Protalix Biotherapeutics Inc (PLX) 2020 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Protalix BioTherapeutics Fiscal Year 2020 Earnings Conference Call. As a reminder, this conference call is being recorded. I will now turn the conference over to our host, Mr. [David Holmes] of LifeSci Advisors, Investor Relations. You may begin your conference, sir. Please proceed.

Thank you, operator. Welcome to Protalix BioTherapeutics' Fiscal Year 2020 Financial Results and Business Update Conference Call. With me today are Dror Bashan, President and Chief Executive Officer of Protalix; and Eyal Rubin, Chief Financial Officer. A press release announcing the results and the update 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 includes 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 in Protalix's filings with the U.S. Securities and Exchange Commission.

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

Thank you, David, and welcome, everyone, to the company's year-end of 2020 financial results and business updates. During today's call, I will review the progress of our key clinical programs and lay out the road map of our upcoming strategic milestones. Following my remarks, our CFO, Eyal Rubin, will review our financial results, and we will then open the line for questions.

This year brought many challenges, including, of course, the unexpected global pandemic. However, we have achieved many significant accomplishments throughout through all of these. And we have continued that positive momentum in the first part of 2021. Together with our development and commercialization partner, Chiesi, we submitted to the U.S. FDA a BLA for PRX-102 for the treatment of adult patients with Fabry disease, and we look forward for the FDA's response.

We continue to build out the clinical profile for PRX-102 with the release key data from the BRIDGE and the BRIGHT's Phase III study, and we look forward to seeing interim data from the BALANCE study during the second quarter of this year.

We further advanced our earlier-stage pipeline of candidates produced for our ProCellEx, our property plant cell-based protein expression system. And earlier this year, we strengthened our balances through a public offering and through the sale of shares under our ATM program. Overall, I'm very proud of our employees and our external partners for their unwavering commitment to advance our mission to bring differentiated therapeutics to the market to help address unmet medical needs.

Please let me now provide some more details regarding our key achievements and upcoming anticipated milestones. Our lead pipeline candidate is pegunigalsidase alfa or PRX-102, which is a therapeutic protein candidate for the treatment of Fabry disease, Fabry neurogenetic disease that occurs in one of every 40,000 people. And most experts agree that there are many undiagnosed patients suffering from this disease.

The current therapeutic market for Fabry disease consists mainly of enzyme replacement therapies and is forecasted to be around $1.9 billion in 2021 and continue to grow at the CAGR of approximately 9.5%. As I mentioned earlier, the FDA accepted the BLA filing for PRX-102 for the treatment of Fabry disease and granted the BLA priority review. The regional PDUFA action date of January 27, 2021, was subsequently adjusted by the FDA to April 27, 2021. We and Chiesi have remained in active dialogue with the FDA.

And as indicated in the BLA filing communication letter last fall, the FDA does not claim to hold an Advisory Committee Meeting to discuss the application. If, indeed, we received an approval letter, Protalix and Chiesi will be ready for a commercial launch of PRX-102 in later this year. We continue to build our clinical profile for -102 as results are released from our comprehensive Phase III clinical program, which is composed of 3 studies: the BRIDGE, the BRIGHT and the BALANCE studies. Last December, we released final results for the 12 months brings Phase III open-label, single-arm switch-over trial of up to 22 Fabry patients who were previously treated with agalsidase alfa or Replagal.

The data shows substantial improvement in renal function as measured by mean annualized eGFR in both male and female patients who were switched from agalsidase alfa to pegunigalsidase alfa. The final results from the BRIDGE trial represent in greater detail in the Annual WORLDSymposium this past February.

Last month, we have announced positive top line results from the BRIGHT Phase III 12 months open-label, switch-over study designed to evaluate the safety, efficacy and pharmacokinetics of pegunigalsidase alfa, 2-milligram per kilogram administered every 4 weeks, for the treatment of Fabry disease in Fabry patients, previously treated with commercially available enzyme replacement therapy for at least 3 years and on a stable dose administered every 2 weeks.

Top line results indicate the 2-milligram per kilogram of PRX-102, administered by intravenous infusion every 4 weeks, was found to be well-tolerated among treated patients, and stable clinical presentation was maintained in adult Fabry patients following the 12 months protocol period. This presents potential for an additional treatment regiment, one that is considerably more convenient for patients without compromising safety and efficacy.

The lead study in our Phase III program is a BALANCE [trial], which is a 24 months trial evaluating the safety and efficacy of pegunigalsidase alfa, 1-milligram per kilogram dose, every 2 weeks, and assessing its effect in Fabry patients with declining renal function versus the current use enzyme replacement therapy, Fabrazyme. We expect to receive interim results from the trial in the next quarter, which would then serve as a basis for the European EMA filing. If these trial results are positive, there is a potential for a commercial launch in Europe in the late of 2022 or the first half of 2023.

