Protalix Biotherapeutics Inc (PLX) 2020 Q3 法說會逐字稿

Greetings and welcome to the Protalix Biopharmaceuticals Third Quarter 2020 Financial Results and Business update. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Investor Relations, Chuck Padala. Thank you, Chuck, you may begin.

Thank you, Paul. Welcome to the Protalix BioTherapeutics Third Quarter 2020 Financial Results and Business Update Conference call. With me today are Dror Bashan, Protalix's President and CEO, as well as Eyal Rubin, Protalix's CFO. A press release announcing the results and the update was issued yesterday 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 the 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 those statements made. Factors that could cause actual results to differ are described in disclaimer and in Protalix’ filing with the U.S. Securities and Exchange Commission.

I will now turn the call over to Mr. Dror Bashan. Dror?

Thank you, Chuck, and welcome, everyone, to the company's third quarter of 2020 financial results and business update. Before we start, I would like to thank everyone for making themselves available for today's call since we had to reschedule due to some technical difficulties impacting the conference call, provide hosting the call yesterday. So we apologize for the inconvenience. And as always, we appreciate your time and support of Protalix.

During this call, I will provide an overview on the progress of our clinical programs and key corporate developments. Following my remarks, our Chief Financial Officer, Eyal Rubin, will review the company's financial results, before we open the lines for questions. So we have accomplished a lot over the last several months. Importantly, we have announced that FDA accepted the BLA filing of PRX-102 for Fabry disease and set a cut-off date of January 27, 2021. The last patient completed treatment in our Phase III BRIGHT study, and we expect to report top line data from this study so -- in the first quarter of 2021. We, together with our development and commercialization partner, Chiesi Global Rare Disease, launched an expanded access program in the U.S. and this will help us to continue and build our clinical data set.

Finally, we regained the New York Stock Exchange compliant in early September and announced an entry into a $30 million at the market equity offering program with Bank of America Securities in October. Clearly, it was a highly productive quarter in our commitment to advancing our pipeline programs and achieving progress for the treatment of the undeserved (sic) [underserved] genetic disorders, such as Fabry disease. Now let me review our recent highlights in more detail. Our lead pipeline candidate is pegunigalsidase alfa or as defined PRX-102, which is a therapeutic protein candidate for the treatment of Fabry disease.

In May of 2020, Chiesi Global Rare Disease with our corporation submitted the BLA to the U.S. FDA under an accelerated approval pathway. In August of this year, we have announced that FDA had accepted the BLA and granted a priority review designation. The FDA also indicated the BLA filing communication -- in the BLA filling communication letter that it is not currently planning to hold an advisory committee meeting to discuss the application. The FDA set a PDUFA action date of January 27, 2021 and the FDA is advised that as part of the BLA review process, it will help to inspect our Israeli manufacturing facility and the facility of a third-party partner of ours in Europe who performed the fill and finish process of pegunigalsidase. Due to the COVID-19 pandemic related to FDA travel restriction, the FDA has advised that it may be -- that it will be unable for them to contact the inspections prior to the PDUFA date. Therefore, we, together with Chiesi are in active dialogue with the FDA and have submitted a request to the FDA for a Type A meeting to seek resolution on this issue of the pre-license inspection of these 2 manufacturing facilities, both in Israel and France.

We do anticipate an FDA response to this request in the first week of November 2020. In August of 2020, we together with Chiesi announced completion of the treatment period of the Phase III BRIGHT study. We expect to release top line results from the BRIGHT study through the first quarter of 2021. The BRIGHT study is a 12-month study, open-label suite over study designed to assess the safety and efficacy and pharmacokinetics of PRX-102 2-milligram per kilogram, administered by intravenous infusion every 4 weeks for 52 weeks in patients with Fabry disease, previously treated with an enzyme replacement therapy, such as Fabrazyme or Replagal.

The BRIGHT study is our second Phase III trial for PRX-102 in Fabry patients and follows the BRIDGE trial positive results that we have announced earlier in May of this year. We anticipate results from this -- from an analysis of our main study PRX-102 Phase III head-to-head clinical study called the BALANCE study in the first half of 2021. I'm so grateful for the collaboration between our teams, all of the patients and the clinicians who have been dedicated to this development program in spite of the challenges of the COVID-19.

