BioLineRx Ltd.
Q4 2016 Earnings Call Transcript

Published: 23 Mar 2017

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx Fourth Quarter 2016 Conference Call. All participants are at present in listen-only mode. Following the management's formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] I'd now like to turn the call over to Ms. Vivian Cervantes of PCG Advisory to read the Safe Harbor statement. Vivian, please go ahead.

[Vivian Cervantes:]

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, believes, estimate, expect, intend, guidance, confidence, target, project, and 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 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 Mr. Phil Serlin, Chief Executive Officer of BioLineRx.

[Philip Serlin:]

Thank you, Vivian, and good morning to everybody. Thank you for joining us today on our year end 2016 earnings conference call. Earlier today, we issued two press releases. The first announced our acquisition of Agalimmune Ltd, and the second our year end 2016 results. You will find a copy of the press releases in the Investor Relations section of our Web site. They were also filed in 6-K this morning. Our announcement this morning of the Agalimmune acquisition is very exciting for us. As it is a first for BioLineRx with the assets and capabilities brought by the Company, playing to our strength through an expanded therapeutic pipeline and stronger focus on immuno-oncology. The transaction is a natural outcome of a very active year. With a reinvigorated organization centered on delivering its key corporate objectives in line with our vision, demonstrating meaningful milestones and achievements of our lead therapeutic platform BL-8040, including important collaborations with immuno-oncology leaders, Genentech, Merck, and MD Anderson and further validating our screening and drug development capabilities through an established immunology and fibrosis franchise with three programs announced under our Novartis collaboration. Our agenda this morning is to first provide you with the strategic rationale for our acquisition of Agalimmune, followed by a review of our accomplishments during the fourth quarter and full-year 2016. We will then discuss our financial results, enumerate our major target milestones for 2017 and 2018, and then open-up the call to your questions. Joining me on today's call are David Malek, BioLine's Chief Business Officer; Mali Zeevi, Chief Financial Officer; Abi Vainsteinm, Vice President Clinical and Medical Affairs; and Ella Sorani, Vice President Development. So let's get started. Many months in the making and after an extensive period of due diligence, we are very pleased to announce the acquisition of Agalimmune Ltd, a private U.K-based immuno-oncology company. We extend to them a warm welcome to the BioLineRx organization. The acquisition is in line with executing on the corporate objective we presented at our Investor breakfast last September. As we continue to build our clinical and near clinical portfolio, execute on strategic transactions as they arise, and increase our focus on the high value field of immuno-oncology. Specifically, Agalimmune brings to BioLine three key factors. First, a unique near clinical immuno-oncology asset AGI-134. Second, complementary immunology expertise and research facilities in the U.K., which support our strategic focus in this area, and third, a pipeline of novel early-stage program that we are excited to explore. Let me share with you our excitement over AGI-134, and then elaborate on how well this add to our existing immuno-oncology pipeline. AGI-134 is a synthetic alpha-Gal immunotherapy in development for solid tumors. Its activity relies on harnessing the body's pre-existing anti-Gal antibodies, which were our most common natural antibodies to induce a systemic specific anti-tumor response the patient's own cancer neo-antigens. The effect demonstrated this twofold. First, it kills the tumor cells of the site of injection, and second it brings about a durable, follow-on, systemic anti-tumor immune response. During treatment, AGI-134 is directly injected into a solid tumor, where it coats the tumor cell membranes, resulting in alpha-Gal being exposed on the tumor cell surface. Anti-Gal antibodies then bind to the alpha-Gal part of AGI-134 to induce the initial immune response that activate certain pathways of cellular cytotoxicity or cell death. This cytotoxicity generates immune-tagged cells and cellular debris in the tumor that induce the follow-on, systemic immune response by activation and expansion of T cells to the patient's own neo-antigens. This approach not only target the primary injectable tumor, but is also demonstrated efficacy against existing distant secondary tumors, and metastases. The mechanism of action also suggests the potential of long-term protection against future metastases. AGI-134 has completed numerous preclinical studies, demonstrating robust protection against the development of secondary tumors in a model of melanoma with a single dose only. Synergy has also been demonstrated in an initial -- in additional preclinical studies with -- when combined with a PD1 immune checkpoint inhibitor, offering the potential to broaden the utility of such immunotherapies and improve the rate and duration of responses in multiple cancer types. As you know while immuno-oncology is one of the most promising approaches for the treatment of cancer, and a lot of current immunotherapies are receiving widespread attention. Many solid tumors are still able to escape the surveillance of the immune system. This is because most immunotherapies work best in highly mutated tumors that are infiltrated with immune cells, termed hot tumors. Unfortunately, the overwhelming majority of human tumors are cold tumors. Therefore transforming a cold tumor into a hot tumor is a major objective in cancer treatment. Now with AGI-134, which harnesses naturally occurring pre-existing antibodies to elicit a tumor specific immune response, the resulting activation and clonal expansion of T cells to the patient's own neo-antigens has the potential to transform cold tumors to hot tumors, thereby significantly expanding treatment potential. We are very eager to move this program forward. AGI-134 is less than 12 months away from a target first-in-man clinical study, with discussions already having been held with both the FDA and the U.K's regulatory body, the MHRA. Proposed initial study indications include melanoma, liver, head and neck, colorectal, lymphoma, and breast cancer. AGI-134 adds an extremely promising new therapeutic program to our immuno-oncology pipeline, with a unique mechanism of action resulting not only in direct cytotoxicity of the injected tumor, but also cytotoxicity of distant existing metastases as well as the potential for long-term systemic anti-tumor immunity. And similar to our BL-8040 platform, we believe there are significant opportunities for combination treatments with other immunotherapies, especially checkpoint inhibitors. I also note the high hopes we’ve for a direct synergistic effect between AGI-134 and BL-8040. While AGI-134 induces a systemic adaptive response, which results in the stimulation and expansion of anti-tumor T cells. BL-8040 could further potentiate this response by augmenting the trafficking of T cells and subsequent infiltration into the tumor. In addition, the two agents together may have a synergistic effect on the tumor microenvironment, as each affects a different pathway resulting in a less immunosuppressive setting. Agalimmune now becomes a wholly-owned subsidiary of BioLineRx, transaction terms included a $6 million upfront payment with a 50-50 split between cash and stock. Future earn out payments are based on future development in commercial milestones with a similar 50-50 split between cash and stock. Now turning to our BL-8040 program. We continue to advance in three main areas of focus

