Protalix BioTherapeutics, a company specializing in the treatment of rare diseases, has announced its fiscal year 2023 financial results and business progress. The company highlighted the regulatory approval of its second drug, Elfabrio, for adult patients with Fabry disease, which is now approved in multiple countries, including the UK, Sweden, and Israel. Protalix's partner, Chiesi Global Rare Diseases, is set to launch Elfabrio in the US, EU, and other approved markets.
With a focus on rare disease treatments, Protalix reported revenues of $40.4 million from product sales and $25.1 million from licensing and R&D services, culminating in a net income of $8.3 million for the year. The company is also progressing with its pipeline, including PRX-115 for severe gout and PRX-119 for diseases associated with neutrophil extracellular traps. Protalix (PLX) plans to continue its development efforts to deliver long-term value to both patients and shareholders.
Key Takeaways
- Protalix BioTherapeutics received regulatory approval for Elfabrio, a treatment for Fabry disease.
- Elfabrio is approved in the UK, Sweden, and Israel, with plans to launch in the US and EU.
- Fiscal year 2023 revenues totaled $40.4 million from product sales and $25.1 million from licensing and R&D services.
- Net income for the year was approximately $8.3 million.
- The company is developing PRX-115 for severe gout and PRX-119 for diseases associated with neutrophil extracellular traps.
- Protalix has a strong balance sheet and expects Elfabrio sales to increase with further approvals and market launches.
Company Outlook
- Sales of Elfabrio are expected to grow as the drug receives additional approvals and is launched in new markets.
- Protalix is committed to developing innovative treatments for rare diseases and aims to create long-term value for stakeholders.
Bearish Highlights
- Free cash flow is contingent on the level of investment in both early and later stage R&D, indicating potential variability in financial performance.
Bullish Highlights
- The company has a robust balance sheet, and its net income reflects a strong financial position.
- The approval and commercialization of Elfabrio in various markets demonstrate the company's capacity to navigate regulatory landscapes and expand its product offerings.
Misses
- No specific misses were reported in the earnings call summary provided.
Q&A Highlights
- Chiesi Global Rare Diseases is handling the PRX-102 studies for pediatric use in Japan and the US; Protalix does not have the timeline details.
- Sales are anticipated to increase gradually, but free cash flow will be influenced by R&D investments.
- Results for PRX-115 are expected soon, with a Phase 2 trial likely to begin in the first half of the next year, pending positive outcomes.
- The company is still determining the appropriate indication for PRX-119 and will update as progress is made.
During the earnings call, Dror Bashan expressed pride in the company's achievements, particularly the approval of drugs developed using their proprietary platform. The company remains dedicated to advancing treatments for rare diseases and providing updates to shareholders. The call concluded with an acknowledgment of ongoing support and a commitment to transparency in future updates.
InvestingPro Insights
Protalix BioTherapeutics has shown resilience and potential for growth, as reflected in the recent financial results. Here are additional insights from InvestingPro that could be of interest to investors:
InvestingPro Data indicates that Protalix holds a P/E Ratio (Adjusted) of 10.1 as of the last twelve months ending Q3 2023, suggesting a valuation that may be attractive relative to earnings. The company also boasts a strong Gross Profit Margin of 74.03% during the same period, highlighting efficient operations and control over costs. Moreover, Protalix has demonstrated substantial EBITDA Growth of 197.22%, signaling robust operational performance.
InvestingPro Tips highlight several positive aspects of Protalix's financial health and future prospects. The company holds more cash than debt on its balance sheet, providing financial stability and flexibility. Analysts are optimistic about the company's future, predicting that Protalix will be profitable this year with net income expected to grow. Additionally, Protalix has been profitable over the last twelve months, reinforcing the company's strong financial position. It is also worth noting that Protalix does not pay a dividend, which could be a strategic decision to reinvest earnings into further growth and development.
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Full transcript - Protalix Biotherapeutics Inc. BATS (NYSE:PLX) Q4 2023:
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 (NYSE:PFE) 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.
Operator: [Operator Instructions] And our first question comes from the line of John Vandermosten with Zacks. Please proceed with your question.
John Vandermosten: Great. Thank you and good afternoon Dror and Eyal. If I start off with a question about some of the PRX-102 studies that are going on, I noticed you had one in Japan and one in the United States for pediatric. Can you give us a timeline on how long those might take and what the next steps would be there to get approvals for Japan and for pediatric indication?
Dror Bashan: So, thank you, John. Actually, this study, this is – and are conducted by Chiesi and this is their responsibility. So, I don’t have the timeline in front of me, of course. And this is for them actually to address that. But you can understand that they put a lot of attention and resources into expanding if I may say the franchise, this is clear.
John Vandermosten: Yes. Great. It sounds like they have a lot of opportunities out there. And also, you may not have gotten a lot of information from Chiesi on this, but when you look at your revenues and kind of expenditures for the year, how should we think of those balancing out in terms of free cash flow on the bottom line? Are they going to be pretty equal based on the view right now? Is that how you are planning going forward?
Eyal Rubin: Hey. Thanks for the question, John. So, I don’t know what equal means. But as Dror mentioned, gradually, we expect the sales obviously to grow. And in terms of the free cash flow, it depends how much money you are going to invest in the early stage and the later stage R&D. As I mentioned in previous calls, the sales to Chiesi are comprised of an inventory buildup as well as obviously, commercial sales to the enrolled commercial patients. We expect that these sales are going to eventually grow and gradually, we will get to the place, as we indicated in our presentation, that we believe that Chiesi with a good job can they take in the market.
John Vandermosten: Got it. And then looking at PRX-115, you had mentioned that there is going to be results from that, it seems like in the next couple of weeks. What – assuming those are positive, what are the next steps for that program? Is that Phase 2, or might there be some other pursuit there?
Dror Bashan: So, if indeed, we continue to go forward, of course, when we move into a Phase 2, yes.
John Vandermosten: Okay. And would that be before the end of this year that you would start that Phase 2?
Dror Bashan: This depends – I think it will be between the end to the first half of next year, yes.
John Vandermosten: The first half of next year, okay. Got it. And then last question on PRX-119. What are the next steps for that? Is that something you might put into the clinic this year?
Dror Bashan: Not yet. We are looking into the right indication to continue with. I think this will take further a bit more to decide.
John Vandermosten: Okay. And then any other milestones on the R&D side that we should think about as we progress through 2024?
Dror Bashan: Once there will be something to update, we will update, of course. We are not exactly sitting on our hands. Well, I think we will pretty much, I would say, even intensively in order to make sure that we can add the additional early-stage assets. It is just – we take our time, and I hope we will cut the right move, but will make sense.
John Vandermosten: Okay. Alright. Thank you, Dror. Thank you, Eyal for your answers.
Dror Bashan: You’re welcome.
Operator: [Operator Instructions] Thank you. At this time, there are no additional questions. Gentlemen, would you want to make some further remarks.
Dror Bashan: So, this is to Dror speaking. I just would like to thank everybody again for the time, and again, to thank our shareholders and our employees for supporting us and moving on with our commitment. And we will – of course, we will update you accordingly on any sort of development, and we will meet in the next earnings update. Thank you.
Operator: This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
Eyal Rubin: Thank you.
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