Protalix BioTherapeutics, Inc.
Q4 2020 Earnings Call Transcript

Published: 30 Mar 2021

[Operator:]

Good morning, ladies and gentlemen, and welcome to Protalix BioTherapeutics’ Fiscal Year 2020 Earnings Conference Call. As a reminder, this conference call is being recorded. I will now turn the conference over to our host, Mr. David Holmes of LifeSci Advisors Investor Relations. You may begin your conference, sir. Please proceed.

[David Holmes:]

Thank you, operator. Welcome to Protalix BioTherapeutics’ fiscal year 2020 financial results and business update conference call. With me today are Dror Bashan, President and Chief Executive Officer of Protalix, and Eyal Rubin, 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 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 statements made. Factors that could cause actual results to differ are described in the disclaimer and in Protalix’s filings with the U.S. Securities and Exchange Commission.

[Dror Bashan:]

Thank you, David, and welcome everyone to the company’s year-end 2020 financial results and business update. During today’s call, I will review the progress of our key clinical programs and lay out the road map of our upcoming strategic milestones. Following my remarks, our CFO, Eyal Rubin, will review our financial results and we will then open the line for questions. This year brought many challenges, including of course the unexpected global pandemic. However, we have achieved many significant accomplishments throughout through all of these and we have continued that positive momentum in the first part of 2021. Together with our development and commercialization partner, Chiesi, we submitted to the U.S. FDA a BLA for PRX-102 for the treatment of adult patients with Fabry disease and we look forward to the FDA’s response. We continued to build out the clinical profile for PRX-102 with the release of key data from the BRIDGE and the BRIGHT’s Phase III study and we look forward to seeing interim data from the BALANCE study during the second quarter of this year. We further advanced our earlier-stage pipeline of candidates produced for our ProCellEx, our proprietary plant cell-based protein expression system. And earlier this year, we strengthened our balance sheet through a public offering and through the sale of shares under our ATM program. Overall, I am very proud of our employees and our external partners for their unwavering commitment to advance our mission to bring differentiated therapeutics to the market to help address unmet medical needs. Please let me now provide some more details regarding our key achievements and upcoming anticipated milestones. Our lead pipeline candidate is pegunigalsidase alfa, or PRX-102, which is a therapeutic protein candidate for the treatment of Fabry disease. Fabry is a rare genetic disease that occurs in one of every 40,000 people and most experts agree that there are many undiagnosed patients suffering from this disease. The current therapeutic market for Fabry disease consists mainly of enzyme replacement therapy and is forecasted to be around $1.9 billion in 2021 and continue to grow at a CAGR of approximately 9.5%. As I mentioned earlier, the FDA accepted the BLA filing for PRX-102 for the treatment of Fabry disease and granted the BLA priority regime. The original PDUFA action date of January 27, 2021 was subsequently adjusted by the FDA to April 27, 2021. We and Chiesi have remained in active dialogue with the FDA. And as indicated in the BLA filing communication letter last fall, the FDA does not plan to hold an advisory committee meeting to discuss the application. If indeed we receive an approval letter, Protalix and Chiesi will be ready for commercial launch of PRX-102 later this year.

[Eyal Rubin:]

Thank you Dror, and thank you everyone for joining today’s call. Let me review our full year 2020 financials. For the year ended December 31, 2020, we recorded revenues from selling goods of $16.2 million compared to revenues of $15.8 million for the same period of 2019. Revenues from license and R&D services for the year ended December 31, 2020 were $46.7 million compared to $38.8 million for the year ended December 31, 2019. Revenues from license agreements represent revenues recognized in conjunction with the Chiesi agreements. The increase is primarily due to the revenue recognized in connection with an updated cost estimation of the two completed Phase III clinical trials of PRX-102, as Dror mentioned previously. Cost of goods sold was $10.9 million for the years ended December 31, 2020 and 2019. Research and development expenses net for the year ended December 31, 2020 were $38.2 million compared to $44.6 million for the year ended December 31, 2019. The decrease is primarily due to the completion of two out of the three Phase III clinical trials of PRX-102 and reduced costs related to the Phase III BALANCE study, as well as a decrease in costs related to manufacturing of our drug in development as some of the manufactured drug products and related costs have been recorded as inventory. We expect research and development expenses to continue to be a primary expense as we enter into a more advanced stage of preclinical and clinical trials for certain of our product candidates, as Dror described previously. Selling, general and administrative expenses were $11.1 million for the year ended December 31, 2020, an increase versus $9.9 million for the year ended December 31, 2019. The increase resulted primarily from an increase in share-based compensation costs. Financial net expenses were $9.2 million for the year ended December 31, 2020 compared to $7.6 million for the same period in 2019, primarily related to the costs in connection with the senior secured notes. As of December 31, 2020, our cash, cash equivalents and short term bank deposits were approximately $38.5 million compared to approximately $18 million on December 31, 2019. In March 2020, as you probably all remember, we completed a $43.7 million private placement offering of common stock and warrants. This past February, we raised an additional approximately $40 million in gross proceeds via an equity offering and we raised an additional $8.8 million through our ATM during the first quarter of 2021. There are $58 million of convertible notes on our balance sheet that could potentially be redeemed this December. We believe that our current financial position provides us a sufficient cash runway through the second quarter of 2022.

[Dror Bashan:]

Thanks Eyal. We believe we are well positioned for success, and we look ahead towards an anticipated commercial product launch with a solid financial base to support growth and a pipeline of potential opportunities. We look forward to updating you as the year progresses. Let’s now please take your questions.

