Everyone, I'm Ben Nassau with Morgan Stanley. Before we start, just have to read a brief disclaimer here. For important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/research_disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. I'm joined by Gilad, the CFO of Protalix BioTherapeutics. Gilad, maybe just to get started, for people in the audience who may be less familiar with Protalix, can you start by giving us the, let's call it 30,000 ft view of the company, where it came from, what makes the technology distinctive, and where you see the company today?
Sure. Good afternoon, everyone, and thank you Ben and Morgan Stanley team for inviting me. We are a pharmaceutical company focusing in rare disease assets in significant unmet need. We build a profitable commercial company based on two products, Elelyso for the Gaucher disease and Elfabrio for the Fabry. Both are partners with global commercial players. Elelyso is licensed to Pfizer worldwide, except for Brazil, where it's licensed to Fiocruz, an arm of the Ministry of Health in Brazil, which is actually doing a very good job. We have 27% share in Brazil, mainly attributable to the very good service and quality of service that they provide to patients, to the community, to the physicians, and that was $11 million of our revenues in 2025. Elfabrio is licensed to Chiesi globally.
Chiesi, for those who don't know, is a privately-owned company with more than $4 billion sales in 2025, of which more than $1 billion sales in rare assets.
Chiesi invest a lot in this area. They acquired Amryt two years ago in 2023. They acquired Calliditas for $1.9 billion this year. They invest a lot in R&D, and we are very happy with the infrastructure and with the investment they do with regards to Elfabrio. Elfabrio is actually our main growth driver.
In terms of our pipeline, our lead product in the pipeline is PRX-115 to treat uncontrolled gout patients, and I will elaborate a bit more about it later. It's also worth mentioning that we have a very unique platform, ProCellEx platform.
It's the first platform that was approved based on the plant cell. What we do is that we express complex human proteins using plant cells.
In suspension. That has many advantages. First, initial set-up cost is cheaper than using mammalian cells.
We manufacture in room temperature, and it's also relatively to scale up or down the production because it's based on bioreactor strains. To summarize, Protalix is now a commercial profitable business. We have a strong balance sheet, no debt, no warrants. We are well-funded to fund our pipeline, in particular the PRX-115.
to the phase II topline results end of next year.
Well, being responsible for multiple approved products as well as profitability is quite the accomplishment, so congrats to you and the team. You touched on it briefly, Gilad, but maybe just to go a little bit deeper. When people hear plant cell-based protein expression, they may not immediately understand what that is and why it truly matters. Why does the platform and the ProCellEx platform that it's based on, that harnesses this, how does that allow you to do that different biologics manufacturing?
Most biologics are produced by mammalian cells factories. It's more expensive to make the set up. It requires cold chain bioreactor temperatures for the bioreactors. It is exposed to contamination.
Sometimes it can shut down a factory if there is a contamination. Our platform is based on plant cell, and again, it's easier, it's cheaper to set it up. We are not exposed to any mammalian pathogens, so there is no risk whatsoever of mammalian contamination.
It is easier for us to scale up and down also to add products. PRX-115 is also produced with this platform.
This resilience, by the way, was well demonstrated at the COVID period.
There was no issue whatsoever in contamination because don't infect plants.
Yeah.
That was a good advantage, and that is basically the main advantage and the uniqueness of our platform.
Yeah. That's definitely unique. I hadn't really heard of it prior to our dialogue, so definitely differentiated. Maybe moving on a little bit, and we talked about it initially, but Chiesi is now responsible for commercializing Elfabrio globally, and you're responsible more for the manufacturing of the product and you get the participation economically through the partnership. That being said, how do you define success for Elfabrio over the next several years?
First I would start by saying that we see a very nice growth since launch in 2023 until now.
Chiesi is a privately owned company, so they do not publish the detailed revenues from Elfabrio.
I can tell you that they keep growing the number of patients, the revenue's growing nicely and also they keep expanding the territories. This year alone, Elfabrio got an approval in Canada, in South Korea, where it was also received orphan drug designation status.
