Protalix BioTherapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Financial amounts below are in U.S. dollars; unless stated otherwise, figures are in millions. The company develops and commercializes plant-cell-produced therapeutic proteins. Its lead investigational candidate, PRX-102, is in development for Fabry disease; its marketed products include taliglucerase alfa.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $16.1 | $11.3 |
| Revenue from selling goods | $9.0 | $4.5 |
| License and R&D services revenue | $7.1 | $6.8 |
| Gross profit / gross margin | $10.1 / 62.5% | $6.6 / 57.9% |
| Operating loss | $(1.9) | $(3.7) |
| Net loss | $(2.3) | $(5.5) |
| Basic and diluted loss per share | $(0.05) | $(0.14) |
| Cash used in operating activities | $5.8 | $9.8 |
- Revenue from goods increased 100%, principally because Brazil sales were $5.5 million versus none in the prior-year quarter, partly offset by a $1.1 million decline in Pfizer sales. Management attributed the Brazil increase to timing differences.
- R&D expense rose 24% to $8.8 million, primarily reflecting subcontractor costs as PRX-102 Phase III trials were completed and extension studies maintained. SG&A was $3.2 million, up 3%.
- Net financial expense fell to $0.4 million from $1.8 million, primarily because of lower interest and debt-amortization costs following the reduction in notes outstanding.
- At quarter-end, cash and cash equivalents were $16.9 million and short-term bank deposits were $16.0 million, totaling $32.9 million. Cash and equivalents alone were $22.1 million below year-end; the company invested $16.0 million in bank deposits during the quarter.
- Total current assets were $56.5 million and current liabilities $35.3 million, implying working capital of about $21.2 million. Total liabilities were $75.9 million; capital deficiency was $7.5 million.
- The 7.50% senior secured convertible notes due 2024 had a carrying value of $28.0 million and aggregate principal of $28.75 million. They are secured by company and subsidiary assets, mature September 1, 2024, and require at least $7.5 million in cash. The company reported compliance with covenants at March 31.
Developments, outlook and risks
- On February 7, 2022, the PRX-102 marketing authorization application was submitted to and validated by the EMA. The FDA had issued a Complete Response Letter in 2021; it cited the need to inspect the Carmiel manufacturing facility and address matters at the European fill-and-finish facility, not concerns about the submitted safety or efficacy data. The company plans an FDA resubmission including final two-year BALANCE analyses.
- After quarter-end, the company and Chiesi reported that the Phase III BALANCE study met its prespecified non-inferiority endpoint versus agalsidase beta. This was topline information announced April 4, 2022; regulatory review and approval remain uncertain. The company also reported final BRIGHT study results in March.
- Management said available cash and short-term deposits were expected to fund capital needs for at least 12 months from issuance of the financial statements. It also expects significant R&D spending and says additional capital may be needed; it had no committed future external funding other than potential Chiesi development and milestone payments.
- The company may sell up to $20 million of common stock under its ATM agreement. In April and May, it sold 746,171 shares for approximately $0.9 million gross proceeds. It also reported post-quarter receipts of approximately $1.2 million in Chiesi expense reimbursements and $3.6 million from Fiocruz sales.
- Key uncertainties include PRX-102 regulatory timing and approval, clinical and development costs, financing and potential dilution, collaborator and supplier performance, and Fiocruz’s purchase obligations. The company noted ongoing uncertainty about COVID-19 effects, though it reported minimal impact on PRX-102 trials to date. It reported no material legal proceedings and no material changes in internal control during the quarter.
Important facts for investors to verify
- Progress, data completeness and regulatory requirements for the FDA BLA resubmission and EMA MAA review, including facility inspections.
- Whether Brazil sales timing normalizes and whether Fiocruz meets its contractual purchase obligations.
- Cash runway against operating burn, planned R&D spending, note interest and the $7.5 million minimum-cash covenant.
- Potential dilution from ATM sales, outstanding notes, warrants and equity awards; the filing excludes potentially dilutive securities from diluted loss per share because they were anti-dilutive.
- Commercial and manufacturing terms, milestone conditions, and the extent of future revenue or funding dependence on Chiesi, Pfizer and other partners.