BioLineRx Ltd. (BLRX) Q2 2018 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx Second Quarter 2018 Conference Call. All participants are present in a 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 turn over the call 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 on our second quarter earnings conference call today. Earlier this morning, we issued our Q2 earnings results. A copy of the press release is available in the Investor Relations section of our website. It was also filed as a 6-K. Our agenda this morning is as follows: We will begin with a review of our programs and activities, enumerate our major target milestones over the next few quarters and then provide a short discussion of our financial results. We will then open up the call to your questions. Joining me on today’s call are Mali Zeevi, Chief Financial Officer, as well as Abi Vainstein, Vice President, Clinical and Medical Affairs; and Ella Sorani, Vice President, Research and Development, who will be available for the Q&A part at the end of the call. We are very pleased to report clinical results and activities that continue to support the therapeutic potential of our drug candidates. Last week, we announced positive data from the lead-in part of our Phase 3 GENESIS trial. Our goal here was to show that BL-8040 in combination with G-CSF effectively mobilizes enough cells for transplantation with only one administration of BL-8040 and in one to two apheresis sessions versus up to four apheresis sessions under today’s current standard-of-care with G-CSF. Our lead-in results for the first 11 patients in the study show that nine out of 11 patients or 82% reached the primary endpoint of over 6 million CD34 cells per kilogram with only one dose of BL-8040 and an up to two apheresis sessions. Furthermore, seven out of 11 patients or 64% reached a threshold of over 6 million CD34 cells per kilogram in a single apheresis session only. Based on this robust data, the Data Monitoring Committee issued a positive recommendation to stop the lead-in part of the study and move immediately to the randomized placebo-controlled part of the study. This is an important milestone in BL-8040’s comprehensive development plan. Other recent announcement I would highlight include; one, the expansion of our COMBAT Phase 2a trial in pancreatic cancer under our collaboration with Merck to include an additional arm with a triple combination of BL-8040, KEYTRUDA and chemotherapy following encouraging data readouts to-date. Two, very encouraging overall survival data from our Phase 2a study in relapsed/refractory AML patients, treated with the combination of BL-8040 and a high dose Cytarabine. And three, the initiation of our Phase 1/2a immuno-oncology study for AGI-134 in several solid tumor indications. I will now provide a little more color on these, as well as other important recent events. As previously mentioned, data from the first lead-in patient cohort of our Phase 3 GENESIS trial in stem cell mobilization prompted the Data Monitoring Committed to recommend early continuation to the randomized placebo-controlled part 2 of the study. Results from the first 11 patients showed robust mobilization of cells in one to two apheresis sessions, demonstrating the potential of BL-8040 treatment to reduce the number of administrations in apheresis sessions as well as hospitalization costs related to the preparation of multiple myeloma patients for autologous stem cell mobilization and transplantation. We are very encouraged by these results and look forward to commencing the placebo-controlled partner trial. We believe collaboration of the lead-in patient results in the full placebo-controlled trial could result in a new treatment paradigm with BL-8040 adding both clinical value to patients and pharmaco-economic value to payers and hospitals. We look forward to the top-line results from the randomized double-blind placebo-controlled partner study, which are expected in 2020. Turning to AML, in June, we reported new overall survival data from the dose expansion part of our Phase 2a in relapsed/refractory AML at the EHA conference in Stockholm. We were extremely pleased to see further significant improvements in overall survival for this very difficult-to-treat patient population as data continues to accumulate from our Phase 2a study in relapsed/refractory AML. We are focused on determining the appropriate next clinical development steps for this indication, in light of this very encouraging data, thus giving BioLineRx broad therapeutic coverage in the AML space with potential activity at different stages of the disease and in different patient populations. As reported, the data showed that the combination of BL-8040 with high-dose Cytarabine in this difficult-to-treat patient population significantly improved overall survival compared with historical data from high-dose Cytarabine monotherapy. Specifically, median overall survival in the 1.5 mgs per kg expansion dose was 10.71 compared to historical data for patients treated only with high-dose Cytarabine showed overall survival of approximately 6.1 months. In addition, the subset of patients exhibiting a response in their 1.5 mgs per kg expansion dose showed prolonged overall survival of 21.8 months. Therefore, these data continue to give us confidence in the AML space, as we execute on our other two important AML trials currently ongoing, a large randomized controlled Phase 2b study in consolidation the BLAST study and a Phase 1/2b in maintenance AML under our collaboration with Genentech. As previously disclosed, we continue to discuss with our collaboration partners on the BLAST study the potential conduct of an interim analysis based on various factors, including the occurrence of a minimum number of reported relapsed events and/or exposure to provide a reasonable statistical powering to the analysis. We previously thought that this would occur towards the end of this year. However, our current best estimate for the timing of such potential interim analysis is now mid-2019. Top-line results for the study are expected in 2021. Finally, turning to our immuno-oncology program. We are very pleased to announce the expansion of our collaboration with Merck to include an additional cohort in the COMBAT Phase 2a study in pancreatic cancer. This expansion follows encouraging partial BL-8040 monotherapy data, results announced in the first quarter with top-line results of the BL-8040 KEYTRUDA combination to present at the ESMO Scientific Conference in October this year. Specifically, the decision to investigate the combination of BL-8040 and KEYTRUDA together with chemotherapy stems from the encouraging results and signals we have seen to-date. Results seen continue to demonstrate the safety and tolerability of BL-8040 and validates its mechanism of action, mainly the BL-8040 mobilizes immune cells into the peripheral blood, promotes T-cell infiltration into tumors, and has an effect on immunosuppressive