Protalix Biotherapeutics Inc (PLX) 2021 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Protalix BioTherapeutics First Quarter 2021 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. Chuck Padala of LifeSci Advisors Investor Relations. Chuck, you may now begin the presentation.

Thank you, Rob. Welcome, everyone, to the Protalix BioTherapeutics first quarter 2021 financial results and business update conference call. With me today are Mr. Dror Bashan, President and CEO of Protalix; and Mr. Eyal Rubin, Chief Financial Officer.

The 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 the 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 the statements made. Factors that could cause actual results to differ are described in the disclaimer and in the Protalix filings 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 first quarter 2021 financial results and business update. During the call today, I will review the progress of our key clinical programs and update on the roadmap of our upcoming strategic milestones. Following my remarks, our Chief Financial Officer, Eyal Rubin, will review the company's financial results before we open the lines for questions.

We were obviously disappointed with the recent receipt of the complete response letter from the FDA last month, but we are encouraged that the FDA did not report any concerns relating to the safety and efficacy of PRX-102. We are working closely with the agency and anticipate the required inspection and subsequent assessment will be completed once the agency travel restrictions are lifted. I will provide more detailed comments on the CRL shortly.

We are continuing to advance our earlier stage pipeline. Additionally, we strengthened our balance sheet during the quarter with a public offering generating $40 million in gross proceeds and feel confident about our ability to continue to fund our clinical programs as we prepare for a potential commercial launch of PRX-102.

Now let me provide more details about our quarter. In late April, we and our development and commercialization partner, Chiesi, received the CRL from the U.S. FDA for PRX-102 for the treatment for adult patients with Fabry disease. In the CRL, the FDA noted the requirement to inspect Protalix manufacturing facility in Karmiel in Israel. And that due to travel restrictions as a result of the COVID-19 pandemic, it was unable to conduct the inspection during the review cycle. The FDA explained that it will continue to monitor the public health situation as well as travel restrictions and is actively working to schedule outstanding inspections.

For our third-party fill and finish facility for PRX-102 in Europe, due to the COVID-19, the FDA reviewed records under Section 704(a)(4) of the Federal Food, Drug, and Cosmetic Act in Europe pre-relicensing inspection. The FDA stated that it will communicate any remaining issues related to the facility in order to seek prompt resolution for any pending items. Our third-party fill and finish facility received the FDA comments just a few days ago and shared them with us. Together, we are reviewing these comments closely with quality and regulatory consultants.

The last significant point was highlighted by FDA in the letter that Fabrazyme was recently converted to a full approval. This new development will need to be addressed in the context of any potential resubmission seeking accelerated approval of PRX-102.

Once again, while we are disappointed to receive the CRL, we intend to work collaboratively with the FDA on resolving issues. These issues are moving forward on the next steps. We are working on scheduling a Type A end-of-review meeting with the FDA, which we plan to request from the FDA by the end of July and to take place approximately 30 days from our request.

Our objective for the meeting is to better understand the issues raised in the CRL and work with the FDA on a plan to resolve these issues. We are confident in the overall clinical profile we have assembled through our development program, and we believe PRX-102 will bring important value to the Fabry patients with unmet clinical needs. We intend to update you on new developments as soon as feasible.

During the quarter, we continued to build our clinical profile for PRX-102. We released positive top line results from the Phase III BRIGHT study, which was designed to evaluate the safety and efficacy and pharmacokinetics of PRX-102 treatment, 2 mg/kg every 4 weeks in up to 30 patients with Fabry disease previously treated with commercially available enzyme replacement therapy. Top line results indicate that 2 mg/kg 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.

Our results demonstrate the potential for a more convenient therapy option for patients without compromising safety and efficacy. We expect to receive full interim results from our Phase III BALANCE trial in the coming weeks. The BALANCE trial is a double-blind head-to-head 24-month trial evaluating the safety and efficacy of pegunigalsidase alfa, 1 mg/kg dosed every 2 weeks in Fabry patients, with declining renal functions versus Fabrazyme. The increment results are anticipated to serve as our basis for the European EMA filing together with additional data from the various clinical trials. Subject to the results, the BALANCE trial, we could potentially have a commercial launch in Europe in the first half of 2023.

