Protalix BioTherapeutics, Inc. (DE)

Greetings and welcome to the Brutalix Biotherapeutics third quarter 2022 financial and business results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce to your host, Mr. Chuck Padala of LifeSci Advisors, Investor Relations for Protallix. Sir, you may begin your conference.

Thank you, Operator, and welcome to the Protallix BioTube Therapeutics 3rd Quarter 2022 Financial Results and Business Update Conference Call. With me today are Dwarah Prashan, President and CEO of Protallix, 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 Portalix 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 the statements made. Factors that could cause actual results to differ are described in the disclaimer and in the portalics filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Jorah Bishan.

Jorah? Thank you, Chuck, and welcome everyone to our third quarter 2022 financial results and business update call. I will begin with a review of our progress and accomplishments over the quarter, along with our plans for the coming months. Following my remarks, Eyal will provide a more detailed review of our financial results and will then open the line for questions. I'll begin with a significant milestone recently achieved. We are pleased to report that last week we, together with our development and commercialization partner, Chiasi Global Rare Diseases, resubmitted the Biologic License Application, or BLA, to the U.S. FDA for PRX102. for the proposed treatment of adults with Fabry disease. The data package contained in the BLA resubmission includes, in addition to the Phase I-II studies, the final two years' analysis of our Phase III balanced clinical trial and the final Phase III open-label BRITE study report. In addition, we have provided data from our long-term open-label extension studies. Achieving these milestones is a testament to the dedication of Frotalix and Chiesi teams to delivering this potential new treatment to patients with Fabry disease, and we are grateful for their hard work and commitment to our program. We and Chiesi anticipate that the FDA will complete its review of the resubmission BLA within six months of receipt. With respect to the PRX-MMA submitted to the European Medicine Agency, the EMA, earlier this year, The EMA is currently reviewing our application. Our dialogue with the EMA is ongoing. As we approach year-end, Protalix is entering into an exciting time as we are moving closer to a potential approval of PRX-102 for the treatment of adult patients with Fabry disease. We believe that PRX-102 has significant potential for patients and families affected by Fabry disease. and we remain committed to continue collaboration with the FDA and EMEA to work towards our goal of successfully bringing this much-needed treatment to the patients in need. Turning to our earlier stage pipeline, we are continuing to develop additional programs expressed through our proprietary protein expression system prosthetics. PRX115 is a novel pegylated uricase in development for treatment of severe gout. We are on track to initiate a first in human phase one clinical study of PRX115 in the first quarter of 2023. In the support for this first in human study, we are finalizing our toxicology package. In addition, we continue to make progress on PRX119, a peculated recombinant human DNase 1 protein designator designed to elongate DNase half-life in circulation for treatment of NET-related diseases. We have conducted preclinical studies to demonstrate feasibility of PRX119, and we look forward to providing updates on these two and other programs as we progress. Finally, our balance sheet provides us with sufficient cash runway to the fourth quarter of 2023, enough to support the company through the potential approval, in addition to continuing to develop our early-stage pipeline programs. I will now turn to Eyal to review our financials. Ayad, go ahead.

