Pfizer Gaucher payment pushes Protalix into profit

The company began sales of its Gaucher's disease treatment in May, but will not report any profits for some time to come.

Protalix Biotherapeutics Inc. (AMEX:PLX; TASE: PLX) reported $29 million revenue for the first half of 2012, including $26 million in the second quarter. It posted a net profit of $3.7 million in the first half and $9.6 million in the second quarter.

The revenue did not come from Protalix's share in sales of Elilyso, its treatment for Gaucher's disease, which was launched by Pfizer Inc. (NYSE: PFE; LSE: PFZ) in May, but from a one-time payment of $25 million from Pfizer for US Food and Drug Administration (FDA) marketing approval of the drug, plus $1.1 million in recognized milestone payments from Pfizer.

Protalix will not record any revenue from Elilyso sales in the US in the coming quarters, either, because of the structure of its contract with Pfizer. Protalix is eligible to 40% of Pfizer's profits from the sale of the drug. Pfizer deducts its production costs from this figure, and reports the amount directly on the profit line. This means that it will not be possible to know exactly what Pfizer and Protalix's revenue from Elilyso are, but only the profit they earn from it - and that is only if Protalix opts to separate in its financial report this profit from it other operating expenses.

Protalix stated that it lost $988,000 on Elilyso sales in the second quarter, because the launch costs will be reported in full for the quarter. However, it had only three weeks of sales during the quarter. It will be easier to judge the sales' performance in the third quarter.

Another reason for the second quarter loss was a change to a short-term agreement with the Brazilian government, under which Pfizer had to replace Elilyso units that were due to expire in 2012. The companies are waiting for a response from the Brazilian government about switching long-term marketing agreement, which is due after the Brazilian Ministry of Health approves the drug.

Protalix's share price rose 0.9% in early trading on the American Stock Exchange to $5.78, giving a market cap of $536 million, after rising 0.7% on the TASE to NIS 22.90.

Published by Globes [online], Israel business news - - on August 6, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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