Protalix BioTherapeutics, Inc. (AMEX:PLX) Q1 2024 Earnings Call Transcript

Protalix BioTherapeutics, Inc. (AMEX:PLX) Q1 2024 Earnings Call Transcript May 10, 2024

Protalix BioTherapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen, and welcome to the Protalix BioTherapeutics First Quarter 2024 Financial and Business Results Conference Call. As a reminder, this conference call is being recorded. I will now turn the conference over to our host, Mr. Mike Moyer of LifeSci Advisors, Investor Relations for Protalix. You may begin your conference.

Mike Moyer: Thank you, operator and welcome to the Protalix BioTherapeutics First Quarter 2024 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 in the business and clinical updates was issued this morning and is available now 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 the statements made. Factors that could cause actual results to differ are described in the disclaimer and in Protalix’s filings with the US Securities and Exchange Commission. I’ll now turn the call over to Dror Bashan. Dror?

Dror Bashan: Thank you, Mike, and welcome, everyone, to our First Quarter of 2024 Financial Results and Business Update Call. I will begin by reviewing our recent accomplishment before handing the call to Eyal who will provide a more detailed review of our financial results, and we’ll then open the line for questions. I will turn first to PRX-115. As announced this morning, given the encouraging initial top-line results from the first seven cohorts of the company’s Phase I first-in-human study of our recombinant uricase candidate, PRX-115, and following the review and acceptance of the safety data by the safety and monitoring committee, the company has decided to expand the study by adding an eighth cohort. Consistent with the initial seven cohorts, the new cohort will consist of eight new subjects and will analyze a higher dose of PRX-115, and the potential of a higher dose resulting in increased exposure time.

In addition to the extension of the first-in-human study, the company also decided to commence preparations for a Phase II clinical trial of PRX-115. PRX-115. To remind you is a recombinant pegylated uricase product candidate produced using our [ProCellEx] (ph) product platform. The study is a double-blind, placebo-controlled, single ascending dose, first-in-human Phase I clinical trial that the company designed to evaluate the safety, pharmacokinetics and pharmacodynamics. Following a single dose of PRX-115 in subjects with elevated uric acid levels. Of the 56 randomized subjects enrolled in this study across seven cohorts. 42 subjects were treated with PRX-115 and 14 subjects were treated with placebo. Gout is the most common inflammatory arthritis, and it is — and it affects approximately 14 million adults in the US, over 7 million in Europe and over 190 million in China.

It is estimated that about 5% of the gout patients are considered with chronic refractory disease. The preliminary results from the first seven cohorts demonstrate the exposure to PRX-115 increased in a dose-dependent manner and that PRX-115 rapidly reduced plasma uric acid concentration to below 6-milligram per deciliter over time following a single administration. With regard to the safety, PRX-115 was found to be well tolerated, 26% of the subject treated with PRX-115 reported study-related adverse events, and the majority of these were mild to moderate and transient in nature. One subject in cohort number two experienced an anaphylactic reaction immediately following the start of the infusion, but the reaction was fully resolved. There were no other serious adverse events reported and no adverse events were reported in the highest-dose cohort, Number Six and Number Seven.

We look forward to updating you on the full results from the expanded trial following the completion of the new cohort. Our next pipeline candidate able — also being expressed for Protalix is PRX-119. PRX-119 is a pegylated recombinant human DNS1 candidate in development for the potential treatment of diseases associated with neutrophil extracellular scraps or NES. Excessive formation of accumulation of the NES can result in different pathological effects and has been observed in various autoimmune inflammatory and fibrotic conditions. Animal studies with PRX-119 have shown that our product candidate has the potential to be an effective treatment for these conditions and additional preclinical studies of PRX-119 are ongoing. In addition to PRX-119 and PRX-115, the company is focusing its research and development efforts on early-stage development assets to build its product development pipeline.

We look forward to providing you with updates on potential development candidates as they become more mature. Finally, as you know, our second approved drug Elfabrio continues to gain approvals, regulatory approvals for the treatment of adult patients with Fabry disease. Most recently, in January of this year, it was approved in Israel and our commercial partner, Chiesi Global Rare Diseases is committed to successful commoditization of Elfabrio, with launches underway in the United States, throughout the European Union, the UK, Switzerland, Israel and additional markets where approvals were granted. We are confident that Chiesi will continue to position Elfabrio for success, and we look forward to the continued growth of Elfabrio franchise.