[David Malek:]

Thank you, Phil, and good morning everyone. We are very excited as BioLineRx having just added Agalimmune to our cancer immunotherapy programs, in addition to our existing collaboration with some of the global leaders in the immuno-oncology space. As Phil mentioned, I will begin by discussing our immuno-oncology collaborations with Merck, Genentech, and MD Anderson, that are based on our BL-8040 platform technology. BL-8040 in a best-in-class CXCR4 antagonist, which is being evaluated for its potential to improve the benefit of immunotherapy in cancer types that are currently resistant to such treatment. BL-8040 has been shown in several clinical and preclinical studies to be a very robust mobilizer of immune cells and to be effective at inducing direct tumor cell death. Recent findings also suggest that CXCR4 antagonist, such as BL-8040 may be effective in improving the infiltration of immune cells, including T cells, into the tumor microenvironment. Therefore, when combined with PD1 antagonists such as Merck's KEYTRUDA or PDL1 antagonists such as Genentech's Atezolizumab, which enabled the activation of anti-tumor immune T cells. BL-8040 has the potential to enable activated T cells to better reach tumor cells in the fight against cancer. Our collaboration activity build on this. As we facilitate exploration of drug combinations that we believe could significantly increase the value and probabilities of success. And of note, our collaboration agreements relating to BL-8040 have no exclusivity which means that we fully retain our commercialization flexibility regarding the compound. Let me now provide you with an update on our immuno-oncology collaboration starting with our partnership with Merck. In January, we made our first foray into the immuno-oncology field as we announced the collaboration agreement with Merck to conduct a Phase 2a trial of BL-8040 in combination with Merck's anti-PD1 immunotherapy KEYTRUDA in the difficult to treat pancreatic cancer population. Advancing the program, in June, we announced the regulatory submission to conduct this Phase 2a trial named the COMBAT study. And as anticipated, we initiated the trial in the third quarter. To date, the program is tracking to expectations with enrollment ongoing. The Phase 2a study which centers in the U.S., Israel, and additional countries, is an open-label, multi-center, single-arm trial designed to evaluate the safety and tolerability of the combination of BL-8040 and KEYTRUDA, as well as multiple pharmacodynamic parameters, including the ability to improve infiltration of T cells into the tumor and their reactivity in up to 30 subjects with metastatic pancreatic adenocarcinoma. Following of the heels [ph] of the COMBAT study, we initiated a Phase 2b collaboration study using BL-8040 with KEYTRUDA in pancreatic cancer with MD Anderson cancer center. The open-label, single-center, single-arm Phase 2b study will focus on the mechanisms of action by which both drugs may synergize. In addition to assessing clinical response, the study will include multiple assessments to evaluate the biological anti-tumor effect induced by the combination. Building on our Merck and MD Anderson collaborations, we are also extremely excited with our Genentech immunotherapy collaborations, which we announced in September. It is a robust program with several Phase 1b study, investigating BL-8040 in combination with Atezolizumab, Genentech's anti-PDL1 cancer immunotherapy in multiple cancer indications. Under the agreement, Genentech would sponsor and conduct several Phase 1b trial in multiple solid cancer indications. The first group of studies including pancreatic cancer, gastric cancer, and non-small cell lung cancer, and there is potential for Genentech to add up to three more indications under the collaboration for other solid and liquid tumors. In addition, we will sponsor and conduct a Phase 1b study in maintenance AML patients under the collaboration. The studies are planned as open-label, multi-center, single-arm trial designed to evaluate the safety and efficacy of the combination of BL-8040 in the Atezolizumab. Upon completion of the study both parties will have the option to expand the collaboration to include a pivotal registration study. To conclude, our BL-8040 clinical development program is extremely robust, which has a multiple short-term goal and have quite a number of milestones coming up in the next 12 to 18 months, which still will come back to at the end of the prepared remarks. Let me now shift gears and elaborate on our multiyear collaboration with Novartis. We are very pleased to note that in 2016 we in-licensed three promising programs under our partnership with Novartis, thus building the foundation for immunology and fibrosis franchise. Specifically, in August, we announced the in-licensing of our first project for liver fibrosis treatment, and in particular non-alcoholic steatohepatitis or NASH. The drug candidate BL-1210 offers a novel mechanism for controlling liver fibrosis through modulation of