cells. Therefore, both collaboration partners believe that the addition of cytotoxic chemotherapy maybe synergistic with the existing combination. As chemotherapy helps to reduce the overall tumor burden and induces immunogenic cell death, leading to activation and expansion of new tumor-reactive T-cells. Based on its demonstrated mechanism of action, BL-8040 should facilitate infiltration of these T-cells into the tumor core alongside the restoration of T-cell activity within the tumor by KEYTRUDA. Thus we and Merck opted for continued investments in this program and the addition of a new arm. Under the expansion a triple combination arm investigating the safety tolerability and efficacy of BL-8040, KEYTRUDA and chemotherapy will be added to the ongoing COMBAT study. The triple combination arm comprising between 30 and 50 patients will specifically focus on second-line pancreatic cancer patients. From a timeline perspective, we will be announcing top-line results on the initial combination arm of the study as mentioned in October at ESMO. We then expect to recruit the first patient into the additional triple combination arm in the fourth quarter of this year and we expect to announce top-line results from the triple combination arm by the end of next year. Turning to our clinical collaboration with Genentech. We continue to execute on the three Phase 1b/2 studies currently running. The AML maintenance study that we are running and two additional studies being run by Genentech that fall under Genentech’s MORPHEUS novel cancer immunotherapy program, one in pancreatic cancer and one in gastric cancer. We look forward to providing an update on one or more of these studies towards the end of 2018. A fourth Phase 1b/2 study under the collaboration to be run by Genentech is planned in lung cancer. However, the timing for initiation of this study is currently unclear. Let me now provide you with an update on our second immuno-oncology program AGI-134. We are pleased to have entered the clinic with our second lead oncology project. AGI-134 represents a new mechanistic class of cancer immunotherapies with a unique and highly differentiated mode of action harnessing preexisting immune machinery to trigger a systemic anti-tumor response and create a pro-inflammatory tumor microenvironment. Numerous preclinical studies to-date have demonstrated that treatment with AGI-134 leads to regression of established primary tumors, prevents the growth of untreated distal secondary tumors and triggers a vaccine effect that may prevent the development of future metastases. Furthermore, a combination of AGI-134 and an anti-PD1 immune checkpoint inhibitor has demonstrated synergistic effect in protection from secondary tumor growth. More treatment options are urgently needed for cancer patients and we are optimistic that AGI-134’s encouraging preclinical results will translate to an efficacious and safe treatment for humans. The study just initiated as a multi-center open-label Phase 1/2a study that will take place in the UK and Israel with possible expansion in 2019 to the US and additional countries in Europe. The study is designed to evaluate the safety, tolerability and efficacy of AGI-134, given both as a monotherapy and in combination with an immune checkpoint inhibitor, in unresectable metastatic solid tumors. The study will be comprised of two parts. One, an accelerated dose-escalation part to assess the safety and tolerability of intratumorally injected AGI-134 as a monotherapy, as well as to determine the maximum tolerated dose and the recommended dose for part 2 of the study. And two, a dose expansion part at the recommended dose, comprised of three cohorts and designed to assess the safety, tolerability and anti-tumor activity of AGI-134 as a monotherapy in a basket cohort of multiple solid tumor types, as well as in two additional cohorts in combination with an immune checkpoint inhibitor, in metastatic colorectal cancer and head and neck squamous cell carcinoma. Efficacy will be assessed by clinical and pharmacodynamic parameters. And we are also planning a wide biomarker assessment as part of the study. Before turning to our discussion of our milestones for 2018, let me take a moment to address the significant strengthening of our patent protection for BL-8040 in AML. The long-term patent exclusivity recently received from the European Patent Office for BL-8040 in combination with Cytarabine provides us with significant additional patent protection in the AML one of BL-8040’s key indications, with two ongoing trials in the AML space; a Phase 2b in consolidation AML and a Phase 1b/2 in maintenance AML, in addition to the continued follow-up on encouraging overall survival results shown in our recently completed relapsed/refractory AML study, and our upcoming evaluation decision regarding next steps in its clinical development program. Finally, let me talk about upcoming milestones. We expect important milestones in the next few quarters, including several data readouts. First, we expect top-line results from our Phase 2a COMBAT study for BL-8040 in combination with KEYTRUDA in pancreatic cancer to be presented at the European Society for Medical Oncology ESMO conference in October 2018. We expect to announce partial results from the Phase 1b/2 study in pancreatic cancer for BL-8040 in combination with atezolizumab under Genentech collaboration by the end of this year. We continue to evaluate together with our collaboration partners the possibility of an interim analysis on our Phase 2b study in consolidation AML now expected in mid-2019. We expect results for the additional cohort in our Phase 2a COMBAT study under the Merck collaboration with the triple combination of BL-8040, KEYTRUDA and chemotherapy by the end of 2019. 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. In our financial discussion we will only go over few significant items on this call; research and development expenses and cash. Therefore, let me invite you to review the filings we made this morning which contain our financials, operating and financial review and press release for additional information. Research and development expenses for the six months ended June 30, 2018 were $9.6 million, an increase of $1.9 million or 24.9% compared to $7.7 million for the six months ended June 30, 2017. The increase resulted primarily from higher expenses associated with new BL-8040 clinical studies commenced during 2017, as well as higher expenses associated with AGI-134, including final preparations for initiation of the Phase 1/2a study, and expenses associated with BL-1230. Turning to cash, the company held over $41 million in cash, cash equivalents and short-term bank deposits as of June 30, 2018. Our financial footing remains solid and provides us with resources necessary to fully execute on our operational plan towards the first half of 2020. 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 Konstantinos Aprilakis of JMP Securities. Please go ahead.