Before turning the call to Eyal, I want to emphasize our strong cash position provides us with sufficient cash to enable the repayment of our convertible notes due in September of this year, and for our ongoing operations. In addition, we expect sales to Chiesi to gradually continue as they anticipate future approvals and launches in additional countries. With that, it is now my pleasure to turn the call over to Eyal for a review of the financials. Please, Eyal.

Eyal Rubin : Thank you, Dror, and thank you, everyone, for joining today’s call. Let me review our first quarter 2024 financials. We recorded revenues from selling goods of $3.7 million for the three months ended March 31, 2024, a decrease of $1.4 million or 27% compared to revenues of $5.1 million for the three months ended March 31, 2023. The decrease resulted primarily from a decrease of $1.1 million in sales to Pfizer and of $0.3 million in sales to Brazil, which decreases resulting primarily from the timing of delivery. We recorded revenues from license and R&D services of $0.1 million for the three months ended March 31, 2024, and a decrease of $4.4 million or 98% compared to revenues of $4.5 million for the three months ended March 31, 2023.

Revenues from license and R&D services are comprised primarily of revenues we recognized in connection with the Chiesi agreement. The decrease resulted primarily from the completion of our research and development obligations with respect to Elfabrio, and as Elfabrio was approved in the US and the EU in May 2023 from the completion of the regulatory processes related to the review of the BLA and the MAA and for Elfabrio by the FDA and the EMA, respectively. Cost of goods sold was $2.6 million for the three months ended March 31, 2024, a decrease of $0.5 million or 16% from cost of goods sold of $3.1 million for the three months ended March 31, 2023. The decrease in cost of goods sold was primarily the result of the decrease in sales to Pfizer and to Brazil.

For the three months ended March 31, 2024, our total research and development expenses were approximately $2.9 million, comprised of approximately $0.5 million in subcontractor-related expenses, approximately $1.5 million of salary and related expenses, approximately $0.2 million of materials-related expenses and approximately $0.7 million of other expenses. For the three months ended March 31, 2023, our total research and development expenses were approximately $5.8 million comprised of approximately $3.5 million of 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. Total decrease in research and development expenses for the three months ended March 31, 2024, was $2.9 million or 50% compared to the three months ended March 31, 2023.

The decrease in research and development expenses primarily resulted from the completion of our Fabry clinical program and the regulatory processes related to the BLA and the MAA review of Elfabrio by the applicable regulatory agencies. Selling, general and administrative expenses were $3.1 million for the three months ended March 31, 2024, and for the three months ended March 31, 2023. Financial income, net were $0.1 million for the three months ended March 31, 2024, compared to financial expenses net of $0.5 million for the three months ended March 31, 2023. The change resulted primarily from high interest income on bank deposits and lower notes interest expenses due to note conversions executed in 2023. For the three months ended March 31, 2024, we recorded a tax benefit of approximately $0.1 million compared to income taxes of $0.2 million for the three months ended March 31, 2023.

Income taxes recorded are primarily from the provision for current taxes and income, mainly derived from US taxable global intangible low tax income duty, mainly in respect of Section 174 of the US Tax Cuts and Jobs Act. Cash and cash equivalents and short-term bank deposits were approximately $48.5 million at March 31, 2024. As Dror mentioned, we believe our cash position is sufficient to enable the repayment of our convert notes due September 2024 and for our ongoing operations. Net loss for the three months ended March 31, 2024, is approximately $4.6 million or $0.06 per share, basic and diluted compared to a net loss of $3.1 million or $0.05 per share, basic and diluted, for the same period in 2023. I will now turn the call back to you Dror.

Dror Bashan: Thanks, Eyal. In closing, I would like to express my confidence in Protalix and its current standing. We have reviewed with you our strong cash position. We have three streams of revenues: Sales to Brazil; sales to Pfizer; and of course, Sales to Chiesi. We are pleased with the interim results from the — from our PRX-115 clinical study, and we look forward to the continued momentum through the rest of this year. We are continuing to leverage our expertise to develop a pipeline of early stage assets with the potential to address rare diseases with high unmet needs. We look forward to updating you on our progress as we continue to drive innovation and create long-term value for both patients and stakeholders. Now I would like to ask the operator to open the line for questions.

Operator: Thank you. [Operator Instructions] And the first question comes from the line of Raghuram Selvaraju with H.C. Wainwright. Please proceed with your question.

