THE REASONS FOR THE FDA'S DELAYS IN APPROVING PROTELIX

Protalix reaches its final alignment after a long and arduous beret journey, in which the company's first application for approval of the product was rejected (February 2011). The manager then authorized Proteix to reapply only on the longer route (Type II resubmission).

After the reapplying (May 2011), the Director postponed the date of his decision by another six months (from November 2011 to May 2012), on the grounds that Protelix had not submitted all the required paperwork. Why is the manager stricter with Protalix? Has the company achieved nice results in Phase 3 product trials, and even markets the product already in several countries?

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For protalix's review after the first rejection. Some argue that the administration is concerned about approving a product developed with Protalix's plant technology, for fear that this will constitute confirmation of other drugs that the company will develop in the same technology. However, it is more likely that the administration will require any future drug and drug to undergo the same arduous process of approvals that the rest of the drugs undergo on the market.

In addition, because the drugs will be plant-based versions of new drugs, it is likely that the administration will also require a switchover trial from each drug (in parentheses it is stated that, in our assessment, the pricing of Protalix after approval should not take into account significant easing of the development costs of additional products against the background of the approval of the first product).

Therefore, it seems that not technology is the cause of the many delays caused by the manager to Protelix and its partner Pfizer. In our assessment, the delays are not due to the product itself, since as mentioned above it has been shown to be effective and safe in a large number of reliable trials. Since we do not know the reasons for the delays, we cannot assess whether they have disappeared in this round, or if they still exist and will prevent the approval again.

The pharmaceutical market for gaucher's disease has changed

In the time since the first approval application, the situation in the pharmaceutical market has changed to gaucher's disease, the market to which protalix is directed at this product. the infection that occurred at genzym's factories was treated and its supply of medicine (which currently constitutes the gold standard) was renewed, and another competitor of protalix – shire – received approval to market its product.

That is, at the moment protalix is requesting approval for the third drug on the market for the same disease. the transition from marketing a drug that is feared to be lacking in the supply of its only competitor to the marketing of a drug that already has two active competitors in the market should be reflected in the pricing of protalix.

In addition, the administration recently delayed the approval of shire's second plant for the production of the drug competing with that of protalix. the plant has already received the approval of its european counterpart of the manager. while analysts see this as a positive sign for protalix, it is a sign that the administration is getting worse with companies operating in this market.

In addition, it does not appear that due to the suspension of approval for the new plant, which is approved to manufacture medicines for europe, there will be a shortage in the near future of the drug in the u.s. market. this should also be reflected in the pricing of protalix.

protalix stock activity

the share price has soared nearly 20 per cent in recent days, and is now below the gap gaped after the approval was first rejected in february 2011. this leap, by the way, technically exhausts the potential for increases resulting from the shuffle breach in which the stock was located.

Assuming that the prophecy was given to fools, and that no new information item entered the market in recent weeks regarding approval, two main reasons for the price increase can be listed precisely in recent days: the desire to reduce exposure to the stock until just before approval, and the media exposure that the company has gained in recent days.

Both reasons are not signs of the strength of the stock, or the strength of the recent rise. therefore, the increase acts solely to the detriment of the investor by reducing the potential profit-loss ratio. assuming that the share price in february 2011 reflected the market estimate that the company would receive the approval, if the company received approval, the stock is expected to jump by about thirty percent. in addition, due to the factors mentioned above, protalix should be priced at a discount relative to its pricing in 2011.

On the other hand, if the company does not receive the approval, the stock will crash at least a similar rate. this ratio is not attractive for investment. thus, everything sits on the assessment of whether the company will receive the approval or not, and the risk accordingly.

Raising by issuing capital on a discount

we'll see how different parties assessed the chances of getting the permit. in february this year, protalix raised $23.6 million through a 14.4 per cent capital offering, in a move that seemed puzzling to the market. the recruitment was then perceived as a lack of confidence in obtaining the approval, since if the product is received there will be no problem to raise, and in addition – why raise at a low price if in a few months the stock will leap?

Also, in an exclusive interview with the ceo ofprotalix before the deadline was postponed to may, dr. aviezer said that he does not anticipate raising capital. what changed the deadline rejection? with all this, at the end of the day in my eyes it was a proper move by the company. protelix has paypal with other promising products, and in the capital market "recruit when possible, not when you need it.

By recruiting, the ceo (up to a certain level) disconnected the fate of the rest of the pipline from the fate of the current leading product, and enabled the continued development of additional products even if approval for the current product is not accepted.

The negative sign from the fundraising is obtained in our assessment from the discontent in which the ipo was carried out. in the prospectus, the company revealed that it had $27 million left in its coffers as of the end of 2011, a figure that reflects a rate of about $8 million per year. the discount to which the company agreed does not reflect cash, therefore.

What else can reflect the discontent other than a lack of trust in obtaining the certificate? also, why hasn't protalix found enough value investors who believe the company's stock will soon jump due to approval to get a better ipo price? the ipo does not appear to be the next hot commodity offering with very strong demand but investors seem to have demanded the immediate capital gain in their reports as ashes from the prospect of a future loss resulting from not receiving approval.

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In conclusion, protalix is a successful israeli biotech company with excellent products. however, due to the long process that has had to go through so far to obtain approval for the leading product, the changes in the market at this time, the lack of clear reasons for the previous rejections, the different pricing of the company at this time.

The reduction of the potential profit-loss ratio and our understanding of the assessment of factors in the company and the market the chance of obtaining approval, in our assessment the stock is not attractive to buy at this time. on a personal note, i wish protix success in obtaining the approval, and strengthen the hands of this israeli company together with the other israeli biotech companies to grow to be the next nature.