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spk06: Good morning, ladies and gentlemen, and welcome to the Protalyx Biotherapeutics Second Quarter 2021 Financial Results and Business Update conference call. As a reminder, this conference is being recorded. I will now turn the conference over to your host, Mr. David Holmes of LifeSci Advisors, Investor Relations, or Protalyx. You may begin your conference.
spk05: Thank you, Joe. Welcome to the Protalyx Second Quarter 2021 Financial Results and Business Update conference call. With me today are Dror Bishan, President and CEO of ProTalex, and Eyal Rubin, Chief Financial Officer. A press release announcing the results and the update was issued this morning and is now available on the ProTalex 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 those statements made. Factors that could cause actual results to differ are described in the disclaimer and in the ProTalex filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Dror Bashan. Dror?
spk03: Thank you, David, and welcome everyone to the company's second quarter 2021 financial results, and financial and business update. During the call today, I will review the progress of our key clinical programs and provide an update on our strategic roadmap for the remainder of 2021 and beyond. Following my remarks, our chief financial officer, Mr. Jan Rubin, will review the company's financial results before we open the line for questions. I would like first to discuss our balance sheet. We ended the quarter with approximately $77 million in cash. As we announced on Friday, on August 12, 2021, we entered into a definitive exchange agreement relating to the exchange of $54.65 million, principal amount of our outstanding 7.5% senior secure convertible notes due 2021. for $28.75 million principal amount of newly issued 7.5% senior secure convertible notes due 2024, $25.9 million in cash and accrued and unpaid interest through the closing date. We plan to close these exchanges as soon as practicable, subject to satisfaction of certain closing conditions. At closing, we will have reduced our debt by $25.8 million and effectively extended the maturity for substantially all of the remaining debt from 2021 until 2024. This extension of the maturity date of the notes allows us to use our cash resources to continue and realize the PRX-102 potential and advance our early stage pipeline. We feel confident about our ability to continue to fund our clinical programs as well as to prepare for potential commercial launch of PRX102. We recently announced that we have submitted a Type A meeting request to the FDA to discuss the complete response letter dated April 27, 2021, regarding the BLA for PRX102 for the proposed treatment of adult patients with Fabry disease. The FDA has scheduled a Type A meeting for September 9, 2021. Our objective for the meeting will be to address the issues raised in the CRL and work with the FDA on a plan for resubmission. We are confident in the overall clinical profile of PRX102 that we have assembled through our extensive development program and believe PRX102 has the potential to provide important value to the Fabry patient community. We plan to update you regarding the new development as soon as feasible. During the quarter, we continued to build our clinical profile for PRX102 with the release of the top-line interim results of our Phase III balanced clinical trial of PRX102 for the proposed treatment for Fabry disease. Based on the interim analysis of the 12-month data generated from the balanced study and in combination with previously reported positive data from the Phase III bright and rich clinical trials of PRX102, Portalix and Chiesi intend, subject to positive meeting with the EMEA Rapporteur, a representative of the EU regulatory authorities, to submit a marketing authorization application to the European Medicine Agency by the first quarter of 2022, and this would position us to potentially have a commercial launch in Europe in the first half of 2023. Two first-stage, early-stage pipeline programs are PRX-115, a planned cell-expressed recombinant pegylated vaccine uricase chemically modified enzyme to treat refractory gout, and PRX119, which is a long-acting DNA for NETS-related diseases. We plan to initiate toxicity studies for PRX115 in the first quarter of 2022, and we are looking forward to updating you on these programs as they progress. Before we turn to Eyal, I would like to recognize what a challenging time has been for all of us. and emphasize how much I appreciate our team and their focus and dedication to our mission of bringing important new medicines to the market for patients with high unmet clinical needs. I will now turn to Eyal for a review of our financials. Eyal, please go ahead.
spk02: Thank you, George, and thank you, everyone, for joining our call today. Allow me to review our second quarter 2021 financials. For the quarter ended June 30, 2021, we recorded revenue from selling goods a year of $3.2 million compared to revenue of $3.6 million for the same period of 2020. Revenues from licensed and R&D services for the three months and the June 30th were $3.2, a decrease of $4.1 million of 56% compared to $7.3 for the same period of 2020. Revenues from licensed and R&D services are comprised primarily of revenue we recognize in connection with our license and supply agreement with Chiesi. The decrease is primarily due to an updated cost estimation throughout the trials until completion in the amount of $4.1 million and from revenues recognizing connection with the progress of our clinical trials that have been completed during 2020. Cost of goods sold for the three months ended June 30th, 2021 was $4.7 million, an increase of 2.9% or 161% compared to 1.8% for the same period in 2020. The increase in cost of goods sold was primarily the result of certain one-time manufacturing costs incurred while preparing for the then anticipated FDA approval of the PRX-102 BLA. Research and development expenses for the three months ended June 30th, 2021 were 7.7 million, a decrease of 1.5 million or 16% compared to 9.2 for the same period of 2020. The decrease is primarily the result of the completion of two out of the three phase three clinical trials of PRX-102 and reduced costs related to our balance study. We expect research and development expenses to continue to be our primary expense as we enter into a more advanced stage of preclinical and clinical trials for the certain of our product candidates. Selling general administrative expenses for the three months ended June 30th, 2021 were 3.2, an increase of 1 million, or 45%, compared to 2.2 for the same period in 2020. The increase resulted primarily from an increase in corporate costs related to insurance and funding. Financial net expenses were 2.1 million for the three months ended June 30th, 2021, and 1.9 million for the three months ended June 30th, 2020. The increase resulted primarily from an increase in the amortization of debt issuances, costs, and debt discounts. Cash, cash equivalents, and short-term bank deposits, as Jor mentioned, were approximately $77 million as of June 30, 2021. On August 12, 2021, we entered into a definitive agreement relating to exchange of $54.65 million principal amount of our outstanding 7.5% senior secure convertible notes due 2021 for $28.75 million principal amount of newly issued 7.5% senior secured convertible notes due 2024. In addition, $25.9 million we paid in cash and accrued unpaid interest through the closing date. We plan to close the exchange as soon as practical, subject to satisfaction of certain closing conditions. The new convertible notes may be converted at any time prior to their maturity date, at the initial conversion rate based upon approximately $1.7755 per share, which represents a 32.5% premium to the closing price of our common stock on the newest stock chain American at the closing of trading on August 13, 2021. The new notes will be secured by affected liens at equal parity with the existing notes on all the material assets of the company and its subsidiaries, and are guaranteed by the company's subsidiaries. Net loss for the three months ended June 30th, 2021 was 11.2 million or 0.25 per share basic and diluted compared to a net loss of 4.1 million or 0.13 per share basic and diluted for the same period of 2020. I will now turn the call back to you, George.