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Q&A Session

Raghuram Selvaraju: Hi, thanks very much for taking my questions. I wanted to ask specifically about PRX-115 and whether you could delineate for us the specific gout subpopulation in which you anticipate this drug candidate might be utilized if approved and what the competitive landscape currently looks like, as well as what types of advantages you anticipate 115 might have against those drugs? I think in particular we are talking about commercially available product called Krystexxa. So perhaps you can enumerate for us whether you believe 115 will have advantages on efficacy, safety and convenience, or if you anticipate advantages on only one or two of the three categories. And how you expect the drug’s advantages to ultimately demonstrate themselves. I realize that it’s relatively early in the drug’s development process, but I was hoping you could enlighten us on those parts. Thanks.

Dror Bashan: So thanks, Ram. As you know, we have finalized — the first seven cohorts, the first — it’s a single-dose study. So we want to be careful, but still we are optimistic. We are moving to Cohort Number Eight, as we mentioned. And we are potentially think that this potential drug will address, I’d say, uncontrolled gout patients. As mentioned, we initiated the preparations for a Phase II study, which will be, of course, a multiple dose study. And we will be much smarter. Right now, we hope to see, I want to be careful, improved safety and better frequency of the drug. From efficacy by the end of the day, we want to reduce the uric acid of course, below six or way, way below six, in a way which will be as consistent as possible throughout full year or [along] (ph) the years.

But let’s see. We think that the results we see right now are encouraging. This is why we move on we did not close the study or put a CSR. And of course, we got — we discussed it not only with the safety component, but of course also with our Board, we got [indiscernible] to prepare a Phase II. Right now, today, as you know, Krystexxa is on the market with once in two weeks, as far as we know. And there is a product by [Sobi] (ph) that’s supposed to enter the market, I don’t know, next year something like this.

Raghuram Selvaraju: Just to clarify, assuming that you move into Phase II, would you expect the efficacy endpoints used in Phase II to include things like reduction in flares or reduction in tophi? And are you expecting to be able to position 115 as a competitor, a direct competitor to Krystexxa? Or do you expect ultimately 115 to be utilized in patients who either are not considered candidates for Krystexxa because of some safety concerns or are refractory to Krystexxa?

Dror Bashan: I think — look first we have to finalize, of course, and we are planning a meeting with regulators, both in the US and the EU, to address our potential design of the Phase II and the overall clinical program then I think we will be smarter to answer you on the first one. On the second one, yes we — the intent is indeed to compete on the market of the uncontrolled gout patients.

Raghuram Selvaraju : Thank you very much.

Dror Bashan : You’re welcome.

Operator: Thank you. [Operator Instructions] The next question is from the line of John Vandermosten with Zacks. Please proceed with your questions.

John Vandermosten: Thank you and good afternoon Dror and Eyal. So for 115, I believe the patients are infused once and then you’re observing them over a three month period. How do the PK levels trend over that period?

Dror Bashan: You’re asking about the first seven cohorts?

John Vandermosten: Yes, exactly. Yes. And I’m assuming that there is probably a similar decline, right?

Dror Bashan: So we did not yet. We wanted to show the full picture once we have the full data of all eight cohorts. So once we will have everything together, including of course the safety data which is most important, we will share it properly. And we didn’t want to show, I would say, a half job.

John Vandermosten: Okay. And does that three month period seem like the right interval to use or maybe more frequently? And as you mentioned, one of the competitors has a much shorter interval between dosing and that does seem like a little bit longer period of three months. Do you think in the future, it might change for the Phase II? Or how do you think about that?

Dror Bashan: So John, maybe I mean what do you mean three months. Can you repeat it, please?

John Vandermosten: So yes, just looking at the trial design in the clinical trials I think you’re observing patients over a three month period with 1 infusion. And I’m wondering what the ultimate infusion periodicity would be based on what you’ve seen so far.

Dror Bashan: Well, I think I don’t follow your question. I’m very sorry.

John Vandermosten: No problem we could follow up later.

Dror Bashan: No, no, please. What we see, and we are very much encouraged is good results reducing the uric acid level, of course faster significant. And therefore, we move into cohort number eight. Once we will have all the data, we will share it transparency, of course.

Eyal Rubin: I think, John, the fact that we are monitoring patients over three months doesn’t necessarily indicate that the infusion intervals are going to be on every three months. Obviously, we have to follow as Dror mentioned, the full set of data, the PK, the PD and the safety and then make a judgement call ahead of the Phase II, obviously, what the interval and what the dosing is going to be.