We were pleased to announce that we received notification from New York Stock Exchange American -- New York Stock Exchange in early September that Protalix regained compliance with all of the continued listing standards set forth in Part 10 of the New York Stock Exchange American Company Guide. On September 4, Protalix was removed from the list of the noncompliant insurance on the New York Stock Exchange American website. In early October, Protalix and Chiesi announced the launch of an Expanded Access Program or EAP in the United States for PRX-102. The EAP allows access to pegunigalsidase alfa to a broader group of physicians and patients beyond those in our Phase III program. This EAP is open to patients with clinical diagnosis of a Fabry disease, who in the opinions of the treating physicians, have no comparable or satisfactory alternative treatment options with currently available FDA-approved therapies for Fabry disease. We are thrilled for this opportunity to provide access to this important therapy option for as many eligible patients as possible. More details regarding the program to be viewed on the clinical trials of website.

And finally, I would like to share that we continue to focus on our balance sheet and capital structure to ensure we have necessary resources to prepare for a potential commercial launch in 2021 and to move our other development program forward. In early October, we entered in -- at the market equity offering sales agreement with Bank of America Securities as an [agent]. This agreement enables us to sell from time to time up to aggregate of USD 30 million of equities of Bank of America, a terms and conditions set forth in this phase. This financing arrangement provides the company with greater capital rate ability to execute our commercialization and development.

Before I will turn the call over to Eyal for an update on the financials. I would like once again to thank our employees for the professionalism, collaborations and tireless efforts during this challenging time through 2020. The pandemic continues to impact our businesses and home lives in Israel and globally, and we know it is not easy to stay focused and positive. We are continuing to operate very well as a team, and we are very much encouraged about the exciting period ahead of us.

With that, I will now turn the call over to Eyal for an overview of our financials. Eyal, please.

Thank you, Dror, and thank you, everyone, again, for joining today's call and beside the inconvenience of the rescheduling. And yes, let me review our third quarter 2020 financials. For the 3 months ended September 30, 2020, we recorded revenues from selling goods of $3.3 million compared to revenues of $5.1 million for the same period of 2019. The decrease resulted primarily from the timing difference in sales to Brazil in 2020 compared to 2019, while in 2019, the shipments were scheduled for the third quarter. This year, they are scheduled for the fourth quarter, and this is the timing difference, which was partially offset by an increase in sales to Pfizer. Earnings from license and R&D services for the 3 months ended September 30, 2020, were $7.5 million compared to $9.1 million for the same period over 2019. Earnings from license and R&D services are comprised primarily of revenues we recognized in connection with our license and supply agreements with Chiesi. The decrease is primarily due to the completion of 2 out of the 3 Phase III clinical trials as well as lower costs related to the BALANCE study, which leads obviously to a lower revenue that we record based on U.S. GAAP.

Cost of goods sold for the 3 months ended September 30 was $2.9 million compared to $3.2 million for the same period in 2019. The decrease is primarily due to a change in our cost structure as as well as lower royalties paid to the Israeli Innovation Authorities. Research and development expenses for the 3 months ended September 30 were $7.7 million compared to $10 million for the same period of 2019. The decrease similar to what I've described in the R&D and license revenues is due to the completion of 2 out of the 3 Phase III clinical trials of PRX-102 and reduced costs related to the BALANCE study as well as a decrease in costs related to manufacturing of our drug in development as some of those manufactured drug product and related costs have been recorded as inventory.

Selling, general and administrative expenses were $2.8 million for the 3 months ended September 30 compared to $2.6 million for the same period in 2019. Financial net expenses were $1.9 million for the 3 months ended September 30, 2020, compared to $2 million for the same period in 2019. At September 30, 2020, our cash, cash equivalents and short-term bank deposits were approximately $41.3 million compared to approximately $18 million at December 31, 2019. I will now turn the call back to you, Dror.

Thank you, Eyal. As you've heard, we have a very productive 2020 so far. We are looking forward for another productive quarter. Looking forward also for another productive year in 2021. Clearly, the next 2, 3 quarters are critical for Protalix, and we are very much optimistic ahead of our potential approval and opening the results of the different studies during 2021. And, of course, improving our pipeline and strengthening the pipeline going forward based on our unique technology. Thank you very much and stay well.

(Operator Instructions) Our first question comes from Ram Selvaraju from H.C. Wainwright.

This is Boobalan dialing in for Ram Selvaraju. Can you hear me okay?

Yes, we do.

Okay. Great. A few questions. So first, to start off. Approximately how many U.S. and European patients are diagnosed with Fabry disease during 2019? And what percentage of these patients are treated with standard of care Fabrazyme?

So I think it's actually -- I believe, the $1 billion question, how many patients. I think there are a couple of thousand patients of the continent. There are many undiagnosed patients as well. I assume there are about 3,000 to 4,000 patients in each of the continents today. And there is a way, probably a bigger number, which are not on treatment as we speak.

Can you ask again on your second question about the existing therapies?

Yes, yes. So what percentage of these patients are treated with Fabrazyme?

