By John Vandermosten, CFA
READ THE FULL PLX RESEARCH REPORT
Reasons To Own / A Compelling Idea for 2025
Protalix Biotherapeutics, Inc. (NYSE:PLX) finds itself in an enviable position as we begin 2025. The company has two approved products generating revenues and a pipeline with multiple candidates in development. Its products are produced and manufactured using the ProCellEx platform which uses a plant cell line rather than the usual mammalian one, to produce its therapeutic proteins. The company recently eliminated all debt from its balance sheet and holds over $27 million in cash on its balance sheet. We expect positive free cash flow generation over the next 12 months, which should strengthen the balance sheet even further.
The first of its approved products is Elelyso, which was approved in 2012 for Gaucher disease. Protalix signed commercialization agreements with Pfizer and Fiocruz, an arm of the Brazilian Ministry of Health. This has led to annual sales from $16 to $23 million for the product worldwide. In May 2023, Elfabrio was approved by the FDA and EMA for Fabry disease. This is a $2 billion market dominated by three products[1] and one where legacy offerings present several shortcomings. Many patients develop antibodies against the enzyme in Fabrazyme and Replagal which reduces its effectiveness. Galafold is only appropriate for a subset of Fabry patients that have a certain galactosidase alpha gene (GLA) mutation. This creates a wide opening for Elfabrio to step in and take market share in the underserved Fabry population.
In December, Protalix’ partner Chiesi submitted a Variation Application to the EMA that requested a change in the dosing regimen for Elfabrio. Based in part on the findings in the BRIGHT study and on new pharmacokinetic data, the sponsors are seeking a less frequent dosing regimen at a dose of 2 mg/kg body weight administered every four weeks in adult patients with Fabry disease in the European Union. Analysis of the BRIGHT study concluded that treatment with Elfabrio every four weeks could offer a new treatment option for patients with Fabry disease.[2]
Both Replagal and Fabrazyme are administered every two weeks, which equates to 26 administrations per year. If Elfabrio were able to gain approval for administration every four weeks, this could reduce the number of administrations relative to these older medicines by half to 13 infusions per year. Elfabrio is a PEGylated,[3] recombinant human α-Gal A. As a result of PEGylation, Elfabrio is stable in plasma, under lysosome-like conditions and presents a prolonged plasma half-life in humans of approximately 80 hours, compared with other commercially available enzyme replacement therapies with half-lives of less than two hours.
Other benefits of Elfabrio over peers is:
- Use of a plant-based expression system which avoid many of the viral contamination problems faced by mammalian cells;
- Fewer patients with anti-drug and neutralizing antibodies vs. Fabrazyme in BALANCE at end of study;
- Reduction in mean annualized estimated glomerular filtration rate (eGFR) slope in the BRIDGE study;[4]
- Potential for infusions every four weeks vs. every two weeks for Fabrazyme and Replagal.
Development Portfolio
Protalix’ development portfolio consists of two named products and additional early-stage discovery programs. The named programs are PRX-115 in gout and PRX-119 for neutrophil extracellular traps (NETs) related diseases. PRX-115 has completed eight planned cohorts in a Phase I study and preliminary results have been presented at the ACR Convergence conference. We discuss the details of the program below.
PRX-115
In March 2023, Protalix announced that it had dosed its first patient in the Phase I clinical trial for PRX-115 in the treatment of severe gout. Since then, Protalix has completed enrolling eight cohorts and has reported results. The trial was designed as a single ascending dose, double-blinded, placebo-controlled study to examine safety, tolerability, pharmacokinetics (PK) and pharmacodynamics (PD) of PRX-115. 64 subjects with elevated urate levels (>6.0 mg/dL) received a single intravenous (IV) infusion divided among eight cohorts. Patients were randomized in a 3:1 ratio between PRX-115 and placebo and were monitored for 85 days (12 weeks) after receiving the infusion. Plasma concentrations of PRX-115 were measured, as were serum anti-drug antibodies and plasma urate levels. Multiple measurements were taken throughout the duration of the study.
