Earnings Call Transcript - BLRX Q2 2023

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx Second Quarter 2023 Financial Results Conference Call. All participants are presently in 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.

John Lacey, Head of Investor Relations and Corporate Communications

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 typically used 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 Phil Serlin, Chief Executive Officer of BioLineRx.

Phil Serlin, CEO

Thank you, John, and good morning, everyone. And thank you for joining us on our second quarter 2023 results conference call today. Earlier this morning, 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. As is our practice, I will begin with an overview, then Mali Zeevi, our Chief Financial Officer, will provide a discussion of our financial results. We will then open up the call and look forward to your questions. Also joining the call today for Q&A are Ella Sorani, Chief Development Officer, and Holly May, President of BioLineRx USA. Beginning with our lead program, Motixafortide, stem cell mobilization for multiple myeloma patients. We continue to finalize preparations for our upcoming PDUFA target action date of September 9, 2023. If approved, Motixafortide would formally transition us to a commercial stage company, a very important milestone in our company's history that would open our future to many additional growth opportunities. Based on the strong efficacy data from the GENESIS Phase 3 clinical trial used to support our NDA application, we believe Motixafortide may play a critical role in addressing unmet needs and could introduce a new treatment paradigm for those with multiple myeloma who require an autologous stem cell transplant. We believe Motixafortide, if approved, can provide improved treatment journeys for patients and more certainty for transplant centers, and our commercial team of account directors is actively meeting with payers and reviewing the potential positive benefits of Motixafortide to patients and the healthcare system. In preparation for anticipated approval, we have assembled a world-class transplant sales team with fast industry experience in general and multiple years of experience with product launches. They also have multiple years of experience specifically in transplant, multiple myeloma, and rare diseases. Their strong backgrounds and knowledge of the U.S. transplant center community have allowed us to continue to sharpen our commercial launch strategy. We have also substantially advanced supply chain market access and medical affairs activities and are confident that we will be able to launch the product soon after potential approval. The U.S. market dynamics for mobilization agents used in stem cell transplants are evolving but remain strong and growing. We estimate the overall U.S. market potential at around $300 million, with about 50% from autologous stem cell transplant in multiple myeloma. If approved, Motixafortide would be the first true advancement in stem cell mobilization in a decade. With the team that we have assembled, I believe we are incredibly well positioned to capture a significant share of the multiple myeloma transplant market over time. On previous calls, we've discussed partnership conversations relating to ex-U.S. development and commercialization of Motixafortide, and this morning, we were excited to announce the signing of an exclusive license agreement for Motixafortide in Asia alongside a concurrent equity investment. The license agreement includes a $15 million upfront payment, plus up to approximately $50 million based on the achievement of specific development and regulatory milestones in China and Japan, and up to nearly $200 million in commercial milestones based on defined sales targets. We are also eligible to receive tiered double-digit royalties on sales. Closing of the transactions is contingent upon approval by the Israeli Innovation Authority of the license agreement within four months of execution, as well as other closing conditions, none of which are related to FDA approval. The agreements were published this morning as part of a separate 6-K. In the area of pancreatic cancer, which is our second major development program for Motixafortide, our clinical program partnerships with Columbia University, and now for the new strategic partnership in Asia announced today, offer the potential to add meaningful and determinative patient data on top of the positive results we've seen in our earlier clinical development trials. As a reminder, our Phase 2a COMBAT/KEYNOTE-202 Triple Combination Study of Motixafortide, KEYTRUDA, and chemotherapy as a second-line therapy demonstrated substantial improvements across all study endpoints relative to historical data, including overall survival, progression-free survival, and the overall response rate in the most challenging PDAC patients, all diagnosed with unresectable Stage 4 disease. The combination also appeared to be well tolerated, with a low incidence of neutropenia and infections in treated patients. As part of our agreement announced this morning, the execution of a randomized Phase 2/3 clinical trial in China is envisioned that will evaluate Motixafortide in combination with a PD-1 inhibitor and standard-of-care chemotherapy in first-line metastatic pancreatic cancer. There is significant unmet need in China in the treatment of pancreatic cancer, and we believe there will be strong physician and patient interest in this clinical evaluation. Additionally, we announced in mid-July the initiation of a randomized investigator-initiated Phase 2 clinical trial, sponsored by Columbia University and jointly funded by Regeneron and BioLineRx in first-line metastatic pancreatic cancer, based on promising data from a single-arm pilot phase. The original pilot study enrolled 10 patients and was to be expanded to 30 patients if data from the first 10 were encouraging, which was defined as three or more patients showing partial responses per RECIST criteria. Following a review of the initial data, the investigators decided to skip the 30-patient single-arm expansion and instead move to a larger randomized design. The amended randomized trial includes 102 patients, and compares the combination of Motixafortide to PD-1 inhibitor cemiplimab and standard-of-care chemotherapy to chemotherapy alone. We anticipate sharing data from the pilot phase at a medical conference in the second half of this year. We believe the additional data developed from these new partnerships could support larger registrational trial opportunities globally. Needless to say, we are excited about the potential of Motixafortide to form the backbone of new PDAC treatment regimens and give new hope to patients suffering from this very difficult-to-treat tumor type while demonstrating the versatility of Motixafortide across both hematological and solid tumor cancers. In parallel with our development work in stem cell mobilization in PDAC, we believe there are additional therapeutic areas where the demonstrated benefits of Motixafortide can be leveraged. One of these is autologous hematopoietic stem cell-based gene therapy for patients suffering from sickle cell disease or SCD, one of the most common genetic diseases globally. To that end, in March, we announced a clinical trial collaboration with Washington University School of Medicine to evaluate Motixafortide in this indication. Unlike multiple myeloma patients, the current standard-of-care mobilization agent GCSF carries significant risks and potential side effects for patients suffering from SCD. Furthermore, in many cases, current mobilization treatments failed to reliably yield optimal numbers of stem cells to facilitate gene therapy. As such, this patient population is in urgent need of a new, more effective mobilization regimen. Through this collaboration, we plan to conduct a proof-of-concept trial that will study Motixafortide as both a single agent and in combination with the immunomodulator natalizumab. The study will assess the safety and tolerability of the two regimens as mobilization agents of CD34 positive hematopoietic stem cells in patients with SCD and is anticipated to begin enrollment by the end of this year. I would now like to turn the call over to Mali Zeevi, our CFO, who will give a brief overview of our main financial results. Mali, please go ahead.

