Protalix BioTherapeutics: The DNase Treatment For Cystic Fibrosis And Opportunity For Profits

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Summary

Positive data from Phase II trial.

Phase II data indicate alidornase alfa could be the most effective DNase treatment thus far.

Small market cap with room to grow in $700m market.

Protalix BioTherapeutics (NYSEMKT:PLX) is a clinical stage bio company targeting Cystic Fibrosis. Positive data from the phase 2 alidornase alfa were released earlier this morning and there are some astonishing details. The press release can be read here.

First, alidornase alfa is a plant cell, that in layman terms, resists actin. Human deoxyribonuclease I, or DNase I, is an approved enzyme for the treatment of CF. Alidornase is an altered version of this. There is a whole slew of scientific information regarding the way the enzymes work, the two versions whether it is actin resistant, or an active site variant. You can read more on the differences, the enzyme itself, and gain further understand of how it works in CF by reading this abstract here.

Cystic Fibrosis is a genetic disorder that affects mainly the lungs but can also have an affect on the pancreas, liver, kidneys, and intestines. The long term issues that arise are infections in the lungs, coughing up mucus, difficulty breathing, sinus infections, poor growth and infertility in males.

There is no known cure for CF and only reactionary treatments are available when infections strikes. The Cystic Fibrosis Foundation has a magnificently detailed article found here that describes everything you need to know about CF.

Protalix Moving Forward

The Israel based company is in a unique position as the Phase 2 trial has shown that it is more effective than Pulmozyme, which is the only approved DNase treatment. The 28-day switchover trial showed a clinical improvement in lung function, which was the primary efficacy target, by reaching a ppFEV1 of 3.4 points from baseline.

For a company with a roughly 160m market cap, positioned to become a highly used option in care of a $700m annual market it is easy to see room for growth. They have $63m cash and equivalents, with a burn of roughly $8m per quarter they have enough cash to continue with their future trials. As always, this is a clinical stage biotech company and cash is always needed. At this MC, with today's share price of approximately 1.15 at the time of this writing, there won't be dilution in the near future.

They currently have approximately 9.2m of annual sales with their EPS up 34.90% this year. They are projecting to increase their EPS next year by 25% according to Finviz. Current estimates for target prices range from 2.60 to 3.50 leaving much room to grow according to Rodman & Renshaw as well as Jefferies. To dig into their financials a little more you can take a look at their website here.

In June of 2017 Protalix will be presenting data at the 40th European Cystic Fibrosis conference.

Professor Eitan Kerem, Chairman of Pediatrics, Head of the Cystic Fibrosis Center at Hadassah University Hospital, and who is the chief investigator of the clinical trial said:

"The efficacy and safety results of alidornase alfa are very encouraging as they demonstrate data that are clinically relevant which brings new hope to CF patients living with this devastating disease. I look forward to taking part in future clinical studies of alidornase alfa as I believe it has the potential to become a gold standard treatment for all CF patients."

The efficacy and safety profile, as there were no adverse side effects, agree.

Again, to repeat, this is a company in the Biotech sector which experiences wild swings both up and down, and should be looked at with the sharpest of magnifying glasses. Cystic Fibrosis is not an easy condition to treat. There is currently options available but they come with tradeoffs in the safety profile. Regardless of how good Phase II data is, the risk remains that the Phase III trial could flounder.

The key factor for me is PRX-110 does not increase lung infections and improves overall lung function. There is always a risk when investing in this world but, in my opinion, there comes a point where the science meets price per share and the potential downside is alleviated. This is one of those cases.

Shortly after today's release of positive data the ticker was hit with a bear attack, actually dropping it down almost 40%. It was an overreaction to a series of tweets with negative tone, and it made for an excellent buying opportunity. I have had this on my radar for quite some time and jumped on the opportunity to become a member of the long group at the 1.00 range. I began digging into the science, what makes it work, and why it will be successful and haven't come up with anything other than: Alidornase is both safe and effective. The Phase III trial will be an exciting time.

Protalix has a solid pipeline with the PRX-102 in a Phase III trial, PRX-110 in Phase II, and OPRX-106 also in Phase II. They have 3 shots on the proverbial goal and the data coming out is extremely bullish in that at least one of the three will score.

Disclosure: I am/we are long PLX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.