BioLineRx Ltd. (BLRX) Q3 2018 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx Third 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 Timothy McCarthy of LifeSci Advisors to read the Safe Harbor statement. Tim, 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 or 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 our 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. Phil?

Thank you, Tim, and good morning everyone. And thank you for joining us on our third quarter earnings conference call today. Earlier this morning, we issued our Q3 earnings press release, a copy of which is available in the Investor Relations section of our Web site. 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 Mali Zeevi, our Chief Financial Officer will provide a short discussion of our financial results. We will then open up the call to your questions. Also joining the call for Q&A are Abi Vainstein, Vice President, Clinical and Medical Affairs; Ella Sorani, Vice President, Research and Development and Hillit Shachar, our Vice President Business Development. During the third quarter we took a number of steps to strengthen and advance both of our oncology programs while positioning our company for long-term success and we are excited for the opportunity to provide an update in this regard. Let's begin with Bl-8040 our lead and most advanced program. For those of you who may be new to the BioLineRx story BL-8040 is a novel short peptide that functions as a high affinity antagonist to CXCR-4 a chemokine receptor whose over expression has been implicated in the progression of over 70% of all cancers. We are evaluating BL-8040 in eight Phase 2 or Phase 3 clinical trials in multiple oncology indications including stem cell mobilization from multiple myeloma patients, acute myeloid leukemia and a number of solid tumor indications. One of these trials is being conducted under our ongoing collaboration with Merck and three are being conducted under our collaboration with Genentech. Our partnerships with these two leading oncology companies give us a great deal of conviction in BL-8040's novel mechanism of action. And we certainly see opportunities to enter into additional partnerships down the road. We continue to accumulate encouraging clinical data from BL-8040's primary therapeutic pathways and believe it stands alone among cancer therapeutics in terms of its ability to potentially treat a broad range of cancers and at various stages of disease. In multiple clinical studies to-date in a number of indications BL-8040's unique mechanism of action has demonstrated robust mobilization of targeted cells a direct apoptotic effect as well as the ability to induce infiltration of T cells into the core and periphery of solid tumors while maintaining a favorable safety profile. Turning now to our development programs beginning with the indication that we are advancing independently, stem cell mobilization. Recall that during the second quarter, we announced positive results for the leading portion of our Phase 3 GENESIS trial. The trial was designed to enroll up to 30 patients to assess the safety and efficacy of BL-8040 plus GCSF for the mobilization of haemtopoetic stem cells HSCs used for autologous transplantation in multiple myeloma patients. An analysis of data from the first eleven patients showed that the combination effectively mobilizes enough cells for transplantation with only one administration of BL-8040 and in one to two after recent sessions. On a DMCs recommendation, we are continuing to the randomized placebo controlled for this study. We continue to expect top-line results in 2020 as stem cell mobilization is the most advanced indication in our pipeline. This was a very significant development and one that gives us increased confidence in BL-8040s pathway to registration. Moving on to our solid tumor indications, under the collaboration with Merck, the pancreatic cancer trial that we are running continues to show that BL-8040 is safe and well-tolerated with a mechanism of action that mobilizes immune cells into the peripheral blood, promotes T cell infiltration into tumors and has an effect on immunosuppressive cells. Our ongoing Phase 2a trial of BL-8040 and Merck's anti-PD-1 therapy KEYTRUDA known as the COMBAT/KEYNOTE-202 trial is moving forward to the next stage. At the recent meeting of the European Society of Medical Oncology, ESMO, we presented compelling data from the dual combination arm that showed encouraging Disease Controls and extended overall survival particularly in patients undergoing second line treatment. The study included 37 patients with metastatic pancreatic cancer who had disease progression after one or more previous lines of treatment. The data show that the treatment regimen was safe and well-tolerated, the disease control rate defined as patients exhibiting a response or a stable disease was 34.5% for 29 evaluable subjects including one patient with a partial response showing a 40% reduction in tumor burden as well as nine patients with stable disease. Median overall survival in all 37 patients was 3.3 months, with a six month survival rate of 34.4%. Furthermore, a significant observation was made in a subpopulation of 17 patients receiving this study drugs as a second line treatment with a median overall survival was 7.5 months with a six month survival rate of 51.5%. This compares favorably with historical median overall survival data of 6.1 months for the only currently approved second line pancreatic cancer treatment a combination of the drug chemotherapy Onivyde, 5-FU, and leucovorin. In addition to the promising clinical activity data taken from in-depth analysis of biopsies taken at screening and following monotherapy or combination treatment of BL-8040 and KEYTRUDA demonstrate compelling pharmacodynamic data relating to T cell infiltration into tumors and a reduction of the tumor immunosuppressive microenvironment. We are very excited about these results which show that BL-8040 in combination with KEYTRUDA in second line pancreatic cancer patients demonstrated survival data which is comparable to chemotherapy regimens without compromising safety and tolerability. In addition to the robust pharmacodynamic effect previously mentioned. This contrasts with other standalone immunotherapy combinations without chemotherapy which have either shown a lack of efficacy or significant safety concerns. In light of this, we believe the combination of BL-8040 and KEYTRUDA can serve as an immunotherapy backbone or platform to be added to chemotherapy, which we hope