midastouch017
1 year ago
Protalix BioTherapeutics, Inc. (PLX) Q4 2023 Earnings Call Transcript
Mar. 14, 2024 1:02 PM ETProtalix BioTherapeutics, Inc. (PLX) Stock
Protalix BioTherapeutics, Inc. (NYSE:PLX) Q4 2023 Earnings Conference Call March 14, 2024 8:30 AM ET
Company Participants
Lauren Merrick - Investor Relations
Dror Bashan - President and Chief Executive Officer
Eyal Rubin - Senior Vice President and Chief Financial Officer
Conference Call Participants
John Vandermosten - Zacks
Operator
Good morning, ladies and gentlemen and welcome to the Protalix BioTherapeutics Fiscal Year 2023 Financial and Business Results Conference Call. As a reminder, this conference call is being recorded. I’ll now turn the conference over to our host, Ms. Lauren Merrick [ph] of LifeSci Advisors, Investor Relations for Protalix. You may now begin.
Lauren Merrick
Thank you, Rob and welcome to the Protalix BioTherapeutics fiscal year 2023 financial results and business update conference call. With me today are Dror Bashan, President and CEO of Protalix; 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 now on the Protalix 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 Protalix’s filings with the U.S. Securities and Exchange Commission.
I will now turn the call over to Mr. Dror Bashan. Dror?
Dror Bashan
Thank you, Lauren and welcome everyone to our fiscal year 2023 financial results and business update call. I will begin by reviewing our accomplishments over the past year and recent progress. Following my remarks, Eyal will provide a more detailed review of our financial results. We will then open the line for questions.
2023 marks a significant year for Protalix as we received regulatory approval for our second drug Elfabrio, for the treatment of adult patients with Fabry disease. In May of 2023, both the FDA and the EMA approved Elfabrio for the treatment of adult patients with Fabry disease. Since then, Elfabrio has been granted additional regulatory approvals in other markets like UK, Sweden and the most recently in Israel as well. Our commercial partner, Chiesi global rare diseases remains focused on the commercial launches, which are underway in the United States, in the European Union, in the UK and additional markets where approvals are granted. We are confident that Chiesi will continue to position Elfabrio for success, and we look forward to continued growth of our Elfabrio franchise. Elfabrio is now the second approved drug expressed via our propriety plant, coal-based protein expression system, Protalix, which further highlights the success of our unique platform with these significant milestones behind us and while we are supporting Chiesi’s operations.
We are continuing to focus on building our – the development of our pipeline of innovative assets for the treatment of genetic and non-genetic rare diseases. Our next clinical development candidate is PRX-115, which is being developed for the potential treatment of severe gout. PRX-115 is a recombinant pegylated uricase product candidate that is also produced using our Protalix platform. In March of 2023, we have initiated a Phase 1 first in human clinical trial of PRX-115 to evaluate its safety, pharmacokinetics, pharmacodynamics and immunogenicity. This is a double-blind placebo-controlled single ascending dose study being conducted in New Zealand in approximately 56 patients with elevated uric acid levels. We are pleased to announce that the trial is now fully enrolled, and we expect to report preliminary results from this study in the second quarter of 2024. Our next pipeline of candidate also being expressed for Protalix is PRS-119. PRX-119 is a pegylated recombinant human DNS1 candidate in developing for the potential treatment of diseases associated with neutrophil extracellular scraps or NES. Additional preclinicals are ongoing, and we will update you accordingly, of course.
In addition to PRX-115 and PRX-119, we have multiple preclinical programs in progress, and we look forward to providing you with the updates on these potential development candidates as they become more mature. On the corporate side, in 2023, we welcome Dr. Eliott Foster as Chairman of our Board of Directors and a member of our nominating committee. Dr. Foster succeeded [indiscernible] who retired and we are grateful to the very dedication and leadership since the founding of Protalix. And we are grateful for Eliot’s contribution thus far as we prepare for an exciting phase of development of the company.
Finally, and before turning the call over to Eyal, I want to note that our strong balance sheet provides us with sufficient cash runway to support our operations and in addition, as Eyal will discuss, sales of Elfabrio to Chiesi increased after regulatory approval of Elfabrio, while Chiesi builds its inventories to support a successful launch. We expect sales to clearly – to gradually continue as they anticipate future approvals and launches in additional countries throughout the world.
With that, it is now my pleasure to turn the call over to Eyal for a review of our financials. And Eyal, please go ahead.
