Executive Summary / Key Takeaways

• Protalix BioTherapeutics leverages its unique ProCellEx plant cell-based protein expression system to develop and commercialize recombinant therapeutic proteins for rare diseases, offering potential advantages in manufacturing cost, speed, and product profile.
• The company has established a commercial foundation with two approved products, Elelyso for Gaucher disease (partnered with Pfizer (PFE) and Fiocruz) and Elfabrio for Fabry disease (partnered with Chiesi), generating three streams of revenue that are expected to grow.
• A significant financial milestone was achieved with the full repayment of outstanding debt in September 2024, strengthening the balance sheet and positioning the company to fund its strategic initiatives, including pipeline development.
• Protalix is strategically focusing its pipeline development on rare renal diseases, building on its experience with Fabry disease, and is advancing PRX-115 for uncontrolled gout towards a Phase 2 trial initiation in the second half of 2025, with estimated top-line results in early 2027.
• While facing competitive pressures from established players and emerging therapies, as well as operational risks including geopolitical factors, Protalix's differentiated technology and strengthened financial position provide a foundation for pursuing high-unmet-need indications.

The Roots of Innovation: ProCellEx and a Strategic Shift

Protalix BioTherapeutics ($PLX) operates within the specialized field of rare disease therapeutics, focusing on developing and commercializing recombinant therapeutic proteins. At the heart of its strategy is the proprietary ProCellEx plant cell-based protein expression system. This technology represents a distinct approach in an industry largely dominated by mammalian cell culture systems. Protalix holds the distinction of being the first and only company to gain FDA approval for a protein produced through plant cell-based expression in suspension, a testament to the platform's potential.

The ProCellEx system is designed to offer several tangible benefits over traditional methods. While precise, directly comparable quantitative metrics for all aspects versus all competitors are not publicly detailed, the company highlights potential advantages in manufacturing cost efficiency, faster processing speeds, potentially higher protein yields, and favorable protein characteristics such as glycosylation and reduced immunogenicity. The system allows for flexible manufacturing and rapid scale-up, utilizing disposable bioreactors that require lower initial capital investment compared to large stainless-steel systems common in mammalian cell culture. The absence of mammalian components also eliminates the risk of mammalian viral contamination. The company's R&D efforts continue to enhance this platform, exploring improvements in efficiency and yield.

Building upon the validation provided by its first approved product, Elelyso (taliglucerase alfa) for Gaucher disease, Protalix has strategically refined its focus. The company is now prioritizing the development of new, early-stage product candidates that address indications with high unmet needs, particularly within the realm of rare renal diseases. This strategic pivot leverages the experience, network, and resources cultivated during the development and commercialization of Elfabrio (pegunigalsidase alfa) for Fabry disease, a lysosomal storage disorder with significant renal manifestations. This focus area allows Protalix to apply its expertise and ProCellEx capabilities to potentially transformative therapies, moving beyond its initial commercial successes to build a sustainable, innovation-driven pipeline.

The competitive landscape in rare diseases is populated by large pharmaceutical companies with established ERT portfolios, such as Sanofi (SNY) with Cerezyme and Fabrazyme, and Takeda Pharmaceutical (TAK) with Replagal. Amicus Therapeutics (FOLD) also competes, particularly in Fabry disease, offering an oral therapy (Galafold). These competitors possess significant scale, extensive global distribution networks, and substantial R&D budgets. While Protalix's ProCellEx technology offers potential cost and manufacturing advantages, its smaller scale and more focused pipeline mean it competes as a niche player. Its strategy relies on developing differentiated products that offer clinical benefits or alternative dosing regimens, often through partnerships, to gain market share against these entrenched rivals.

The Commercial Foundation: Approved Products and Revenue Streams

Protalix has successfully brought two enzyme replacement therapies to market, providing a crucial commercial foundation and generating revenue to support its ongoing operations and pipeline development.

Elelyso (taliglucerase alfa) for Gaucher disease was the company's first approved product. Commercialization is managed through partnerships: Pfizer holds the global rights excluding Brazil, while Fundação Oswaldo Cruz (Fiocruz) commercializes the product in Brazil. Under the amended agreement with Pfizer, Protalix supplies drug substance and Pfizer handles commercialization, retaining all revenue and expenses outside Brazil. In Brazil, Protalix retains the rights and is responsible for expenses and revenues, supplying BioManguinhos alfataliglicerase to Fiocruz. A notable challenge in the Brazil partnership has been Fiocruz's purchases falling below agreed milestones, although supply continues.

