0001144204-19-014450 | 10-Q/A | XBRL Viewer | Protalix Biotherapeutics INC

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2018	May 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 three months ended March 31, 2018 we originally filed with the Securities and Exchange Commission, or the Commission, on May 9, 2018, or the Original Filing, in connection with the recognition in this Amendment of revenue from a license agreement that was not recognized previously. All amendments and restatements to the financial statements are non-cash in nature.
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
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		145,569,955
Entity Emerging Growth Company	false
Entity Small Business	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 41,319	$ 51,163
Accounts receivable - Trade	4,756	1,721
Other assets	2,594	1,934
Inventories	7,019	7,833
Total current assets	55,688	62,651
FUNDS IN RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT	1,798	1,887
PROPERTY AND EQUIPMENT, NET	7,311	7,676
Total assets	64,797	72,214
Accounts payable and accruals:
Trade	4,872	7,521
Other	10,697	9,310
Contracts liability	2,651
Convertible notes	5,930	5,921
Total current liabilities	24,150	22,752
LONG TERM LIABILITIES:
Convertible notes	46,108	46,267
Contracts liability	22,382	25,015
Liability for employee rights upon retirement	2,427	2,586
Other long term liabilities	5,172	5,051
Total long term liabilities	76,089	78,919
Total liabilities	100,239	101,671
COMMITMENTS
CAPITAL DEFICIENCY
Total shareholders' equity (capital deficiency)	(35,442)	(29,457)
Total liabilities net of capital deficiency	$ 64,797	$ 72,214

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2018

Mar. 31, 2017

COST OF GOODS SOLD

$ (2,924)

$ (2,088)

RESEARCH AND DEVELOPMENT EXPENSES

^[1]

(7,286)

(5,967)

Less - grants

843

1,338

RESEARCH AND DEVELOPMENT EXPENSES, NET

(6,443)

(4,629)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

^[1]

(2,498)

(2,537)

OPERATING LOSS

(5,151)

(6,365)

FINANCIAL EXPENSES

(2,220)

(2,087)

FINANCIAL INCOME

132

1,625

LOSS FROM CHANGE IN FAIR VALUE OF CONVERTIBLE NOTES embedded derivative

(52,321)

FINANCIAL (EXPENSES) INCOME, NET

(2,088)

(52,783)

LOSS FOR THE PERIOD

$ (7,239)

$ (59,148)

NET LOSS PER SHARE OF COMMON STOCK - BASIC AND DILUTED

$ (0.05)

$ (0.48)

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING LOSS PER SHARE-BASIC AND DILUTED

145,305,982

124,467,602

Goods [Member]

REVENUES

$ 4,553

$ 2,889

License and Service [Member]

REVENUES

$ 2,161

[1]	Includes share-based compensation

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation	$ 42	$ 65
General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation	$ 20	$ 53

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

124,134,085

Share-based compensation related to stock options

118

Convertible note conversions

517

$ 1

516

Convertible note conversions (in shares)

^[1]

923,018

Net loss for the period

(59,148)

Balance at Mar. 31, 2017

(68,470)

$ 125

203,209

(271,804)

Balance (in shares) at Mar. 31, 2017

^[1]

125,057,103

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

Share-based compensation related to restricted stock award

^[2]

Share-based compensation related to restricted stock award (in shares)

^[1]

29,898

Convertible note conversions

1,192

$ 2

1,190

Convertible note conversions (in shares)

^[1]

1,811,260

Net loss for the period

(7,239)

Balance at Mar. 31, 2018

$ (35,442)

$ 146

$ 267,747

$ (303,335)

Balance (in shares) at Mar. 31, 2018

^[1]

145,569,955

[1]	Common Stock, $0.001 par value; Authorized – as of March 31, 2018 and 2017 - 250,000,000.
[2]	Represents an amount less than $1.