Thank you, Dror, and thank you, everyone, for joining today's call. Let me please review our third quarter 2022 financials. The company recorded revenues from selling goods of $8.8 million during the three-month end of September 30th, 2022, an increase of $4.3 million, a 96% compared to revenue of $4.5 million for the three-month end of September 30th, 2021. An increase of 3.4 million in sales to Pfizer, resulting from timing difference, and an increase of 2.4 million in sales to Chiesi was partially offset by a decrease of 1.5 million in sales to Brazil, resulting from timing differences. Revenue from license and R&D services for the three months ended September 30, 2022, or 5.4 million, a decrease of 2.1 million, or 28%, compared to the revenue of 7.5 million for the three months ended September 30th, 2021. Revenues from licensed and R&D services are comprised primarily of revenues we recognize in connection with the Chiesi agreement. Cost of goods sold was 7.1 million for the three months ended September 30th, 2022, an increase of 3.4 million or 91% from cost of goods sold of 3.7 million for the three months ended September 30th, 2021. The increase in cost of goods sold was primarily the result of the increase in sales of goods. For the three months ended September 30th, 2022, our total research and development expenses were approximately $7.4 million, comprised of approximately $4.9 million in subcontractor-related expenses, approximately $1.7 million of salary and related expenses, approximately $0.2 million of material-related expenses, and approximately $0.6 million of other expenses. For the three months ended September 30th, 2021, our total research and development expenses were approximately 7.3 million comprised of approximately 4.8 million in subcontractor related expenses, approximately 1.6 million of salary and related expenses, approximately 0.1 million of material related expenses, and approximately 0.8 million of other expenses. Total decrease in research and development expenses was 0.1 million or 1% for the three months ended September 30th, 2022, compared to the three months ended September 30th, 2021. Selling general administrative expenses were 2.8 million for the three months ended September 30th, 2022, a decrease of 0.2 million or 7% compared to 3 million for the three months ended September 30th, 2021. The decrease was primarily due to the decrease in salary related and selling costs. Financial expenses nets were 0.4 million for the three months ended September 30th, 2022, compared to financial expenses net of 2.3 million for the three months ended September 30th, 2021. The decrease is all primarily from lower interest and debt amortization costs due to a decrease in our outstanding notes from an aggregate principal amount of 57.92 million of 2021 notes to an aggregate principal amount of 28.75 million of 2024 notes and an increase in exchange rates of new Israeli shekel for US dollars over the period. Cash, cash equivalents, and short-term bank deposits were approximately $20.8 million at September 30, 2022. As Jor mentioned, we believe that our current financial position provides us with a sufficient cash runway through the fourth quarter of 2023. I will now turn the call back to you, Jor.

Thank you. Should we now open the floor for questions? Yes, please. Thank you.

Ladies and gentlemen, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The 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. One moment, please, while we poll for questions.

To ask questions, please press star 1 now. We have a first question from the line of Bubalan Patriappan with H.E.

Wainwright. Please go ahead.

Hi. Can you hear me okay?

Yes.

Good morning to you.

All right, great. Congrats on the BLA submission. This is great news for Brutalix shareholders. A couple of questions from us. So firstly, some investors are curious to know at what point you'll be able to share the full details of the agreement between Brutalix and KSC with respect to BRX102.

Eyal, you would like to refer to that?

Yeah, given the agreement between the parties, we will not make the agreement public. The agreement is reducted for, obviously, legal reasons, and it will stay this way as soon as they will hit the relevant milestones, whether it's going to be commercial, regulatory, or the royalties, obviously, is going to be disclosed as part of the financial reports or the relevant, if required, PRs.

Okay, clear, all right, understood. With respect to PRH115, so I was wondering if you could talk about maybe on a preclinical level, what kind of efficacy are you seeing? And also, are you seeing any ADAs or undesired immune response?

So, you know, I will say the following, that I think that with the data that we have at present, we feel comfortable to continue, of course, And since uricase does not exist in the human body, it's better that we will speak once we will have final result of the phase one study with human beings, of course. This will be by far more substantial to discuss upon and not just to say things which are, you know, from preclinical studies. So, you know, the data that we have supports and gives us the comfort to continue, of course. But, you know, I don't want to put hopes before we get results from human beings that will hopefully participate and finalize the study as we plan. This will be by far better.

Okay, understood. And then maybe within PRX1 and 5, speaking about PRX1 and 5 competitive landscape, as you probably know, Horizon as a drug, Cristexa, and there's also a company that we cover called Selecta Biosciences and they are currently in phase three and the readout is expected in first quarter 23. I'm just curious how your PRX-115 gout program is differentiated from Cristexa and CEL-212.