We announced in February an exclusive partnership with SarcoMed USA for the worldwide development and commercialization of alidornase alfa, or PRX-110, for the use in the treatment of any human respiratory disease or condition, including, but not limited to, sarcoidosis, pulmonary fibrosis and other related diseases via inhaled delivery.

Turning to our balance sheet. We ended the quarter with $70.4 million in cash, which includes the proceeds from a public offering of our common stock in February, and Eyal will provide more details around our financial in a moment. We feel confident about our financial position and our ability to fund our development plans for the year.

Before I will turn to Eyal, I would like to recognize again what a challenging time has been for all of us and emphasize to our team how proud I am of their focus and resilience. This has been a challenging week for us for our local employees in Israel, and we wish for imminent peace and stability for all.

I will now turn it to Eyal for a review of our financials. Eyal, please?

For the quarter ended March 31, 2021, we recorded revenue from selling of goods of $4.5 million compared to revenue of $5 million for the same period

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was $6.8 million compared to $16.6 million for the quarter ended March 31, 2020. So cost of goods sold was primarily

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the 3 months ended

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$3.1 million for the 3 months ended March 31, 2021, compared to $3.2 million for the same period last year.

Financial net expenses were $1.8 million for the 3 months ended March 31, 2021, compared to $3 million for the 3 months ended March 31, 2020. The decrease was primarily due to a decrease in expenses related to the outstanding convertible notes equal to $1.3 million. As of March 31, 2021, as Dror mentioned, our cash, cash equivalents and short-term bank deposits were approximately $70.4 million.

During the first quarter of 2021, we raised gross proceeds of $8.8 million from the sale of common stock under our ATM program and gross proceeds of $40.2 million via public offering of our own stock. Net loss For the 3 months ended March 31, 2021, was $5.5 million or $0.13 per share, basic and diluted, compared to a net gain of $1.7 million or $0.10 per share, basic and diluted, for the same period of 2020.

I'll now turn the call back to you, Dror.

Thank you, Eyal. We look forward to working closely with the FDA on the pass forward of PRX-102 for adults Fabry patients to be able to bring this important drug to commercialization. We're excited about continuing to advance our earlier-stage pipeline and continuing to build the company for the long-term success. We look forward to updating you as the year progresses.

And let's now take your questions, please.

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

This is Boobalan dialing in for Ram Selvaraju. So just to clarify, should the FDA conducted the site inspection on time, PRX-102 would have been approved, correct?

So the -- as we shared publicly, the CRL included the 2 facilities: one is the drug substance in Israel; and the other one is the fill-finish in [months]. And the third topic, not in this order, of course, was the fact that Fabrazyme was fully approved in the U.S. So all these topics has to be discussed with the FDA and will be raised if the Type A meeting as planned will be -- will take place, of course. And then we will get clarification and direction going forward.

Understood. So are you aware of any cases where the FDA has waived site inspection due to their inability to conduct sites review on time?

Yes. There are -- it's possible to hold a virtual inspection. Maybe there is another alternative like a record review inspection. But again, we are not deciding for the FDA. We are actually -- but we will raise all these alternatives again with the FDA, and hopefully, it will come to agreed upon solution.

Okay. So you noted in your press release that you will request the FDA a Type A meeting sometime by the end of July. Then assuming Class I resubmission, so do you have any thoughts when FDA will conduct a site inspection in your site as well as the third-party site?

Can you repeat the last 2 sentences, please? I'm sorry.

So assuming Class I resubmission, when do you expect the FDA to conduct a site inspection in your site as well as the third-party site?

We don't -- I wish I knew. We do not control those schedules. What we meant that we have, by the regulation, we have 90 days as far as I know to request a Type A meeting. And from the day of request, the FDA, if agrees, in 30 days, the Type A meeting takes place. For the sake of our discussion, if indeed the Type A meeting, for example, will take place in July, then it depends on the discussion of the Type A meeting. Following that, we will be able to decide on our pathway for resubmission. Then when the FDA will conduct an inspection in our Israeli site and/or in the French site, we wish it will be sooner than later, but we do not control their timetable.

