Protalix BioTherapeutics, Inc.
Q1 2021 Earnings Call Transcript

Published: 14 May 2021

[Operator:]

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.

[Chuck Padala:]

Thank you, Rob. Welcome, everyone, to Protalix BioTherapeutic 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. A press release announcing the results and the update was issued this morning and is now available on the Protalix website.

[Dror Bashan:]

Thank you, Chuck, and welcome, everyone, to the Company's First Quarter 2021 Financial Results and Business Updates. 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's level restrictions are lifted. I will provide more details, comments on the CRL shortly. We are continuing to advance our earlier stage pipeline. Additionally, we strengthen 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 potential commercial loans 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 treatments for adult patients with Fabry disease. In the CRL, the FDA noted the requirement to inspect Protalix manufacturing facility in in Israel and 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 finished facility for PRX-102 in Europe, due to the COVID-19 FDA reviewed records under Section 704(a)4 of the Federal Food, Drug & Cosmetic Act in Europe pre-licensing 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 finished facility received the FDA comments just few days ago and shared them with us. Together, we are reviewing these comments closely with quality and regulatory consultants.

[Eyal Rubin:]

For the quarter ended March 31, 2021, we recorded revenue from selling the goods of $4.5 million compared to revenue of $5 million for the same period $6.8 million compared to $16.6 million for the quarter ended March 31, 2020. Revenues from LifeSci agreements represented the revenues in the first quarter of 2020 in connection with 2021 to cost of goods sold was primarily for the three months ended -- those were $3.1 million for the three months ended March 31 2021 compared to $3.2 million for the same period last year. Financial net expenses were $1.8 million for three months ended March 31, 2021, compared to $3 million for the three months ended March 31, 2020. The increase 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 in 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 three 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.

[Dror Bashan:]

Thank you, Eyal. We look forward to working closely with the FDA on the fast-forward of PRX-102 for adult 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.

[Operator:]

Thank you. At this time we'll be conducting a question-and-answer session. Our first question is from the line of Raghuram Selvaraju with H.C. Wainwright. Please, proceed with your question.

[Boobalan Pachaiyappan:]

Hi, this is Boobalan dialing in for Raghuram Selvaraju and thanks for taking my question. So, just to clarify, should the FDA conduct the site inspection on time, PRX-102 now being approved?

[Dror Bashan:]

As we shared publicly, the CRL included the two facilities -- one is the drug cell plant in Israel. And the other one is the fill and finish 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 FDA and will be raised in the Type A meeting as planned. That will take place, of course and then we will get clarification and direction going forward.

[Boobalan Pachaiyappan:]

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

[Dror Bashan:]

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

[Boobalan Pachaiyappan:]

Okay, so you noted in your press release that you will request the FDA a Type A meeting some time by the end of July, assuming Class 1 resubmission. So, do you have any thoughts when FDA will conduct a site inspection in your site as well as a third party site?

[Dror Bashan:]

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

[Boobalan Pachaiyappan:]

So, assuming Class 1 resubmission, when do you expect the FDA to conduct a site inspection in your site as well as the third party site?

[Dror Bashan:]

I wish I knew. We do not control those schedules. What we meant that 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 the inspection in our Israel side and/or in the French side, we wish it will be sooner than later, but no, we do not control their timetable.

[Boobalan Pachaiyappan:]

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 review process?

[Dror Bashan:]

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

[Boobalan Pachaiyappan:]

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

[Dror Bashan:]

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 work closely ahead of preparing the Type A meeting and the EU submission, which is unchanged from a time table point of view.

[Boobalan Pachaiyappan:]

Thanks so much for the additional clarity.

[Dror Bashan:]

You're welcome.

[Operator:]

Thank you. Our next question comes in line of John Vandermosten with Zacks Investments Research. Please, proceed with your question.

[John Vandermosten:]

Good afternoon, Dror and Eyal. 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 is it your understanding that you must hold the Type A meeting prior to inspection taking place?

[Dror Bashan:]

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's 90 days to request a Type A meeting and from the day of the request, there are 30 days to hold this meeting. Clearly, we would like to do it, I think sooner than later, but with the rights clear once we are fully prepared. And the inspection-wise, both for the Israeli side and the French side, this is up to the FDA actually and this is part of the -- if I may say, communication with them.

[John Vandermosten:]

Okay, so that's still being decided?

[Dror Bashan:]

Yes, sir, it's not decided.

[John Vandermosten:]

And then about the French facility. I think you said that there were some issues to resolve. I guess I'm just trying to understand kind of the bottleneck 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?

[Dror Bashan:]

We are not commenting on the specifics here and we are currently working together with our quality and regulatory consultant on the case to resolve these issues with FDA.

[John Vandermosten:]

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 the resubmission to the FDA?

[Dror Bashan:]

As far as I know -- let's put it this way. Chiesi and Protalix are preparing the data right now. The DLA that was submitted a year ago was based on the Phase 1/2 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 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.

[John Vandermosten:]

Okay. All right. That's all for me. Thank you Dror.

[Dror Bashan:]

Thank you.

[Operator:]

Thank you. Our next question is from John Hudson , a private investor. Please, proceed with your question.

[Unidentified Analyst:]

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

[Dror Bashan:]

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

[Unidentified Analyst:]

I certainly hope so, too.

[Dror Bashan:]

Yes. But this is the truth, I mean it's nothing stated, nothing has changed in all time but it's very unfortunate of what's going on right now, very unfortunate; and still we hope for a quieter times very, very soon. And then, things are back to normal, if I may say.

[Unidentified Analyst:]

Thank you.

[Dror Bashan:]

Usually they're 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.

[Unidentified Analyst:]

Yes.

[Operator:]

Okay.

[Dror Bashan:]

Thank you.

[Operator:]

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

[Dror Bashan:]

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

[Operator:]

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