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spk05: Good morning, ladies and gentlemen, and welcome to the Protallix Second Quarter 2022 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 for Protallix. Thank you. You may begin your conference.
spk03: Thank you, Operator, and welcome to the Protallix Biotherapeutics Second Quarter 2022 Financial Results and Business Update Conference Call. With me today are Dror Bishan, President and CEO of Portalix, and Eyal Rubin, Senior Vice President and Chief Financial Officer. A press release announcing the results and the update was issued this morning, and it's available now on the Portalix website. Please take a moment to read the disclaimers 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 these statements made. Factors that could cause actual results to differ are described in the disclaimer and in the portalics filing with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Dror Bashan. Dror?
spk02: Thank you, Chuck, and welcome everyone to our second quarter 2022 financial results and business update call. I will begin with a review of our progress and accomplishments over the second quarter, along with our plans for the coming months. Following my remarks, Eyal will provide a more detailed review of our financial results. We will then open the line for questions. Let me begin with a review of our Phase III balanced clinical trial for PRX102 for the treatment of Fabry disease in adults. In April, we announced positive top-line results from the trial, showing that PRX102 successfully met its primary endpoint on kidney function and presented a favorable tolerability and immunogenicity profile. I'm happy to report that the clinical study report, which is called also as the CSR, for the balanced trial has been completed. The final analysis of the balanced study confirms the positive top-line results and favorable tolerability profile. These encouraging results highlight our confidence that PRX-102 has the potential to become an important treatment option for patients with Fabry disease. We are excited to move closer to potential approval of PRX-102 and then the commercial launch. The BLA resubmission will include the positive results from our three completed Phase III clinical trials, the BALANCE, the BRIDGE, and the BRIGHT, as well as our Phase I-II safety study. With respect to PRX102-MAA submitted to the EMA, we are working closely with Chiesi Global Rare Disease to advance the review process. The MMA was submitted earlier this year, in February of 2022. This is an exciting time for Portalix. As we move closer to a potential approval for PRX102 for the treatment of Fabry disease, we believe that the totality of our clinical data which is based on hundreds of years of aggregate patient exposure, demonstrates that PRX-102 can be an important new treatment option for patients with Fabry disease. Chiesi, our global partner, has been working on the commercialization plan to provide a solid foundation to successfully bring PRX-102 to the market upon its anticipated approval. With regard to our broader pipeline, we continue to invest in new product candidates to support our goal of becoming a significant biotherapeutic company. To that end, we have established a pipeline of early-stage programs in development, from discovery stage to phase one, which will start early next year. And all of these programs involve molecules that we express for prosthetics, our proprietary protein expression system, which enables us to express and develop potential products which will address real unmet needs on the market. In parallel, we continue to work to improve our technological capabilities, both on the Procelec system and in the chemical modifications area. We are moving forward with PRX115 and novel pegylated uricase for treating severe gout patients, and the first inhuman phase one study is planned to commence in the first quarter of 2023. As support for this first inhuman study, we are finalizing our toxicology package, of course. With respect to PRX119, we have conducted several experiments, practical studies to demonstrate the feasibility of PRX119, and we look forward to providing updates on these and additional programs as they progress. Our 2022 annual meeting of stockholders was held on June 30, 2022. At the meeting, our stockholders approved all of the items on the agenda. In addition, our board of directors appointed Shmuel Bentsvi, for Muli to be a member of the board of directors. As David Granot's stature on the board ended as of the meeting. On behalf of Portalix, I would like to thank David for his dedicated service to our company and wish him the best in his future endeavors. Muli has extensive financial and economical knowledge as well as considerable management, business, and auditing experience. Muli is now the chairman of our audit committee and a member of the compensation committee. We are very happy to welcome Muli to Portalix. Finally, our balance sheet provides us with sufficient cash runway to the third quarter of 2023, enough to support our plans for resubmission and potential approval, in addition to continuing to develop our early-stage pipeline programs. I will now turn to Eyal for review of our financials. Eyal, please go ahead.
