Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 01, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Protalix BioTherapeutics, Inc. | |
Entity Central Index Key | 1,006,281 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | PLX | |
Entity Common Stock, Shares Outstanding | 148,374,921 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 41,868 | $ 51,163 |
Accounts receivable – Trade | 4,894 | 1,721 |
Other assets | 2,619 | 1,934 |
Inventories | 7,959 | 7,833 |
Total current assets | 57,340 | 62,651 |
DEFERRED ASSET | 1,450 | |
FUNDS IN RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT | 1,779 | 1,887 |
PROPERTY AND EQUIPMENT, NET | 6,628 | 7,676 |
Total assets | 67,197 | 72,214 |
Accounts payable and accruals: | ||
Trade | 4,388 | 7,521 |
Other | 10,163 | 9,310 |
Convertible notes | 5,921 | |
Total current liabilities | 14,551 | 22,752 |
LONG TERM LIABILITIES: | ||
Convertible notes | 47,320 | 46,267 |
Deferred revenues | 61,780 | 26,851 |
Liability for employee rights upon retirement | 2,386 | 2,586 |
Other long term liabilities | 6,154 | 5,051 |
Total long term liabilities | 117,640 | 80,755 |
Total liabilities | 132,191 | 103,507 |
COMMITMENTS | ||
CAPITAL DEFICIENCY | (64,994) | (31,293) |
Total liabilities net of capital deficiency | $ 67,197 | $ 72,214 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
REVENUES | $ 663 | $ 7,526 | $ 7,222 | $ 16,773 | |
COST OF REVENUES | (1,917) | (6,066) | (7,024) | (13,677) | |
GROSS PROFIT (LOSS) | (1,254) | 1,460 | 198 | 3,096 | |
RESEARCH AND DEVELOPMENT EXPENSES | [1] | (10,803) | (7,118) | (25,565) | (22,389) |
Less – grants | 732 | 729 | 1,810 | 2,545 | |
RESEARCH AND DEVELOPMENT EXPENSES, NET | (10,071) | (6,389) | (23,755) | (19,844) | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | [1] | (2,638) | (2,836) | (7,294) | (8,187) |
OPERATING LOSS | (13,963) | (7,765) | (30,851) | (24,935) | |
FINANCIAL EXPENSES | (1,811) | (3,680) | (5,824) | (8,809) | |
FINANCIAL INCOME | 230 | 8 | 437 | 1,670 | |
LOSS FROM CHANGE IN FAIR VALUE OF CONVERTIBLE NOTES EMBEDDED DERIVATIVE | (38,061) | ||||
FINANCIAL EXPENSES, NET | (1,581) | (3,672) | (5,387) | (45,200) | |
NET LOSS FOR THE PERIOD | $ (15,544) | $ (11,437) | $ (36,238) | $ (70,135) | |
NET LOSS PER SHARE OF COMMON STOCK BASIC AND DILUTED | $ (0.10) | $ (0.09) | $ (0.25) | $ (0.55) | |
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING LOSS PER SHARE – BASIC AND DILUTED | 148,187,513 | 132,549,001 | 146,752,355 | 128,223,722 | |
[1] | Includes share-based compensation |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Research and Development Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation | $ 14 | $ 43 | $ 54 | $ 163 |
General and Administrative Expense [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation | $ 8 | $ 32 | $ 42 | $ 128 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | ||
Balance at Dec. 31, 2016 | $ (9,957) | $ 124 | $ 202,575 | $ (212,656) | ||
Balance (in shares) at Dec. 31, 2016 | [1] | 124,134,085 | ||||
Share-based compensation related to stock options | 291 | 291 | ||||
Reclassification of embedded derivative | 43,634 | 43,634 | ||||
Convertible notes conversions | 8,781 | $ 10 | 8,771 | |||
Convertible notes conversions (in shares) | [1] | 9,711,235 | ||||
Conversion component related to convertible notes issuance | 1,315 | 1,315 | ||||
Net loss for the period | (70,135) | (70,135) | ||||
Balance at Sep. 30, 2017 | (26,071) | $ 134 | 256,586 | (282,791) | ||
Balance (in shares) at Sep. 30, 2017 | [1] | 133,845,320 | ||||
Balance at Dec. 31, 2017 | (31,293) | $ 144 | 266,495 | (297,932) | ||
Balance (in shares) at Dec. 31, 2017 | [1] | 143,728,797 | ||||
Share-based compensation related to stock options | 80 | 80 | ||||
Share-based compensation related to restricted stock award | 16 | [2] | 16 | |||
Share-based compensation related to restricted stock award (in shares) | [1] | 29,898 | ||||
Convertible notes conversions | 1,291 | $ 2 | 1,289 | |||
Convertible notes conversions (in shares) | [1] | 1,928,907 | ||||
Convertible notes exchange | 1,150 | $ 2 | 1,148 | |||
Convertible notes exchange (in shares) | [1] | 2,613,636 | ||||
Net loss for the period | (36,238) | (36,238) | ||||
Balance at Sep. 30, 2018 | $ (64,994) | $ 148 | $ 269,028 | $ (334,170) | ||
Balance (in shares) at Sep. 30, 2018 | [1] | 148,301,238 | ||||
[1] | Common Stock, $0.001 par value; Authorized – as of September 30, 2018 and 2017 - 250,000,000. | |||||
