Protalix BioTherapeutics, Inc. (DE)

Good morning, ladies and gentlemen, and welcome to the Protallix Biotherapeutics Full Year 2021 Earnings Call. At this time, all participants are on a listen-only mode, and the conference is being recorded. I will now turn the conference over to our host, Mr. Chuck Padalla of LifeSciAdvisors Investor Relations for Protallix. Thank you. Please go ahead.

Thank you, Donna. Welcome to the Protallix Biotherapeutics Physical Year 2021 Financial Results and Business Update Conference Call. With me today are Jorba Shahan, President and CEO of Pertalix, and Eyal Rubin, Senior Vice President and Chief Financial Officer. A press release announcing the results and the update was issued this morning and is available on the Pertalix 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-listing 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 the Protolix filing with the U.S. Securities and Exchange Commission. With that, I will now turn the call over to Mr. Dror Bishan.

Dror? Thank you for the introduction, Chuck, and welcome everyone to Protolix Fiscal Year 2021 Financial Results and Business Update Corner. During this call, I will review the progress of our key clinical programs and provide an update of some of our future plans. Following my remarks, Mr. Yael Rubin, our Chief Financial Officer, will review our financial results and we will then open the line for questions. I'm very pleased with the progress we made during 2021. Over the course of last year, we made significant strides in multiple fronts. First, we have finalized the BALANCE Phase III study and we plan to share top-line results of this study by next week. We have reviewed, with applicable regulatory agencies, our pathway for regulatory submissions. And for the EU, we have reviewed our pathway for submission of a marketing authorization agreement, or MAA, for PRX102 with European Medicine Agency, or EMA, which was actually submitted in February of 2022. For the United States, we have reviewed the pathway for resubmission of the Biologic License Application, or PLA, for PRX102, which we expect to be submitted to the FDA later this year. I want to emphasize the close collaboration we continue to have with our commercial partner, Chiesi Global Rare Disease, in all aspects of PRX102 program, and we thank them very much for their efforts and appreciate their partnerships. In parallel, we invested resources in our early stage pipeline to advance a number of programs. Our goal is to continue to invest both human and financial capital into new product candidates and establish a more significant pipeline while maintaining our focus in bringing PRX 102 to the finish line. Finally, we strengthened our financial balance sheet in the second half of this year, of last year actually, and now we have sufficient cash runway until Q3 2023. Let me now review our results and our expected milestone in greater detail. In September of 2021, we, together with Chiesi, completed a Type A meeting with the FDA regarding PRX102-BLA.

Sorry.

This meeting took place actually following a complete response letter we received in April of 2021. With guidance received from the FDA, we and Chiesi developed a pathway for resubmission of a BLA for PRX102, and we expect to resubmit PRX102 BLA to the FDA in the second half of this year. We anticipate the data package for the BLA resubmission will include results from our Phase III balanced study clinical trial. As mentioned, we expect to announce top-line results next week. A final analysis of the balanced study is anticipated to be available later this year after we have finalized all analysis and discussion of the collected data. We believe that the balanced results, if positive, together with our data sets from the Phase 3 BRIDE trial and the Phase 3 BRIDGE trial, might provide a compelling case to the regulators to consider this important new potential treatment option for adult patients with Fabry disease. In February of 2022, we and Chiesi submitted an MAA to the European Medicine Agency for PRX102 for the treatment of adult patients with Fabry disease. The application was validated, confirming that all essential elements required for scientific assessment were included in the application. If the MAA is approved, PRX102 will be authorized for sale in all member nations of the European Union. We are very excited to have achieved this milestone, and we are looking forward to providing updates as they arise. Turning to our early stage pipeline, PRX115, as a pegylated enzyme expressed via prosthetics for intravenous administration of recombinant uric acid, that we are studying as a potential treatment for refractory gout, Gout is the most common inflammatory arthritis in the United States, affecting an estimated 9.2 million adults, and an estimated approximately 2% of the gout population is considered to have chronic refractory disease. The uricase enzyme converts uric acid to alienation, which is easily eliminated through urine. However, the uricase enzyme does not exist naturally in humans. We use prosthetics to express and optimize recombinant uricase enzyme, which we are designing to have an improved half-life, reduce immunogenicity, and potentially longer-term efficacy. We have initiated toxicology studies earlier this year, and we plan to initiate a Phase I clinical study early next year. The second one is PRX119, which is a pegylated recombinant human DNase I expressed by our system prosthetics and designed to elongate DNase half-life in the circulation for the treatment of NETS-related diseases. The only FDA-approved DNAS-1 during NETS-alpha is for treatment of cystic fibrosis patients via inhalation. We are developing long-acting DNAS-1 to potentially customize the treatment of a rise medical condition in which NETS are involved. And we will update you as the program develops and we identify an initial target as indication. I will now turn to Eyal for a review of our financials Eyal, please go ahead.

