Today July 18th the shares of Protalix are down about 7% due to a July 17 report by the Israeli Business Globes website related to PLX's largest shareholder, a holding company called Biocell Ltd.
The conflict started as the shares price of Biocell (trading in TASE the Israeli market) keep dropping, and Biocell have no activity unless holding 17% of Protalix shares, but their price that used to follow Protalix prices start move in other direction leaves the shareholders of Biocell with a huge losses, in the last two months, Biocell Shareholders start asking the management for a liquidation of the company and the distribution of its Protalix shares as a dividend in kind. Shareholders have been pressing the company to either liquidate or change its conduct. The Protalix holding is the company's sole interest, and investors say that they should own Protalix directly, and that there is no justification for the salaries of Biocell's managers and directors. Biocell's directors rejected the shareholders' arguments. The directors' argue that liquidating the company would severely affect the value of its holdings, because Protalix's value is partly based on future improvements and looking for upgrades of Protalix as they are very close for the NDA resubmission .
I had a chance to discuss this with Protalix IR (Investor Relations) and they see this as a positive development as it limits the potential for any near-term non fundamental disruption for PLX from a share sale. We had a similar case to what had been observed with ITMN when largest holder Warburg Pincus recently liquidated its position. In case and Biocell will make the distribution to Biocell shareholders, so we can see a potentially only 10-20% of the shares needing to be sold on the open market to cover taxes. Protalix's future and main catalyst is the taliglucerase NDA resubmission that will be in the next few weeks and U.S., Brazilian, European, and Israeli regulatory approvals potentially later in Q3- Q4 2011. And only this catalyst will drive the price of Protalix , I can see the shares price at this levels around $6.20 - $6.50 definitely a good buying opportunity.
Disclosure: Long PLX