Protalix BioTherapeutics, Inc. (AMEX:PLX) Q4 2022 Earnings Call Transcript February 27, 2023
Operator: Good morning ladies and gentlemen and welcome to the Protalix full year 2022 earnings call. As a reminder, this conference is being recorded. I will now turn the conference over to your host, Monique Kosse of LifeSci Advisors, investor relations for Protalix. Thank you, you may begin.
Monique Kosse: Thank you Operator, and welcome to the Protalix BioTherapeutics' fiscal year 2022 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 Monique and welcome everyone to our fiscal year 2022 financial results and business update call. I will begin by reviewing our progress and accomplishments over the past year along with our plans for the coming months. Following my remarks, Eyal will provide a more detailed review of our financial results, and we will then open the line for questions. 2022 was a strong year for Protalix, and over the last year we made significant progress on multiple fronts. I would like to begin by highlighting our most recent achievement together with our development and commercialization partner, Chiesi Global Rare Diseases. We are very pleased that the European Medical Agency's Committee for Medicinal Products for human use, or CHMP, adopted a positive opinion and recommended marketing authorization of PRX-102 for the treatment of adults with Fabry disease.
This is a significant step towards the potential approval of PRX-102 in Europe and brings us closer to delivering this treatment option to Fabry patients around the world. The final decision is now referred to the European Commission, which is expected to provide a decision on marketing authorization in early May of this year. Not only are we approaching potential approval in Europe but we also look forward to potential approval in the United States. As previously announced the USFDA accepted our re-submitted biologic license application for review in December. It was re-submitted already November 9. We received the acknowledgement letter on December 9 and our assigned PDUFA target action date of May 9, 2023 is quickly approaching. Including in these regulatory submissions to the EMA and FDA were the comprehensive results from our Phase III clinical program, as well as long term data from our ongoing open label expansion studies.
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Final results from our Phase III BRIGHT and BALANCE trials were completed and announced earlier this year, and both studies met their respective efficacy and safety objectives. This robust set of data represents hundreds of years of patients' exposure to PRX-102 and we believe provides a compelling case to the regulators to consider this important potential treatment option for adults affected by Fabry disease. We look forward to providing you with updates as we approach potential approval in the EU and the U.S. If approved, PRX-102 will be the second approved drug from our proprietary protein expression system, called ProCellEx, providing even further validation of this unique and innovative platform. As we enter into what will be an exciting year for Protalix, we would like to reiterate our appreciation for Chiesi's partnership and dedication to this program, and we thank both Protalix and Chiesi's teams for all their efforts to deliver this potential new treatment to patients with Fabry disease.
Turning to our early stage pipeline, we are continuing to develop promising candidates expressed through our ProCellEx protein expression system. PRX-115 is a novel PEGylated uricase in development for the treatment of severe gout. Final results from the first stage of one month's multiple dosing toxicity study of PRX-115 in two species to support the Phase I study show no indication of safety concerns. Our current development plan goal is to initiate a Phase I clinical trial in the next couple of weeks. In addition, we continue to make progress on PRX-119, a PEGylated recombinant human DNAse 1 protein designed to elongate DNAse half life in circulation for the treatment of NETS related diseases. We have conducted preclinical studies to demonstrate the feasibility of PRX-119 and we look forward to providing updates on this program as we progress throughout this year.
Finally, our balance sheet provides us with sufficient cash runway through the first quarter of 2024, supporting the company through potential approval in addition to continuing developing our early stage pipeline program, as I mentioned. Before I turn to Eyal for a review of our financials, I would like to say that with regard to the filed earlier this morning, I have to clarify that the was filed with connection to the ATM program and the company has to emphasize this is not an announcement of fundraising. Now I'll turn to Eyal. Eyal, please?
Eyal Rubin: Thank you Dror, and thank you everyone for joining today the operational review of our full year 2022 financials. The company recorded revenues from selling goods of $25.3 million for the year ended December 31, 2022, an increase of $8.6 million or 51% compared to revenues of $16.7 million for the year ended December 31, 2021. The increase resulted from an increase of $2.2 million in sales to Pfizer, an increase of $3.1 million in sales to Brazil, and an increase of $3.3 million in sales to Chiesi. Revenue from licensed and R&D services for the year ended December 31, 2022 were $22.3 million, an increase of $0.7 million or 3% compared to revenues of $21.6 million for the year ended December 31, 2021. Revenue from license and R&D services represent mainly the revenues we recognize in connection with the Chiesi agreements.
Cost of goods sold for the year ended December 31, 2022 was $19.6 million, an increase of $3.3 million or 20% compared to the cost of goods sold of $16.3 million for the year ended December 31, 2021. The increase in cost of goods sold was primarily the result of an increase in sales of goods. Total research and development expenses for the year ended December 31, 2022 were approximately $29.3 million, comprised of approximately $17.8 million in subcontractor-related expenses, approximately $7.3 million of salary and related expenses, approximately $1.4 million of material related expenses, and approximately $2.8 million of other expenses. For the year ended December 31, 2021, our total research and development expenses were approximately $29.7 million, comprised of approximately $18.4 million in subcontractor-related expenses, approximately $7.4 million of salary and related expenses, approximately $1.2 million of material related expenses, and approximately $2.7 million of other expenses.
The decrease in research and development expenses of $0.4 million or 1% for the year ended December 31, 2022 compared to the year ended December 31, 2021 resulted primarily from $0.6 million decrease in subcontractor-related expenses in connection with our PRX-102 clinical trials partially offset by a $0.2 million increase in materials related expenses. Selling, general and administrative expenses were $11.7 million for the year ended December 31, 2022, a decrease of $1 million or 8% from $12.7 million for the year ended December 31, 2021. The decrease resulted primarily from a decrease in professional fees and salary-related expenses. Financial expenses net was $1.4 million for the year ended December 31, 2022, a decrease of $5.7 million or 80% compared to financial expenses of $7.1 million for the year ended December 31, 2021.
The decrease resulted primarily from lower interest and debt amortization costs due to a decrease in our outstanding notes from an aggregate principal amount of $57.92 million for 2021 notes to an aggregate principal amount of $28.75 million of 2024 notes, and an increase in exchange rate of new Israeli shekel for U.S. dollars over the period. For the year ended December 31, 2022, we recorded income taxes of approximately $530,000. We didn't record income taxes for the year ended December 31, 2021. The income taxes were recorded for 2022 as certain sections regarding the deductibility of research and development expenses of the U.S. Tax Cuts and Jobs Act of 2017 went into effect on January 1, 2022. Cash, cash equivalents, and short term bank deposits were approximately $22.2 million as of December 31, 2022.
I will now turn the call back to you, Dror.
Dror Bashan: Thank you Eyal. Thank you everyone for joining us on today's call. We are excited for the year ahead as we await potential approval of PRX-102 for adult patients with Fabry disease, and we continue to work towards our mission of delivering new medicines to patients with high unmet needs. Now I will turn the call back to the Operator to open the line for questions, please.