spk03: Thank you, Eyal. We look forward to working closely with the FDA to develop a path forward to bring PRX102 to commercialization for adult public patients. And we're working towards continuing to advance our early stage pipeline and positioning of the company for the long-term success. We look forward to updating you as the year progresses. Now let's have your questions, please.
spk06: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we call for questions. Our first question is from Ram Selvarahu with HC Wainwright. Please proceed.
spk01: Hi, this is Boubalen dialing in for Ram Sivaraju, and thanks for taking my question. So, first one, what are your expectations for the upcoming type A meeting with the FDA, and what key items will be discussed during the meeting?
spk03: Okay, so, you know, as we have just mentioned, the plan is to discuss the item raised at the CRL and to discuss our path forward in order to go for resubmission.
spk01: Assuming the meeting goes well, what would be the possible next steps, and when do you think the FDA may be able to inspect the manufacturing sites?
spk03: I wish I knew when they will be able to inspect the manufacturing sites. I suggest we all wait for the meeting. Once we get the meeting minutes, we will be much smarter.
spk01: Okay. With respect to the PRX-115 and 119 programs, So could you elaborate a little more on the remaining gating factors?
spk03: On PRX115, we plan to enter into toxicology studies in early 2022, and then following that into phase one. And PRX119 is still in preclinical models, and I assume a year later, we will go into a toxicology study and then take it from there.
spk01: Okay, one final from me. So with respect to the upcoming EMA meeting, so do you anticipate any roadblocks with respect to EMA filing and approval of PRX-102?
spk03: Look, we hope there will not be any roadblocks. We expect the meeting to take place early October, and then subject clearly to, let's call it a green light, we will be able to submit in early 2022 or Q1 2022.
spk01: Okay, that's it from me. Thanks for taking my questions.
spk07: Thank you.
spk06: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad, and a confirmation tone will indicate that your line is in the queue. Our next question is from John Vandermosten with Zacks Investment Research. Please proceed.
spk04: Hi, Jerome. Good afternoon to you. I wanted to start off with a question on the expenses in the gross margin, or the gross cost there. Will those need to be incurred again if approval is granted, or are they just one-time expenses that you won't need to incur when approval comes from the FDA?
spk02: Those were one-timer. Obviously, we cannot elaborate too much here, but in anticipation of the BLA approval, obviously we had to take certain steps in our manufacturing plant, which were a one-timer, as we wrote.
spk04: Okay. I mean, were they administrative costs mostly, or were they kind of physical costs where you were putting new things into place?
spk02: It's not new things, but they obviously strengthen some of the processes. and the administrative costs around the submission.
spk04: Okay, got it, got it. And there was a big favorable swing in contracts liability, and just wanted to make sure, and that was on the cash flow statement, wanted to make sure that was related to the future milestone payment that you received.
spk02: This is one. And obviously, since there's also manufacturing of goods for Chiesi, which since the BLA approval got delayed, This is also part of the contractual abilities there.
spk04: Okay, yeah, because I think it swung like $16 million or something in the quarter. And then one other thing, I'm not sure if you saw, but the EMA approval of Gallifold in children 12 and older, does that help illuminate the pathway at all for you, perhaps for a pediatric approval for PRX-102? I mean, I know it's a different class of drug, but Any takeaways from that that might help you in the future down the road if you pursue the pediatric indication for 102?
spk03: This is all. I don't know. Actually, I don't think it's a headwind. I hope it helps. I don't really know.
spk04: Okay. Yeah, I was thinking that, you know, when something like that gets approved, it kind of shows what the EMA is concerned about and, you know, what they want to see.
spk03: Probably favorable, but, you know, as long as they will find that PRX-102 does have a potential room, you know, as an alternative on the market, I assume it will be discussed and hopefully approved also for pediatrics.
spk04: Great. Thank you, guys.
spk07: I appreciate you taking my questions. You're welcome. Thank you.
spk06: Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Dror Bashan for closing remarks.
spk03: So all I ask is that everybody will continue to be safe under this COVID phenomena, and thank you very much for the time. We will keep updating you. Thank you.
spk06: This concludes today's conference. You may disconnect your lines at this time. Thank you very much for your participation. Have a great day.
spk07: Thank you.
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