Mali Zeevi, CFO

Thank you, Phil. As is our practice, in our financial discussion, we will only go over a few significant items on this call: research and development expenses, net loss, and cash. Therefore, let me invite you to review the filings we made this morning, which contain our financials, 20-F, and press release for additional information. Before we get into our review of the quarter, let me remind everyone that this morning's strategic partnership announcement, described in a separate 6-K, included a $15 million non-dilutive upfront payment related to the license agreement, as well as $14.6 million in straight common equity investment. The transaction is subject to formal approval of the license agreement by the Israeli Innovation Authority as well as other closing conditions. Now to the quarter. Research and development expenses for the three months ended June 30, 2023, were $3 million, a decrease of $2.4 million or 44.3%, compared to $5.4 million for the three months ended June 30, 2022. The decrease resulted primarily from lower expenses related to NDA supporting activities related to Motixafortide, as well as lower expenses associated with the completed AGI-134 clinical trial. Let me now turn to net loss. Net loss for the three months ended June 30, 2023, was $18.5 million, compared to $7.4 million for the three months ended June 30, 2022. The company's net loss for the six months ended June 30, 2023, amounted to $30.7 million, compared to $12.4 million for the six months ended June 30, 2022. The increase in net loss for both the three and the six months ended June 30, 2023, was primarily due to a non-operating expense of approximately $7.8 million and $10.8 million, respectively, related to the revaluation of outstanding warrants, resulting from an increase in the company's share price over the preceding three and six months. The company emphasized that this expense did not impact its cash position as of June 30, 2023, nor its projected cash runway. Now turning to cash. The company held $32.8 million of cash, cash equivalents, and short-term bank deposits as of June 30, 2023. Again, this does not include the roughly $30 million in funding from this morning's strategic partnership announcement, nor does it include $30 million available to us under our debt agreement with Kreos Capital, which is tied to the payment of certain milestones. We believe we are well positioned to execute on our operating plans. And with that, I'll turn the call back over to Phil.

