BioLineRx Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the BioLineRx third quarter 2024 financial results conference call. All participants are presently in a 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.

Thank you, operator. Welcome, everyone. Thank you for joining us on our third quarter 2024 results conference call. Earlier today, 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 6K. I'd like to remind you that certain statements we've made during the call will be forward-looking. Because such statements deal with future events and are subject to many risks and uncertainties, actual results may differ materially from those in the forward-looking statements. For a full discussion of these risks and uncertainties, please review our annual report on Form 20F and our quarterly reports on Form 6K that are filed with the U.S. Securities and Exchange Commission. At this time, it is now my pleasure to turn the call over to Mr. Phil Serwin, Chief Executive Officer of BylineRx.

Thank you, John, and good morning, everyone. And thank you for joining us on today's call. I'll begin this morning with a recap of the significant licensing agreement that we announced last week with AirMid Limited, followed by a review of our third quarter performance, and then Molly Zevi, our Chief Financial Officer, will briefly recap our financials. Afterwards, we will take your questions. Ellis Serrani, our Chief Development Officer, is also available for Q&A. Last week, we announced that we executed an exclusive license agreement with AirMid Limited, the parent company of Gameta Cell Limited for Motexifortide, which is sold in the U.S. under the brand name Afexta. Recall that Afexta is our FDA-approved and commercially available stem cell mobilization agent, indicated in combination with GCSF for the collection and subsequent autologous transplantation in patients with multiple myeloma. The agreement covers all indications with the notable exception of solid tumors like pancreatic ductal carcinoma, or PDAC, and all territories with the exception of Asia, where we previously entered into a license agreement with Gloria Biosciences for Metixifortide in that region. This transaction is very beneficial for BioLine RX, with a $10 million upfront payment, $87 million in potential commercial milestones, and very healthy royalties of between 18 and 23%. In addition, we received another $9 million in the form of an equity investment from Highbridge Capital. This aggregate cash influx has enabled the company to finalize an agreement with BlackRock to repay a significant portion of its outstanding debt and restructure the remaining debt on favorable terms. With the transfer of our commercial program to AirMid GametaCell, we have also reduced our cash burn in a very substantial manner, with our cash runway now extending into 2026. And I will provide more financial details about this shortly. Lastly, the agreement allows us to return to our drug development roots with a streamlined organization that has a proven track record in clinical development and regulatory affairs. To that end, we will continue to support development of metixifortide in metastatic pancreatic cancer through our existing collaborations, which have the potential to create near-term value for shareholders. Over the next year, we also plan to evaluate early-stage clinical assets in the areas of oncology and rare disease. where we think we can leverage our expertise in complex drug development and create long-term shareholder value. We believe the choice of Gametacel as our commercial partner is a fortuitous one. Gametacel adds a highly differentiated mobilization agent, Inifexa, to a commercial portfolio that already includes AmiSearch, the first and only FDA-approved NAM-modified cell therapy for patients with hematologic malignancies in need of an allogeneic hematopoietic cell transplant. We envision GametaCell meaningfully growing effects to sales by leveraging its portfolio for improved access to its transplant center customers. As part of this transaction, GametaCell is seeking to transition a significant number of former members of the BioLine Rx commercial team who have been so instrumental in the early commercial success of Effecsta, driving penetration to over 40% of our target centers and capturing 10% of the market at the end of Q3. In addition, recall that Effecsta is also being evaluated in patients with sickle cell disease undergoing gene therapy, with two phase one investigator-initiated trials ongoing. one at Washington University in St. Louis and the other at St. Jude Children's Research Hospital. We view this as another opportunity for long-term value creation. Quickly reviewing the terms of the agreement, in exchange for the license, we received a $10 million upfront payment. We also are eligible to receive up to an additional $87 million of potential commercial milestones, plus royalties on net sales of effects ranging from 18% to 23%. We will also supply Metixa Fortide on a cost plus basis, both for commercial and development supply. In addition, certain funds managed by Highbridge Capital Management have made a $9 million equity investment in BioLineRx. This equity investment and the combined future potential commercial milestones from licensing agreements with Aramid and Gloria Biosciences, as well as royalties on net sales, are expected to provide a strong foundation for our company. Looking now at the new BioLine RX, concurrent with the partnering transaction, we are shutting down our U.S. commercial operations. I would like to thank Holly May, who headed our U.S. commercial operations, for her tireless commitment to building a world-class team and ensuring a successful launch. It is largely due to her efforts that we are experiencing strong momentum for Afexta, particularly among top-tier transplant centers, that are leaders with respect to installing new therapies on formulary and into daily clinical practice. This transformation, along with additional cost reductions, will allow us to reduce our annual cash burn by more than 70% effective January 1st, 2025, and refocus our efforts on clinical development in Israel. With the proceeds from this transaction, we entered into an agreement with BlackRock to repay $16.5 million of the approximately $29 million in outstanding debt, with the remaining balance restructured at terms very favorable to our company, including at the pre-existing annual interest