Protalix Biotherapeutics Inc (PLX) 2025 Q1 法說會逐字稿

Good morning ladies and gentlemen, and welcome to the Protalix Biotherapeutics first quarter 2025 financial and business results conference call. As a reminder, this conference is being recorded. I will now turn the conference over to our host Mike Moyer of Lifei Advisors, Investor Relations for Protalix. Thank you. Please go ahead.

Thank you, operator, and welcome to the Protalix Biotherapeutics first quarter 2025 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 financial results for the quarter and corporate updates was issued this morning and is available now on the Protalix website. Please take a moment to read the disclaimer and forward-looking statements in the press release.

The earnings released in 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 Protalix's filings of the US Securities and Exchange Commission. I will now turn the call over to Mr. Bashan.

Thank you, Mike. And thank you everyone for joining for our first quarter of 2025 financial results and business update. I will begin with the reviewing of our accomplishments over the quarter in recent weeks. Following my remarks, Eyal will provide a detailed review of our financial results, and then we will open the line for your questions, of course.

We had another solid quarter with an increase in revenues from selling goods compared to the same period last year. Giving the promising results obtained in 2024 from our first in human study of our gout product candidate PRX-115, we are focused on building on the momentum and working towards initiating the Phase 2 clinical trial in patients with gout later this year.

At the same time, we continue to evaluate additional pipeline candidates for potential further development, including PRX-119, as well as other early-stage clinical assets.

Eyal will discuss the details of our financial achievements in a few minutes, and I would like to start with PRX-115. As we announced with our results for 2024, we completed alcohols in the first in human Phase 1 clinical trial of PRX-115. The study involved a single dose of PRX-115 in subjects with elevated uric acid levels. Overall, PRX-115 exposures increased.

And in a single dose of PRX-115 rapidly reduce plasma uric acid levels, both in do dependent manner. Both in those dependent manner. So, the encouraging results from these studies suggest a long-acting effect and may enable us to potentially widen the dosing interval, which could enhance patients' compliance and treatment flexibility. I encourage you to check the publication section of our website where we have uploaded a poster that was presented at the ACR Conference in November of 2024 describing the results.

We are excited to progress with the clinical development of PRX-115 and our goals and our goal continues to be initiation of this Phase 2 study in the second half of this year.

I now turn to Elfabrio. Last year, our commercial partner Chiesi Global Rural Diseases continued to increase its focus on Elfabrio and invest substantially in medical and commercial program. Last December, Chiesi announced-- that the European Medicine Agency, or EMA validated a variation submission for pegunigalsidase.

This submission is to reduce the dosing frequency in the label to be 2 milligram per kg every four weeks. The currently approved dose is 1 mg per kg administered every two weeks. The application was supported by the revised Population-PK model and a new exposure response analysis of the clinical data from the previously completed BRIGHT Phase 3 clinical study, as well as the related expansion, extension study.

We look forward to working closely with both Chiesi and the EMA throughout the review process and we expect to hear from the EMA during the first quarter of this year. We continue to appreciate Chiesi's partnership and dedication to Fabry's patients and patient community.

Our next pipeline can also expressed for prosthetics is PRS-119. PRX 119 is PEGylated recombinant human DNase I candidate in development of the potential treatments of diseases associated with not to fill extracellular traps on it. The clinical of PRX-119 remain ongoing.

As we have been discussing throughout the past year, we have been focusing our efforts on early-stage development assets to build our product development pipeline. This includes leveraging our prosthetics platform and regulation capabilities, evaluating drug delivery system that may allow protective delivery of different modalities, and focusing on therapeutic areas to renal diseases.

We will continue these efforts throughout 2025, and we hope to provide with further updates as this program become more mature. For now, let me say that I'm excited about our R&D efforts. And we are laying the groundwork for future developments. With that, it is now my pleasure to turn the call over to Eyal to review our financials. Eyal, please go ahead.

Thank you, Dror, and thank you everyone for joining today's call. Let me review our first quarter 2025 financials.