the immune system. In this preclinical project, BioLineRx will address unique drug target that will modulate the immune system to ultimately reduce the liver fibrogenesis and therefore reduce liver scarring. By limiting the fibrosis process this way, the goal is to potentially control the disease progression. And we announced our second liver fibrosis project in September 2016 through the in-licensing of a novel treatment for various liver failure conditions, such as end-stage liver disease and NASH. This treatment BL-1220 is an orally administered, novel composition of sodium alginate. Preclinical studies obtained in animal models of liver impairment suggest that BL-1220 has strong hepato-protective effects. Collectively, the data demonstrate that BL-1220 can restore liver function. The technology could be directed toward a rapid regeneration of normal liver function in both acute and chronic conditions of liver injury. And our third project under the Novartis alliance is a novel, anti-inflammatory treatment for Dry Eye Syndrome. This project BL-1230 is a potent and selective cannabinoid receptor type 2 or CB2R agonist. The involvement of CB2R in immune modulation is well established and preclinical studies in three ocular inflammatory models have demonstrated that BL-1230 eye drops have significant anti-inflammatory activity, which attenuates the pathology and improves histological outcomes. In addition, we intend to explore the potential use of this compound in systemic inflammatory conditions. We continue to jointly screen and evaluate promising preclinical and clinical therapeutic candidate with Novartis. We continue to expect several more to enter our pipeline in 2017, and we look forward to additional announcements in the months ahead. Let me now turn the call back to Phil.

[Philip Serlin:]

Thank you, David. We are focused to deliver on our corporate objectives. As we turn to 2017, we draw your attention to the following upcoming corporate milestones over the next 12 to 18 months. We expect partial results from the immuno-oncology Phase 2a study for pancreatic cancer for BL-8040 in combination with Merck's KEYTRUDA by the second half of 2017 with top line results in the second half of 2018. We also expect completion of our stem cell mobilization Phase 2 study for allogeneic transplantation by year end 2017. Next, we expect to initiate a Phase 3 registration study in stem cell mobilization for autologous transplantation in the second half of this year. Further, we plan to initiate a number of Phase 1b immuno-oncology studies for BL-8040 in combination with Genentech's Atezo in multiple solid tumor indications, as well as in AML during the second half of 2017 with partial results in the second half of 2018. We plan to initiate a first-in-man clinical study with AGI-134, our new innovative immuno-oncology asset obtained as part of the Agalimmune acquisition during the first half of 2018. Lastly, we continue to screen and review innovative projects under our Novartis strategic collaboration, as well as outside of the collaboration as well as outside of the collaboration both for our own pipeline as well as for our joint venture in China and we anticipate continued in-licensing of value add novel compounds. Before turning the call over to the financial discussion, I would like to spend a minute or two updating you on BL-7010, our product for the treatment of celiac disease and gluten sensitivity. Over the last two years, we put enormous efforts into examining alternative development and commercialization pathways for BL-7010 in addition to the celiac disease pathway, including as a food supplement to potentially address the market for gluten sensitivity. Just to recall, in the U.S., BL-7010 for celiac would be fully regulated as a drug and the development pathway through the NDA is very long at this point estimated to be another seven to eight years at least. At the same time, we continue to evaluate the pathway for celiac disease in Europe, which is shorter perhaps for approval purposes, but it's very similar to the U.S for marketing purposes. Unfortunately, this become increasingly apparent that in light of the scientific, regulatory, and market challenges attending the development of a product for gluten sensitivity in general, as well as celiac disease in particular, the probability of commercial success for BL-7010 [technical difficulty] immuno-oncology, we’ve concluded that it would be preferable not to continue to invest in research and development efforts related to BL-7010 and to allocate our resources in management attention to projects that have a higher probability of commercial success. In light of all this, we have notified the licensor of our decision to terminate the project. I must say that this was not an easy decision to take, but I'm sure it is the right one and that it will be beneficial for our shareholders going forward. I’d now like to turn the call over to Mali Zeevi, our CFO, who will give a brief overview of our key financial statement items. Mali, go ahead.