Eyal Rubin
Thank you, Dror. And thank you everyone for joining todays call. Let me review our fiscal year 2023 financials. We recorded revenues from selling goods of $40.4 million for the year ended December 31, 2023, an increase of $15.1 million or 60% compared to revenues of $25.3 million for the year ended December 31, 2022. The increase resulted primarily from an increase of $14.1 million in sales of Elfabrio drug product to Chiesi following the approval by the FDA and the EMA of Elfabrio as Dror described, an increase of $0.1 million in sales to Pfizer and of $0.9 million in sales to Brazil.
We recorded revenues from license and R&D services of $25.1 million for the year ended December 31, 2023, an increase of $2.8 million or 13% compared to revenues of $22.3 million for the year ended December 31, 2022. The increase resulted from the $20 million regulatory milestone payment from Chiesi in connection with the FDA approval of Elfabrio, which was partially offset by a decrease of $17.2 million in revenues recognized in connection with the R&D performance obligation under the Chiesi agreement as the company has completed the Phase 3 clinical program thereunder.
Revenues from license and R&D services represent primarily the revenues the company recognized for services provided under the Chiesi agreement. Cost of goods sold was $23 million for the year ended December 31, 2023, an increase of $3.4 million or 17% compared to cost of goods sold of $19.6 million for the year ended December 31, 2022. The increase in cost of goods sold was primarily the result of increase in sales of goods per for Chiesi Brazil and Pfizer. Sales to Chiesi included certain drug substance costs, which had already been recognized as research and development expenses as it was produced as part of the research and development activities.
Accordingly, the related cost of goods sold does not include the cost of subs. For the year ended December 31, 2023, the company total research and development expenses were approximately $17.1 million, comprised of approximately $6.3 million subcontractor related expenses, approximately $7.8 million of salary-related expenses, approximately $0.6 million of material-related expenses and approximately $2.4 million of other expenses. For the year ended December 31, 2022, the company’s total research and development expenses were approximately $29.3 million, comprised of approximately $17.8 million in sub-contractor related expenses, approximately $7.3 million of salary and related expenses, approximately $1.4 billion of material-related expenses and approximately $2.8 million of other expenses.
The decrease in research and development expenses was $12.2 million or 42% for the year ended December 31, 2023, compared to the year ended December 31, 2022. The decrease in issues and development expenses resulted primarily from $11.5 million decrease in subcontractor-related expenses in connection with the PRX-102 clinical trials and a $0.8 million decrease in materials related expenses.
Selling, general and administrative expenses were $15 million for the year ended December 31, 2023, an increase of $3.3 million or 28% from $11.7 million for the year ended December 31, 2022. The increase resulted primarily from an increase of approximately $2.3 million in one-time cash bonuses, share-based compensation and salary and related expenses as well as an increase of $0.3 million in travel conferences and employee training expenses. Financial expenses net was $1.9 million for the year ended December 31, 2023, an increase of $0.5 million or 36% compared to financial expenses of $1.4 million for the year ended December 31, 2022. The increase was primarily due to a decrease of $0.9 million in income related to exchange rates as well as an increase in interest expenses of $0.7 million which was partially offset by a gain recognized due to the conversion of a portion of the 2024 notes of $0.4 million and $0.6 million increase in interest income.
For the year ended December 31, 2023, we recorded income taxes of approximately $0.3 million, a decrease of $0.2 million or 40% compared to tax expenses of $0.5 million for the year ended December 31, 2022. The income taxes resulted primarily from the provision for current taxes and income mainly derived from U.S. taxable global intangible low tax income duty, mainly in respect of Section 174 of the U.S. Tax Cuts and Jobs Act effective in 2022, Section 174 of the TCJA requires all U.S. companies, for tax purposes, to capitalize and subsequently amortize R&D expenses that fall within the scope of Section 174 over 5 years for research activities conducted in the United States and over 15 years for research activities conducted outside of the United States rather than deducting such costs in the current year.
The net income taxes gives effect to a valuation allowance release equal to approximately $3.1 million. Cash and cash equivalents and short-term bank deposits were approximately $44.6 million at December 31, 2023. Net income for the year ended December 31, 2023, was approximately $8.3 million or $0.12 per share basic and $0.09 per share diluted compared to a net loss of $14.9 million or $0.31 per share basic and diluted for the same period in 2022.
I will now turn the call back to you, Dror.
Dror Bashan
Thank you, Eyal. I would like to conclude by expressing how pride we are on of all that Protalix has accomplished throughout 2023. With two drugs expressed via our proven platform are now approved, we are continuing to build our expertise to develop a type of assets to potentially transform the treatment of rare disease. I am grateful for a world-class team who constantly demonstrate unwavering commitment to our mission. We look forward to updating you on our progress as we continue to drive innovation and create long-term value for the patients and stockholders.
