BioLineRx Ltd. Q1 FY2024 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx First Quarter 2024 Financial Results Conference Call. All participants are presently in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. I would now like to turn over the call to John Lacey, Head of Investor Relations and Corporate Communications. John, please go ahead.

Thank you, operator. Welcome, everyone. Thank you for joining us on our first quarter 2024 results conference call. Earlier today, we issued a press release, a copy of which is available in the Investor Relations section of our website. It was also filed as a 6-K. I'd like to remind you that certain statements we make during the call will be forward-looking. Because such statements deal with future events and are subject to many risks and uncertainties, actual results may differ materially from those in the forward-looking statements. For a full discussion of these risks and uncertainties, please review our annual report on Form 20-F and our quarterly reports on Form 6-K that are filed with the US Securities and Exchange Commission. At this time, it is now my pleasure to turn the call over to Mr. Phil Serlin, Chief Executive Officer of BioLineRx.

Thank you, John, and good morning, everyone, and thank you for joining us on today's call. Joining me today are Holly May, President of BioLineRx USA, and Mali Zeevi, our Chief Financial Officer. In addition, Ella Sorani, our Chief Development Officer, will be joining the call for Q&A. I will begin with a brief update on the significant progress that we are making on our APHEXDA launch, then turn the call over to Holly who will go into our commercialization progress in more detail. I will then provide an update on our very promising pancreatic cancer and sickle cell disease programs. Finally, Mali will review our financial results. We will then open up the call to your questions. Let me begin with an APHEXDA commercialization update. As we've noted previously, transplant centers, the end users of APHEXDA are a well-defined group in the US. Approximately 80 of the 212 centers in the US perform roughly 85% of all transplant procedures. In this foundational year for APHEXDA, we focused our efforts on these top centers and are making strong progress. To date, we have established formulary placement at centers that manage approximately 26% of all multiple myeloma-related transplant procedures in the top 80 centers, up from 20% last quarter. Importantly, we remain on track to achieve our 35% target by the end of the second quarter and 60% by the end of this year. As a result of this work, we saw steady growth in adoption in this, the first full quarter since launch. While it is very early in the launch, we are nonetheless pleased, not only with the sales trajectory that we are on, but on the progress that we continue to make, getting APHEXDA on more transplant center formulary and treatment protocols. Furthermore, feedback from transplant centers on the clinical benefits has been positive. They are experiencing APHEXDA's value firsthand, which simply put is greater certainty, greater certainty in collection, time to collection and scheduling. This is a new era for multiple myeloma patients and transplant centers. Patients are more often older and increasingly received quad induction therapy, which can increase mobilization risk. Additionally, transplant centers are seeing increased competition for APHEXDA chair time while experiencing staffing challenges. Greater certainty is the innovation that APHEXDA is providing this new era, and it is having a positive impact on patients as well as nursing and technical staffing. Our team is excited to be introducing a new standard of care for the mobilization of stem cells for multiple myeloma patients. Staying on the topic of stem cell mobilization, recall that last October, we closed an exclusive license agreement with Gloria Biosciences for the development and commercialization of motixafortide across all indication locations in Asia. Gloria’s IND for a small stem cell mobilization bridging study, a requirement for commercialization approval in China was recently accepted by the Center for Drug Evaluation of the National Medical Products Administration in China. We expect that this study will commence with the first patient dosed in the second half of this year. Additionally, for countries in Asia that do not require a bridging study, Gloria is making great progress. We anticipate commercialization to begin in the Bao region of China, in Singapore and in Macau over the next few quarters. We estimate that Asia had over 51,000 reported cases of multiple myeloma, the largest number of cases globally. Stem cell mobilization is, therefore, a significant opportunity for both companies in the region. At this point, I'd like to turn the call over to Holly May, President of BioLineRx US, for a more detailed review of our early APHEXDA commercialization progress. Holly, please go ahead.