The study was conducted at New Zealand Clinical Research under the New Zealand Medicines and Medical Devices Safety Authority. Further details on the clinical trial can be found on clinicaltrials.gov and the related entry under NCT05745727.
Subjects considered for enrollment presented elevated uric acid levels (>6.0 mg/dL) and no previous exposure to PEGylated uricase. Primary endpoints will evaluate the safety and tolerability of a single infusion of PRX-115 as assessed by frequency of drug related adverse events, graded by severity. Clinical laboratory results and vital signs will also be evaluated. Secondary endpoints will examine the reduction in uric acid and dosing efficacy.
Results from the Phase I PRX-115 trial were presented at the ACR annual meeting last November. The poster is entitled Prolonged Plasma Urate Lowering after a Single Intravenous Administration of PRX 115, a Novel PEGylated Uricase, in Participants with Elevated Urate Levels and was presented by Protalix’ Dr. Orit Cohen Barak. PRX-115 was found to be well-tolerated. 25% of the subjects treated (12/48) reported study drug related adverse events (AEs). One subject in cohort 2 experienced an anaphylactic reaction right after infusion. The reaction resolved completely and the subject was evaluated over the course of the study for further safety assessments. No other subjects experienced this reaction and there were no other serious adverse events.
Results from the Phase I support moving on to the next stage of development. One of the most visible benefits of PRX-115 is that the product may allow for a reduction in the number of infusions required for successful treatment compared with approved products. We note that Krystexxa which is approved by the FDA and indicated for chronic gout is administered every two weeks as an intravenous infusion. Planning for the PRX-115 Phase II trial is underway with trial design details expected over the next several quarters and a launch in 2H:25.
PRX-119
PRX-119 is the plant cell-expressed PEGylated recombinant human DNase I product candidate being designed to elongate half-life in the circulation of the molecule for NETs-related diseases. Protalix has conducted preclinical studies to evaluate the feasibility of the candidate and expects to continue compiling preclinical information and conducting data analysis to review with stakeholders. Studies conducted to date have determined that the administration of PRX-119 decreased circulating DNA levels and significantly enhanced the survival of mice in both a CLP-induced sepsis model and an ARDS model. Additional preclinical development is ongoing. We expect to hear further details on the direction of the program in coming quarters.
Reasons to Own
- Two globally approved commercialized products in rare disease
- Proprietary plant-based expression system
- Pipeline of products including lead PRX-115 in uncontrolled gout
- Free cash flow generating
- Attractive valuation with target price over 5x latest closing price
- No debt
Recent Protalix Research
- November 15, 2024
- August 22, 2024
- May 15, 2024
- March 15, 2024
- November 7, 2023
- August 8, 2023
- May 30, 2023
- May 11, 2023
- May 5, 2023
Summary
Protalix maintains an enviable position in the small cap biotech space with a clean balance sheet holding no debt and expected positive free cash generation. The company features two approved products that we expect to grow and a development portfolio that has shown early success in the gout indication. The shares are substantially undervalued relative to our target price. One of the primary risks in the small cap space is absent for Protalix, which is the need to raise capital and dilute earlier investors shifting the balance of investors towards long only. We maintain our valuation to $14 per share.
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[1] Other products include Fabrazyme by Sanofi, Galafold by Amicus Therapeutics, and Replagal by Takeda. We rely on Evaluate, Ltd. for Fabry disease market size estimates.
[2] Holida, M., et al. A phase III, open-label clinical trial evaluating pegunigalsidase alfa administered every 4 weeks in adults with Fabry disease previously treated with other enzyme replacement therapies, Journal of Inherited Metabolic Disease. October 2024.
[3] A pegylated drug is a therapeutic molecule that has been chemically modified by attaching polyethylene glycol (PEG) chains. The PEG coating essentially acts as a protective shield, making the medicine more effective and longer-lasting in the body.
[4] BRIDGE participants improved from -5.90 mL/min/1.73m2/year on Replagal to -1.19 mL/min/1.73m2/year on Elfabrio in all patients.