Now, I would like to ask the operator to open the call for questions.
Question-and-Answer Session
Operator
[Operator Instructions] And our first question comes from the line of John Vandermosten with Zacks. Please proceed with your question.
John Vandermosten
Great. Thank you and good afternoon Dror and Eyal. If I start off with a question about some of the PRX-102 studies that are going on, I noticed you had one in Japan and one in the United States for pediatric. Can you give us a timeline on how long those might take and what the next steps would be there to get approvals for Japan and for pediatric indication?
Dror Bashan
So, thank you, John. Actually, this study, this is – and are conducted by Chiesi and this is their responsibility. So, I don’t have the timeline in front of me, of course. And this is for them actually to address that. But you can understand that they put a lot of attention and resources into expanding if I may say the franchise, this is clear.
John Vandermosten
Yes. Great. It sounds like they have a lot of opportunities out there. And also, you may not have gotten a lot of information from Chiesi on this, but when you look at your revenues and kind of expenditures for the year, how should we think of those balancing out in terms of free cash flow on the bottom line? Are they going to be pretty equal based on the view right now? Is that how you are planning going forward?
Eyal Rubin
Hey. Thanks for the question, John. So, I don’t know what equal means. But as Dror mentioned, gradually, we expect the sales obviously to grow. And in terms of the free cash flow, it depends how much money you are going to invest in the early stage and the later stage R&D. As I mentioned in previous calls, the sales to Chiesi are comprised of an inventory buildup as well as obviously, commercial sales to the enrolled commercial patients. We expect that these sales are going to eventually grow and gradually, we will get to the place, as we indicated in our presentation, that we believe that Chiesi with a good job can they take in the market.
John Vandermosten
Got it. And then looking at PRX-115, you had mentioned that there is going to be results from that, it seems like in the next couple of weeks. What – assuming those are positive, what are the next steps for that program? Is that Phase 2, or might there be some other pursuit there?
Dror Bashan
So, if indeed, we continue to go forward, of course, when we move into a Phase 2, yes.
John Vandermosten
Okay. And would that be before the end of this year that you would start that Phase 2?
Dror Bashan
This depends – I think it will be between the end to the first half of next year, yes.
John Vandermosten
The first half of next year, okay. Got it. And then last question on PRX-119. What are the next steps for that? Is that something you might put into the clinic this year?
Dror Bashan
Not yet. We are looking into the right indication to continue with. I think this will take further a bit more to decide.
John Vandermosten
Okay. And then any other milestones on the R&D side that we should think about as we progress through 2024?
Dror Bashan
Once there will be something to update, we will update, of course. We are not exactly sitting on our hands. Well, I think we will pretty much, I would say, even intensively in order to make sure that we can add the additional early-stage assets. It is just – we take our time, and I hope we will cut the right move, but will make sense.
John Vandermosten
Okay. Alright. Thank you, Dror. Thank you, Eyal for your answers.
Dror Bashan
You’re welcome.
Operator
[Operator Instructions] Thank you. At this time, there are no additional questions. Gentlemen, would you want to make some further remarks.
Dror Bashan
So, this is to Dror speaking. I just would like to thank everybody again for the time, and again, to thank our shareholders and our employees for supporting us and moving on with our commitment. And we will – of course, we will update you accordingly on any sort of development, and we will meet in the next earnings update. Thank you.
Operator
This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Eyal Rubin
Thank you.
midastouch017
1 year ago
Protalix BioTherapeutics Reports Fiscal Year 2023 Financial and Business Results
https://finance.yahoo.com/news/protalix-biotherapeutics-reports-fiscal-2023-105000190.html
Company to host conference call and webcast today at 8:30 a.m. EDT
CARMIEL, Israel, March 14, 2024 /PRNewswire/ -- Protalix BioTherapeutics, Inc. (NYSE American: PLX), a biopharmaceutical company focused on the development, production and commercialization of recombinant therapeutic proteins produced by its proprietary ProCellEx® plant cell-based protein expression system, today reported financial results for the fiscal year ended December 31, 2023, and provided a business update.
