Protalix BioTherapeutics, Inc. (PLX) Q3 2020 Earnings Report, Transcript and Summary

Greetings and welcome to the Protalix Biopharmaceuticals Third Quarter 2020 Financial Results and Business Update. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Investor Relations. Chuck Padala. Thank you, Chuck, you may begin.

Thank you, Paul. Welcome to the Protalix BioTherapeutics, Third Quarter 2020 Finance Results and Business Update Conference Call. With me today are Dror Bashan, Protalix's President and CEO, as well as Eyal Rubin, Protalix's CFO. A press release announcing results and the update was issued yesterday morning and it's available on the Protalix website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The earnings release and the 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 in our filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Dror Bashan.

Thank you, Chuck, and welcome everyone to the company's third quarter of 2020 financial results and business update. Before we start, I would like to thank everyone for making themselves available for today's call, since we had to reschedule due to some technical difficulties in texting their conference call provider hosting the call yesterday. So we apologize for the inconvenience. And as always, we appreciate your time and support of Protalix. During this call, I will provide an overview on the progress of our clinical program and key corporate developments. Following my remarks, our Chief Financial Officer, Mr. Eyal Rubin, will review the company's financial results, before we open the lines for questions. We have accomplished a lot over the last several months. Importantly, we have announced that FDA accepted the BLA filing of PRX-102 for Fabry disease, and set a cutoff date of January 27, 2021. The last patient completed treatment in our PHASE-III BRIGHT study, and we expect to report top line data from this study in the first quarter of 2021. We, together with our development and commercialization partner Chiesi Global Rare Diseases, launched and expanded access program in the US and this will help us to continue indeed, our clinical data set. Finally, we regain the New York stock exchange compliant in early September and announced an entry into a $30 million in the market equity offering program with Bank of America Securities in October. Clearly, it was a highly productive quarter in our commitment to advancing our pipeline programs and achieving progress for the treatment of the undeserved genetic disorder, such as Fabry disease. Now, let me review our recent highlights in more detail. Our lead fighting candidate is the pegunigalsidase alfa, or as defined, PRX-102, which is a therapeutic protein candidate for the treatment of Fabry disease. In May of 2020, Chiesi Global Rare Diseases with our cooperation submitted the BLA to the US FDA under an accelerated approval pathway. In August of this year, we have announced that the FDA has accepted the BLA and granted a priority-review designation. The FDA also indicated in the BLA filing communication that's in the daily filing communication nature [ph] that it is not currently planning to hold an advisory committee meeting to discuss the application. The FDA set the PDUFA action date of January 27, 2021, and the FDA has advised that as part of the BRRE [ph] process, it will have to inspect our Israeli manufacturing facility and the facility of the third-party partner of ours in Europe who perform the field finished [ph] process of pegunigalsidase. Due to the COVID-19 pandemic, related to FDA travel restriction, the FDA has advised that it may be they will be unable for them to put out the inspections prior the PDUFA date. Therefore, we, together with Chiesi, are in active dialogue with the FDA and have submitted a request to the FDA for a Type A meeting to seek resolution on this issue of the pre-license inspection of these two manufacturing facilities, both in Israel in France. We do anticipate an FDA response to this request in the first week of November, 2020. In August of 2020, we, together with Chiese, announced completion of the treatment period of the Phase III BRIGHT study. We expect to release the results from the BRIGHT study for the first quarter of 2021. The BRIGHT study is a 12-month study, open-label switch-over study, designed to assess the safety and efficacy and pharmacokinetics of PRX-102. Two milligrams per kilogram, administered by intravenous infusion every four weeks for 52 weeks in patients with Fabry disease, previously treated with an enzyme replacement therapy such as Fabrazyme and Replagal. The great studies our second Phase III trial or PRX-102 in Fabry patient, and follows the BRIDGE trial positive results that we have announced earlier in May of this year. We anticipate results from an interim analysis of our main study PRX 102 Phase III head-to-head clinical study, called the BALANCE study, in the first half of 2021. I'm so grateful for the collaboration between our teams, all of the patients and clinicians who have been dedicated to this developing program, in spite of the challenges of the COVID-19. We are pleased to announce that we received notification from the New York Stock Exchange -- American New York Stock Exchange, in early September that Protalix has regained compliance with all of the continued listing standards set forth part 10 [ph] of the New York Stock Exchange American Company guide. On September 4, Protalix was removed from the list of the non-compliant insurers on the New York Stock Exchange American website. In early October, Protalix and Chiesi announced the launch of an expanded access program, or EAP, in the United States for PRX-102. The EAP allows access of Pegunigalsidase alfa to a broader group of physicians and patients beyond those in our Phase III program. This EAP is open to patients with clinical diagnosis or Fabry disease, who, in the opinions of their treating physicians, have no comparable or satisfactory alternative treatment options with currently available FDA-approved therapies for Fabry disease. We are thrilled for this opportunity to provide access to this important therapy option for as many eligible patients as possible. More details regarding the program can be viewed on the clinicaltrials.gov website. And finally, I would like to share that we continue to focus on our balance sheet and capital structure to ensure we have met the necessary resources to prepare for potential commercial launch in early 2021, and to move our other development program forward. In early October, we entered in at -- at the market equity offering phase agreement with Bank of America Securities as an agent; this agreement enables us to save from time to time, upto aggregate $30 million of equities of Bank of America at terms and conditions set forth in this agreement [ph]. This financing arrangements provides the company with greater capital raise, ability to execute our commercialization and development. Before I turn the call over to Eyal with an update on the financials, I would like once again to thank our employees for their professionalism, collaborations and tireless efforts during these challenging times in 2020. The pandemic continues to impact our businesses and all lives in Israel and globally, and we know it is not easy to stay focused and positive. We are continuing to operate very well as a team, and we are very much encouraged about the exciting period ahead of us. With that, we now turn the call over to Eyal for an overview of our financials. Eyal, please.