Turning to our early pipeline programs. We continue to work with SarcoMed USA to develop alidornase alfa or PRX-110, which is produced via our ProCellEx system for the use in the treatment of any human respiratory disease or condition, including, but not limited to sarcodosis, pulmonal fibrosis and other related diseases via inhaled delivery.

We recently announced an exclusive partnership with SarcoMed USA to evaluate therapeutic candidates for these disease areas via inhaled delivery. We look forward to continuing to develop this partnership, and we'll update you on our clinical plans.

We are performing preclinical testing of PRX-115, our plant cell-expressed recombinant PEGylated uricase, a chemically modified enzyme under development for the potential treatment of refractory gout. Gout is the most common inflammatory arthritis in the United States, affecting an estimated 9.2 million adults. An estimated approximately 2% of the gout population is thought to have chronic refractory disease. The uricase enzyme converts uric acids to animation, which is easily eliminated through urine.

However, the uricase enzyme does not exist naturally in the urine. We use ProCellEx to express and optimize recombinant uricase enzyme under development for the potential treatment of refractory gout, which we are designing to have an improved half-life, reducing enogenicity and potentially longer-term efficacy.

We have also begun developing -- or developed the -- of PRX-119, our plant cell-expressed pegulated recombinant human DNase I product candidate, which we are designing to have an elongated half-life in the circulation of -- for the potential treatment of NETs-related diseases, NETs or neutrophil extracellular traps, our web-like structure released by activated neutrophils that track and kill a variety of microorganisms. According to scientific literature, animal studies have demonstrated that DNase I treatment reduces NETs' toxicity. Our property modified DNase I may potentially enable effective treatment of acute and chronic conditions. We are planning to commence Phase I clinical trials of both PRX-115 and PRX-119 throughout 2022.

Turning to our balance sheet. We ended the year with USD 38.5 million in cash, cash equivalents and short-term bank deposits, and we raised an additional approximately $40 million gross proceed in public equity offering in the first quarter of 2021. We also raised $8.8 million through the sale of common stock under our ATM program during the first quarter of 2021. Eyal will provide more commentary regarding our cash flow plans, but I would like to add that we feel confident about our balance sheet and appreciative the support we have received from our existing and new added institutional stockholders.

Before I turn it to Eyal, I just wish to recognize what the challenging time this was for all of us and restate how proud I am of our team for their focus and commitment. We did not allow this global pandemic to have a material address effect on our operations. We are looking forward to an exciting year ahead of Protalix and all of our teammates and partners.

Let me turn it to Eyal for a review of our financials. Thank you.

Thank you, Dror, and thank you, everyone, for joining today's call. Let me review our full year 2020 financials. For the year ended December 31, 2020, we recorded revenues from selling goods of $16.2 million compared to revenues of $15.8 million for the same period of 2019. The revenues from license and R&D services for the year ended December 31, 2020, were $46.7 million compared to $38.8 million for the year ended December 31, 2019.

Revenues from license agreements represent the revenues we recognized in conjunction with the Chiesi agreement. The increase is primarily due to the revenue recognized in connection with an updated cost estimation of the 2 completed Phase III clinical trials of PRX-102, as Dror mentioned previously.

Cost of goods sold was $10.9 million for the years ended December 31, 2020 and 2019. Research and development expenses, net for the year ended December 31, 2020, were $38.2 million compared to $44.6 million for the year ended December 31, 2019. The decrease is primarily due to the completion of 2 out of the 3 Phase III clinical trials of PRX-102 and reduced costs related to the Phase III BALANCE study, as well as a decrease in costs related to manufacturing of our drug in development as some of the manufactured drug products and related costs have been recorded as inventory.

We expect research and development expenses to continue to be our primary expense as we enter into a more advanced stage of preclinical and clinical trials for certain of our product candidates, as Dror described previously.

Selling, general and administrative expenses were $11.1 million for the year ended December 31, 2020, an increase versus $9.9 million for the year ended December 31, 2019. This resulted primarily from an increase in share-based compensation costs.

Financial net expenses were $9.2 million for the year ended December 31, 2020, compared to $7.6 million for the same period in 2019, primarily related to the costs in connection with the senior secured notes. As of December 31, 2020, our cash, cash equivalents and short-term bank deposits were approximately $38.5 million compared to approximately $18 million on December 31, 2019.

In March 2020, as you probably all remember, we completed a 43.7 million private placement offering of common stock awards. This past February, we raised an additional approximately $40 million in gross proceeds via an equity offering, and we raised an additional $8.8 million through our ATM during the first quarter of 2021.