We recorded revenues from selling goods of $10 million during the three months ended March 31, 2025, an increase of $6.3 million or 170% compared to revenues of $3.7 million for the three months ended March 31, 2024.

The increase resulted primarily from an increase of $5.9 million in sales to Pfizer and an increase of $0.4 million in sales to Fiocruz in Brazil. We recorded revenues from licensed and R&D services of $0.1 million for three months ended March 31st, 2025, and March 31, 2024.

Revenues from license and R&D services are comprised primarily of revenues we recognize in connection with our license supply agreements with Chiesi. Going forward, we expect to generate minimal revenues from life and R&D services other than potential regulatory milestone payments.

Cost of goods sold was $8.2 million for the three months ended March 31, 2025, and increased to $5.6 million or 215% from cost of goods sold of $2.6 million for the three months ended March 31, 2024. The increase in cost of goods sold was primarily the result of an increase in sales to Pfizer and Fiocruz in Brazil.

For the three months end on March 31, 2025, our total research and development expenses were approximately $3.5 million comprised of approximately $1.8 million of salary-related expenses, approximately $0.8 million subcontractor related expenses, approximately $0.2 million of materials related expenses, and approximately $0.7 million of other expenses.

For the few months ended March 31, 2024, our total research and development expenses were approximately $2.9 million, comprised of approximately $1.5 million of salary and related expenses, approximately $0.5 million of stock contractor related expenses, approximately $0.2 million of material related expenses, and approximately $0.7 million of other expenses.

Total increase in research and development expenses for the three months ended March 31st, 2025, was $0.6 million or 21% compared to the three months ended March 31, 2024. The increase in research and development expenses resulted primarily from the advance in our clinical pipeline.

Selling general administrative expenses were $2.6 million from three months end in March 1, 2025, a decrease of $0.5 million or 16% compared to $3.1 million from three months ended March 31, 2024.

The decrease started primarily from a decrease of $0.4 million in salary related expenses and a decrease of $0.1 million in selling expenses.

Financial income net was $0.4 million for the three months end March 31, 2025, compared to financial income of net of $0.1 million for the three months ended March 31, 2024.

The difference resulted primarily from lower note interest expenses due to the September 2024 repayment in full of all the outstanding principal and interest payable under our then outstanding 7.5% senior secured promissory notes, partially offset by a lower interest income on bank deposits and higher exchange rate costs.

For the three months end in March of each March 31, 2025, and March 31, 2024, we recorded the tax benefit of approximately $0.1 million. The tax benefit resulted primarily from deferred taxes on income mainly derived from guilty income, mainly in respect of Section 174 of the U.S. Tax Cuts and Jobs Act, of 2017 or the TCJA.

Effectively in 2022, Section 174 of the TCJA requires all US companies for tax purposes to capitalize and subsequently amortize R&D expenses that fall within the scope of Section 174 over five years for research activities conducted in the US and over 15 years for research activities conducted outside the United States rather than deducting such costs in the current year.

Cash, cash equivalent and short-term bank deposits were approximately $34.7 billion at March 31, 2025. Net loss for the quarter ended March 31, 2025, was approximately $3.6 million or $0.05 per share basically and diluted compared to $4.6 million or $0.06 per share basically and diluted for the same period in 2024. I will now turn the call back to you Dror.

Thank you Eyal. To conclude, 2025 is off to a good start and promises to be exciting year for Protalix as we continue to build out the foundations for the future. We are excited to begin a Phase 2 program for PRX-115 later this year and we continue to make progress on our early-stage R&D efforts. I'm confident in our strategy.

Balance sheet and three streams of revenue will enable the next phase of pipeline development for products. We look forward to updating you on our progress as we continue to drive innovation and create long-term value for both patients and stockholders. Now I would like to ask the operator and to open the call for questions, please.

Thank you. The floor is now open for questions. (Operator Instructions)

John Vandermosten, Zack.

