Protalix BioTherapeutics(PLX) - 2023 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for the period ended September 30, 2023, encompassing balance sheets, statements of operations, changes in equity, and cash flows Condensed Consolidated Balance Sheets Total assets significantly increased by September 30, 2023, while total liabilities decreased, leading to a shift from a capital deficiency to positive stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total Current Assets | $72,618 | $44,880 | | Cash and cash equivalents | $20,408 | $17,111 | | Inventories | $21,583 | $16,804 | | Total Assets | $87,569 | $55,787 | | Total Current Liabilities | $43,359 | $32,429 | | Total Liabilities | $49,322 | $66,427 | | Total Stockholders' Equity (Deficiency) | $38,247 | ($10,640) | Condensed Consolidated Statements of Operations The company achieved a net income of $14,356 thousand for the nine months ended September 30, 2023, a significant turnaround from a prior-year loss, driven by increased revenues and reduced R&D expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $55,008 | $39,021 | $10,345 | $14,183 | | Operating Income (Loss) | $16,075 | ($10,519) | ($1,887) | ($3,125) | | Net Income (Loss) | $14,356 | ($11,187) | ($1,852) | ($3,567) | | Diluted EPS | $0.16 | ($0.24) | ($0.04) | ($0.07) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly decreased to $4,913 thousand for the nine months ended September 30, 2023, reflecting improved profitability and a net increase in cash from financing activities Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,913) | ($22,389) | | Net cash used in investing activities | ($16,369) | ($9,988) | | Net cash provided by financing activities | $24,666 | $4,163 | | Net Increase (Decrease) in Cash | $3,297 | ($28,265) | | Cash at End of Period | $20,408 | $10,720 | Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies, business developments including Elfabrio's approvals and a $20,000 thousand milestone payment, product pipeline updates, and potential impacts from the Israel conflict - Elfabrio® (pegunigalsidase alfa) received marketing approval from the European Commission (EC) on May 5, 2023, and the U.S. Food and Drug Administration (FDA) on May 9, 2023, for the treatment of adult patients with Fabry disease[26] - Following the FDA approval of Elfabrio, the company received a $20,000 thousand milestone payment from its commercial partner, Chiesi[41][58] - The company's product pipeline includes PRX-115 for severe gout, which entered a Phase I clinical trial in March 2023, and PRX-119 for NETs-related diseases[34][35] Disaggregation of Revenues (in thousands) | Revenue Source | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Revenues from selling goods | | | | Pfizer | $7,972 | $11,279 | | Brazil | $5,120 | $7,162 | | Chiesi | $17,217 | $2,781 | | Total revenues from selling goods | $30,309 | $21,222 | | Revenues from license and R&D services | $24,699 | $17,799 | - In October 2023, the company noted that the war declared by Israel against Hamas could potentially affect its business and operations, although no direct impact has occurred to date[93] Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes financial results, highlighting the impact of Elfabrio's approvals on revenue, reduced R&D expenses, improved liquidity with $41,000 thousand cash, and product pipeline progress Recent Company Developments & Pipeline The company highlights recent regulatory approvals and commercialization of Elfabrio across key markets, details its ProCellEx® platform, and provides an overview of its product pipeline, including clinical-stage candidates - Elfabrio received marketing authorization in Great Britain (August 2023) and Switzerland (September 2023) for adult patients with Fabry disease[97][99] Product Pipeline Status | Product | Indication | Development Stage | | :--- | :--- | :--- | | Elelyso® | Gaucher Disease | Approved in 23 markets | | Elfabrio® | Fabry Disease | Approved (US and EU) | | Uricase (PRX-115) | Severe Gout | Phase I (Final results expected Q2'24) | | Long Acting (LA) DNase I (PRX-119) | NETs-Related Diseases | Discovery and Preclinical | - The Phase III BALANCE study results suggested comparability in treatment effects between PRX-102 and agalsidase beta, with a potentially favorable safety profile for PRX-102 based on lower rates of infusion-related reactions and anti-drug antibodies[144][145] - The first patient was dosed in the Phase I trial for PRX-115 for severe gout in March 2023; as of September 30, 2023, 32 patients have been dosed[181] Results of Operations Financial performance significantly improved, with revenues from goods rising 43% and license/R&D services increasing 39% for the nine months ended September 30, 2023, while R&D expenses decreased 41% Financial Performance vs. Prior Year (Nine Months Ended Sep 30) | Metric (in millions) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues from Selling Goods | $30.3 | $21.2 | +43% | | Revenues from License and R&D Services | $24.7 | $17.8 | +39% | | Cost of Goods Sold | $14.1 | $17.2 | -18% | | Research and Development Expenses | $14.0 | $23.7 | -41% | Financial Performance vs. Prior Year (Three Months Ended Sep 30) | Metric (in millions) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues from Selling Goods | $10.2 | $8.8 | +16% | | Revenues from License and R&D Services | $0.2 | $5.4 | -96% | | Research and Development Expenses | $3.7 | $7.4 | -50% | Liquidity and Capital Resources As of September 30, 2023, the company held $41,000 thousand in cash and equivalents, deemed sufficient for the next 12 months, with reduced convertible notes and improved operating cash flow - The company had $41,000 thousand in cash, cash equivalents, and short-term bank deposits as of September 30, 2023[215] - Management believes current cash is sufficient to satisfy capital needs for at least 12 months from the report's issuance date[219][227] - Net cash used in operating activities for the nine months ended September 30, 2023, was $4,913 thousand, compared to $22,389 thousand for the same period in 2022[220][223] - As of September 30, 2023, the total principal amount of the 2024 Notes outstanding was $20,420 thousand, following conversions that reduced the principal by approximately $8,300 thousand during the nine-month period[217][226] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is currency exchange rate fluctuations between the U.S. dollar and the New Israeli Shekel, impacting operating results due to significant NIS-denominated costs - The main market risk is currency exchange risk between the U.S. dollar (functional currency) and the New Israeli Shekel (NIS)[233] - Approximately 43% of the company's costs, including salaries and office expenses, are incurred in NIS[234] - The company estimates that a 1% revaluation of the NIS would affect its loss before tax by less than 1%[234] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2023[236] - There were no changes in internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[239] PART II – OTHER INFORMATION Legal Proceedings The company reports that it is not currently involved in any material legal proceedings - The company is not involved in any material legal proceedings[240] Risk Factors This section updates risk factors, primarily focusing on geopolitical risks in Israel, which could adversely affect operations, supply chains, and personnel due to ongoing military conflict - A key risk factor is the company's location in Israel, where political, economic, and military conditions, such as the war declared in October 2023, could adversely affect operations[242] - To date, operations have not been adversely affected by the conflict, but facilities are within range of potential rocket attacks, and government insurance may not cover all potential damages[242] - The obligation of many employees to perform military reserve duty, especially during a conflict, could disrupt operations and have a material adverse effect on the business[244] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds from such sales during the reporting period - None[245] Defaults Upon Senior Securities The company reported no defaults upon its senior securities - None[246] Mine Safety Disclosures This item is not applicable to the company's business - Not applicable[248] Other Information The company states that none of its directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the third quarter of 2023 - During the quarter ended September 30, 2023, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement[249] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The exhibits list includes CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL files (Exhibit 101 series) filed with the report[250][252]