Phil Serlin, CEO

Thank you, Mali. In closing, as is our custom, I would like to take a few moments to summarize our key upcoming milestones. First, potential FDA approval of APHEXDA in September 2023. Next, potential U.S. launch of APHEXDA in stem cell mobilization shortly after approval. Initiation of a clinical trial in collaboration with Washington University School of Medicine to evaluate Motixafortide as monotherapy and in combination with natalizumab for CD34-positive hematopoietic stem cell mobilization for gene therapies in sickle cell disease in the second half of this year. Initial cohort data from the ongoing Columbia University investigator-initiated study, evaluating Motixafortide in combination with the PD-1 inhibitor LIBTAYO or cemiplimab and standard-of-care chemotherapy in first-line metastatic PDAC patients. With that, we have now concluded the formal part of our presentation. Operator, we will now open up the call to questions.

Operator, Operator

Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. The first question is from Joe Pantginis of H.C. Wainwright. Please go ahead.

Joe Pantginis, Analyst

Hi, everybody. Good morning and good afternoon. And congratulations on the licensing agreement. Nice to see this external validation. So first, Phil, let me turn first to the upcoming PDUFA date. We all hope it's going to be positive, obviously. Anything you can share from now about the launch logistics or trajectory regarding how soon do you think you'd be able to launch the drug if it is approved and any sort of rate-limiting catalyst that we need to consider?

Phil Serlin, CEO

Yes. So first of all, thanks very much. It's great speaking to you. I'm going to turn that question over to Holly. Holly, can you take that, please?

Holly May, President of BioLineRx USA

I would love to take that. So if approved by the FDA, we are ready to enter the market very quickly. So we have all of our supply and distribution set up. We have agreements with the major specialty distributors. We have, for the last couple of months, been out making connections with customers and all stakeholders from the payor level to institutional pharmacists to physicians, nurses, etc., and building relationships. Not quite yet talking down effect, because obviously, we need approval and label, but we have been building very strong relationships and from a supply and distribution perspective, we are absolutely 100% ready to go. And our intention is to enter the market as quickly as we possibly can. Did that answer your question? Or was there a second part?

Joe Pantginis, Analyst

Holly, it certainly did. Thank you very much for that. So I'd like to focus now on the Asian partnership and maybe some of the logistics around that. So I guess first, and I apologize, I've only gotten through the high level of the 6-K. So I apologize if it's in there. What is required or timelines for tech transfer and other factors around this agreement? And then also, I know there are multiple territories considered here. Do you have an indication that these territories would accept the FDA approval? Or could there be a particular geographical requirement for, say, a small bridging or confirmatory study? Thank you.

Phil Serlin, CEO

I'll address the second part of your question. Ella, please correct me if I say anything inaccurate. Many Asian countries will depend heavily on FDA approval. For instance, countries like Singapore or Hong Kong might find it easier to obtain approval even without conducting a bridging study. Conversely, we anticipate that larger markets such as China and Japan will likely require some form of bridging study to secure approval. Our partners are developing a tailored plan for the development and commercialization of stem cell mobilization specific to those countries. Regarding the requirements for tech transfer, we have several minor closing conditions to fulfill, including obtaining approval from the Israeli Innovation Authority. The 6-K contains more detailed information about this. We need to appoint a director, who will have a seat on our Board of Directors, along with some other small closing conditions. Once the closing is finalized—hopefully within the next three to four weeks, ideally by the end of Q3—we will move forward. We already have a draft development plan for pancreatic cancer as part of our agreement, and we will begin executing that while providing the necessary technology transfer. They will also start preparing the required regulatory submissions to advance in the development plan.

Joe Pantginis, Analyst

That's very helpful. And then one last, if you don't mind. In fact, I'm going to quote some of your prepared comments where you say, as is customary. So as is customary, I'm going to ask the question I ask all the time. So can you provide any guidance or body language as to the maturity of discussions in other territories?

Phil Serlin, CEO

Body language, you're very funny. I will just say, as I've said before, we are laser-focused on the U.S. right now. We obviously brought a deal right now in Asia. And so I can't say that we're not speaking to other parties as well. And we are obviously interested in maximizing the value of Motixafortide throughout the world. So we are continuing to discuss in other territories. But our focus right now is on the launch and on the approval. And we're only talking right now a PDUFA date of less than 10 days away. So right now, I think that we've got a lot on our plate right now between the tech transfer that's necessary for the Asian market and the launch in the U.S. I think that once we successfully reach those objectives, we will start to turn to other territories as well on a more intensive basis.

Joe Pantginis, Analyst

Absolutely. I really appreciate all the color, Phil, and good luck coming into the PDUFA.

Phil Serlin, CEO

Thank you very much.

Operator, Operator

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