spk01: Thank you, Jor, and thank you, everyone, for joining today's call. Let me review our second quarter 2022 financials. For the quarter ended June 30, 2022, we recorded revenue from selling of goods of $3.4 million, an increase of $0.2 million, or 6%, compared to the revenues of $3.2 million for the same period of 2021. Revenues from licenses and R&D services for the quarter ended June 30, 2022, were $5.4 million, an increase of $2.2 million, or 69%, compared to 3.2 million for the quarter ended June 30th, 2021. Revenues from licensed and R&D services are comprised primarily of revenues we recognized in connection with the KSZ agreements. Cost of goods sold was 4.1 million for the three months ended June 30th, 2022, a decrease of 0.6 million or 13% versus 4.7 million for the same period last year. The decrease in cost of goods sold was primarily the result of a decrease in manufacturing costs due to higher yields and lower wastage. Research and development expenses for the three months ended June 30th, 2022 were 7.6 million, a decrease of 0.1 million or 1% compared to 7.7 million for the same period last year. Selling general administrative expenses were 2.6 million for the three months ended June 30th, 2022. a decrease of 0.6 million on 19% versus 3.2 million for the same period last year. The decrease resulted primarily from a decrease in salary-related and selling costs. Financial income net were 0.2 million for the three months ended June 30, 2022, compared to financial expenses net of 2.1 million for the same period last year. The decrease resulted primarily from lower interest and debt amortization costs due to a decrease in our outstanding note from an aggregate principal amount of 57.92 million over 2021 notes to an aggregate principal amount of 28.75 million over 2024 notes, and an increase in the exchange rate of New Israeli shekel for U.S. dollars over the period. As of June 30, 2022, our cash-cash equivalents and short-term bank deposits were approximately 28.6 million compared to 39 million as of December 31, 2021. We believe that our current financial position provides us with sufficient cash runway through the third quarter of 2023. I will now turn the call back to you, George.
spk02: Thank you, Eyal. Thank you, everyone, for joining us on today's call. I will now turn back to the operator to open the line for questions. Please.
spk05: At this time, I will be conducting a question-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. a confirmation symbol indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes from the line of Ram Savaraju with H.G. Wainwright. You may proceed with your question.
spk06: Hi, this is Bubal. I'm dialing in for Ram Savaraju. And thanks for taking our questions. A few from us. So firstly, Now that your clinical analysis is complete, what needs to occur from now until the BLA filing?
spk02: So actually, this is part of the process. I mean, the CSR is part of the package that is being composed together with the other clinical trials and additional data, of course, on other aspects. It will be part of the resubmission later this year to the FDA.
spk06: Okay. Okay. Got it. Have you conducted any physician-based market research study and discussed the target product profile and potential appealability of PRX102 for Fabry disease?
spk02: So if you think from a marketing point of view, this is clearly the mandate of Chiesi, and I'm positive they are doing a very thorough job vis-à-vis or ahead of the potential launch process. or approval next year. You know, they take it very seriously. For them, it's, I believe, a very high-priority asset. And they do whatever can be done in order to have a successful launch. Clearly, we need approval.
spk06: I was wondering if you could share if KSI has done any market research focusing on U.S. positions, and that maybe you can share some findings with us.
spk02: I don't have anything right now. Clearly, you can approach key SDNC, and also we can discuss it on a different point of time, of course.
spk06: Understood. What's your status in terms of CMC capabilities? Do you or your commercial partner have plans to expand capacity further?
spk02: I mean, currently, what we have, the capacity that we have supposed to be enough capacity even more than enough, if I may say, to support the market. There's no issue. I mean, it's supposed to be at least 50% of the market. I mean, let's get to 50% of that, and then we can decide if we expand or not. Okay, clear.
spk06: One more. Can you remind us of the potential milestones and breakdown of regulatory versus commercial for PRX-102?
spk01: Yeah, so the milestones, the agreement is reducted, and there's a reason to it. Obviously, we cannot share it with the public. Okay.
spk06: All right. Thanks for taking our questions.
spk02: Thank you.
spk06: Thank you very much.
spk05: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Our next question comes from the line of John Van Dermensen with Zax. You may proceed with your question.
