Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 01, 2018 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | true | |
Amendment Description | This Amendment No. 1 to Form 10-Q, or this Amendment, amends the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018 we originally filed with the Securities and Exchange Commission, or the Commission, on November 7, 2018, or the Original Filing. | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Protalix BioTherapeutics, Inc. | |
Entity Central Index Key | 0001006281 | |
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 |
FUNDS IN RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT | 1,779 | 1,887 |
PROPERTY AND EQUIPMENT, NET | 6,628 | 7,676 |
Total assets | 65,747 | 72,214 |
Accounts payable and accruals: | ||
Trade | 4,388 | 7,521 |
Other | 10,163 | 9,310 |
Contracts liability | 9,786 | |
Convertible notes | 5,921 | |
Total current liabilities | 24,337 | 22,752 |
LONG TERM LIABILITIES: | ||
Convertible notes | 47,320 | 46,267 |
Contracts liability | 33,493 | 25,015 |
Liability for employee rights upon retirement | 2,386 | 2,586 |
Other long term liabilities | 6,154 | 5,051 |
Total long term liabilities | 89,353 | 78,919 |
Total liabilities | 113,690 | 101,671 |
COMMITMENTS | ||
CAPITAL DEFICIENCY | (47,943) | (29,457) |
Total liabilities net of capital deficiency | $ 65,747 | $ 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 | ||
COST OF GOODS SOLD | $ (1,917) | $ (6,066) | $ (7,024) | $ (13,677) | |
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] | (4,088) | (2,836) | (8,744) | (8,187) |
OPERATING LOSS | (3,741) | (7,765) | (15,636) | (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 | $ (5,322) | $ (11,437) | $ (21,023) | $ (70,135) | |
NET LOSS PER SHARE OF COMMON STOCK BASIC AND DILUTED | $ (0.04) | $ (0.09) | $ (0.14) | $ (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 | |
Goods [Member] | |||||
REVENUES | $ 663 | $ 7,526 | $ 7,222 | $ 16,773 | |
License and R&D services [Member] | |||||
REVENUES | $ 11,672 | $ 16,665 | |||
[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 | (29,457) | $ 144 | 266,495 | (296,096) | ||
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 | (21,023) | (21,023) | ||||
Balance at Sep. 30, 2018 | $ (47,943) | $ 148 | $ 269,028 | $ (317,119) | ||
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 | $ (21,023) | $ (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 contracts liability (including non-current portion) | 18,264 | (837) |
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 pegunigalsidase 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 1. Restatement of previously issued condensed consolidated financial statements The Company has restated these financial statements to correct an error in the revenue recognition from the agreements with Chiesi. Previously, the Company had identified a single performance obligation with regard to its promises under each of the agreements. The Company subsequently concluded that there are two performance obligations under each of the agreements as follows: (i) the license together with research and development services and (ii) a contingent performance obligation regarding future manufacturing. As such, the Company has recognized revenue for the combined performance obligations (the license and the research and development services) for the three and nine months ended September 30, 2018 for the satisfaction of the performance obligation that occurred during the three and nine months ended September 30, 2018. The Company’s decision to restate the financial statements previously reported on its Quarterly Reports on Form 10-Q, was approved by, and with the continuing oversight of, the Company’s Audit Committee. 2. Impacts of restatement The effects of the restatement on the line items within the Company’s condensed consolidated balance sheets as of September 30, 2018 are as follows: September 30, 2018 ( U.S. dollars in thousands) As Adjustments As restated CONTRACTS ASSET $ 1,450 $ (1,450 ) $ - CURRENT LIABILITIES: Contracts liability - 9,786 9,786 Total current liabilities $ 14,551 $ 9,786 $ 24,337 LONG TERM LIABILITIES: Contracts liability 61,780 (28,287 ) 33,493 Total long term liabilities 117,640 (28,287 ) 89,353 Total liabilities 132,191 (18,501 ) 113,690 CAPITAL DEFICIENCY $ (64,994 ) $ 17,051 $ (47,943 ) The effects of the restatement on the line items within the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2018 