Thank you, Dror, and thank you, everyone, again, for joining today's call. Let me review our fourth quarter and full year 2021 financials. For the year ended December 31, 2021, we recorded revenues from selling goods of $16.7 million, an increase of $0.5 million, or 3%, compared to revenues of $16.2 million for the same period of 2020. Revenues from license and R&D services for the year ended December 31st, 2021 were 21.6 million compared to 46.7 million for the year ended December 31st, 2020. Revenues from license agreement represent the revenue we recognize in connection with the Chiesi agreement. The decrease is primarily due to lower costs incurred in the year ended December 31, 2021 in connection with the PRX program. Cost of goods sold was $16.3 million for the year ended December 31, 2021, an increase of $5.4 million, or 50%, versus $10.9 million for the year ended December 31, 2020. The increase was primarily from one-time manufacturing costs incurred while preparing for the then-anticipated FDA approval of the PRX-102 BLA and higher manufacturing costs. R&D expenses for the year ended December 31, 2021 were 29.7 million, a decrease of 8.5 million, or 22%, compared to 38.2 for the year end of December 31, 2020. The decrease is primarily due to the completion of the three clinical trials of PRX102, as Dror mentioned. We expect R&D expenses to continue to be our primary expense as we enter into a more advanced stage of preclinical and clinical trials for certain of our product candidates, as elaborated by Dror earlier. Selling general and administrative expenses were $12.7 million for the year ended December 31, 2021, an increase of $1.6 million, or 14%, versus $11.1 million for the year ended December 31, 2020. The increase resulted primarily from an increase in corporate costs related mainly to insurance. Financial expenses net was $7.1 million for the year end of December 31, 2021, a decrease of $2.1 million, or 23%, compared to $9.2 million for the same period of 2020. As of December 31, 2021, our cash-cash equivalents and short-term bank deposits were approximately $39 million compared to $38.5 as of December 31, 2020. As Dror mentioned earlier, during the third quarter of 2021, we successfully completed a note exchange to effectively lower the aggregate principal amount over our then outstanding convertible notes to $28.75 million and to extend the maturity of the remaining notes from 2021 to 2024. We believe that our current financial position provides a sufficient cash runway through the third quarter of 2023. I will now turn the call back to you, Dror.

Thank you, Eyal. So thanks to all of you joining us for today's call. We look forward to working closely together with Chiesi to collaborate with the FDA and the EMA to bring the PRX1022 market. As I mentioned in my opening remarks, we are extremely excited for the opportunity for resubmission which lies... I'm sorry. As I mentioned in my opening remarks, we are extremely excited for the opportunity for resubmission which lies ahead in second half of 2022. Our aim is to bring forward this important potential treatment option for adult patients with heart disease. Now, I will turn the call back to the operator, and let's have your questions, please.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question 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. Once again, that's star one to register a question at this time. Our first question is coming from John Vandermorsen of Zaxx. Please go ahead.

Hey, good afternoon. Dora Eyal. Good to hear your voices again. In the BRIGHT study, what was the trigger for switching to one patient from the four-week regime to the two-week regime? Again, please, in the balanced study? I'm sorry, in the bright study. Sorry. Yeah, in the bright study, what was the trigger for switching the one patient from the four-week to the two-week regimen?

Well, John, I don't have the answers in front of me. If we speak about one patient out of 30 that were enrolled, we look into it and we can get back to you.

Okay. Well, because I noticed that, you know, all the patients are supposed to be on the four-week regimen. and then one of them shifted to the two-week. And I was just wondering if there was a trigger or something that shifted that.

I assume there was a trigger. I will verify the effect, and I will revert, of course. Okay.

Sounds good. Sounds good. And then on, you know, Chiesi Rare Disease, have they started sales yet? Do they have a sales team in place already? So when your product rolls on, you know, they already have – you know, interactions going on.

They have established a rare disease business, I think, close to three years ago, if I remember well. They bought a couple of small assets and they have recruited enough, if I may say, infrastructure, well experienced from, if I may say, from the main, from, you know, from rare disease companies and other companies with experience. So actually, please remember that we were ahead of approval actually a year ago, close to a year ago. So they do have infrastructure, and I call marketing in the wide term. We speak about sales, patient advocacy, marketing, market access, et cetera, on the ground with, I assume, many hundred years of experience in each of the continents ready to go. That's great. That's great news.

And then the last question for me is on the resubmission, the PRX-102 review. BLA resubmission? Is the only thing that you're waiting on there really is the results from the balance study, the final results to submit that, or is there something else that also needs to get completed before you resubmit?

We are actually, you know, once we open the top-end results and share, then there will be a couple of months to find out the results of the balance study and establish a CSR, which is a clinical study report. Then in parallel, actually, and this is not on the critical path, but it will be ready as well, is of course the fill and finish with all the data around it. And actually beyond that, there is nothing else. So this is why we are geared to, we will be moving, if I may say, into final steps of submissions later this year. Once the CSR is done, I assume it will take another few weeks, you know, QA processes, et cetera, verifying everything is okay, and then we move on.

Okay. Thanks for the detail, Dora. I'll hop back into you. Thank you. Thank you, sir.

Once again, ladies and gentlemen, that is star one to register. Any questions at this time? We have additional questions coming from John of Zax. Please go ahead.

Thank you for taking my follow-up. Just a couple questions on the forecast for next year for R&D. Eyal, you mentioned something about that, you know, that we're going to maybe see an incremental increase year over year. As you know, had about $30 million in R&D expense for 2021. Is that, what do you see as the direction of that in 2022?

I assume that the net-net, we're going to see more investments in the preclinical and the early stage pipelines on the expense of PRX-102 as we progress in the submission. Obviously, it's not going to be part of the R&D as we expect most of the regulatory costs to be behind us. So net-net, I guess we're going to be in the same neighborhood, maybe a couple of millions more, but nothing significant. It's going to be only, I think, a new deployment of the capital from 102, since all trials are done and most of the expenses are already behind us, deploying them into the new or the early pipeline that we have.

Okay, that's helpful. Thank you.

Thank you. At this time, I'd like to turn the floor back over to Mr. Bashan for closing comments.

Thank you for that.

So all I ask is to thank you again for the time, and I hope we will have good news next week.

And we will update you, of course, accordingly. Thank you very much.

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.