BST Trade Alert: May 28, 2013
May 28, 2013
Recommendation:
Buy BioLineRx (NASDAQ: BLRX) up to $1.85 per share.
About the Company:
BioLineRx is a fascinating Israeli biotech.
The company was founded in 2003 by Teva Pharmaceuticals (NYSE: TEVA), a global leader in the generic drug industry with a market cap of $33 billion. Just four years later it completed an IPO and began trading on the Tel Aviv Stock Exchange. And in 2011, the company’s ADRs began trading on NASDAQ.
TEVA continues to be a major investor in BLRX as it owns approximately 7% of the company’s outstanding shares.
BioLineRx employs a three-stage business model that is quite unique.
Stage 1 (the bench stage) involves acquiring molecules with promising futures from academic institutions. Each molecule goes through a stringent selection process which evaluates its scientific and marketing potential.
In stage 2 (the bedside stage), the company takes the molecule through pre-clinical and early-stage clinical testing. This stage typically ends once the company has demonstrated the molecule’s proof of concept in humans.
Stage 3 (the partner stage) is where the company partners up with a large drug company. A strategic partnership is formed to finish clinical development and bring the product to market.
This business model affords BioLineRx a couple of major advantages.
First off, it has enabled the company to build a large development pipeline in relatively short order.
BioLineRx currently has six drugs in clinical development, including one with huge market potential in late-stage trials. And it has 5 additional programs in pre-clinical testing that represent multiple next generation opportunities.
What’s more, the pipeline’s growing steadily as a new molecule enters the clinic every 12 to 24 months.
Another major advantage of this business model is that it significantly reduces development costs. By bringing in a partner after proof of concept, BioLineRx avoids footing the bill for expensive phase 3 clinical trials.
So, what therapeutic areas is the company focusing on?
The company looks for compounds that have advantages over currently available drugs or that address unmet medical needs. As such, they’re developing drugs for cancer, cardiovascular disease, inflammatory bowel disease, and neuropathic pain.
Let’s take a close look at one of the leading drug candidates now…
About the Drug:
In September 2012, BioLineRx completed an important deal with Biokine Therapeutics. The deal gave BioLineRx exclusive, worldwide rights to develop and commercialize BL-8040.
It’s a phase 2 ready drug candidate for the treatment of acute myeloid leukemia (AML) as well as other types of blood cancers.
BL-8040 is a short peptide that functions as a high affinity antagonist of the chemokine receptor, CXCR4. This important receptor is directly involved in tumor progression, angiogenesis, metastasis, and cell survival. It’s not only over-expressed in over 70% of human cancers, but its expression also often correlates with disease severity.
According to Professor Amnon Peled of the Gene Therapy Institute, Hadassah Medical Center…
“CXCR4 is one of the most important cancer targets discovered in recent years. It is essential for multiple aspects of cancer progression in over 70% of all cancers, including leukemia, breast, lung, colon, and prostate cancer. BL-8040, as a CXCR4 antagonist, therefore has the potential to target and kill various cancer cells, and studies in animal models of the disease have shown that this agent may stimulate hematological cancer cell death. In addition, for many blood cancers, the bone marrow provides protection for malignant cells from chemotherapeutic agents. Therefore, by inducing mobilization of these cells into the peripheral blood, CXCR4 antagonists literally “flush out” the malignant cells from their hiding places.”
How does the drug work?
It binds to CXCR4 on tumor cells and blocks its availability to the ligand CXCL12. This leads to cell death or release of tumor cells from their microenvironment resulting in heightened exposure to chemo- and bio-based anti-cancer therapy.
Pre-clinical testing showed that BL-8040 has a promising future as a potential treatment for a variety of cancers. It inhibited the growth of tumors in multiple myeloma, non-Hodgkins lymphoma, leukemia, non-small cell lung carcinoma, neuroblastoma, and melanoma.
But that’s not all…
The drug also showed it’s efficient, both alone and in combination with the anti-cancer drug Rituximab, in reducing bone marrow metastasis of lymphoma cells and stimulating lymphoma cell death.
BL-8040 recently completed a successful phase 1/2 clinical trial in 18 multiple myeloma patients.
The drug demonstrated an excellent safety profile at all doses tested. And it was highly effective in mobilizing hematopoietic stem cells and white blood cells from the bone marrow to the peripheral blood.
What’s more, BL-8040 also mobilized cancer cells from the bone marrow and other sites. This means it may sensitize these cells to chemo- and bio-based anti-cancer therapy. And most importantly, the drug showed a direct anti-cancer effect by inducing cell death.
The next step is a phase 2 trial in up to 50 AML patients.
The company announced in April that it will soon begin a phase 2 trial of BL-8040 in AML. The study will evaluate the safety and efficacy of BL-8040 in adult patients with relapsed or refractory AML. And it will also assess BL-8040’s ability to mobilize cells from the bone marrow to the peripheral blood and induce cell death.
This exciting phase 2 trial is slated to begin in the current quarter. Initial results are expected in the fourth quarter of 2013.
About the Market for This Product:
AML is a cancer of the myeloid line of blood cells. It’s characterized by the rapid growth of abnormal white blood cells that accumulate in the bone marrow and interfere with the production of normal cells.
This form of cancer is the most common acute leukemia affecting adults, and it’s incidence increases with age. Although AML is a relatively rare disease, accounting for about 1.2% of cancer deaths in the US, it’s incidence is expected to increase as the population ages.
First-line treatment for AML is chemotherapy, which is divided into induction and post-remission therapy.
The goal of induction therapy is to achieve complete remission by reducing the number of leukemic cells to an undetectable level. The goal of post-remission therapy is to eliminate any residual undetectable disease and achieve a cure.
Unfortunately, induction therapy is not always successful and AML does return in some patients.
For patients with relapsed AML, the only proven potentially curative therapy is hematopoietic stem cell transplant. The sole FDA approved drug for AML, Mylotarg, was voluntarily withdrawn from the market by Pfizer in 2010.
No question about it, there’s a huge need for a more effective AML treatment.
And if BL-8040 is successful, it could be a significant revenue stream for BioLineRx. The leukemia therapeutics market was valued at $6.3 billion in 2010. And that market is expected to grow to a stunning $11.3 billion by 2020.
About the Potential Catalyst:
Initial results from the phase 2 trial of BL-8040 in AML are expected during the fourth quarter of 2013.
About the Shares:
BLRX got off to a strong start in 2013. The stock surged from a low of $2.40 to a high of $4.85 in late January. It was an impressive 102% gain in just one month’s time!
However, the stock has since given up those gains and more.
In late March, BLRX plunged to a low of $1.60 per share on disappointing phase 2/3 trial results for the company’s experimental schizophrenia drug. The trial failed to show the drug provided any treatment benefit over the leading anti-psychotic drug prescribed for schizophrenia.
And the company discontinued the trial as a result.
While the news is certainly a short-term negative, we think the huge price drop provides an attractive entry point. Once investors get over the failed trial, we expect them to turn their attention to the phase 2/3 trial of BL-8040.
Of course, the potential for positive trial data in the fourth quarter will likely prompt investors to pile into BLRX ahead of the results. With the shares trading so low, investors who buy in now should see nice gains over the next several months.
Grab your shares of BLRX as soon as possible. You definitely don’t want to miss out on any potential rally off these extremely low levels.
Key Facts:
| Company: | BioLineRx |
| Ticker: | BLRX |
| Recent Price: | $1.68 |
| Market Cap: | $36 million |
| Avg. Daily Volume: | 212,066 shares |
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Category: BST Trade Alert
