Protalix BioTherapeutics, Inc. (DE)

Good morning, ladies and gentlemen, and welcome to the ProTalix Biotherapeutics Second Quarter 2025 Financial and Business Results Conference Call. As a reminder, this conference is being recorded. I will now turn the conference over to our host, Mr. Mike Moyer with LifeSci Advisors. You may begin your conference.

Thank you, Operator, and welcome to the ProTalix Biotherapeutics Second Quarter 2025 Financial Results and Business Update Conference Call. With me today are Dror Bashan, President and CEO of Portalix, I.L. Rubens, Senior Vice President and Chief Financial Officer. A press release announcing the financial results for the quarter in corporate updates was issued this morning and is now available on the Portalix website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The earnings released in 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 Bratalex's filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Bishan. Sure.

Thank you, Mike, and thank you, everyone, for joining our second quarter of 2025 financial results and business update call. I will begin with... with reviewing our accomplishments over the quarter and recent weeks. Following my remarks, Eyal will provide a detailed review of our financial results. We will then open the line for questions, of course. In the first half of 2025, we experienced a 50% increase in revenues from selling goods compared to the same period last year. Revenue growth was driven primarily by sales of El Fabrio to Chiesi. As you know, Chiesi is an international biopharmaceutical group with 31 affiliates worldwide and a dedicated global rare disease division. They're an ideally suited partner for the commercialization of Elfabrio for Fabry disease, which represents a global market of approximately 2.3 billion US dollars in 2025 and is forecasted to reach approximately 3.2 billion by 2030. As we have discussed in the past, under the terms of our partnership, Chiesi is solely responsible for the commercialization of El Fabrio, including distribution, patient acquisition, retention, and payer reimbursement. And Portalix is responsible for manufacturing and product distribution to Chiesi. Operationally, Chiesi conducts its own internal commercial forecasting to guide its inventory needs, and to date has placed bulk orders with Portalix since regulatory approval for El Fabrio, since it was launched or approval was obtained in 2023. Once a bulk order has been delivered to Chiesi, Portalic recognizes such an order as a sale. Since commercialization of El Fabio is still in early phase of market launch, it is important to emphasize certain aspects of this relationship and how it is expected to function in the near future. In the early phase of the launch, there may be quarter with no bulk orders are made due to inventory destocking. Current ordering patterns are only expected to change once the underlining demand characteristics stabilize and launch matures and market share gradually grows. Orders placed by Chiesi are not made in direct relation to pace of patient acquisition and retention, so they cannot be used as a substitution for estimates of end-user demand for El Fabrio. With that said, I have to emphasize that we continue to anticipate that Fabio O'Reilly is exceeding $100 million by 2030, based on the projected 15% to 20% market share of the estimated 3.2 billion Fabry total market. In addition to these elements, I remind you that last year, in 2024, the European Medicine Agency, EMA, validated PSD's variation submission for Elfabrio label to include a less frequent dosing regimen, once in four weeks, versus the current standard of care, every two weeks dosing regimen, for all current Fabri injectable medications. This variation submission is still under review by CMA. To reiterate, we have a committed partner, and Chiesi has consistently increased its focus on Elfabrio by making substantial investments in medical, regulatory and successful commercialization programs. We continue to appreciate Chiesi partnership and dedication to Fabry disease patients and the patients community. I now turn to our Gout product candidate, PRX115. Given the promising results obtained in 2024 from our first in human study of PRX115, we are focused on building on the momentum and continue to progress towards initiation of a Phase II study in the second half of 2025 and enrollment of the first patient in the fourth quarter. As we announced with our results for 2024, the first in-human study involved a single dose of PRX115 in subjects with elevated uric acid levels. The encouraging results from the study suggest a long-acting effect and the potential of widening the dose interval, which would enhance patients' compliance, and treatment flexibility. As we have been discussing throughout the past year, our R&D efforts are focused on early-stage development assets to build our product development pipeline. This includes leveraging our prosthetics platform and regulation capabilities, evaluating drug delivery systems that may allow protective delivery of different modalities, and focusing on therapeutic areas for renal rare disease. These efforts will continue throughout 2025, and we intend to provide further updates as these programs mature. We are excited about the groundwork, and we are laying for future developments. Before turning the call over to Eyal for a review of our financials, I will close my remarks with a personal note. As we recently announced, Eyal is stepping down as our Chief Financial Officer after six years of dedicated service to Protanx. And Eyal and I worked closely and collaboratively on Protalic's successful transformation. We contributed greatly to the strengthening of the company's capital and preparing us for future growth. On behalf of the board and the Protalic family, we thank Eyal for all the contributions and wish him continued and well-earned success in the future. As we have previously announced, Eyal is to be succeeded by Gilad Mablo. Gilad is a seasoned financial executive with deep experience in healthcare and technology companies and has an extensive background in capital markets, transactions, mergers, acquisitions, and business development. We are happy to welcome Gilad to the team and have every confidence that he will play an important role in Portalix management as we continue to work towards future growth. Eyal, now it's your turn, please.