There are 58 million of convertible notes on our balance sheet that could potentially be redeemed this November. We believe that our current financial position provides us a sufficient cash runway through the second quarter of 2022.

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

Thanks, Eyal. We believe we are well-positioned for the success and as we look ahead towards an anticipated commercial product launch with a solid financial base to support growth and a pipeline of potential opportunities. We look forward to updating you as the year progresses, and let's now please take your questions.

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

This is Boobal dialing in for Ram Selvaraju. So I'd like to first get your thoughts on[lyso] sales performance in 2020. And what are your expectations for 2021?

Eyal, would you like to take it?

Sure. So the sales that appears on our financials are mostly related to the ELIZA, and we talked about the $16 million in connection with our sales, both to Pfizer and in Brazil. We believe that the 2021 is going to be approximately in the same neighborhood, maybe a little better, a little stronger. But given the pandemic in Brazil, we expect that the number is going to remain quietly the same and the same for Pfizer.

All right. Great. So with respect to PRX-102, I believe the PDUFA data is approaching. So what are your expectations on that? And if the drug is approved by the FDA, what elements could feature in your messaging to patients and physicians?

To us, as far as we know, things are progressing as we updated. Our current PDUFA date is April 27. And hopefully, once we get approval, we will launch -- we'll launch shortly after. I hope that we will be able to release in the next few weeks or a few months, the final results of the BRIGHT study, the once in 4 weeks, and clearly, to publish the outcomes of the interim analysis during Q2 of the BALANCE study, which will hopefully, if positive, will pave the way for submission to the European Union. Hello?

Hi, can you hear me?

Yes. Of course.

All right. Okay. I thought the line went off a little bit. And what can you comment on regarding the large preparation activities for PRX-102? And when can we learn more about the pricing information? Do you think PRX-102 will be priced premium over fabryzyme?

Yes. I suggest we wait until we have approval and then we will discuss with our partner and share with the market, post-approval. I can assure you that preparations are -- actually, everything is set, and we are ready to go, including the team, the marketing sales, the medical, et cetera, and of course, final product to the market.

All right. One final from me. Can you comment on the market opportunity for moderate to severe pulmonary sarcoidosis?

So this is a very interesting indication, and there is unmet need. And it's -- there are not too many drugs right now developed or approved for this specific indication. So if, indeed, things will go well and indeed, this product will be further developed and its approval, we estimate a big market, which probably will consist of many hundreds of millions of dollars. But we speak about years ahead, so it's difficult to focus if it will cross the $1 billion or not right now.

(Operator Instructions) Our next question comes from John Vandermosten with Zacks Investments.

Let me start off with just a question on the implications of the BRIGHT study. Does that -- how might you go about modifying or talking with the FDA about modifying the label for a different dosing periodicity for that? Is that something that you're planning? Or how should we think about that opportunity?

So the outcomes of the BRIGHT study are not -- or the BRIGHT study is not part of the BLA that was submitted. So post-approval, we will -- we plan to submit a clinical supplement.

Okay. Very good. And do you know what might the timing be on that? Would it be in the next 6 months or so, assuming a favorable April 27 outcome?

I don't want to commit. I hope it will be until year-end, but I don't control the timetable right now. So I assume it will be wiser in about a month or 2 from today.

Okay. And for PRX-110, inhaled delivery seems like a very interesting approach. And I'm wondering if there are other opportunities for inhaled delivery, perhaps nasal administration or something like that, that have some benefits for certain indications. Is that something that you may pursue?

At present, all inhaled indications are with SarcoMed or PRX-110. I want to be very careful. So this is the situation right now. We are developing an elongated DNase I for NETs-related diseases, as I mentioned. But this is a different category, if I may say.

Okay. Yes, it seems like an interesting opportunity, but obviously, we're kind of in early stages for that. Last question for me is on the FDA, and I think you may have mentioned this. Just the FDA inspections, I've been trying to get a sense of how those have been going and wondered if you had any anecdotal observations on the FDA inspecting anywhere, even in the United States? Or just how that is going along? Because I know that's a key issue for everyone pretty much who's waiting on a PDUFA date.

So indeed (inaudible), I don't have a general view on what's going on in the U.S. I can assure that one thing, we will have official updates, we will share with the market, of course.

(Operator Instructions) There are no further questions in queue at this time. I would like to turn the call back over to management for closing comments.

So this is Dror speaking. I just ask to thank everybody for the time and participation in this call, and I wish everybody to be healthy and safe, and good luck. Thank you very much.

Thank you, ladies and gentlemen. This does conclude today's teleconference. You may disconnect your lines at this time, and have a great day.