Good morning, ladies and gentlemen, and welcome to the Protalix BioTherapeutics Third Quarter 2026 Financial and Business Results Conference Call. As a reminder, this conference is being recorded. I will now turn the conference over to our host, Mr. Mike Moyer of LifeSci Advisors, Investor Relations for Protalix. Thank you. Please go ahead.
Thank you, operator, and welcome to the Protalix BioTherapeutics Third Quarter 2026 Financial Results and Business Update Conference Call. With me today are Dror Bashan, President and CEO, and Gilad Mamlok, Senior Vice President and Chief Financial Officer. A press release announcing the financial results and corporate updates was issued this morning and is available now on the Protalix website. Please take a moment to read the disclaimer about forward-looking statements in the press release. The earnings in this teleconference include forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from the statements made. Factors that could cause actual results to differ are described in the disclaimer and in Protalix filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Mr. Bashan. Dror?
Thank you, Mike, and thank you everyone for joining us for this call. We concluded the first nine months of 2026 with revenues of $75.6 million, reflecting our continued progress and growing financial position, which supports our ability to execute our strategy and advance our key priorities. We end the quarter with cash and deposit of $48.5 million, a position of strength that enables us to continue advancing PRX-115 for uncontrolled gout, as well as our pipeline in rare renal diseases. Gilad will walk through the details of the quarter. Looking ahead, we see Elfabrio as the foundation of our business, with PRX-115 as an important growth opportunity. Elfabrio continues to expand its global reach, with approval in multiple markets outside the U.S.
With the global Fabry market projected to reach approximately $3.2 billion by 2031, we believe Elfabrio is positioned to capture a significant portion, supported by our partnership with Chiesi. Our commercial foundation enable us to advance PRX-115 in uncontrolled gout. Uncontrolled gout is a disease with low quality of life and high unmet need. This represents a blockbuster uricase market opportunity. PRX-115 is a PEGylated uricase designed for high specific activity, prolonged circulation half-life, and reduced immunogenicity. We believe PRX-115 has the potential to be best-in-class therapy. Today, at the American College of Rheumatology, or ACR Convergence 2026, we are presenting individual patient data from our phase I study, PRX-115. The individual patient data reinforce our previous findings and show PRX-115 plasma levels measurable up to 85 days.
Our positive uric lowering data supports the potential for less frequent dosing, which is what our phase II RELEASE study is designed to test. This is a double-blind, placebo-controlled phase II study in uncontrolled gout patients. It tests PRX-115 with a fixed dose across different dosing intervals with and without methotrexate. The RELEASE study is actively enrolling, and we expect top-line results in the second half of next year. Beyond PRX-115, we are building a pipeline in rare renal diseases. We believe our partner commercial business, our balance sheet, and no debt or warrants, and our focused pipeline limit downside risk while preserving significant upside potential as we advance our pipeline. With that, I will turn the call over to Gilad for a detailed review of the financial results and outlook. Gilad, please.
Thank you, Dror. For the third quarter of 2026, total revenues were $21.9 million compared to $17.9 million in the third quarter of 2025. For the first nine months of 2026, total revenues were $75.6 million compared to $43.6 million for the first nine months of 2025, which includes the previously reported $25 million milestone payment received from Chiesi. For the third quarter of 2026, revenues from selling goods were $21.8 million compared to $17.7 million in the third quarter of 2025, an increase of $4.1 million. For the first nine months of 2026, revenues from selling goods were $49.1 million compared to $43.1 million for the first nine months of 2025, an increase of $6 million. The increase was driven mainly by higher sales of Elfabrio to Chiesi.
For the remainder of the results, I will report only on the third quarter, and you can refer to this morning's press release for additional year-to-date data. Cost of revenues was $7.9 million compared to $8.3 million in the same period in 2025, a decrease of $0.4 million. The decrease was mainly attributable to lower sales to Fiocruz, partially offset by higher sales to Chiesi and Pfizer. R&D expenses were $6.9 million compared to $4.5 million in the prior year period, an increase of $2.4 million. The increase was mainly driven by higher subcontractor expenses related to the RELEASE study, partially offset by a $1 million grant recorded under the R&D Law as a reduction of R&D expenses, which we are eligible for, and we intend to file for grants under the R&D Law.
We expect to continue to incur expenses as the RELEASE study progresses and additional preclinical and clinical programs advance. SG&A expenses were $3.1 million, up $0.2 million from prior year period, largely attributable to $0.1 million higher professional fees and $0.1 million higher salary and related expenses. Financial income net was $0.6 million compared to $0.1 million in the third quarter of 2025. The change was mainly due to exchange rate fluctuations and higher interest income. Taxes on income were $0.7 million compared to a tax benefit of $0.1 million in the third quarter of 2025. The tax expense resulted mainly from taxes on income derived from global intangible low-taxed income, or GILTI. Net income for the quarter was $4 million, or $0.05 per share basic and diluted, compared to net income of $2.4 million, or $0.03 per share basic and diluted in the third quarter of 2025.
For the first nine months, net income was $26.1 million, or $0.33 per share basic and $0.31 per share diluted. Turning to the balance sheet, cash equivalents, and short-term bank deposits totaled $48.5 million as of September 30, 2026, compared to $40.7 million as of June 30, 2026. We have no outstanding debt or warrants, providing us with substantial financial flexibility to support our continued pipeline advancement. With that, I will turn the call back over to Dror.
Thank you, Gilad. In closing, I would like to emphasize that we concluded the first nine months of 2026 with revenues of $75.6 million, reflecting the continued progress and growing financial position, which supports our ability to execute our strategy and advance our key priorities. Now, I will ask the operator to open the call for questions.
Thank you. We will now be conducting a question-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Ram Selvaraju from H.C. Wainwright. Please proceed with your question.
