Analyst Conference Summary

Biotechnology

conference date: August 10, 2020 @ 5:30 AM Pacific Time
for quarter ending: June 30, 2020 (Q2, second quarter 2020)

Forward-looking statements

Overview: BLA submitted for PRX-102 for Fabry disease.

Basic data (GAAP):

Revenue was $11.0 million, down sequentially from $21.6 million, and down from $12.2 million year-earlier.

Net income was negative $4.2 million, down sequentially from $1.7 million, and up from negative $7.7 million year-earlier.

EPS was negative $0.13, down sequentially from $0.10, and up from negative $0.52 year-earlier.

Guidance:

Could get PDUFA date for PRX-102 any day now.

Conference Highlights:

Dror Bashan, Protalix's CEO, said "This quarter, we delivered on two very important milestones for the company: announcing positive topline results in our BRIDGE phase III clinical trial of PRX-102 for the treatment of Fabry disease and subsequent BLA submission to the FDA. We were able to accomplish these goals even as we faced the challenging headwinds from the global COVID-19 pandemic, and I am very proud of our entire team for their commitment and dedication. As we look towards an exciting second half of the year, we are continuing to build Protalix for the long term. We augmented our research and development team with highly qualified and seasoned veterans to support and enhance our pipeline, and we announced a new partnership to explore the development of PRX-110. We are gratified to have a balance sheet supporting our strategic plans and look forward to continuing to execute as we move towards the anticipated commercial launch of PRX-102 for the treatment of Fabry disease."

Protalix and Chiesi submitted the BLA for PRX-102, Pegunigalsidase alfa, for Fabry disease, on May 27, 2020 via the FDA's Accelerated Approval pathway based on data from the completed Phase I/II clinical trials of PRX-102 and the ongoing Phase III BRIDGE clinical trial. On July 28, 2020, the FDA informed Chiesi that the BLA had been filed for review and that the FDA was working on the 74-day letter. In addition, the FDA informed Chiesi that no Refuse To File will be issued for the PRX-102 BLA. The Company had announced positive 12-month interim on-treatment data from the first 16 out of the 22 adult patients (9 males and 7 females) enrolled in the BRIDGE Phase III open label switch-over study of PRX-102 for the treatment of Fabry disease. The interim data demonstrate a mean improvement in kidney function, in both male and female patients, when switched from agalsidase alfa (Replagal) to PRX-102. The Phase 3 BALANCE and the BRIGHT trial have completed enrollment. In February 2020, Protalix and Chiesi announced the receipt of an agreement letter from the FDA for the Initial Pediatric Study Plan (iPSP) for PRX-102 for the treatment of Fabry disease.

Protalix on March 11, 2020 secured securities purchase agreements to raise proceeds equal to $43.7 million through a private financing with a number of leading Israeli and U.S. investors. 17.6 million shares paired with warrants to purchase one share at $2.36 were issued

In Q2 2020 Protalix entered into a non-binding term sheet with SarcoMed USA, Inc. to explore the development and commercialization of PRX-110 (alidornase alfa) in the treatment of Pulmonary Sarcoidosis and related diseases.

On March 16, 2020, the Company announced that it has agreed to conduct a feasibility study with Kirin Holdings Company to evaluate the production of a novel complex protein utilizing ProCellEx. The Company received a non-refundable payment of $1.0 million and Kirin will provide research funding for cell line engineering and protein expression studies on the target protein.

Revenue generated by taliglucerase alfa sales was $3.6 million, down sequentially from $5.0 million, and up from $3.4 million year-earlier. $7.3 million of revenue was from licensing and R&D services.

On February 6, 2020, Protalix and Chiesi announced the receipt of an agreement letter from the FDA for the Initial Pediatric Study Plan (iPSP) for PRX-102 for the treatment of Fabry disease, outlining an agreed-upon approach to address the needs of pediatric Fabry patients.

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 and equivalents balance ended at $40 million, up sequentially from $37 million. Debt is $53 million in convertible notes.

Cost of revenue was $5.3 million. R&D (net of grants) expense $19.5 million. SG&A $5.4 million. Leaving an operating income of $2.5 million. Financial expense $5.0 million.

Q&A summary:

Pandemic impact on sales? So far, in 1H 2020, we do not see any Covid-19 impact. We believe 2020 sales will be in the same neighborhood as 2019. We did switch patients to home care, and are monitoring the situation closely.

If PRX-102 approved, how soon to launch, pricing v. Fabrazyme? We are waiting for the PDUFA date, it should launch shortly after that. Pricing will be determined with our global partner Chiesi. We will update you when we know something.

SarcoMed details? We are working on the full license agreement. We will release details when there an agreement. The license only covers pulmonary sarcodosis, but they will have options for other indications. Before signing we will verify if there are the resources to move the product forward in the indication.

R&D costs going forward? Same pace as first half. But extension studies are funded by Chiesi, so there should be a graducal decrease as patients switch going forward. We could also spend more on pipeline development.

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