John Viglotti: Hello, and welcome to Virtual Investor Conferences. My name is John Viglotti, and on behalf of OTC Markets and our co-host, Zacks Small Cap Research, we’re very pleased you joined us for our next presentation from Protalix Biotherapeutics. Their session will be moderated by John Vandermosten. He’s the Senior Biotechnology Analyst with Zacks Small Cap Research. Please note that you can submit questions for the presenter in the box to the left of the slide. At this point, I’m very pleased to welcome Dror Bashan. He’s the President and Chief Executive Officer of Protalix Biotherapeutics, which trades on the NYC American market under the symbol PLX. Welcome, Dror and John.
John Vandermosten: Protalix is a revenue-generating biotech company with two commercialized products in Gaucher disease and Fabry disease. The company also has a development pipeline focused on gout and other rare renal diseases. Dror, welcome to the OTC Life Sciences Investor Forum. Thank you for being here.
Dror Bashan: Thank you, John. Good morning to everybody.
JV: One of Protalix’s strengths is its balance sheet. Dror, why don’t we start with that? Tell us about your financial profile and your cash and debt position.
DB: Actually, we are debt-free as of last week. Protalix paid its debt in full. We paid over $60 million in the last five years, including, I assume, an additional $15 million of interest. We reported $45 million in cash at the end of Q2. We paid $20.4 million, which was the last payment to the note holders. We have sufficient cash, which we calculate in addition to revenues from our partnerships. We are certain that we have sufficient cash to maintain our operations, including the planned R&D, phase two in gout, and other research activities, as you mentioned, in the renal diseases area going forward.
JV: So, Protalix has two revenue-generating products, Elfabrio and ELELYSO, for Fabry and Gaucher disease, respectively. Can you give us some background on the recently approved… Well, it’s been almost over a year now. Who’s commercializing the recently approved Elfabrio, and how did it fulfill an unmet need in the market before it was approved?
DB: Elfabrio was approved in May of 2023. It was launched in the summer of 2023 in the US, so actually, it’s a year into the launch in the US market. In Europe, the same was approved in May of 2023. In Europe, following approval, you usually go to reimbursement discussions; market by market, you get approvals. Today, in most markets, the drug is available, and Chiesi, our commercial partner, continues to work intensively to make this drug or brand available to patients.
DB: Overall, following a robust clinical program with three different phases, three studies, and a head-to-head study against the main enzyme, Fabrazyme, in Fabry disease. The drug is available as a good alternative for the patients. We have good results from the phase three. We have a very good safety profile. We have a very good immunogenicity profile. Chiesi is also investing heavily into expanding the brand and expanding the franchise going forward with conducting a pediatric study, a pregnant women study, a Japanese study, and other activities to enhance the drug’s penetration and availability for the patients.
JV: Okay. In our model, Elfabrio is the primary driver of the company’s valuation. What does Chiesi bring to the table? We had a chance to look at their rare disease profile or products that they’re commercializing, and there are 12 of them, and they’ve got several others in development, including Elfabrio, which has been approved. What do you see in the future with Chiesi, especially since you have a development portfolio that may also interest them?
DB: Thank you for that. I will explain Chiesi a little bit. Chiesi is a private company. They sell about $3 billion in sales. They are a very serious company, family-oriented, based in Italy. They established a rare disease-based innovative business about four and a half years ago. It’s based in Boston. They have licensed, bought, and invested in different assets like ours. Our brand is their top priority. They say so. They’ve invested a couple of hundred million dollars so far and continue to invest in this brand to expand the penetration further. They see a very long life cycle for this brand. From the first year in the US and the, let’s say, seven or eight months in Europe, we are very much pleased with their progress. We are in daily touch with them and have a close relationship, and we are pleased so far.
JV: You mentioned earlier that Elfabrio has been approved in the EU and the United States. You also mentioned Japan. I think you said there’s a study going on there, so I guess that’s on track to be approved in the future. I think I even saw in the news recently that it had been cleared in Scotland. Where are some other areas where Elfabrio has been approved, and how do you see that effort to continue that global spread of Elfabrio being available and approved for patients with Fabry?
DB: Chiesi operates globally, both in sales and medical, and invests heavily. It goes hand-in-hand that, as they expand geographically and expand the label will leverage the overall outcome.
