bone marrow to the peripheral blood, followed by collection and subsequent autologous transplantation in patients with multiple myeloma. We see this as a major development for BL-8040 and our company in general as it marks a clear and relatively rapid path to bring our lead project to regulatory approval in the U.S. In addition, in March, we reported interim data on our ongoing Phase 2 study for BL-8040 in stem cell mobilization for allogeneic bone marrow transplantation. This data indicated that a single injection of BL-8040 mobilized sufficient amounts of cells required for transplantation at a level of efficacy similar to that achieved by using four to six injections of G-CSF, the current standard of care. Furthermore, all recipients transplanted so far have experienced a successful neutrophil engraftment. The recipients will be followed for one year to assess acute and chronic GVHD events. As for the donors, treatment with BL-8040 was safe and well-tolerated. Assuming no safety concerns, we plan to continue with part two of the study which will permit enrollment of recipients with either matched siblings or haploidentical donors up to a total enrollment in the study of 24 donor/recipient pairs. We are looking forward to the topline results which remain slated for the end of 2017. And with AML, we continue to investigate BL-8040 as a consolidation treatment together with Cytarabine, the current standard of care, for patients who have responded to standard induction treatment and are in complete remission. This Phase 2b trial is a double-blind placebo-controlled randomized multicenter study aimed at assessing the efficacy of BL-8040 in addition to standard consolidation therapy in AML patients. Up to 194 patients will be enrolled in the trial. The primary endpoint of the study is to compare the relapse free survival time in AML subjects in their first remission during a minimum follow-up time of 18 months after randomization. At present, we are considering performing an interim analysis on this study in 2018 with topline results expected in the second half of 2019. I will now turn the call over to David.

Thank you, Phil, and good morning everyone. I will begin by discussing our immuno-oncology collaborations with Genentech, Merck, and MD Anderson that are based on our BL-8040 platform technology. As we have previously discussed, our collaboration activities bailed on BL-8040 as a best-in-class CXCR4 antagonist as it improves the infiltration of immune cells into the tumor microenvironment. Therefore, when combined with PD-1 antagonists such as Merck's KEYTRUDA or PDL-1 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 cell and to fight against cancer, increasing the value and probability of success. Of note, our collaboration agreements relating to BL-8040 have no exclusivity or partnering commitments, which means that we fully retain our commercialization flexibility regarding the compound. In September last year, we announced our immunotherapy collaboration with Genentech, a robust program with several Phase 1b studies investigating BL-8040 in combination with Atezolizumab, Genentech's anti-PDL-1 cancer-immunotherapy in multiple cancer indications, all of which are expected to initiate in the second half of 2017. Genentech also have the option to add up to three more indications under this collaboration for other solid and liquid tumors. We are very pleased to highlight that we are now poised to initiate the first Phase Ib clinical trial under this collaboration in the second half of 2017, following completion of the regulatory submission for the BATTLE study in maintenance AML. The studies are planned as open-label multi-center single-arm trials designed to evaluate the safety and efficacy of the combination of BL-8040 and Atezolizumab. Upon completion of the studies, both parties will have the option to expand the collaboration to include a pivotal registrational study. Turning to our immuno-therapy collaboration with Merck, we're pleased to report continuing advancement in our program. The collaboration includes one Phase 2a study named the COMBAT study, combining BL-8040 with Merck's PD-1 inhibitor, KEYTRUDA, which was initiated in the third quarter of 2016. To-date the program is tracking to expectation with enrollment ongoing. The study includes centers in the U.S., Israel, and other countries and 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 the infiltration of T cells into the tumor and their reactivity in up to 30 subjects with metastatic pancreatic adenocarcinoma. We continue to expect partial results in the second half of 2017 with topline results in the second half of 2018. In addition, in January, MD Anderson initiated a Phase 2b study combining BLA-8040 with KEYTRUDA in pancreatic cancer. This program is part of a strategic clinical research immunotherapy collaboration between Merck and MD Anderson. The open-label single-center single-arm Phase 2b study will focus on the mechanism of action by which both drugs may synergize. In addition to assessing clinical response, the study would include multiple assessments to evaluate the biological anti-tumor effects induced by the combination. We believe that our multiple collaborations with world leaders provide significant validation of BL-8040's potential in the immuno-oncology field. And we are very excited we're -- with our progress in this area. Lastly, let me now shift gears and elaborate on our multi-year collaboration with Novartis. We're coming away from productive meetings with Novartis including the recently concluded Biomed conference this week in Israel. We remained actively engaged jointly screening and evaluating promising preclinical and clinical therapeutic candidates with Novartis. In 2016, as reported, we in-licensed three promising programs; building the foundations for immunology and fibrosis franchise. We aim to in-license a few additional projects under this collaboration in 2017. Let me now turn the call back to Phil.