Elfabrio (pegunigalsidase alfa) for Fabry disease is the company's second approved product, commercialized globally through an exclusive partnership with Chiesi Farmaceutici S.p.A. This partnership has been instrumental, providing upfront payments, development cost reimbursements, and potential future milestone payments and tiered royalties based on Chiesi's net sales. Elfabrio received marketing authorization in the European Union and approval in the United States in May 2023, followed by approvals in other territories. The path to FDA approval involved overcoming a Complete Response Letter primarily related to manufacturing facility inspection delays due to the COVID-19 pandemic, highlighting the regulatory hurdles inherent in the industry. Chiesi is actively working to expand Elfabrio's label, having submitted a variation application to the EMA in December 2024 seeking approval for a less frequent dosing regimen of 2 mg/kg every four weeks, with an update expected from the EMA in the fourth quarter of 2025. Chiesi is also sponsoring additional clinical studies, including pediatric and Japanese trials, demonstrating commitment to the product's lifecycle and market expansion.

These two products generate revenue through what management refers to as "three streams": sales to Chiesi, sales to Pfizer, and sales to Fiocruz Brazil.

Revenues from selling goods saw significant growth in the first quarter of 2025, reaching $9.995 million, a 171.8% increase compared to $3.677 million in Q1 2024. This increase was primarily driven by higher sales to Pfizer (+$5.852 million) and Fiocruz Brazil (+$0.466 million). Fiscal year 2024 was a record year for revenues from selling goods, totaling $53 million, a 31% increase from $40.4 million in 2023, with growth across all three streams, notably an $11.8 million increase in sales to Chiesi. Management emphasizes that Chiesi's underlying market performance and patient recruitment are strong and improving quarterly, although Protalix's sales to Chiesi's inventory can cause quarterly revenue figures to be lumpy and not directly reflect Chiesi's end-market sales. Management expects these revenue streams to continue and grow, estimating potential revenues from Chiesi alone to be north of $100 million by 2030.

In contrast, revenues from license and R&D services decreased significantly in FY 2024 ($0.4 million) compared to FY 2023 ($25.1 million). This was primarily due to the $20 million regulatory milestone payment received from Chiesi in Q2 2023 upon FDA approval of Elfabrio and the completion of revenue-generating R&D obligations related to the Fabry program. Management expects minimal future revenue from this line item, aside from potential future regulatory milestone payments, estimated globally at up to approximately $75 million remaining under the Chiesi agreement.

Fueling the Pipeline: Strategic R&D and Financial Strength

With a commercial foundation established, Protalix is directing its resources towards building a robust pipeline of future therapies, strategically leveraging its core ProCellEx technology and focusing on areas of high unmet medical need. The strategic prioritization of rare renal diseases is a key element of this approach, aiming to capitalize on the company's accumulated knowledge and infrastructure from the Fabry program. This focus includes evaluating potential candidates for conditions such as Autosomal Dominant Polycystic Kidney Disease (ADPKD), Alport Syndrome, and Focal Segmental Glomerulosclerosis (FSGS).

A leading candidate in the pipeline is PRX-115, a PEGylated uricase for the treatment of uncontrolled gout. The company recently completed a Phase 1 clinical trial, which demonstrated encouraging results, including dose-dependent exposure, rapid and long-lasting reduction in plasma urate levels (remaining below 6 mg/dL for up to 12 weeks at the highest doses), and a generally well-tolerated profile. These findings suggest the potential for a wide dosing interval, which could significantly enhance patient compliance and treatment flexibility compared to existing therapies like Krystexxa. Protalix is in advanced preparations for a Phase 2 clinical trial of PRX-115 in patients with gout, with initiation planned for the second half of 2025. Management estimates that top-line results from this study could be available around the beginning of 2027, depending on patient enrollment rates. The estimated third-party costs for this Phase 2 study are north of $20 million, which the company plans to finance with its current resources.

Another pipeline candidate is PRX-119, a PEGylated recombinant human DNase I product candidate. Currently in preclinical studies, PRX-119 is being developed for the potential treatment of diseases associated with neutrophil extracellular traps (NETs), including NETs-related renal autoimmune associated diseases, aligning with the company's focus on renal indications. Protalix is also exploring novel plant-based drug delivery systems and other modalities like small molecules and oligonucleotides to broaden its therapeutic reach.

