Protalix Biotherapeutics Inc (PLX) 2023 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Protalix Biotherapeutics fiscal year 2023 financial and business results conference call. As a reminder, this conference call is being recorded.

I'll now turn the conference over to our host, Ms. Mike Moyer, of LifeSci Advisors, Investor Relations for Protalix. You may now begin.

Thank you, Rob, and welcome to the Protalix Biotherapeutics fiscal year 2023 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. Press release announcing the results from 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 include for 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 US Securities and Exchange Commission.

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

Thank you, Moyer. And welcome everyone, to our fiscal year 2023 financial results and business update call. I will begin by reviewing our accomplishments over the past year and recent focus. Following my remarks, Eyal will provide a more detailed review of our financial results. We will then open the line for questions. 2023 marked a significant year for Protalix received regulatory approvals for our second drug [Elfabrio] for the treatment of adult patients with Fabry disease.

In May of 2023, both the FDA and the EMA approved there Elfabrio for the treatment of adult patients with Fabry disease. Since then, Elfabrio has been granted additional regulatory approvals it and in other markets like UK, Switzerland and most recently in Israel as well. Our commercial partner, Chiesi global rare diseases remains focused on the commercial launches, which are underway in the United States, in the European Union, in the UK and additional markets where approvals are granted, we are confident the Chiesi will continue to position us Elfabrio for success. And we look forward to continued growth of our Elfabrio's franchise.

In February is now the second approved drug express real preparative plant coal-based protein expression system ProCellEx, which further highlights the success of our unique platform with these significant milestones behind us. And while we are supporting Chiesi's operations. We are continuing to focus on building our the development of our pipeline of innovative assets for the treatment of genetic and non-genetic rare diseases.

Our next clinical development candidate is PRX-115, which is being developed for the potential treatment of severe adult. PRX-115 is a recombinant PEGylated uricase product candidate that is also produced using our ProCellEx platform. In March of 2023, we have initiated a Phase 1 first-in-human clinical trial of PRX-115 to evaluate the safety, pharmacokinetics, pharmacodynamics and immunogenicity.

This is a double-blind, placebo-controlled single ascending dose study being conducted in New Zealand in approximately 56 patients with elevated uric acid levels. We are pleased to announce that the trial is now fully enrolled, and we expect to report preliminary results from this study in the second quarter of 2024.

Our next pipeline candidate also being expressed for Protalix is PRX-119. PRX-119 is a PEGylated recombinant human DNase one candidate in developing for the potential treatment of diseases associated with neutrophil extracellular traps on [necks]. Additional preclinical data are ongoing, we will update you accordingly of course.

In addition to PRX-115 and PRX-119, we have multiple preclinical programs in progress, and we look forward to providing you with updates of these potential development candidates as they become more mature.

On the corporate side, in 2023, we welcome Dr. Eliot Forster as Chairman of our Board of Directors and a member of our Nominating Committee. Dr. Forster succeeded Zeev Bronfeld will retired, and we are grateful to the [Eliot] is indication that leadership since the founding of Protonix, and we are grateful for Eliot contributions thus far as we prepare for an exciting phase of development of the company.

Finally, and before turning the call over to Eyal, I want to note that our strong balance sheet provides us with sufficient cash free cash runway to support our operations. And in addition, as I will discuss sales of a ELfabrio's to clear the increased after regulatory approvals of a ELfabrio will while carefully build inventories to support successful launch. We expect sales to clearly to gradually continue. As they anticipate future approvals and launches in additional countries throughout the world.

With that, it is now my pleasure to turn the call over to Eyal for a review of our financials. Eyal, please go ahead.

Thank you, Dror, and thank you, everyone, for joining today's call. Let me review our fiscal year 2023 financials. We recorded revenues from selling goods of $40.4 million for the year ended December 31, 2023, an increase of $15.1 million or 60% compared to revenues of $25.3 million for the year ended December 31, 2022. The increase resulted primarily from an increase of $14.1 million sale of Elfabrio drug product to Chiesi following the approvals by the FDA and the EMA of a Elfabrio as George described, an increase of $0.1 million in sales to Pfizer and of $0.9 million in sales to Brazil.

We recorded revenues from license and R&D services of $25.1 million for the year ended December 31, 2023, an increase of $2.8 million or 13% compared to revenues of $22.3 million for the year ended December 31, 2022. The increase resulted from the $20 million regulatory milestone payment from Chiesi in connection with the FDA approval of Elfabrio, which was partially offset by a decrease of $17.2 million in revenues recognized in connection with the R&D performance obligation under the Chiesi the agreements as the company has completed the Phase 3 clinical program there under.

Revenues from license and R&D services represent primarily the revenues the company recognized for services provided under the Chiesi agreement. Cost of goods sold was $23 million for the year ended December 31, 2023, an increase of $3.4 million or 17% compared to cost of goods sold of $19.6 million for the year ended December 31, 2022.

The increase in cost of goods sold was primarily the result of increasing sales of goods for Chiesi, Brazil and Pfizer. The Chiesi included certain drug substance costs, which had already been recognized as research and development expenses as it was produced as part of the research and development activities accordingly and related cost of goods sold does not include the cost of such drugs substance.

For the year ended December 31, 2023, the company total research and development expenses were approximately $17.1 million, comprised of approximately $6.3 million subcontractor related expenses, approximately $7.8 million of salary and related expenses, approximately $0.6 million material expenses and approximately $2.4 million of other expenses.

For the year ended December 31, 2022, the company's total research and development expenses were approximately $29.3 million, comprised of approximately $17.8 million subcontractor related expenses, approximately $7.3 million of salary and related expenses, approximately $1.4 material related expenses. And approximately $2.8 million of other expenses.

