Protalix Biotherapeutics Inc (PLX) 2021 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Protalix BioTherapeutics Full Year 2021 Earnings Call. (Operator Instructions) The conference is being recorded.

I will now turn the conference over to our host, Mr. Chuck Padala of LifeSci Advisors, Investor Relations for Protalix. Thank you. Please go ahead.

Thank you, Donna. Welcome to the Protalix BioTherapeutics Fiscal Year 2021 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 and the update was issued this morning and 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 the Protalix' filing with the U.S. Securities and Exchange Commission.

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

Thank you for the introduction, Chuck, and welcome, everyone, to Protalix Fiscal Year 2021 Financial Results and Business Update Call.

During this call, I will review the progress of our key clinical programs and provide an update of some of our future plans. Following my remarks, Mr. Eyal Rubin, our Chief Financial Officer, will review our financial results, and we will then open the line for questions.

I'm very pleased with the progress we made during 2021. Over the course of last year, we made significant strides in multiple fronts. First, we have finalized the BALANCE Phase III study, and we plan to share top line results of this study by next week.

We have reviewed with applicable regulatory agencies, our pathway for regulatory submissions. And for the EU, we have reviewed our pathway for submission of a marketing authorization agreement or MAA, for PRX-102 with the European Medicine Agency, or EMA and -- which was actually submitted in February of 2022.

For the United States, we have reviewed the pathway for resubmission of the biological license application, or BLA, for PRX-102, which we expect to be submitted to the FDA later this year. I want to emphasize the close collaboration we continue to have with our commercial partner, Chiesi Global Rare Diseases in all aspects of PRX-102 program, and we thank them very much for their efforts and appreciate their partnership.

In parallel, we invested resources in our early-stage pipeline to advance a number of programs. Our goal is to continue to invest both human and financial capital into new product candidates and establish a more significant pipeline while maintaining our focus in bringing PRX-102 to the finish line.

Finally, we strengthened our financial balance sheet in the second half of this year -- of last year actually. And now we have sufficient cash runway until Q3 2023.

Let me now review our results and our expected milestone in greater detail. In September of 2021, we, together with Chiesi, completed the Type A meeting with the FDA regarding PRX-102 BLA -- sorry -- this meeting took place actually following a complete response letter we received in April of '21 -- 2021. With guidance received from the FDA, we and Chiesi developed the pathway for resubmission of a BLA for PRX-102, and we expect to resubmit PRX-102 BLA to the FDA in the second half of this year. We anticipate the data package for the BLA resubmission will include results from our Phase III BALANCE study clinical trial.

As mentioned, we expect to announce top line results next week. A final analysis of the BALANCE study is anticipated to be available later this year after we have finalized all analysis and discussion of the collected data. We believe that the BALANCE results, if positive, together with our data [facts] from the Phase III BRIGHT trial and the Phase III BRIDGE trial might provide a compelling case to the regulators to consider this important new potential treatment option for adult patients with Fabry disease.

In February of 2022, we and Chiesi submitted an MAA to the European Medicines Agency for PRX-102 for the treatment of adult patients with Fabry disease. The application was validated confirming that all essential elements required for scientific assessments were included in the application. If the MAA is approved, PRX-102 will be authorized for sale in all member nations of the European Union. We are very excited to have achieved this milestone, and we are looking forward to providing updates as they [arise].

Turning to our early stage pipeline, PRX-115 as a PEGylated enzyme expressed via ProCellEx for intravenous administration of recombinant Uricase and -- that we are starting as a potential treatment for refractory gout. Gout is the most common inflammatory arthritis in the United States, affecting an estimated 9.2 million adults and an estimated approximately 2% of the gout population is considered to have chronic refractory disease. Uricase enzyme converts uric acid to allantoin, which is easily eliminated through urine. However, Uricase enzyme does not exist neutrally in humans. We use ProCellEx to express and optimize recombinant Uricase enzyme, which we are designing to have an [improved] half-life, reduce immunogenicity and potentially longer-term efficacy.

We have initiated toxicology studies earlier this year, and we plan to initiate the Phase I clinical study early next year. Second one is PRX-119, which is a PEGylated recombinant human DNase I expressed by our system ProCellEx and designed to elongate the DNase's half-life in the circulation for the treatment of NETs-related diseases. The only FDA approved DNase I, dornase alfa, is for treatment of cystic fibrosis patients via inhalation. We are developing long-acting DNase I to potentially customize the treatment of [various] medical condition in which NETs are involved. And we will update you as the program develops, and we identify -- and we identify I'm sorry, an initial targeted indication.

I will now turn to Eyal for a review of our financials. Eyal, please go ahead.

Thank you, Dror, and thank you, everyone, again, for joining today's call. Let me review our fourth quarter and full year 2021 financials. For the year ended December 31, 2021, we recorded revenues from selling goods of $16.7 million, an increase of $0.5 million or 3% compared to revenues of $16.2 million for the same period of 2020. Revenues from licenses and R&D services for the year ended December 31, 2021 were $21.6 million compared to $46.7 million for the year ended December 31, 2020.

Revenues from license agreements represent the revenue we recognized in connection with the Chiesi agreement. The decrease is primarily due to lower costs incurred in the year ended December 31, 2021, in connection with the PRX (inaudible).

