FDA Delays Protalix's Drug Decision; Investors Feel Sick

Today, Protalix BioTherapeutics

announced that the FDA would delay the PDUFA delay of its taliglucerase alfa drug by three months to May 1st, 2012. The company submitted its NDA in early August and had originally expected a decision by February 2012. However, Protalix submitted clinical data on taliglucerase which changed the original NDA and the FDA decided it needed more time to review the modified submission. Taliglucerase is designed to treat Gaucher's disease, which occurs when toxic fatty substances accumuluate throughout the body, most often in the lungs, bone marrow, or liver. This accumulation sometimes causes organs to enlarge which results in bone pain. The disease occurs because the patient suffers from an enzyme deficiency which would typically break down the harmful fatty substances. The disease is can occur in young and older people, but most common among the Jewish population. Typical treatment options involve replacement of the enzymes to more sufficiently break down fatty substances. The company had previously received a CRL from the FDA in February. The agency requested more information on the drug, including additional details on clinical trials, as well as info on the drug's chemistry and manufacturing protocols. Prior to the submission, Protalix CEO David Aviezer commented, "We believe we have adequately addressed the requests that were outlined by the FDA in their Complete Response Letter. We will continue to work closely with the FDA as it moves forward with the NDA review." One clinical trial enrolled 26 adult patients who switched from Cerezyme, the leading form of Gaucher's disease treatment, to taliglucerase. Clinical results showed that Protalix's drug is both safe and effective, and that patients currently using Cerezyme could switch between the two drugs. Protalix also ran trials which involved new treatment patients that showed improvement over a 24 month period. Image scanning also showed that patients with bone marrow issues showed improvement during the same time frame. Investors have not been kind to Protalix as the stock opened nearly 20% lower this morning. Despite the setback, many analysts believe that its approval could steal market share from Cerezyme. Protalix has also partnered with Pfizer

to market the drug, and it is possible that it could be offered at a lower price than Cerzyme to appeal to health insurers. Canaccord Genuity analyst Ritu Baral predicted that the drug could capture 15% or more of the $2 billion Gaucher market. Like most biotech companies, trading Protalix carries a great deal of risk. The stock could move dramatically in either direction depending on the FDA's decision in May. A much safer, but still profitable trade would be to wait until the FDA gives its approval. Given the potential market for the drug, investors could be rewarded with significant revenue growth over the first couple years of sales.