are as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 ( U.S. dollars in thousands, except per share data) As Adjustments As As Adjustments As REVENUES FROM LICENSE AGREEMENTS $ - $ 11,672 $ 11,672 $ - $ 16,665 $ 16,665 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ (2,638 ) $ (1,450 ) $ (4,088 ) $ (7,294 ) $ (1,450 ) $ (8,744 ) OPERATING LOSS $ (13,963 ) $ 10,222 $ (3,741 ) $ (30,851 ) $ 15,215 $ (15,636 ) LOSS FOR THE PERIOD $ (15,544 ) $ 10,222 $ (5,322 ) $ (36,238 ) $ 15,215 $ (21,023 ) Net loss per share of common stock-basic and diluted $ (0.10 ) $ 0.06 $ (0.04 ) $ (0.25 ) $ 0.11 $ (0.14 ) The effects of the restatement on the line items within the Company’s condensed consolidated statements of changes in capital deficiency for the nine months ended September 30, 2018 are as follows: Nine Months Ended September 30, 2018 ( U.S. dollars in thousands, except per share data) As Adjustments As restated Net loss for the nine months ended September 30, 2018 $ (36,238 ) $ 15,215 $ (21,023 ) Balances as of September 30, 2018 Accumulated deficit (334,170 ) 17,051 (317,119 ) Total capital deficiency $ (64,994 ) $ 17,051 $ (47,943 ) Although there was with no impact to net cash provided by operating activities, net cash used in investing activities or net cash used in financing activities, the effects of the restatement on the line items within the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 are as follows: Nine Months Ended September 30, 2018 ( U.S. dollars in thousands) As Adjustments As restated Cash flows from operating activities: Net loss $ (36,238 ) $ 15,215 $ (21,023 ) Increase in contracts liability 34,929 (16,665 ) 18,264 Increase in contract asset (1,450 ) 1,450 - Net cash used in operating activities $ (3,738 ) $ - $ (3,738 ) The impacts of the restatement have been reflected throughout the financial statements, including the applicable footnotes, as appropriate. In addition, in connection with the Chiesi Ex-U.S. Agreement, the Company should have recognized $1.8 million of revenue in the last quarter of 2017 and accordingly has revised certain items in its consolidated financial statements for December 31, 2017 presented herein. The Company evaluated the materiality of the error from quantitative and qualitative perspectives, and concluded that the error was immaterial to the Company’s prior annual consolidated financial statements. Since the revision was not material to any prior interim period or annual consolidated financial statements, no amendments to previously filed interim or annual periodic reports was required. Consequently, the Company revised the historical consolidated financial information presented herein. Below are amounts as reported and as adjusted for December 31, 2017: December 31, 2017 ( U.S. dollars in thousands) As originally Adjustments As revised Contracts liability $ 26,851 $ (1,836 ) $ 25,015 Accumulated deficit (297,932 ) 1,836 (296,096 ) 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 (as restated) 1. Revenue 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. Revenue from Chiesi Agreements According to Accounting Standard Codification Topic 606, Revenue from contracts with customers (“ASC 606”), a performance obligation is a commitment to provide a distinct good or service or a series of distinct goods or services. Goods and services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created. A good or service promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. The Company has identified two performance obligations in each of the Chiesi agreements as follows: (1) the license and research and development services and (2) a contingent performance obligation regarding future manufacturing. The Company determined that the licenses granted to Chiesi together with the research and development services should be combined into a single performance obligation under each agreement since Chiesi cannot benefit from a license without the research and development services. The research and development services are highly specialized and are dependent on the supply of the drug. The future manufacturing is contingent on regulatory approvals of the drug and the Company deems these services to be separately identifiable from other performance obligations in the contract. Manufacturing services post-regulatory approval are not interdependent or interrelated with the license and research and development services. The