[2] | Represents an amount less than $1. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY) [Parenthetical] - $ / shares | Sep. 30, 2018 | Sep. 30, 2017 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (36,238) | $ (70,135) |
Adjustments required to reconcile net loss to net cash used in operating activities: | ||
Share based compensation | 96 | 291 |
Depreciation | 1,257 | 1,469 |
Financial (income) expenses, net (mainly exchange differences) | (37) | 13 |
Changes in accrued liability for employee rights upon retirement | (86) | 54 |
Gain on amounts funded in respect of employee rights upon retirement | (45) | (21) |
Net loss in connection with conversions of convertible notes | 204 | 587 |
Change in fair value of convertible notes embedded derivative | 38,061 | |
Amortization of debt issuance costs and debt discount | 1,916 | 1,710 |
Issuance of shares for interest payment in connection with conversions of convertible notes | 205 | 1,111 |
Changes in operating assets and liabilities: | ||
Increase (decrease) in deferred revenues | 34,929 | (837) |
Increase in deferred asset | (1,450) | |
Increase in accounts receivable and other assets | (3,661) | (6,467) |
Increase in inventories | (126) | (2,234) |
Increase (decrease) in accounts payable and accruals | (1,805) | 8,698 |
Increase in other long term liabilities | 1,103 | |
Net cash used in continuing operations | (3,738) | (27,700) |
Net cash provided by discontinued operations | 116 | |
Net cash used in operating activities | (3,738) | (27,584) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (498) | (681) |
Increase in restricted deposit | (247) | (336) |
Amounts funded in respect of employee rights upon retirement, net | 70 | (68) |
Net cash used in investing activities | (675) | (1,085) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net payment for convertible notes | (4,752) | (10,961) |
Net proceeds from issuance of convertible notes | 9,542 | |
Net cash used in financing activities | (4,752) | (1,419) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (130) | 289 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (9,295) | (29,799) |
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 51,163 | 63,281 |
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD | 41,868 | 33,482 |
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS: | ||
Purchase of property and equipment | 237 | 666 |
Convertible notes conversions | 2,236 | 7,668 |
SUPPLEMENTARY DISCLOSURE ON CASH FLOWS | ||
Interest paid | $ 2,411 | $ 2,613 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES a. General Protalix BioTherapeutics, Inc. (collectively with its subsidiaries, the “Company”), and its wholly-owned subsidiaries, Protalix Ltd. and Protalix B.V. (the “Subsidiaries”), are biopharmaceutical companies focused on the development and commercialization of recombinant therapeutic proteins based on the Company’s proprietary ProCellEx ® ® The Company’s product pipeline currently includes, among other candidates: (1) pegunigalsidase alfa, or PRX-102, a therapeutic protein candidate for the treatment of Fabry disease, a rare, genetic lysosomal disorder; (2) alidornase alfa, or PRX-110, a proprietary plant cell recombinant human Deoxyribonuclease 1, or DNase, under development for the treatment of Cystic Fibrosis, to be administered by inhalation; and (3) OPRX-106, the Company’s oral antiTNF product candidate which is being developed as an orally-delivered anti-inflammatory treatment using plant cells as a natural capsule for the expressed protein. Obtaining marketing approval with respect to any product candidate in any country is dependent on the Company’s ability to implement the necessary regulatory steps required to obtain such approvals. The Company cannot reasonably predict the outcome of these activities. On October 19, 2017, Protalix Ltd. and Chiesi Farmaceutici S.p.A. (“Chiesi”) entered into an Ex-US license agreement (the “Chiesi Ex-U.S. Agreement”) pursuant to which Chiesi was granted an exclusive license for all markets outside of the United States to commercialize pegunigalsidase alfa. On July 23, 2018, Protalix Ltd. entered into an Exclusive License and Supply Agreement with Chiesi (the “Chiesi U.S. Agreement”), with respect to the development and commercialization of pegunigalsidase alfa in the United States. Under each of the Chiesi Ex-U.S. Agreement and the Chiesi U.S. Agreement, Chiesi made an upfront payment to Protalix Ltd. of $25.0 million in connection with the execution of the agreement. In addition, under the Chiesi Ex-U.S. Agreement, Protalix Ltd. is entitled to additional payments of up to $25.0 