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY) [Parenthetical] - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (7,239)	$ (59,148)
Adjustments required to reconcile net loss to net cash used in operating activities:
Share based compensation	62	118
Depreciation	430	492
Financial (income) expenses, net (mainly exchange differences)	28	(9)
Changes in accrued liability for employee rights upon retirement	(124)	42
Gain on amounts funded in respect of employee rights upon retirement	(44)	(20)
Net loss (income) in connection with conversions of convertible notes	218	(1,445)
Change in fair value of convertible notes embedded derivative		52,321
Amortization of debt issuance costs and debt discount	619	590
Issuance of shares for interest payment in connection with conversions of convertible notes	205
Changes in operating assets and liabilities:
Increase in contracts liability (including non-current portion)	18	1,088
Increase in accounts receivable and other assets	(3,512)	(3,092)
Decrease (increase) in inventories	814	(1,855)
Increase (decrease) in accounts payable and accruals	(1,009)	2,370
Increase in other long term liabilities	121
Net cash used in continuing operations	(9,413)	(8,548)
Net cash provided by discontinued operations		122
Net cash used in operating activities	(9,413)	(8,426)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(249)	(220)
Increase in restricted deposit	(188)	(23)
Amounts funded in respect of employee rights upon retirement, net	109	(40)
Net cash used in investing activities	(328)	(283)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payment for conversion of convertible notes		(6,726)
Net cash used in financing activities		(6,726)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(103)	171
NET DECREASE IN CASH AND CASH EQUIVALENTS	(9,844)	(15,264)
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	51,163	63,281
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD	41,319	48,017
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
Purchase of property and equipment	342	636
Convertible notes conversions	987	517
SUPPLEMENTARY DISCLOSURE ON CASH FLOWS
Interest paid	$ 145	$ 432

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

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

protein expression system (“ProCellEx”). To date, the Company has successfully developed taliglucerase alfa (marketed under the name alfataliglicerase in Brazil and certain other Latin American countries and Elelyso

in the rest of the territories) for the treatment of Gaucher disease that has been approved for marketing in the United States, Brazil, Israel and other markets. The Company has a number of product candidates in varying stages of the clinical development process. The Company’s current strategy is to develop proprietary recombinant proteins that are therapeutically superior to existing recombinant proteins currently marketed for the same indications.

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 directly 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.

Since its approval by the FDA, taliglucerase alfa has been marketed by Pfizer Inc. (“Pfizer”), as provided in the exclusive license and supply agreement by and 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 (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 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 three months ended March 31, 2018.

On October 19, 2017, Protalix Ltd. and Chiesi Farmaceutici S.p.A. (“Chiesi”) entered into an Ex-US license (the “Chiesi Agreement”) pursuant to which Chiesi was granted an exclusive license for all markets outside of the United States to commercialize pegunigalsidase alfa. Under the terms and conditions of the Chiesi Agreement, Protalix Ltd. retained the right to commercialize pegunigalsidase in the United States.

Under the Chiesi Agreement, Chiesi made an upfront payment to Protalix Ltd. of $25.0 million in connection with the execution of the agreement and Protalix Ltd. is entitled to additional payments of up to $25.0 million in development costs, capped at $10.0 million per year. Protalix Ltd. is also eligible to receive additional payments of up to $320.0 million, in the aggregate, in regulatory and commercial milestone payments.

Under the terms of the Chiesi Agreement, Protalix Ltd. will manufacture all of the PRX-102 needed for all purposes under the agreement, subject to certain exceptions, and Chiesi will purchase pegunigalsidase alfa from Protalix, subject to certain terms and conditions. Chiesi will make tiered payments of 15% to 35% of its net sales, depending on the amount of annual sales, as consideration for the supply of pegunigalsidase alfa.

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 March 31, 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

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 Chiesi Agreement. Previously, the Company had identified a single performance obligation with regard to its promises under the agreement. The Company subsequently concluded that there are two performance obligations under the agreement 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 obligation (the license and the research and development services) for the three months ended March 31, 2018 for the satisfaction of the performance obligation that occurred during the three months ended March 31, 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 March

2018

are as follows:

	March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments			As restated
CURRENT LIABILITIES:
Contracts liability	$	-		$	2,651		$	2,651
Total current liabilities		21,499			2,651			24,150
LONG TERM LIABILITIES:
Contracts liability		29,030			(6,648	)		22,382
Total long term liabilities		82,737			(6,648	)		76,089
Total liabilities		104,236			(3,997	)		100,239
CAPITAL DEFICIENCY	$	(39,439	)	$	3,997		$	(35,442	)

