Protalix BioTherapeutics Inc. (NYSE:PLX) Q4 2021 Earnings Conference Call March 31, 2022 8:30 AM ET
Company Participants
Dror Bashan – President, Chief Executive Officer
Eyal Rubin – Senior Vice President, Chief Financial Officer
Charles Padala – LifeSci Advisors
Conference Call Participants
John Vandermosten – Zacks Small Cap Research
Operator
Good morning ladies and gentlemen and welcome to Protalix BioTherapeutics’ full year 2021 earnings conference call.
At this time, all participants are in a listen-only mode and the conference is being recorded.
I will now turn the conference over to our host, Mr. Chuck Padala of LifeSci Advisors, investor relations for Protalix. Thank you, please go ahead.
Charles Padala
Thank you Donna. Welcome to the Protalix BioTherapeutics’ fiscal year 2021 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 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 the Protalix filings with the U.S. Securities and Exchange Commission.
With that, I will now turn the call over to Mr. Dror Bashan. Dror?
Dror Bashan
Thank you for the introduction, Chuck, and welcome everyone to Protalix fiscal year2021 financial results and business update call. During today’s call, I will review the progress of our key clinical programs and provide an update of some of our future plans. Following my remarks, Mr. Eyal Rubin, our Chief Financial Officer will review our financial results, and we will then open the line for questions.
I’m very pleased with the progress we made during 2021. Over the course of last year, we made significant strides in multiple forms. First, we have finalized the BALANCE Phase III study and we plan to share top line results of this study by next week. We have reviewed with applicable regulatory agencies our pathway for regulatory submissions, and for the EU we have reviewed our pathway for submission of the marketing authorization agreement, or MAA for PRX-102 with the European Medicine Agency, or EMA, which was actually submitted in February of 2022.
For the United States, we have reviewed the pathway for resubmission of the biologic license application, or BLA for PRX-102, which we expect to be submitted to the FDA later this year. I want to emphasize the close collaboration we continue to have with our commercial partner, Chiesi Global Rare Disease in all aspects of the PRX-102 program, and we thank them very much for their efforts and appreciate their partnership. In parallel, we invested resources in our early stage pipeline to advance a number of programs. Our goal is to continue to invest both human and financial capital into new product candidates and establish a more significant pipeline while maintaining our focus in bringing PRX-102 to the finish line.
Finally, we strengthened our financial balance sheet in the second half of this year–of last year, actually, and now we have sufficient cash runway until Q3 2023.
Let me now review our results and our expected milestones in greater detail.
In September of 2021, we together with Chiesi completed a Type A meeting with the FDA regarding PRX-102 BLA. This meeting took place actually following a complete response letter we received in April of 2021. With guidance received from the FDA, we and Chiesi developed a pathway for resubmission of the BLA for PRX-102 and we expect to resubmit PRX-102 BLA to the FDA in the second half of this year. We anticipate the data package for the BLA resubmission will include results from our Phase III BALANCE study clinical trial.
As mentioned, we expect to announce top line results next week. A final analysis of the BALANCE study is anticipated to be available later this year after we have finalized all analysis and discussion of the collected data. We believe that the BALANCE results, if positive, together with our data sets from the Phase III BRIGHT trial and the Phase III BRIDGE trial might provide a compelling case to the regulators to consider this important new potential treatment option for adult patients with Fabry disease.
In February of 2022, we and Chiesi submitted an MAA to the European Medicine Agency for PRX-102 for the treatment of adult patients with Fabry disease. The application was validated, confirming that all essential elements required for scientific assessment were included in the application. If the MAA is approved, PRX-102 would be authorized for sale in all member nations of the European Union. We are very excited to have achieved this milestone and we are looking forward to providing updates as they arise.