million in pegunigalsidase alfa development costs, capped at $10.0 million per year and to receive additional payments of up to $320.0 million, in the aggregate, in regulatory and commercial milestone payments. Under the Chiesi U.S. Agreement, Protalix Ltd. is entitled to payments of up to a maximum of $20.0 million to cover development costs for pegunilgalsidase alfa, subject to a maximum of $7.5 million per year, and to receive an additional up to a maximum of $760.0 million, in the aggregate, in regulatory and commercial milestone payments. Under the terms of both of the Chiesi agreements, Protalix Ltd. will manufacture all of the pegunigalsidase alfa needed under the agreements, subject to certain exceptions, and Chiesi will purchase pegunigalsidase alfa from Protalix, subject to certain terms and conditions. Under the Chiesi Ex-U.S. Agreement, Chiesi is required to make tiered payments of 15% to 35% of its net sales, depending on the amount of annual sales outside of the United States, as consideration for product supply. Under the Chiesi U.S. Agreement, Chiesi is required to make tiered payments of 15% to 40% of its net sales, depending on the amount of annual sales outside of the United States, as consideration for product supply. Since its approval by the FDA, taliglucerase alfa has been marketed by Pfizer Inc. (“Pfizer”), in accordance with the exclusive license and supply agreement between Protalix Ltd. and Pfizer, which is referred to herein as the Pfizer Agreement. In October 2015, the Company entered into an Amended and Restated Exclusive License and Supply Agreement with Pfizer (the “Amended Pfizer Agreement”) which amends and restates the Pfizer Agreement in its entirety. Pursuant to the Amended Pfizer Agreement, the Company sold to Pfizer its share in the collaboration created under the Pfizer Agreement for the commercialization of Elelyso in exchange for a cash payment equal to $36.0 million. As part of the sale, the Company agreed to transfer its rights to Elelyso in Israel to Pfizer while gaining full rights to it in Brazil. Under the Amended Pfizer Agreement, Pfizer is entitled to all of the revenues, and is responsible for 100% of expenses globally for Elelyso, excluding Brazil where the Company is responsible for all expenses and retains all revenues. On June 18, 2013, the Company entered into a Supply and Technology Transfer Agreement (the “Brazil Agreement”) with Fundação Oswaldo Cruz (“Fiocruz”), an arm of the Brazilian Ministry of Health (the “Brazilian MoH”), for taliglucerase alfa. Fiocruz’s purchases of alfataliglicerase to date have been significantly below certain agreed upon purchase milestones and, accordingly, the Company has the right to terminate the Brazil Agreement. Notwithstanding the termination right, the Company is, at this time, continuing to supply alfataliglicerase to Fiocruz under the Brazil Agreement, and patients continue to be treated with alfataliglicerase in Brazil. Approximately 10% of adult Gaucher patients in Brazil are currently treated with alfataliglicerase. The Company is discussing with Fiocruz potential actions that Fiocruz may take to comply with its purchase obligations and, based on such discussions, the Company will determine what it believes to be the course of action that is in the best interest of the Company. In 2017, the Company received a purchase order from the Brazilian MoH for the purchase of alfataliglicerase for the treatment of Gaucher patients in Brazil for consideration of approximately $24.3 million. Shipments started in June 2017. The Company recorded revenues of $7.1 million for sales of alfataliglicerase to Fiocruz in 2017, and $2.6 million during the nine months ended September 30, 2018. Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development activities and the corresponding level of expenditures for at least 12 months from the date of approval of the September 30, 2018 financial statements, although no assurance can be given that it will not need additional funds prior to such time. If there are unexpected increases in general and administrative expenses or research and development expenses, the Company may need to seek additional financing. b. Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (of a normal recurring nature) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2017, filed by the Company with the Commission. The comparative balance sheet at December 31, 2017 has been derived from the audited financial statements at that date. c. Net loss per share Basic and diluted loss per share (“LPS”) are computed by dividing net loss by the weighted average number of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), outstanding for each period. Diluted LPS is calculated in continuing operations. The calculation of diluted LPS does not include 76,195,921 and 73,310,911 shares of Common Stock underlying outstanding options and restricted shares of Common Stock and shares of Common Stock issuable upon conversion of the convertible notes for the nine months ended September 30, 2017 and 2018, respectively, and 80,696,070 and 73,280,977 shares of Common Stock for the three months ended September 30, 2017 and 2018, respectively, because the effect would be anti-dilutive. d. Revenue recognition 1. Revenues from supply agreements The Company recognizes revenues from supply agreements and from selling products when control is transferred to the customer and collectability is probable. 2. Revenues from Chiesi Agreements As Chiesi is obligated to acquire pegunigalsidase alfa from the Company and the development services are not considered distinct, development and manufacturing of a product to be commercialized by Chiesi is viewed as a single performance obligation under each of the agreements. Since there is only one performance obligation, all payments received from Chiesi prior to the satisfaction of the Company’s obligation will be deferred. Therefore, the upfront payments and future research and development reimbursement payments and any potential additional development milestone payments under each agreement are contract liabilities and will be deferred until the commencement of commercial manufacturing in the applicable territories. e. Recently adopted standards In May 2014, the Financial Accounting Standards Board (“FASB”) In January 2016, the FASB issued ASU, No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. The guidance is effective for annual reporting periods beginning after December 15, 2017. The implementation of this ASU did not have a material impact on the Company’s consolidated financial statements. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 2 - INVENTORIES The Company’s inventory at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, 2018 2017 ( U.S. dollars in thousands) Raw materials $ 3,201 $ 3,838 Work in progress 276 485 Finished goods 4,482 3,510 Total inventory $ 7,959 $ 7,833 |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | NOTE 3 – FAIR VALUE MEASUREMENT The Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value is based on the price that would be received from the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value. The fair value of the financial instruments included in the working capital of the Company is usually identical or close to their carrying value. The fair value of the convertible notes derivative is based on Level 3 measurement. The fair value of the remaining $58.0 million in aggregate principal amount of the Company’s outstanding 7.50% measurement. The Company prepared a valuation of the fair value of the Company’s 2021 Notes (a Level 3 valuation) as of September 30, 2018. The value of these notes was estimated by implementing the binomial model. The liability component was valued based on the Income Approach. The following parameters were used: 2021 Notes Stock price (USD) 0.73 Expected term (years) 3.13 Risk free rate 2.87 % Volatility 75.56 % Yield 13.50 % |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES | NOTE 4 – CONVERTIBLE NOTES All of our outstanding convertible notes are accounted for using the guidance set forth in the FASB Accounting Standards Codification (ASC) 815 which requires that the Company determine whether the embedded conversion option must be separated and accounted for separately. ASC 470-20, regarding debt with conversion and other options, requires the issuer of a convertible debt instrument that may be settled in cash upon conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The 2021 Notes were accounted for partially as liability and equity components of the instrument and partially as a debt host contract with an embedded derivative resulting from the conversion feature. During the year ended December 31, 2017, the embedded derivative was reclassified to additional paid in capital. Issuance costs regarding the issuance of the 2021 Notes are amortized using the effective interest rate. During the nine months ended September 30, 2018, note holders converted $1.1 million aggregate principal amount of the 2021 Notes into a total of 1,456,354 shares of Common Stock, and