Two days ago, we revisited Protalix BioTherapeutics(AMEX: PLX) with our subscribers. Shares of the company jumped back over the 50 moving average and given their upcoming date with the FDA (they have a PDUFA date of February 25, 2011 for their Gaucher’s disease treatment, UPLYSO [taliglucerase alfa]), we think shares may continue to appreciate. In fact, we continue to believe that UPLYSO will be approved in the US and later this year in the EU.
UPLYSO was granted orphan product designation, fast track development status and supporting efficacy/safety data came from a Phase 3 developed under a Special Protocol Assessment (SPA). Protalix and partner, Pfizer, are going to be competing with Genzyme’s Cerezyme, a currently approved treatment for Gaucher’s, which has had great commercial success(Q4 2010 revenue ~$225 million). Genzyme has built strong relationships in the Gaucher’s disease space over the years and is currently developing an oral version. Unfortunately, treatment with Cerezyme can cost upwards of $250,000/year and their manufacturing process had some recent difficulties causing a temporary shortage.
Despite these advantages, we believe that UPLYSO can compete with Cerezyme. UPLYSO’s clinical profile and cost will make it highly competitive, despite Genzyme’s advantages. Due to much lower production costs, Protalix/Pfizer have hinted at pricing UPLYSO somewhere in $150,000 to $200,000 per patient per year in Europe. Based on their pivotal data, UPLYSO’s safety and efficacy profile are on par with Cerezyme, if not better. Note the primary endpoint of the study was a 20% mean reduction from baseline in spleen volume(SV) after 9 months, as measured by MRI. UPLYSO demonstrated a statistically significant reduction in mean spleen volume after 9 months compared with baseline in both treatment groups, 60 U/kg group with mean reduction in SV of 38.0% (p<0.0001) and the 30 U/kg group with mean reduction in SV of 26.9% (p<0.0001). Their treatment demonstrated early onset of action, as primary endpoint was achieved in both groups after only 6 months of therapy. This is very much on par with the pivotal data Genzyme submitted for approval, which showed a 35% reduction in SV.
They also demonstated significant improvements in key secondary endpoints including increase in hemoglobin, decrease in liver volume and increase in platelet count for both dosing arm. The 60 U/kg dose group saw the greatest improvements in clinical endpoints. Much of the secondary data demonstrated UPLYSO’s efficacy, which was quite similar to Cerezyme. They also showed that only 6% of patients in Protalix's study developed antibodies to UPLYSO, although none developed neutralizing antibodies. Historical data suggests Cerezyme's antibody rate at about 15% in the first year. UPLYSO safety data was quite clean, with no serious or severe adverse events reported; most adverse events were deemed as unrelated to UPLYSO.
The clinical data appear highly supportive of approval, so it appears much will rest on their manufacturing process. Protalix originally filed for approval in December 2009, but in early February requested additional data regarding the Chemistry, Manufacturing and Controls (CMC) section of the NDA. This isn’t too surprising considering this is one of the first plant-cell based protein manufacturing platforms to come before the FDA. This request mainly centered around the validation of manufacturing processes at an upgraded facility. Naturally, UPLYSO’s enrollment in the Fast-Track, SPA and Orphan Drug programs were instrumental in working out potential issues in a timely manner.
Recently, Protalix filed an S-3 to offer up to $150 million in common stock in the future; we don’t anticipate a raise before the PDUFA date. Protalix stands to receive $25 million from Pfizer if approved in the US, with an additional $25 million for approval in the EU. Pfizer and Protalix have a 60/40 profit share on future revenues and expenses are shared between both. Wells Fargo analysts believe that “PLX/PFE could capture slightly more than 20% of the market, leading to $350 million in annual sales.” They have a price target range of $12-14.
Protalix fits into the space of companies that are entering the biosimilars/biobetters space, which we expect to be an active space these next few year. Their technology offers many advantages over previous approaches and we suspect that big pharma interest will continue. In particular, their plant-cell based platform, ProCellEx, offers potential partners low-cost, highly scalable protein production with a stable manufacturing process. FDA approval of UPLYSO would certainly create more outside interest for potential partnerships and other collaborations going forward.
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