BLRX: On Your Marks, Get Set…
NASDAQ:BLRX
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2Q:23 Operational and Financial Results
It had been relatively quiet between the first and second quarter report with only the start of the Phase II metastatic pancreatic cancer trial evaluating motixafortide announced in July. However, along with the second quarter report, BioLineRx Ltd. (NASDAQ:BLRX) revealed an exclusive agreement for development and commercialization in Asia. The arrangement includes an upfront payment and investment in BioLineRx that will materially extend the company’s cash runway and allow for sales throughout China, Japan and other Far East territories.
Second quarter earnings were announced on August 30, 2024 concurrent with intense background work to prepare for the anticipated FDA approval of motixafortide for stem cell mobilization in multiple myeloma patients. A conference call was held with management along with the filing of Form 6-K providing additional information. First and foremost in investors’ minds is the target action date of September 9, 2023 for motixafortide, or Aphexda as it is branded, for stem cell mobilization in multiple myeloma patients.
In this report, we will review the latest news reported as well as 2Q:23 operational and financial results. Since our previous update, BioLineRx has oriented its efforts towards pre-commercialization activities. A discussion of BioLineRx’ plans to commercialize Aphexda can be found in a previous report entitled BLRX: Self-Commercialization in the US. It discusses the company’s plans, reviews Aphexda’s mechanism of action and addresses the real-world benefits of an improved approach to stem cell mobilization.
Below we summarize financial results for the three-month period ended June 30, 2023, compared to the same period ending June 30, 2022:
➢ Research and development expenses totaled $3.0 million, down 44% from $5.4 million, on account of lower expenses related to the new drug application (NDA) supporting activities related to motixafortide and lower expenses associated with the completed AGI-134 study;
➢ Sales and marketing expenses were $5.6 million, up 384% from $1.2 million on account of initiation of pre-commercialization activities related to motixafortide;
➢ General and administrative (G&A) expenses were $1.3 million, up 24% from $1.0 million due to a rise in payroll and related expenses due to an increase in headcount and share-based compensation, as well as small increases in a number of G&A expense categories;
➢ Non-operating expense was ($7.7) million reflecting changes in fair-value adjustments of warrant liabilities on the balance sheet as the company’s share price rose;
➢ Net financial expenses amounted to ($0.9) million which was impacted by interest paid on loans partially offset by interest received from cash balances;
➢ Net loss was ($18.5) million compared with ($4.9) million, or ($0.01) and ($0.01) per share respectively.
Cash, equivalents and short-term bank deposits as of June 30, 2023 totaled $32.8 million, down from the year end 2022 balance of $51.1 million. Cash burn during 2Q:23 amounted to ($9.8) million and cash used in financing was ($134,000) related to repayment of lease liabilities. The substantial increase in cash burn year to date reflects the aggressive effort to prepare for the approval of motixafortide which is anticipated in a few days. In September 2022, BioLineRx entered into a $40 million loan agreement with Kreos Capital, and $10 million was drawn. The remaining $30 million will be available in two additional tranches upon the achievement of unspecified milestones. BioLineRx’ deal granting rights to two entities in Asia will also contribute to cash balances in the amount of almost $30 million, which is expected to extend the need for more capital by several quarters.
Asia License Agreement
Along with its second quarter earnings release, BioLineRx announced that it had signed an exclusive license agreement to develop and commercialize motixafortide in Asia along with an equity investment from two partners. Features of the arrangement include:
➢ $15 million upfront payment
➢ Potential development, regulatory and sales milestones
➢ Tiered double-digit royalties
➢ Initiation of a registrational study in stem-cell mobilization in China
➢ Initiation of a randomized Phase II/III study in first line pancreatic cancer
➢ Equity investment of $14.6 million
The equity investment was made at $2.136 per American Depository Share (ADS) with no warrants attached. This represents 6,829,137 shares. Other closing conditions of the transaction include the requirement that it be approved by the Israeli Innovation Authority within four months. While only select financial details are public, this appears to be a standard agreement for a strong candidate and if successful will open up one of the largest markets in the world to motixafortide in multiple indications. We expect to update our valuation model to reflect this following FDA approval and launch of motixafortide in the United States.
The license agreement has been made between BioLineRx and two separate entities. The first is Guangzhou Gloria Biosciences Co., Ltd., a company organized under the laws of the People’s Republic of China. The second company is Hong Seng Technology Limited, a company organized under the laws of the Special Administrative Region of Hong Kong.
Additional detail in the Form 6-K filing show more specific detail including that BioLineRx is further entitled to $49 million based on reaching development and regulatory milestones in China and Japan and up to $197 million in sales milestones based upon defined sales targets. Royalties will range from 10-20% of revenues. A caveat is that if FDA approval for motixafortide does not occur by the end of 2023, the development and regulatory milestones will only be partially payable and royalty rates drop to single digits. Further discussion of the arrangement is available in the filing.
Motixafortide Pancreatic Trial
BioLineRx began a Phase II clinical trial in first line metastatic pancreatic cancer as announced in a July 17th press release. The investigator-initiated effort will be evaluating motixafortide based on the success of earlier work done in a single arm pilot study. A clinicaltrials.gov entry (NCT04543071) details the design and endpoints among other pieces of information.
The study, sponsored by Columbia University, will compare treatment with motixafortide combined with a PD-1 inhibitor (cemiplimab) and chemotherapy to chemotherapy alone in 102 subjects. This builds on an adaptive single arm study that allowed for expansion if data was supportive. We anticipate that BioLineRx’ primary development activities will shift to pancreatic ductal adenocarcinoma (PDAC) following approval of motixafortide for stem cell mobilization.
The company provides a description of the agent’s mechanism of action explaining that motixafortide takes advantage of the expression of the CXCR4 receptor on different immune cells and orients the immune system against the tumor. Among CXCR4-expressing immune cells, some exhibit anti-tumoral activity, such as effector T cells and some exhibit pro-tumoral activity and support tumor growth. By blocking the CXCR4 receptor, motixafortide was shown in a Phase II study in pancreatic cancer patients to enhance anti-tumoral activity and inhibit the pro-tumoral activities by modulating the effector/suppressor cell ratio towards a proinflammatory profile.
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