JV: You are working on a development portfolio now. Your focus internally has shifted to PRX-115, which is for Gout. And still thinking about Chiesi, might they be a good partner for some of the other development candidates you’re working on, such as the one in Gout or some of the others you have?
DB: They might be. It depends on their focus, of course. As I mentioned, we are in a good relationship. They give us, Elfabrio, at least, a very high priority. It’s not like a big pharma company that things change from different strategies every few years. For future renal indications, I would say this is not their focus for gout right now. It may change in a couple of years. We first need to finish phase two in Gout, which will take two and a half years from today. But Chiesi is certainly a potential partner and a preferred one. I’m not saying it to make a view on the checkbox. We are pleased with what they do.
JV: Right. Yeah, I get the sense from our quarterly conference calls that your relationship with them is pretty strong and works well. Since you were focused on Gout for there, I thought we’d talk about that a little bit more, PRX-115. Right now, you are working on a phase one trial. And if I remember correctly, you’ve completed seven of eight cohorts so far working on that. Gout is a large disease. It’s not a top one, but I think about 14 million individuals in the United States have the disease. Right now, KRYSTEXXA is the dominant product in the market. So, let me ask you about PRX-115 and how it can address some of the current shortcomings in the standard of care. I think some of the side effects observed may be allergic reactions or limited efficacy in the current standard of care.
DB: If you don’t mind, I’ll explain the gout. Indeed, there are only about 14 million people in the US. However, gout is mainly treated by allopurinol alike, which is a generic drug. It’s pretty cheap overall. Actually, it’s good enough for the lighter patients, the beginners, or those who are not getting to the severe and refractory stages. If they take it in a disciplined way, they don’t get to the severe stage. Actually, gout and uric acid accumulate in different tissues. And, if you do not take care of it, you get all kinds of severe stage, like crystal urate in the joints and other tissues. I will give an example of patients not being able to shake hands. It hurts your significant quality of life.
DB: KRYSTEXXA is approved for the severe stage or refractory gout stage. They do very nicely here in the US. They sell over a billion dollars a year. They inject into an infusion an enzyme. It’s a uric acid. Uric acid does not exist in our body. It’s done in a clinic and a hospital. They do a very good job treating those specific segments of the overall gout indication. And still, there is a pretty big opportunity. I would add that Sobi submitted the BLA again in June of this year for the same indication with another enzyme.
DB: We believe we have to be modest, of course. We are running our phase one study, and in November, we will publish the topline results of the whole study with eight cohorts. However, from the first seven cohorts, we came out very encouraged. This is why we extended an additional cohort. And we think we have a potential, I would say, again, a very good alternative, meaning lower frequency of dosing or infusion. We also hope for a good immunogenicity safety profile. This, of course, is yet to be seen. We have to remember phase one is a single dose. If indeed, as we expect, cohort number eight will continue the trend of the first seven, it will be an overall very encouraging result. In addition, we will get a green light from the FDA. We have submitted the pre-IND package. The first patient is planned for mid-next year. I would say we have already initiated the activities to execute them properly.
JV: You alluded to phase two, which you plan to start next year. What does the timing look like for that? It sounds like phase one’s come along pretty well. I think you said in November, you will have results from that, which sets you up for phase two in 2025. When might that trial be complete? And how do you think it would be designed?
DB: Right now, the first patient will be in mid-next year. We expect top-level results from the overall study in Q1 of 2027. It really depends on the pace of enrollment, etc. Whatever we have incorporated into our plan model, this is where we see it right now. It’s a multiple-dose study, of course. Once we get the green light from the FDA, we will move imminently to phase two unless there are any major hurdles.
JV: Very quick. Are there any expedited pathways available for gout or PRX-115? I guess what I’m thinking is, if you have a successful phase two, is there a way you might get to the market soon after 2027? Or do you think you’ll have to go to phase three?
DB: We have to be realistic. I think this is not part of our plan right now.
JV: Okay, okay. There’s always hope.
DB: Yeah, no, it’s okay. I don’t want to put expectations or to be unrealistic. This is not our way. But we truly believe, by the way, again, if we had seen that our frequency is once in two weeks like KRYSTEXXA, we would not have continued further. Okay, let’s be clear. So we see right now that it has to be validated in phase two, a way lower frequency of dosing or infusion, plus hopefully a good immunogenicity profile. And time will tell. The drug works for sure. It’s much better with an improved DPP. Let’s wait a bit.
