Q3 2021 Protalix Biotherapeutics Inc Earnings Call

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Good morning, ladies and gentlemen, and welcome to the pulp helix Biotherapeutics third quarter 2021 financial results and business update conference call.

As a reminder, this conference is being recorded I would now like to turn this conference over to your host Mr. Chuck Fidel of lifestyle Advisors Investor Relations. Both with colleagues. Thank you you may begin your presentation.

Thank you Laura.

Welcome to the <unk> Therapeutics third quarter, 2021 financial results and business update conference call.

With me today are Dror, bashan, President and CEO of <unk>, and <unk> Rubin Chief Financial Officer.

A press release announcing results and the update was issued this morning. It is 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 the statements made.

Factors that could cause actual results to differ are described in the disclaimer and in <unk> filing with the U S Securities and Exchange Commission.

I'll now turn the call over to <unk> CEO, Mr. Dror sure sure.

Thank you Chuck and welcome everyone to the company's third quarter 2021 financial results and business update call. During the call today I'm going to review the progress of our key clinical programs and provide an update on our strategic roadmap for the remainder of 2021 and beyond following.

Following my remarks, our Chief Financial Officer to review the company's financial results before we open the line for questions.

In September of this year for colleagues and I will talk with you as they participate in a type a meeting with the FDA during which they have in principle agreed that the bakers proposed to the FDA fully BLA resubmission physical pleasure to support traditional approval for <unk> for the preclinical fabry disease.

The plan that the package for the BLA Resubmission given the change regulatory landscape in the United States will include the final two years of analysis of the balance study.

And we were pleased with this outcome and we intend to continue to dwell collaborate lately with the FDA and resolve the issues noted in the CFO Ed with a goal of commercializing a new alternative drug to treat probably patients we.

We anticipate the Resubmission of the biological license application BLA for the Plos, one I'll talk to the FDA in the second half of next year.

In October of 2021, Photonics, and kidney announced that the meeting is being held with their repo tool in Colorado to the European Medicines agency regarding Pra's one of them.

And for that you can discuss the scope the anticipated marketing authorisation application submission for the European Union and the adult oriented global doors generally support people for planned NDA submission for P. Erik Swan.

This is an important step in the necessary resubmission activities, leading up to it and an MAA submission Bay.

Based on the interim analysis could be 12 months, that's not generated from the balance study that the company announced in June of 2021 and in combination with the previously reported positive data from the bright and bridge study the company in kids, we expect to submit an MAA to the EMA for pier rigs one or two during the first quarter of 2022.

We are confident in the overall clinical profile won't be all rigs one or two that we have assembled through all extensive development program.

So bill we together with scares me.

And now the final dosing to the last page I think the balance study for the proposed treatment.

The balance study the 24 month randomized double blind active controlled wpri's wanted to incomplete patients with impaired renal function we have.

He paid the relief from the Unblinded top line data.

During the second quarter of 2020 after all remaining patients.

Completed the 24 month treatment period.

We plan to initiate that study for P. O X $1 15, which is a planned sale express recombinant pegylated uricase chemically modified enzyme to treat refractory gout in the first quarter of 2022.

In addition, we are working on the plans for development of Claris one.

Maintaining which is a plant that express Peggy they didn't recombinant human Vietnam full nights related diseases.

115, and is being shown in several preclinical studies with Io specific specific activity a longer half life and accordingly, the company intends to explore the possibility of developing PR was 115 for every two months, which would lessen the Franklin deal necessarily hooked utilization is probably the treatment, thereby.

Do you think that physical and financial burden experienced by patients and the patient community.

With respect to PRA for 19, several experiments in mice.

Model demonstrates the flexibility.

During 2019 as a treatment for sepsis. The data showed promising results in determining the dose and dose dependent response in micro level.

In addition, we have begun working with a third policy to develop a new methodologies for protein modification.

We continue to evaluate potential strategic marketing partnerships and collaboration problems with biotechnology and pharmaceutical companies for Prs, one paying the planes that are coming on Vietnam.

Which we are considering a potential treatment for a variety of a spear with one indication as well as our own.

They're early stage product candidates.

We will update you on our early stage pipeline events unfold unfolds.

Unfolds I'm sorry.

I would like to call close the fiction Oh.

My comments, we acknowledge them.

The J E.

C and grit of our team members and probably during such a challenging time and emphasize how much your April all making a difference towards our mission of bringing important new medicines to market for patients with high unmet medical needs I will now turn to <unk>.

To review of our financials. Please go ahead.

Thank you Dror.

Yeah look I sort of described the notes exchange.

<unk> completed the end of August August 25, 26, 2021, the company completed exchange.

What are your exchanges.

The majority of our then outstanding seven 5% senior secured convertible notes due in November 2021.

Which are referred to as the 2021 knows with institutional noteholders exchanged an aggregate of $54 65 million principal amount of outstanding 2021 notes were exchanged for.

For an aggregate of $28 75 million principal amount of newly issued seven 5% senior secured convertible notes due 2024.

$25 9 million in cash and approximately one 1 million in cash representing crude and unpaid interest through the closing date.

Does he exchange.

Today is the maturity date of the <unk> 2021 notes and we are required today to sell all of the remaining 2021 notes and pay all accrued but unpaid interest thereon on November nine.

The company delivered the necessary funds under the indenture governing the 2021 notes to effectively this sharp to effectively discharge the remaining outstanding 2021.

To summarize the company's debt has been cut by more than half compared to the debt levels at June 32021, the remaining debt matures in the third quarter of 2024 and accordingly. The company now has additional financial flexibility and have sufficient capital to fund its operations through important mile.

In 2022, and now I'll turn to the results.

It is from selling.

