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01/11 03:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: increased revenues and a return to profitability are positive, but higher R&D expenses and unclear management responses in the Q&A raise concerns. While strong sales to Chiesi and improved net income are encouraging, the lack of guidance on key strategic areas and potential financial strain from increased R&D costs suggest a cautious outlook. The absence of a new partnership announcement or significant guidance changes also tempers enthusiasm, leading to a neutral sentiment prediction.
Revenues from selling goods $15.4 million during Q2 2025, an increase of $2.1 million or 16% compared to $13.3 million in Q2 2024. The increase was primarily due to an $8 million rise in sales to Chiesi, partially offset by a $4.7 million decrease in sales to Brazil (timing difference) and a $1.2 million decrease in sales to Pfizer.
Revenues from license and R&D services $0.2 million for Q2 2025, unchanged from Q2 2024. These revenues are primarily from the agreement with Chiesi.
Cost of goods sold $5.9 million for Q2 2025, a decrease of $3.6 million or 38% compared to $9.5 million in Q2 2024. The decrease was mainly due to reduced sales to Pfizer and Fiocruz Brazil, partially offset by increased sales to Chiesi.
Research and development expenses $6 million for Q2 2025, an increase of $3 million or 100% compared to $3 million in Q2 2024. The increase was primarily due to preparations for the planned Phase II clinical trial of PRX-115.
Selling, general and administrative expenses $2.6 million for Q2 2025, a decrease of $0.9 million or 26% compared to $3.5 million in Q2 2024. The decrease was mainly due to a $0.6 million reduction in salary and related expenses and a $0.3 million reduction in selling expenses.
Financial expenses, net $0.5 million for Q2 2025, compared to financial income net of $0.2 million in Q2 2024. The increase in financial expenses was primarily due to exchange rate costs and lower interest income from bank deposits, partially offset by lower notes interest expenses after the repayment of convertible promissory notes in September 2024.
Tax expenses $0.5 million for Q2 2025, compared to a tax benefit of $0.1 million in Q2 2024. The tax expenses were mainly due to GILTI income and changes in U.S. tax legislation.
Net income $164,000 for Q2 2025, compared to a net loss of $2.2 million in Q2 2024. The improvement was due to increased revenues and reduced costs.
Cash and cash equivalents and short-term bank deposits $33.4 million as of June 30, 2025.
Elfabrio commercialization: Revenue growth driven by sales of Elfabrio to Chiesi. Anticipated royalties exceeding $100 million by 2030 based on projected 15%-20% market share of the $3.2 billion Fabry market.
PRX-115 development: Promising results from first-in-human study in 2024. Phase II study initiation planned for the second half of 2025, with first patient enrollment in Q4 2025.
Fabry disease market: Global market estimated at $2.3 billion in 2025, forecasted to reach $3.2 billion by 2030. Chiesi is responsible for commercialization of Elfabrio.
Revenue growth: 50% increase in revenues from selling goods in the first half of 2025 compared to the same period in 2024. Q2 2025 revenues from selling goods were $15.4 million, a 16% increase from Q2 2024.
Cost management: Cost of goods sold decreased by 38% in Q2 2025 compared to Q2 2024, primarily due to changes in sales distribution.
R&D focus: Increased R&D expenses by 100% in Q2 2025 compared to Q2 2024, driven by preparations for PRX-115 Phase II trial and early-stage development efforts.
Leadership transition: CFO Eyal Rubin stepping down, succeeded by Gilad Mamlok, a seasoned financial executive with experience in healthcare and technology sectors.
Revenue dependency on Chiesi: Protalix's revenue growth is heavily dependent on Chiesi's bulk orders for Elfabrio. Since Chiesi's ordering patterns are not directly tied to patient acquisition and retention, there may be quarters with no bulk orders due to inventory destocking, leading to revenue volatility.
Early-stage commercialization risks: Elfabrio is still in the early phase of market launch, and its market share and demand characteristics are not yet stabilized. This creates uncertainty in revenue projections and operational planning.
Regulatory approval uncertainty: The EMA's review of the variation submission for Elfabrio's less frequent dosing regimen is still pending. Delays or rejection could impact the product's competitive positioning and market adoption.
Increased R&D expenses: Protalix expects significant increases in R&D expenses as it progresses into more advanced stages of preclinical and clinical trials for its product candidates, which could strain financial resources.
Tax legislation impact: Changes in U.S. tax legislation, including the restoration of deductibility for domestic research expenditures, may have financial implications that are still being evaluated.
Supply chain and operational risks: Protalix's manufacturing and distribution responsibilities for Elfabrio could face challenges, especially if there are disruptions in supply chain or operational inefficiencies.
Elfabrio Royalties: Anticipated to exceed $100 million by 2030, based on a projected 15% to 20% market share of the estimated $3.2 billion Fabry total market.
EMA Label Variation Submission for Elfabrio: The European Medicine Agency (EMA) is reviewing a variation submission to include a less frequent dosing regimen (once every 4 weeks) for Elfabrio, compared to the current standard of care (every 2 weeks).
PRX-115 Phase II Study: The company plans to initiate a Phase II study for PRX-115 in the second half of 2025, with the first patient enrollment expected in the fourth quarter of 2025.
R&D Efforts: Focused on early-stage development assets, leveraging the Protalix platform and PEGylation capabilities, and exploring drug delivery systems for renal rare diseases. Updates on these programs are expected as they mature.
The selected topic was not discussed during the call.
The earnings call reveals mixed signals: increased R&D expenses and net loss improvement are positive, but unclear responses on revenue guidance and cash burn are concerning. The positive outlook for PRX-115's market potential and Elfabrio's potential EMA approval are offset by limited visibility on financial metrics. The Q&A section highlights uncertainties, with management's evasive answers potentially dampening investor confidence. Overall, the stock is likely to remain stable, resulting in a neutral sentiment.
The earnings call presents a mixed picture: increased revenues and a return to profitability are positive, but higher R&D expenses and unclear management responses in the Q&A raise concerns. While strong sales to Chiesi and improved net income are encouraging, the lack of guidance on key strategic areas and potential financial strain from increased R&D costs suggest a cautious outlook. The absence of a new partnership announcement or significant guidance changes also tempers enthusiasm, leading to a neutral sentiment prediction.
The earnings call reveals several concerns: missed EPS expectations, increased R&D expenses, and significant supply chain costs. While revenue from selling goods increased, the cost of goods sold rose dramatically, indicating potential operational inefficiencies. The Q&A session highlighted uncertainties in regulatory outcomes and vague management responses, further undermining confidence. Despite some positive revenue growth, the lack of a share repurchase program and financial instability suggest a negative outlook for the stock price.
The earnings call summary presents a mixed picture: strong revenue growth and improved net loss are positive, but rising costs, regulatory uncertainties, and lack of shareholder return plan weigh negatively. The Q&A session reveals management's evasive responses on key issues, adding uncertainty. While revenue from key partnerships is promising, the absence of clear guidance and potential supply chain challenges temper optimism. The stock price is likely to remain stable, as positive and negative factors balance out, resulting in a neutral sentiment.
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