"2023 was a significant year for Protalix, as we received regulatory approvals of Elfabrio for the treatment of adult patients with Fabry disease and advanced our growing pipeline," said Dror Bashan, Protalix's President and Chief Executive Officer. "As the second drug produced through our proven protein expression platform, Elfabrio's approval is a welcome milestone for Fabry disease patients and their families. Our commercial partner Chiesi Global Rare Diseases is continuing to position Elfabrio for global success, with launches underway in the United States, the European Union, the UK and additional markets where approvals were granted. As we continue to provide Chiesi with operational support for its activities, we have turned our attention to developing our innovative pipeline. For example, PRX-115, our proprietary recombinant PEGylated uricase for the treatment of severe gout, is currently being studied in a first-in-human phase I clinical trial. We anticipate that results from the trial will be published in the second quarter of 2024. As a company powered by a professional team and solid financials, and with the potential for revenue growth, we are poised for an exciting future and look forward to making a positive impact on patients' lives and delivering long-term value to our stockholders."
Fiscal Year 2023 and Recent Business Highlights
Regulatory and Commercial Advancements
The Company, together with its development and commercialization partner, Chiesi Global Rare Diseases (Chiesi), a business unit of the Chiesi Group, gained marketing authorizations in the United States, the European Union, the UK, Switzerland and Israel for Elfabrio® (pegunigalsidase alfa), a PEGylated recombinant human a-Galactosidase-A enzyme, for the treatment of adult patients with confirmed Fabry disease. Elfabrio is administered via intravenous infusion at a dose of 1 mg/kg every two weeks.
On May 5, 2023, the Company announced that the European Commission (EC) granted marketing authorization to Elfabrio in the European Union for the treatment of adult patients with Fabry disease.
On May 10, 2023, the Company announced that the U.S. Food and Drug Administration (FDA) approved Elfabrio in the United States for the treatment of adult patients with Fabry disease.
On August 15, 2023, Chiesi announced that the UK Medicines and Healthcare products Regulatory Agency (MHRA) granted marketing authorization for Elfabrio in Great Britain for long-term enzyme replacement therapy in adult patients with a confirmed diagnosis of Fabry disease.
On September 11, 2023, Swissmedic, the national authorization and supervisory authority for drugs and medical products in Switzerland, announced the approval of Elfabrio in Switzerland for long-term enzyme replacement therapy in adult patients with a confirmed diagnosis of Fabry disease.
In January 2024, the Israeli Ministry of Health granted principle approval of Elfabrio for adult patients with a confirmed diagnosis of Fabry disease.
The FDA approval triggered a $20.0 million milestone payment from Chiesi. In addition, the Company generated $17.5 million from sales of Elfabrio to Chiesi during 2023 post-regulatory approval, as Chiesi is building its inventory and recruiting commercial patients in the United States and Europe.
Clinical Developments
In March 2023, the first patient was dosed in the Company's First in Human (FIH) Phase I clinical trial of PRX–115, a recombinant PEGylated uricase product candidate under development as a potential treatment for severe gout. The FIH trial is a double-blind, placebo-controlled, single ascending dose study designed to evaluate the safety, pharmacokinetics, pharmacodynamics and immunogenicity of PRX–115 in approximately 56 patients with elevated uric acid levels (>6.0 mg/dL) and no previous exposure to PEGylated uricase. The study, which is fully-enrolled, is being conducted at the New Zealand Clinical Research (NZCR) under the New Zealand Medicines and Medical Devices Safety Authority (MedSafe) and the Health and Disability Ethics Committee (HDEC) guidelines. The Company anticipates that preliminary results from the study will be published in the second quarter of 2024.
Corporate Developments
On September 14, 2023, Eliot Richard Forster, Ph.D. began his tenure as Chairman of the Board of Directors, replacing former Chairman Zeev Bronfeld, who retired for personal reasons.
Fiscal Year 2023 Financial Highlights
The Company recorded revenues from selling goods of $40.4 million for the year ended December 31, 2023, an increase of $15.1 million, or 60%, compared to revenues of $25.3 million for the year ended December 31, 2022. The increase resulted primarily from an increase of $14.1 million in sales of Elfabrio drug product to Chiesi, following the approvals by the FDA and the European Medicines Agency (EMA) of Elfabrio, an increase of $0.1 million in sales to Pfizer Inc., or Pfizer, and of $0.9 million in sales to Brazil, resulting from timing differences.
The Company recorded revenues from license and R&D services of $25.1 million for the year ended December 31, 2023, an increase of $2.8 million, or 13%, compared to revenues of $22.3 million for the year ended December 31, 2022. The increase resulted from the $20.0 million regulatory milestone payment from Chiesi in connection with the FDA approval of Elfabrio which was partially offset by a decrease of $17.2 million in revenues recognized in connection with the R&D performance obligation under the Chiesi Agreements as the Company has completed the phase III clinical program thereunder. Revenues from license and R&D services represent primarily the revenues the Company recognized for services provided under the Chiesi Agreements.
