Protalix BioTherapeutics, Inc. (AMEX:PLX) Q1 2023 Earnings Call Transcript

Protalix BioTherapeutics, Inc. (AMEX:PLX) Q1 2023 Earnings Call Transcript May 4, 2023

Operator: Good morning, ladies and gentlemen, and welcome to the Protalix BioTherapeutics First Quarter 2023 Financial Business Results Conference Call. As a reminder, this conference is being recorded. I will now turn the conference over to our host, Mr. Chuck Padala of LifeSci Advisors, Investor Relations for Protalix. You may now begin.

Charles Padala: Thank you, Tina. Welcome, everyone, to the Protalix BioTherapeutics First Quarter 2023 Financial Results and Business Update Conference Call. With me today are Dror Bashan, President and CEO of Protalix; and Eyal Rubin, Senior Vice President and Chief Financial Officer. A press release announcing the results and the update was issued this morning and is now available on the Protalix website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The earnings release and this teleconference include forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from statements made. Factors that could cause actual results to differ are described in the disclaimer and Protalix’s filing with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Dror Bashan. Dror?

Dror Bashan: Thank you, Chuck, and welcome, everyone, to our First Quarter 2023 Financial Results and Business Update Call. I will begin by reviewing our recent progress and accomplishments. Following my remarks, Eyal Rubin will provide a more detailed review of our financial results. We will then open the line for questions. As we updated earlier this morning, we, together with our development and commercialization partner, Chiesi Global Rare Diseases, are waiting on EC decision, which should be announced in the next couple of days. In addition to the EU, we are also quickly approaching potential approval in the United States. Our signed PDUFA target action date is next week, May 9, 2023, and we look forward to providing you with an update when we hear from the FDA.

We are grateful for the Protalix team as well as our partnership with Chiesi that has brought us to this stage. We are confident that if approved, Chiesi is well-equipped to realize the full potential of PRX-102. They have ramped up commercial activities and are prepared for launch. Fabry disease represents a potential significant opportunity in a multibillion-dollar market that is in need of an alternative treatment option and we, together with Chiesi, are prepared to deliver. Now turning to our pipeline. We are continuing to make progress in our earlier stage programs. PRX-115 is a novel PEGylated uricase in development for the treatment of severe gout. In March of 2023, the first patient was dosed in our Phase I first in human clinical trial for PRX-115 in patients with elevated uric acid levels.

And the trial is a double-blind placebo-controlled single-ascending dose study designed to evaluate the safety, pharmacokinetics, pharmacodynamics and immunogenicity of PRX-115 in up to 56 patients. The study is being conducted in New Zealand. And to date, 9 patients have been — already have been dosed in this trial. We look forward to continued enrollment and dosing of patients. We also continued to progress on PRX-119, a PEGylated recombinant human DNase I protein designed to elongate DNase half-life in circulation for treatment of NETs-related diseases. We have conducted preclinical studies to demonstrate the feasibility of PRX-119. We look forward to providing updates on these programs and others as we look to build our growing pipeline.

You may recall that last December, in 2022, we announced our decision that it was in our company’s best interest to voluntarily delist our common stock from Tel Aviv Stock Exchange. On March 22 of this year, 2023, our common stock was delisted from the Tel Aviv Stock Exchange, and the last trading day on the Tel Aviv Stock Exchange was March 20, 2023. Finally, our balance sheet provides us with sufficient runway to the third quarter of 2023, supporting the company through potential approvals in addition to continuing to develop our earlier-stage pipeline programs. I will now turn to Eyal — thank you. I will now — yes, of course. I will now turn to Eyal for a review of our financials. Eyal, please?

Eyal Rubin: Well, thank you, Dror. And just to make it clear, obviously, the cash runway is until third quarter of 2024. Thank you, everybody, for joining the call today. Let me review our first quarter 2023 financials. We recorded revenues from selling goods of $5.1 million during the 3 months ended March 31, 2023, a decrease of $3.9 million or 43% compared to revenue of $9 million for the 3 months ended March 31, 2022. The decrease resulted primarily from a decrease of $2.7 million in sales to Brazil and a decrease of $1.1 million in sales to Pfizer, both resulting from timing differences. We recorded revenues from license and R&D services of $4.5 million for the 3 months ended March 31, 2023, a decrease of $2.6 million or 37% compared to revenues of $7.1 million for the 3 months ended March 31, 2022.

Revenues from license and R&D services are comprised primarily of the revenue we recognized in connection with the Chiesi agreement. Cost of goods sold was $3.1 million for the 3 months ended March 31, 2023, a decrease of $2.9 million or 48% from cost of goods sold of $6 million for the 3 months ended March 31, 2022. The decrease in cost of goods sold was primarily the result of decrease in sales of goods. For the 3 months ended March 31, 2023, our total research and development expenses were approximately $5.8 million comprised of approximately $3.5 million in subcontractor related expenses, approximately $1.5 million of salary and related expenses, approximately $0.1 million of material-related expenses and approximately $0.7 million of other expenses.

For the 3 months ended March 31, 2022, our total research and development expenses were approximately $8.8 million comprised of approximately 5.8 million subcontracted rated expenses, approximately $2 million of salary and related expenses, approximately $0.2 million of material related expenses and approximately $0.8 million of other expenses. Total decrease in research and development expenses was $3 million or 34% for the 3 months ended March 31, 2023, compared to the year ended March 31, 2022. The decrease in research and development expenses primarily resulted from the completion of both our Fabry clinical program and a substantial portion of the regulatory process related to the BLA and the MMA submission for PRX-102 as Dror described earlier.