Guys, thanks very much for taking my questions and congrats on all the recent progress. Regarding the expansion of your IO collaboration, with Merck to include triple combo, consisting of 8040, KEYTRUDA and chemo in pancreatic cancer. So, you’ve already reviewed the factors that led to the decision to add a triple combo on. I was wondering if you might discuss any work you intend to do or that you think is necessary to determine the appropriate dosing and schedule of each component of the combo? And then I’ve a quick follow-up question.

Thanks, Konsta. Go ahead Abi, would you like to answer that?

Yes. Thanks, Konsta. Basically, we have already decided on the combination that we want to do and the design of this study. We’re having a talk with a lot of key opinion leaders and we are deep in the area of the pancreatic cancer and involving different studies. And we actually believe that the treatment and the schedule of treatment that we decided is one that we are -- would help the patient the most. And the first to go without saying that we are doing this in a very close collaboration with the Merck people and the design of the study and the decision about the treatment that we will give with BL-8040 in combo is -- was decided upon communication and consolidation with Merck.

Okay. Perfect. And then regarding AGI-134, so you mentioned possible expansion into the US and additional countries in Europe after recently initiated trial. Can you discuss the gating factors involved here, what you need to see before expansion into these regions? And then I know it’s early, but do you expect to see monotherapy activity with 134?

Yes. So, I mean I’ll let Abi expand a little bit more about the monotherapy aspect. But I think was more just a way of us not hedging as far as exactly the timing of it. We do definitely intend to open sites both in the US and in other countries in Europe. I -- so it sounded like it was a potential, I think that’s very, very, very likely that we will open up sites both in the US and the rest of the countries in Europe. You want to answer about monotherapy?

Yes. It’s just a matter of timing. We opened first in Israel because it was faster than the other countries. But we are moving forward and it’s not related to any milestones in terms of safety and efficacy and nothing else. We are working in parallel and if you need to open 10 sites, you need to open one-by-one and it’s the same in this case. We were beginning with Israel and then we moved forward to Europe and today US.

You want to answer about the monotherapy, what kind of activity you are expecting?

Basically, I want to remind all of you that this is the first study that we have with AGI and the most important thing that we want to see is the safety of the molecule but we are planning to do a very large biomarker assessment of this molecule and we expect to see -- and to reaffirm the mechanism of action of our drug. Of course that we always expect to see efficacy but it’s just the beginning. We are moving -- we are doing the development as needed and basically we want to see that the drug is safe, that the mechanism that we proposed is the one that we see in patients and hopefully we will see some activity.

Yes, I mean I think -- I do want to point out Konsta that we've done a number of preclinical studies and we saw very nice activity on a monotherpay basis as well as activity in combination with a checkpoint inhibitor. And so, we want to maximize the potential to see activity on a monotherapy basis and that's why we are doing both the monotherapy arm and the combination arms because we would like to give from a clinical perspective a chance for the molecule to show activity on a monotherpay basis.

