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Overview

Protalix Bio Therapeutics (NYSEMKT:PLX) is a company focused on the development and commercialization of recombinant therapeutic proteins based on its proprietary plant cell-based protein expression system. Its lead candidate is taliglucerase alfa, which is being developed for Gaucher's disease and has a PDUFA date set for May 1, 2012.

Last week Protalix Bio Therapeutics announced a secondary offering aimed at raising $24M. This involved plans to sell 4.5M shares at $5.25. The price represented a 15% discount to the close prior to the announcement. The market reacted as might be expected with PLX opening down 12% the morning after the announcement.

Market

PLX is developing taliglucerase for the treatment of Gaucher's disease (GD). GD is the most common Lysosomal Storage Disorder. It is a genetic disorder, which results in fat being deposited in various organs including the spleen and liver. In the U.S. it has an incidence of ~1 in 12,000 live births.

The most common signs and symptoms of GD are enlargement of the liver and spleen, anemia, nosebleeds, reduced platelets (resulting in easy bruising and long clotting times), severe joint pain (usually hips or knees), and osteoporosis. Weakening of the bones can lead to spontaneous fractures.

Current treatment for GD is enzyme replacement therapy. Cerezyme is a recombinant enzyme manufactured by Genzyme (GENZ). It is extremely expensive with treatment costing > $200K per year. Treatment must be continued for the life of the patient.

The total market for GD treatments is currently estimated at $1.3B per year and is growing. There are approx. 10,000 patients worldwide but only about half of them receive treatment.

VPRIV is an enzyme replacement that is manufactured by Shire (NYSE:SHP). It was approved by the FDA in February, 2010. PLX's drug is also a recombinant enzyme. However, it is plant derived and if approved it would be the first plant-made pharmaceutical.

Pivotal phase 3 trial

PLX completed its pivotal trial of taliglucerase alfa in September 2009. The trial had a primary endpoint, mean reduction in spleen volume after 9 months, that was specified in an SPA agreed upon prior to the trial's start.

Results were as follows:

  • The trial met its primary endpoint at both doses tested
  • Secondary endpoints were also met; including decreased liver volume, increased hemoglobin concentration, increased platelet count.
  • No serious adverse events were reported; all adverse events were mild or moderate in nature.

The company recently announced long-term safety and efficacy data form a 15- month follow on study that followed 26 patients originally enrolled in the pivotal trial. These data were consistent with the results of the 9-month trial.

In addition the company has completed a switch-over study to assess safety and efficacy of taliglucerase alfa in patients with GD disease that are currently undergoing enzyme replacement therapy with Cerezyme. Patients with stable disease were switched from intravenous Cerezyme treatment every other week to intravenous infusions of taliglucerase alfa at an equivalent dose, every other week for a 9-month period. After 9 months:

  • Patients remained stable with regard to spleen volume, liver volume, platelet count and hemoglobin concentration
  • Taliglucerase alfa was well tolerated, and no drug-related serious adverse events were reported

Partnerships

PLX has an agreement with Pfizer (NYSE:PFE) for the development and commercialization of taliglucerase alfa. Under the terms of the agreement PFE has exclusive worldwide licensing rights with the exception of Israel. PFE and PLX will share revenue and development costs on a 60:40 basis.

PFE made upfront payments of $60M and will make additional milestone payments upon the drug receiving U.S. approval ($25M) and European approval ($25M).

Conclusion

Clearly, the primary concern here is that the company has chosen to raise money so close to the PDUFA date. This may be taken as a negative signal that management does not believe that the company is well positioned for approval. It may also be seen as a prudent move to generate some capital now - capitalizing on the recent strong biotech market and the positive long-term data that the company announced earlier this month at the Annual Meeting of the Lysosomal Disease Network.

To me this seems like an attractive place to start a position in PLX. The uncertainly about capital raising, always an issue with biotech stocks, has been taken off the table. The risk:reward is attractive in that the $5.25 level may represent a good floor for the stock price. The company has good clinical data for an indication that is under served. While the number of patients is extremely small, currently available treatments are expensive enough that the market opportunity is attractive.

Source: Potentially Good Entry Point For Protalix Bio Therapeutics