Protalix BioTherapeutics, Inc. (PLX) Earnings Call Transcript & Summary

Thank you. I just have to read a brief disclaimer here. So for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. I'm joined by Gilad, the CFO of Protalix BioTherapeutics. And so, Gilad, maybe just to get started, for people in the audience who may be less familiar with Protalix, can you start by giving us the, let's call it 30,000-foot view of the company, where it came from, what makes the technology distinctive, and where you see the company today?

Good afternoon everyone and thank you Ben and the Morgan Stanley team for inviting me. We are a pharmaceutical company focusing on rare disease assets in significant areas of unmet need. We built a profitable commercial company based on two products, Elelyso for Gaucher disease and Elfabrio for Fabry. Both are partnered with global commercial players. Elelyso is licensed to Pfizer worldwide, except for Brazil, where it's licensed to Fiocruz, an arm of the Ministry of Health in Brazil, which is actually doing a very good job. We have 27% share in Brazil, mainly attributable to the very good service and quality of service that they provide to patients, to the community, to the physicians, and that was $11 million of our revenues in 2025. Elfabrio is licensed to Chiesi globally. Chiesi, for those who don't know, is a privately owned company with more than €3.6 billion sales in 2025, of which more than €1 billion sales in rare diseases. He has invested a lot in this project. In this area, they acquired Amryt three years ago in 2023. They acquired KalVista for $1.9 billion this year. The investors in Amryt, we are very happy with the infrastructure and with the investment they do with Elfabrio and we see Elfabrio is actually our main growth driver. In terms of our pipeline, our lead product in the pipeline is PRX115 to treat uncontrolled Gout patients, and I will elaborate a bit more about it later. And it also worth mentioning that we have a very unique platform, ProCellEx platform. It's the only platform, it's the first platform that was approved based on the plant cell. What we do is that we express complex human proteins using plant cells in suspension and that has many, many advantages. First, the initial set of course is cheaper than using mammalian cells. We manufacture in room temperature and it's also relatively to scale up or down the production because it's based on bioreactor strengths. So to summarize, Protalix is now a commercial, profitable business. We are strong, we have also a strong balance sheet, no debt. We are well funded to fund our pipeline, in particular the PRX115 to the phase with the Phase 2 top-line results end of next year.

Well, I mean, multiple, being responsible for multiple approved products as well as profitability is quite the accomplishment. So congrats to you on the team. You touched on it briefly, Gilad, but maybe just to go a little bit deeper, when people hear plant cell based protein expression, they may not immediately understand kind of what that is and why it truly matters. And so why does the platform and the Protalix platform that it's based on, that, you know, harnesses this, how does that allow you to kind of do that different biologics manufacturing?

So most biologics are produced by mammalian cells factories. It's more expensive to make the setup. It requires cold chain. Bio-actor temperatures for the bioreactors, it is exposed to a contamination. So, and sometimes it can shut down a factory if there is a contamination. When our product, our platform is based on plant cell and again, it's easier, it's cheaper to set it up. We are not exposed to any mammalian pathogens, so there is no risk whatsoever of mammalian contamination. And it's easier for us to scale up and down, also to add products. PRX115 is also produced with this platform. This Brazilian, by the way, was well demonstrated at the COVID period. There was no issue whatsoever in contamination because COVID doesn't infect plants. That was a good advantage, and that's basically the main advantage and the uniqueness of our platform.

Yes, definitely unique. I hadn't really heard of it prior to our dialogue, so definitely different. Maybe moving on a little bit, and we'll we talked about it initially, but Chiesi is now responsible for commercializing Elfabrio globally, and you're responsible more for the manufacturing of the product, and you get the participation economically through the partnership. That being said, how do you define success for Elfabrio over the next several years?