JV: Yeah, that makes me think about Elfabrio as well. That has much longer action than the standard of care before Elfabrio’s improvement. So, it sounds like that’s a recurring theme in your products. Actually, to look at your platform that generates these products is the ProCellEx Platform. It’s pretty interesting because it is a plant-based expression platform.
JV: Most of the other expression platforms used are like CHO, which is Chinese Hamster Ovary or E. Coli or a number of other ones. I think you have only one plant expression system, and maybe you can correct me if I’m wrong. But maybe spend a little time telling us about your ProCellEx Platform, how it works, how it’s different, and how it’s differentiated, I guess, from some of the other more widely used platforms.
DB: As far as we know, this is the only system that can express complex human proteins, I mean, with glycosylation. So, plant cells in suspension. We now have two drugs approved that were expressed through the system. The third one is the 115. There were other attempts. Not all of them, of course, were successful.
DB: This system can express any protein, in principle. We also added chemical modifications, regulations, and others to improve clinical output. We are looking as we speak, and we have already made the first strides to give the system an edge and have new technologies that can be added or combined with it. Let’s call it ProCellEx 3.0. I hope that next year, we will have news to share.
DB: Overall, the setup of such a system per line is way cheaper, but I want to be careful. I don’t try to mean that overall, we are way cheaper on the day-to-day. The setup is cheaper. Viruses cannot enter the membrane of a cell plant. I would say it’s a unique platform that can actually competitively express proteins.
JV: Is it a little easier to purify the output from ProCellEx than it would be for some animal-based or insect-based or one of those other expression systems?
DB: I would say, first, it depends on the protein. If we speak about an enzyme, a peptide, an antibody, etc. Second, I would say that our manufacturing line, which clearly is based on the system, is simplified. We work at room temperature and other aspects that simplify the process. We can scale up, scale down. We add more bioreactors. This is in a nutshell. It depends on protein to what extent the yield is better or easier to express. But it’s okay. No complaints.
DB: I think it’s unique. We can express different protein types as long as we find them. I think this is most important as long as we continue to develop innovative therapies that address real unmet needs. Going forward, we will continue to use the system. I don’t think everything will be for the system because when we go into those very specific renal indications we have identified, it could be that we put our hands or license or collaborate on already advanced molecules.
DB: We go back two or three years; it’s not so smart. Or it’s done with a company that has a different system. But if we go again two, three years down the road, I would assume not only will we have the outcome of phase two in gout, but we will have, for the sake of our discussion, about six programs, give or take, I hope, four to six programs, active, innovative one within these specific indications that address real unmet needs on the market. This is a way to go up the ladder of evolving the company and bringing it to a more significant position.
DB: Of course, don’t forget that Chiesi plays an important part here. Elfabrio is important because we truly believe Chiesi is doing well so far. We have all the reasons to assume that we’ll continue to do well in the market. As we publish, let’s say 20% of the market is very feasible in our eyes, and we see a high probability of that. It should be a very important financial tool for Protalix to evolve into a more significant platform.
JV: You mentioned renal rare disease as your new focus or a refined focus area. What does that mean? What are some of the indications that we might see emerge out of that focus? And why did you choose that area?
DB: Thank you. During the development of the Fabry program, which was probably about ten years, the measurements in Fabry were mainly renal ones. So, actually, we got acquainted and got on the learning curve of the knowledge, of course, with treating physicians and nephrologists in the renal area and basic research experts. We think we have a lot of knowledge and understanding, bringing the drug to an end. We worked heavily or intensively in the last six quarters to fine-tune our pathway forward. We looked at where we think we are strong and our disadvantages. We have to remember we are a small company.
DB: We have to stay modest. We cannot just go all over the place. We had, and still have, a pretty wide chain of experts. And together, under certain criteria we agreed upon, we decided we needed to focus on the renal area. We have identified several indications within the renal area, like ADPKD, Alport, and others. But again, it’s a handful of renal indications. We already took it into action. We have multiple opportunities. Again, in the early stage, we must be careful not to risk the company. I’m speaking in addition to the gout. We are focusing on discovery and phase one opportunities. We see very interesting innovative technologies or ideas or molecules. And we are in discussions. I hope the first project will be in the pipeline sooner rather than later.