The decrease in research and development expenses was $12.2 million or 42% for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in research and development expenses resulted primarily from a fee for an $11.5 million decrease in subcontractor related expenses in connection with the PRX-102 clinical trials and a $0.8 million decrease in materials related expense.

Selling, general and administrative expenses were $15 million for the year ended December 31, 2023, an increase of $3.3 million or 28% from $11.7 million for the year ended December 31, 2022. The increase resulted primarily from an increase of approximately $2.3 million in onetime cash bonuses, share-based compensation and salary and related expenses as well as an increase of $0.3 million in travel conferences and employee training expenses.

Cash and expenses net was $1.9 million for the year ended December 31, 2023, an increase of $0.5 million or 36% compared to financial expenses of $1.4 million for the year ended December 31, 2022. The increase was primarily due to a decrease of $0.9 million in income related to exchange rates as well as an increase in interest expenses of $0.7 million, which was partially offset by a gain recognized due to the conversion of portion of the 2024 notes of $0.4 million and a $0.6 million increase in interest income.

For the year ended December 31, 2023, we recorded income taxes of approximately $0.3 million, a decrease of $0.2 million or 40% compared to tax expenses of $0.5 million for the year ended December 31, 2022. The income taxes resulted primarily from the provision for current taxes and income, mainly derived from US taxable global intangible low-taxed income GILTI mainly in respect of section 174 of the US Tax Cuts and Jobs Act effective in 2022, Section 174 of the TCJA requires all US companies for tax purposes, the capitalized and subsequently amortize R&D expenses that fall within the scope of section 174 and five years for research activities conducted in the United States in over 15 years for research activities conducted outside of the United States rather than deducting such costs in the current year. The net income taxes gives effect to a valuation allowance release equal to approximately $3.1 million.

Cash and cash equivalents and short-term bank deposits were approximately $44.6 million at December 31, 2023. Net income for the year ended December 31, 2023, was approximately $8.3 million or $0.12 per share basic and $0.09 per share diluted compared to a net loss of $14.9 million or $0.31 per share basic and diluted for the same period in 2022.

I would like turning the call back to you, Dror.

Thank you, Eyal. I would like to conclude by expressing how proud we are of all that Protalix has accomplished throughout 2023 with two drugs express via our proven platform are now approved. We are continuing to build our expertise to develop a pipeline of assets to potentially transform the treatment of rare disease. and grateful for our world-class team who constantly demonstrate unwavering commitment to our mission. We look forward to updating you on our progress as we continue to drive innovation and create long-term value for the patients and stockholders.

Now I would like to ask the operator to open the call for Q&A.

(Operator Instruction)

John Vandermosten, Zacks.

Great. Thank you, and good afternoon, Dror and Eyal. I would start off with a question about some of the PRX-102 studies that are going on. I noticed you had one in Japan and one in the United States for pediatric. Can you give us a time line on how long those might take and what the next steps would be there to get approvals for Japan and for pediatric indication?

So thank you, John. Actually, this study this is -- there conducted by (inaudible) and this is those possibilities. So I don't have the time line in front of mind, of me of course, and this is for them actually to address that. But I think you can understand that they took a lot of attention and resources into expanding, if I may say the franchise. This is clear?

Yes, great. It sounds like you have a lot of opportunities out there. And also, you mean, you may not have gotten a lot of information from TAG on this, but when you look at your revenues and expenditures for the year. How should we think of those balancing out in terms of free cash flow and the bottom line? Are they going to be pretty equal based on the view right now? Is that how you're planning going forward?

Yes. Thanks for the question, John. So I don't know what equal means, but the As Dror mentioned, gradually, [expected] obviously to grow. In terms of the free cash flow, it depends how much money we're going to invest in the early stage in the latest stage R&D. As I mentioned in previous calls, the Celtic is the are comprised of inventory buildup as well as obviously commercial sales to the enrolled commercial patients.

Again, we expect that the yes, the sales are going to eventually grow and gradually, yes, we'll get to the place as we indicated in our presentation that we believe the [TAG] would be a good job and they are taking the market.

Got it. And then looking at PRX-115, you had mentioned that there's going to be results from that. It seems like in the next couple of weeks, what assuming those are positive, what are the next steps for that program? Is that Phase 2 or might there be some of their suite there?

No. So if indeed we continue to go forward, of course, move into a Phase 2. Yes.

Okay. And would that be before the end of this year that you would start that Phase 2.

This depends. I think it will be between the end to the first half of next year. Yes.

The first half of next year. Okay, got it. And then last question on PRX-119, what are the next steps for that? Is that something you might put into the clinic this year?

Not yet. We are looking into you know, the right indication to continue resizing, this will take further a bit more to the site.

Okay. And then any other milestones on the R&D side that we should think about as we progress through 2024.

You know, once there will be something to which we will update of course, we are not exactly sitting on our hands. Well, I think we will pretty much, I would say, very intensively in order to make sure that we can add the additional early stage assets. It is just, we take our time and I hope we will talk to the right moves that will make sense.

Okay. All right. Thank you, Dror and thank you, Eyal. Appreciate your answers.

You're welcome.

(Operator Instructions)

Thank you at this time there is no additional questions, gentlemen, would like to make some further remarks.

This Dror speaking. I just would like to thank everybody again for the time. And again, to thank our shareholders and our employees for supporting us and moving on with our commitment. And we will, of course, we'll update you accordingly on any further development, and we will meet in the next earnings update. Thank you.

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

Thank you.