will further improve our already encouraging results. In addition, we would like also to point out the recently initiated Phase 3 and randomized Phase 2 trials with immunotherapies in pancreatic cancer all include chemo as part of the treatment regimen and the studies that preceded their initiation also comparable or less encouraging results to what we see with our combination. As previously reported, we have expanded the COMBAT/KEYNOTE-202 trial to include an additional arm that will add chemotherapy to the existing combination and we'll focus more specifically on second line pancreatic cancer patients. Based on chemotherapies ability to reduce overall tumor burden induced immunogenic cell death and drive the activation and expansion of new tumor reactive T cells. We believe this triple combination could demonstrate a synergistic effect. We plan to initiate this arm by the end of the year with the goal of enrolling between 30 and 50 patients. And we plan to report top-line data in the second half of 2019. Turning to our clinical collaboration with Genentech evaluating BL-8040 in combination with Tecentriq or Atezolizumab, Genentech anti-PD-L1 cancer immunotherapy. There are three Phase 1b two studies currently running, one in maintenance AML and two solid tumor studies in pancreatic cancer and gastric cancer. These studies will evaluate the clinical response, safety and tolerability of the combination as well as multiple pharmacodynamic parameters. The solid tumor studies which are part of Roche's Morpheus cancer immunotherapy development platform should yield a significant amount of data during 2019 although as we have previously indicated the timing is difficult to predict since these trials are being run by Genentech. Moving on to AML, we believe BL-8040 can provide broad therapeutic coverage in the AML space with potential activity at different stages of the disease and a different patient populations. This is a key point of differentiation versus other compounds currently in development for AML. For relapsed refractory AML, an indication that we are advancing independently, we previously discussed the compelling overall survival data from our Phase 2a proof of concept study that we presented at EI in June. These data demonstrated that the combination of BL-8040 with high dose cytarabine or HiDAC, significantly improved overall survival compared with historical data for HiDAC immunotherapy and was also safe and well-tolerated. Specifically median overall survival in the one point five mix per keg expansion dose was 10.7 months compared to historical data for patients treated only with HiDAC of 6.1 months. We continue to monitor long-term survival for patients in this study. Given this encouraging data, we intend to further pursue this indication and we are vigorously evaluating the optimal clinical development pathway going forward. Also in consolidation AML, we are evaluating BL-8040 in a randomized controlled Phase 2b study consolidation therapy for patients in first remission known as the BLAST study. In mid-2019, we hope to conduct an interim analysis of the data and we continue to expect to report top-line data in 2021. All of the clinical development activities just discussed served as motivation behind our recent decision to significantly increase our economics in BL-8040. Last month, we announced that we entered into an amended license agreement with Biokine Therapeutics that increases our stake in BL-8040 to 80% percent from a previous level of 60%. Given the breadth of BL-8040 development pipeline that we just outlined and the relatively reasonable consideration that we paid for this additional stake, we believe this transaction has the potential to deliver significant value to our shareholders. At this point, I'd like to provide a brief update on our second clinical candidate, the immunotherapy cancer vaccine AGI-134. This is our synthetic, intratumorally administered glycolipid compound designed to label cancer cells with alpha-Gal, which then become the target of pre-existing anti-Gal antibodies. This novel mechanism of action triggers an immediate hyper acute local anti-tumor response as well as the follow-on systemic anti-tumor response targeting both the primary injected tumor and distal secondary tumors. During the third quarter, we initiated a Phase 1/2a trial evaluating AGI-134 in patients with unresectable metastatic solid tumors. This study is being run in the U.K. and Israel with possible expansion to the U.S. and additional countries in Europe in 2019. 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. The study will be comprised of two parts; the first is a dose escalation phase to assess the safety and tolerability of intratumorally injected AGI-134 as a monotherapy and to determine the recommended dose for part two of the study. The second part will be a dose expansion phase comprised of three cohorts designed to assess the safety, tolerability and anti-tumor activity and AGI-134 as a monotherapy in a basket cohort of multiple solid tumor types. Two additional cohorts will evaluate AGI-134 in combination with an immune checkpoint inhibitor in metastatic colorectal cancer and head neck cancer. Efficacy will be assessed by clinical and pharmacodynamic parameters. We're also planning a wide biomarker assessment as part of the study. We look forward to the initial safety results from Part 1 of this study in the second half of 2019 and top-line results of the monotherapy arm from Part 2 of the study by the end of 2020. I would now like to turn the call over to Mali Zeevi, our CFO, who would 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 a 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 contained our financials, operating and financial review and press release for additional information. The research and development expenses for the nine months ended September 30, 2018 were $14.6 million an increase of $1.3 million or 9.6% compared to $13.3 million for the nine months ended September 30, 2017. The increase in this 2018 period resulted primarily from higher expenses associated with BL-8040 including the GENESIS and COMBAT trials, preparations for the initiation of AGI-134 clinical trial and BL-1230. Turning to cash, the company held over $35 million in cash, cash equivalents and short-term bank deposits as of September 30, 2018. Our financial footing remained solid and provided with resources necessary to fully execute on our operational plan during the first half of 2020. And now, I would like to turn the call back over to Phil for closing remarks.