That's one thing. Also, when we look at the outlook of Chiesi, which again is not public, we are very optimistic about the trajectory.
When you look at the Fabry market overall, it's about $2.2 billion in 2025.
Sure.
The forecast is that it's going to grow to $3.2 billion in 2031. Given the past performance, the trajectory and other factors I will detail-
we see Elfabrio capturing 15%-20% by 2031, which also is going to create significant more revenues for us.
Some other catalysts or some other very key factors that are important to know about Elfabrio, this year was very significant. In the first half of the year, we got an approval from the CHMP from the EU for regimen dosage of every four weeks for Elfabrio.
Okay.
Compared to the current every two weeks.
In the U.K., the MHRA in the U.K. followed in May, which that means that as of now, Elfabrio is the only enzyme replacement therapy for Fabry that can be used every four weeks instead of every two weeks. I think the advantage is clear. It is 50% less burden for the patients, 50% less infusion. It is a huge competitive edge for Elfabrio.
The competition doesn't have it. We are eligible, and we received $25 million regulatory milestone, at the beginning of the year in the first quarter. On top of that, in May this year we were granted by the U.S. Patent and Trademark Office, the USPTO.
an extension for the core patents of Elfabrio until November 2035. That's a great strengthening of our patents. With the fact that Elfabrio is also the only regulated enzyme replacement therapy compared to the competition.
Amicus that was bought by the way by BioMarin for $4.8 billion.
Yeah.
Galafold, Replagal and Fabrazyme, that's also an advantage. That also enables a longer half-life, which is also an advantage.
Given that, given the patents, given every four weeks, which is significant.
and Chiesi is also working now with the FDA to see if that can be achieved also in the U.S.
We are even more optimistic about capturing 15%-20% of the market by 2031, which is going to significantly increase our revenues from Elfabrio.
Definitely. I would imagine the dosing regimen would lead to higher adherence and compliance, which would be more attractive to patients and prescribers as well, so.
Much more attractive and we already see it. In Europe it's a process because you get approval, we got approval in March, but then Chiesi needs to get the approval country by country. It's more technical reimbursement issues. It's not, again, clinical and regulatory path, so it takes time, but we see the effect. We already see patients converting from every two weeks to every four weeks.
We expect that to keep boosting the revenues in Europe.
That's great. Maybe touching on the pipeline a little bit now. PRX-115 for uncontrolled gout, really exciting prospect and an important part of the next chapter for you and the company. I don't want to get ahead of the clinical data, but I guess what would you need to see from the program to be convinced that this is truly going to be a meaningful commercial asset?
I will start by that it's a very exciting product. Gout is well known. We have about 11 million patients suffering from gout in the U.S.
Yeah.
We are targeting the uncontrolled gout patient, which is about 300,000, and we are offering uricase therapy, the same as KRYSTEXXA is offering by Amgen.
There are about 180,000 patients qualified for uricase therapy. Just to give you the sense, Amgen generated revenues from KRYSTEXXA of $1.35 billion in 2025, treating, they do not disclose the exact number, treating about 8,000 patients. So it is less than 5% in the potential.
When we look at 2026, the first half, it is already $655 million, 12% year-over-year.
That means also they increased the price, so we see already $1.556 billion. If you look at the early 2030s when we plan to come with the product to the market, you are talking about a market of $2.5 billion-$3 billion.
I think the market potential is clear.
Yeah.
It is very big. On top of that, this was an exciting year for this space. Sobi acquired Arthrosi for $1.5 billion.
Krystal Biotech that is now in the phase III, raised $130 million recently. The space is very interesting, and it is interesting because there is really a significant unmet need here.
Sure.
We finished our phase I study where we had eight cohorts and we used patients with elevated uric acid levels.
The idea of the phase I was to show, to check 1 mg until 36 mg, and to see the effect. The results we received, I cannot show the graph, but you can see it in our presentation.