Thank you, Dror, for your very kind words. It has been a pleasure to work with you these last years. I'm sure that under the continued leadership and with the support of my very capable successor, Vitalik has a bright future. Vitalik's financial management will be in good hands under his leadership. With that, I will now review our second quarter 2025 financials. We recorded revenues from selling goods of 15.4 million during the three months ended June 30, 2025, an increase of 2.1 million, or 16%, compared to revenues of 13.3 million for the three months ended June 30, 2024. The increase resulted primarily from an increase of 8 million in sales to Chiesi, partially offset by a decrease of 4.7 million in sales to Brazil, which is a timing difference, and 1.2 million in sales to Pfizer. Revenues from licensed and R&D services were $0.2 million for the three months ended June 30, 2025 and June 30, 2024. Revenues from licensed and R&D services are comprised primarily of revenues we recognize in connection with our agreements with Chiesi. We expect to generate minimal revenues from licensed and R&D services other than potential regulatory milestone payments. Cost of goods sold was $5.9 million for the three months ended June 30, 2025, a decrease of $3.6 million or 38% from cost of goods sold of $9.5 million for the three months ended June 30, 2024. The decrease in cost of goods sold was primarily the result of the decrease in sales to Pfizer in Rio Cruz, Brazil, partially offset by the increase in sales to Chiesa. For the three months ended June 30, 2025, our total research and development expenses were approximately 6 million, comprised of approximately 3 million subcontractor related expenses, approximately 2 million in salary and related expenses, approximately 0.2 million of materials related expenses, and approximately 0.8 million of other expenses. For the three months ended June 30, 2024, our total research and development expenses were approximately 3 million, comprised of approximately 1.6 million of salary and related expenses, approximately 0.5 million in subcontractor related expenses, approximately 0.2 million of materials related expenses, and approximately 0.7 million of other expenses. Total increase in research and development for the three months ended June 30, 2025 was 3 million or 100% compared to research and development expenses of 3 million for the three months ended June 30, 2024. The increase in research and development expenses resulted primarily from preparations for the planned phase two clinical trial of TRX115. We expect to continue to increase significant increase in research and development expenses as we enter into a more advanced stage of fair clinical and clinical trials for certain of our product candidates. Telling general administrative expenses were 2.6 million for the three months end of June 30, 2025, a decrease of 0.9 million or 26% compared to 3.5 million for the three months end of June 30, 2024. The decrease resulted primarily from a decrease of 0.6 million in salary and redundant expenses and a decrease of 0.3 million in selling expenses. Financial expenses net was 0.5 million for the three months end of June 30, 2025, compared to financial income net of 0.2 million for the three months end of June 30, 2024. The increase in financial expenses net resulted primarily from exchange rate costs and low interest income on bank deposits, partially offset by lower notes interest expenses due to the September 2024 repayment in full of all the outstanding principal interest table under the convertible promissory notes that were then outstanding. We recorded tax expenses approximately 0.5 million for the three months end of June 30, 2025, compared to a tax benefit of approximately 0.1 million for the three months end of June 30, 2024. Tax expenses or benefit resulted primarily from taxes and income mainly derived from guilty income, mainly in respect of Section 174 of the U.S. Tax Cuts and Jobs Act of 2017, the TCJA. Effective in 2022, Section 174 of the TCJA requires all U.S. companies for tax purposes to capitalize and subsequently amortize IMD expenses that fall within the scope of Section 174 over five years for research activities conducted in the United States and over 15 years for research activity conducted outside the United States, rather than deducting such costs in the current year. On July 4, 2025, tax reform legislation was enacted in the United States through the passage of H.R. 1, the One Big Beautiful Bill Act, which includes significant corporate tax changes, including a restoration of the current deductibility for domestic research expenditure beginning in 2025, With transition options for privacy capital as announced, we continue to evaluate the impact that new legislation will have on the consolidated financial statements. In June 30, 2025, we had $33.4 million in cash and cash equivalents and short-term bank deposits. Net income for the three months ended June 30, 2025 was approximately $164,000 or $0 per share basically diluted compared to net loss of approximately 2.2 million or 3 cents per share, basically diluted for the same period in 2024. In closing, I wish to extend my sincere thanks to the many investors and stakeholders in Protonix that have supported us the last six years. It has been an honor to work with you all. I will now turn the call back to you, Joel.

Thank you, Ayaan. Again, we appreciate everything you have done for Protonix. To conclude, for the first half of 2025, we continue to execute our strategic plan and build for the foundation of our future. We are excited to begin a phase two program for PRX 115 later this year into making progress on our early stage R&D efforts. I'm confident that our strategy balance sheet and three streams of revenue will create value for the stockholders. We look forward to updating you on our progress as we continue to drive innovation and create long-term value for both patients and stockholders. Now, I will turn the operator to open the call for questions, please.