Great, thank you. And how are you doing, and all. I thought I'd start out with, any visibility that you might have on an Elfabrio milestone. I know in the past we've talked about that and we've, advanced a quarter since then, and I want, I wanted to know if we're close to anything and what you have to say on that.

All I can say, I mean, I think we've discussed it multiple times, and I can emphasize it today, of course, it's very relevant that Chiesi sales efforts and outcomes are strong. Okay, the pace of recruitment of commercial patients is very good and above our expectations.

And Protalix sales as we discussed, [APS] inventory, they are not directly to the market. Managing the inventory does not reflect, one to one with actual sales, which I think I emphasized, and actually they are actually improving every quarter.

This is, what we can say, [TSC] is a private company. We are obliged by the agreement to not detail specific numbers, but I say loudly and I hope clear that they are doing very well and actually improving every quarter.

Okay. And you mentioned on the call about the change in dosing frequency in the the EMA and in the EU. Is there any effort going to be made for a similar approach in the United States to gain that doing here.

Currently, what first, what we discussed is an application we submitted. Okay, it's not a done deal. This is, I hope it will be approved, of course. It's ongoing. We don't have any red flag present, so it's ongoing and we are encouraged, with regard to the US once there will be something to update, we will update, of course.

Okay. And I was looking at the list of medications for gout, and I know we've talked about [Christefa] previously on these calls and in our other meetings. I also noticed that there was Novartis's ears out there and wanted to know how that fits into the into the treatment of gout?

We will know more, I would say, let's put it this way, from the Phase 1, we are very much encouraged from the outcomes of the Phase 1, which just single dose. Once we initiate the Phase 2 and especially once we have the top end results, we will know much more. This is a well designed study, double blind, a high, I would say statistical power, even very high.

It was discussed with the FDA. So if indeed it will be, it will mimic or will be close to the Phase 1 results, we have a potentially a very good asset in hand including, at least what we see for now want to be careful future competition. You don't expect me to refer to this product to the other.

Okay, yeah, I know it's indicated for a bunch of different things including gout. I didn't know.

No complaints, but I cannot refer to, specific potential competition, the market is, or the pipeline is bigger than one program.

Got it. And final question for me is just on on the options. I think you had some options that were both close to exploration and close to their exercise price last quarter. Did those get cleared out or what was the disposition of that?

So I think Eyal will refer to that if it's okay.

Yeah, sure, Dror. So John, thanks for the question. The, warrant that you're referring to, from the, 2020 pipe transaction, they all expired other than a minimal amount, the disclosure obviously the [10-Q], 908,000 warrants were exercised all the rest, if I remember correctly, 12.5 million shares. A warrant actually expired without being a exercise.

Okay. Very good. Thank you, Eyal. Thank you, Dror.

Thank you, John.

Thank you. Ben Axasudti of Parental Securities.

Hello, Dror thank you for taking my questions and congrats on the continued, progress. I just, small questions on the, Phase 2 trial planned in gout. Do you also, I'm not sure if I missed that one. Do you also plan to enroll, US patients? And then the other question is more of a general, what other benefits could you, kind of mention versus like this text, besides the injection frequency. What else would you like that, it is worth highlighting and looking at? Thank you.

So thank you for that. The answer for the first question is yes, the majority of the patients, will be enrolled in the US. And as for the second one and of course, it's, this is the plan.

And to your second question, beyond the frequency, which is, by the way, very much important, it will be significant. We will need to see the outcomes in order to say that we have a better immunogenicity profile or others, so, we, of course, we hope to have a very good safety profile and a very good immunogenicity profile, but let's see the results. But certainly this is the intent as well.

Okay, thank you very much.

Thank you. [Robert Raju], HC Wainwright. Please go ahead.

Hi, good morning. This is Dan on for Ram. Thanks for taking our questions. So I guess just to start, we were wondering and just to confirm, as there's been a lot of recent changes in the FDA, even more so as of I think it's today, the ProCellEx products are regulated by [Cedar] in the US, Right?

As far as I know, if I remember well, and I can relocate it, maybe I remember how Fabrio was, approved by the division.

