Protalix Biotherapeutics Inc (PLX) 2022 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Protalix Full Year 2022 Earnings Call. As a reminder, this conference is being recorded. I will now turn the conference over to your host, Monique Kosse of LifeSci Advisors, Investor Relations for Protalix. Thank you. You may begin.

Thank you, operator, and welcome to the Protalix BioTherapeutics Fiscal Year 2022 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 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 the statements made. Factors that could cause actual results to differ are described in the disclaimer and in Protalix' filings with the U.S. Securities and Exchange Commission.

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

Thank you, Monique, and welcome, everyone, to our fiscal year 2022 financial results and business update call. I will begin by reviewing our progress and accomplishments over the past year, along with our plans for the coming months. Following my remarks, Eyal will provide a more detailed review of our financial results, and we will then open the line for questions.

So, 2022 was a strong year for Protalix. And over the last year, we made significant progress on multiple fronts. I would like to begin by highlighting our most recent achievements, together with our development and commercialization part of Chiesi Global Rare Diseases. We are pleased -- or very pleased that the European Medicines Agency's Committee for the Medicinal Products for Human Use, or CHMP, adopted a positive opinion and recommended marketing authorization of PRX-102 for the treatment of adults with Fabry disease. This is a significant step towards the potential approval of PRX-102 in Europe and brings us closer to delivering risk treatment option to Fabry patients around the world.

The final decision is now referred to the European Commission, which is expected to provide a decision marketing authorization in early May of this year. Not only we are approaching potential approval in Europe but we also look forward to potential approval in the United States. As previously announced, the U.S. FDA accepted our resubmitted Biologic License Application for review in December. It was resubmitted already in November 9. We received this acknowledgment letter on December 9 and our signed PDUFA target action date of May 9, 2023, is quickly approaching.

Including in these regulatory submission to the EMA and FDA were the comprehensive results from our Phase III preclinical program as well as long-term data from our ongoing open-label extension studies. Final results from our Phase III BRIGHT and BALANCE trials were completed and announced earlier this year. And both studies met their respective efficacy and safety objectives. This robust set of data represents hundreds of years of patient's exposure to PRX-102, and we believe provides a compelling case to the regulators to consider this important potential treatment option for adults affected by Fabry disease.

We look forward to providing you with updates as we approach potential approval in the EU and the U.S. If approved, PRX-102 will be a second approved drug from our proprietary protein expression system called ProCellEx, providing even further validation of this unique and innovative platform. As we enter into what will be an exciting year for Protalix, we would like to reiterate our appreciation for Chiesi's partnership and dedication to this program. And we thank both Protalix and team for all their efforts to deliver this potential new treatment to patients with Fabry disease.

Turning to our early stage pipeline. We are continuing to develop promising candidates expressed through our prosthetics protein expression system. PRX-115 is a novel PEGylated uricase in development for the treatment of severe gout. Final results from the first stage of 1 month's multiple dosing toxicity study of PRX-115 in 2 species to support the Phase I study show no indication of safety concern. Our current development plan goal is to initiate a Phase I clinical trial in the next couple of weeks.

In addition, we continue to make progress on PRX-119, a PEGylated recombinant human DNase1 protein designed to elongate DNase half-life in circulation for the treatment of NETs related diseases. We have conducted preclinical studies to demonstrate the feasibility of PRX-119, and we look forward to providing updates on this program as we cover throughout this year.

Finally, our balance sheet provides us with sufficient cash runway to the first quarter of 2024, supporting the company through potential approval in addition to continuing developing our early-stage pipeline programs, as I mentioned.

Now before I turn to Eyal for a review of our financials, I would like to say that with regard to the [PRO] filed earlier this morning, I have to clarify that the possible file with connection to the ATM program and the company has to emphasize this is not an announcement of a fundraising. Now I'll turn to Eyal. Eyal, please.

Thank you, Dror, and thank you, everyone, for joining today's review of fiscal year 2022 financials. The company recorded revenues from selling goods of $25.3 million for the year ended December 31, 2022, an increase of $8.6 million or 51% compared to revenues of $16.7 million for the year ended December 31, 2021. The increase resulted from an increase of $2.2 million in sales to Pfizer, an increase of $3.1 million in sales to Brazil and an increase of $3.3 million in sales to Chiesi.