We're very focused to deliver on our corporate objectives. Over the next 12 to 18 months, our target milestones are as follows; we expect partial results from our immuno-oncology Phase 2a study for pancreatic cancer for BL-8040 in combination with Merck's KEYTRUDA by the second half of 2017 of this year with topline results in the second half of next year. Next, we expect to initiate a Phase 3 registration study in stem cell mobilization for autologous transplantation in the second half of this year. Further, we plan to initiate four Phase 1b immuno-oncology studies for BL-8040 in combination with Genentech's Atezolizumab in the second half of 2017 with partial results in the second half of 2018. We also expect completion of our stem cell mobilization Phase 2 study for allogeneic transplantation by year end. And we plan to initiate a first-in-man clinical study with AGI-134, our new innovative immuno-oncology asset obtained as part of the Agalimmune acquisition during the first half of 2018. 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 anticipate continued in-licensing of value add novel compounds. We will provide you with timely updates as we execute on our plans. I would now like to turn the call over to Mali Zeevi, our CFO, who will give a brief overview of our key financial statement items. Mali go ahead.

Thank you, Phil. Before I begin, let me invite you to review our quarterly filings, which contains our operating and financial reviews and press release for additional information. I will only go over three significant items on this call; research and development expenses and cash including net proceeds from our financing in April. Research and development expenses for the three months ended March 31st, 2017 were $3.6 million, an increase of $1.1 million or 41% compared to $2.5 million for the three months ended March 31st, 2016. The increase resulted primarily from an increase in spending on BL-8040 as well as an increase in spending on new projects. Turning to cash, the company held $30.4 million in cash, cash equivalents, and short-term bank deposit as of March 31st, 2017. In April 2017, we completed an underwritten public offering of our American Depository Shares for net proceeds of $26.2 million. Our financial resources provide us with a flexibility to pursue our programs into late 2019. With that, we have now concluded the formal part of our presentation. Operator, we are now opening up the call to question.

Ladies and gentlemen, at this time, we'll begin the question-and-answer session. [Operator Instructions] The first question from [Indiscernible] of JMP Securities. Please go ahead.

Thanks for taking the question guys. As you mentioned Phil, you are engaged in the discussions with the FDA regarding the registration program for 8040 in setting of autologous transplant. I was wondering if you could perhaps share the details of your interactions with the agencies specifically as they relate to the trial design for your upcoming Phase 3, are you trying patient enrolment, potential end point, et cetera. Let’s start with that and I have a quick follow-up. Thank you.

Yes, hi. I don’t think actually we are going to be able to give much color on that right now. We will be obviously filing a protocol for that and I think we will be able to give more color on that a little bit later in the year, but I don’t think we are really going to be able to give much color like as I said. Abi, is there anything.

No, I don’t think so. We are working on that and we are -- we discussed with them the design and that currently we cannot share this information, not now.

Okay.

Sorry. As soon we are able to we will obviously give full disclosure of the design etcetera, etcetera.

Okay. Appreciate that. And then in autologous transplant, I mean how to get into the details obviously, but the discussions with the FDA did we touch on that at all, may be preliminary registration program discussed there would it be separate from the autologous transplant? Thanks.

Yes, it is -- go ahead Abi.

No, we focused this meeting only autologous stem cell mobilization. We had a meeting the past about allogeneic, but this meeting was only focused on autologous program.

Okay. Thanks guys.

Okay. Thank you.

Your next question from Joe Pantginis of Rodman & Renshaw. Please go ahead.

Hey, guys. Good morning. Thanks for taking the question. Couple if you don’t mind. First, when you are looking at potential for AGI-134, you already have these collaboration for I/O with Merck and Genentech's, so what is the potential as you get to the clinic to have this product just act as a bolt-on to these collaborations?

David, go ahead.

Thanks. Hi Joe, how are you? Yes, I think, it’s a good question. We already shared some data that was generated pre-clinically about the potential synergies in AGI-134 and checkpoint inhibitors versus PD1 inhibitor and we definitely think there is a true potential for that moving forward obviously, but some level of monotherapy that we wanted to check first in humans, but that’s definitely a direction that we are looking into and we'll start developing. Obviously, we just got the projects in our hands recently, but this direction is definitely we want to go forward.

