At the beginning of this week, we highlighted Protalix Biotherapeutics Inc (NYSEMKT:PLX) as being a company to keep an eye on, with the highlighting rooted in the fact that management was set to hold a conference call on the back of its full-year 2016 earnings release near-term.
Well, that conference call just took place, and we sat in on it too see if management would offer any insight as to where we can expect the company to go during the remainder of the first quarter of 2017 and beyond.
Here is what we learned.
First, for those new to the company, this one is a biotechnology entity with a focus on a variety of different indications, but primarily, blockbuster targets like inflammatory conditions and oncology. Basically, and as we described last time, the company takes already approved drugs and attempts to reproduce them using its proprietary drug development technology; a technology that allows it to use plant cells to create drugs that are otherwise only created using mammalian cells. Plant cell production is far cheaper than mammalian cell production, and therein lies a clear advantage for Protalix if and when it can get one of its proprietary assets to market.
There were a few things we were looking for on the just-held call as indicative of near-term potential, but our primary focus was on two specific points.
The first, when can we expect data from a phase II study in cystic fibrosis, and related to the same point, does management have any indication of what this data might reveal. The second, how much cash does the company have on hand, and how does this cash balance feed into dilution risk going forward.
Management covered both points, although the former in not quite as much detail as we might have liked (to be honest, in as much detail as we could have expected).
So, the cystic fibrosis trial was initially set to readout during the first quarter of this year, we got interim data earlier on in the year, and this interim data pointed towards some degree of clinical benefit for the drug in question – AirDNASE.
Management indicated that we should see topline at some point during early April (so we’re looking at the first ten days as a guideline here) and also that the trial has been accepted for presentation at the 14th Annual European CF Conference to be held in June 2017. This latter presentation suggests that management expects the data from the overall study to mirror that of the positive interim results, but that is an assumption only, and should be regarded as speculative on our part.
The reason this trial is so important, is that if the data proves overwhelmingly positive, and is able to display a clearly definable benefit in cystic fibrosis patients over the current standard of care, then there is a chance this one could hit markets without having to undergo a phase 3 (or at least, being allowed by the FDA hit shelves pursuant to the company undertaking a post commercialization phase 3).
So, moving to the second point, cash on hand.
We didn’t expect this one to be too much of a problem, based on burn and previous filings, but to have the company confirmed that it has more than $63 million cash on hand, and that’s this should provide a runway into early 2019, is as good if not better than we could have hoped for. It essentially removes the dilution risk between now and at least one of the company’s assets reaching registration submission, and at this end of the biotechnology market, that should be considered as a large downside pressure lifted.
So what’s next?
Well, it is now all about the phase 2 data early April. The company is down around 15% off the most recent swing high, and we see this dip as an opportunity to pick up a discount exposure ahead of the phase 2 read out. The data could go against Protalix, and therein lies the risk, but given what we have seen already, we expect positive results.
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Disclosure: We have no position in PLX and have not been compensated for this article.