Research and development expenses reflect these pipeline activities. While R&D expenses decreased in FY 2024 ($13 million) compared to FY 2023 ($17.1 million) primarily due to the completion of the Fabry clinical program, they saw an increase in Q1 2025 ($3.5 million) compared to Q1 2024 ($2.9 million), driven by the advancement of the clinical pipeline, particularly PRX-115. Management expects R&D expenses to continue to increase as the pipeline progresses into more advanced clinical stages.

Financially, Protalix has significantly strengthened its position. A key highlight was the full repayment of the 7.5% senior secured convertible promissory notes in September 2024, utilizing available cash. This move rendered the company debt-free, enhancing its financial flexibility.

As of March 31, 2025, the company held approximately $34.7 million in cash and cash equivalents and short-term bank deposits. Financing activities in Q1 2025 included raising approximately $2.9 million net from sales of common stock under its At The Market (ATM) offering agreement and $2.2 million from warrant exercises. The ATM agreement was amended in March 2025 to allow for the sale of up to an additional $20 million in stock, with approximately $19.7 million remaining available as of the end of Q1 2025. Warrants issued in 2020 expired in March 2025, removing a potential source of future dilution. Management believes that the current cash position, combined with expected revenues, is sufficient to fund operations for at least 12 months from the filing date of the Q1 2025 report (May 9, 2025), including the planned Phase 2 PRX-115 study.

Risks and Competitive Dynamics

Despite its progress, Protalix faces inherent risks and competitive challenges common in the biopharmaceutical industry. Commercialization risks for Elfabrio include market acceptance, competition from existing therapies (Fabrazyme, Replagal, Galafold), reimbursement challenges, and regulatory factors such as the boxed warning on the U.S. label. Elelyso also competes with other Gaucher treatments (Cerezyme, Vpriv, Cerdelga), and the partnership with Fiocruz carries the risk of non-compliance with purchase obligations.

Operational risks include potential disruptions from the ongoing conflict in Israel, although the company has taken mitigation steps like storing drug substance in multiple locations. Global conditions, supply chain challenges, and the inflationary environment also pose risks. Regulatory risks are significant for pipeline candidates, with potential for delays or rejections in clinical trials and marketing applications. Managing complex relationships with partners like Chiesi, Pfizer, and Fiocruz is crucial.

The competitive landscape for both approved products and pipeline candidates is intense. While Protalix's ProCellEx technology offers potential advantages in manufacturing cost and speed, larger competitors like Sanofi and Takeda Pharmaceutical benefit from greater financial resources, established market share, and broader pipelines. Amicus Therapeutics's success with an oral therapy highlights the potential for alternative modalities to challenge traditional ERTs. Protalix's strategy to focus on niche, high-unmet-need indications and leverage its technology aims to carve out market share and differentiate its products, but success is contingent on positive clinical outcomes and effective commercial execution by its partners.

Financially, while debt-free, Protalix operates with significantly lower revenue and cash flow compared to its larger competitors. For instance, Sanofi reported €43.1 billion in revenue in 2024 with gross margins around 70-75%, while Protalix's TTM revenue is $53.40 million with a TTM gross profit margin of 49.97%. Takeda Pharmaceutical's TTM gross margin is around 51%. Amicus Therapeutics, though smaller than Sanofi and Takeda Pharmaceutical, has a TTM gross margin of 90%. This highlights that while Protalix's technology may offer manufacturing efficiencies, its overall profitability metrics currently trail those of its competitors, reflecting differences in scale, product mix, and operational structure. The need for future funding beyond current resources, depending on pipeline progress and commercial success, remains a potential risk, particularly given the volatility of its stock price.

Conclusion

Protalix BioTherapeutics stands at a pivotal point, having successfully transitioned to a commercial-stage company with two approved products and a strengthened financial position following the repayment of its debt. The core of its investment thesis lies in the unique ProCellEx plant cell-based protein expression system, which offers potential competitive advantages in the development and manufacturing of recombinant proteins for rare diseases.

Leveraging the revenue generated from its partnerships with Chiesi, Pfizer, and Fiocruz, Protalix is strategically investing in its future pipeline, with a clear focus on rare renal diseases. The advancement of PRX-115 for uncontrolled gout towards a Phase 2 trial represents a key near-term catalyst. While competing against larger, more established players and facing inherent industry risks, Protalix's differentiated technology and targeted pipeline strategy position it to pursue high-unmet-need indications. The company's ability to execute on its clinical development plans, secure favorable regulatory outcomes, and see continued commercial success through its partners will be critical determinants of its long-term value creation for investors. The progress of the PRX-115 program and the potential for label expansion for Elfabrio in Europe are key factors to monitor as Protalix seeks to build on its foundation and realize the full potential of its plant-based platform.