Thank you, Phil. As mentioned, this is a new era for patients with multiple myeloma planning for a stem cell transplant. Patients are receiving transplants at increased ages, and in the US, they are now often treated with quadruplet induction therapy which leads to the highest rate of complete responses and prolonged progression-free survival. These are both great achievements with strong benefits for patients. However, increased age and the combination of drugs used in quad therapy are both known to contribute to poor stem cell mobilization. As a result, the number of patients categorized as predicted poor mobilizers is increasing. This outcome is impacting in real time, long-held mobilization treatment paradigms at centers. This quarter, we presented two posters that highlighted the innovation benefits of APHEXDA on center efficiency and economics. This data, which was presented at the American Society for Apheresis Annual Meeting, or ASFA, and at the International Society for Pharmacoeconomics and Outcomes Research, or ISPOR, is supporting decision-makers at centers as they consider new mobilization strategies. Results from the analysis presented at ASPA, which assumed an institution averaging 20 transplants per month showed that switching to GCSF plus APHEXDA could increase apheresis capacity by 52 patient days per month versus GCSF alone or by 12.3 patient days per month versus GCSF in combination with plerixafor. Additionally, the analysis presented at ISPOR showed that even with APHEXDA's higher drug costs compared to other mobilization regimens, specifically GCSF alone or GCSF plus generic plerixafor, the combination of GCSF plus APHEXDA may confer a similar or better overall financial impact. Early adopting centers understand how this efficiency can offer a better economic outcome to them and to the healthcare system overall. They are also seeing the tangible value that APHEXDA is bringing to their patients, and this knowledge is being shared peer-to-peer at other transplant centers. Like any newly launched drug in a hospital setting where there can be a longer ramp-up cycle, APHEXDA is in its foundational period. Our commercial team is making strong and steady progress with centers. And as a result, we continue to see APHEXDA added to formularies at the top centers, and we predict continued growth. In summary, I'm very pleased with our momentum since launch and the powerful methods of innovation, efficiency and value that we are able to convey to patients, physicians and transplant center leaders. Now, let me turn the call back over to Phil.

Thank you, Holly. Turning now to our second development indication for motixafortide in pancreatic cancer. Our randomized Phase 2 study collaboration in first-line pancreatic cancer sponsored by Columbia University and supported equally by BioLineRx and Regeneron is actively enrolling. Data from the 11-patient pilot phase of this trial known as CheMo4METPANC continues to show encouraging findings. We recently announced new data from an abstract accepted at this week's American Society of Clinical Oncology, or ASCO’s 2024 Annual Meeting. The new analysis of paired pre- and on-treatment biopsy samples demonstrated a significant increase in CD8-positive T-cell density in tumors from all 11 patients treated with the combination of motixafortide, PD-1 inhibitor zimberelimab and standard of care chemotherapy, gemcitabine and nab-paclitaxel with a p-value of less than 0.007. These biopsy sample findings continue to confirm immune cell activation and tumor microenvironment modulation initially observed in the earlier COMBAT Phase 2a clinical trial. PD-1 immunotherapies have previously shown limited to no efficacy in pancreatic cancer. We believe that motixafortide can alter tumor resistance in pancreatic cancer and potentially other solid tumor types, helping to overcome a significant obstacle for immunotherapies, including PD-1s. In addition to the chemo for METPANC trial as part of our license agreement with Gloria Biosciences, we are working with them on the design of an additional randomized Phase 2b clinical trial, evaluating motixafortide in combination with Gloria's commercial PD-1 inhibitor, zimberelimab, a standard of care combination chemotherapy in first-line pancreatic cancer. That trial in China is expected to commence in the first half of 2025. In summary, we believe the combination potential of motixafortide and PD-1 inhibitors in pancreatic cancer as well as over 20 other solid tumor types with high levels of CXCR4 expression could be a significant multibillion-dollar opportunity. Turning now to sickle cell disease. We are also making great progress pursuing motixafortide’s potential to support gene therapy for patients with sickle cell disease, which requires significant quantities of hematopoietic stem cells for genetic manipulation, manufacturing and transplant success. The most commonly used drug for the collection of stem cells, G-CSF, is contraindicated in patients with sickle cell disease, and the current strategy using plerixafor has shown limitations, including the need for multiple collection cycles to achieve the necessary hematopoietic stem cell yields. For some, gene therapy may be prohibitive due to the failure to obtain adequate numbers of hematopoietic stem cells. We are actively working with leaders in the gene therapy field and look forward to the second half of this year when the early data is expected from our collaboration with Washington University School of Medicine in St. Louis, which is evaluating motixafortide for the mobilization of hematopoietic stem cells in patients with sickle cell disease in the Phase 1 clinical trial. At this point, I'd like to turn the call over to Mali, who will review our financials. Mali, please go ahead.

