Protalix Biotherapeutics Inc (PLX) 2020 Q1 法說會逐字稿

Greetings, and welcome to the Protalix BioTherapeutics First Quarter 2020 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Chuck Padala with Protalix Investor Relations. Thank you, sir. You may begin.

Thank you, operator. Hello, everyone, and welcome to Protalix BioTherapeutics's First Quarter 2020 Financial Results and Business Update Conference Call. With me today is Mr. 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 is 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 the statements made. Factors that could cause actual results to differ are described in the disclaimer and in our filings with the U.S. Securities and Exchange Commission.

I'll now turn the call over to Mr. Dror Bashan.

Thank you. Good morning, and thank you for joining us today to review the company's first quarter 2020 operations and recent highlights. During this call, I will provide an update on our clinical and corporate progress. And then I will ask our CFO, Eyal Rubin, to review the company's financial results before opening the lines for questions.

The first quarter of 2020 has been certainly transformational for Protalix, despite the COVID-19 pandemic that affected global markets. I am proud to say that despite the pandemic, Protalix was able to keep the company running smoothly and adapt quickly to the changing environment. As we anticipated, last week Protalix, together with our development and commercialization partner, Chiesi Global Rare Disease, a unit of the mother company, Chiesi, submitted the biological license application to the U.S. FDA for PRX-102 via the FDA Accelerated Approval pathway. PRX-102 was granted Fast Track designation by the FDA in January 2018. The BLA submission includes a comprehensive set of preclinical, clinical and manufacturing data compiled from our completed Phase I/II clinical trials of PRX-102, including the related extension study succeeding the Phase I/II clinical trial of PRX-102 and the interim clinical data from our Phase III BRIDGE switch-over study as well as safety data from our ongoing clinical studies of PRX-102, including the extension studies. Upon the BLA approval, if approved, Protalix will be eligible to receive milestone payment from Chiesi.

Earlier in May, we have announced our positive top line results from the completion of the Phase III BRIDGE clinical trial of PRX-102. This open-label switch-over study met its main objective for safety and efficacy and indicated substantial improvement in renal function in patients switched from Replagal to PRX-102. This important study confirms our belief that PRX-102 can be an important enzyme replacement therapy and the new treatment option for Fabry disease. Together with our 2 ongoing fully enrolled Phase III clinical trials, the BALANCE and the BRIGHT studies, we believe we have the most comprehensive and robust Phase III clinical program for Fabry disease currently in progress. Additionally, in February of this year, we have announced together with our development and commercialization partner, Chiesi, the receipt of an agreement later from the FDA for the initial pediatric study plan for PRX-102, outlining an agreed-upon approach to address the needs of pediatric Fabry patients as well.

On March 16 this year, we have announced an agreement to conduct feasibility study with Kirin Holdings Company to evaluate the production of a novel complex protein using ProCellEx, and the company received an unrefundable payment of $1 million; and Kirin has agreed to provide research funding for Protalix scientists to contact cell line engineering and protein expression studies on the target protein.

I will now turn over the call to Eyal, our CFO, to review our financials.

Thank you, Dror, and thank you, everyone, for joining today's call. So as we previously announced in March, Protalix entered into a securities purchase agreement with certain existing and new institutional and other accredited investors in a private placement. In connection with the private placement, we issued approximately 17.6 million unregistered shares of our common stock at a purchase price of $2.485 per share and warrants to purchase an additional approximately 17.6 million shares of common stock at an exercise price of $2.36 per share in exchange for aggregate net committed proceeds equals to approximately $41.3 million. Net proceeds from the financing are being used to advance our clinical programs and commercialization of PRX-102 for the treatment of Fabry disease as well as to further develop our early-stage pipeline of therapeutics and for general corporate purposes. And now for the numbers.

For the 3 months ending March 31, 2020, Protalix recorded revenues from selling goods of $5 million, an increase of $1.5 million or 43% compared to revenues of $3.5 million for the same period of 2019. The increase resulted primarily from an increase of $0.8 million in sales of drug product to Brazil as well as an increase of $0.7 million in sales of drug substance to Pfizer. Revenue from license and research and development for the 3 months ended March 31, 2020, were $16.6 million, an increase of $9.7 million or 140% compared to revenues of $6.9 million for the same period of 2019. The revenues from license agreements represented revenues recognized in connection with the previously announced agreement with Chiesi.

Cost of goods sold was $3.4 million for the 3 months ended March 31, 2020, an increase of $1.4 million, or 68%, from the cost of goods sold of $2 million for the same period of 2019. R&D expenses were $10.3 million for the 3 months ended March 31, 2020, a decrease of $1.4 million or 12% compared to $11.7 million of R&D expenses for the same period of 2019.

SG&A expenses were $3.2 million for the 3 months ended March 31, 2020, an increase of $1 million, or 43%, compared to $2.2 million for the same period of 2019. And finally, net income for the 3 months ended March 31, 2020, was $1.7 million or a profit of $0.10 per share basic and diluted compared to a net loss of $7.3 million or $0.5, $0.50 per share basic and diluted loss for the same period of 2019.