DB: To add, John, if I may, if we take it, let’s say, three or four years down the road licensing, developing, collaborating on multiple programs within, let’s say, two, three, four indications, I think we will be a small center of excellence within these indications because there will be a lot of focus. I hope, of course, some of them will be successful. Some of them will not. This is life. But I’m sure that the process will be robust. When you have a good process and are disciplined, good things usually come out of it.
JV: Certainly. When we look at PRX-115 and the rest of your development portfolio and think about R&D spending, I assume that the vast majority of your R&D spending right now and probably for the next year, the next 12 months would probably be on PRX-115. What is that breakdown for R&D?
DB: Let’s divide it into two. Labor-wise, most of our labor expense is on the research, on the R. From a clinical perspective, paying for a CRO to conduct a phase two study plus other labs and providers is dozens of millions of dollars. There is no secret. So, the next few years will be heavier on this one. Also, please remember that investing in and focusing on discoveries less for a clinical is usually not big amounts. Again, once we find something very interesting, we will invest more.
DB: We will not cut any corners. This is very important to explain.
JV: Do you see funding? Do you see funding this out of your revenues?
DB: Yes. Under the current plan, under the current plan with phase two in gout and the research efforts right now under our plan, including the expected revenues from Chiesi and Pfizer, what we do in Brazil, we do not plan to raise money. We don’t see a need for that. Look, if there is an opportunity that we need more, we will not risk the company. We cannot risk the stability of Protalix. We have achieved it after many efforts, if I may say so. But currently, as we see it in the next two years, under the current plans, they can change. However, under the current plan for phase two and the R&D, we can finance ourselves, which is a pretty good position for a small company.
JV: Yeah. It’s great to be able to fund it out of your operations. I meant to ask you earlier about the ProCellEx Platform and your manufacturing facilities. As far as I understand, do you have a single manufacturing facility where you produce everything?
DB: Yes. We do the drug substance, the drug product, or the fill and finish, which actually is a sterile process where we bottle to some extent into the vials. The biological API is done for ELELYSO in Pfizer, and for Elfabrio, it’s done in Chiesi.
DB: I do not underestimate, and I don’t get myself wrong, but this is the last step, actually. It’s actually bottling into vials.
JV: If you wanted to expand the ProCellEx Platform to another area, let’s say demand really grows. Would you be able to do that?
DB: Yeah. I will expand it into two. We can do up to 50% of the market or even more with our current line to support the Gaucher and the Fabry demand. We increase additional shifts and additional employees. Clearly, if indeed I would say we will have, and by the way, including the gout, okay. It could be that we will establish another drug substance just as mitigation of risk, but not because of any capacity constraints. We can support the market today with almost unlimited quantity. It’s true that if it makes sense, of course, for additional drugs, we will have to establish a new facility or a new line. This is okay.
DB: I hope these problems will come sooner than later. First, I hope they will mature sooner rather than later.
JV: That would be great. I think we only have a couple of minutes left. I wanted to end with a question about your recent investor day. It was about a month ago. I think you had Dr. Levinard and Dr. Schlesinger, who gave a very good presentation about the background of gout and what you’ve accomplished so far in phase one. Can you highlight some of the some of the main takeaways that people should have from that event?
DB: Let’s focus on its two main subjects. One is the Fabry one. We think we have brought a very good alternative to the market, and slowly but surely, Chiesi will penetrate; we truly believe that both the patients and the treating physicians will be more and more into it. I will consider this and Elfabrio for new patients. Chiesi puts a lot of effort into it, medical and other resources. It seems that it was in the right direction. I’m sure it’s here for us to stay for many years. We educated on gout; maybe it sounds a bit arrogant, but we explained about the gout industry. We explained the merits of our program, and the preliminary results from the first seven calls are very encouraging. We hope to open positively for number eight and move on to phase two.
JV: Right. Well, Dror, thank you for joining us here at the OTC Life Sciences Investor Forum. And just for everyone listening, don’t forget that the ticker symbol for Protalix Biotherapeutics is PLX.
DB: Thank you, John. And thank you very much, everybody.
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