Protalix BioTherapeutics, Inc. (DE)

Continue to stand by. The conference will begin momentarily. We do appreciate your patience and ask that you please remain on the line. Thank you. Thank you. Thank you. Good morning, ladies and gentlemen, and welcome to the Portalix Biotherapeutics First Quarter 2023 Financial Business Results Conference Call. As a reminder, this conference is being recorded. I will now turn the conference over to our host, Mr. Chuck Padala of LifeSci Advisors Investor Relations for Portalix. You may now begin.

Thank you, Tina. Welcome, everyone, to the Portalix Biotherapeutics First Quarter 2023 Financial Results and Business Update Conference Call. With me today are Dror Vashon, President and CEO of Protalex, and Ayal Rubin, Senior Vice President and 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 statements made. Factors that could cause actual results to differ are described in the disclaimer and fatalities filing with the U.S. Security and Exchange Commission. I will now turn the call over to Mr. Dror Bashar. Dror?

Thank you, Chuck, and welcome everyone to our first quarter 2023 financial results and business update call. I will begin by reviewing our recent progress and accomplishments. Following my remarks, Eyal will provide a more detailed review of our financial results. We will then open the line for questions. As we updated earlier this morning, we, together with our development and commercialization partner, Chiasi Global Rare Diseases, are waiting on an EC decision which should be announced in the next couple of days. In addition to the EU, we are also quickly approaching potential approval in the United States. Our assigned PDUFA target action date is next week, May 9, 2023, and we look forward to providing you with an update when we hear from the FDA. We are grateful for the Protalyx team as well as our partnership with Chiesi that had brought us to this stage. We are confident that if approved, Chiesi is well equipped to realize the full potential of PRX-102 They have ramped up commercial activity and are prepared for launch. Fabry disease represents a potential significant opportunity in a multi-billion dollar market that is in need of an alternative treatment option, and we, together with Chiesi, are prepared to deliver. Now, turning to our pipeline. We are continuing to make progress in our earlier stage programs. PRX115 is a novel pegylated uricase in development. for the treatment of severe gout. In March of 2023, the first patient was dosed in our phase one, first in human clinical trial for PRX115 in patients with elevated uric acid levels, and the trial is a double-blind placebo-controlled single ascending dose study designed to evaluate the safety, pharmacokinetics, pharmacodynamics, and immunogenicity of PRX115 in up to 56 patients. The study is being conducted in New Zealand, and to date, nine patients already have been dosed in this trial. We look forward to continued enrollment and dosing of patients. We also continue to progress on PRX119, a peculated recombinant human DNase 1 protein designed to elongate DNase half-life in circulation for treatment of NETS-related diseases. We have conducted preclinical studies to demonstrate the feasibility of PRX119. We look forward to providing updates on these programs and others as we look to build our growing pipeline. You may recall that last December in 2022, we announced our decision that it was in our company's best interest to voluntarily delist our common stock from Tel Aviv Stock Exchange. On March 22nd of this year, 2023, our common stock was delisted from the Tel Aviv Stock Exchange, and the last trading day on the Tel Aviv Stock Exchange was March 20th, 2023. Finally, our balance sheet provides us with sufficient runway to the third quarter of 2023, supporting the company through potential approvals, in addition to continuing to develop our earlier stage pipeline programs. I will now turn to Eyal. Thank you. I will now, yes, of course, I will now turn to Eyal for review of our financials. Eyal, please.

So thank you, George. And just to make it clear, obviously the cash run is until the third quarter of 2024. Thank you, everybody, for joining the call today. Let me review our first quarter 2023 financials. We recorded revenues from selling goods of $5.1 million during the three months ended March 31st, 2023. Decrease of $3.9 million, 43% compared to revenue of $9 million for the three months ended March 31st, 2022. The decrease resulted primarily from a decrease of 2.7 million in sales to Brazil and a decrease of 1.1 million in sales to Pfizer, both resulting from tightening differences. We recorded revenues from licensed and R&D services of 4.5 million for the three months ended March 31st, 2023, a decrease of 2.6 million, 37% compared to revenues of 7.1 million for the three months ended March 31st, 2022. Deverages from licensed and R&D services are comprised primarily of the revenue we recognize in connection with the Chiesi agreement. Cost of goods sold was $3.1 million for the three months ended March 31st, 2023, a decrease of $2.9 million, or 48%, from cost of goods sold of $6 million for the three months ended March 31st, 2022. The decrease in cost of goods sold was primarily the result of decrease in sales of goods. For the three months ended March 31st, 2023, our total research and development expenses were approximately 5.8 million, comprised of approximately 3.5 million of subcontractor-related expenses, approximately 1.5 million of salary-related expenses, approximately 0.1 million of material-related expenses, and approximately 0.7 million of other expenses. For the three months ended March 31st, 2022, our total research and development expenses where approximately 8.8 million comprised of approximately 5.8 million subcontracted related expenses, approximately 2 million of salary and related expenses, approximately 0.2 million of material related expenses, and approximately 0.8 million of other expenses. Total decrease in research and development expenses was 3 million, but 34% for the three months ended March 31st, 2023, compared to the three months ended March 31st, 2022. The decrease in research and development expenses primarily resulted from the completion of both our fabric clinical program and a substantial portion of the regulatory process related to the BLA and the MAA submissions for PRX-102 as Jor described earlier. Selling general administrative expenses were 3.1 million for the three months ended March 31st, 2023, a decrease of 0.1 million or 3% compared to 3.2 million for the three months ended March 31st, 2022. A decrease of approximately $0.4 million in salary-related expenses was partially offset by an increase of $0.3 million in professional fees. Financial expenses net were $0.5 million for the three months ended March 31, 2023, compared to financial expenses net of $0.4 million for the three months ended March 31, 2022. In the three months ended March 31, 2023, we recorded income taxes of approximately $0.2 million. Cash-in-cash equivalents were approximately $33 million at March 31, 2023. Net loss for the three months ended March 31, 2023 was approximately $3.1 million, or $0.05 per share, basic and diluted, compared to a net loss of $2.3 million, or $0.05 per share, basic and diluted, for the same period in 2022. I will now turn the call back to you, Joel.

