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Michael Bryant
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Investor. Mission: Help people make money. Degree: Chemistry from NC State University. Featured author of Momentum Options Weekly Wrap (http://momentumoptionstrading.com/ ) Follow me on Motley Fool Caps at http://caps.fool.com/player/modestus1.aspx . For short-term ideas about big movers,... More
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  • A Safe Strategy to Play Protalix (PLX) 0 comments
    Feb 24, 2011 10:52 AM | about stocks: PLX

    Note:  This was the article deleted back in February.  Just posted it for those who want to look at it.  The drug was rejected, as I warned in the article.

    Protalix BioTherapeutics
    (NYSEMKT:PLX) gets FDA decision tomorrow, Friday February 25th, on Uplyso, its treatment for Gaucher disease.  “Gaucher disease is a rare genetic disorder in which a person lacks an enzyme called glucocerebrosidase,” causing “harmful substances to build up in the liver, spleen, bones, and bone marrow.” http://www.ncbi.nlm.nih.gov/pubmedhealth/PMH0001590  The drug no doubt works, passing phase 3 trial and getting Special Protocol Assessment from the FDA for the trial design. http://www.fool.com/investing/high-growth/2011/02/23/will-uplyso-get-past-the-fda.aspx However, the FDA did delay approval on the drug the last time it reviewed based on “"validation of the manufacturing process."  The drug is made by plant cells.  Approval will validate their technology, making it the “first FDA approved BLA for recombinant therapeutic proteins using a plant-cell based expression system.” seekingalpha.com/article/252718-ubs-anal... Being the first is always a big jump to undertake.  And noting that the FDA has been safety oriented over the past year, plus the previous delay, makes me think approval may not happen this time either.

     

    A big red flag I see is that “one of the most enthusiastic investors, who pushed Protalix in its first days as a public company - Teva Pharmaceutical Industries Ltd. Chairman Dr. Phillip Frost - sold most of the shares he owned.” seekingalpha.com/article/254351-4-israel...  If he was a big fan, he wouldn’t sell everything before the company’s big moment unless he saw something wrong.  Any insider hints?

     

    Despite my bearish view, approval is a possibility.  Therefore, since I am not 100% certain, it is safest to take a 50-50 strangle.  Assuming it will jump or fall by 40%, I recommend buying both the March 30th $13 calls and the March 30th $5 puts.  As long as it goes above $13 or below $5, you will make money.

     

    Special thanks to http://momentumoptionstrading.com/



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: PLX
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