Understood. So switching gears a little bit. So Fabrazyme was recently converted to full approval. So what impact would this have on PRX-102 in addition to a delay in your review process?

So this is what we plan to discuss with the agency. We hope there will not be -- I mean, clearly, there is a delay because we got the CRL. This is clear. Following -- this is exactly what will be discussed at the Type A meeting in order to resubmit as soon as possible. Resubmission after a CRL is a 6-month review process. The time to resubmission depends on what will be discussed and decided for this Type A meeting.

So one final question from me. How did Chiesi react to the CRL? And what kind of impact will the FDA inspection site delay -- FDA site inspection delay have on your commercialization activity?

So first, Chiesi is clearly disappointed with the CRL. I would like to mention that Chiesi actually trust very much with the product and the potential of PRX-102 to be a good alternative for the Fabry patient community going forward, both in the U.S. and the EU. And we worked closely ahead of preparing the Type A meeting and the EU submission which is unchanged from a timetable point of view.

(Operator Instructions) Our next question comes from the line of John Vandermosten with Zacks Investment Research.

Let me start off with another question on, I guess, the order of events related to the Type A meeting and the inspection. Are those independent of each other? Or must you hold the -- or is it your understanding that you must hold the Type A meeting prior to an inspection taking place?

I think they are not dependent on each other. The Type A meeting regulatory-wise has its own schedule, as I mentioned. From the day that we received the CRL, I think, I hope I'm not mistaken, there are 90 days to request a Type A meeting. And from the day of the request, there are 30 days to hold this meeting. Clearly, I would like to do it, I think, sooner than later, but with the right -- clearly once we are fully prepared. And the inspection-wise, both at the Israeli site and the French site, this is up to the FDA actually. This is part of, if I may say, communication with them.

Okay. So that's still being decided.

Yes, sir, it's not decided.

And then about the French facility, I think you said that there were some issues to resolve, and I guess I'm just trying to understand kind of the bottleneck or order of events. It seems like the inspection is the kind of the main thing and then just minor issues at the French facility. Is that your understanding at this point?

So we are not commenting on the specifics here. And we are currently working together with our quality and regulatory consultant on the pace forward to resolve these issues with the FDA.

Okay. And again, I know it's early and you haven't had your Type A meeting, but is there any sense that some of the data from the BRIGHT, BALANCE or BRIDGE studies might be used as part of a resubmission to the FDA?

As far as I know -- let's put it this way. Chiesi and Protalix are preparing the data right now. The BLA that was submitted a year ago was based on the Phase I/II plus safety data from some of the other studies, but it's not efficacy data from the other studies. I assume that we will not -- we'll now combine the parties. Again, Chiesi and Protalix are working very seriously and closely together, updating, if I may say, the briefing book ahead of this Type A meeting.

Our next question is from John Hudson, a private investor.

My question is, do you anticipate any delays with the FDA relative to the Palestinian attacks on Israel?

I don't think so. Actually, I do not. Unfortunately, there are tensions here, security tensions, but I hope it will be -- I can't say it will be solved soon, but it will be calmed down soon, and life will be back to normal, if I may say. I don't know what is normal, but as usual.

I certainly hope so too.

Yes. Yes. But this is the truth. I mean, nothing's changed. It's kind of -- it's very unfortunate of what's going on right now, very unfortunate. And still, we hope for quieter times very, very soon and then things are back to normal, if I may say. Usually, there are like, I don't know, 10 or 16 flights a day from Tel Aviv to New York or vice versa, so this is not the issue.

There are no additional questions at this time. I'll hand the floor back to management for further remarks.

So first, thank you. I wish to thank everybody for their time. We will keep updating you once we will have relevant data, of course. And I wish everybody a very nice weekend. And I hope for quieter days in Israel very soon. Thank you very much.

Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation.