BioLineRx Ltd. Q2 FY2024 Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx Second Quarter 2024 Financial Results Conference Call. Following management's formal presentation, instructions will be given for the question-and-answer session. I would now like to hand the call over 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 second 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 U.S. Securities and Exchange Commission. On the call today, we will have Phil Serlin, Chief Executive Officer of BioLineRx; 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. At this time, it is now my pleasure to turn the call over to Phil.

Thank you, John, and good morning, everyone, and thank you for joining us on today's call. Following our strong second quarter 2024 performance and the encouraging progress of APHEXDA to launch to date, I wanted to highlight that today's BioLineRx is a fully integrated leader in stem cell mobilization with promising label expand opportunities. This is a stark change from last year, and we are well positioned to deliver value to all of our stakeholders. I will begin with a brief update on the important progress that we are making on our APHEXDA launch, then turn the call over to Holly, who will go into our commercialization and life cycle management progress in more detail. Mali will review our financial results, and then I will give a brief summary of our upcoming milestones. We will then open the floor for your questions. Let me begin with an effect to commercialization update. Last quarter, we set an important goal. We said that among our targeted top 80 transplant centers, by the end of the second quarter, we would secure formulary placement at institutions managing 35% of stem cell transplant procedures. I am happy to say that we surpassed this goal by June 30, with formulary placement at institutions managing 37% of transplant procedures. We continue to make steady progress on this most important launch metric and remain on track to achieve our year-end target of 60%. Additionally, last quarter, we achieved formulary status at two of the largest transplant centers in the U.S., and we also doubled the number of centers ordering product. We are pleased with this continued positive momentum in only the second full quarter of our commercialization program. Each week, we learn about patients who have failed to collect enough stem cells on other mobilization agents putting their path to transplant at risk. These patients were given APHEXDA, and they achieved their stem cell mobilization goals, many in a single apheresis session. Transplant centers are seeing the tremendous efficacy that APHEXDA can provide in this new era for multiple myeloma patients, where patients are more often older and increasingly receive quad induction therapy which can increase mobilization risk. In July, the FDA granted approval of an important quad therapy approach for transplant-eligible, newly diagnosed multiple myeloma patients, including daratumumab and lenalidomide, which can negatively impact stem cell yields. The approval was based on the tremendous efficacy results seen in the PERSEUS trial, which compared the quad therapy to the leading triple therapy. The quad therapy lowered the risk of disease progression or death by 60%. Physicians have been treating patients with quad therapies prior to this approval. However, we believe that the data from this trial and the subsequent FDA approval will accelerate the process of quad therapy becoming the new standard of care, which, while beneficial to patients, has the potential to further increase the need for APHEXDA. Our team is excited to be introducing a new standard of care for the mobilization of stem cells for multiple myeloma in this new era of care for patients. At this point, I'd like to turn the call over to Holly May, President of BioLineRx U.S., to discuss our commercialization efforts and some of our life cycle management initiatives. Holly, please go ahead.

Thank you, Phil. Last quarter, I discussed APHEXDA benefits on center efficiency and economics, and in conversations with transplant center key decision-makers, including physicians, pharmacists, and apheresis unit Managing Directors. These two factors continue to be a significant determinant in transplant center formulary adoption. We launched APHEXDA into a mobilization agent market that included generic plerixafor, which had just entered generic status a few months before our approval. At the same time, transplant centers were realizing the impact that new induction therapy approaches have on stem cell collection yields. These factors created many questions for centers that have had long-standing protocols for many years. It is within this changing landscape that institutions have come to understand APHEXDA's innovative benefits for patients and are actively studying how our product can benefit their center, and members of our field force are supporting them in this effort with our efficiency modeling tools. Additionally, we are publishing important health economic data and continue to work on additional research. Our health economic presentations in April at the American Society for Apheresis Annual Meeting and at the International Society for Pharmacoeconomics and Outcomes Research demonstrated the economic advantages for centers using G-CSF plus APHEXDA over G-CSF alone or G-CSF plus plerixafor. Given the efficacy, efficiency, and economic benefits that APHEXDA provides, we believe that key decision-makers will continue to move toward our best-in-class mobilizer. Let me transition now to our life cycle management efforts. Our vision is to maximize the potential of APHEXDA in its current indication and to expand into key areas with high unmet need. There is significant interest from independent investigators to evaluate APHEXDA across several areas associated with myeloma, including mobilization studies in patients treated with quad therapies or for post-CAR T cytopenia management. We are also actively communicating with physician researchers across several additional disease states that have unmet needs in stem cell mobilization. One critical area that continues to make progress is evaluating APHEXDA's stem cell mobilization potential in patients with sickle cell disease undergoing gene therapy. This type of gene therapy requires significant quantities of stem cells to produce the therapies. Speaking with leaders in the field, using a mobilization agent that could speed the collection process would be a significant advantage for patients. Our two ongoing sickle cell disease Phase 1 investigator-initiated studies with Washington University in St. Louis and St. Jude's Children's Research Hospital in Memphis were designed by significant key opinion leaders in this research area. We anticipate early data from the Washington collaboration in the second half of this year and the first patient dosed in the St. Jude study in September. Overall, in the next 12 months, we anticipate several independent investigators to initiate studies that will provide BioLine with critical data and insights to aid our ongoing life cycle management efforts. Now let me turn the call over to Mali to provide a financial update.

Thank you, Holly. 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 profit, and cash. I invite you to review the filings we made this morning, which contain our financials and press release. Total revenue for the three months ended June 30, 2024, was $5.4 million. We did not record any revenue during the second quarter of 2023. Revenue for the quarter reflects a portion of the upfront payment from the Gloria Biosciences license, which amounted to $3.6 million, as well as $1.8 million of net revenue from product sales of APHEXDA in the U.S. Cost of revenue for the three months ended June 30, 2024, was $0.9 million. We did not record any cost of revenue during the second quarter of 2023. Cost of revenue for the quarter primarily reflects the amortization of intangible assets, royalties on net product sales of APHEXDA in the U.S., and cost of goods sold on product sales. Research and development expenses for the three months ended June 30, 2024, were $2.2 million, compared to $3 million for the same period in 2023. The decrease resulted primarily from lower expenses related to motixafortide activities, the termination of the development of AGI-134, and the decrease in share-based compensation. Sales and marketing expenses for the three months ended June 30, 2024, were $6.4 million compared to $5.6 million for the same period in 2023. The increase resulted primarily from the ramp-up in headcount costs associated with our fully hired field team. Net income for the three months ended June 30, 2024, was $0.5 million compared to a net loss of $18.5 million for the same period in 2023. The net income for the 2024 period included $7.8 million in nonoperating income compared to nonoperating expenses of $7.7 million for the same period in 2023, both mainly related to the noncash revaluation of warrants. As of June 30, 2024, the company had cash, cash equivalents, and short-term bank deposits of $40.1 million. The company anticipates that this amount will be sufficient to fund operations as currently planned into 2025. And with that, I'll turn the call 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. We anticipate the first patient dosed in the St. Jude sickle cell disease gene therapy Phase 1 trial in September. The Phase 1 clinical trial is an open-label multicenter study evaluating the safety, tolerability, and feasibility of single-agent motixafortide for the mobilization and collection of CD34+ hematopoietic stem cells in 12 patients aged 18 and older with sickle cell disease. We anticipate the initiation of the bridging study by collaboration partner Gloria Biosciences to support the approval of APHEXDA in stem cell mobilization for multiple myeloma in China in the second half of this year. Also in the second half of this year, as Holly mentioned, we anticipate a presentation on early data from the Washington University sickle cell disease gene therapy Phase 1 trial evaluating motixafortide as a monotherapy and in combination with natalizumab for stem cell mobilization. Additionally, working with Gloria Bio, we completed the study design of the Phase 2b combination study evaluating motixafortide in first-line pancreatic cancer. We anticipate that Gloria will submit the study design for regulatory review in 2024, with the study initiating in 2025. Finally, we continue recruitment in the CheMo4METPANC IIb randomized clinical trial in first-line metastatic pancreatic cancer sponsored by Columbia University in partnership with Regeneron. We anticipate that this trial, which had very encouraging pilot phase data published at ASCO this quarter, will be fully enrolled by 2027. With that, we have now concluded the formal part of our presentation. Operator, we will now open the call up for questions.

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

Great. Thank you. So the summer is usually known to have kind of negative seasonal effects for both, I guess, therapy use and with hospital staff, especially in academic settings. And I'm wondering if you could comment on how you expect seasonally the effort to go with sales of APHEXDA. Do you anticipate a strong pickup activity in September? And was this summer, I guess it's not over yet, but I guess was this summer as you had expected?

Yes. So John, good morning, and thanks for the question and for joining the call. I'll turn it over to Holly in a moment. But our results are through June 30, so we're talking now about the second quarter, which is really the spring. I would like to mention that we doubled our sales in Q2 from Q1. I'm not sure the results at this point reflect any kind of slowdown, seasonal slowdown in the summer. Things are looking very, very good at the moment. I'll let Holly expand on that if she'd like.

