BioLineRx Responds to Rumors, Cooling Off Its Share Price

Speculation about its new anti-schizophrenia drug fed 90% spike; company officials state that they have no new information.

Yoram Gabison
Yoram Gabison
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Yoram Gabison
Yoram Gabison

Responding to speculation about the effectiveness of its experimental anti-schizophrenia drug that nearly doubled the company's share price, officials of BioLineRx announced Sunday they had no information about a recent clinical trial on the drug. The announcement sent shares of BioLineRx plunging 9.1% on trading volume of NIS 11.5 million, five times the normal rate.

BioLineRx, whose CEO is Kinneret Savitsky, has been one of the hottest stocks in the biomedical industry sector in 2013. Its share price had risen by 91 percent on heavy volume since early January.

The outcome of the clinical trial, in which doctors and patients did not know who was administering or receiving the test drug, is one of the most significant events in its history as a publicly-traded company. Company officials insisted Sunday that the results of the double-blind study were still a secret, and any information published in the media is only speculation.

On January 7, BioLineRx announced that it would publish the interim results of clinical trials of BL-1020, a medication for treating schizophrenia, the week of March 18. Analysts believe that BL-1020, which is intended to compete with Johnson & Johnson’s medication Risperdal, will result in better cognitive function in schizophrenia patients than Risperdal achieves.

On January 15, Scott Matusow wrote on his website, Seeking Alpha, “If the data that is expected to be released in March confirms the previous results [which indicated that BL-1020 was as effective, if not more effective, and safer than Risperdal], we can expect a massive move in the stock price.” The stock responded nicely to Matusow’s article, rising by the fairly massive rate of 50 percent.

The same day as Matusow's article, BioLineRx made a curious decision to hold an investors' meeting on February 5, 2013 to survey the expected developments in all the products in its pipeline for 2013: eight products, six of which are in various stages of clinical development.

The odd decision to hold an investors’ conference on February 5 to survey the developments that are expected for 2013, particularly the interim results of the clinical trial of the BL-1020 molecule for treating schizophrenia that are to be published in March 2013, hardly dampened the capital market’s optimism over the clinical trial’s results. The company’s willingness to discuss the results of the clinical trial – ironically entitled Clarity 6 – mere weeks before being published could be interpreted likely as a belief on its part that the results would be positive.

It is also hard to remember any similar case where a meeting was held before the results were published rather than immediately afterward.

However, the company announced Wednesday it was postponing the investor's meeting. In Sunday's statement, the company said the planned meeting was postponed for technical reasons. "It will be rescheduled for a later date according to the company’s schedule and activities, with full transparency," the company stated.

The statement also provided details of which results would be provided to the committee – the estimated number of additional patients the study requires in order to obtain statistically significant results about the subjects’ cognitive function.

The statement read further: “Following the many calls and questions about the way the interim results for 1020 will be examined and analyzed, the company wishes, in its desire to act transparently and responsibly, to provide clarifications. The company has stated repeatedly, whether in meetings with investors or in conversations, that it has no new information."

The company invited investors to listen to the webcast of a presentation BioLineRx will be making at next week's BIO CEO and Investor Conference in New York.

“As for the rumors connecting the increase in the company’s share prices with any attempt by the company to encourage it or not prevent it – the main reason for the increase in the company’s stock over the past few weeks comes from the American stock market where many biomed investors who read the reports in the media and opinions by outside bloggers are active," the statement explained. "The role of management is to report the company’s activity in the clearest, most responsible and most accurate way. It does this in the official reports it publishes for investors.

"The company is not responsible for, nor does it encourage, the publication of surveys and recommendations, whether positive or negative, by outside entities. Rather, the company reiterates what it stated in the official reports it releases, as it always does. As evidence, following the report that appeared on yesterday, the company issued an official clarification in order to keep investors from being misled.”

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