Revenue from license and R&D services for the year ended December 31, 2022, were $22.3 million, an increase of $0.7 million or 3% compared to revenues of $21.6 million for the year ended December 31, 2021. Revenue from license and R&D services represent mainly the revenues we recognized in connection with the Chiesi agreements. Cost of goods sold for the year ended December 31, 2022, was $19.6 million an increase of $3.3 million or 20% compared to the cost of goods sold of $16.3 million for the year ended December 31, 2021.

The increase in cost of goods sold was primarily the result of an increase in sales of goods. Total research and development expenses for the year ended December 31, 2022, were approximately $29.3 million comprised of approximately $17.8 million in subcontractor related expenses; approximately $7.3 million of salary and related expenses; approximately $1.4 million of material-related expenses; and approximately $2.8 million of other expenses.

For the year ended December 31, 2021, our total research and development expenses were approximately $29.7 million comprised of approximately $18.4 million in subcontractor related expenses; approximately $7.4 million of salary and related expenses; approximately $1.2 million of material-related expenses; and approximately $2.7 million of other at expenses. The decrease in research and development expenses of $0.4 million or 1% for the year ended December 31, 2022, compared to the year ended December 31, 2021, resulted primarily from $0.6 million decrease in subcontractor-related expenses in connection with our PRX-102 clinical trials, partially offset by a $0.2 million increase in materials-related expenses.

Selling, general and administrative expenses were $11.7 million for the year ended December 31, 2022, a decrease of $1 million or 8% from $12.7 million for the year ended December 31, 2021. The decrease resulted primarily from a decrease in professional fees and salary-related expenses. Financial expenses net was $1.4 million for the year ended December 31, 2022, a decrease of $5.7 million or 80% compared to financial expenses of $7.1 million for the year ended December 31, 2021. The decrease resulted primarily from lower interest and debt amortization costs due to a decrease in our outstanding notes from an aggregate principal amount of $57.92 million of 2021 notes to an aggregate principal amount of $28.75 million of 2024 notes and an increase in exchange rate of new shekel for U.S. dollars over the period.

For the year ended December 31, 2022, we recorded income taxes of approximately $530,000. We didn't record income taxes for the year ended December 31, 2021. The income taxes were recorded for 2022, as a certain section regarding the deductibility of research and development expenses of the U.S. tax cuts and Job Act of 2017 went into effect on January 1, 2022. Cash, cash equivalents and short-term bank deposits were approximately $22.2 million as of December 31, 2022.

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

Thank you, Eyal. Thank you, everyone, for joining us on today's call. We are excited for the year ahead as we await potential approval of PRX-102 for adult patients with Fabry disease, and we continue to work towards our mission of delivering new medicines to patients with high unmet needs. Now I will turn the call back to the operator to open the line for questions, please.

(Operator Instructions) Our first question comes from Boobalan Pachaiyappan with H.C. Wainwright.

Great. Congrats on the progress and a few questions from our end. So we know Chiesi makes launch decisions for PRX-102. But from your perspective, how early could the drug be launched in order for dear shareholders to derive maximum value?

So first, thank you for the question. This is a question to Chiesi. As far as we understand, once we get approved, there will be a couple of months, I assume, to finalize reimbursement schemes or programs with the relevant insurers in the different countries in Europe. And of course, in parallel, I hope, in the U.S. and then it will be valid commercially. But again, this is a question to Chiesi, but I assume this is the plan.

Okay. In your view, what's the general physician awareness for PRX-102 in European Union?

Can you repeat the question? I could not understand it. I'm sorry.

So I'm trying to understand the general physician awareness of PRX-102 in European Union.

So -- thank you. I think there is a high awareness. This program is, if I may say -- the clinical program is 8, 9 years old, and the program itself is even earlier. We work with investigators and physicians throughout the world. We had clinical side, both in Europe and in the U.S. as well as Australia and other places. So as time goes by and when we mentioned a couple of times that we have hundreds of years of patients accumulated exposure, clearly, a significant portion is also in Europe. So I hope this answers your question.

Okay. Clear. Can you frame Fabry disease market opportunity in European Union? And can you discuss any progress or any gating steps to securing reimbursement in European Union.

