BioLine Tumbles Most on Record After Drug Fails in Study

BioLineRx Ltd. (BLRX) tumbled the most on record after an experimental treatment for schizophrenia failed to help patients in a mid-stage clinical trial, prompting the Israeli drugmaker to end development of the compound.

BioLine, based in Jerusalem, plunged 51 percent to $1.87 at 12:01 p.m. in New York, the lowest price since July 2011, when the shares were listed in the U.S. The Bloomberg Israel-US Equity Index of the biggest Israeli companies in the U.S. rose for the first time in four days, adding 0.8 percent.

The treatment, BL-1020, didn’t meet the trial’s main goal of improving cognitive function compared with risperidone, a generic drug, BioLine said in a statement. The American depositary receipts had gained 51 percent this year through yesterday. Shares in Tel Aviv dropped 52 percent to 6.82 shekels, or $1.86 today.

“For the stock price to be cut in half, in our view, seems excessive,” Raghuram Selvaraju, an analyst at New York-based Aegis Capital Corp., said in a phone interview. He cut his share-price estimate today by 36 percent to $7 and kept a buy rating on BioLine. “All the institutional investors I spoke with thought it would fail.”

The biopharmaceutical company said in the statement that research and development costs will drop this year and in part of 2014 by about $6 million to $7 million.

Schizophrenia is a disabling brain disorder, affecting about 1 percent of Americans, according to the National Institute of Mental Health.

To contact the reporter on this story: Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.