Cost of goods sold was $16.3 million for the year ended December 31, 2021, an increase of $5.4 million or 50% versus $10.9 million for the year ended December 31, 2020. The increase was primarily from onetime manufacturing costs incurred while preparing for the then anticipated FDA approval of the PRX-102 BLA and higher manufacturing costs.

R&D expenses for the year ended December 31, 2021 were $29.7 million, a decrease of $8.5 million or at 22% compared to $38.2 million for the year ended December 31, 2020. Decrease is primarily due to the completion of the 3 Phase III clinical trials of PRX-102 as Dror mentioned.

We expect R&D 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 elaborated by Dror earlier.

Selling, general and administrative expenses were $12.7 million for the year ended December 31, 2021, an increase of $1.6 million or 14% versus $11.1 million for the year ended December 31, 2020. The increase resulted primarily from an increase in corporate costs related mainly to insurance.

Financial expenses net was $7.1 million for the year ended December 31, 2021, a decrease of $2.1 million or 23% compared to $9.2 million for the same period of 2020. As of December 31, 2021, our cash, cash equivalents and short-term bank deposits were approximately $39 million compared to $38.5 million as of December 31, 2020.

As Dror mentioned earlier, during the third quarter of 2021, successfully completed a note exchange to effectively lower the aggregate principal amount of our then outstanding convertible notes to $28.75 million and to extend the maturity of the remaining notes from 2021 to 2024. We believe that our current financial position provides us sufficient cash runway through the third quarter of 2023.

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

Thank you, Eyal. So thanks to all of you joining us for today's call. We look forward to working closely together with Chiesi to collaborate with the FDA and the EMA to bring the PRX-102 to market.

As I mentioned in my opening remarks, we are extremely excited for the opportunity for resubmission, which lies -- I'm sorry. As I mentioned in my opening remarks, we are extremely excited for the opportunity to resubmit -- for resubmission, which lies ahead in second half of 2022. Our aim is to bring forward this important potential treatment option for adult patients with Fabry disease.

Now I will turn the call back to the operator, and let's have your questions, please.

(Operator Instructions) Our first question is coming from John Vandermosten of Zacks.

In the BRIGHT study, what was the trigger for switching the one patient from the 4-week regime to the 2-week regime?

Again, please, in the BALANCE study?

I'm sorry, in the BRIGHT study, sorry. Yes, in the BRIGHT study, what was the trigger for switching the one patient from the 4-week to the 2-week regimen?

John, I don't have the answers in front of me. If we speak about 1 patient out of 30 that were enrolled, we look into it, and we can get back to you.

Okay. Well -- because I noticed that all the patients are supposed to be on the 4-week regimen and then one of them shifted to the 2-week. And I was just wondering what -- if there was a trigger or something that shifted that?

I assume there was a trigger. I will verify the fact, and I will revert, of course.

Okay. Sounds good. Sounds good. And then on Chiesi rare disease, have they started sales yet? Did they have a sales team in place already? So when your product rolls on, they already have interactions going on with...

They have established the rare disease business, I think, close to 3 years ago, if I remember when. They bought couple of small assets and they have recruited enough, if I may say, infrastructure, well experienced from -- if I may say, from the main -- from rare disease companies and other companies with experience. So actually, please remember that we were ahead of approval actually a year ago, close to a year ago. So they do have infrastructure and I will call marketing in the wide term. We speak about sales, patient advocacy, marketing, market access, et cetera, on the ground with I assume many hundred years of experience in each of the continents ready to go.

That's great. That's great news. And then the last question for me is on the resubmission, the PRX-102 BLA resubmission, is the only thing that you're waiting on there really is the results from the BALANCE study, the final results to submit that? Or is there something else that also needs to get completed before you resubmit?

We are actually -- once we open the top line results and share, then there will be a couple of months to finance the results of the BALANCE study and establish a CSR, which is a clinical study report. Then in parallel, actually, and this is not on the critical path, but it's -- it will be ready as well is, of course, the feed and finish with all the data around it. And actually, beyond that, there is nothing else. So this is why we are here to -- we will be moving, if I must say, into final steps of submissions later this year. Once the CSR is done, I assume it will take another few weeks, QA processes, et cetera, verifying everything is okay, and then we move on.

(Operator Instructions) We have additional questions coming from John of Zacks.

Just a couple of questions on the forecast for next year for R&D. Eyal, you mentioned something about that, that we're going to maybe see an incremental increase year-over-year as had about $30 million in R&D expense for 2021. Is that -- what do you see as the direction of that in 2022?

I assume that the net-net, we're going to see more investments in the preclinical and the early stage pipeline on the expense of PRX-102 as we progress in the submission. Obviously, it's not going to be part of the R&D as we expect most of the regulatory costs to be behind us. So net-net, I guess we're going to be in the same neighborhood, maybe a couple of millions more, but nothing significant. It's going to be only I think a new deployment of the capital from 102 since all trials are done and most of the expenses are already behind us, deploying them into the new -- or the early pipeline that we have.

At this time, I'd like to turn the floor back over to Mr. Bashan for closing comments.

Thank you for that. So all I ask is to thank you again for the time, and I hope we will have good news next week. And we will update you, of course, accordingly. Thank you very much.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.