Yes. Thanks, Phil, and good morning, John. We have actually analyzed some of the seasonality on a month-to-month basis. Because this is indicated for multiple myeloma, and it's very dependent on patients needing to get timely transplants, we don't necessarily see those same kinds of seasonal effects with a product like APHEXDA as you may with others. That's a very general answer, but that is not something that we are terribly concerned about, and we have not built huge downturns into any kind of forecasting for that reason. Does that answer your question?

Yes, it does. And how would you characterize the reorder rate? It seems like based on a top-down view that it's fairly good. Would you characterize it that way as well?

Holly, you want to take that?

Yes, I would be happy to. Once a product is on formulary, that is the biggest hurdle for beginning utilization and sales growth. Our field teams are actively onboarding institutions that have approved us for formulary through their Pharmacy and Therapeutics committees. This is a crucial aspect of our future growth. We are also focused on increasing sales in institutions where we already have formulary acceptance by selling more to those hospitals. Initially, the field teams concentrated on preparing P&T committees to include us on formulary, and that effort continues. However, we are now also pursuing sales initiatives in those institutions to boost enrollments. We expect to generate revenue from both new and existing accounts as we progress throughout the year.

Okay. And final question on sickle cell and gene therapy. I guess I was surprised to see two studies in the same gene therapy indication. Can you tell me why that is? And then are there any other gene therapy indications that would also be the next place to use motixafortide to collect the proper number of cells?

Yes. Let me ask Ella whether she can talk about the differences between the two studies a little bit.

Yes. I'm sorry, but the design of the St. Jude study is not disclosed yet. There is a difference between the two studies in terms of ...

Yes, I understand your point. Perhaps that information isn't available for disclosure at this time. I’m curious if I've overlooked whether we've shared that detail. You're certain that we haven't provided that information? I apologize for any confusion. There are differences in the studies based on whether they involve single or multiple administrations and the study sizes. However, as Ellen mentioned, I don’t believe we’ve discussed the design thus far. There are restrictions on publication and embargoes that prevent us from discussing these matters right now.

Okay. Are there any other gene therapy indications that might also benefit from using motixafortide to collect enough cells? I assume that's why sickle cell was chosen compared to others, as they require more cells.

Yes. It's more complicated than that. Mobilization is difficult in sickle cell patients because the underlying mobilization agent G-CSF is contraindicated in sickle cell patients. They can only receive what you would call a booster, like plerixafor or APHEXDA. I'll turn it over to Holly for more context.

Yes, I'm happy to talk about that a little bit. There are different types of gene therapy, some like AV therapy do not require hematopoietic stem cells, while others, like the sickle cell approved therapies from Bluebird and Vertex do require stem cells to complete the gene therapy. Sickle cell, based on the observations Phil just made, is the ideal place to begin using a product like APHEXDA for stem cell mobilization to complete that type of gene therapy. We do see that there could be other types of gene therapies requiring CD34 stem cells that could benefit from APHEXDA in the future, but currently, we are focused on generating data in sickle cell due to the high unmet need.

Understood. Thank you, Holly.

Thanks, John.

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

Great. Thanks for allowing me a follow-up. Have there been any inquiries from investigators about using APHEXDA outside of multiple myeloma, expanding more into other leukemias?

As Holly mentioned, and I'll let her expand on it a little, we have a number of requests from investigators to perform investigator-initiated studies in potentially different indications. Holly, do you want to expand on that a little?

Yes, I'm looking for guidance here about what I can say. We are in the process of these investigator-initiated studies, some for indication-enhancing data. Other investigators are very interested in areas of study where the mobilization of stem cells is required. We have a very active investigator-initiated studies program that we initiated since launch, and we continue to review all of those proposals, which indicates a lot of interest in motixafortide in other indications.

Okay, great. Thank you.

Thanks, John.

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 U.S., please call 1 (888) 295-2634. In Israel, please call 03-925-5904. Internationally, please call 972-3-955-904. Mr. Serlin, would you like to make your concluding statement?

Yes, I would. Thank you, operator. In closing, we are progressing through 2024 with significant momentum both with the ongoing commercial ramp-up of APHEXDA as well as the advancement of our development programs in sickle cell disease and pancreatic cancer. I'm excited for what we are poised to accomplish over the remainder of the 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 November. Be safe, and have a good day.

This concludes BioLineRx second quarter 2024 conference call. Thank you for your participation. You may now disconnect.