Q2 2021 Protalix Biotherapeutics Inc Earnings Call
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Okay.
Good morning, ladies and gentlemen, and welcome to the bio Therapeutics second quarter 2021.
Actual results and business update conference call.
As a reminder, this conference is being recorded.
I will now turn the call conference over to your host Mr. David Holmes of lifestyle Advisors Investor Relations for both hotels you may begin your conference.
Thank you Joe.
Welcome to the <unk> second quarter 2021 financial results and business update conference call with me today are Dror, Bashan, President and CEO of Photonics, and Yale Rubin Chief Financial Officer.
A press release announcing the results and the update was issued this morning and is now available on <unk> 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 those statements made.
Factors that could cause actual results to differ are described in the disclaimer and in the <unk> filings with the U S Securities and Exchange Commission.
I'll now call the turn the call over to Mr. Dror for Sean George.
Thank you David and welcome everyone to the company's second quarter, 2021 financial results and financial and business update during the call today I will review the progress of our key clinical programs and provide an update on our strategic roadmap for the remainder for the remainder of 2021 and beyond.
Following my remarks, our Chief Financial Officer, Roomies, Billy Automobile will review the company's financial results before we open the lines.
I would like first to discuss our balance sheet. We ended the quarter with approximately $77 million in cash as we announced on Friday on August 12, 2021, we entered into a definitive exchange agreements relating to the exchange of $54.65.
Others principal amount of outstanding seven 5% senior secured convertible notes due 2021 for $28.75 million principal amount of newly issued seven odd percent senior secured convertible notes due 2024.
$5.9 million in cash.
And accrued and unpaid interest to the closing date we.
We plan to close these exchanges as soon as profit proxy cable subject to satisfaction of certain.
Closing conditions.
At closing, we will have reduced our debt by $25.8 million and effectively extended the maturity for substantially.
All of the remaining debt from 2021 until 2024.
This extension of the maturity date of the notes allows us to use our cash resources to continue and realize the peer rates, one or two potential and advanced our early stage pipeline, we feel confident about our ability to continue to fund our clinical programs as well as to prepare for potential commercial launch of <unk>.
Rigs one of them.
We recently announced that we have submitted a type a meeting request to the FDA to discuss the complete response letter dated April 27th 2021 regarding the BLA for PRA, its one or two for the proposed treatment of adult patients with fabry disease, the SBA as scheduled.
<unk> meeting.
September nine 2021, our objective for the meeting would it be to address the issues raised in the CLO and work with the FDA on a plan for Resubmission. We are confident in the overall clinical profile feel it's one or two that we have assembled through our extensive development program and believe <unk> two has the potential to provide important.
Due to the Fabry patient community, we plan to update you regarding the new development as soon as feasible.
During the quarter, we continued to build our clinical profile for pier rigs, one or two with the release of the topline interim results of our phase III balance clinical drive four P. O P. Alex one or two for the proposed treatment for fabry disease Fabry disease.
Based on the interim analysis of the 12 months data generated from the balance study and in combination with the previously reported positive data from the phase III bright and bridge screening called tries.
The next one or two orthotics and Kathleen 10 subject to positive meeting with the EMEA local tool. It representative of the EU regulatory authorities to submit a marketing authorization application to the European medicines agency by the first quarter of 2022, and this would position us to potentially have a commercial launch in Europe in the first half of <unk>.
23.
We will file a stage.
The early stage pipeline programs LPL, It's 115, it Glenn said express recombinant Pegylated uricase chemically modified enzyme to treat refractory gout N. P. O. It's 119, which is a long acting Vietnam full next related diseases.
We plan to initiate toxicity study.
Studies for peer rates 115 in the first quarter till 'twenty to 'twenty, two and we are looking forward to updating you on these programs as they progress.
Before we turn to our young I would like to recognize what the challenging time has been for all of us and emphasize how much I appreciate all the team and their focus and dedication to our mission of bringing important new medicines to the market for patients with high unmet clinical need and I will now turn to our you also review of our financials.
Go ahead.
Thank you George and thank you everyone for joining our call today.
I want to review, our second quarter 2021 financials.
For the quarter ended June 32021, we recorded revenue from selling goods.
$3.2 million compared to revenue of $3.6 million for the same period of 2020.
Revenues from licenses and R&D services for the three months ended June 30 were $3 two a decrease.
$4.1 million or 56% compared to seven 3% for the same period of 2020.
Revenues from license and R&D services are comprised primarily of revenue we recognized in connection with our license and supply agreement with Kinsey. The decrease is primarily due to an updated cost estimation. So while the trials and fewer completion in the amount of $4.1 million from revenue is recognized in <unk>.
And with the progress of our clinical trials that have been completed during 2020.
Cost of goods sold for the three months ended June 30 of 2021 was $4.7 million an increase of $2.90, 461 or six 1%.
Compared to $1 eight for the same periods in 2020, the increase in cost of goods sold was primarily the result of certain one time and it's actually in cost incurred while preparing for the than anticipated FDA approval of the <unk> want them to be early.
Research and development expenses for the three months ended June 30th 2021 was $7.7 million a decrease of $1.5 million or 16% compared to 2.292 for the same period of 2020. The decrease is primarily the result of the completion of two out of the three phase III clinical trials with parents want them too.
And reduced costs related to our balance study, we expect research and development expenses to continue to be our primary expense as we enter into a more advanced stage of preclinical and clinical trials for certain of our product candidates.
Selling general and administrative expenses for the three months ended June 32021 were $3, two an increase of 1 million or 45% compared to $2. Two for the same periods. In 2020. The increase resulted primarily from an increase in corporate costs related to insurance and funding.