Some of them, I believe, hold the majority of the market. Some of them is a pool worldwide. So I think they have like close to 90% in the U.S. The rest is Galafold oral medication from Amicus. There's another enzyme replacement therapy by Shire (inaudible) called Replagal, which is not approved in the U.S. However, it is approved everywhere (inaudible). So outside the U.S., Fabrazyme and Replagal, the 2 ERT share, I don't know, about 35%, 40% each. In Galafold holds in Europe, something like 20% is or take, we can see it on their recalls later this year. So as you can understand, Fabrazyme is the golden standard, if I may say, it is approved both in the U.S. and outside the U.S.

Okay. Great. With respect to your Expanded Access Program in the United States for PRX-102, how many patients are expected to be treated overall? Do you plan to use this data with your ongoing Phase III for your future marketing activities?

So let's separate. The Expanded Access Program is like -- it's not exactly out of Phase III. It actually a vehicle and an opportunity for patients who not tolerate or not satisfied with the current treatment to move into our product. It's actually a side of the Phase III, which are ongoing, the BALANCE, but which is in going the BALANCE study. How many patients? I don't know. We just started about a month ago. I hope there will be as many as possible, any number will be just misleading. Anything else you would have to ask with regard to that?

So -- and then moving on, assuming PRX-102 is absurd during early 2021. What factors could potentially drive the market penetration during early years? And what factors might slow down the market penetration?

So I think first, getting approval, the indication will -- is expected to be for all complications as with Fabrazyme, our drug, and we will understand net to initiate a pediatric study for potentially to be -- this product would be a poor for kid. I think that the outcomes of our Phase I/II of the BRIDGE study and hopefully, positive outcomes of our once in 4 weeks, which is an additional regimen and clearly a significant improvement for the relevant patients is a very nice backwind for our launch in Q1 of 2021. This is on the positive side. I think we are supposed to publish results of an interim analysis of our BALANCE study, which means all patients after 12 months. This is for the European authorities. If indeed positive, this is clearly a very nice sign and backwind for our launch in the U.S. and then we will proceed, of course, for submission into the European authorities. And if it will not be positive, this will slow down, I assume, let's say, it will not be a backwind for the launch. However, the product is and the outcome so far from the Phase I/II, decreasing the Gb3, the specific being accumulated in the tissues. The outcome from the switch over from Replagal to our drug and hopefully, good results from the new regimens, once in 4 weeks should be a very good supportive backwind for the launch of these products.

Great. And I'm glad that you mentioned that.

We are very much optimistic. Yes. Please.

Okay. Yes. Sorry. Yes. And yes, the next one. You mentioned about the pediatric population. And I really wanted to get your thoughts on this. So from a clinical standpoint, what are the similarities and differences between adult Fabry patients and pediatric Fabry patients? And with respect to beginning clinical trials, do you have a timeline in mind? And do you plan to use the same endpoint for the pediatric study that were used for the other clinical trials?

So I don't have the -- unfortunately, I don't have the protocol in front of my eyes, and I can look and get back to you with regard to the endpoint. As far as I understand, Fabrazyme is a pool for kids or children, let's call it, up to 18 years old. Above that, it's considered the adults. And we are planning to launch this study in order to be able to expand our label also to children who suffer from Fabry disease to enable them potential new alternative on the market.

Okay.

I think it's really important.

Yes. Absolutely.

Please understand just to -- maybe to explain. There is another -- today, there are 2 approved medications in Fabry, one is Fabrazyme for all Fabry patients and one is Galafold, which with chaperone technology, and therefore, it fits to a portion of the -- Fabry population, about 30%, genetic wise, it should be a genetic fit. And you can also see it from the market share. So having another enzyme, hopefully, an important one. We have to show it, of course, on the market. I think is a new hope for these patients and their families, and it's important to have it both for adults and also for kids, of course.

Okay. And last 1 from me. Do you plan to ink additional collaboration deals (inaudible) production platform over the next 6 to 12 months?

For some reason, your voice became low. Can you -- or weak, can you please reask?

Yes. Do you plan to ink additional deals on your platform over the next 6 or 12 months?

Yes. We're sure we are working on that. We discuss with multiple parties, both licensing out or the let's say, based on our platform and also licensing in all kinds of technologies or idea that can be also implemented with our technology. So I hope within the next 6 to 12 months, we will be able to to update, of course, and to strengthen the pipeline, which is very much important.

(Operator Instructions) At this time, there are no further questions. I would like to turn the floor back over to management for any closing comments.

So this is Dror speaking, and I wish everybody to continue and be well, and thank you for the time. And I encourage everybody who has any questions or query to approach us directly, via e-mails or phone numbers, et cetera, and we will be happy to answer. And thank you very much again.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.