Protalix BioTherapeutics, Inc. (PLX) CEO Moshe Manor On Q3 2018 Results - Earnings Call Transcript

Protalix BioTherapeutics, Inc. (NYSE:PLX) Q3 2018 Earnings Conference Call November 6, 2018 8:30 AM ET

Executives

Yossi Maimon - CFO
Moshe Manor - President and CEO

Analysts

Lucy Codrington - Jefferies

Operator

Good day, ladies and gentlemen, and welcome to the Protalix BioTherapeutics Third Quarter 2018 Conference Call. [Operator Instructions]. I would now like to introduce the conference over to your host Yossi Maimon, CFO. You may begin, sir.

Yossi Maimon

Thank you. Hello everyone and good morning and welcome to Protalix BioTherapeutics third quarter earnings results and corporate update conference call. With me today is Moshe Manor, our President and CEO. A press release announcing the results is available on our website.

Please take a moment to read the disclaimer about forward-looking statements in the press release, the earnings release, and this teleconferencing group forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. Such factors are described in the disclaimer and in our filing with the US Securities and Exchange Commission. I will turn now the call over to Mr. Moshe Manor.

Moshe Manor

Thank you Yossi. Good morning and thank you for joining us today to review the company's third quarter and recent highlights. During the call this morning I will provide a corporate update and then Yossi will review the company financials before opening up the slides for questions. This quarter the company remained highly focused on the clinical and commercial development of our lead patent Pegunigalsidase alfa or PRX-102 for the treatment of Fabry disease. In September we were pleased to announce the first preliminary read out from our comprehensive Phase 3 program which came from the BRIDGE study our 22 patients switch over from Replagal to PRX-102. Preliminary data from the first 16 patients enrolled in the trial demonstrated a significant improvement in kidney function to the point of actually reverse downturn trend into an improvement one when switch from Replagal to PRX-102. Based on characteristics were based on a variable historical [indiscernible] for approximately two years and additional three months measurement taking, during the three months running period of the study while treated with Replagal before switching to PRX-102 treatment. The annualized estimating [indiscernible] filtration rate or eGFR slope for patients on Replagal was negative which translated to annualized loss of 6.8 as measured by ml per minute per 1.73 square meter. The mean eGFR slope for the same patients following six months of treatment was PRX-102 was changed to positive demonstrating of 3.7 ml to 1.73 square meter. This result were not only statistically significant but also highly encouraging as we showed not only an improvement in the function but also a worsening patient deterioration [ph].

This preliminary data represented a different Canadian symposium for Lysosomal Disease in October 2018. We anticipate completing enrolment in the BRIDGE study in the first quarter of 2018. We expect to present data from this study in future medical conferences during 2019. Based on the promising preliminary BRIDGE study result and taking into account a newly issued guidance on the U.S. for the Drug Administration, the FDA for slow progressing disease with low prevalence together with our partner Chiesi plan to engage with the FDA during the first half of 2019 to discuss the most optimal regulatory fast forward for PRX-102. The decision to engage with the agency is also in light of the recent FDA designation of Fabry disease condition with a significant unmet need coupled with the fact there is currently no available therapy with final approval in the U.S. were the two commercial available therapies were approved on accelerated temporary basis with [indiscernible] market only where we believe our data set was minimum.

While we continue to enroll patient in all of our current ongoing Fabry disease study we believe that with over 110 Fabry patients enrolment are studies included in our PRX-102 clinical program to-date. We have a sufficient number of patients for expedited review including filing application for accelerated approval.

Regarding our program on the commercial front for PRX-102 we expand our partnership with Chiesi to include exclusive U.S. Rights for Development and Commercialisation. As you may recall the term of the agreements includes that an upfront payment of $25 million up to $20 million in development cost in royalty ranging from 15% to 40%. Moving to our earlier stage asset and specifically PRX-106 we continue to discuss partnering opportunity, however in parallel we are also evaluating the potential of running our own large controlled Phase 2b trial for this program.

Based on this prefix from our discussion with physicians and companies we feel PRX-106 has tremendous potential and with additional clinical data we believe the company will be able to retain significantly more value than its put today.

With that we do not expect to announce any additional licensing use in 2018 outside of the expansion of the Chiesi partnership which already occurred.