[Operator:]

Thank you. At this time, we will conduct a question-and-answer session. Our first question comes from Ram Selvaraju with H.C. Wainwright. Please proceed.

[Boobalan Pachaiyappan:]

Hi, this is Boobalan dialing in for Ram Selvaraju. Thanks for taking my question. So I would like to first get your thoughts on Elelyso sales performance in 2020, and what are your expectations for 2021?

[Dror Bashan:]

Eyal, you would like to take it?

[Eyal Rubin:]

Sure. So the sales that appears on our financials are mostly related to the Elelyso and we talked about the $16 million in connection with our sales both to Pfizer and in Brazil. We believe that 2021 is going to be approximately in the same neighborhood, maybe a little better, a little stronger. But given the pandemic in Brazil, we expect that the number is going to remain quietly the same and the same for Pfizer.

[Boobalan Pachaiyappan:]

All right, great. So with respect to PRX-102, I believe the PDUFA date is approaching. So what are your expectations on that? And if the drug is approved by the FDA, what elements could feature in your messaging to patients and physicians?

[Dror Bashan:]

To us, as far as we know, things are progressing as we updated. Our current PDUFA date is April 27. And hopefully, once we get approval, we will launch shortly after. I hope that we’ll be able to release in the next few weeks or few months the final results of the BRIGHT study in one to four weeks, and clearly to publish the outcomes of the interim analysis during Q2 of the BALANCE study, which will, hopefully, if positive, will pave the way for submission to the European Union. Hello?

[Boobalan Pachaiyappan:]

Hi, can you hear me?

[Dror Bashan:]

Yes, of course.

[Boobalan Pachaiyappan:]

All right, okay. I thought the line went off a little bit. What can you comment on regarding the launch preparation activities for PRX-102? And when can we learn more about the pricing information? Do you think PRX-102 will be priced premium for Fabrazyme?

[Dror Bashan:]

Well, I suggest we wait until we have approval and then we will discuss with our partner and share with the market post approval. I can assure you that preparations are -- actually, everything is set and we are ready to go, including the team, the marketing, sales, medical, et cetera., and of course final product to the market.

[Boobalan Pachaiyappan:]

All right. One final from me, can you comment on the market opportunity for moderate to severe pulmonary sarcoidosis?

[Dror Bashan:]

So this is a very interesting indication and there is unmet need. And it’s - there are not too many drugs right now developed or approved for this specific indication. So if indeed things will go well and indeed this product will be further developed and get approval, we estimate that -we estimate a big market, which probably will consist of many hundreds of millions of dollars, but we speak about years ahead, so it’s difficult to focus if it will cross the $1 billion or not right now.

[Boobalan Pachaiyappan:]

That’s it for me. Thanks so much for your time.

[Dror Bashan:]

You are welcome.

[Operator:]

Our next question comes from John Vandermosten with Zacks Investments. Please proceed.

[John Vandermosten:]

Hello, everyone, and thanks for taking my question. Let me start off with just a question on the implications of the BRIGHT study. Does that - how might you go about modifying or talking with the FDA about modifying the label for a different dosing periodicity for that? Is that something that you’re planning or how should we think about that opportunity?

[Dror Bashan:]

The outcomes of the BRIGHT study are not – or the BRIGHT study is not part of the BLA that was submitted. So post-approval, we will – we plan to submit a clinical supplement.

[John Vandermosten:]

Okay, very good. And do you know, what might the timing be on that? Would it be in the next six months or so, assuming a favorable April 27 outcome?

[Dror Bashan:]

I don’t want to commit. I hope it will be until year-end, but I don’t control the timetable right now. So I assume we will be wiser in about a month or two from today.

[John Vandermosten:]

Okay. And for PRX-110, inhaled delivery seems like a very interesting approach. And I’m wondering if there are other opportunities for inhaled delivery, perhaps nasal administration or something like that, that has some benefits for certain indications. Is that something that you may pursue?

[Dror Bashan:]

At present, all the inhaled indications are with SarcoMed or PRX-110. I want to be very careful, so this is the situation right now. We are developing an elongated DNase 1 for NETs-related diseases, as I mentioned, but this is a different category, if I may say.

[John Vandermosten:]

Okay. Yes, it seems like an interesting opportunity, but obviously we’re kind of in the early stages for that. Last question from me is on the FDA, and I think you made mention of this, just the FDA inspections, I’ve been trying to get a sense of how those have been going and wondered if you had any anecdotal observations on the FDA inspecting anywhere, even in the United States, or just how that is going along, because I know that’s a key issue for everyone pretty much who’s waiting on a PDUFA date.

[Dror Bashan:]

So indeed, as a key, I don’t have a general view on what’s going on in the U.S. I can assure you that once we will have official updates, we will share with the market, of course.

[John Vandermosten:]

Okay. Thank you, Dror. Appreciate it.

[Dror Bashan:]

You are welcome.

[Operator:]

There are no further questions in queue at this time. I would like to turn the call back over to management for closing comments.

[Dror Bashan:]

So this is Dror speaking. I’d just like to thank everybody for their time and participation in this call, and I wish everybody to be healthy and safe, and good luck. Thank you very much.

[Operator:]

Thank you, ladies and gentlemen. This does conclude today’s teleconference. You may disconnect your lines at this time, and have a great day.