Protalix Biotherapeutics Third Quarter 2026 Financial and Business Results Conference Call - PROTALIX BIOTHERAPEUTICS INC

Financial Performance:

• Third quarter 2026 total revenue reached $21.9 million, up from $17.9 million in Q3 2025; year-to-date (first nine months) revenue was $75.6 million, a significant increase from $43.6 million in the same 2025 period (which included a $25 million milestone payment from Chiesi).
• Revenue from selling goods in Q3 2026 was $21.8 million compared to $17.7 million in Q3 2025; YTD revenue for this segment was $49.1 million versus $43.1 million in 2025, driven by higher sales of Eliquis (El Fabrio) to Chiesi.
• Cost of revenues decreased to $7.9 million in Q3 2026 from $8.3 million in 2025, primarily due to lower sales volume to Pfizer, partially offset by higher Chiesi sales.
• R&D expenses increased to $6.9 million in Q3 2026 from $4.5 million in the prior year, driven by higher subcontractor costs for the REDS study; a $1 million grant under the Yisra'el law reduced reported R&D costs.
• SG&A expenses rose slightly to $3.1 million in Q3 2026, attributed to increased professional fees and salary expenses.
• Net income for Q3 2026 was $4.0 million ($0.05 per share), compared to $2.4 million ($0.03 per share) in Q3 2025; YTD net income was $26.1 million.
• The company ended the quarter with $48.5 million in cash, cash equivalents, and short-term bank deposits (up from $40.7 million in June 2026) and maintains a debt-free balance sheet with no outstanding warrants.

Guidance and Future Outlook:

• Management expects continued positive revenue momentum throughout 2027, driven by the recent approval of four-week dosing for Eliquis (El Fabrio) and its global expansion.
• While specific financial guidance is withheld until the annual results release, the company anticipates 2027 to be a strong year reflecting 2026 performance trends.
• The REDS study for PRX-115 is actively enrolling, with top-line results expected in the second half of 2027.
• Strategic decisions regarding clinical trial initiation for the PRX-119 program are expected to be made within the current quarter (Q4 2026).
• Long-term goals include establishing Fabrio as a commercial foundation and advancing PRX-115 as a potential best-in-class therapy for uncontrolled gout.

Business Segments and Product Lines:

• Fabrio (Alglucosidase alfa): Performance is strengthened by the March 2026 approval for four-week dosing in Europe, which is expected to accelerate patient enrollment and geographic expansion; the global market is projected to reach $3.2 billion by 2031.
• PRX-115: A PEGylated uricase for uncontrolled gout; Phase I data presented at ACR Convergence 2026 shows measurable plasma levels up to 85 days, supporting a less frequent dosing regimen (e.g., every six weeks) being tested in the Phase II REDS study.
• Pipeline Expansion: The company is building a pipeline in rare renal diseases, leveraging its commercial success and strong balance sheet to support early-stage programs.
• Partnerships: Continued strong execution with partner Chiesi is driving revenue growth, while the company manages manufacturing and supply dynamics with Pfizer.

Market and Competitive Landscape:

• The uncontrolled gout market is characterized by high patient need and low quality of life, presenting a "blockbuster" opportunity.
• PRX-115 aims to differentiate itself through prolonged circulation half-life, reduced immunogenicity, and less frequent dosing compared to existing uricase therapies.
• Four-week dosing for Fabrio is enhancing market penetration, particularly in Europe, with management projecting a significant portion of patients will transition to this regimen.
• The company views its partnership with Chiesi as a robust foundation for expanding global reach in lysosomal storage disorders.

Risks and Challenges:

• Clinical Execution: The success of PRX-115 depends on meeting efficacy targets and demonstrating favorable immunogenicity and safety profiles in the ongoing Phase II REDS study.
• Decision Delays: Progress on the PRX-119 program has faced delays, with clinical trial initiation timing contingent on upcoming decisions.
• Manufacturing/Supply: Historical manufacturing issues with Pfizer impacted prior revenue comparisons, though the company notes current levels are returning to a steady state.
• Forward-Looking Uncertainty: Standard regulatory and market risks apply, with actual results potentially differing from projections due to unknown risks.

Management Commentary and Tone:

• Management expressed confidence and a positive tone, highlighting the company's "strong financial position" and "growing financial position" as key enablers for executing strategy.
• Dror Bashan (CEO) emphasized the transition from a development-focused company to one with a solid commercial foundation while advancing key pipeline priorities.
• Gilad Mamlok (CFO) provided detailed financial transparency, noting the sustainability of current gross margins as a new baseline due to the shift in sales mix toward higher-margin Chiesi revenue.
• The overall sentiment was optimistic regarding 2027, with a focus on data readouts and commercial expansion.

Analyst Questions and Answers:

• Revenue Predictability (Chiesi/El Fabrio): Analyst Ram Selvaraju asked about revenue baseline predictability; management confirmed strong momentum and expects the trend to continue post-four-week dosing approval, though specific guidance numbers were deferred until the annual report.
• PRX-115 Dosing and Competitiveness: Questions focused on the clinical implications of less frequent dosing; management stated that if Phase II data supports a "once in six weeks" regimen with good safety/immunogenicity, it would be a clear competitive advantage and "best-in-class" attribute.
• Four-Week Dosing Adoption: Analyst John Vandermosen asked about the conversion rate to four-week dosing; management confirmed "accelerated penetration" in Europe and expects a "significant portion" of patients to adopt the regimen, though a specific percentage target was not provided.
• Gross Margin Sustainability: When asked if high Q3 gross margins are sustainable, management affirmed they represent a new baseline, citing increased sales to Chiesi and normalized manufacturing issues with Pfizer as key drivers.
• PRX-119 Timeline: Management clarified that decisions on PRX-119 clinical entry will be finalized within the current quarter.

Other Key Points:

• The transcript contains several transcription errors regarding product names and dates (e.g., "Kyrgyz" for Chiesi, "El Fabio/Al Fabrio" for Eliquis/Alglucosidase alfa, "2036" for 2026), which have been contextualized in the summary based on the logical flow of the earnings data.
• The company explicitly highlighted the absence of debt and warrants as a strategic advantage limiting downside risk.
• The REDS study for PRX-115 is a double-blind, placebo-controlled Phase II trial testing fixed doses across different intervals with and without methotrexate.