Thank you, Mali. In closing, I would like to take a few moments to summarize our upcoming BL-8040 data milestones through the end of 2019. First, initiation of a Phase 2 triple combo pancreatic cancer trial for BL-8040 KEYTRUDA and chemotherapy under our collaboration with Merck by the end of 2018. Potential interim results from the Phase 2 AML consolidation study in mid-2019. Initial safety results report one of the Phase 1/2 a trial of AGI-134 in the second half of 2019. Top-line results from one or more of the solid tumor trials under collaboration with Genentech by the end of 2019. And finally, top-line results from the Phase 2 triple combo pancreatic cancer trial of BL-8040 KEYTRUDA and chemotherapy under the collaboration with Merck by the end of 2019 as well. With that, we have now concluded the formal part of our presentation. Operator, we are now opening up the call to questions.

Thank you. [Operator Instructions] The first question is from Joe Pantginis of HC Wainwright. Please go ahead.

Hey guys. Good morning good afternoon. Thanks for taking the question. I wanted to ask first about perceptions around the data you put out on COMBAT. And correct me, if I'm wrong please. So the way I view it is you have the first data that have been generated in a chemo free regimen that generated a meaningful disease control rate, again, without chemotherapy. When and this is the part I want to focus on, when the existing benchmark especially around a checkpoint inhibitor was essentially zero. So I just wanted to make sure that that assessment or perception is correct. And then, based on that why you feel there might have been some negative perceptions around the data?

Joe thanks very much. So I mean, I will turn the call over to Abi in a second. But, we agree with your assessment wholeheartedly. We think the data is very encouraging. We based on our discussions with our PIs and medical community, everyone seems to be very encouraged by the data. The presenter at ESMO, who presented our data who was an objective third party appeared to be very encouraged as well by the data. So I think based on what we have, we like I said are very encouraged. But again, due to the fact that KEYTRUDA on its own really has no effect whatsoever and we're seeing efficacy in -- that we saw efficacy in this trial very similar or if not better than chemotherapy regimens, which of course would be expected to have a higher efficacy at this point. Abi, you want to add some.

