By John Vandermosten, CFA

NYSE:PLX

READ THE FULL PLX RESEARCH REPORT

2024 Financial and Operational Review

Protalix Biotherapeutics, Inc. (NYSE:PLX) announced 2024 financial and operational results in a March 17^th, 2024 press release and in its Form 10-K filing. The reports were followed by a conference call which discussed recent achievements, clinical updates and financial performance. In 2024, Protalix repaid its convertible debt and completed the Phase I PRX-115 trial in gout. A poster presentation in November summarized the findings at the American College of Rheumatology conference. A Phase II study for PRX-115 is now planned for 2H:25. 2024 product revenues rose 31%, driven by inventory builds of Elfabrio by Chiesi.

2024 revenues essentially matched our estimates at $53.4 million were dominated by revenues from Chiesi. This produced annual net income of $2.9 million or $0.04 per share. 

Financial results for the year ending December 31^st, 2024, compared to the prior comparable year:

• Revenues were $53.4 million, down 18% from $65.5 million due to the recognition of a $20 million milestone related to the Elfabrio approval. Product revenues rose 31% due to a material increase in sales of Elfabrio to Chiesi. Elelyso sales through Pfizer and Fiocruz rose 3% with both partners increasing their year over year revenues. Revenues from licensing were $418,000 representing catch up amounts for costs related to research and development related to Elfabrio;
• Cost of revenue was $24.3 million vs. $23.0 million reflecting greater Elelyso volumes;
• Research and development expenses fell 24% to $3.0 million from $3.7 million. Completion of the Fabry clinical program and related regulatory efforts in 2023 led to the decline;
• Selling, general and administrative expenses were down 18% to $12.2 million compared to $15.0 million on a reduction in salary and related expenses as well as lower professional fees;
• Net financial income was ($237,000) compared to a net financial expense of $1.9 million. The difference resulted primarily from note conversions that reduced income expense in 2023 and convertible note repayments in 2024 and higher income on bank deposits;
• Income tax of $1.2 million compares to $254,000;
• Net income was $3.2 million vs a net loss of ($1.9) million, or ($0.03) per share versus $0.21 per share;

The cash and equivalents balance on December 31^st, 2024 totaled $34.8 million versus $44.6 million at the end of 2023. Compared to the third quarter end, cash rose by about $7 million due to cash from equity issuance and positive free cash flow generation. Compared to the end of 2023, cash fell due to the repayment of the convertible note in the third quarter. After the end of the reporting period, Protalix collected $6.9 million from Elelyso sales, sold 1.22 million shares to raise $2.5 million and issued 908,000 shares from warrant exercise, receiving $2.1 million. No warrants remain outstanding.

Reasons To Own / A Compelling Idea for 2025

In February, we highlighted the investment thesis for owning Protalix Biotherapeutics. The company has two approved products generating revenues and a pipeline with multiple candidates in development. Its products are produced and manufactured using the ProCellEx platform which uses a plant cell line rather than the usual mammalian one, to produce its therapeutic proteins. The company recently eliminated all debt from its balance sheet and holds over $27 million in cash on its balance sheet. We expect positive free cash flow generation over the next 12 months, which should strengthen the balance sheet even further. See our video summary here.

The first of its approved products is Elelyso, which was approved in 2012 for Gaucher disease. Protalix signed commercialization agreements with Pfizer and Fiocruz, an arm of the Brazilian Ministry of Health. This has led to annual sales from $16 to $23 million for the product worldwide. In May 2023, Elfabrio was approved by the FDA and EMA for Fabry disease. The product has been approved for marketing in the United States, the European Union, Great Britain, Switzerland, Peru, Israel, Russia and Singapore. This is a $2 billion market dominated by three products^[1] and one where legacy offerings present several shortcomings. Many patients develop antibodies against the enzyme in Fabrazyme and Replagal which reduces its effectiveness. Galafold is only appropriate for a subset of Fabry patients that have a certain galactosidase alpha gene (GLA) mutation. This creates a wide opening for Elfabrio to step in and take market share in the underserved Fabry population.

In December, Protalix’ partner Chiesi submitted a Variation Application to the EMA that requested a change in the dosing regimen for Elfabrio. Based in part on the findings in the BRIGHT study and on new pharmacokinetic data, the sponsors are seeking a less frequent dosing regimen at a dose of 2 mg/kg body weight administered every four weeks in adult patients with Fabry disease in the European Union. Analysis of the BRIGHT study concluded that treatment with Elfabrio every four weeks could offer a new treatment option for patients with Fabry disease.^[2]

Both Replagal and Fabrazyme are administered every two weeks, which equates to 26 administrations per year. If Elfabrio were able to gain approval for administration every four weeks, this could reduce the number of administrations relative to these older medicines by half to 13 infusions per year. Elfabrio is a PEGylated,^[3] recombinant human α-Gal A. As a result of PEGylation, Elfabrio is stable in plasma, under lysosome-like conditions and presents a prolonged plasma half-life in humans of approximately 80 hours, compared with other commercially available enzyme replacement therapies with half-lives of less than two hours.

Other benefits of Elfabrio over peers is:

• Use of a plant-based expression system which avoid many of the viral contamination problems faced by mammalian cells;
• Fewer patients with anti-drug and neutralizing antibodies vs. Fabrazyme in BALANCE at end of study;
• Reduction in mean annualized estimated glomerular filtration rate (eGFR) slope in the BRIDGE study;^[4]
• Potential for infusions every four weeks vs. every two weeks for Fabrazyme and Replagal.

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^{[1] Other products include Fabrazyme by Sanofi, Galafold by Amicus Therapeutics, and Replagal by Takeda. We rely on Evaluate, Ltd. for Fabry disease market size estimates.}

^{[2] Holida, M., et al. A phase III, open-label clinical trial evaluating pegunigalsidase alfa administered every 4 weeks in adults with Fabry disease previously treated with other enzyme replacement therapies, Journal of Inherited Metabolic Disease. October 2024.}

^{[3] A pegylated drug is a therapeutic molecule that has been chemically modified by attaching polyethylene glycol (PEG) chains. The PEG coating essentially acts as a protective shield, making the medicine more effective and longer-lasting in the body.}

^{[4] BRIDGE participants improved from -5.90 mL/min/1.73m2/year on Replagal to -1.19 mL/min/1.73m2/year on Elfabrio in all patients.}