Analyst Conference Summary

Biotechnology

conference date: May 10, 2017 @ 5:30 AM Pacific Time
for quarter ending: March 31, 2017 (first quarter 2017)

Forward-looking statements

Overview: Protalix received FDA permission to start a study of PRX-102 for once monthly dosing for Fabry Disease.

Basic data (GAAP):

Revenue was $2.9 million, up from $0.7 million year-earlier.

Net income was negative $59.1 million, down from negative $8.5 million year-earlier.

EPS was negative $0.48, down from negative $0.09 year-earlier.

Guidance:

none

Conference Highlights:

Moshe Manor, Protalix’s CEO, said "2017 has been an exciting year... we are very enthusiastic for the months ahead." The firm is transforming from a biosimilar company to a bio-better company.

For PRX-102, Pegunigalsidase alfa, for Fabry disease interim Phase 2 data was positive. The Phase 3 study starts enrollment in October, with completion of enrollment expected in 2017. 12-month interim data analysis expected in 2H 2018. It is a 24 month study. [See PRX-102 press release for details]

For PRX-110, Alidornase alfa, for Cystic Fibrosis, positive Phase 2 results were reported in April 2017. Full data will be presented at a conference in June. Demonstrated a mean absolute increase in the percent predicted expiratory volume of 3.4 points from baseline and a mean increase in ppFEV1 of 3.3 points from last inhalation of Pulmozyme. The last few patients patients pulled the average response down; this should not be interpreted as meaning a decrease in efficacy over time.

OPRX-106, an oral anti-TNF for ulcerative colitis enrolled its first Phase 2 patient in November 2016, with full results expected near year-end 2017.

There was a non-cash charge of $50.9 for the remeasurement of the derivative for the convertible bonds because of the large increase in the value of the stock. This loss should be reversed in Q2. Excluding that, the net loss would have been $8.3 million or $0.07 per diluted share.

In March received a purchase order for $24.3 million from Brazil for Alfataliglicerase for Gaucher disease. The first shipment under this order is expected in June.

Cash balance ended at $48.0 million, down $15.3 sequentially from $63.3 million. $113 million in convertible notes due in 2021 are outstanding. Company should be funded through data readouts.

Q&A:

Reversal of the charge, will it be $50 million in Q2? It is a balance sheet item. It will be reversed fully. Some will go through P&L, some through shareholder's equity, % not determined yet but roughly half and half.

Brazil number in quarter? We had $0 in Brazil in Q1 2016. We had $1.2 million in Q1 2017.

Alfataliglicerase potential revenue? Total size of market $50 million, we want to take a majority of this, too early to say what we can achieve.

Cash burn v. net income? We did see a cash burn of about $15 million. We did have some cash conversion of convertible notes, about $7.5 million.

CF last three patients issue? There are always CF patients who are poor responders, these just came late in the timeline. The statistical number is very good, including compared to Pulmozyme. It is clinically meaningful and is very encouraging. That is why the CF Foundation is very interested.

Deferred revenue of $2 million? That will go into the cash flow this year, just accounting.

Fabry 4 weeks dosing, type of patients expected? We have the 1 mg every two weeks. The 2 mg every four weeks is expected to stabilize patients longer term. The convenience would really help patients, it would be great if the results also show improved efficacy.

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