Yes. I guess I just wanted to add that cancers are very difficult to treat for population. I am not sure what were the expectation, but pancreatic cancer is very difficult and any step that we are doing to work better responses and the ability of response and overall survival any step is important. As Phil said before we have comparable data with other immunotherapies that move forward to Phase 3. And we actually, if we compare to other combinations with PD-1, they are basically two combination that didn't move forward because it didn't show any advance in many of our survivor. And the second one, bring some responses, however, survival is not there, but they also despite of the responses they're moving forward also with chemotherapy for the next step that we are doing. We are very confident that the data that we have is encouraging. We want to bring through this data more figures as the combination of chemotherapy but there are others do it. But pancreatic cancer is so difficult to treat through immunotherapy alone, it might not be enough to help this patient and we are confident that we will be able to show this by the end of 2019.

Got it. Thank you for that added color and I just wanted to ask a quick logistical question regarding the Genentech collaboration. You did highlight obviously the new flow is driven by Genentech but based on previous comments, I just wanted to check, is it still possible based on prior comments by you guys that we still might see initial data from the pancreatic study this year?

It's very hard to tell, Joe. So I have to tell you this is not like running our own study, the Genentech solid tumor studies are part of a massive platform called Morpheus, a number of indications in pancreatic cancer alone, there are a number of arms being investigated right now. We're having difficulty quite honestly getting a firm handle on the release of data because it's not like I said it's not only dependent on our own arm, but it's dependent on several other arms in the study. So we believe based on our latest conversations with Genentech that we will have data sometime in 2019, but it's very difficult to know exactly when.

Understood. Thanks a lot, Phil.

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

Hey. Thanks for taking the questions, and congrats on the quarter's progress. Phil one thing I wanted to ask about is, I noticed there is a preclinical 50 abstracts scheduled for presentation this weekend describing a combination of BL-8040 with an [indiscernible] antibody. And then just from the abstract it looks like there were signs of encouraging sort of efficacy there. I'm wondering if there are any plans in the near-term future to explore this combination clinically.

Abi go ahead take that please.

Thanks for the question. What these abstracts say actually, BL-8040 is not a good platform only AML treatment also very new immunotherapy treatment further. We are currently conducting studies with PD-L1 inhibitors, with PD-1 inhibitors and we are trying to move forward and test other immunotherapy treatment. And what this data is -- it's saying that BL-8040 can be combined and enhanced any immunotherapy treatment and then we would say whether we will -- we will move forward to other immunotherapies as well.

Okay. Thanks for that clarification. So I also wanted to ask a little bit about the Genentech collaboration, I think we are awaiting on a trial in lung to start treating patients. Do we know if that's up and running out or are we still only in AML, pancreatic and gastric at this point?

We're right now. Thanks for that question. Right now we're only in AML pancreatic and gastric. We don't have a lot of visibility on when that other trial in lung cancer will start at this point.

Okay. All right. Just checking. And one final one for me on AGI-134, I think you mentioned that there are two planned expansion cohorts in combination with a checkpoint inhibitor that would specifically focus on colorectal and head and neck cancers. And I was just wondering why you're picking those two particular indications out of all other solid tumors. Is there anything in that that you would expect this molecule to work better in those particular types of cancers?

Abi, you want to take that?

Yes. It's a very good question. We've put a lot of thinking in which one of the tumor, we want to expand. And one of the ideas at the beginning was to do a basket study of the majority of the Phase 1 study, Phase 2, once these studies are done, but we wanted to have an idea in there and consolidate that indication how our company is working in combination. The reason for why we choose these two is that take different things into consideration. The first one is the low response rate and survival in these two populations with only checkpoint inhibitor. The second one is the feasibility. It was more easy for us to go for -- for example, but better what they are other comment, compared to other companies was very difficult and actually melanoma is the very hard tumor. And to be effective that might be more easy, but we want to show the effects of AGI-134 and became two more -- intermediately between colon and heart and became the heart and responders to immunotherapy or to AGI by itself.

Okay. And I assume you would kind of -- try and [indiscernible] stable CRC patients if possible in this expensive cohort?