Got it. Okay, and then secondly, can you discuss any effects that the planned US pharmaceutical tariffs may have on cost of goods sold? Would those be booked when you sell the inventories, or would you have an after sale agreement on that?

Yes, we refer to this (multiple speakers) than I do of course.

Of course. So we're actually we're not selling to the US, we're selling to Chiesi Farmaceutici, the, Italian company, so our relationship with Chiesi is basically a relationship between an Israeli company and an Italian company taxes. That they are now in the news obviously are not going to impact our relationship with Chiesi with regards to the way that Chiesi they is going to ship those the actually the vials, the Fabrio to the US that's I guess going to be an intercompany transaction between two of the entities held by the same point company. So I'm not even sure that that's going to impact them, but they, that is a question for them.

Got it. And kind of a follow up on that, can you confirm if, Chiesi discussed any increase in the list price or plans to increase the list price of, Elfabrioin the US in response to those tariffs?

The answer is no. They, as far as we know, and again it's not that we can share their pricing strategy that's confidential and protected on the license agreement, but they, as far as we understand today, they, this is not part of the plan, but obviously it might change once they, once and if the taxes are going to, be pay tax in place, we'll see how the, how this impacts the price in the market, and I guess they're going to focus.

But it's difficult to see today what will be, the change of the tariffs and it's a bit volatile and the Chiesi is a very, well established company. They know what they're doing, so I'm sure we are in very good hands, like, in very good commercial hands, by the way.

Got it. Thank you.

Thank you. Dar Bashish, Private Investor.

Thank you very much for taking my call, gentlemen. You said in your statement this morning that you expect minimal revenues going forward on the R&D line item basically from Chiesi. Can you tell me what the approximate amount of the value of the contract left to be paid out by Chiesi is? Thank you.

Yeah, so let me explain what I said. So research and development revenues that we recorded in the past were associated in connection with a license and R&D agreement with Chiesi. It means to say that when they invested in Elfabrio back then, so they funded part of the development cost, they put a down payment.

All of this according to the GAAP has to be linearly a divided along the years of the life of the agreement or the development. This is the reason that in past years this line item was greater, way greater than the minimal revenues that we're showing.

Going forward, the only thing that will appear is not going to be the a commercial milestones because that's going to be part of the fi but only the regulatory milestones and they go to milestones if I had to and again that's a very, you know.

And it's a far estimate. Nobody knows that it has to do with the once every two weeks, once every four weeks, I'm sorry, in the US, if approved once every four weeks in Europe, if approved, if in the future we'll be able to show superiority, basically those are their goals or milestones that are left.

Yeah, so if you want you to quantify them, they can be up to something like $75 million. But the obviously I think it's at this point because the a milestone by milestone and it depends yeah when if you get it.

If I could simply clarify, you're saying that there's approximately $75 million left to pay out on the agreement with Chiesi.

No, that's not what I'm saying. I'm saying that under this line item, the research and development revenues, the $75 million potential milestones, the global potential milestones on the Chiesi agreement which includes commercial milestones and go to milestones.

Any number between, I don't know, up to half a billion dollars that makes sense. It all depends on their sales and when they hit the various thresholds in the various agreements, I just remind everybody on the call that we're talking about two separate agreements, SIS and US, and the last ones are separately paid and accrued. So in theory, the, overall, milestones to be paid can be potentially up to half a billion dollars.

Okay, thank you very much appreciate your answer.

You're welcome. Thank you. We're showing no further questions at this time. I'd like to turn the floor back over to Mr. Bashan for closing comments.

So, thank you and thank you everybody that joined the call. I would like to emphasize again that what we have said in the past, as I mentioned, Chiesi sales for sales efforts are strong, pace of recruitment of commercial patients is very good and actually beyond our expectations.

And totaled sales are to these inventories to actually manage the inventory sales and not directly to the market. And beyond that, we are focused on building our pipeline. Of course, we will initiate the Phase 2 out later this year. So, we look forward to update you as the progress continues.

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.