Turning to our early stage pipeline, PRX-115 is a PEGylated enzyme expressed via ProCellEx for intravenous administration of recombinant uricase that we are studying as a potential treatment for refractory gout. Gout is the most common inflammatory arthritis in the United States, affecting an estimated 9.2 million adults, and it’s estimated approximately 2% of the gout population is considered to have chronic refractory disease. Uricase enzyme converts uric acid to allantoin, which is easily eliminated through urine; however, uricase enzyme does not exist naturally in humans. We use ProCellEx to express and optimize recombinant uricase enzyme, which we are designing to have an improved half life, reducing immunogenicity and potentially longer term efficacy. We have initiated toxicology studies earlier this year and we plan to initiate the Phase I clinical study early next year.
The second one is PRX-119, which is a PEGylated recombinant human DNase I expressed by our system, ProCellEx and designed to elongate DNase half life in the circulation for the treatment of NETs related diseases. The only FDA approved DNase I, dornase alpha, is for treatment of cystic fibrosis patients via inhalation. We are developing long acting DNase 1 to potentially customize the treatment of a variety of medical conditions in which NETs are [indiscernible] and we will update you as the program develops and we identify an initial target indication.
I will now turn to Eyal for a review of our financials. Eyal, please go ahead.
Eyal Rubin
Thank you Dror, and thank you everyone again for joining today’s call. Let me review our fourth quarter and full year 2021 financials.
For the year ended December 31, 2021, we recorded revenues from selling goods of $16.7 million, an increase of $0.5 million or 3% compared to revenues of $16.2 million for the same period of 2020. Revenues from license and R&D services for the year ended December 31, 2021 were $21.6 million compared to $46.7 million for the year ended December 31, 2020. Revenues from license agreements represents the revenue we recognize in connection with the Chiesi agreement. The decrease is primarily due to lower costs incurred in the year ended December 31, 2021 in connection with the PRX program.
Cost of goods sold was $16.3 million for the year ended December 31, 2021, an increase of $5.4 million or 50% versus $10.9 million for the year ended December 31, 2020. The increase was primarily from one-time manufacturing costs incurred while preparing for the then-anticipated FDA approval of the PRX-102 BLA and higher manufacturing costs.
R&D expenses for the year ended December 31, 2021 were $29.7 million, a decrease of $8.5 million or 22% compared to $38.2 million for the year ended December 31, 2020. The decrease is primarily due to the completion of the three Phase III clinical trials of PRX-102, as Dror mentioned. We expect R&D expenses to continue to be a primary expense as we enter into a more advanced stage of preclinical and clinical trials for certain of our product candidates, as elaborated by Dror earlier.
Selling, general and administrative expenses were $12.7 million for the year ended December 31, 2021, an increase of $1.6 million or 14% versus $11.1 million for the year ended December 31, 2020. The increase resulted primarily from an increase in corporate costs related mainly to insurance.
Financial expenses net was $7.1 million for the year ended December 30, 2021, a decrease of $2.1 million or 23% compared to $9.2 million for the same period of 2020. As of December 31, 2021, our cash, cash equivalents and short term bank deposits were approximately $39 million compared to $38.5 million as of December 31, 2020.
As Dror mentioned, earlier during the third quarter of 2021 we successfully completed a note exchange to effectively lower the aggregate principal amount of our then-outstanding convertible notes to $28.75 million and to extend the maturity of the remaining notes from 2021 to 2024. We believe that our current financial position provides us sufficient cash runway through the third quarter of 2023.
I will now turn the call back to you, Dror.
Dror Bashan
Thank you Eyal.
Thanks to all of you joining us for today’s call. We look forward to working closely together with Chiesi to collaborate with the FDA and the EMA to bring PRX-102 to market. As I mentioned in my opening remarks, we are extremely excited for the opportunity for resubmission which lies–I’m sorry. As I mentioned in my opening remarks, we are extremely excited for the opportunity for resubmission which lies ahead in the second half of 2022. Our aim is to bring forward this important potential treatment option for adult patients with Fabry disease.
Now I will turn the call back to the Operator, and let’s have your questions, please.
