The madness surrounding BioLineRx Ltd. (NASDAQ: BLRX) has calmed considerably on Wednesday, one day after more than doubling their share price on news that they had secured a licensing deal involving an oral hepatitis C pill known as BL-8020. Shares of BLRX closed at 3.29 on Monday but spiked to a 52-week high of 6.87 on Tuesday as investors seemingly ignored the fact that the hepatitis C drug is still in preclinical testing. By the end of Tuesday’s trading session shares settled at 5.55 and for those investors who bought high the bleeding continued into Wednesday as shares have fallen as low as 4.60; they are currently moving around the 4.90 – 4.95 range and while that is considerably better than their 50-day moving average of 3.41 just how long they can maintain this level remains to be seen.
Remarkably investors pounced on Tuesday’s news without even knowing the terms of the deal that BLRX and Genoscience, the private French firm that developed the drug, reached. In fact, investors likely didn’t even understand the function of the drug; they simply jumped on one of the hottest trends going, betting on biopharmaceutical development companies entering the hepatitis C drug game.
All that is really known about BL-8020 was revealed in BLRX’s press release announcing the worldwide, exclusive license agreement:
“BL-8020 acts via a unique mechanism of action, by inhibiting Hepatitis C virus (HCV)-induced autophagy, which differs from the mechanism of currently used anti-HCV agents. BL-8020′s safety and efficacy were demonstrated in pre-clinical studies. These studies have shown that BL-8020, when combined with other anti-Hepatitis C virus (HCV) agents, has a synergistic effect. BL-8020′s synergistic effect on other therapies is likely to increase their potency and reduce the numerous adverse effects often associated with these drugs, by enabling utilization of lower dosages. In addition BL-8020 may reduce therapy duration, which is currently up to 48 weeks. The use of two drugs acting by different mechanisms is also likely to be beneficial for patients who have developed resistance to current treatments and is an effective strategy used against other viruses such as HIV.”
Addressing the benefits and potential of BL-8020 Dr. Kinneret Savitsky, CEO of BLRX, stated “Current therapies are characterized by numerous severe side effects, long treatment duration and development of resistance. In these respects, BL-8020 has a demonstrated safety and efficacy profile, may shorten therapy duration and may combat resistance by acting as an add-on platform which can potentially be combined with other oral Hepatitis C therapies to increase their efficacy.”
As optimistic as BLRX sounds it can’t be ignored that this drug is still in preclinical trials; meaning that while it “has a demonstrated safety and efficacy profile, may shorten therapy duration and may combat resistance by acting as an add-on platform which can potentially be combined with other oral Hepatitis C therapies to increase their efficacy” it hasn’t been tested in humans.
Obviously if BL-8020 proves to be safe and effective in treating human patients with hepatitis C then there is incredible growth potential for BLRX. In their press release BLRX provides some hard to ignore figures including “According to the World Health Organization (WHO), more than 170 million people worldwide are chronically infected with HCV. In addition, HCV infection is the leading cause of liver transplantation and is a risk factor for liver cancer. The global Hepatitis market was estimated at $6.5 billion in 2010 and is forecasted to grow to $11.5 billion in 2016.”
With that being said, even if everything goes perfectly through the trial phases and approval is gained, it could be years before BLRX brings BL-8020 to market. It’s not as if BLRX is the only biotechnology company out there developing hepatitis C drugs and many of these companies are further down the road than the Israeli drug maker.
Perhaps investors took note of BLRX’s pipeline prior to acting on Tuesday’s news and found their current portfolio to be attractive. The company lists five clinical stage candidates in their current portfolio: BL-1020 for schizophrenia has commenced a Phase II/III study; BL-1040, for prevention of pathological cardiac remodeling following a myocardial infarction, is currently undergoing a pivotal CE-Mark registration trial and has been out-licensed to Ikaria Inc. for a total deal value of $282.5 million, in addition to sales royalties; BL-5010 for non-surgical removal of skin lesions has completed a Phase I/II study; BL-1021 for neuropathic pain is in Phase I development and BL-7040 for treating Inflammatory Bowel Disease (IBD) has completed Phase I.
Additionally, BLRX has 12 products in various pre-clinical development stages for a variety of indications, including central nervous system diseases, oncology, infectious diseases, cardiovascular and autoimmune diseases.
None of this is to say that BLRX isn’t a worthy company to invest in or that BL-8020 doesn’t have an upside but there are currently a number of unknowns that continue to make the company a real risk. With shares as high as they are it would seem hard to believe that there won’t be a drawback soon, in many ways there has already been, but there should be plenty of time to get in lower further down the road.