Protalix BioTherapeutics, Inc. (AMEX:PLX) Q4 2023 Earnings Call Transcript
Protalix BioTherapeutics, Inc. (AMEX:PLX) Q4 2023 Earnings Call Transcript March 14, 2024
Protalix BioTherapeutics, Inc. misses on earnings expectations. Reported EPS is $-0.07 EPS, expectations were $-0.03. Protalix BioTherapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, ladies and gentlemen and welcome to the Protalix BioTherapeutics Fiscal Year 2023 Financial and Business Results Conference Call. As a reminder, this conference call is being recorded. I’ll now turn the conference over to our host, Ms. Lauren Merrick [ph] of LifeSci Advisors, Investor Relations for Protalix. You may now begin.
Lauren Merrick: Thank you, Rob and welcome to the Protalix BioTherapeutics fiscal year 2023 financial results and business update conference call. With me today are Dror Bashan, President and CEO of Protalix; and Eyal Rubin, Senior Vice President and Chief Financial Officer. A press release announcing the results and the update was issued this morning and is available now on the Protalix 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 Protalix’s filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Dror Bashan. Dror?
Dror Bashan: Thank you, Lauren and welcome everyone to our fiscal year 2023 financial results and business update call. I will begin by reviewing our accomplishments over the past year and recent progress. Following my remarks, Eyal will provide a more detailed review of our financial results. We will then open the line for questions. 2023 marks a significant year for Protalix as we received regulatory approval for our second drug Elfabrio, for the treatment of adult patients with Fabry disease. In May of 2023, both the FDA and the EMA approved Elfabrio for the treatment of adult patients with Fabry disease. Since then, Elfabrio has been granted additional regulatory approvals in other markets like UK, Sweden and the most recently in Israel as well.
Our commercial partner, Chiesi global rare diseases remains focused on the commercial launches, which are underway in the United States, in the European Union, in the UK and additional markets where approvals are granted. We are confident that Chiesi will continue to position Elfabrio for success, and we look forward to continued growth of our Elfabrio franchise. Elfabrio is now the second approved drug expressed via our propriety plant, coal-based protein expression system, Protalix, which further highlights the success of our unique platform with these significant milestones behind us and while we are supporting Chiesi’s operations. We are continuing to focus on building our – the development of our pipeline of innovative assets for the treatment of genetic and non-genetic rare diseases.
Our next clinical development candidate is PRX-115, which is being developed for the potential treatment of severe gout. PRX-115 is a recombinant pegylated uricase product candidate that is also produced using our Protalix platform. In March of 2023, we have initiated a Phase 1 first in human clinical trial of PRX-115 to evaluate its safety, pharmacokinetics, pharmacodynamics and immunogenicity. This is a double-blind placebo-controlled single ascending dose study being conducted in New Zealand in approximately 56 patients with elevated uric acid levels. We are pleased to announce that the trial is now fully enrolled, and we expect to report preliminary results from this study in the second quarter of 2024. Our next pipeline of candidate also being expressed for Protalix is PRS-119.
PRX-119 is a pegylated recombinant human DNS1 candidate in developing for the potential treatment of diseases associated with neutrophil extracellular scraps or NES. Additional preclinicals are ongoing, and we will update you accordingly, of course. In addition to PRX-115 and PRX-119, we have multiple preclinical programs in progress, and we look forward to providing you with the updates on these potential development candidates as they become more mature. On the corporate side, in 2023, we welcome Dr. Eliott Foster as Chairman of our Board of Directors and a member of our nominating committee. Dr. Foster succeeded [indiscernible] who retired and we are grateful to the very dedication and leadership since the founding of Protalix. And we are grateful for Eliot’s contribution thus far as we prepare for an exciting phase of development of the company.
Finally, and before turning the call over to Eyal, I want to note that our strong balance sheet provides us with sufficient cash runway to support our operations and in addition, as Eyal will discuss, sales of Elfabrio to Chiesi increased after regulatory approval of Elfabrio, while Chiesi builds its inventories to support a successful launch. We expect sales to clearly – to gradually continue as they anticipate future approvals and launches in additional countries throughout the world. With that, it is now my pleasure to turn the call over to Eyal for a review of our financials. And Eyal, please go ahead.