rate of 9.5%. With potential revenue from two licensing agreements, together with a significantly streamlined organization, with a greatly reduced cost structure and restructured debt, we are very well positioned to advance our near and long-term value creation strategy for investors. At this point, I'd like to review our PDAC program, which we continue to advance through our existing collaborations that require de minimis investment. Recall that motixifortide is an inhibitor of CXCR4, which plays a critical role in establishing and maintaining tumors. It is highly expressed in over 20 different tumor types, and it is estimated that greater than 70% of PDAC patients show an overexpression of CXCR4. PD-1 and PD-L1 inhibitors have demonstrated significant efficacy in multiple solid tumor types, but no survival benefit in a large randomized PDAC trial comparing combination immunotherapy and standard of care chemotherapy versus standard of care chemotherapy alone. In contrast, a phase two trial in second line patients with metixifortide plus PD-1 inhibitor plus standard of care chemotherapy demonstrated improvements across all study endpoints. So while PDAC is an inherently challenging cancer to treat, there is very strong scientific and clinical rationale for continued development. Motixifortide is being evaluated in an active phase 2B study led by Columbia University known as Chemo4MetPank, which is supported equally by BiolineRx and Regeneron. Recall that this trial had an initial pilot phase, and based on the results of this pilot phase, an assessment would be made on advancing to an expansion phase of the study. Seven of 11 patients in the pilot phase, or 64%, experienced a partial response, of which five were confirmed PRs as of the July 2023 cutoff date, with one patient experiencing complete resolution of the metastatic lesion in the liver. Along with the three patients, or 27%, experiencing stable disease, This resulted in a disease control rate of 91%. These findings compare favorably to historic partial response and disease control rates of 23% and 48%, respectively, reported with the current standard of care. Based on these compelling data, we, along with Columbia and Regeneron, agreed to amend the original expansion phase of the study from a single arm expansion study with a target enrollment of 30 patients to a much larger randomized phase 2B study of 108 patients with two arms. Metixifortide, Regeneron's PD-1 inhibitor simiplimab, and standard of care chemotherapy versus standard of care chemotherapy alone. The trial's primary endpoint is progression-free survival. Secondary objectives include safety, response rate, disease control rate, duration of clinical benefit, and overall survival. To further accelerate enrollment, Columbia plans to activate an additional three trial sites over the next two quarters, in addition to the two that are currently enrolling. We anticipate that the trial should be fully enrolled by 2027. Metixifortide is also planned to be evaluated in a planned Phase IIb PDEC study in China, led by Gloria Biosciences, pursuant to the license agreement that we signed with Gloria in October of last year. That study will evaluate metixifortide in combination with Gloria's commercially approved PD-1 inhibitor, Zimbarilumab, and standard of care combination chemotherapy in first-line pancreatic cancer. The opportunity for us to help patients in dire need of effective new treatment options while addressing a multi-billion dollar market opportunity is significant. PDAC is a very difficult cancer to treat given that it is often asymptomatic until stage four. It has the highest mortality rate among solid tumor malignancies. Globally, nearly half a million people were diagnosed with PDAC in 2020 alone. We look forward to keeping you up to date on our progress in this important program. Now I'd like to briefly review some key performance indicators for Effecsta during the third quarter, as I believe they reflect the many benefits to transplant centers and patients that key decision makers are increasingly realizing particularly as they pertain to center efficiency and economics. As we've noticed previously, transplant centers, the end users of Effecsta, are a well-defined group in the U.S. Approximately 80 of the 212 centers in the U.S. perform roughly 85% of all transplant procedures. Among those 80 centers, by the end of the third quarter, we secured formulary placement at institutions managing over 40% of transplant procedures. We also continued to see steady growth in the number of centers reordering product. Furthermore, we saw an approximate 40% increase in the number of institutions ordering effects during the third quarter as compared to the second quarter. As the third quarter was only the third full quarter since launch, we are very pleased with the traction that we've seen, especially with the availability of Plurix A4 or generic Mozabil, which entered the market shortly before our launch. In fact, During the third quarter, we achieved a 10% market share milestone of total CXCR4 inhibitor usage in the U.S., which compares Afexda to branded Mozaville and generic Plurixifor across all indications. We believe that this strong growth trajectory will continue through GametaCell's commercial program, building on the strong foundation in place. As we have discussed on prior conference calls, there are a number of factors that are driving the need for more effective mobilization regimens. First, multiple myeloma patients are getting older, and these patients are more challenged to achieve the required stem cell yields for transplantation. In addition, the growing use of quad induction therapies, while beneficial to patients, can negatively impact stem cell yields. Last quarter, we cited the Perseus trial, in which a recent FDA-approved quad therapy was shown to reduce risk of disease progression or death in multiple myeloma patients by 60%. pointing to the trend toward quad therapies as a new standard of care induction therapy. It is against this backdrop of a rapidly changing SAMHSA mobilization treatment landscape that we believe Afexta can address significant unmet needs in the market. We are pleased to have entrusted its future success to an ideal partner like GametaCell with the expertise and infrastructure to maximize Afexta's commercial potential. Now let me turn the call over to Molly to provide a financial update. Molly, please go ahead.

