The share price of Protalix Biotherapeutics Inc. (NYSE MKT:PLX; TASE: PLX), which produces drugs based on proteins obtained from plants, has shot up 300% since December, giving the company a market cap of $178 million. It has emerged that US hedge fund O'Connor Global Multi-Strategy Alpha Master Limited (part of UBS Asset Management) now holds 9.5% of the company. This follows a debt settlement that the company made in December.
The settlement involved massive dilution of the shareholders, following which the share price plunged 40% in a single day. Shortly afterwards, the share price began a recovery that has continued up to today. It appears that the market has digested the debt settlement, and was pleasantly surprised by a $24 million order for the company's leading product from the Brazilian government, as well as by the purchase of a substantial stake by Knight Therapeutics Inc., controlled by the Goodman family of Canada. In addition, Protalix is expected to reach several milestones over the coming year, among them good results in trials of its Fabry disease treatment and of a product for treating cystic fibrosis.
The difficulties from which Protalix has suffered in recent years arose from the relative failure of its leading product, for treating Gaucher disease. Because the product's performance did not meet expectations, Protalix found itself unable to repay its debt. Over the past two years, Protalix's CEO Moshe Manor and its chairman Shlomo Yanai decided to redirect the company's focus from the Gaucher product to efforts to develop new products, among them the Fabry and cystic fibrosis treatments, as well as a product for treating inflammatory diseases, which is an orally administered version of drugs currently given by injection.
The other change instituted by Mano was the transfer of rights to the Gaucher product to Pfizer in all territories except Brazil, in exchange for all revenue from the Brazilian market, where as mentioned the company recently signed a contract with the government.
The agreement in Brazil was original supposed to have meant orders of $40 million annually within two years, and altogether at least $280 million in orders over seven years, but the Brazilian government delayed its implementation.
In the debt settlement, $54 million of debt repayable in 2018 was converted to $40 million new debt repayable in 2021, and the company issued additional debt of $22 million and shares amounting to 20% of the company to creditors who agreed to the conversion. $14 million in debt remains to be repaid in 2018.
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2017
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