So no -- the program -- first, again, this is a question to Chiesi. The indication is about between $2 billion, $2.1 billion is, it grows globally. And I hope that -- and we believe that for Chiesi, we know it will be a very high priority. And I'm sure they will apply the best effort on their commercial program. And then we will have to position this drug well -- and that's it. As for specific details with regard to their reimbursement efforts, I suggest you ask Chiesi directly.

Okay, clear. Switching gears, speaking about your 115 [Gold] program. I know last -- during the last call, you mentioned that IND will be submitted in the first quarter. So can you clarify the IND has already been submitted you're ready to launch Phase I?

So we are ready to launch Phase I. The Phase I will be conducted outside the U.S. in a center of excellence in New Zealand. I assume that once -- and that hopefully, we will finalize a Phase I successfully. We will prepare meanwhile, and we will discuss also with the FDA with regard to Phase II and next steps.

Okay. So with respect to 115, again, how many healthy volunteers or patients -- I'm not sure which one you're going to -- who you're going to target. But how many initial data set patients you need in order to move forward or maybe to get closer to the proof-of-concept studies?

So what we are planning now is the first in-human Phase I study. And we will publish everything once we publish the protocol. So you will see all details.

Okay. And maybe 1 final question. How long do you expect to run the Phase I study? And maybe when you're -- ideally you would like to see the data?

We study -- I'm sorry, I could not understand.

So I'm just curious, how long do you expect to run your 115 Phase I study?

I apologize. So we expect to run it until the end of this year. So I hope we will be able to finalize the CSR by the beginning of next year.

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

Let me start out with a question on just milestones that we expect after May. May is supposed to be a big month with both EMA and FDA expected. But after that, what should we look for on the horizon in terms of milestones for the company.

Eyal, please.

Yes. I think, John, you're referring to clinical (inaudible) right? not financial ones.

Well, just any major events. I mean you have the other 2 programs, which Dror talked about just a little bit on 115 in terms of that Phase I. But just anything else we should keep an eye out for on the horizon.

Not at this point, as Dror mentioned. We have first in human in the next couple of weeks on the PRX-115, and they finish it by the end of this year with the possibly, potentially we're going to be with (inaudible) early next year, the first (inaudible) main major milestones that we can foresee (inaudible) the current pipeline.

And in terms of the financial cash flows and everything that's related to PRX-102. When do we expect -- assuming that sales are made in the second quarter or even the third quarter, when might those cash flows be recognized or received? And when might they be recognized on the financial statements?

So my (inaudible) with the (inaudible) approvals, should we receive the within 60 days from market from the event. Obviously, they're going to be recorded as we get them from (inaudible) to the street along with the financials.

Okay. Very good. And I saw that you mentioned in the K -- and we talked about this before, but you mentioned in the K this time that (inaudible) is no longer -- has exclusivity in the EU and lyso is marketing globally. What does this mean for future revenues?

Yes. So since we don't commercialize the lyso it's been marketed and commercialized by Pfizer (inaudible) decide whether to start the marketing in Europe are serving them Pfizer based on the fields we received from them. They'll have to rethink internally as whether to penetrate market by market. We're calling it EU. (inaudible) at the end of the day, it's a market-by-market (inaudible) struggle. So they'll have to make up their minds and they will be [14 to 40].

Okay. Great. And I assume that you have regular conversations with them on kind of how things are going with the product sales. So I mean, you guys obviously have to plan production and everything like that. So I assume that you have conversations with them, right?

Yes, that's correct. Again, question for them (inaudible) holding the commercial rights.

Got it. Got it. And last one for me is I also saw that you -- your agreement with Chiesi for fill finish activities. I just guess just wondering what the geographic location was of that since you're going to be producing the drug product in Israel. And then I guess, where is it going to be shipped for the further disposition?

It's going to be shipped to pharma (inaudible) pharma, and from there, it's going to be delivered globally?

At this time, I would like to turn the call back over to management for closing comments.

So I have to thank everybody very much for their time today, and we are very happy with the recommendation of the CHMP, and we look forward to providing you with further good news down the road. Thank you very much. Have a nice day.

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

Thank you.