Through John Vandermosten, CFA
Financial and operational review 2020
Protalix Biotherapeutics, Inc. (NYSE: PLX) announced its 2020 financial and operating results on March 30, 2021 Press release and deposit of 10-K shape. The reports were followed by a conference call this morning, which discussed recent achievements, including clinical trial results, proceeds from capital increases and upcoming regulatory activities. Key events for 2020 and 2021 to date include the acceptance of a Biologics License Application (BLA) for PRX-102 and the allocation of the target action date of April 27, 2021. The first results and the final results of the BRIGHT and BRIDGE studies have been announced and the BALANCE study has been fully recruited. Protalix has stepped up its relationship with SarcoMed, which will study PRX-110 in pulmonary sarcoidosis. In the financial area, revenues of $ 62.9 million exceeded our estimate of $ 53.8 million due to increased research and development revenues from the Chiesi relationship. Loss per share of ($ 0.22) compared to our forecast of ($ 0.39).
Financial results for the year ended December 31, 2020, compared to the year ended December 31, 2019:
➢ Revenue was $ 62.8 million, up 15% from $ 54.7 million. Elelyso sales increased 2% with improved year-over-year Pfizer sales partially offset by lower sales in Brazil due to the impact of the pandemic. The 20% increase in revenues from R&D services is mainly due to revenues recognized as part of an updated cost estimate for the completed BRIGHT and BRIDGE studies.
➢ The gross margin (product sales only) increased from 31.3% to 33.0%.
➢ Research and development expenses fell from $ 44.6 million to $ 38.2 million, a decrease of 14%. The decrease was due to the completion of the BRIGHT and BRIDGE studies and the lower costs of the BALANCE study.
➢ Selling, general and administrative expenses were $ 11.1 million, an increase of 13% from $ 9.9 million due to an increase in equity compensation and employee compensation. board, partially offset by lower travel, rental and utility costs.
➢ Financial expenses amounted to $ 9.7 million compared to $ 8.0 million related to interest expense on convertible notes.
➢ The operating loss amounted to (6.5) million dollars compared to (18.3) million dollars. On an average balance per share, the net loss was ($ 0.22) and ($ 1.23) respectively.
The cash and cash equivalents balance as at December 31, 2020 was $ 38.5 million. At the end of the quarter, additional funds were raised, including a gross amount of $ 40 million from a public offering and an additional $ 9 million from the at-the-money program (ATM ) which is expected to bring the cash balance to over $ 80 million in Q1: 21 after adjusting for financing costs. Cash consumption was $ (26.8) million, offset by $ 46.5 million in financing cash flow generated by the issuance of common shares and warrants, offerings of ‘shares in ATMs and the exercise of vouchers. The strong balance sheet is sufficient to meet the principal amount of $ 57.9 outstanding on the convertible notes due November 2021.
On February 11, 2021, Protalix at a time offers a public offering of ordinary shares and announced its pricing. The company ultimately issued 8,749,999 shares at $ 4.60 per share. Bank of America Securities acted as bookkeeper and Oppenheimer & Co. as co-manager of the offering. The net proceeds will be used to fund clinical trials for Protalix applicants and R&D activities and for general corporate working capital. Funds will also be available to cover the $ 58 million in convertible notes which mature in November. The completion of the increase was ad February 18, 2021, with gross proceeds totaling approximately $ 40.25 million and overuse fully exercised.
Protalix clinical development pipeline (1)
Exclusive partnership with SarcoMed USA
Protalix ad on February 11, that it had entered into an exclusive partnership with SarcoMed USA to develop alidornase alfa for the treatment of pulmonary sarcoidosis. This is the culmination of a non-binding July 2020 term sheet between the two companies. SarcoMed USA is a privately held company that was formed in 2017 to support its lead product candidate, SM001, a recombinant DNase I administered by inhalation, in pulmonary sarcoidosis. The agreement grants an exclusive worldwide license for alidornase alfa (PRX-110), the recombinant phase II DNase I from Protalix, for use in the treatment of idiopathic lung disorders, including, but not limited to, sarcoidosis, pulmonary fibrosis and other related diseases by inhaled administration. .