Goods were $4 5 million during the three months ended September 32021, an increase of $1 2 million or 36% compared to revenues of $3 3 million for the three months ended September 32020.

The increase of $3 2 million in sales to Brazil, resulting from timing differences was partially offset by a decrease of $2 million in sale to Pfizer, resulting from timing difference as well.

Revenues from license and R&D services for the three months ended September 32021, and September 32020 were $7 5 million.

Revenues from license and R&D services are comprised primarily of revenues the company recognized in connection with the size of the supply agreement with the kids.

The revenue increase of 1 million recognized from the queuing feasibility study was offset by $1 million decrease in revenue generated under the company's license and supply agreement with <unk>.

Cost of goods sold was $3 7 million for three months ended September 32021, an increase of.

$4 8 million or 28% from cost of goods sold of $2 9 million for the three months ended September 32010, the increase in cost of goods sold was primarily the result of higher sales.

Research and development expenses were $7 3 million for the three months ended September 32021, a decrease of.

One 4 million or 5% compared to $7 7 million of R&D expenses for the three months ended September 32020 the.

The decrease is primarily the result of completion of two out of the three phase III clinical trial with <unk> hundred two and reduced costs related to the balance study.

We expect R&D expenses to continue to be our primary expense as we enter into more advanced stage of preclinical and clinical trials of certain of our product candidates as George described previously.

Selling general and administrative expenses were $3 million, an increase of $22 million or 7% for the three months ended September 32021, compared to $2 8 million for the same period in 2020.

The increase is primarily the result of an increase of 44 million corporate costs, mainly related to insurance.

And then any points to increasing sales and marketing costs, partially offset by a decrease of <unk> five in share based compensation.

But actual expenses net were $2 2 million for the three months ended September 32021, and one 9 million for three months ended September 32020. The increase resulted primarily from loss on extinguishment related to the exchange of our 2021 move as I described earlier.

September 32021, we had $48 7 million in cash cash equivalents and short term bank deposits.

I will now turn the call back to you George.

Okay.

Thank you.

But we look forward working closely together, we scan the closing with the FDA and EMEA to bring the pier rigs one or two towards commercialization for adult <unk> patients.

And in addition, clearly we'll update you as matters progress now that have your question Steve.

At this time well be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star She'll Chair I move your questions from the queue for practice.

I'm teasing sneaker equipment it may be necessary. So you can pick up your handset before pressing the star key one moment.

Question.

Our first question comes from the line of Ram Silverado with H C. Wainwright you May proceed with your question.

Hello. This is Myles speaking so rob thanks for taking my questions.

Thank you thanks for the update on the a type a meeting we just wanted a little more data.

Well the discussions focused on inspecting the manufacturing sites and if so could you summarize the key points there.

So you know the manufacturing part of the policy.

We all know and we agreed with FDA.

They will review the two years that.

With an endpoint of non inferiority and we have agreed with the FDA that we will end the London four week data for their review and.

You know once we will complete it.

The FDA is the I assume regularly.

There are regulations as opposed to inspect the facility Theres nothing.

More than that the message.

Okay, great. Thanks for the clarity and then there's one more from us so given that your BLA will include the final two year analysis of the phase III study.

What are your baseline.

Case expectations regarding the study results. So you know what what do you think it would be the minimum delta and Egfr Youre looking out so between the treatment and be active arms do you think demonstrating superiority over the fiber xyrem is a requirement to winning a favorable reimbursement.

If yes, why if no why not.

So you know I Wouldnt, Firstly I suggest we would wait for the outcomes and second with regard to reimbursement.

Any future marketing strategy or plan.

Yes.

You know this is killing it.

You can find me Sydney area, you can approach them of course.

Alright, Thank you very much for asking the question.

Our next question comes from the line of John Benda Mask. Some of the Docs you May proceed with your question.

Hello, Dror al how are you.

How are you.

I'm doing well.

Is there a specific conference or meeting where do you expect to present the balance data.

Okay can you repeat the question please.

Yeah is there a specific conference or meeting where you expect to present the balance data when it becomes ready in the first half of next year.

Well you know first we have to see whatever we will share it will be top line results at the beginning then you know we will do all the analysis in order to establish a C is all of the clinical study report I see them. Following that there will be a conference as William we usually participate or specific conference to present the data.

Okay, and I would assume that would probably be in the fall is that does that.

It sounded at the right time frame.

We expect the top line results would be in Q2.

Okay, great well I was thinking you'd presented at a conference at some later point.

Okay.

The result also planned with us always.

The intent is indeed to further honor.

Allies and find out at all the data.

Okay and a question on the on the convertible notes I think there was a small proportion of that amount that was listed on the balance sheet today.

It was paid down today on November 15th.

How much should we reduce that amount going forward that's listed on there for the convertibles.

I think yes.

As a comparison.

The amount of approximately 3 million leftover from the 2021 notes.

That's it.

Okay very good and last one for me is on the gross margin is there any guidance or help you could give us for estimating that that proportion of product sales going forward. It seems like it's been rather volatile in recent quarters and wanted to see if there's any any anything.

If you could help us with in terms of our forecasting that in the future.

Okay, Yeah, that's going to be hard for a simple reason the margins that we have on the Brazilian sales are different than the ones, we have and Pfizer and the ones that we haven't yet.

And obviously the mixture.

At the end of the day comprises the margins that you see.

Okay, well that is helpful. Thank you Carol.

Youre welcome.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, one moment, while we poll for questions.

Ladies and gentlemen, we have reached the end of today's question answer session I would like to turn this call back over to Mr. Joe Beauchamp for closing remarks.

Well, thank you and thank you everybody for the time and we will continue to update you on our progress going forward. Thank you very much.

This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your day.

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