Protalix (PLX) recently received their Day 74 FDA report on the acceptance of their BLA application applying for market authorization to PRX-102. This was also positive granting priority review for PRX-102 for adult patients with Fabry disease which is a genetic disease that leads to spingolipids building up in blood vessel walls, kidneys, heart, skin, and other places in the body causing pain and lowering life expectancy to close to 60 years old. It is known to cause strokes, bilateral symmetry, and organ failure as well. It is currently treated with Fabrazyme by Genzyme in the US at approximately $300,000 per patient annually in the US. Europe uses Replaggal by Shire for treatment. There is also an oral medication named Galafold by Amicus used globally.   

PRX-102 also known as pegunigalsidase alfa is a designed, long-acting, recombinant, PEGylated, cross-linked α-galactosidase-A treatment. Protalix’s PRX-102 is designed to potentially provide a “significant improvement” in the safety or effectiveness of the treatment of Fabry disease. The FDA has assigned a priority review for this application with a goal date of January 27^th, 2021. There is a growing need for new treatments for this disease as the disease also causes kidney failure and even those treated today experience early kidney failure.

With Fabry’s lowest estimate of 19,000 infants or 1 in 80,000 infants alone, there is a substantial potential market for this drug whether or not it is priced at the current market price or at a 20% discount. With onset of this disease also occurring at older ages this estimate is on the conservative side. There are currently 6,700 known patients being treated with Fabry’s and growing. Protalix market cap is currently only about $125 million. Even if PRX-102 doesn’t become the standard of care or not, it will more than justify a price for Protalix to be substantially higher than where it is. Depending on the effectiveness being equal to existing treatments, I estimate gross margins at 30% although it could be higher based on lower cost production and/or potential superiority to existing treatments.

Pegunigalsidase alfa (PRX-102) is a plant cell culture-expressed drug that is chemically modified to offer a stabilized version of the recombinant α-Galactosidase-A enzyme. It was produced through Protalix’s ProCellEx plant cell-based protein expression system. Because of this, Protalix is uniquely able to produce a broad array of complex glycosylated proteins, some of which are difficult to produce in mammalian, bacterial, and yeast cell-based systems. Through this technology, it is possible in certain cases, to develop and commercialize recombinant proteins without infringing upon the method-based patents or other intellectual property rights of third parties.

Also, in conjunction with the plant based cultures, it avoids many of the weaknesses of conventional recombinant protein production while offering significant production, regulatory and cost benefits. Those benefits include no risk of “infection by human or animal pathogens,” which in turn means lower investment and maintenance costs.

Protalix reported their financial results for the second quarter of 2020 earlier this week. The company reached the midpoint of the year with $35M in cash and short-term bank deposits, which is believed to be sufficient to sustain operations through the approval and launch of PRX-102 in the U.S. by Protalix's partner Chiesi. Net loss per share for the period came in at $0.13 vs. forecast of a net loss of $0.10. Going forward, significantly greater attention is likely to be paid to 2021 and the potential revenue lift that Protalix may see from royalties on sales of PRX-102. According to HC Wainwright & Co. they foresees an 80% chance of approval of PRX-102.

The reason why Protalix’s PRX-102 is so interesting is that the current drug regime for Fabry’s has a decreasing effect over time including potential production of anti-drug antibodies in patients and adverse infusion reactions that lead to a high burden for those wanting treatment. The existing drugs used in current treatment of Favry’s also provides only limited tissue penetration leading to renal failure. It is suggested that PRX-102 may reverse some of these adverse effects or at least can offer a secondary solution to current medications. Those on it in Brazil can take PRX-102 once a month if their condition isn’t deteriorating and two-dose regiments for others. Sales in Brazil are picking up as the drug becomes more widely accepted and provides an alternate drug for those suffering Fabry’s disease.

I believe that Protalix is a good play on getting a bigger population using their medication to fight Fabry’s disease globally if approved. In addition, ProCellEx is valuable on its own for producing a broad array of complex glycosylated proteins for developing commercialized recombinant proteins in volume at a reduced price for manufacturing. Protalix should retrace its price target back towards the $7 dollar range as their losses evaporate and PRX-102’s footprint becomes reality. On the off chance it does not receive further licensing, it should continue to trade between $2 to $3 on the hopes for further licensing deals for their ProCellEx or other drugs produced on its platform. Thus I believe there is beta in this stock at current prices. This is especially true if the company can negate its quarterly losses and move into quarterly profits on PRX-102.

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