spk04: I wanted to start out with a question on a recent journal article that I was reading through on Orphanet, and it looked at the current treatments in Europe for Febre disease, and they found a tremendous shortcoming with what's offered right now, and particularly they pointed out pain and temperature intolerance were two of the items that were noted. Can Unigal address those issues better than existing therapy?
spk02: You know, I don't know if we can tell you that we have compared to all three drugs on the market. We looked into pain as part of our clinical program, especially on the balance trial, and the data that we have there will be shared with the authorities. As you know, our endpoint is measured by full EGFR. Our main endpoint is not full pain questionnaire or something like this, but certainly we looked We address the pain aspect as well.
spk04: Okay, great. Yeah, I mean, obviously there's something missing there, and perhaps Unigel can address that. Second question is just on the opportunity for combination therapy in the Febreze space. You know, that's a trend in some other indications, and I'm wondering if that's something that might be possible for Febreze.
spk02: Okay. I don't know. It could be. It has to be, of course, checked on a clinical trial. I think the overall indication, although it's well known for many, many years, still evolves, and more and more developments are there right now in the pipeline, mainly early stage, but still way more than, let's say, five and ten years ago. And I'm sure going forward, there may be some companies that will go for potential combination. The question is, with what? reduction, with gene therapy, could be, but there should be, you know, scientific justification to even to initiate such a study. I'm not aware as of yet, let's put it this way.
spk04: Okay, something for the future. Next question is looking at Gaucher and Pfizer. You know, I was looking at the revenues that you reported for the second quarter. It seems like, you know, I know these are lumpy. but it seems like Pfizer is kind of trending up. I mean, who knows what could happen in the future. But with that in mind, Vipriv, which was a Shire drug, I think that is ending its exclusivity this month in Europe. And I'm wondering, does that open up an opportunity for Pfizer to expand LLISO into Europe?
spk02: So, you know, it's true that, you know, the exclusivity period ends up soon. Pfizer is clearly aware about it. And we have discussed it in the past. It's up to them and their call if and how to enter Europe.
spk04: Okay. I mean, it sounds like they know about it. I mean, it's a large opportunity. Obviously, the EU is number two after the United States in terms of the size of the market. And it seems like they're picking up.
spk02: It's true. But, you know, John, there are three – at least three enzymes that are on the market for many years, right? Or two enzymes in Europe and three enzymes in the U.S., or also in other countries, of course. And by the end of the day, they do give or take a similar job, okay? And thanks God and science. the enzymes or the ERTs are doing a good job in a way that patients can live pretty comfortably, if I may say, in a pretty good quality of life for many, many, many years, which is rare. Not because it's a rare disease, because of the outcome. So, patients that are, or Gaucher patients, are treated, right? In order to enter a market, I don't know, in the UK or in Germany or wherever it is, you need to penetrate through some either differentiation or something else. It's not like a walk in the park today when you have two very, very significant players on the market for many years. It's not, it's, it's Shire and Genzyme or Takeda and Sanofi, right? So I assume that Pfizer is looking into it seriously and thoroughly and they will take their decisions.
spk04: Okay. Very good. And, you know, last one is for you. You mentioned that the gross margin had improved due to some, improvements in efficiency, I guess, you could generalize. Is that something that will continue going forward, or is that just a one-time kind of benefit? Which way do you see that going?
spk01: It depends. Partially, it's a consistent thing that we'll see the benefit going forward. Part of it is the yield. We don't control the yields. Sometimes you get an outstanding yield that you don't even anticipate, which breaks all records, and usually the normal curve, so some of it obviously will stay there, some will disappear.
spk04: Okay, so it sounds like, I don't want to put words in your mouth, but it sounds like it'll move up slightly for some factors, but other factors are kind of volatile and you can't really determine whether they're going to continue.
spk06: No, that's true.
spk04: Okay, great. Well, I appreciate you taking my questions. Thanks so much.
spk03: Sure.
spk05: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad one moment while we poll for questions. Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Dora Bashan for closing remarks.
spk02: So thank you. I would like to thank everybody again for their time, and we will clearly update accordingly whenever we have something to update the market. Looking forward to talk to you next time. Thank you.
spk05: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.
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