Selling, general and administrative expenses were $3.1 million for the 3 months ended March 31, 2023, a decrease of $0.1 million or 3% compared to $3.2 million for the 3 months ended March 31, 2022. A decrease of approximately $0.4 million in salary and related expenses was partially offset by an increase of $0.3 million in professional fees. Financial expenses net were $0.5 million for the 3 months ended March 31, 2023, compared to financial expenses net of $0.4 million for the 3 months ended March 31, 2022. In the 3 months ended March 31, 2022, we recorded income taxes of approximately $0.2 million. Cash and cash equivalents were approximately $33 million at March 31, 2023. Net loss for the 3 months ended March 31, 2023, was approximately $3.1 million or $0.05 per share basic and diluted compared to a net loss of $2.3 million or $0.05 per share basic and diluted for the same period in 2022.

I will now turn the call back to you, Dror.

Dror Bashan: So thank you very much, Eyal, and thanks, everybody, for joining us on today’s call. I’m sure everybody is under anticipation for the upcoming approvals. Clearly, it’s an exciting time for us. We are looking forward to providing you, of course, with the update once we have them, both from the EU and the FDA. And in addition, we are planning on hosting an investor event late June to discuss Protalix’s strategic priorities going forward. Now I will turn back to the operator and open the line for questions.

Q&A Session

Operator: . The first question comes from John Vandermosten of Zacks.

John Vandermosten: Dror, and Eyal, how are you guys doing?

Dror Bashan: We are doing fine. Thank you, John.

John Vandermosten: That’s good to hear. Next week is going to definitely be a big week for you guys, so we’re all over here looking forward to that. But I thought I would spend a little time on PRX-115, just to understand kind of that a little bit better. I guess you’re running the trial in New Zealand, as you’ve mentioned many times. Are there any incentives that you’re getting from running it there? I know that that’s a pretty favorable place to do early-stage trials just because the benefits that the Australian and New Zealand government provide developers there.

Dror Bashan: John, can you repeat? I don’t understand the question. What is the question exactly?

John Vandermosten: Sure. So in the Oceania area, in New Zealand and Australia, I noted frequently that there are very supportive environment in terms of tax benefits and credits and things like that to run trials down there. Is that something that you’re benefiting from for PRX-115 down there?

Dror Bashan: Eyal?

Eyal Rubin: Yes, that’s correct, but that’s not the reason we are running the trial there. We didn’t apply in order to benefit from a tax credit. You need to open an on-site, on-the-ground site there in New Zealand and in Australia. And they obviously are running for at least the Phase I. We saw that it’s too big of a burden. The reason was that the CRO that we picked and the sites are — they have expertise and their enrollment capabilities are good for such reasons that we would pick the site and the CRO.

John Vandermosten: Okay. Great. And obviously, this is the Phase I where the primary goal is safety. But I wanted to see if you could share some of the secondary end points that you’re looking at that might look at efficacy. And then also, if we’re successful in these early stages, what might some of the endpoints be for a pivotal trial in terms of efficacy?

Dror Bashan: So John we planned, as I mentioned, up to 56 patients. And in addition to safety, of course, which is the first thing, we would like to see immunogenicity. We would like to see to what extent we reduce the uric acid, maybe hints or signs of frequency of dosing. So — but this has to be — we are at the very beginning. So we will never show off, and there’s nothing to show off it right now. So we — hopefully, we plan to — once we have the final reports, including the PK/PD to better analyze it and understand how to properly conduct the Phase II.

John Vandermosten: Sounds good. And the — one of the major players in gout right now is KRYSTEXXA. And I’m just wondering if you have a comparison of how PRX-115 goes up against that guy.

Dror Bashan: No. We will have to see results before we can say anything.

John Vandermosten: Okay. Well, I was thinking in terms of mechanism of action or kind of the unmet need perhaps that 115 may address. Not ultimate efficacy, but just how it might work in terms of the MOA.

Dror Bashan: By the end of the day, we hope to have a differentiation in at least on an improved profile and in at least in one important aspect. We will have to see if it will be the frequency of dosing, immunogenicity or a combination.

John Vandermosten: Great. Okay. That’s helpful. And last thing for me, just obviously, next week is a huge week. And what are the next steps that we should expect to see? I know you mentioned that there’s — you’re going to have a call with investors in another month to go over priorities and things like that. But what are the next steps we should expect to see, I guess, from you and Chiesi in terms of commercialization and getting things ready, assuming we’re getting positive news back?

Dror Bashan: So we will clearly update immediately the market once, hopefully, of course, we get the approval from the EU and following that with the FDA. This is the sequence we see right now, of course, or anticipate. So we will, of course, update and explain. And I’m not familiar with anything else right now. Once Chiesi plan the launch of the product, then we’ll update, of course.

Operator: . We show no further questions at this time. I’ll turn the call back over to our speakers for any closing remarks.

Dror Bashan: All I have to say, thank you, everybody, for this time. And we are looking forward, of course, to update you very, very soon. Thank you very much.

Operator: Thank you. This does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you. Have a good day.