I will now turn the call back to Yossi who will provide the financial overview.

Yossi Maimon

Thank you, Moshe. For the nine months ended September 30, 2018 we reported a net loss of $36.2 million or $0.25 per share basic and diluted compared to a net loss of $32.1 million or $0.25 per share basic and diluted excluding remeasurement of derivative for the same period in 2017.

We reported total revenues of $7.2 million for the first nine months of 2018 compared to $16.8 million for the same period of 2017. The decrease is attributed mainly to lower shipments of alpha taliglucerase to Brazil despite the increase in number of patients we had with alpha taliglucerase but also from lower sales of drug substance through Pfizer. The $25 million proceeds received from Chiesi during the recent quarter as an upfront payment were not recorded as revenues and were deferred according to the revenue recognition rules of U.S. GAAP. These proceeds would be recorded upon the commencement of commercial manufacturing. The [indiscernible] treatment was also applied to the $25 million upfront payment received by the company in the fourth quarter of 2017 and the $11.8 million of R&D reimbursement payments the company has received from Chiesi.

Research and development expenses were $23.8 million for the nine months ended September 30, 2018 compared to $19.8 million for the same period of 2017. The increase is accretive to the advance we made in the Phase 3 studies for our Fabry program. Selling, general and administrative expenses were $7.3 million for the first nine months of 2018 compared to $8.2 million for the same period of 2017. As of September 30, 2018 we had $41.9 million of cash and cash equivalent we expect to see full reduction in operating cash consumption going forward mainly as the effect of the Chiesi R&D support from the U.S. deal will come into effect.

To realize the reduction in operating cash consumption going forward and mainly as the full effect of [indiscernible] R&D support will come into play. Depending on how the discussion with the FDA will proceed regarding the potential expedited Fabry program that Moshe indicated. Our current cash balance could potentially take us through filing for accelerated approvals and again depending on how the discussion go even through such approval, such approval obviously will need significant milestone payments from Chiesi.

With that I will now turn the call back to the Operator who will open up the call for questions from the audience. Operator?

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question comes from Lucy Codrington from Jefferies. Your line is now open.

Lucy Codrington

I just have a couple, so just looking at the analysis on the BRIDGE data was it an all planned status analysis and is this similar to the analysis that will be done for the final endpoint on the balance trial. I'm just looking at some of the at the kind of historical data set in individual patients from your presentation and there's a variable number of recordings of that over the two years as you would expect outside of a clinical trial and is that going to be the same in the balance analysis just in terms of the confidence in those slopes and the figures compared to your kind of post-treatment number and on to the plans for the 106 study, how might we think in terms of affecting R&D spend and going forward into 2019 and then my last question just relates to the shipment shipments to Brazil. How did this kind of look in 3Q specifically rather than just the nine months? Thank you.

Moshe Manor

Regarding your question on the study well the BRIDGE study looked at the switch over from Replagal to one or two where we looked at couple of end point by the end point we looked at the eGPR slope before and after treatment and we had two years data including three months running period so we look at the change in eGFR. Well currently the plan in the balance study is [indiscernible] we are looking at the comparison of the slope a two years slope of our product versus Fabry [ph]. What we have mentioned on approaching the FDA and getting the FDA is including going to discuss with the FDA looking at the data coming from [indiscernible] in different ways like per patient and what we have already now so this is originally that's the plan but that will be part of our discussion with the FDA as the overall package for both expedited view and final approval as well.

Yossi Maimon

The other two questions you have we don't have any plans currently for any R&D spend on PRX-106 it's something that we are starting to look at and review in, think it's going to some extent correlate to how the discussion with the FDA will progress. In terms of Brazil we didn't record any revenues in the third quarter although we do have a shipment that is getting ready to go out but we didn't record any revenues during the third quarter itself.

Operator

Thank you and I'm not showing any further questions at this time. I will now turn the call back to Moshe Manor, CEO for any further remarks.

Moshe Manor

Thank you for your time this morning and continued support. We look forward to continuing to update you on our progress at the investment and medical meeting as well as on our future quarterly calls. Thank you and have a good day.

Operator

Ladies and gentlemen thank you for your participation in today's conference. This concludes today's program you may all disconnect. Everyone have a great day.