Thank you, Dror. And thank you everyone again for joining today's call despite the inconvenience of the rescheduling. Let me review our third quarter 2020 financials. For the three months ended September 30, 2020, we recorded revenues from selling goods of $3.3 million compared to revenues of $5.1 for the same period of 2019. The decrease is also primarily from the timing difference in sales to Brazil in 2020 compared to 2019, while in 2019, the shipments were scheduled for the third quarter, this year they are scheduled for the fourth quarter. And this is the timing difference, which was partially offset by an increase in sales to Pfizer. Revenue from licensed and R&D services for three months ended September 30, 2020, were $7.5 million compared to $9.1 for the same period of 2019. Revenue from licensed and R&D services are comprised primarily of revenues we recognize in connection with our license and supply agreements with Chiesi. The decrease is primarily due to the completion of two out of the three Phase III clinical trials, as well as lower costs related to our BALANCE study, which leads, obviously, to a lower revenue that we recorded based on U.S. GAAP. Cost of goods sold for the three months ended September 30, was $2.9 million compared to $3.2 for the same period in 2019. The decrease is primarily due to a change in our cost structure, as well as lower royalties due to the Israel Innovation Authority. Research and development expenses for the three months ended September 30, were $7.7 million compared to $10 million [ph] for the same period of 2019. The decrease, similar to what I've described in the R&D and licensed revenues, is due to the completion of two out of three Phase III clinical trials of PRX-102, and reduced costs related to the BALANCE study, as well as a decrease in costs related to manufacturing of our drug in development, as some of those manufactured drug products and related costs have been recorded as inventory. Selling and general administrative expenses were $2.8 million for the three months ended September 30, compared to $2.6 million for the same period in 2019. Financial net expenses were $1.9 million for the three months ended September 30, 2020, compared to $2 million for the same period in 2019. At September 30, 2020, our cash equivalents and short-term bank deposits were approximately $41.3 million compared to approximately $18 million at December 31, 2019. I will now turn the call back to Dror.

Thank you, Eyal. As many of you heard, we had a very productive 2020 so far. We are looking forward for another productive quarter. Looking forward also for another productive year in 2021. Clearly the next two, three quarters are critical for Protalix and we are very much optimistic ahead of our potentially proven and opening the results of the different studies during 2021. And of course, improving our pipeline -- shrinking the pipeline going forward based on our unique technology. Thank you very much and stay well.

Thank you, we will now be conducting a question and answer session. [Operator Instructions] Our first question comes from Ram Selvaraju from H.C. Wainwright. Please proceed with your question.

Hi, this is Boobalan dialing in for Ram Selvaraju. Few questions, first to start off, approximately how many US and European patients were diagnosed with Fabry disease during 2019? And what percentage of these patients are treated with standard-of-care; Fabrazyme?

I think it's actually -- I believe the billion dollar question how many patients, I think got a couple of thousands on the continent. There are many undiagnosed patients as well. I assume there are about 3000 to 4000 patients in each of the continents today. And there is a probably a bigger number which are not on treatment, as we speak. Can you ask again on the second question about the existing therapies?