Thank you, Phil. As is our practice, I will go over the most significant items in our financial statements, revenues, cost of revenues, research and development expenses, sales and marketing expenses, net loss, and cash. I invite you to review the 6K filing we made this morning that contains our financials and press release. Total revenue for the three-month ended September 30, 2024, was $4.9 million. The company did not record any revenue during the third quarter of 2023. Revenue for the quarter reflects a portion of the upfront payment from the Gloria Biosciences License, which amounted to $3.2 million, as well as $1.7 million for the net revenue from product sales of Ofexta in the U.S. Cost of revenue for the three months ended September 30, 2024, was $0.8 million. The company did not record any cost of revenue during the third quarter of 2023. Cost of revenue for the quarter primarily reflects the amortization of intangible assets, royalties on net product sales of a factor in the U.S., and cost of goods sold on product sales. Research and development expenses for the three months ended September 30, 2024, were $2.6 million, compared to $2.7 million for the same period in 2023. The decrease resulted primarily from lower expenses related to the termination of the development of AGI-134 and a decrease in payroll and share-based compensation. Sales and marketing expenses for the three months ended September 30, 2024, were $5.5 million, compared to $8.1 million for the same period in 2023. The decrease resulted primarily from lower expenses of commercialization activities related to Motexa fortis. The higher expenses in the corresponding period of 2023 reflect the ramp-up of pre-commercialization activities related to motixifortide. General and administrative expenses for the three months ended September 30, 2024, were $1.4 million compared to $1.5 million for the same period in 2023. The decrease resulted primarily from small decreases in a number of GNA items. Net loss for the three months ended September 30, 2024 was $5.8 million compared to net loss of $16 million for the same period in 2023. The net loss for the 2024 period included $0.8 million in non-operating income compared to non-operating expenses of $3.1 million for the same period in 2023. both primarily related to non-cash re-evaluation of warrants. As of September 30, 2024, the company had cash, cash equivalents, and short-term bond deposits of $29.2 million. Following the out-license to Airmid, the equity investment from Highbridge, and the debt repayment to BlackRock, the company's cash, cash equivalents, and short-term bond deposits are expected to be approximately $20 million, which we believe will be sufficient to fund operations into 26 as currently planned. And with that, I'll turn the call over to Phil.

Thank you, Molly. In closing, I would like to take a moment to summarize our revised milestones. Over the next two quarters, we anticipate adding three new clinical trial sites to the ongoing chemo for MedPank Phase 2B randomized clinical trial in first-line PDAC sponsored by Columbia University. and anticipate interim data in 2026. Working with Gloria Bio, we look forward to continued progress with the planned stem cell mobilization bridging study and the phase 2B combination study, evaluating metixifortide in first-line pancreatic cancer. Finally, in 2025, we will evaluate additional early-stage clinical assets for in-licensing and further development, seeking to add one new asset in 2025 and an additional one in 2026. With that, we have now concluded the formal part of our presentation. Operator, we will now open the call to questions.

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you would like to ask a question, please press star 1. If you would like to withdraw your question, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Please stand by while we poll for your questions. The first question is from... Joe Pantgenis of H.C. Wainwright. Please go ahead.

Hi, everybody. Good morning. Good afternoon. I've got a few questions, if you don't mind. So first, Phil, I just wanted to make sure I heard you correctly with regard to pipeline growth. Did you say potential enlicing of one asset in 2025 and one in 2026?