transaction price was comprised of fixed consideration and variable consideration (capped research and development reimbursements). Under ASC 606, the consideration to which the Company would be entitled upon the achievement of contractual milestones, which are contingent upon the occurrence of future events, are a form of variable consideration. The Company estimates variable consideration using the most likely method. Amounts included in the transaction price are recognized only when it is probable that a significant reversal of cumulative revenues will not occur, usually upon achievement of a specific milestone. The Company used significant judgment when it determined variable consideration. Since the customer benefits from the research and development services as the entity performs, revenue from granting the license and the research and development services is recognized over time using the cost-to-cost method. The Company used significant judgment when it determined the costs expected to be incurred upon satisfying the identified performance obligation. Revenue from additional research and development services ordered by Chiesi, is recognized over time using the cost-to-cost method. The Company accounted for the Chiesi U.S. agreement as a modification of the Chiesi Ex-U.S. Agreement. As such, the Company recorded revenue through a cumulative catch-up adjustment in the amount of $6.2 million. The Company’s revenue recognition accounting policy prior to January 1, 2018, was materially the same. 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, (U.S. dollars in thousands) 2018 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
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 (AS RESTATED) The following table summarizes the Company’s disaggregation of revenues: Nine Months Ended September 30, (U.S. dollars in thousands) 2018 2017 Pfizer $ 4,649 $ 10,198 Brazil $ 2,573 $ 6,575 Total revenues from selling goods $ 7,222 $ 16,773 Revenues from license and R&D services $ 16,665 |
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 pegunigalsidase 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 1. Restatement of previously issued condensed consolidated financial statements The Company has restated these financial statements to correct an error in the revenue recognition from the agreements with Chiesi. Previously, the Company had identified a single performance obligation with regard to its promises under each of the agreements. The Company subsequently concluded that there are two performance obligations under each of the agreements as follows: (i) the license together with research and development services and (ii) a contingent performance obligation regarding future manufacturing. As such, the Company has recognized revenue for the combined performance obligations (the license and the research and development services) for the three and nine months ended September 30, 2018 for the satisfaction of the performance obligation that occurred during the three and nine months ended September 30, 2018. The Company’s decision to restate the financial statements previously reported on its Quarterly Reports on Form 10-Q, was approved by, and with the continuing oversight of, the Company’s Audit Committee. 2. Impacts of restatement The effects of the restatement on the line items within the Company’s condensed consolidated balance sheets as of September 30, 2018 are as follows: September 30, 2018 ( U.S. dollars in thousands) As Adjustments As restated CONTRACTS ASSET $ 1,450 $ (1,450 ) $ - CURRENT LIABILITIES: Contracts liability - 9,786 9,786 Total current liabilities $ 14,551 $ 9,786 $ 24,337 LONG TERM LIABILITIES: Contracts liability 61,780 (28,287 ) 33,493 Total long term liabilities 117,640 (28,287 ) 89,353 Total liabilities 132,191 (18,501 ) 113,690 CAPITAL DEFICIENCY $ (64,994 ) $ 17,051 $ (47,943 ) The effects of the restatement on the line items within the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2018 are as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 ( U.S. dollars in thousands, except per share data) As Adjustments As As Adjustments As REVENUES FROM LICENSE AGREEMENTS $ - $ 11,672 $ 11,672 $ - $ 16,665 $ 16,665 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ (2,638 ) $ (1,450 ) $ (4,088 ) $ (7,294 ) $ (1,450 ) $ (8,744 ) OPERATING LOSS $ (13,963 ) $ 10,222 $ (3,741 ) $ (30,851 ) $ 15,215 $ (15,636 ) LOSS FOR THE PERIOD $ (15,544 ) $ 10,222 $ (5,322 ) $ (36,238 ) $ 15,215 $ (21,023 ) Net loss per share of common stock-basic and diluted $ (0.10 ) $ 0.06 $ (0.04 ) $ (0.25 ) $ 0.11 $ (0.14 ) The effects of the restatement on the line items within the Company’s condensed consolidated statements of changes in capital deficiency for the nine months ended September 30, 2018 are as follows: Nine Months Ended September 30, 2018 ( U.S. dollars in thousands, except per share data) As Adjustments As restated Net loss for the nine months ended September 30, 2018 $ (36,238 ) $ 15,215 $ (21,023 ) Balances as of September 30, 2018 Accumulated deficit (334,170 ) 17,051 (317,119 ) Total capital deficiency $ (64,994 ) $ 17,051 $ (47,943 ) Although there was with no impact to net cash provided by operating activities, net cash used in investing activities or net cash used in financing activities, the effects of the restatement on the line items within the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 are as follows: Nine Months Ended September 30, 2018 ( U.S. dollars in thousands) As Adjustments As restated Cash flows from operating activities: Net loss $ (36,238 ) $ 15,215 $ (21,023 ) Increase in contracts liability 34,929 (16,665 ) 18,264 Increase in contract asset (1,450 ) 1,450 - Net cash used in operating activities $ (3,738 ) $ - $ (3,738 ) The impacts of the restatement have been reflected throughout the financial statements, including the applicable footnotes, as appropriate. In addition, in connection with the Chiesi Ex-U.S. Agreement, the Company should have recognized $1.8 million of revenue in the last quarter of 2017 and accordingly has revised certain items in its consolidated financial statements for December 31, 2017 presented herein. The Company evaluated the materiality of the error from quantitative and qualitative perspectives, and concluded that the error was immaterial to the Company’s prior annual consolidated financial statements. Since the revision was not material to any prior interim period or annual consolidated financial statements, no amendments to previously filed interim or annual periodic reports was required. Consequently, the Company revised the historical consolidated financial information presented herein. Below are amounts as reported and as adjusted for December 31, 2017: December 31, 2017 ( U.S. dollars in thousands) As originally Adjustments As revised Contracts liability $ 26,851 $ (1,836 ) $ 25,015 Accumulated deficit (297,932 ) 1,836 (296,096 ) 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 (as restated) 1. Revenue 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. Revenue from Chiesi Agreements According to Accounting Standard Codification Topic 606, Revenue from contracts with customers (“ASC 606”), a performance obligation is a commitment to provide a distinct good or service or a series of distinct goods or services. Goods and services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created. A good or service promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. The Company has identified two performance obligations in each of the Chiesi agreements as follows: (1) the license and research and development services and (2) a contingent performance obligation regarding future manufacturing. The Company determined that the licenses granted to Chiesi together with the research and development services should be combined into a single performance obligation under each agreement since Chiesi cannot benefit from a license without the research and development services. The research and development services are highly specialized and are dependent on the supply of the drug. The future manufacturing is contingent on regulatory approvals of the drug and the Company deems these services to be separately identifiable from other performance obligations in the contract. Manufacturing services post-regulatory approval are not interdependent or interrelated with the license and research and development services. The transaction price was comprised of fixed consideration and variable consideration (capped research and development reimbursements). Under ASC 606, the consideration to which the Company would be entitled upon the achievement of contractual milestones, which are contingent upon the occurrence of future events, are a form of variable consideration. The Company estimates variable consideration using the most likely method. Amounts included in the transaction price are recognized only