Schizophrenia claimed another victim Wednesday as shares of BioLineRx Ltd. plummeted after the company halted the Phase II/III CLARITY trial of BL-1020, its first-in-class, orally available GABA-enhanced antipsychotic and the lead program in the company's diverse pipeline.

Results from a pre-planned interim analysis indicated the trial would not meet the pre-specified primary efficacy endpoint of improving cognitive function at six weeks or the secondary endpoints of long-term cognition at 12 and 24 weeks, compared to Risperdal (risperidone, Johnson & Johnson).

The interim analysis included data on 230 subjects, with 168 evaluable for analysis on the primary cognitive endpoint.

Battered even before the opening bell, shares of BioLineRx (NASDAQ:BLRX) fell to a 52-week low of $1.60 in early trading before closing the day at $1.80, a loss of $2.01, or 52.8 percent. Volume was more than 15 times higher than average.

On a call to discuss the interim findings, CEO Kinneret Savitsky said BioLineRx decided to perform the interim analysis in light of costs to run the trial, which have been borne entirely by the Jerusalem-based biotech. BioLineRx yanked the study after conferring with the independent data monitoring committee during a blinded data presentation.

Although no additional patients will be enrolled in the CLARITY study, the company plans to examine positive trends in social cognition that were observed in several statistical measures once the data are unblinded. However, Savitsky cautioned against raising expectations, noting that "it's too early to say" if the resources poured into BL-1020 could be recouped in a commercial product.

The findings were all the more surprising given robust results from the company's Phase IIb EAGLE study, which suggested the drug was safe and effective in improving schizophrenia as well as cognitive function, with the beneficial effect on cognition even more pronounced when accounting for the effects of circadian rhythm.

The disappointment in Savitsky's voice was palpable: "Our business model is not to place all of our value on one project," she said. "This is essential in our risky industry, as the CLARITY project clearly shows."

Terminating CLARITY "will allow us to reallocate resources to other projects," Savitsky added.

With CLARITY halted, BioLineRx expects R&D expenses to decrease by $6 million to $7 million for the remainder of this year and into 2014, according to Phil Serlin, the company's chief financial and operating officer. Reducing the burn should allow the company's current cash reserves of approximately $28 million to fund operations into 2015, he said.

Over the next 12 to 18 months, BioLineRx expects to meet significant clinical milestones related to other pipeline assets, which could pad its coffers, Serlin added. For instance, BL-1040, designed to prevent cardiac remodeling following myocardial infarction and out-licensed to Ikaria Inc., is undergoing a pivotal CE-Mark registration trial. That potential $282.5 million deal was inked in 2009. (See BioWorld Today, July 7, 2009.)

BioLineRx also has BL-5010 for the nonsurgical removal of skin lesions, which has completed a Phase I/II study; BL-7040 for inflammatory bowel disease, currently in a Phase II trial; BL-8040 for acute myeloid leukemia and other hematological cancers, expected to begin a Phase II study this year; and BL-1021 for neuropathic pain, which is in Phase I.

Setback in Treating Cognition in Schizophrenia

Schizophrenia patients have a number of options in addition to Risperdal, including Zyprexa (olanzapine, Eli Lilly and Co.), Geodon (ziprasidone HCI, Pfizer Inc.), Clozaril (clozapine, Novartis AG), Fanapt (iloperidone, Vanda Pharmaceuticals Inc. and Novartis) and Abilify (aripiprazole, Bristol-Myers Squibb Co. and Otsuka Pharmaceutical Co. Ltd.).

However, the CLARITY failure represented a setback in treating the cognitive symptoms associated with the disorder, which have defied efforts to develop more effective therapeutic approaches.

Challenges in the indication haven't deterred attempts to solve the puzzle. Earlier this month, privately held EnVivo Pharmaceuticals Inc. initiated a Phase III program for lead compound EVP-6124, an alpha-7 agonist, with primary endpoints of effect on cognitive function and on clinical function. (See BioWorld Today, March 1, 2013.)

In 2010, Envoy Therapeutics Inc. and Takeda Pharmaceutical Co. Ltd. formed a three-year research alliance to discover drugs for schizophrenia using Envoy's bacTRAP technology, which combines genetic engineering with molecular biology techniques for labeling and extracting the protein-making components of specific cell types. Though still preclinical, that collaboration prompted Takeda to acquire privately held Envoy last year for up to $140 million in cash, including an undisclosed up-front and milestone payments. (See BioWorld Today, Nov. 7, 2012.)

Other biotechs with schizophrenia programs targeting cognitive function include Omeros Corp., Mnemosyne Pharmaceuticals Inc., Sage Therapeutics Inc., Galenea Corp. and Cyrenaic Pharmaceuticals Inc.

The next big news in schizophrenia will likely come from Targacept Inc., which is studying alpha-7 neuronal nicotinic receptor compound TC-5619 as a potential treatment for negative symptoms and cognitive dysfunction in schizophrenia. A 450-patient Phase II trial is relying on the Scale for the Assessment of Negative Symptoms as the primary outcome measure, with data expected in the fourth quarter. (See BioWorld Today, Sept. 18, 2012.)

In the meantime, BioLineRx will seek to recover from its stumble. The company's stock has its own history of mood swings, last year gaining 68 percent in a single day during the oral hepatitis C virus feeding frenzy when it inked a worldwide, exclusive license agreement with privately held French firm Genoscience to develop and commercialize orally available protease inhibitor (PI) BL-8020. (See BioWorld Today, Jan. 25, 2012.)

This time around, company officials did not predict a quick rebound in the stock's price.

"We have some significant milestones along the way, so there's every reason to expect that we may see an upswing in the stock within the next year or two," Serlin said.

Ironically, BL-1020 sparked an investor revolt in 2010 at Cypress Bioscience Inc. after the San Diego firm licensed North American development and commercialization rights to the compound, paying BioLineRx $30 million up front and potentially $335 million in milestones. Cypress investors hammered the stock, sending shares down 37.8 percent when the deal was disclosed. (See BioWorld Today, June 22, 2010.)

That deal, in turn, spurred a hostile takeover attempt by shareholders before Cypress agreed to a $255 million cash acquisition by Ramius LLC and Royalty Partners, which then returned the North American rights to BL-1020 to BioLineRx. (See BioWorld Today, July 20, 2010, Dec. 16, 2010, and May 13, 2011.)