Thanks so much for taking our questions, and congratulations on all of this recent progress. Two points. Firstly, I was wondering if you could give us some more granularity on the degree of predictability we might be able to expect with regard to revenue recognition coming from Chiesi and sales of Elfabrio, and if the most recent quarterly result indicates a potential new plateau or a new level that we should anticipate being able to use as a sort of a baseline reference. I also wanted to ask about the most recent data that you have showcased with PRX-115 and what the implications of this are on two fronts.
Firstly, the convenience profile of this asset in the treatment refractory gout context and how this might position it as a potential best-in-class or best-in-disease drug within the uricase class, as well as the potential implications of less frequent dosing and more stable levels and overall therapeutic activity sustained after more infrequent dosing from an efficacy standpoint compared to existing currently available uricase drugs. Thank you.
Regarding the first question, Ram, we do see a very nice year from Chiesi. Also, given the approval of every four weeks that was received in March this year, including also the milestone payment we received, I can say that we expect this increase to continue. We are not going to provide guidance now, but as we provided guidance for this year at the beginning of this year, we are going to do the same for 2027 once we publish our annual results. But we do see a positive momentum that continues.
And on—
Just to add, I mean, Chiesi performs well. I mean, they have a good team around them with a broad commercial front. There is a long-term plan they execute, and they do well. So, we see, at least right now, we expect this trend to continue. Regarding PRX-115, can you repeat the question, please?
Just with respect to the data that you have most recently showcased demonstrating the possibility of significantly less frequent dosing and the sustainability of the clinical impact of the drug, what implications does this have for the competitive positioning of this asset versus existing uricase drugs? Thank you.
Thank you. The outcome of the phase I were encouraging. We are now actually way into the enrollment, and we hope to finalize it next quarter. We think that, of course, if we meet any of the arms, the active arms that we are testing, and especially the one with the 166 or [audio distortion] or [audio distortion] without methotrexate, together with the outcome of immunogenicity of safety IRR, which we hope from what we have designed the PEG and other changes that we did to the enzyme, we hope to get a good outcome, which clearly will be beneficial for these patients with uncontrolled gout. Meaning, let us say, less frequent dosing, for the sake of our discussion, as an example, once in six weeks, with good immunogenicity and safety profile, do not ask me to give you a number. Let us call it a good outcome.
It is certainly an alternative that patients, together with their treating physician, will consider. This is how we look into it. This is what we call or define best in class.
Thank you.
Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from John Vandermosten with Zacks SCR. Please proceed with your question.
Thank you, and hello, Dror and Gilad. I wanted to start out with a question on the four-week dosing for Elfabrio and see if you had any indication from Chiesi of what the conversion rate had been for patients shifting to that, and then also perhaps the financial impact of that in terms of on the revenue side and proportion of forward-looking revenues.
John, it looks like there was a disconnection. Please don't hang up the line. We're just experiencing technical difficulty. I'm going to go ahead and add them back in. Please hold.
Okay. Sure.
We have the speakers back. John, are you still with us?
I'm still here.
Okay, great. Please proceed with your question. Thank you for holding.
Great. No problem. Hey, Dror, Gilad. How are you doing? My question was on just the anticipated and current penetration of the four-week dosing for Elfabrio that you've seen so far, and what you think the opportunity is there on the revenue side in terms of proportion to future revenues.
Well, we think, from what we see so far, that the execution is good and Chiesi is progressing. Certainly, it enhances the penetration and the, I would say, geographic expansion of Elfabrio. We don't divide it between the once in two weeks and once in four weeks from a guidance point of view. We think it will be enhanced and stronger and stronger outcomes.
I would add to that, John, good morning, that we see an accelerated penetration in terms of number of patients joining in Europe. So we definitely see an effect of the four weeks.
Okay. I mean, yeah, just phrase it just a little bit differently. Do you think you could get up to maybe about half the patients on the four-week dosing at some point, given the convenience of it? Or is there some reason why it might top out at some different level?
I think it will be a significant portion. It's difficult for me to tell you after six months or seven months from approval exactly the percentage. It's certainly a significant portion of the patients.
Okay. And gross margin was fairly strong this quarter. Similar to the other analyst's question on sustainability going forward, do you think that's a new baseline that we can use in terms of product gross margin over the coming quarters, or is there something particular to the third quarter that supported that being a little bit higher?
I suggest to look at the year always, at the first nine months, and yes, you can refer it as a baseline because like we explained, revenues to Chiesi are increasing, and that improves the gross margin. Revenues to Pfizer decreased because there were manufacturing issues last year, so it was a bit higher than the current steady state level. So yes, you can refer to it as a baseline in a way.
Is there a material difference between the Elfabrio and Elelyso gross margins that might support a continued increase as Elfabrio grows more rapidly?
Yes. The Elfabrio margin is higher. Mm-hmm.
Okay, great. Last question from me is just on PRX-119 and what you expect in terms of activities for that program going forward, and when do you think you will decide whether or not to enter into clinical trials for that asset?
Thank you for that. I know it is being delayed, but we assume we will take decisions this quarter what we do with this program, then we will update. Okay, then it will be clear when we are planning to enter into phase I.
Got it. All right. Well, thank you guys. Appreciate the answers.
You are welcome.
Thank you, John.
We have reached the end of the question-and-answer session. I would like to turn the floor back over to President and CEO Dror Bashan for closing comments.
Thank you everybody again for joining us for this call. As I mentioned earlier, we had a good nine months of 2026, and we expect a good overall 2026. It reflects our continued progress and growing financial position, and this supports our ability to execute the strategy and advance our key priorities. Thank you. We will talk next quarter, actually in mid-March, over the overall 2026 and future 2027. Thank you very much.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.