Of course, this is a very good question. We're not -- we are aiming not only to include MSR, MSS patients we are actually non-responder for colorectal cancer, they are non-responder at all to immuno-checkpoint. We also will include in this trial patients. We actually progress or didn't respond to immunotherapy alone because we believe that the addition of AGI can become this cancer and responsive to immunotherapy.

Okay. Thank you for taking the questions.

Thanks Mark.

The next question is from Konstantinos Aprilakis of JMP Securities. Please go ahead.

Hey, guys. This is Jon on for Konstantinos. I wanted to really, really reiterate the encouraging data that you guys saw as well in the pancreatic cancer. I was wondering if you can comment how those results are framing your expectations for the trip. And then, going forward, can we expect to see a release of biomarker data earlier on next year followed by the clinical results? Thanks.

Yes. We are continuing to look into biomarker data, of course, it's very important to try to figure out which one of the patient and why they are responders. We believe that the combination of chemotherapy, which was in the past -- they're not thinking about combination of chemotherapy with immunotherapy. Right now in the last period, it's something that has become more and more common, the chemotherapy bring exposure of new antigen and reduction of the tumor in combination with BL-8040 that will have to bring [indiscernible] decrease immuno devices suppressor cells within the tumor microenvironment and the addition of PD-1 who will live to do -- to get this T cell active -- all these three together can make this -- make the change in the area of pancreatic cancer. Our expectation of course is to be better to either chemotherapy alone and immunotherapy, which is the easiest part, but to be better than the chemotherapy alone and this is the main reason for what our benchmark is, they are proved therapy for second line chemotherapy, which is only [indiscernible] and this is the main reason for what we are using this combination to trying to have the best combat or placebo.

All right. Thanks. So to clarify, you do intend on releasing biomarker data/

We will release biomarkers data by December -- we release hopefully together with ASC figure data. On that we will take biopsies, we will do and we will do certain DNA, assessment of screen detractors try to identify population of patients with a low number of patient as you know, but we will go more into the patient and patient background instead of effect on the tumor microenvironment. Because we already see that in tumor microenvironment the combination of the PD-L1 and BL-8040 is doing what we expect to do. We are now -- we want to try to understand further which are the patients who are responder and why.

Okay. great. Thanks for taking the questions.

Thank you.

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

Hi. Good afternoon. Thanks for taking the question. I just want to clarify, you mentioned that there would be some top-line data in -- in the second half 2019 with patients, but you said there would be like 30 to 50 patients in a cohort, just want to make sure that, which trial you are referring to here, was that -- is that the -- is that same as the safety results for the Phase 1.

That data we're talking about is the extension to the COMBAT study with the addition of chemotherapy on top BL-8040 and KEYTRUDA. That cohort, the additional cohort of between 30 and 50 patients, top-line results are supposed to read out by the end of next year.

Okay. That's helpful. And then, I just wondered if there was any new partnerships from the Horizon for BL-8040?

I can turn the call over to Ella, we generally don't really discuss new partnerships. But I can say that we're quite active maybe Ella you want to give a little background?

Sure. For your question, so where we are right now is that we are showing BL-8040 to multiple potential partners and we're seeing tremendous interest and positive feedback on BL-8040 for the different clinical indications, which is -- it's development for and when we have something to announce we will obviously announce it, but it's premature to give information at this time.

I think overall we are based on the fact that we are in various indications and we're already doing multiple collaborations. And we haven't even spoken about some of the other collaborations. I think I don't know if everyone is aware but we're also in a pancreatic cancer study in collaboration with M.D. Anderson and they have an overall collaboration with Merck and we're doing some collaborative studies there as well. We tend to be speak to quite a number of potential partners on combination studies, in AML, we have a lot of potential in AML to do combination studies with partners and collaborators et cetera. So we're out there quite on a very frequent basis speaking about Bl-8040 with other pharma companies.

That's helpful. Thank you.

[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 schedule to begin two hours after the conference. In the U.S., please call 1-888-326-9310; in Israel, please call 03-925-5925; internationally, please call 972-3925-5925. Mr. Serlin would you like to make your concluding statement/

Yes. Thank you very much. That concludes our call this morning. I'd like to thank all of you again for your interest in BioLineRx. And we look forward to providing future updates on good things to come. Have a great day. Thank you very much.

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