Yeah, I think that's what our plan is. We have a number of assets that we're already looking at. It's hard to say, you know, BD things don't always go exactly according to plan, but I think overall that's our plan.

No, of course. Okay. So then going to your current announcements, and thank you for all the details today that were very helpful. With regard to, say, the pancreatic program, I guess, how do we mix that with, you know, the potential for metixifortide in additional solid tumor indications plus the ability to potentially have a business development discussions around that, and can you discuss the level of maturity of these discussions?

Yeah, so as far as the PDAC, you know, I think that we look at PDAC as sort of as a, you know, prototype, so to speak, for other solid tumors. We are... probably not going to put a lot more money at this point into PDAC. You know, as you know, we have the two collaborations that are ongoing that are really running in the background with, you know, at a very, you know, low cost to the company, basically drug, you know, the supply of drug product. And so we think the best use for our current capital is to bring some new assets into the pipeline while these programs are still ongoing. And we hope that there will be some initial data sometime, you know, next year, I'm sorry, next in 2026, some interim data from the Columbia study, which then would serve as, you know, probably the launching off point for some potential business development discussions, et cetera.

That's very helpful. And then with regards to the MRID effects to sale, a couple of things here. So just from a logistical standpoint, do they have any potential option on the solid tumor program?

They do not.

They do not. Okay, that's simple enough. And I guess two things here. So with regard to the company restructuring, it sounds like that it's mostly or largely the field force that they'll be assimilating?

Not necessarily. I mean, you know, I don't think we're at liberty to tell you, you know, to speak for them, but they are taking a piece of our organization or a number of our personnel, and I don't think it's only limited to customer-facing employees.

Okay. And then my last question is, I guess, from a financial standpoint and the important details you shared with regard to the drug launch to date, how should we sort of view, to the level of detail you can, sort of the integration time within their program of effects and how that might impact any potential lags or dips in sales, especially as we go into the first quarter and insurance resets, et cetera.

Yeah, so I'm hoping that there won't be too much of a lag in anything. I mean, they're taking, like I said, a significant number of employees with them. We're also, according to the agreement, we're providing them with transition services for the next, you know, number of months. And so we think, you know, we're going to ash, you know, we'll probably going to, you know, to tandem as well. So I think that, you know, we believe that, you know, the transition period should be quite seamless. And I don't believe there'll be a significant lag in, you know, in sales or in the uptick of sales.

Thank you very much.

All right, Joe, have a great day.

The next question is from Justin Walsh of Jones Trading. Please go ahead.

Hi, thanks for taking the question. I wonder if you can provide some color on where you view the company's core competencies as we wait to hear more about the addition of potential assets to your pipeline.

Thanks, Justin. Good morning. So, you know, I mean, you know, as we mentioned, we'll be returning to our roots as an Israeli-based development company. But with many, I think we have many positive attributes that other companies, you know, may not have. You know, we have a highly experienced development team with, you know, fully validated capabilities from early stage projects all the way to approval and, of course, commercialization, but I'll just talk about it until approval. You know, so those are some of our capabilities. We have, you know, a full, you know, our Israeli team has, full capabilities in regulatory affairs in CMC, in quality assurance, in clinical operations, in preclinical development, et cetera. So, I mean, we've got, you know, in medical affairs, et cetera. So we've got, you know, we've got a full, you know, complement of the disciplines necessary to move forward in development. You know, I think, you know, just even to go further with that, I think that we also have, you know, cash flows from two partnering arrangements, that will provide commercial milestones and royalty revenues on an ongoing basis that other development companies might have. And we also have, as I mentioned, we have the significant trials in PDAC that are ongoing under these meaningful collaborations that are really moving forward at a de minimis cost to the company. So I think, all in all, I think that we feel that we're very well-placed moving forward. Again, as I mentioned, we're looking to bring in two new assets in the 2025, 2025, 2026 period. We have a list of potential unlicensed candidates. All of them meet our criteria of a low upfront payment in oncology and rare disease with relatively modest and affordable clinical development programs. That's how we see ourselves moving forward. I hope that gave you a comprehensive answer to your question.

Yeah, definitely. Thanks for taking the question.

Great.

The next question is from John von der Mosten of Zax. Please go ahead.

Thank you, and hello, Phil and Molly. Looking at the 2025 expenses, I think you indicated there'd be a 70% reduction in spend And I guess, you know, if we look at kind of the estimates out there, it seems like we just take out sales and marketing expense and leave R&D and G&A kind of as they have been. Is that a fair way to look at it? And also, obviously, take out the cost of goods sold as well.