[Mali Zeevi:]

Thank you, Phil. Please note that we invite you to review our annual 20-F, which contains our financial, operating and financial review and press release for additional information. I will only go over through significant items on this call, research and development expenses and cash. Research and development expenses for 2016 were $11.2 million, a decrease of $0.3 million or 2.6%, compared to $11.5 million for 2015. The decrease results primarily from increase in spending on BL-7010, partially offset by increased spending on new projects. And on to cash, we ended 2016 with almost $36 million in cash, cash equivalents and short-term bank deposits. Our financial results provide us with a flexibility to pursue [ph] the programs into the first half of 2019. With that, we have now concluded the formal part of our presentation. Operator, we are now opening up the call to questions.

[Operator:]

Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions] The first question is from Richard [indiscernible]. Please go ahead.

[Unidentified Analyst:]

Hello. Thank you, Phil and other executives at BioLine. I had a question about the Agalimmune acquisition. I know that currently Novartis is set up to acquire to further license of drugs that are coming out of Israel. Will Novartis also be in a position to select candidates from the Agalimmune pipeline or that -- is that just exclusive to Israeli products? Thank you.

[Philip Serlin:]

Hi, thanks. Hi. Good morning and thanks for your question. On a contractual basis, the agreement and the collaboration with Novartis is limited to Israeli sourced assets. Novartis can as well as any other company can look at and speak to us about other assets, but this Agalimmune asset AGI-134 plus the other assets that are in their pipeline are not related to the framework agreement with Novartis.

[Unidentified Analyst:]

Thank you, Phil. About how many products are in the Agalimmune pipeline currently?

[Philip Serlin:]

David, can you answer that question?

[David Malek:]

Sure. Hi. Thanks for the question. I think one of the reason we’re excited about this acquisition is obviously AGI-134 as the leading asset in the -- clinical asset that we have high hopes for, but I think the other one as you mentioned is the fact that Agalimmune has developed several additional projects all revolving around the similar mechanism of action for targeting alpha-Gal. They’ve approximately four earlier stage projects basically all with immuno -- immunology, immunotherapy, immuno-oncology and all basically in the area or in the target of alpha-Gal, but with different moieties and different ways, people like to target that biological target which we find to be quite exciting and quite unique for this company.

[Unidentified Analyst:]

Yes, sounds great. And thank you, David and Phil for taking my question.

[Philip Serlin:]

Thanks very much.

[Operator:]

[Operator Instructions] The next question is a follow-up from Richard [indiscernible]. Please go ahead. Richard are you with us?

[Unidentified Analyst:]

Oh no, I already did. I’m off now. Thank you. That’s all the question I have.

[Operator:]

Okay, great. There are no further questions at this time. Before I ask Mr. Phil Serlin to go ahead with concluding statements, 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 1-888-782-4291. In Israel, please call 03-925-5940. Internationally, please call 972-3-925-5940. Mr. Serlin, would you like to make your concluding statement?

[Philip Serlin:]

Yes, thank you. I would like to thank all of you for joining us on today's call and for your support. We are very excited about our prospects ahead and remain on target to delivering our objectives with a focus on building a pipeline of assets that leverages our scientific reach and expertise, specifically in the oncology, immunology space. We look forward to keeping you updated as we execute on our plans. Thank you very much.

[Operator:]

Thank you. This concludes the BioLineRx fourth quarter 2016 conference call. Thank you for your participation. You may go ahead and disconnect.