Cost of goods sold was $23.0 million for the year ended December 31, 2023, an increase of $3.4 million, or 17%, compared to cost of goods sold of $19.6 million for the year ended December 31, 2022. The increase in cost of goods sold was primarily the result of the increase in sales of goods to Chiesi, Brazil and to Pfizer. Sales to Chiesi included certain drug substance costs which had already been recognized as research and development expenses as it was produced as part of research and development activities. Accordingly, the related cost of goods sold does not include the costs of such drug substance.
For the year ended December 31, 2023, the Company's total research and development expenses were approximately $17.1 million, comprised of approximately $6.3 million in subcontractor-related expenses, approximately $7.8 million of salary and related expenses, approximately $0.6 million of materials-related expenses and approximately $2.4 million of other expenses. For the year ended December 31, 2022, the Company's total research and development expenses were approximately $29.3 million, comprised of approximately $17.8 million in subcontractor-related expenses, approximately $7.3 million of salary and related expenses, approximately $1.4 million of materials-related expenses and approximately $2.8 million of other expenses. Total decrease in research and developments expenses was $12.2 million, or 42%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease in research and development expenses resulted primarily from a $11.5 million decrease in subcontractor-related expenses in connection with the PRX-102 clinical trials, and a $0.8 million decrease in materials-related expenses.
Selling, general and administrative expenses were $15.0 million for the year ended December 31, 2023, an increase of $3.3 million, or 28%, from $11.7 million for the year ended December 31, 2022. The increase resulted primarily from an increase of approximately $2.3 million in one-time cash bonuses, share-based compensation and salary and salary-related expenses, as well as an increase of $0.3 million in travel, conferences and employee training expenses.
Financial expense, net was $1.9 million for the year ended December 31, 2023, an increase of $0.5 million, or 36%, compared to financial expenses of $1.4 million for the year ended December 31, 2022. The increase was primarily due to a decrease of $0.9 million in income related to exchange rates as well as an increase in interest expenses of $0.7 million which was partially offset by a gain recognized due to conversions of a portion of the 2024 Notes of $0.4 million and a $0.6 million increase in interest income.
For the year ended December 31, 2023, the Company recorded income taxes of approximately $0.3 million, a decrease of $0.2 million, or 40%, compared to tax expenses of $0.5 million for the year ended December 31, 2022. The income taxes resulted primarily from the provision for current taxes on income mainly derived from U.S. taxable global intangible low-taxed income (GILTI) mainly in respect of Section 174 of the U.S. Tax Cuts and Jobs Act (the "TCJA"). Effective in 2022, Section 174 of the TCJA requires all U.S. companies, for tax purposes, to capitalize and subsequently amortize R&D 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 activities conducted outside of the United States rather than deducting such costs in the current year. The net income taxes gives effect to a valuation allowance release equal to approximately $3.1 million.
Cash, cash equivalents and short-term bank deposits were approximately $44.6 million at December 31, 2023.
Net income for the year ended December 31, 2023 was approximately $8.3 million, or $0.12 per share, basic, and $0.09 per share, diluted, compared to a net loss of $14.9 million, or $0.31 per share, basic and diluted, for the same period in 2022.
Conference Call and Webcast Information
The Company will host a conference call today, March 14, 2024 at 8:30 am EDT, to review the financial results and provide a business update. To participate in the conference call, please dial the following numbers prior to the start of the call:
Conference Call Details:
Date: Thursday, March 14, 2024
Time: 8:30 a.m. Eastern Daylight Time (EDT)
Toll Free: 1-877-423-9813
International: 1-201-689-8573
Israeli Toll Free: 1-809-406-247
Conference ID: 13744193
Call me™: https://tinyurl.com/4pkhcxcj
The Call me™ feature allows you to avoid the wait for an operator; you enter your phone number on the platform and the system calls you right away.
Webcast Details:
The conference will be webcast live from the Company's website and will be available via the following links:
Company Link: https://protalixbiotherapeutics.gcs-web.com/events0
Webcast Link: https://tinyurl.com/mumnf9da
Conference ID: 13744193
Participants are requested to access the websites at least 15 minutes ahead of the conference to register, download and install any necessary audio software.
A replay of the call will be available for two weeks on the Events Calendar of the Investors section of the Company's website, at the above link.
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