Yes, so what percentage of these patients are treated with Fabrazyme?

Some of them, I believe, hold the majority of the market, some of them as opposed worldwide, so I think they have like close to 90% in the U.S., the rest is [indiscernible]. There is another enzyme replacement therapy by Shire developed called Replagal, which is not approved in the U.S., however, it is approved everywhere outside of U.S. So that would size the U.S Fabrazyme and Replagal [indiscernible] share -- I don't know, about 35% to 40% each, and Galafold Holding Europe, something like 20%. And we will take -- I mean, we can see it on the reports later this year. As you can understand, Fabrazyme is the golden standard if I may say, as it is approved, both in the U.S. and outside of U.S.

Okay, great. With this secure, expanded access program in the United States for PRX-102, how many patients are expected to be treated overall? Do you plan to use this data with your ongoing Phase III for your future marketing activities?

The expanded access program is not exactly out of Phase III, it's actually an opportunity for patients who do not tolerate or are not satisfied with the current treatment to move into our product. It's actually aside of Phase III, which is ongoing BALANCE study. How many patients, I don't know, we just started about a month ago, I hope there will be as many as possible, any number will be misleading.

And then moving on, assuming PRX-102 showed during early 2021. What factors could potentially drive the market penetration during early years, and what factors that might slow down the market penetration?

I think first getting the program indication; we expect it to be for all Fabry patients. As with Fabrazyme, our drug, and we will -- I understand have to initiate a periodic study for -- potentially to be -- it would be -- this product will be approved for kids. I think that the outcomes of our Phase I/II of the BRIDGE study, and hopefully positive outcomes of our once in four weeks, which is additional regiment. And clearly, a significant improvement for the relevant patient is a very nice win for our launch in Q1 of 2021. This is on the positive side; I think we are supposed to publish results of an interim analysis of our BALANCE study, which means all patients up to 12 months. This is for the European authorities, it's indeed positive. This is clearly a very nice sign for our launch in the US. And then we will proceed of course, for submission into the European authorities. And if it will not be positive, this will slow down; I assume that it will not be adequate for the launch. However, the product is in the outcome so far from the Phase I/II decreasing the GB3 [ph], the specifics of it being accumulated in the tissues. The outcomes from the switch-over from Replagal to our drug, and hopefully good results from the new regimens once in four weeks, to be a very good supportive for the launch of this product.

Great. And I'm glad you mentioned that. And the next one, you mentioned about the pediatric population. And I really wanted to hear your thoughts on this from a clinical standpoint. What are the similarities and differences between adult populations and pediatric Fabry patients? And with respect to beginning clinical trials, do you have a timeline in mind? And do you plan to use the same endpoint for the pediatric study that was used for the other clinical trials?

Unfortunately I don't have the protocol in front of my eyes. And I can look and get back to you with regard to the endpoints. As far as I understand, Fabrazyme is approved for kids or for children, let's call it up to 18 years old; above that, it considered adults. And we are planning to launch this study in order to be able to expand our labeling also to children who suffer from Fabry disease to enable them a potential new alternative on the market, as it's very important. Just maybe to explain, there is another -- today in the U.S. there are two approved medications in Fabry, one is Fabrazyme for all Fabry patients, and one is Galafold, which is with a chaperone technology, and therefore it fits to a portion of the Fabry population, about 30% genetic-wise to be a genetic fit. And you can also see it from the market share. So having another enzyme, hopefully an important one, we have to show it, of course, on the market. I think is a new hope for these patients and their families. And it's important to have as dose for adults, and also for kids, of course.

Okay. And last one for me. Do you plan to ink additional collaboration data [Technical Difficulty] platform over the next six to 12 months?

For some reason, your voice became low. Can you ask again?

Yes, do you plan to enter additional deals on your platform over the next six to 12 months?

We are working on that. We discuss it with multiple parties. Both licensing out of there, let's say, based on our platform, and also licensing all kinds of technologies, or ideas that can be also implemented with our technology. So I hope within the next six to 12 months, we really may be able to update, of course, and to strengthen the pipeline which is very much important.

Okay, all right. That's it from me. Thanks so much.

[Operator Instructions] At this time, there are no further questions. I would like to turn the floor back over management for any closing comments.

So this is Dror speaking and I wish everybody to continue and be well and thank you for the time and I encourage everybody who has any questions or query to approach us directly via emails or phone numbers, etcetera. And we will be happy to answer and thank you very much again.

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