when it is probable that a significant reversal of cumulative revenues will not occur, usually upon achievement of a specific milestone. The Company used significant judgment when it determined variable consideration. Since the customer benefits from the research and development services as the entity performs, revenue from granting the license and the research and development services is recognized over time using the cost-to-cost method. The Company used significant judgment when it determined the costs expected to be incurred upon satisfying the identified performance obligation. Revenue from additional research and development services ordered by Chiesi, is recognized over time using the cost-to-cost method. The Company accounted for the Chiesi U.S. agreement as a modification of the Chiesi Ex-U.S. Agreement. As such, the Company recorded revenue through a cumulative catch-up adjustment in the amount of $6.2 million. The Company’s revenue recognition accounting policy prior to January 1, 2018, was materially the same. |
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. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments [Table Text Block] | The effects of the restatement on the line items within the Company’s condensed consolidated balance sheets as of September 30, 2018 are as follows: September 30, 2018 ( U.S. dollars in thousands) As Adjustments As restated CONTRACTS ASSET $ 1,450 $ (1,450 ) $ - CURRENT LIABILITIES: Contracts liability - 9,786 9,786 Total current liabilities $ 14,551 $ 9,786 $ 24,337 LONG TERM LIABILITIES: Contracts liability 61,780 (28,287 ) 33,493 Total long term liabilities 117,640 (28,287 ) 89,353 Total liabilities 132,191 (18,501 ) 113,690 CAPITAL DEFICIENCY $ (64,994 ) $ 17,051 $ (47,943 ) The effects of the restatement on the line items within the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2018 are as follows: Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 ( U.S. dollars in thousands, except per share data) As Adjustments As As Adjustments As REVENUES FROM LICENSE AGREEMENTS $ - $ 11,672 $ 11,672 $ - $ 16,665 $ 16,665 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ (2,638 ) $ (1,450 ) $ (4,088 ) $ (7,294 ) $ (1,450 ) $ (8,744 ) OPERATING LOSS $ (13,963 ) $ 10,222 $ (3,741 ) $ (30,851 ) $ 15,215 $ (15,636 ) LOSS FOR THE PERIOD $ (15,544 ) $ 10,222 $ (5,322 ) $ (36,238 ) $ 15,215 $ (21,023 ) Net loss per share of common stock-basic and diluted $ (0.10 ) $ 0.06 $ (0.04 ) $ (0.25 ) $ 0.11 $ (0.14 ) The effects of the restatement on the line items within the Company’s condensed consolidated statements of changes in capital deficiency for the nine months ended September 30, 2018 are as follows: Nine Months Ended September 30, 2018 ( U.S. dollars in thousands, except per share data) As Adjustments As restated Net loss for the nine months ended September 30, 2018 $ (36,238 ) $ 15,215 $ (21,023 ) Balances as of September 30, 2018 Accumulated deficit (334,170 ) 17,051 (317,119 ) Total capital deficiency $ (64,994 ) $ 17,051 $ (47,943 ) Although there was with no impact to net cash provided by operating activities, net cash used in investing activities or net cash used in financing activities, the effects of the restatement on the line items within the condensed consolidated statements of cash flows for the nine months ended September 30, 2018 are as follows: Nine Months Ended September 30, 2018 ( U.S. dollars in thousands) As Adjustments As restated Cash flows from operating activities: Net loss $ (36,238 ) $ 15,215 $ (21,023 ) Increase in contracts liability 34,929 (16,665 ) 18,264 Increase in contract asset (1,450 ) 1,450 - Net cash used in operating activities $ (3,738 ) $ - $ (3,738 ) In addition, in connection with the Chiesi Ex-U.S. Agreement, the Company should have recognized $1.8 million of revenue in the last quarter of 2017 and accordingly has revised certain items in its consolidated financial statements for December 31, 2017 presented herein. The Company evaluated the materiality of the error from quantitative and qualitative perspectives, and concluded that the error was immaterial to the Company’s prior annual consolidated financial statements. Since the revision was not material to any prior interim period or annual consolidated financial statements, no amendments to previously filed interim or annual periodic reports was required. Consequently, the Company revised the historical consolidated financial information presented herein. Below are amounts as reported and as adjusted for December 31, 2017: December 31, 2017 ( U.S. dollars in thousands) As originally Adjustments As revised Contracts liability $ 26,851 $ (1,836 ) $ 25,015 Accumulated deficit (297,932 ) 1,836 (296,096 ) |