cash payments of approximately $14,439, in the aggregate. An additional 14,860 shares of Common Stock were issued after September 30, 2018 in connection with the make-whole premium associated with certain of the converted notes that were converted during the third quarter of 2018. In addition, in June 2018, the Company exchanged $3.42 million aggregate principal amount of the Company’s outstanding 4.50% convertible promissory notes due 2018 (the “2018 Notes”) for 2,613,636 shares of Common Stock and approximately $2.2 million in cash and delivered the necessary funds under the indenture governing the 2018 Notes, which was $2.5 million. On September 15, 2018, the 2018 Notes matured and have been paid in full. As of September 30, 2018, a total of $58.0 million aggregate principal amount of the 2021 Notes were outstanding. In addition, as of September 30, 2018, none of the 2018 Notes were outstanding. |
REVENUES
REVENUES | 9 Months Ended |
Sep. 30, 2018 | |
Income Statement [Abstract] | |
REVENUES | NOTE 5 – REVENUES The following table summarizes the Company’s disaggregation of revenues: Nine Months Ended September 30, (U.S. dollars in thousands) 2018 2017 Revenues: Pfizer $ 4,649 $ 10,198 Brazil $ 2,573 $ 6,575 $ 7,222 $ 16,773 |
STOCK TRANSACTIONS
STOCK TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK TRANSACTIONS | NOTE 6 – STOCK TRANSACTIONS On September 13, 2018, the Company’s compensation committee approved the grant of 10-year options to purchase, in the aggregate, 6,360,000 shares of Common Stock, of which options to purchase 4,000,000 shares were granted to the Company’s executive officers and options to purchase 2,360,000 shares were granted to other employees with an exercise price equal to $0.56 per share and $0.51 per share, respectively, under the Company’s 2006 Employee Stock Incentive Plan, as amended (the “Plan”). The options vest over a four-year period in 16 equal quarterly increments. Vesting of the options granted to the executive officers is subject to acceleration in full upon a Corporate Transaction or a Change in Control, as those terms are defined in the Plan, and are subject to certain other terms and conditions. The Company estimated the fair value of the options on the date of grant using the Black-Scholes option-pricing model to be approximately $1.9 million based on the following weighted average yield of 0% for all years; expected volatility of 64.3%; risk-free interest rates of 2.9%; and expected life of six years. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
General | a. General Protalix BioTherapeutics, Inc. (collectively with its subsidiaries, the “Company”), and its wholly-owned subsidiaries, Protalix Ltd. and Protalix B.V. (the “Subsidiaries”), are biopharmaceutical companies focused on the development and commercialization of recombinant therapeutic proteins based on the Company’s proprietary ProCellEx ® ® The Company’s product pipeline currently includes, among other candidates: (1) pegunigalsidase alfa, or PRX-102, a therapeutic protein candidate for the treatment of Fabry disease, a rare, genetic lysosomal disorder; (2) alidornase alfa, or PRX-110, a proprietary plant cell recombinant human Deoxyribonuclease 1, or DNase, under development for the treatment of Cystic Fibrosis, to be administered by inhalation; and (3) OPRX-106, the Company’s oral antiTNF product candidate which is being developed as an orally-delivered anti-inflammatory treatment using plant cells as a natural capsule for the expressed protein. Obtaining marketing approval with respect to any product candidate in any country is dependent on the Company’s ability to implement the necessary regulatory steps required to obtain such approvals. The Company cannot reasonably predict the outcome of these activities. On October 19, 2017, Protalix Ltd. and Chiesi Farmaceutici S.p.A. (“Chiesi”) entered into an Ex-US license agreement (the “Chiesi Ex-U.S. Agreement”) pursuant to which Chiesi was granted an exclusive license for all markets outside of the United States to commercialize pegunigalsidase alfa. On July 23, 2018, Protalix Ltd. entered into an Exclusive License and Supply Agreement with Chiesi (the “Chiesi U.S. Agreement”), with respect to the development and commercialization of pegunigalsidase alfa in the United States. Under each of the Chiesi Ex-U.S. Agreement and the Chiesi U.S. Agreement, Chiesi made an upfront payment to Protalix Ltd. of $25.0 million in connection with the execution of the agreement. In addition, under the Chiesi Ex-U.S. Agreement, Protalix