Got it. And then with regard to -- I am sorry.

No, go ahead.

With regard to the 8040 AML consolidation study, Phil you mentioned that there is a potential I think for interim data in 2018, or I should just say in interim look does that include potential data or just looking at typically DSMB look at the study?

Yes. We are not completely closed on that yet, but I have to say, it’s more likely to be the second, DSMB look at the study some type of utility or whatever now that would be more likely the scenario.

Got it. And my last question, if you don’t mind is more of microscopic business strategy. Over the last one year or six months to a year, you've obviously brought your focus onto immuno-oncology you have the collaboration with Merck and Genentech's and you also all of the ongoing screenings with Novartis. So with that said you have a lot of balls in the air right now. You have good cash balance to bring your programs forward. So what is your appetite at this point to look for additional collaborations or expansions or what have you?

Yes well first of all, you should I think that we've mentioned in the past the Novartis collaboration comes with the certain level of funding. And so potentially a program that we would bring in and when it would get to the clinic we would have quite a bit, the majority of the clinical development would be funded. So that provides us with the ability to bring in assets that we would otherwise probably not be able to bring in at this point. So I think that we are -- we have a lot on our plate right now I think, you're correct. We are continuing to bring in assets. We will be very picky as far as what we're bringing in. I think that you probably will see assets that are more advanced than let's say in the past. We had brought in we are probably going to be looking less at early stage preclinical assets and more in the later stage preclinical and IND-ready or early clinical stage. So I think that's sort of our focus. Again we have the funding mechanism with Novartis which is of course is very crucial to being able to carry out those plans.

Got it. Thanks a lot guys.

The next question from Jason Kolbert of Maxim Group. Please go ahead.

Hi Phil. Thanks for taking the questions. Can you guys talk a little bit more about AGI-134 and the mechanism of action, is it differentiated from using maybe an I/O 12 approach and since in the preclinical work that's been published there seems to be synergy with checkpoints. So once you move into the clinic, are you considering going rate to a checkpoint combination or are you going to try to do this as a model therapy first and then see what that looks like and take it from there?

Go ahead. Abi, would you like to take that.

No, I wanted to refer to the last part of your question about the combinations. Yes, of course in oncology, we are always trying to do combination that we are looking also at activity of AGI-134 as a single agent. When will be the right time to combine that as we are discussing this right now, but we believe that this compound can be effective as the monotherapy as well and that again will be -- it's too early now to say what would be the timing for the combination and when we will do that?

And I think I just want to add to what Abi said or maybe emphasize we think there is a lot of rationale behind AGI-134 as a model of therapy. Also as we've mentioned in combination, but we would really like to maximize the potential from a clinical development perspective of showing bringing data robust data on a model therapy basis. So we're going to do whatever we can to move forward on that basis as well as on a combination basis.

Okay. Thanks and just a quick question on the 2b study and I know you are going to take a look potentially in 2018, but even if you wait for the data in 2019 a full dataset with 194 so patients and given the need at this line of therapy is there the possibility that this could be used for registration or is that something that you're thinking about?

This is something that we will need to discuss to the point that we have the data is very difficult to discuss this kind of or to make this kind of arrangement with FDA without having the data. But we had in the past the meeting with MHRA and we discussed the design of this study on what will be the next step and they were very optimistic and they were…

They were open

…open and willing to collaborate with us in order to get in the earliest manner to the market, but again with FDA we didn't discuss that and we need to discuss at point we have the result.

And Jason, I think that it's clear that a lot will be depend on the robustness of the data and obviously, if we have very robust data that will put us in a lot better position to have this discussion and find some shortcuts with regulatory authorities.

Okay, great. Thank you for taking the questions.

Thank you.

[Operator Instructions] There are no further questions at this time. Before I ask Mr. Phil Serlin to go ahead with concluding statements, 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 1-877-456-0009. In Israel, please call 03-925-5946. Internationally, please call 972-3-925-5946. 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 and for your support. We're focused on building a pipeline of assets that leverages our scientific reach and expertise, particularly in oncology and immunology. Our team is driven and excited about our prospects. We look forward to providing you with timely updates as we execute on our plans. Have a nice day and thank you joining us.

Thank you. This concludes the BioLineRx first quarter 2017 conference call. Thank you for your participation. You may go ahead and disconnect.