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, (U.S. dollars in thousands) 2018 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 (Tables)
FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements, Recurring and Nonrecurring | 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 Pfizer $ 4,649 $ 10,198 Brazil $ 2,573 $ 6,575 Total revenues from selling goods $ 7,222 $ 16,773 Revenues from license and R&D services $ 16,665 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (condensed consolidated balance sheets) (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||||
CONTRACTS ASSET | $ 0 | |||
CURRENT LIABILITIES: | ||||
Contracts liability | 9,786 | |||
Total current liabilities | 24,337 | 22,752 | ||
LONG TERM LIABILITIES: | ||||
Contracts liability | 33,493 | 25,015 | ||
Total long term liabilities | 89,353 | 78,919 | ||
Total Liabilities | 113,690 | 101,671 | ||
CAPITAL DEFICIENCY | (47,943) | (29,457) | $ (26,071) | $ (9,957) |
Previously Reported [Member] | ||||
CURRENT ASSETS: | ||||
CONTRACTS ASSET | 1,450 | |||
CURRENT LIABILITIES: | ||||
Contracts liability | 0 | |||
Total current liabilities | 14,551 | |||
LONG TERM LIABILITIES: | ||||
Contracts liability | 61,780 | 26,851 | ||
Total long term liabilities | 117,640 | |||
Total Liabilities | 132,191 | |||
CAPITAL DEFICIENCY | (64,994) | |||
Restatement Adjustment [Member] | ||||
CURRENT ASSETS: | ||||
CONTRACTS ASSET | (1,450) | |||
CURRENT LIABILITIES: | ||||
Contracts liability | 9,786 | |||
Total current liabilities | 9,786 | |||
LONG TERM LIABILITIES: | ||||
Contracts liability | (28,287) | $ (1,836) | ||
Total long term liabilities | (28,287) | |||
Total Liabilities | (18,501) | |||
CAPITAL DEFICIENCY | $ 17,051 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES (condensed consolidated income statement) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Significant Accounting Policies [Line Items] | |||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | [1] | $ (4,088) | $ (2,836) | $ (8,744) | $ (8,187) |
OPERATING LOSS | (3,741) | (7,765) | (15,636) | (24,935) | |
LOSS FOR THE PERIOD | $ (5,322) | $ (11,437) | $ (21,023) | $ (70,135) | |
Net loss per share of common stock-basic and diluted | $ (0.04) | $ (0.09) | $ (0.14) | $ (0.55) | |
License and Service [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
REVENUES FROM LICENSE AGREEMENTS | $ 11,672 | $ 16,665 | |||
Previously Reported [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | (2,638) | (7,294) | |||
OPERATING LOSS | (13,963) | (30,851) | |||
LOSS FOR THE PERIOD | $ (15,544) | $ (36,238) | |||
Net loss per share of common stock-basic and diluted | $ (0.10) | $ (0.25) | |||
Previously Reported [Member] | License and Service [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
REVENUES FROM LICENSE AGREEMENTS | $ 0 | $ 0 | |||
Restatement Adjustment [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | (1,450) | (1,450) | |||
OPERATING LOSS | 10,222 | 15,215 | |||
LOSS FOR THE PERIOD | $ 10,222 | $ 15,215 | |||
Net loss per share of common stock-basic and diluted | $ 0.06 | $ 0.11 | |||
Restatement Adjustment [Member] | License and Service [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
REVENUES FROM LICENSE AGREEMENTS | $ 11,672 | $ 16,665 | |||
[1] | Includes share-based compensation |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES (condensed consolidated statements of changes in capital deficiency) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Significant Accounting Policies [Line Items] | ||||||
Net loss for the nine months ended September 30, 2018 | $ (5,322) | $ (11,437) | $ (21,023) | $ (70,135) | ||
Total capital deficiency | (47,943) | (26,071) | (47,943) | (26,071) | $ (29,457) | $ (9,957) |
Retained Earnings [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Net loss for the nine months ended September 30, 2018 | (21,023) | (70,135) | ||||
Total capital deficiency | (317,119) | $ (282,791) | (317,119) | $ (282,791) | $ (296,096) | $ (212,656) |
Previously Reported [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Net loss for the nine months ended September 30, 2018 | (15,544) | (36,238) | ||||
Total capital deficiency | (64,994) | (64,994) | ||||