Question-and-Answer Session
Operator
[Operator instructions]
Our first question comes from John Vandermosten of Zacks. Please go ahead.
John Vandermosten
Hey, good afternoon Dror, Eyal. Good to hear your voices again.
In the BRIGHT study, what was the trigger for switching the one patient from the four-week regime to the two-week regime?
Dror Bashan
Again, please – in the BALANCE study?
John Vandermosten
I’m sorry, in the BRIGHT study. Sorry, yes, in the BRIGHT study, what was the trigger for switching the one patient from the four-week to the two-week regimen?
Dror Bashan
John, I don’t have the answer in front of me, if we speak about one patient out of 30 that were enrolled. I will look into it and we can get back to you.
John Vandermosten
Okay, because I noticed that all the patients are supposed to be on the four-week regimen, and then one of them shifted to the two-week, and I was just wondering what–if there was a trigger or something that shifted that.
Dror Bashan
Yes, I assume there was a trigger. I will verify the facts and I will revert, of course.
John Vandermosten
Okay, sounds good. Then on Chiesi Rare Disease, have they started sales yet? Do they have a sales team in place already so when your product rolls on, they’ll already have interactions going on–
Dror Bashan
Yes, yes. They have established already this business, I think close to three years ago, if I remember well. They [indiscernible] assets and they have recruited enough, if I may, infrastructure, well experienced from the main–you know, from rare disease companies and other companies with experience, so actually please remember that we were ahead of approval actually a year ago, close to a year ago, so they do have infrastructure and are co-marketing, in the wide term, to speak about sales, patient advocacy, marketing, market access, etc. on the ground with, I assume, many hundred years of experience in each of the continents, ready to go.
John Vandermosten
That’s great news. Then last question from me is on the resubmission, the PRX-102 BLA resubmission. Is the only thing that you’re waiting on there really the results from the BALANCE study, the final results to submit that, or is there something else that also needs to get completed before you resubmit?
Dror Bashan
We are actually–you know, once we open the top line results and share, then there will be a couple of months to finalize the results of the BALANCE study and establish a CSR, which is a clinical study report, then in parallel actually, and it’s not on the critical path but it will be ready as well, is of course the fit and finish with all the data around it. Actually beyond that, there is nothing else, so, but this is why we are geared to–or we will be moving, if I may say, into final steps of submissions later this year once the CSR is done. I assume it will take another few weeks – you know, QA process at [indiscernible] verifying everything is okay and then we move on.
John Vandermosten
Okay, thanks for the detail, Dror. I’ll hop back in queue. Thank you.
Dror Bashan
Thank you sir.
Operator
Once again, ladies and gentlemen, that is star, one to register any questions at this time.
We have additional questions coming from John of Zacks. Please go ahead.
John Vandermosten
Thanks for taking my follow-up. Just a couple questions on the forecast for next year for R&D. Eyal, you mentioned something about that, that we’re going to maybe see an incremental increase year-over-year. You had about $30 million in R&D expense for 2021. What do you see as the direction of that in 2022?
Eyal Rubin
I assume that net-net we’re going to see more investment in the preclinical and the early stage pipeline. On the expense of PRX-102 as we progress in the submission, obviously it’s not going to be part of the R&D as we expect most of the regulatory costs to be behind us, so net-net I guess we’re going to be in the same neighborhood, maybe a couple million more, but nothing significant. I think the new deployment of the capital from 102, since all trials are done and most of the expenses are already behind us, we are deploying them into the new or the early pipeline that we have.
John Vandermosten
Okay, that’s helpful. Thank you.
Operator
Thank you. At this time, I’d like to turn the floor back over to Mr. Bashan for closing comments.
Dror Bashan
Thank you for that. All I have is to thank you again for the time, and I hope we will have good news next week. We will update you, of course, accordingly. Thank you very much.
Operator
Ladies and gentlemen, thank you for your participation. This concludes today’s event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.
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