Ltd. is entitled to additional payments of up to $25.0 million in pegunigalsidase alfa development costs, capped at $10.0 million per year and to receive additional payments of up to $320.0 million, in the aggregate, in regulatory and commercial milestone payments. Under the Chiesi U.S. Agreement, Protalix Ltd. is entitled to payments of up to a maximum of $20.0 million to cover development costs for pegunilgalsidase alfa, subject to a maximum of $7.5 million per year, and to receive an additional up to a maximum of $760.0 million, in the aggregate, in regulatory and commercial milestone payments. Under the terms of both of the Chiesi agreements, Protalix Ltd. will manufacture all of the pegunigalsidase alfa needed under the agreements, subject to certain exceptions, and Chiesi will purchase pegunigalsidase alfa from Protalix, subject to certain terms and conditions. Under the Chiesi Ex-U.S. Agreement, Chiesi is required to make tiered payments of 15% to 35% of its net sales, depending on the amount of annual sales outside of the United States, as consideration for product supply. Under the Chiesi U.S. Agreement, Chiesi is required to make tiered payments of 15% to 40% of its net sales, depending on the amount of annual sales outside of the United States, as consideration for product supply. Since its approval by the FDA, taliglucerase alfa has been marketed by Pfizer Inc. (“Pfizer”), in accordance with the exclusive license and supply agreement between Protalix Ltd. and Pfizer, which is referred to herein as the Pfizer Agreement. In October 2015, the Company entered into an Amended and Restated Exclusive License and Supply Agreement with Pfizer (the “Amended Pfizer Agreement”) which amends and restates the Pfizer Agreement in its entirety. Pursuant to the Amended Pfizer Agreement, the Company sold to Pfizer its share in the collaboration created under the Pfizer Agreement for the commercialization of Elelyso in exchange for a cash payment equal to $36.0 million. As part of the sale, the Company agreed to transfer its rights to Elelyso in Israel to Pfizer while gaining full rights to it in Brazil. Under the Amended Pfizer Agreement, Pfizer is entitled to all of the revenues, and is responsible for 100% of expenses globally for Elelyso, excluding Brazil where the Company is responsible for all expenses and retains all revenues. On June 18, 2013, the Company entered into a Supply and Technology Transfer Agreement (the “Brazil Agreement”) with Fundação Oswaldo Cruz (“Fiocruz”), an arm of the Brazilian Ministry of Health (the “Brazilian MoH”), for taliglucerase alfa. Fiocruz’s purchases of alfataliglicerase to date have been significantly below certain agreed upon purchase milestones and, accordingly, the Company has the right to terminate the Brazil Agreement. Notwithstanding the termination right, the Company is, at this time, continuing to supply alfataliglicerase to Fiocruz under the Brazil Agreement, and patients continue to be treated with alfataliglicerase in Brazil. Approximately 10% of adult Gaucher patients in Brazil are currently treated with alfataliglicerase. The Company is discussing with Fiocruz potential actions that Fiocruz may take to comply with its purchase obligations and, based on such discussions, the Company will determine what it believes to be the course of action that is in the best interest of the Company. In 2017, the Company received a purchase order from the Brazilian MoH for the purchase of alfataliglicerase for the treatment of Gaucher patients in Brazil for consideration of approximately $24.3 million. Shipments started in June 2017. The Company recorded revenues of $7.1 million for sales of alfataliglicerase to Fiocruz in 2017, and $2.6 million during the nine months ended September 30, 2018. Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development activities and the corresponding level of expenditures for at least 12 months from the date of approval of the September 30, 2018 financial statements, although no assurance can be given that it will not need additional funds prior to such time. If there are unexpected increases in general and administrative expenses or research and development expenses, the Company may need to seek additional financing. |
Basis of presentation | b. Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (of a normal recurring nature) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2017, filed by the Company with the Commission. The comparative balance sheet at December 31, 2017 has been derived from the audited financial statements at that date. |