Previously Reported [Member] | Retained Earnings [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Total capital deficiency | (334,170) | (334,170) | ||||
Restatement Adjustment [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Net loss for the nine months ended September 30, 2018 | 10,222 | 15,215 | ||||
Total capital deficiency | 17,051 | 17,051 | ||||
Restatement Adjustment [Member] | Retained Earnings [Member] | ||||||
Significant Accounting Policies [Line Items] | ||||||
Total capital deficiency | $ 17,051 | $ 17,051 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES (condensed consolidated of cash flows) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Significant Accounting Policies [Line Items] | ||||
Net loss | $ (5,322) | $ (11,437) | $ (21,023) | $ (70,135) |
Increase in contracts liability | 18,264 | (837) | ||
Increase in contract asset | 0 | |||
Net cash used in operating activities | (3,738) | $ (27,584) | ||
Previously Reported [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Net loss | (15,544) | (36,238) | ||
Increase in contracts liability | 34,929 | |||
Increase in contract asset | (1,450) | |||
Net cash used in operating activities | (3,738) | |||
Restatement Adjustment [Member] | ||||
Significant Accounting Policies [Line Items] | ||||
Net loss | $ 10,222 | 15,215 | ||
Increase in contracts liability | (16,665) | |||
Increase in contract asset | 1,450 | |||
Net cash used in operating activities | $ 0 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES Reported and as adjusted (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Significant Accounting Policies [Line Items] | ||
Contracts liability | $ 33,493 | $ 25,015 |
Accumulated deficit | (296,096) | |
Restatement Adjustment [Member] | ||
Significant Accounting Policies [Line Items] | ||
Contracts liability | (28,287) | (1,836) |
Accumulated deficit | 1,836 | |
Previously Reported [Member] | ||
Significant Accounting Policies [Line Items] | ||
Contracts liability | $ 61,780 | 26,851 |
Accumulated deficit | $ (297,932) |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Oct. 19, 2017 | Oct. 31, 2015 | Sep. 30, 2018 | Dec. 31, 2017 | 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 | $ 0.001 | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 73,280,977 | 80,696,070 | 73,310,911 | 76,195,921 | |||||
Brazil [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Percentage Of Adult Gaucher Patients Treated With alfataliglicerase | 10.00% | ||||||||
Brazil Agreement [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Supply Commitment In Year 2017 | $ 24.3 | $ 24.3 | |||||||
Pfizer Agreement [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Proceeds From Exchange For Rights To Royalties | $ 36 | ||||||||
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 | $ 2.6 | $ 7.1 | |||||||
Chiesi US Agreement [Member] | |||||||||
Significant Accounting Policies [Line Items] | |||||||||
Upfront Nonrefundable Noncreditable Payment Receivable | $ 25 | ||||||||
Additional Amounts Payable To Cover Development Costs | $ 20 | ||||||||
Maximum Entitlement Of Development Costs To Cover Per Year | 7.5 | ||||||||
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones | $ 760 | ||||||||
Revenues | $ 1.8 | $ 6.2 | |||||||
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 | ||||||||
Additional Amounts Payable To Cover Development Costs | 25 | ||||||||
Maximum Entitlement Of Development Costs To Cover Per Year | 10 | ||||||||
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones | $ 320 | ||||||||
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 | |
Goods [Member] | ||||
Revenues | $ 663 | $ 7,526 | $ 7,222 | $ 16,773 |
License and R&D services [Member] | ||||
Revenues | $ 11,672 | 16,665 | ||
Goods [Member] | ||||
Revenues | 7,222 | 16,773 | ||
Pfizer [Member] | Goods [Member] | ||||
Revenues | 4,649 | 10,198 | ||
Brazil [Member] | Goods [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 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-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares | 6,360,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 4 years |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 0.51 |
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 Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 0.56 |
Executive [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 Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 0.51 |