Thank you very much, Eyal, and thanks everybody for joining us on today's call. I'm sure everybody is under anticipation for the upcoming approvals. Clearly, it's an exciting time for us. We are looking forward to providing you, of course, with updates once we have them, both from the EU and the FDA. In addition, we are planning on hosting an investor event late June to discuss Portalic's strategic priorities going forward. Now I will turn back to the operator and open the line for questions.

Thank you. If you would like to register a question or comment, please press the 1 followed by the 4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. One moment, please, for our first question. The first question comes from John van der Mosen of Zax. Please go ahead.

Thank you. And hello, Joriel. How are you guys doing?

We are doing fine. Thank you, John.

That's good to hear. Next week is going to definitely be a big week for you guys. So, you know, we're all over here looking forward to that. But I thought I would spend a little time on PRX 115 just to understand kind of that a little bit better. I guess you're running the trial in New Zealand, as you've mentioned many times. Are there any incentives that you're getting from running it there? I know that that's a pretty favorable place to do early-stage trials just because of the benefits that the Australian and New Zealand governments provide developers there.

John, can you repeat? I don't understand the question. What is the question exactly?

Oh, sure. You know, in the Oceana area in New Zealand and Australia, I know frequently that there are very supportive environments in terms of tax benefits and credits and things like that to run trials down there. Is that something that you're benefiting from for PRX 115 down there?

Yeah, that's correct, but that's not the reason we are running the trial there. We didn't apply in order to benefit from a tax credit. You need to open a... and on the ground site there in New Zealand and Australia, and obviously running for Phase 1, we thought that it's too big of a burden. The reason was that the CRO that we picked and the sites, they have expertise and their enrollment capabilities are good. That's the reason that we picked this site and then the CRO.

Okay, great. Thank you for that detail. you know, obviously this is the phase one where the primary goal is safety, but I wanted to see if you could share some of the secondary endpoints that you're looking at that might look at efficacy. And then also, you know, if we're successful in these early stages, what might some of the endpoints be for a pivotal trial in terms of efficacy?

We planned, as I mentioned, up to 56 patients. And in addition to safety, of course, which is the first thing, We would like to see immunogenicity. We would like to see to what extent we reduce the uric acid, maybe hints or signs of frequency of dosing. But this has to be, you know, we are at the very beginning, so we will never show off. There's nothing to show off at right now. So we hopefully or we plan once we have the, you know, the final reports, including the PKPD, to better analyze it and understand how to properly conduct the phase two.

Sounds good. And one of the major players in gout right now is Chris Texa. And I'm just wondering, you know, if you have a comparison of how PRX 115 goes up against that guy.

No, we will have to see results before we can say anything, you know.

Okay. Well, I was thinking in terms of mechanism of action or, you know, kind of the unmet need perhaps that 115 may address, you know, not ultimate efficacy, but just, you know, how it might work in terms of the MOA.

You know, by the end of the day, we hope to have a differentiation and at least an improved profile, at least in one important aspect. You know, we will have to see if it will be the frequency of dosing, immunogenicity, or a combination.

Great. Okay, that's helpful. And last thing for me, just, you know, obviously next week is a huge week. And what are the next steps that we should expect to see? I know you mentioned that you're going to have a call with investors in another month to go over priorities and things like that. But what are the next steps we should expect to see, I guess, from you and Chiesi in terms of, you know, commercialization and getting things ready? assuming we're getting a positive news back.

So, no, we will clearly update immediately the market once, hopefully, of course, we get the approval from the EU and following that with the FDA. This is the sequence we see right now, of course, or anticipate. So we will, of course, update and explain. And, you know, I'm not familiar with anything else right now. Once Chiesi will plan... you know, the launch of the product, they will update, of course.

Great. All right. Well, thank you, Dror. Thank you, Al. Appreciate your responses to my questions.

Thank you, John. As a reminder, via the phone lines, you may press the 1 followed by the 4 if you would like to register a question or comment. Once again, that is the 1 followed by the 4. We show no further questions at this time. I'll turn the call back over to our speakers for any closing remarks.

All I ask to say is thank you, everybody, for your time, and we are looking forward, of course, to update you very, very soon. Thank you very much.

Thank you. This does conclude the conference call for today. We thank you for your participation, and I'll let you please disconnect your lines. Thank you, and have a good day.