Thank you. 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. 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. The first question is from John Vandermosten from Zach's SCR. Please go ahead.

Great. Thank you. And welcome to the CFO seat, Gilad, and best wishes to you all. And it seems like a long, long time since we first met back in New York pre-COVID, a world away, definitely. I thought I'd start out with a question on PAZ. It looks like they started or are planning to launch a study called PAGASO. I guess the way I see it, maybe it's a phase four trial or something for El Fabrio. It looks at real-world setting use of the product. Any comments on that, on how that trial, you know, what its objectives are?

So, you know, John, this is part of their phase four program in order to enhance I would say the merits and strengths of the program. You know, once we will have, of course, outcomes, we will continue, of course, to update. Okay.

And second question is on the 115 program. You know, you're going to start a phase two pretty soon and also, I think, try to enroll before the end of the year. How many sites do you expect for that trial and what, you know, any of the details? that you can provide on how that's going to be structured. And I'll take my answers offline. Thank you.

Sure. It's okay. So we plan a couple of dozens of sites. It depends. We will operate mainly or most of the sites supposed to be in the U.S. I would say between 20 to 30 sites overall and a couple of sites will be outside the U.S. As we will start recruiting, we'll see if we need to expand it or we are okay with 20 or 25 or you know, give or take this number. Right now, we open, I think, 25.

I mean, as a plan. John.

Looks like he disconnected. We can go to the next question. Next question is from Robert Raju from HC Wainwright. Please go ahead.

Good morning. This is Dan on for Ron. Thanks for taking our questions and just wanted to say, good luck to all. I haven't been here for very long, but it's been a lot of fun. Um, so basically kind of curious, has Casey mentioned what percentage of the market share they hold in fabric disease? Um, or do you guys have an indication on that? And does Casey have any specific market strategies in place currently to expand El Fabrio sales? If so, what are those? And I'd like to ask a followup if I could.

So first, thank you for that. I think we have discussed, well, we have an agreement in place with Chiesi. We do not disclose number of patients and or market share, and we respect that of course. I can assure you, and we say it again and again, not only on earnings call, Chiesi does well on the marketplace, actually better than we expect. We continue to see growth of patient acquisition and actually a significant growth. And, you know, as time goes by, they grow their market share. And I assume, going back to what I've said at the beginning, that within a year, year and a half, we'll see something which is much more gradually growth than fluctuations of sales, you know, from Portalix to Chiesi's inventory.

All right. Thank you for that. And During your opening remarks, maybe I'm reading into this a little bit, but you mentioned that Gilad has significant experience in business development and mergers and acquisitions. Could you expand on how Portalix might utilize his experience to that degree? Thank you. Can you repeat the last sentence? Just can you expand on how Portalix might utilize his experience in that avenue of, I guess, general interest in business development and mergers and acquisitions?

So I would like to add, Gilad brings a I would say, deep experience or vast experience in multiple aspects and discipline of financial and business activity and know-how and knowledge. Protralix right now is not planning, as far as I know, any mergers and acquisitions. We are focusing on growing our pipeline right now. If there will be a small licensing, it will be very small. We are not going to, I mean, unless there will be an opportunity, I'm not familiar at this stage. I would like to explain, we are not opening now with an avenue of mergers and acquisitions. This is not the case. We will grow our company through internal and, I would say, inorganic, hopefully, couple of programs, but it will be done in a gradually and responsible manner. All right, thank you so much. This does not mean that Gilad or anyone else on the management does not have experience in business development. But let's leave these big words. We are not in a situation where I hope we operate in a responsible and rational way. We are not going to risk the company.

It will not happen.

As a reminder, to ask a question, please press star one. The next question is from Dar Barshis, a private investor. Please go ahead.

Yes, good morning, gentlemen. Eyal, thank you so much for your dedicated service over the past six years. We appreciate it. And can you please give me an idea of what the remaining value of our contract with Kiese is, please?

So, you know, other than a, you know, the numbers were never public, but just to give a sense, and since it's in our presentation and I've mentioned it, they, uh, on calls, uh, other than the royalties, uh, which has, you know, mentioned, then we have it also in our presentation, we believe that they, uh, sales, the kids, we are going to exceed a hundred million dollars by 2030 on the regulatory and commercial milestones. We believe again, based on the projected 2030 market, And based on their penetration and the market share that they are sharing with us, the forecasted market share they are sharing with us, we believe that Petalix can be up to half a billion dollars in milestone, both commercial and regulatory. But again, it's far out. We're talking about, you know, by 2030, it all depends on the market and their penetration. But those can be achievable numbers.

Thank you. You're welcome. And thanks for the kind words.

There are no further questions at this time. I would like to turn the floor back over to Dror Bashan for closing comments.

Thank you. So thank you all for joining the call today. We truly appreciate your trust and continued support as shareholders. And we look forward to keeping you updated on our progress in the future, of course. So thank you very much.

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