By John Vandermosten, CFA
NASDAQ:BLRX
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A few days prior to its third quarter earnings report, BioLineRx Ltd. (NASDAQ:BLRX) announced a commercialization agreement with Ayrmid Ltd. and its subsidiary Gamida Cell Ltd. BioLineRx will grant Ayrmid rights to commercialize Aphexda (motixafortide) across all indications except in solid tumors and in all territories except Asia. The arrangement will provide a $10 million upfront payment to BioLineRx, royalties ranging from 18% to 23% and the potential for $87 million in commercial milestones. After a transition period, BioLineRx’ expenses are expected to decline by about 70% as the company reverts to a research and development firm.
The announcement of the arrangement with Ayrmid was followed by the third quarter earnings report where total revenues reached $4.9 million and net loss was ($5.8) million. Aphexda revenues were down sequentially to $1.7 million and lower than expected expenses across the board, especially sales and marketing led to the less severe-than-expected loss which was about 60% of what we had forecast.
Other achievements of note since our last update include BioLine’s launch of the “Mobilization Matters” digital resource for multiple myeloma patients, a new US Patent Office allowance for a motixafortide patent and announcement an oral presentation at the American Society of Hematology (ASH) Annual Meeting in December.
3Q:24 Operational and Financial Results
BioLineRx achieved third quarter 2024 sales of $4.9 million producing a net loss of ($5.8) million or ($0.00) per share. Ignoring non-operating income, net loss was ($5.4) million. The results were announced in a press release on November 25, 2024 followed by a conference call with management and the filing of Form 6-K providing additional information.
Below we summarize financial results for the three-month period ended September 30, 2024, compared to the same prior year period:
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Revenues were $4.9 million representing a portion of the upfront and milestone payment from Gloria Biosciences of $3.2 million and Aphexda product revenues of $1.7 million versus $0. Aphexda reached 10% market share of total CXCR4 inhibitor usage in the United States. Institutions ordering the drug increased by 40% in the third quarter;
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Cost of revenues was $0.8 million which largely represents a pass through to license-holder Biokine as a royalty on motixafortide revenues. Amortization of intangible assets is also included in cost of revenues. Product gross margin relating to Aphexda sales was 95.2%;
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Research and development expenses totaled $2.6 million, down 6% from $2.7 million, on account of lower expenses related to the termination of the AGI-134 program and a decrease in payroll and share-based compensation;
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Sales and marketing expenses were $5.5 million, down 32% from $8.1 million as a result of commercialization activities related to Aphexda including the addition of new sales personnel and a fully hired field team;
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General and administrative (G&A) expenses were $1.4 million, down 7% from $1.5 million due to small decreases in a number of expense categories;
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Non-operating expense was $756,000 million reflecting changes in fair-value adjustments of warrant liabilities on the balance sheet;
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Net financial expenses amounted to ($1.2) million as financial expenses of ($1.6) million related to the BlackRock loan were partially offset by financial income of $0.4 million from bank deposit interest;
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Net loss was ($5.8) million compared with ($16.0) million, or ($0.00) and ($0.02) per share respectively.
Cash, equivalents and short-term bank deposits as of September 30, 2024 totaled $29.2 million, down from the year end 2023 balance of $43.0 million. Cash burn for the first nine months was ($35.3) million and net cash from financing was $21.8 million. Financing cash contributions came from issuance of share capital and warrants as well as net proceeds from the loan agreement with BlackRock. After the end of the quarter and in conjunction with the commercialization deal with Ayrmid, BioLineRx received a $9 million equity investment and used these proceeds along with the $10 million milestone from Ayrmid to reduce the BlackRock debt by $16.5 million. Following the announced transactions as of the report of third quarter results, estimated cash and equivalents are $20 million, which is seen to be sufficient to support operations into 2026.