Net loss per share | c. Net loss per share Basic and diluted loss per share (“LPS”) are computed by dividing net loss by the weighted average number of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), outstanding for each period. Diluted LPS is calculated in continuing operations. The calculation of diluted LPS does not include 76,195,921 and 73,310,911 shares of Common Stock underlying outstanding options and restricted shares of Common Stock and shares of Common Stock issuable upon conversion of the convertible notes for the nine months ended September 30, 2017 and 2018, respectively, and 80,696,070 and 73,280,977 shares of Common Stock for the three months ended September 30, 2017 and 2018, respectively, because the effect would be anti-dilutive. |
Revenue Recognition | d. Revenue recognition 1. Revenues from supply agreements The Company recognizes revenues from supply agreements and from selling products when control is transferred to the customer and collectability is probable. 2. Revenues from Chiesi Agreements As Chiesi is obligated to acquire pegunigalsidase alfa from the Company and the development services are not considered distinct, development and manufacturing of a product to be commercialized by Chiesi is viewed as a single performance obligation under each of the agreements. Since there is only one performance obligation, all payments received from Chiesi prior to the satisfaction of the Company’s obligation will be deferred. Therefore, the upfront payments and future research and development reimbursement payments and any potential additional development milestone payments under each agreement are contract liabilities and will be deferred until the commencement of commercial manufacturing in the applicable territories. |
Recently adopted standards | e. Recently adopted standards In May 2014, the Financial Accounting Standards Board (“FASB”) In January 2016, the FASB issued ASU, No. 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The guidance affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. The guidance is effective for annual reporting periods beginning after December 15, 2017. The implementation of this ASU did not have a material impact on the Company’s consolidated financial statements. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The Company’s inventory at September 30, 2018 and December 31, 2017 consisted of the following: September 30, December 31, 2018 2017 ( U.S. dollars in thousands) Raw materials $ 3,201 $ 3,838 Work in progress 276 485 Finished goods 4,482 3,510 Total inventory $ 7,959 $ 7,833 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements, Recurring and Nonrecurring | The Company prepared a valuation of the fair value of the Company’s 2021 Notes (a Level 3 valuation) as of September 30, 2018. The value of these notes was estimated by implementing the binomial model. The liability component was valued based on the Income Approach. The following parameters were used: 2021 Notes Stock price (USD) 0.73 Expected term (years) 3.13 Risk free rate 2.87 % Volatility 75.56 % Yield 13.50 % |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Income Statement [Abstract] | |
Statements of operations | The following table summarizes the Company’s disaggregation of revenues: Nine Months Ended September 30, (U.S. dollars in thousands) 2018 2017 Revenues: Pfizer $ 4,649 $ 10,198 Brazil $ 2,573 $ 6,575 $ 7,222 $ 16,773 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Oct. 19, 2017 | Oct. 31, 2015 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Jul. 23, 2018 | |
Significant Accounting Policies [Line Items] | ||||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 73,280,977 | 80,696,070 | 73,310,911 | 76,195,921 | ||||
Revenues | $ 663 | $ 7,526 | $ 7,222 | $ 16,773 | ||||
Brazil [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Percentage Of Adult Gaucher Patients Treated With alfataliglicerase | 10.00% | |||||||
Revenues | $ 2,573 | $ 6,575 | ||||||
Brazil Agreement [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Supply Commitment In Year 2017 | $ 24,300 | |||||||
Pfizer Agreement [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Proceeds From Exchange For Rights To Royalties | $ 36,000 | |||||||
Amended Pfizer Agreement [Member] | Protalix Bio Therapeutics Incorporation [Member] | Brazil [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Collaborative Arrangement Revenues and Expenses Sharing Percentage | 100.00% | |||||||