Eyal Rubin: Thank you, Dror. And thank you everyone for joining todays call. Let me review our fiscal year 2023 financials. We recorded revenues from selling goods of $40.4 million for the year ended December 31, 2023, an increase of $15.1 million or 60% compared to revenues of $25.3 million for the year ended December 31, 2022. The increase resulted primarily from an increase of $14.1 million in sales of Elfabrio drug product to Chiesi following the approval by the FDA and the EMA of Elfabrio as Dror described, an increase of $0.1 million in sales to Pfizer and of $0.9 million in sales to Brazil. We recorded revenues from license and R&D services of $25.1 million for the year ended December 31, 2023, an increase of $2.8 million or 13% compared to revenues of $22.3 million for the year ended December 31, 2022.
The increase resulted from the $20 million regulatory milestone payment from Chiesi in connection with the FDA approval of Elfabrio, which was partially offset by a decrease of $17.2 million in revenues recognized in connection with the R&D performance obligation under the Chiesi agreement as the company has completed the Phase 3 clinical program thereunder. Revenues from license and R&D services represent primarily the revenues the company recognized for services provided under the Chiesi agreement. Cost of goods sold was $23 million for the year ended December 31, 2023, an increase of $3.4 million or 17% compared to cost of goods sold of $19.6 million for the year ended December 31, 2022. The increase in cost of goods sold was primarily the result of increase in sales of goods per for Chiesi Brazil and Pfizer.
Sales to Chiesi included certain drug substance costs, which had already been recognized as research and development expenses as it was produced as part of the research and development activities. Accordingly, the related cost of goods sold does not include the cost of subs. For the year ended December 31, 2023, the company total research and development expenses were approximately $17.1 million, comprised of approximately $6.3 million subcontractor related expenses, approximately $7.8 million of salary-related expenses, approximately $0.6 million of material-related expenses and approximately $2.4 million of other expenses. For the year ended December 31, 2022, the company’s total research and development expenses were approximately $29.3 million, comprised of approximately $17.8 million in sub-contractor related expenses, approximately $7.3 million of salary and related expenses, approximately $1.4 billion of material-related expenses and approximately $2.8 million of other expenses.
The decrease in research and development expenses was $12.2 million or 42% for the year ended December 31, 2023, compared to the year ended December 31, 2022. The decrease in issues and development expenses resulted primarily from $11.5 million decrease in subcontractor-related expenses in connection with the PRX-102 clinical trials and a $0.8 million decrease in materials related expenses. Selling, general and administrative expenses were $15 million for the year ended December 31, 2023, an increase of $3.3 million or 28% from $11.7 million for the year ended December 31, 2022. The increase resulted primarily from an increase of approximately $2.3 million in one-time cash bonuses, share-based compensation and salary and related expenses as well as an increase of $0.3 million in travel conferences and employee training expenses.
Financial expenses net was $1.9 million for the year ended December 31, 2023, an increase of $0.5 million or 36% compared to financial expenses of $1.4 million for the year ended December 31, 2022. The increase was primarily due to a decrease of $0.9 million in income related to exchange rates as well as an increase in interest expenses of $0.7 million which was partially offset by a gain recognized due to the conversion of a portion of the 2024 notes of $0.4 million and $0.6 million increase in interest income. For the year ended December 31, 2023, we recorded income taxes of approximately $0.3 million, a decrease of $0.2 million or 40% compared to tax expenses of $0.5 million for the year ended December 31, 2022. The income taxes resulted primarily from the provision for current taxes and income mainly derived from U.S. taxable global intangible low tax income duty, mainly in respect of Section 174 of the U.S. Tax Cuts and Jobs Act effective in 2022, Section 174 of the TCJA requires all U.S. companies, for tax purposes, to capitalize and subsequently amortize R&D expenses that fall within the scope of Section 174 over 5 years for research activities conducted in the United States and over 15 years for research activities conducted outside of the United States rather than deducting such costs in the current year.
The net income taxes gives effect to a valuation allowance release equal to approximately $3.1 million. Cash and cash equivalents and short-term bank deposits were approximately $44.6 million at December 31, 2023. Net income for the year ended December 31, 2023, was approximately $8.3 million or $0.12 per share basic and $0.09 per share diluted compared to a net loss of $14.9 million or $0.31 per share basic and diluted for the same period in 2022. I will now turn the call back to you, Dror.
Dror Bashan: Thank you, Eyal. I would like to conclude by expressing how pride we are on of all that Protalix has accomplished throughout 2023. With two drugs expressed via our proven platform are now approved, we are continuing to build our expertise to develop a type of assets to potentially transform the treatment of rare disease. I am grateful for a world-class team who constantly demonstrate unwavering commitment to our mission. We look forward to updating you on our progress as we continue to drive innovation and create long-term value for the patients and stockholders. Now, I would like to ask the operator to open the call for questions.
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