And that was a net expenses were $2.
$1 million for the three months ended June 30th 'twenty, 'twenty, one and $1.9 million for the three months ended June 32020, the increase resulted primarily from an increase in the amortization of debt issuance cost.
Cost and debt discount.
Cash cash equivalents short term bank deposits as Joe mentioned were approximately $77 million as of June 30th 2021.
On August 12, 2021, we entered into definitive agreement relating to exchange of $54.65 million principal amount of our outstanding seven 5% senior secured convertible notes due 2021 for $28.75 million principal amount of newly issued seven 5% senior secured convertible notes due 2024.
In addition, $25.9 million, we paid in cash and accrued and unpaid interest through the closing date, we plan to close the exchange as soon as practical subject to satisfaction of certain closing conditions. The new convertible notes may be converted at any time prior to their maturity date at an initial conversion rates based upon.
<unk>, one $775.5 per share.
Which represents a 32, 5% premium to the closing price of our common stock on the newest stocks gene American at the closing of trading on August 13.2021.
The new notes will be secured by SEC leanne at equal Verde with the existing notes on all the material assets of the company and its subsidiaries and guaranteed by the company's subsidiaries.
Net loss for the three months ended June 30th 2021 was $11.2 million or <unk> 25 per share basic and diluted compared to a net loss of $4.1 million or <unk> 13 per share basic and diluted for the same period of 2020.
I will now turn the call back to you Dror. Thank you Ian.
We look forward to working closely with FDA to develop the best forward to bring <unk>, one or two to commercialization for adult <unk> patients.
We're working towards continuing to advance our early stage pipeline and positioning the company for the long term success, we look forward to updating updating you as the year progresses.
Now let's have your questions. Please.
Ladies and gentlemen, we will now be conducting a question and answer session.
If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the queue.
Press Star two 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 open call for questions.
Our first question is from Ram <unk> with H C. Wainwright. Please proceed.
Hi, This is Bob Allen dialing in for Ron Suraj, you and thanks for taking my questions.
First one what are your expectations for the upcoming type a meeting with the FDA and what key items will be discussed during the meeting.
Okay. So you know as we have just mentioned the planning to discuss the.
The item raise of the C O Ellen to discuss our path forward in order to go for Resubmission.
Assuming the meeting goes well what would be the possible next steps and when do you think that they may be able to inspect the manufacturing sites.
So I wish I knew when that we'd be able to inspect the manufacturing sites.
So just we all wait for the meeting.
Once we get the meeting maintenance, we will be much smelter.
Okay.
With respect to the BRL 115 on 119 programs. So could you elaborate a little more on the remaining gating factors.
So MPLX 115, and we plan to enter in toxicology studies in early 2022, and then full.
Following that the into a phase one.
The NPL rate is 119, he's still in preclinical models and I assume a year later.
We would go into a toxicology study and then take it from there.
Okay. One final from me so with respect to the upcoming EMA meeting. So do you anticipate any roadblocks with respect to EMA filing and approval of fear of excellent data.
Look we are we hope there will not be any roadblocks.
We expect that meeting to take place early October.
And then subject clearly to let's call. It the green light, we would be able to so many things.
2022 O Q1.2022.
Okay. That's it from me thanks for taking my questions. Thank.
Thank you.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate that your line is in the queue.
Our next question is from Jon Vander motion with Zacks investment Research. Please proceed.
Hydro are all good good afternoon to you all.
I wanted to start off with a question on the on the expenses in the in the gross margin or the gross the gross cost there.
Those need to be incurred again, if approval is granted or are they are they just onetime expenses that were.
That you won't need to incur when approval comes from the FDA.
Those were a one timer.
Obviously, we cannot elaborate too too much here, but they are in anticipation of the BLA approval. Yeah, obviously, we'll have to take certain steps.
We are in our manufacturing plants.
Which were a one timer as we wrote.
Okay, I mean were they administrative costs, mostly or were they kind of physical costs, where you were.
Putting new.
New things into place.
So it's not new things they are but they obviously are strengthening some of the processes.
Administrative costs around the the submission.
Okay got it got it and then there was a big favorable swing in contracts liability and just wanted to make sure that was on the cash flow statement wanted to make sure that was related to the future milestone payment that you received.
This is one a and obviously since they are.
There is also a manufacturing a good tricky as Ian.
Yeah, which since the BLA approval got delayed yeah. This is also part of the year contractual liabilities there.
Okay, Yeah, because I think it swung like $16 million or something in the quarter.
And then one other thing.
Not sure if you saw that the EMEA approval and golf holding children 12, and older does that help illuminate the pathway. It off for you perhaps for a pediatric <unk>.
Approval for peer X, one or two I mean, I know, it's a different class of drug but anything any takeaways from that are there that might help you in the future down the road if you pursue the pediatric.
The Ah indication for one or two.
Oh. This is all I don't know actually I don't think it's a it's a headwind.
I hope it helps I don't really know.
Okay, Yeah, I was thinking.
When something like that that gets approved it kind of shows what the EMA is concerned about what they want to see probably favorable about the you know as long as that we can find that the MPLX one O to O W. P.
Potential, whom you know as an alternative on the market I assume it will be discussed and hopefully approved dose of the drug.
Great. Thank you guys I appreciate you taking my questions and welcome.
Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the call back to Sean for closing remarks.
So all I ask is that everybody will continue to be safe under this COVID-19 phenomenon. Thank you very much for the time, we will keep updating you. Thank you.
This concludes today's conference you may disconnect. Your lines at this time. Thank you very much for your participation and have a great day. Thank.
Thank you.
Okay.
Yeah.