Commercialization Agreement with Ayrmid Pharma
On November 21st, BioLineRx announced an exclusive license agreement with Ayrmid Pharma Ltd., the parent company of Gamida Cell, where Ayrmid will assume commercialization rights for Aphexda in stem cell mobilization. The deal provides a $10 million upfront payment, commercial milestones for sales and additional regulatory approvals totaling $87 million and royalties ranging from 18% to 23%. Ayrmid gains rights in all geographies excluding Asia[1] in all indications excluding solid tumor indications.[2] Along with the Ayrmid agreement, BioLineRx raised an additional $9 million equity investment with Highbridge Capital that will be used to reduce debt.[3]
Ayrmid’s subsidiary, Gamida Cell, will execute the commercialization effort. Gamida Cell is now marketing Omisirge, a nicotinamide modified allogeneic hematopoietic progenitor cell therapy derived from cord blood. The product is indicated for use in patients with hematologic malignancies who are planned for umbilical cord blood transplantation following myeloablative conditioning to reduce the time to neutrophil recovery and the incidence of infection. BioLineRx is taking advantage of the substantial overlap between the target market for Aphexda and Omisirge. BioLineRx will separate its US commercialization subsidiary headed by President Holly May and transfer about a third of the team to Gamida Cell to continue its activities. The transition of the Aphexda commercialization activities from BioLineRx to Gamida Cell is expected to take place over the next month or so with the changeover complete by early 2025.
We see the integration into the Gamida Cell sales team as a beneficial change as the group will now have more products to offer as well as a broader reach, thereby increasing the efficiency of the marketing effort. We further see the merit in layering on a new product to an existing sales team which has developed relationships and established territories. We identify synergies in multiple product offerings as it allows representatives to frequently interact with the providers and professionals who use their products. Additionally, the incremental cost of adding one new product to the mix is minimal. BioLineRx has noted that while it has cost about $25 million to sustain the sales team to support Aphexda inside of BioLineRx, there is only a $3 to $5 million incremental cost anticipated to market Aphexda using the Gamida Cell sales force.
2H:24 Financings
On November 20, 2024, BioLineRx issued 16,471,449 ADSs or pre-funded warrants for ADSs along with 0.5 warrants for every ADS or pre-funded ADS. The units were sold at $0.5464 per ADS (or $0.5463 per pre-funded ADS warrant). The 8,235,724 regular ADS warrants have an exercise price of $0.59. The financing raised $9.0 million in gross proceeds.
Along with the Ayrmid agreement and the ADS sale, BioLineRx also amended its loan agreement with BlackRock. The loan was carried on the balance sheet at $27.8 million as of September 30, 2024. The company will pay $16.5 million of the loan with recent proceeds and future revenue-based payments will be cancelled. Other modifications as a result of the loan modification include a reduction in the required minimum cash balance to $4.0 million. The remaining debt balance will carry a fixed annual interest rate of 9.5%
Summary
BioLineRx made a surprise announcement prior to its third quarter report announcing that it had signed a licensing agreement with Ayrmid to commercialize Aphexda in all indications except solid tumors worldwide except for Asia. The deal takes advantage of Gamida Cell’s salesforce, which has established itself commercializing Omisirge, a product with a near 90% marketing overlap with Aphexda. BioLineRx will maintain rights to developing motixafortide in solid tumors, specifically PDAC, for which it has several trials with partners underway. The agreement frees up BioLineRx to return to its research and development roots and seek new products to advance. The BioLineRx team is now stronger and more experienced in the realm of research, development and regulatory process and brings this asset to the table as it seeks new candidates. With a competency in oncology and early-stage clinical trials, we anticipate that the company will find a Phase I or Phase II ready asset in the solid tumor space to add to its pipeline. With milestones and royalty revenues expected from multiple sources over the next years, the company has improved its profile and will be less reliant on capital markets to fund its R&D activities.
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[1] Rights to motixafortide have already been granted to Gloria Biosciences in Asia.
[2] BioLineRx will retain rights to solid tumor indications for motixafortide.
[3] Highbridge Capital is also an investor in Gamida Cell.