The next is question is from Joe Pantginis of HC Wainwright.

Two questions please. The first one is logistical I hope. Just wanted to get some additional color with regard to the pushing out of timelines for the AML consolidation study and curious if you’ve had any interview also with the recent changes to the AML treatment landscape?

So it has nothing to do with the changes to the AML treatment landscape and I'll let Abi expand a little bit on the second part. But it's really -- it's -- we have not seen -- I mean first of all this is a study being done in collaboration with the German Leukemia Alliance Group and so every decision is being made jointly with them. Recently when we've done some analysis we’ve simply not seen enough events that enable us to feel that these analysis will be powered enough to give us the type of information that we would like to see ourselves and also report to the public. So therefore that's really the only reason why where it's being pushed off for another six months or so. Do you have anything to add?

No, I think, no.

Okay.

Okay. So my second question, since 8040 seems to continue obviously to push in the right direction, when you look at just the stem cell aspects of the drug, I was wondering if you can just add a little more color -- I know you mentioned these couple of things briefly but maybe add a little more color with regard to the stem cell mobilization aspect and what the real potential of patient benefits could be as well as the pharmaco-economic benefits, should it be approved?

Yes, basically what we want to show with this study that only one dose of BL-8040 is able to mobilize a big amount of cells which is more than the minimal required of 2 million. We are talking here about 6 million cells in up to two apheresis. Mainly the difference will be first of all that the patients will receive only one dose, they need to come for injections in the evening only one time. Therefore, if we are able to show that we can do this in one apheresis session, it will be much more robust. But also if you see that we can collect 6 million in two apheresis sessions to bring the patient less time to the hospital to dose them less, I think it will be of great value compared to our competitors right now. And this is our aim in this study to show that we can make the life easier for the patient as well.

Yes. As you mentioned Joe, I mean we are -- of course we are looking at the pharmaco-economic aspects as well. But I think that they go -- and we think they go hand-to-hand. If we can reduce the amount of administrations and also the apheresis sessions, it will be beneficial both to the patients and also from economic perspective.

Thank you very much.

The next question is from Mark Breidenbach of Oppenheimer. Please go ahead.

Hi. Thanks for taking the questions. Just a couple on the lead-in cohort from GENESIS. First of all, can you tell me if all 11 patients were successfully transplanted, even the two that didn’t hit their target dose, target harness after two apheresis sessions, if were enough stem cells collected to actually undergo the transplant? And the second question is, are there any plans to discuss the transplant outcomes for this lead-in cohort, sometime in the next coming months? Thank you.

Go ahead. A – Abi Vainstein : Thanks for the question. Basically all the patients reached a minimum needed of 2 million cells and -- which is very encouraging for us, it’s -- 100% of the patients reaching the minimum needed is -- from our point of view is very encouraging. In regards of the engraftment, of course that we are following up these patients but the main purposes of lead-in period is to allow us to move forward and to have some color before we move to the randomization part of the study, more in terms of the safety and immediate efficacy in terms of mobilization. We are not planning to publish any data on engraftment in these patients because this is not -- was not the objective of this lead-in period. We are -- we will wait, all of us, till the end of the study and to see what happens also on the mobilization part and the engraftment part of the study.

Okay. Thanks for clarifying. That’s it for me.

The next question is from Caroline Palomeque from Maxim Group. Please go ahead.

So just quickly on the finance side. So, with the pipeline advancing and the cost of the trial, can you give any guidance on future burn and what you think your runway will be?

Yes. So we’ve actually giving guidance about that in the past and it’s also in our current 6-K, and quarterly operating review. We have about two years of cash left; our cash balance is a little bit above $41 million. We’re burning more or less around $20 million a year. So, we are -- we intend to stay in that framework and so we expect our cash to last until through the second quarter of 2020.

[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 US, please call 1877-456-0009. In Israel, please call 03-925-5937. Internationally, please call 972-3-925-5937. 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. In summary, we continue to execute on our programs and are pleased to report on our progress. Specifically, we are encouraged by our data readouts which provide us with a growing clinical data base in support of BL-8040’s mechanism of actions in our three main therapeutic areas. Facilitating continued investments is therapeutic potential. And having recently imitated our Phase 1/2a immuno-oncology study for AGI-134 in several solid tumor indications, we look forward to providing updates as we develop our second main drug program. We appreciate your continued support and thank you for joining us this morning.

Thank you. This concludes the BioLineRx second quarter 2018 conference call. Thank you for your participation. You may go ahead and disconnect.