Thank you, Phil. As is our practice, I will only go over the most significant items in our financial statements: revenues, cost of revenues, research and development expenses, sales and marketing expenses, net loss, and cash. I invite you to review the 6-K filing we made this morning that contains our financials and press release. The revenues for the quarter ended March 31, 2024, were $6.9 million. We did not record any revenues during the first quarter of 2023. Revenues for the quarter reflect a portion of the upfront payment from the Gloria Biosciences license agreement and the milestone payment achieved under the same license agreement, which collectively amounted to $5.9 million, as well as $0.9 million of net revenues from product sales of APHEXDA in the US. Cost of revenues for the quarter ended March 31, 2024, was $1.5 million. We did not record any cost of revenues during the first quarter of 2023. The cost of revenues for the quarter primarily reflect sublicense fees on a milestone payment received under the Gloria Biosciences license agreement and royalties on net product sales of APHEXDA in the US, as well as amortization of intangible assets and cost of goods sold on product sales. Research and development expenses for the quarter ended March 31, 2024, were $2.5 million compared to $3.7 million for the same period in 2023. The decrease resulted primarily from lower expenses related to motixafortide supporting activities as well as the termination of the development of AGI-134. Sales and marketing expenses for the quarter ended March 31, 2024, were $6.3 million compared to $3.9 million for the same period in 2023. The increase resulted primarily from the ramp-up of commercialization activities related to motixafortide, including headcount costs associated with fully hired field teams. Net loss for the quarter ended March 31, 2024, was $0.7 million compared to $12.2 million for the same period in 2023. The net loss for the 2024 period included $4.5 million in non-cash income compared to non-operating expenses of $2.9 million for the same period in 2023, both specifically related to the revaluation of warrants. As of March 31, 2024, the company had cash, cash equivalents, and short-term bank deposits of $28.2 million. Subsequent to the end of the quarter, we accessed an additional $20 million in non-dilutive debt financing under our previously announced agreement with BlackRock, formerly Quellos Capital. We also completed a $6 million registered direct equity offering. We anticipate that this amount will be sufficient to fund operations as currently planned into 2025. And with that, I'll turn the call back over to Phil.

Thank you, Mali. In closing, as is our custom, I would like to take a few moments to summarize our upcoming milestones. The first is continued commercialization ramp-up of APHEXDA in the US. Next, initiation of a bridging study by Gloria Biosciences to support approval of APHEXDA in stem-cell mobilization for multiple myeloma in China. Then completion of recruitment in the Phase 1 pilot study of motixafortide for gene therapies and sickle cell disease led by Washington University School of Medicine, with initial data expected in the second half of this year. Also continued recruitment in the chemo for METPANC Phase 2b randomized clinical trial in first-line metastatic pancreatic cancer sponsored by Columbia University and supported by BioLineRx and Regeneron. And lastly, preparation activities with Gloria Biosciences on a Phase 2b combination study evaluating motixafortide in first-line pancreatic cancer. With that, we have now concluded the formal part of our presentation. Operator, we will be happy now to open the call to questions.

The first question is from Joe Pantginis of HC Wainwright. Please go ahead.

Hey everybody, good morning and good afternoon. Thanks for taking the questions. Very nice to hear all the early factors contributing to the potential strong launch of APHEXDA. So a couple of questions there, if you don't mind. So first, I realize, obviously, there might be a lot of noise around your answers here because it's still early in the launch. But first off, Phil, you mentioned a few different things, but I guess for you and Holly, what would you say are the top one or two early factors that centers are seeing are truly differentiated even if it's as simple as access to chairs quicker?

Okay. First of all, Joe, good morning. It's a pleasure to hear your voice. I think this one, I will turn it over to Holly. Holly, can you take this?

Thank you, Phil, and thank you, Joe, for the question. It's certainly about chair time. As I mentioned earlier, we had two compelling posters that highlight the efficiencies institutions can achieve using APHEXDA plus G-CSF compared to their standard mobilization regimen. Another key point we've previously discussed is the three pillars of our value proposition. One aspect that resonates with every center is the clinical benefit, specifically the increased number of CD34 stem cells mobilized in a single apheresis. This translates to greater efficiencies and reduced chair time for the centers. However, what stands out most across all institutions utilizing APHEXDA is the amount of stem cells that can be harvested in a single session, which aligns with our encouraging Phase 3 data. Did that address your question?