Under the terms of the agreement, SarcoMed will be responsible for the identification, selection and conduct of clinical research and development of pharmaceutical candidates. In exchange for the license, Protalix is entitled to an advance of $ 3.5 million, subject to conditions, additional payments related to regulatory and commercial milestones, and tiered royalties on net sales of products marketed by the through the license.
PRX-115 is a recombinant PEGylated uricase enzyme expressed by developing plant cells for refractory gout. This condition affects 9.2 million at perhaps double that level with more men than women suffering from it. Although there are treatments for the disease with urate-lowering therapies, many do not respond, producing an unmet need. The side effects of the available drugs are severe, and black box warnings for anaphylaxis and strong immunogenic reactions are present. Protalix sees an opportunity with the use of the enzyme uricase, which can convert the build-up of uric acid into allantoin, which can be easily excreted from the body. This approach can provide an improved side effect profile and longer term efficacy compared to current treatments.
Protalix introduced PRX-119 in January 2021 as a new enzyme in preclinical work for extracellular neutrophil trap Diseases related to (NET). Excessive formation or inefficient clearance of NETs can cause pathological effects and are present in autoimmune, inflammatory and fibrotic conditions. Preclinical work has shown that treatment with DNase can improve the toxicity of NETs and Protalix plans to advance efforts to treat the acute and chronic conditions associated with this compound.
Alidornase alfa is a recombinant human deoxyribonuclease I (DNase I) expressed via the ProCellEx platform. Administration is by inhalation for direct application to the lungs. DNase I therapy may act as a mucus-thinning (mucolytic) agent to aid airway clearance to improve lung function and reduce the risk of infection. The decaying inflammatory cells, namely neutrophils, release DNA in the sputum, which polymerizes and is present in high concentrations, contributing to the viscosity of the sputum. DNase I breaks down DNA, thereby reducing the viscosity of the mucus.
PRX-102 clinical trial results
PRX-102 is a recombinant α-galactosidase-A enzyme. Protalix uses its ProCellEx platform to express the enzyme, then chemically modifies it through surface pegylation. The protein subunits are covalently linked via chemical crosslinking using short PEG fragments, resulting in a molecule with unique pharmacokinetic parameters. In clinical studies, PRX-102 has demonstrated a circulatory half-life of approximately 80 hours. Due to Fabry’s chronic birth, patients must receive an IV infusion of enzyme replacement therapy every two weeks, which is a significant burden. PRX-102, with its extended half-life, aims not only to be more effective, but also to reduce the frequency of doctor visits for Fabry patients.
Three Phase III studies have been initiated to support regulatory approval of PRX-102 worldwide, designated BRIDGE, BALANCE and BRIGHT. After an exit from main results in May 2020, the BRIDGE trial provided final results on December 30, reiterating its findings of substantial improvement in kidney function. See our March 31 report for more details on the test results.
Comparison of the phase III trial PRX-102 (5)
Since our recent initiation on Protalix the company provided several updates including closing nearly $ 50 million in gross revenue since the start of the year, expanding a partnership with SarcoMed USA, announcing final results of BRIDGE and the provision of BRIGHT master data. We also expect positive news from the FDA regarding the approval of PRX-102 next month. Assuming FDA approval, sales of the enzyme are expected to be underway by 2:20 am. Below, we summarize the key elements of our thesis:
➢ PRX-102 target action date April 27, 2021, subsequent approval and commercialization
➢ Potential for superiority compared to the market leader Fabrazyme
➢ Existing sales and royalty income from taliglucerase alfa
➢ PRX-102 orphan indication
➢ Partnership with Chiesi for the worldwide commercialization of PRX-102 in Fabry disease
➢ Rights on milestones and royalties
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1. Protalix company presentation March 2021
2. Singh, G. et al. Gout and hyperuricemia in the United States: prevalence and trends. Rheumatology. 2019; 58 (12): 2177-2180.
3. Dehlin, M. et al. Global epidemiology of gout: prevalence, incidence, treatment regimens and risk factors. Nat Rev Rheumatol
4. Pressler T. (2008). Review of recombinant human deoxyribonuclease (rhDNase) in the management of patients with cystic fibrosis. Biologics: targets and therapy, 2 (4), 611–617. https://doi.org/10.2147/btt.s3052
5. Source: Protalix 2020 Form 10-K