Protalix hires Citigroup to examine sale options

Market sources see the drug developer being acquired for between $600 million and $1 billion with Pfizer the likely buyer.

Protalix Biotherapeutics Inc. (NYSE:PLX; TASE: PLX) has hired investment bank Citigroup to investigate strategic options for commercializing the company's assets or completely selling the company. Protalix is probably interested in selling either a controlling stake or the entire company.

In confriming reports Protalix said, "The company has engaged Citigroup to assist it in reviewing a broad array of product partnering, technology sharing and other strategic alternatives. There is no assurance that Protalix will undertake any such strategic alternative."

If the company is to be sold then Pfizer Inc. (NYSE: PFE) would be the logical pharmaceutical firm to acquire control of Protalix because it already has a commercialization agreement with the Israeli drug developer for its Gaucher's treatment Elylyso. However, Protalix will presumably be eager to generate competition for its acquisition as it did before reaching a commercialization deal over Elylyso. In that instance, Pfizer agreed to pay Protalix an initial sum of $60 million for the treatment that has US Food and Drug Administrative (FDA) approval.

Some market sources believe that talk of $1 billion for the acquisition of Protalix is too high. Harel Finance analyst Steven Tepper said, "It is logical for Protalix to be sold now because the products it is developing, except for Elylyso, are far from the market and it will cost significant sums to sell them, while for Elylyso peak annual sales of $180 million is reasonable, so I would give a target price of $600-700 million for the company."

On the other hand, US hedge fund Dafna Capital Management LLC (an investor in Protalix) managing member Dr. Fariba Ghodisan observes that recent deals in the pharmaceutical market reflect a large appetite by major pharmaceutical firms for the acquisition of young companies with interesting development platforms and products in advanced phases. She mentions the deal whereby Allergan acquired Map Pharmaceuticals for nearly $1 billion, even though its product was not yet approved.

She said, "I feel that a value of $1 billion is reasonable for a proven technological platform in the generics sector, especially in biogenerics, which currently very much interests the major firms."

Protalix's share price rose 20% on Wall Street this evening to $6.41, giving a market cap of $606 million.

Published by Globes [online], Israel business news - - on February 5, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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