The next question is from John Vandermosten of Zacks. Please go ahead.

Thank you. So let me go on some of the questions about just the APHEXDA rollout. And based on your observations of the formulary committee meetings, are they bunched up around certain parts of the year? I mean, maybe the end of the semester for academic institutions or just at the end of the quarter, when you see a lot of those come through. Can you give me any color on that?

Yeah, sure. Hi, John, first of all, thanks for dialing in. Holly, do you want to take that?

Thank you for your question, John. There isn't really a specific timeline by quarter or year for this. Most institutions hold P&T committee meetings every month. There is some delay in the process because we need to communicate with the P&T members and secure a spot on their agenda. Once we receive approval from the committee, there are additional protocols and order sets to establish. So, while it may take longer to ramp up, it's important to note that these P&T meetings do not align strictly with the end of a quarter or year. They occur monthly, and our field teams are diligently working at each center to provide the necessary information for these committee meetings to hopefully yield positive outcomes.

Okay. And so I guess that suggests that you'd see a steady increase in penetration as we move towards your target for the end of the year?

I think that, that's a correct statement. Yes, John.

Great. I calculated that there are about 132 transplant centers not in your target group. Have any of those started using APHEXDA? How do you think those non-target centers will begin using the product? Perhaps through physicians who have used it in the primary centers taking it with them or recognizing its value. How do you see those centers that you aren't directly targeting using the product as we progress through the quarters?

Holly, did you get that?

Yes, I did. First, it's important to note that 86% of all transplants in multiple myeloma are performed in just 80 centers, so your assessment is quite accurate. The additional effort needed to reach the remaining 14% is not necessarily efficient, especially for a small company like BioLine that is primarily focused on those top 80 centers. Additionally, we haven't mentioned that we're also considering institutions that utilize a booster agent similar to APHEXDA. Many of the centers within that additional 14% still do not employ a boosting agent at the same rate as the top 80. There are many reasons for our strong emphasis on those top 80 centers. This doesn’t mean that we won’t find value in the other institutions eventually, but it will require significantly more effort from our field teams to engage them. Therefore, in our first year, we are concentrating on where we can achieve the most impact as swiftly as possible.

Okay. That's helpful. And another question on the gene therapy side, again, I know I was asking this. But Phil, you and I have talked in the past and, Holly too, maybe, on just how part of the goal of the current trial that's going on in Washington University is to establish safety. I guess after you achieve that and the data is made available, do you anticipate that there will be a lot of demand in gene therapy clinical trials for the use of your product? I mean, do you see that, that is something that maybe other studies are looking at and kind of waiting to kind of get the validation from the sickle cell trial to kind of use it themselves?

That's a very good question, John. I can also invite Holly and Ella to share their insights. We are currently engaging with several potential collaboration partners in both the industry and academic institutions. We definitely expect to see more clinical trials in this area in the future. Does that address your question, or would you like more information?

No, that's helpful. And unless you have anything else to elaborate on that. I do have one more on the finance side. I mean, that doesn't answer it. I didn't want to leave Mali out as looking at gross margin, and I wanted to see if there's any guidance you could give us in terms of trying to estimate that as we move through the year based on our forecast for product sales.

Yeah. So I mean, I think that you can see in our financial statements that gross margins are well in excess of 90% and significantly in excess of 90%. And I don't think that, that's going to change.

Okay. All right. Thank you for taking my questions.

You’re welcome. Have a great day.

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 1 (888) 295-2634. In Israel, please call 03-925-5904. Internationally, please call 972-3-925-5904. Mr. Serlin, would you like to make your concluding statement?

Yes. Thank you, operator. In closing, we are progressing through 2024 with significant momentum both with the ongoing commercial ramp of APHEXDA as well as the advancement of our development programs in pancreatic cancer and sickle cell disease. I'm excited for what we are poised to accomplish over the remainder of this year and next. Thank you all very much for your continued interest in BioLineRx. We look forward to providing our next comprehensive quarterly update in August. Be safe, and have a great day.

Thank you. This concludes the BioLineRx first quarter 2024 conference call. Thank you for your participation. You may go ahead and disconnect.