Zacks Small Cap Research – BLRX: First Aphexda Sales Recognized – Technologist

By John Vandermosten, CFA

NASDAQ:BLRX

READ THE FULL BLRX RESEARCH REPORT

Since the 3Q:23 report in November, BioLineRx Ltd. (NASDAQ:BLRX) has been focused on Aphexda commercialization following drug approval in September 2023. Since then, two other trials evaluating motixafortide have dosed first patients. One was the gene therapy trial in collaboration with the Washington University School of Medicine for stem cell mobilization in sickle cell disease. The other was in collaboration with Columbia University for first line pancreatic ductal adenocarcinoma (PDAC) along with a PD-1 inhibitor and chemotherapy. Other recent announcements include a US Patent and Trademark Office (USPTO) notice of allowance for motixafortide manufacturing know-how and poster presentations at two transplant conferences. On March 26th, the company reported full year 2023 financial results and provided an operational update to stakeholders.

Aphexda is progressing along the regulatory path in China under the guidance of partner Gloria Biosciences. It was the subject of an investigational new drug (IND) application in February. If the IND is cleared, the bridging study for the drug in stem cell mobilization (SCM) could begin in 2H:24. In other areas of Asia which do not require a bridging study, Gloria should begin commercialization in the near term with revenues expected in the next few quarters.

The Aphexda commercialization effort in the United States has achieved positive coverage decisions for plans representing 95% of covered lives in the US, inclusion of Aphexda in the NCCN guidelines, formulary inclusion in 20% of the top 80 transplant centers and assignment of a Medicare reimbursement J-code are all accomplishments the team has achieved so far. Based on management predictions, penetration rates of 35% of the top 80 centers is expected by the end of 2Q:24 and 60% by year end 2024.

2023 Operational and Financial Results

BioLineRx’ first Aphexda sales were recorded in the fourth quarter 2023. Revenues of $4.8 million consisted of an upfront payment of $4.6 million related to the Gloria license agreement and $0.2 million in Aphexda product sales.

2023 results were announced on March 26, 2024 highlighting first revenues for Aphexda, a medication used to mobilize stem cells in patients with multiple myeloma undergoing autologous stem cell transplantation. A conference call was held with management along with the filing of Form 20-F providing additional information.

Below we summarize financial results for the twelve-month period ended December 31, 2023, compared to the same prior year period:

➢ Revenues were $4.8 million representing a portion of the upfront payment from Gloria Biosciences ($4.6 million) and Aphexda product revenues of $190,000 versus $0;

➢ Cost of revenues was $3.7 million which largely represents a pass through to Biokine as a portion of the upfront payment. Product gross margin, relating to Aphexda sales was 94%;

➢ Research and development expenses totaled $12.5 million, down 29% from $17.6 million, on account of lower expenses related to the new drug application (NDA) supporting activities related to Aphexda and lower expenses associated with the completed AGI-134 study;

➢ Sales and marketing expenses were $25.3 million, up 291% from $6.5 million on account of initiation of pre-commercialization activities related to Aphexda;

➢ General and administrative (G&A) expenses were $6.3 million, up 25% from $5.1 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;

➢ Impairment of intangible assets was $6.7 million compared to $0 with the change related to the impairment of AGI-134 as BioLineRx terminates the program;

➢ Non-operating expense was ($10.8) 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 ($0.1) million which was impacted by interest paid on loans offset by interest received from cash balances;

➢ Net loss was ($60.6) million compared with ($25.0) million, or ($0.06) and ($0.03) per share respectively.

Cash, equivalents and short-term bank deposits as of December 31, 2023 totaled $43.0 million, down from the year end 2022 balance of $51.1 million. 2023 cash burn was ($22.9) million and cash flows from financing were $15.1 million related to share capital and warrant exercise. Gloria made an upfront payment of $15 million in October 2023, of which only $4.6 million was recognized on the income statement. A portion of this amount was passed through to Biokine. Based on cash position and management’s expectations, BioLineRx expects to have sufficient resources to meet capital requirements into 2025.

Other Motixafortide Trials

Since December of 2023, BioLineRx partners have dosed first patients in two trials for motixafortide in gene therapy and PDAC. Both partners are universities in the United States, but the end indications are quite different. The first trial is sponsored by the Washington University School of Medicine and is evaluating motixafortide and natalizumab to mobilize CD34+ hematopoietic stems cells for gene therapy in sickle cell disease. The second trial is sponsored by Columbia University and is examining motixafortide treatment in combination with a checkpoint inhibitor and first line chemotherapies in PDAC.

Washington University School of Medicine Sickle Cell Disease

In late December, BioLineRx partner Washington University School of Medicine (WashU) in Saint Louis, Missouri dosed its first patient. WashU is conducting a proof-of-concept study to identify a more efficient CD34+ hematopoietic stem cell (HSC) mobilization regimen for patients with sickle cell disease (SCD). The study, registered under the NCT05618301 identifier, plans to enroll five patients diagnosed with SCD to assess the safety and tolerability of motixafortide alone and with natalizumab to produce HSCs for use in gene therapy. Patients will be followed for eight weeks for adverse event monitoring. This purpose of this trial is to evaluate the safety of stem cell mobilization in sickle cell patients and will not be followed by gene therapy treatment which may take place at a later time under another investigational new drug (IND) application.

Columbia University Pancreatic Adenocarcinoma

The investigator-initiated trial is a multi-center, randomized Phase IIb study evaluating motixafortide with cemiplimab, gemcitabine and nab-paclitaxel for effectiveness in treating pancreatic ductal adenocarcinoma. It combines the might of Regeneron and BioLineRx along with Columbia University in this combination drug trial. On February 28th, BioLineRx announced that the first patient had been enrolled in the CheMo4METPANC Phase II combination study. While checkpoint inhibitors have been effective in a number of cancers such as melanoma, this has not been the case for PDAC prompting investigators to examine the use of combination therapies to improve prognosis. Early pilot data was supportive of this proof-of-concept study where 64% of patients experienced a partial response and 27% experienced stable disease. Listed under NCT04543071 in the clinical trials database, the study first enrolled 11 participants to measure response rate and safety. Study objectives were met with the first group, and it is now expanding into a randomized Phase IIb study enrolling 108 participants in two arms. Early pilot phase data were presented at the Immuno-oncology 360° Summit on February 29, 2024.

AGI-134 Program Exit

AGI-134 is a synthetic alpha-gal immunotherapy for solid tumors which was acquired in 2017. The compound employs the body’s pre-existing, highly abundant, anti-alpha-gal, or anti-Gal, antibodies to induce a systemic, specific anti-tumor response to the patient’s own tumor neo-antigens. This response is designed to not only kill the tumor cells at the site of injection, but also to bring about a durable, follow-on, anti-metastatic immune response. BioLineRx has elected to terminate development of the AG-134 program to focus its efforts on further development and commercialization of motixafortide. A non-cash charge of $6.7 million was recognized on the income statement in the fourth quarter to reflect the program’s discontinuation. As part of the original acquisition of the asset, the sellers retained an option to re-acquire interests in the company that owned AGI-134 for a nominal amount. BioLineRx is awaiting a response from the sellers to see if they will exercise their reversionary option right.

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