Fiocruz [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Revenues | $ 2,600 | $ 7,100 | ||||||
Chiesi US Agreement [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Upfront Nonrefundable Noncreditable Payment Receivable | $ 25,000 | |||||||
Additional Amounts Payable To Cover Development Costs | $ 20,000 | |||||||
Maximum Entitlement Of Development Costs To Cover Per Year | 7,500 | |||||||
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones | $ 760,000 | |||||||
Chiesi US Agreement [Member] | Minimum [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Payment On Net Sales Percentage | 15.00% | |||||||
Chiesi US Agreement [Member] | Maximum [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Payment On Net Sales Percentage | 40.00% | |||||||
Chiesi Ex US Agreement [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Upfront Nonrefundable Noncreditable Payment Receivable | $ 25,000 | |||||||
Additional Amounts Payable To Cover Development Costs | 25,000 | |||||||
Maximum Entitlement Of Development Costs To Cover Per Year | 10,000 | |||||||
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones | $ 320,000 | |||||||
Chiesi Ex US Agreement [Member] | Minimum [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Payment On Net Sales Percentage | 15.00% | |||||||
Chiesi Ex US Agreement [Member] | Maximum [Member] | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Payment On Net Sales Percentage | 35.00% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Raw materials | $ 3,201 | $ 3,838 |
Work in progress | 276 | 485 |
Finished goods | 4,482 | 3,510 |
Total inventory | $ 7,959 | $ 7,833 |
FAIR VALUE MEASUREMENT (The lia
FAIR VALUE MEASUREMENT (The liability component was valued based on the Income Approach) (Details) - 2021 Notes [Member] - Fair Value, Inputs, Level 3 [Member] | 9 Months Ended |
Sep. 30, 2018$ / shares | |
Stock price (USD) | $ 0.73 |
Expected term (years) | 3 years 1 month 17 days |
Risk free rate | 2.87% |
Volatility | 75.56% |
Yield | 13.50% |
FAIR VALUE MEASUREMENT (Narrati
FAIR VALUE MEASUREMENT (Narrative) (Details) $ in Millions | Sep. 30, 2018USD ($) |
Fair Value, Inputs, Level 3 [Member] | |
Convertible Debt, Fair Value Disclosures | $ 78 |
7.50% Convertible Notes 2016 [Member] | |
Debt Instrument, Interest Rate, Stated Percentage | 7.50% |
7.50% Convertible Notes 2016 [Member] | Fair Value, Inputs, Level 3 [Member] | |
Debt Instrument, Face Amount | $ 58 |
CONVERTIBLE NOTES (Narrative) (
CONVERTIBLE NOTES (Narrative) (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | |
Repayments of Convertible Debt | $ 4,752,000 | $ 10,961,000 | |
Debt Conversion, Converted Instrument, Amount | $ 2,236,000 | $ 7,668,000 | |
2018 Notes [Member] | |||
Debt Conversion, Converted Instrument, Shares Issued | 2,613,636 | ||
Repayments of Convertible Debt | $ 2,200,000 | ||
Debt Conversion, Converted Instrument, Amount | $ 3,420,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.50% | ||
2021 Notes [Member] | |||
Debt Conversion, Converted Instrument, Shares Issued | 1,456,354 | ||
Repayments of Convertible Debt | $ 14,439 | ||
Long-term Debt, Gross | 58,000,000 | ||
Debt Conversion, Original Debt, Amount | 1,100,000 | ||
Repayments of Remaining Convertible Debt Through Necessary Funds | $ 2,500,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 7.50% | ||
2021 Notes [Member] | Subsequent Event [Member] | |||
Debt Conversion, Converted Instrument, Shares Issued | 14,860 |
REVENUES (Statements of operati
REVENUES (Statements of operations) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 663 | $ 7,526 | $ 7,222 | $ 16,773 |
Pfizer [Member] | ||||
Revenues | 4,649 | 10,198 | ||
Brazil [Member] | ||||
Revenues | $ 2,573 | $ 6,575 |
STOCK TRANSACTIONS (Narrative)
STOCK TRANSACTIONS (Narrative) (Details) - Option to purchase shares of common stock [Member] $ / shares in Units, $ in Millions | Sep. 13, 2018USD ($)$ / sharesshares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | shares | 6,360,000 |
Share Based Compensation Arrangement By Share Based Payment Award Grant Date Fair Value | $ | $ 1.9 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 64.30% |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 2.90% |
Share Price | $ / shares | $ 0.51 |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years |
Executive Officers [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 4,000,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.56 |
Employees [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 2,360,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ / shares | $ 0.51 |