And now I'll turn the call back to Dror.

Thank you, Eyal. During the last quarter, we were able to close the $43.7 million private placement. Furthermore, the top line results from our Phase III BRIDGE study and the subsequent released submissions recently for PRX-102, which were announced in May, showed that Protalix has actually gained momentum by leaning into an unprecedented challenge. I'm convinced now more than ever that our team is positioned for long-term success and look forward to continuing our momentum through the rest of this year and into 2021; and to my team and to our many investors, partners and colleagues, I thank you and appreciate it very much.

With that, I will now turn the call back to the operator, which will open the call for questions from the audience.

(Operator Instructions) Our first question comes from the line of Ram Selvaraju with H.C. Wainwright.

This is Boobalan dialing in for Ram Selvaraju. So the first one: how long is it likely to take for the FDA to render a decision on whether or not to accept the BLA for PRX-102 for review?

So I'm sorry, but I did not understand the question. We have submitted the file, and we are waiting for the FDA to decide on the PDUFA date.

So yes, I'm curious -- we are wondering, how long would it take in order to hear from that?

I'm sorry. I missed that. I'm sorry. So it depends upon the FDA. The FDA decision, if it considers to give a priority review or not, it takes between 2 months to 2 months and 14 days, 2.5 months. It's upon their decision. I'm sorry, it was my misunderstanding.

Okay. Understood. Yes. With respect to the PRX-102, will it be manufactured solely in Israel? Or are you planning to manufacture the drug at an alternative side?

So the drug substance is currently manufactured in Israel and the final product actually is being manufactured outside of Israel. If there will be any decision to add a site, we will update, of course. At present, this is the situation.

Okay. Understood. So how is Chiesi planning to handle market access and reimbursement? And what kind of experience does your partner have in these areas in the context of orphan drugs within the U.S. market?

So Chiesi is extensively building the rare disease business globally. It is based in Boston. They have bought a couple of assets already. They have teams on the ground both in the U.S. and in Europe. I think the vast majority of the teams, probably all of them with extensive experience and track record of rare disease, many of them come from specific rare disease companies, ex-Genzyme and others. So in this respect, I believe that they will do a very good job. So actually, we -- if we count heads, if I may say, so they have probably thousands of years of experience combined in both continents already, and they are actually strengthening up ahead of the, hopefully, approval and launch next year.

Great. So did COVID-19 have any impact on Elelyso, Brazil? If so, could it be quantified?

So at present, I want to be careful. At present, at least for the first half, we don't see any influence. And I hope this will continue into the second half of 2020. So currently not.

Okay. Great. And one final question. Are you making any progress on identifying potential license fees for OPRX-106 and PRX-110, and when might we see developments on these fronts?

So we are working on potential collaborations. If -- once there will be something to report, of course, we will report accordingly.

(Operator Instructions) Our next question comes from the line of Philippa Gardner with Jefferies.

Just 2 questions from me; possibly too early to say, but I was just wondering if you would expect to have an FDA advisory committee meeting as part of the review of the regulatory submission? And then my second question was just, again, on manufacturing, I think the product currently being made at a facility that's already been inspected, so do you think that the FDA review will require another inspection of the facility? Or how do you think the FDA might handle that?

So I will start with the second question, because I did not -- I apologize, but I did not understand the first one. The line was not clear. With regard to the first question, our site was audited and inspected in July of 2019 successfully with no 483s. Still, we are ready for another inspection, if it will happen again; I don't know if due to the COVID-19 it will happen. But clearly, we are ready, and there is no issue with that. But if you don't mind to repeat your first question.

Yes. It was just whether you thought there'd be an advisory committee meeting as part of the FDA review.

I mean, the BLA was submitted and we'll follow the regular procedure. So first to get a PDUFA date and then the review cycle. And as part of it, probably, I don't know what will happen due to the COVID-19, but we expect inspection by the FDA and a review, and that's it. And clearly a discussion.

(Operator Instructions) We've received a question from the line of [Walter Goring], a private investor.

Congratulations on your progress. I have 4 little questions. How many warrants have been exercised since the financing?

I'll take the question. The warrants are not exercisable. They are blocked for 6 months, according to the deal. So none of them were exercised at this point.

Okay. Are you aware of a company called Kentucky Bioprocessing that works with the tobacco protein and what they're doing with that product line?

I'm not aware of, but probably my team is aware of. This is Dror speaking.

Right. Okay. What is the plant protein behind the Elelyso product?

The Elelyso product is carrot, and the rest are with BY-2, which are tobacco cells.

Okay. When will 102 be given a marketing name and who will do that?

This is a good question. So it's up to Chiesi to decide. Clearly, they consult with us, but it's Chiesi's decision. And I hope soon. It's something that they propose a name or a list of names to the FDA, I believe, and then they get the approval.

I see. Okay. Congratulations on the progress.

Thank you, sir.

It appears we have no additional questions at this time. So I'd like to pass the floor back over to management for any additional closing comments.

So thank you. I ask to thank everybody for the time. And I wish all of us good health and to continue with improvement in Protalix. So thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.