Analyst Conference Summary

Biotechnology

conference date: August 8, 2019 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2019 (Q2, second quarter 2019)

Forward-looking statements

Overview: Running out of money and potentially unable to continue operations, despite being in discussion with FDA for potential accelerated approval of PRX-102 for Fabry disease.

Basic data (GAAP):

Revenue was $12.2 million, up sequentially from $10.44 million, and up from $4.8 million year-earlier.

Net income was negative $7.7 million, down sequentially from negative $7.26 million, and up from negative $8.5 million year-earlier.

EPS was negative $0.05, down sequentially from $0.05, and down from $0.06 year-earlier.

Guidance:

"Based on the Company’s current cash resources and commitments, the Company believes it may not be able to maintain its current planned development activities and the corresponding level of expenditures for at least 12 months from the date of approval of the financial statements as of June 30, 2019 in the absence of a refinancing or restructuring of its existing obligations. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. Additional information will be included in Note 1(a) and other parts of the Company’s Quarterly Report on Form 10-Q which will be filed the day of the earnings call. The Company is evaluating various financing alternatives and related transactions."

Conference Highlights:

Dror Bashan, Protalix's CEO, said "We are very optimistic about our interactions with the U.S. Food and Drug Administration over the second quarter of 2019, which resulted in our decision to, together with our partner Chiesi Farmaceutici, begin preparing a biologics license application for pegunigalsidase alfa for the treatment of Fabry disease, which we expect to submit in the first quarter of 2020 through the FDA’s Accelerated Approval pathway." We clearly have a drug candidate that is much better than the current standard of care. Recognizes the company has its challenges, but believes can improve the capital structure. The Going Concern statement "should not come as a surprise to anyone."

Working hard to get PRX-102 across the finish line. We are excited by the data reported so far.

Revenue generated by taliglucerase alfa sales was $3.43 million, about flat sequentially from $3.53 million, and up from $2.01 million year-earlier.

For PRX-102, Pegunigalsidase alfa, for Fabry disease, based on the FDA discussion during our recent meeting we believe that the potential filing for accelerated approval might be based on data the Company has already generated in its clinical trials of PRX-102. The Phase 3 BRIGHT trial presented good data in June 2019. The Phase 3 BRIDGE study enrollment was completed in December 2018. As of today, the BALANCE trial is near complete enrollment. The Company is scheduled to present three posters during the 6th Update on Fabry Disease international conference being held in Prague, Czech Republic, on May 26-28, 2019. In 2018 U.S. rights were sold to Chiesi Farmaceutici S.p.A., which had already bought ex-U.S. rights. Will discuss regulatory path with FDA in Q2 2019, believes already has sufficient patients for accelerated approval.

For PRX-110, Alidornase alfa, for Cystic Fibrosis, for now the focus is on other programs, to conserve cash.

OPRX-106, an oral anti-TNF for ulcerative colitis Phase 2 top line results were positive. In discussions with portential partners.

An oral version of Humira is being worked on, no timeline for moving to clinical trials.

Cash balance ended at $25.1 million, down sequentially from $30.4 million. Debt is $49.4 million in convertible notes.

Believes has funding into 2020 using present cash only. R&D expense will be reduced as Chiesi assumes responsibility.

Cost of revenue was $2.7 million. R&D (net of grants) expense $13.3 million. SG&A $2.1 million. Leaving an operating loss of $5.8 million. Financial expense $1.9 million, financial income $0 million.

Q&A summary:

R&D expenses? It is higher than the same quarter last year because of higher patient enrollment. Should be at the same or higher rate for rest of year. We need to continue to buy Fabryzyme (the comparator) for an enlarging number of patients.

Chiesi milestones? We believe approval is approval accelerated or not. Acceptance of the accelerated approval pack should trigger the first milestone.

Value of other assets? Evaluation of pipeline assets will take a few months. We will share when we know.

PRX-102 timeline? Balance study should finalize enrollment soon. It requires two years dosing from last patient in to establish superiority for Fabryzme.

PRX-102 bright trial? Top line data at the end of 2020. Under accelerated approval path the Bright study is not included.

PRX-102 Bridge trial? We have 16 patients that will be included in the BLA, at least for safety data.

Enzyme replacement therapies v. other therapy types? Migelastat, as we understand, does not address all Fabry patients, just 30% with a particular mutation. Other data is early, if things work for the patients that is good.

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