I think it's going to be a little bit more than that. I think we're going to, as a company that also had operations in the U.S., besides the actual U.S. commercial operations, I think that some of our spend from Israel, having a U.S. subsidiary that was active, created some additional spend. So I think it's a little bit more than that. I think you can expect a decrease in G&A expenses. as well and etc so we're looking to to be you know lean and mean going forward and as I said you know we believe that you know we will be on the right track with you know moving forward with development only in Israel again I think I also want to mention that Israel itself is sort of a low cost you know a place to you know to have development and And so I think that we're looking at that over 70% reduction overall in spend.

Okay. And then on the R&D side, should we think of that kind of continuing on at the same level? And what are those obligations going to be? I mean, I think there's PDAC in there. Is there anything else in there that's ongoing?

Yeah. So we have some obligations regarding some – a five-year commitment, post-marketing commitment with the FDA. But that's not very significant. And as well, our PDAC commitments are more, you know, our drug supply plus, you know, some small grant, nothing significant. So, I mean, we're going to be having, you know, two, you know, PDAC, two Phase IIb studies, hopefully ongoing at, you know, almost no cost to the company. The post-mortgage commitment will be, you know, quite low. And then the rest of our spend will be on, you know, new projects as we bring them in.

Okay. And as we look at, you know, potentially a pivotal or registrational trial in PDAC, I guess you seem to indicate that that would be taken over by partners and that you would probably have limited contribution there.

Yeah, I mean, listen, you know, everything is possible, but I think, you know, we believe that something of this size in solid tumors in general, it would make sense to partner, especially if we have, you know, very robust data from the phase 2B or from the phase 2Bs. So I think our probably, our main pathway forward would be to, you know, to look to partner it out. And this being such a blockbuster indication, we don't really think that it would be difficult, depending, of course, on the data.

Okay. So that seems to orient your attention more towards earlier stage products. So I guess how would you think about adding a new product? I mean, what stage of development would it be in? I think oncology probably is an area where you have some experience. How would you, you know, time to commercialization, stage of development, indication, what are those kind of factors that you're thinking about when you're looking at something to layer on?

Yeah, so, I mean, I said, you know, I think we're looking at oncology, rare disease. We're looking at early-stage clinical assets. I can't say that that's the only thing that we'd look at. You know, maybe something very, very late-stage preclinical, but I think our focus is primarily on early-stage clinical assets. with best in class potential and with small molecules, peptides, things that we have a lot of experience with previously and to sort of leverage our capabilities going forward.

Okay. And then on China, it seemed like you had mentioned that there's clearance there, I guess, in some areas that don't require the bridging study, when would you expect first revenues to show up from that region?

That's hard to say. I mean, you know, it could, it's hard for us to say right now, and we haven't given any guidance on that. We're hoping that 2025 will be, you know, a year where there is revenues, although we don't have a lot of You know, we don't have a lot of control over, you know, over what's going on, you know, what Glory is doing. We're obviously meeting with them on a regular basis. I would imagine that that first sale should occur sometime in 2025. Okay. Thank you, Phil. All right. Great. Thanks so much.

If there are any additional questions, please press star 1. you would like to withdraw your question, please press star 2. Please stand by while we poll for more questions. A follow-up question from John von der Mosten of Zax. Please go ahead.

Great. Thanks for one more. On Gametacel, is the only other product that they're commercializing the OmniSurge product, or do they have something else besides that?

Right now, that's what they have. I think they may have plans to bring in some additional

products but right now they have army surge and of course now they have effect stuff great all right thank you there are no further questions at this time before i ask mr phil sirlin to go ahead with his closing statement 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 1-888-295-2634 In Israel, please call 03-9255-904. Internationally, please call 9723-9255-904. Mr. Thurland, would you like to make your concluding statement?

Yes. Thank you, Operator. In closing, we are very pleased to have entered into this licensing agreement with AirMid GametaCell, which allows us to return to our drug development roots while simultaneously benefiting from effects as long-term commercial potential in stem cell mobilization, sickle cell disease, and other non-solid tumor indications. We believe this path forward best positions us to create value for our shareholders while developing novel new therapies for patients with cancer and serious rare diseases. Thank you all very much for your continued interest in BioLineRx. We look forward to providing our next comprehensive quarterly update in March. Be safe and have a great day.

Thank you. This concludes the BioLineRx third quarter 2024 conference call. Thank you for your participation. You may go ahead and disconnect.