The results show that in the cohort eight where we use 36 mg, patients managed to stay below the 6 mg per deciliter threshold for more than 80 days.
That's very encouraging and that support our target for the phase II, to differentiate against KRYSTEXXA and to have either every four weeks without methotrexate or six or eight weeks methotrexate.
Sure.
That's exactly how we designed the phase II, which is a double-blinded study with five arms, 30 patients each arms. The key differentiators in this arm is to get either every four weeks without methotrexate or with methotrexate, eight weeks, but also six and four weeks methotrexate.
Yep
Either differentiated against KRYSTEXXA, which currently the dosing regimen with KRYSTEXXA is two weeks with methotrexate. We think we have a very high potential here. In terms of where we expect results, where it's around the corner. We are expecting to obtain results in the second half of 2027, so it's a year plus from now. Since we see such a big potential with this product and given our financial strength, we can either market it or go to phase III and commercialize it ourselves.
or maximize the options based on the phase II results and the
Yeah
expected interest that we think is going to be if we indeed get robust results for the phase II.
Well, I think the potential for differentiation is definitely clear, especially as you think about titrating methotrexate and always good to have optionality with the program. That's great. And certainly looking forward to the data later. Maybe you talked about being well-funded and profitability, so maybe we'll shift a little bit to financing and the like. I think to date, quarterly revenue's been a little lumpy. I think that's largely due to partner purchasing patterns, and it doesn't always necessarily correspond to underlying patient demand.
I guess, how do you see this evolving as Elfabrio becomes more established? We talked about the positive opinion in Europe and the rollout there. I would love to hear your take on that.
I start by saying that we enter the second half with a financial significant strength.
We had a very strong first half with $53.6 million revenues, including the $25 million regulatory milestone we received. We had $22.1 million net income in the first half compared to $3.5 million net loss last year. We ended the quarter with almost $41 million cash. We have no debts, we have no loans, so we enter in a very strong position.
In terms of the lumpiness of the fluctuation of the revenues, you are absolutely right. I want to take a minute to explain the model. It is not a classic royalties model.
Correct.
We are selling batches to Pfizer and Chiesi. That means that if Chiesi, for example, wants to increase the inventory from inventory management considerations-
they may order more batches in one quarter and then obviously less batches in the quarter to follow because they already have the inventory. What we see, we see a continuous growth in the patients and continuous growth of revenues of Chiesi. Now, the market doesn't see it because, again, Chiesi is a private-owned company, and they do not disclose the numbers.
Yeah.
The market looks at our numbers. Sometimes there are these fluctuations like you mentioned-
there is a jump in the revenues in one quarter, and then the quarter after it goes down.
Yeah.
Even though the revenues of Chiesi continues to go up and we are kind of punished because of that. That's why we are trying to explain on every stage and when we meet with investors-
it's a bit different mechanism because we are selling batches.
Sure.
The economics of that is that the price of a batch is based on tier royalties with Chiesi.
It's based on 15%-30% in ex-U.S. and 15%-40% in the U.S. We are selling the batches and that's why there is fluctuation between the quarters.
That's why we also encourage investors to look in annual levels.
Yeah.
We also, which is the first time we did it, we gave guidance for 2026.
$78 million - $83 million total revenues, of which $33 million - $35 million come from Elfabrio, which is 50% more than last year.
$20 million - $22 million from Elelyso, and $25 million is the milestone which we already received in the first quarter.
Got it. I guess how much visibility do you potentially see with the batches given what we just talked about, and how do you manage your supply in that respect?
We continuously talk to Chiesi every month about the inventory management.
Yeah.
When you look on annual basis, you see the growth.
Yeah.
By quarters it is very difficult to see it from the outside.
Sure.
Again, that is why we encourage the annual view. The annual view should reflect it because, like I said, for Elfabrio, for example, we gave guidance of $33 million-$35 million for Elfabrio in 2026. It is 50% more than 2025.
Sure.
Do not look quarter-over-quarter.
Yeah.