So first I would start by saying that we see a very nice growth since launch in 2023 until now. Chiesi is a privately owned company, so they do not publish the detailed revenues from Elfabrio. But I can tell you that they keep growing the number of patients. The revenue is growing nicely. They keep expanding the territories. This year alone, Elfabrio got an approval in Canada, in Korea, South Korea, where it also received orphan drug designation status. So that's one thing. And also when we look at the outlook of Chiesi, which again is not public, we are very optimistic about the trajectory. And when you look at the Fabry market overall, it's about $2.2 billion in 2025. And the forecast is that it's going to grow to $3.2 billion in 2031. Given the past performance trajectory and other factors I will detail, we see Elfabrio capturing 15% to 20% by 2031, which also going to create significant more revenues for us. Some other catalysts or some other very key factors that are important to know about Elfabrio. This year was very significant. In the first half of the year, the CHMP of the EU for a regimen dosage of every four weeks for Elfabrio, compared to the current every two weeks. And the U.K., the MHRA in the U.K. followed in May. That means that as of now, Elfabrio is the only enzyme replacement therapy for Fabry that can be used every four weeks instead of every two weeks. I think the advantage is clear. It's 50% less burden for the patients, 50% less infusion. It's a huge competitive edge for Elfabrio because the competition doesn't have it. And we were eligible and we received $25 million regulatory milestone at the beginning of the year in the first quarter. On top of that, in May this year, we were granted by the U.S. Patents and Trademark Office, the USPTO, an extension for the core patents of Elfabrio until November 2035, so that's a great strengthening of our patents. With that, with the fact that Elfabrio is also the only regulating and regulated enzyme replacement therapy compared to the competition, Amicus that was bought by BioMarin for $4.8 billion, Galafold, Replagal and Fabry, that's also an advantage, that also enables a longer half-life, which is also an advantage. Given that, given the patents, given every four weeks, which is significant, and Chiesi is also working now with the FDA to see if that can be achieved also in the U.S., we are even more and more optimistic about capturing 15% to 20% of the market by 2031, which is going to significantly increase our revenues from Elfabrio. Definitely, yeah, I would imagine.

Dosing regimen would lead to higher adherence and compliance, which would be more attractive to patients and prescribers as well.

Much more attractive, and we already see it. In Europe, it's a process because you get approval. We got approval in March, but then Chiesi need to get approval country by country. It's more technical reimbursement issues. It's not, again, clinical and regulatory path but so it takes time but we see the effect we already see patients converting from every two weeks to every four weeks and we expect that to keep boosting the revenues in Europe. That's great. Maybe touching on the pipeline a little bit now, you know, PRX115 for uncontrolled gout, really exciting prospect and an important part of the next chapter for you and the company. I don't want to get ahead of the clinical data, but I guess what would you need to see from the program to be convinced that this is truly going to be a kind of meaningful commercial asset? So I will start by that it's a very exciting product. Gout is well known. We have about 11 million patients suffering from gout in the U.S. We are targeting the uncontrolled gout patients, which is about 300,000, and we are offering uricase therapy the same as Krystexxa is offering by Amgen. There are about 180,000 patients qualified for uricase therapy. Just to give you the sense, Amgen generated revenues from Krystexxa of $1.34 billion in 2025, treating, they don't disclose the exact number, treating about 8,000 patients. So it's less than 5% in the potential. And when we look at 2026, the first half, it's already [indiscernible] million, 12% year over year. That means also the increased price. So we see already $1.5-$1.6 billion. And if you look at the early 2030s, when we plan to come with the first of the market, you're talking about a market of $2.5 billion to $3 billion. So I think the market potential is clear, is very big. And on top of that, this was an exciting year for this space. So we acquired [Atrosi] for $1.5 billion. Crystalys Therapeutics, that is now in the Phase 3, raised $130 million recently. So the space is very interesting. It's interesting because there is really significant unmet need here. Now we finished our Phase 1 study where we had eight cohorts and we used patient with elevated uric acid levels. And the idea of the Phase 1 was to show, to check, 1 milligram and 36 milligram and the CBA effect. The results we received, we don't, I cannot show the graph, but you can see it in our presentation. The results show that in the cohort eight, where we used 36 milligram, patients managed to stay below the 6 milligram per deciliter threshold for more than 80 days. That's very encouraging, and that supports our target for the Phase 2, to differentiate against Krystexxa and to have either every four weeks without methotrexate or six or eight weeks with methotrexate. That's exactly how we designed the Phase 2, which is a double-blinded study with five arms, 30 patients each arm. The key to the study differentiators if in this arm is to get either every four weeks without methotrexate or with methotrexate, eight weeks, but also six and four weeks in methotrexate, either differentiated against Krystexxa, which currently, the dosing regimen with Krystexxa is two weeks with methotrexate. So we think we have a very high potential here. In terms of where we expect results, in a way, it's roundabout corner. We are expecting top-line results in the second half of 2027. So it's a year plus for us from now and since we see such a big potential with this product and given our financial strength, we can either market it, go to Phase 3 and commercialize it ourselves or maximize the options based on the and the Phase 2 results and the expected interest that we think is going to be if we indeed get robust results for the Phase 2.

I think the potential for differentiation is definitely clear, especially as you think about Tysha's, treating with that methotrexate and you know, always good to have optionality with the program, so that's great and yeah certainly looking forward to the data later. Maybe you talked about kind of being well-funded and profitability, so maybe we'll shift a little bit to kind of financing and the like. I think to date, quarterly revenue has been a little lumpy. I think that's largely due to kind of partner purchasing patterns, and it doesn't always necessarily correspond to kind of underlying patient demand. I guess, how do you see this evolving as Elfabrio becomes more established? We talked about the positive opinion in Europe and the rollout there. So yeah, I would love to hear your take on that.