So I think that you know once we receive results it will be by far more easier to explain where we see the differentiation. Clearly the intent is not to develop a drug which will be, you know, identical or a me too. The intent is to differentiate either through the frequency of the infusion and also immunogenicity and, you know, before we, you know, I will say much more and it's not because it's a big secret, it's because it has to be based on data. And we prefer to base it on even early stages clinical data from Phase 1-2 than on, you know, preclinical and science only.

All right. Thank you so much for taking my questions. Cool.

Thank you. To ask a question, ladies and gentlemen, please press star 1 on your touch-tone phone now. We have next question from the lineup, John Vandersmosten with Zax. Please go ahead.

How are you guys doing? I want to start off with a question on Brazil. They recently had an election which changed the government there. I'm wondering if you might expect any differences due to that change? Maybe a little bit more liberal demand for pharmaceutical products?

I don't foresee, I don't think there will be any major changes at present. You know, this drug exists in Brazil for a couple of good years already. You know, I don't foresee. We sell in competitive prices, of course, compared to Sanofi and others. And I think right now we are fine. But, you know, we will see.

Okay, very good. And then also on Pfizer's sales, do you know if they have any sales in Europe or not? I think we had discussed on the previous call about the end of exclusivity for Vitriv, and I think that was August 30th. Were they able to penetrate the European market at all with the drug?

First, it's a question to Pfizer, but I'm not aware that they have launched in Europe as of yet. Okay.

Okay. And let's see. And then I guess we've got – I was going to ask about 115 and just the competitive environment there, and I think we already addressed that. I think it's about a billion-dollar market. Is there any kind of portion of the market that you're pursuing in particular? I mean, since there are already products there. It looks like it's being dominated by about three. How do you see yourselves fitting in into the current set of products that are available?

So I think, you know, first, KZ is responsible for the marketing, of course. But we believe that in light of the safety, immunogenicity, the efficacy data, the two potential regimens, we have, if I may say, a good, even a very good alternative for the patients from, you know, from all these aspects. And by the end of the day, it is a drug for the patient. The patients, I mean. And I think, or I hope, that Chiesi will do a good job. And they are clearly taking care of it and preparing themselves well. And we will do fair on the market.

Great. And then, you know, on Chiesi and their rare disease.

The combination of the safety, the immunogenicity, the efficacy data, the robustness of the program. And, of course, the potential two regiments is a very good alternative, potentially, of course.

Great. Yeah, I guess we'll keep an eye out for that Phase I data. And just on that Phase I data from 115, I guess we would expect that to come out somewhere around mid-year next year. Is that sound about right?

I believe something like it's about 12 months from the initiation of the study. I assume end of next year, beginning of Q1 the year after. I mean, speak about the final results.

Okay. Maybe we'll have, like, some kind of top line prior to that, just to get a sense of... We will see along the way. Okay. And then just the last one for me on KAZ's, you know, rare disease subsidiary here in, I guess it's, I think it's in Boston, right? Have they started marketing any products yet? And I'm just wondering kind of where they are in terms of ramping that up. I know that there are some other products, some of the rare disease products that are still in development, but I wasn't quite sure where they are in terms of commercialization activities. How are they looking on that side of things?

They've established their rare disease division already a couple of years ago. They bought a couple of rare disease assets, so they have, I think, a couple of drugs on the market. Actually, they have their own site, of course. It's not a secret. Right now, for the last year, I believe there are... since we were supposed to get approval in the U.S., but also in Europe today, they are ready to go. So we have full teams preparing themselves and actually, you know, ready for launch, hopefully. Great.

All right, well, congratulations on the BLA submission and look forward to hearing good news back from the FDA and EMA in the near term. Thank you.

Thank you. Looking forward to that. Thank you. Again, if you have a question, please press star 1 on your touch-tone phone now.

As there are no further questions from the participants, I would now like to turn the call back over to Dror Basin, President and CEO, for closing remarks. Over to you, sir.

Thank you. So thanks again, everybody, for joining our call, and looking forward to speak with you next time. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.