The market is growing, patients are growing. They grow organically. They grow by expanding geographies.
Every four weeks in Europe is very significant, and we already see some effect, and we expect it to keep affecting the market. Chiesi is working with the FDA about checking the possibility of having every four weeks in the U.S. There is nothing to report now, but this is something that is a work in progress. If you get it, of course, it is also very significant in the U.S. So all of these factors, including also extending the life of the patent and the great execution of Chiesi. They are really an ideal partner in terms of their investment in these assets, and in particular in Elfabrio, bring us to the conclusion that we expect to be between 15% and 20% in 2031. It is a significant growth in revenues from where we are now until then.
Yeah. No, definitely. Hopefully with the precedent set by Europe, there is clear rationale for the FDA as well.
Great. Maybe a bigger picture question. Protalix is in somewhat of a unique position in that the cash flow from Elfabrio and Elelyso will likely fund a considerable amount of your R&D costs, which is a very fortunate position for a biotech to be in, particularly for PRX-115. As we look forward, what other areas could be of interest to you beyond the ProCellEx platform?
First, we can leverage the ProCellEx platform for other indications.
I would say that Protalix has been, as you know, for many years, Protalix was established 30 years ago, so there is a lot of accumulated experience in Protalix in R&D, in clinical, in the regulatory, in the manufacturing space. So we have very talented people, and we are leveraging that experience to look for other opportunities. There is nothing now to report because it is all still at the early stage.
The idea is to take five to seven discovery products and expand them to the clinic. We are looking at indications like ADPKD, like Alport. I think we have a good screening with all the experience of the team. We are not limited only to the ProCellEx platform. We can use also other platforms. We also sign agreements with partners and see how we can leverage experience also of others. We announced some of them, like the agreement we had with Secarna, a German company.
The strength of the cash allows us really to keep leveraging the experience beyond even PRX-115. But of course, PRX-115 is what we are laser-focused now
Sure
to bring it to the top line results by the end of 2027.
Got it. A lot to be excited about.
Yes.
I think those were all the prepared questions I had, Gilad, but is there anything else you'd maybe like to touch on or leave the audience with?
I joined the company in August last year. I think it has been a very exciting 12 months. The every four weeks in Europe for Elfabrio was really a very significant milestone for the patients first.
Because it is a 50% reduction of the burden on the patients. For the company, for the competition, it is a huge competitive edge. It increases strongly our confidence in getting more market share. The phase II for gout, the PRX-115, is progressing well. We are somewhere around the middle of the trial, and we expect the top line result again by the end of 2027. Gout is a very exciting indication. It also got a lot of attention in 2026 with the acquisitions and the capital raise around this area.
It is really an unmet need. What you have now is first-line therapy with allopurinol mainly. You do not have a good effective second-line therapy. There is a third-line therapy with KRYSTEXXA, which now is treating less than 5% in the uric qualified patients. I think whoever we talk to, it is very clear that there is a huge gap here, unmet need that we enter into and provide a big potential. We are also optimistic about our capabilities to bring more products into the pipeline because we keep thinking also about the future beyond the two products, beyond the PRX-115 that can become our third commercial product and probably become even bigger than the first two.
We cleared all the debts, all the warrants for the balance sheet.
Yeah
is very clear. We have many opportunities to fund ourself, and it was also reflected in the share price. A year ago, it was about $1.5, now we are about $2.7, so I think the market does appreciate the performance.
Still, in terms of the valuation, we think we have a way to go.
Sure.
Some of the issues, the asymmetry of information, there are things that we keep explaining because we think, like we said, this stream of expected royalties from Elfabrio and from Elelyso is significant, and I don't think it's fully reflected.
The fact that we are going to have results from the phase II for gout next year is something we think the market is going to pay more attention because it's really becoming a catalyst that is a year, a year plus from now.
Definitely. Well, great. Well, a lot to be excited about. Gilad, thank you very much for the time.
Thank you.
Appreciate it.
Thank you very much.
All right.