Maxim Group Downgrades BioLineRx (BLRX) to Hold
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Maxim Group downgraded BioLineRx (NASDAQ: BLRX) from Buy to Hold with a price target of $1.00 (from $4.00).
Analyst Jason Kolbert highlighted:
- The biotechnology bear market that emerged in 2015 continues to drive an increase in the cost of capital and the dilution that companies face. The net result has been a shift in valuations, particularly for microcap companies, to the low end of the historical range. BioLineRx is well funded with $41M in cash and cash equivalents (into 2018), but with that said we see few catalysts over the next year to drive a significantly higher stock price. As a result, we are downgrading BLRX to Hold (from Buy).
- BL-8040 is our focus for the company, but the clinical timeline looks longer than we originally anticipated. With expansion to more early stage studies (including two studies in pancreatic cancer in combination with Keytruda), we see good long-term potential. The main driver remains AML, though POC data may not come until 2019, thus our downgrade.
- Our struggle has been to reconcile the positive data in "no-option" (relapsed-refractory) patients in the AML population with the earlier patients, who may see the greatest benefit but drive a longer time to marketplace.
- Modeling changes. We push out our assumptions for BL-8040 commercialization to 2022 (from 2018). We also push out BL-7010 commercialization (now as a diet supplement vs. prescription drug, thus lower pricing) from 2018 to 2020, and assume a smaller market share. The net effect: The adjustments to our therapeutic models, combined with a 30% discount rate applied to equally weighted free cash flow, discounted EPS and sum-of-the-parts models, reduce our price target to $1 from $4, as such we move to Hold (from Buy).
Shares of BioLineRx closed at $0.88 yesterday.
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