The effects of the restatement on the line items within the Company’s condensed consolidated statements of operations for the three months ended March 31, 2018 are as follows:

	Three Months Ended March 31, 2018
( U.S. dollars in thousands, except per share data)	As originally reported			Adjustments		As restated
REVENUES FROM LICENSE AGREEMENTS	$	-		$	2,161	$	2,161
OPERATING LOSS	$	(7,312	)	$	2,161	$	(5,151	)
LOSS FOR THE PERIOD	$	(9,400	)	$	2,161	$	(7,239	)
Net loss per share of common stock-basic and diluted	$	(0.06	)	$	0.01	$	(0.05	)

The effects of the restatement on the line items within the Company’s condensed consolidated statements of changes in capital deficiency for the three months ended March 31, 2018 are as follows:

	Three Months Ended March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments		As restated
Net loss	$	(9,400	)	$	2,161	$	(7,239	)
Balances as of March 31, 2018
Accumulated deficit		(307,332	)		3,997		(303,335	)
Total capital deficiency	$	(39,439	)	$	3,997	$	(35,442	)

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 three months ended March 31, 2018 are as follows:

	Three Months Ended March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments			As restated
Cash flows from operating activities:
Net loss	$	(9,400	)	$	2,161		$	(7,239	)
Increase in contracts liability		2,179			(2,161	)		18
Net cash used in operating activities	$	(9,413	)	$	-		$	(9,413	)

The impacts of the restatement have been reflected throughout the financial statements, including the applicable footnotes, as appropriate.

In addition, in connection with the agreement with Chiesi, 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 reported			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

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 78,142,133 and 73,800,491 shares of Common Stock underlying outstanding options and restricted shares of Common Stock and shares issuable upon conversion of outstanding convertible notes for the three months ended March 31, 2017 and 2018, respectively, because the effect would be anti-dilutive.

Revenue recognition (as restated)

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.

Revenue from Chiesi Agreement

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 the Chiesi Agreement as follows: (1) the license and research and development services and (2) a contingent performance obligation regarding future manufacturing.

The Company determined that the license together with the research and development services should be combined into single performance obligation since Chiesi cannot benefit from the 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's revenue recognition accounting policy prior to January 1, 2018, was materially the same.

Recently adopted standards

In May 2014, the

Financial Accounting Standards Board (“FASB”) issued guidance on revenues from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions require capitalization of certain contracts costs, consideration of the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount timing and uncertainty of revenues and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2017. On January 1, 2018, the Company adopted the new accounting standard, ASC 606, Revenue from Contracts with Customers, and all the related amendments, using the modified retrospective method. The implementation of this Accounting Standards Update (ASU) did not have a material impact on the Company’s consolidated financial statements.

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

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 2

INVENTORIES

Inventory at March 31, 2018 and December 31, 2017 consisted of the following:

	March 31,		December 31,
( U.S. dollars in thousands)	2018		2017
Raw materials	$	3,529	$	3,838
Work in progress		317		485
Finished goods		3,173		3,510
Total inventory	$	7,019	$	7,833

FAIR VALUE MEASUREMENT

3 Months Ended

Mar. 31, 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 $5.9 million in aggregate principal amount of the Company’s outstanding 4.50% convertible promissory notes due 2018 (the “2013 Notes”), and of the remaining $58.1 million in aggregate principal amount of the Company’s outstanding 7.50% secured convertible promissory notes due 2021 (the “2016 Notes”) is approximately $5.7 million and $69.3 million, respectively, based on a Level 3 measurement.

The Company prepared a valuation of the fair value of the 2013 Notes and the 2016 Notes (a Level 3 valuation) as of March 31, 2018. The values of these notes were estimated by implementing the binomial model. The liability component was valued based on the Income Approach. The following parameters were used:

	2013 Notes			2016 Notes
Stock price (USD)		0.5399			0.5399
Expected term (years)		0.46			3.63
Risk free rate		1.88	%		2.45	%
Volatility		62.44	%		70.96	%
Yield		12.89	%		12.44	%

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

CONVERTIBLE NOTES

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

CONVERTIBLE NOTES

NOTE 4 – CONVERTIBLE NOTES

All of the Company’s 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 Company accounts for the 2013 Notes as a liability, on an aggregated basis, in their entirety. The 2016 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 2016 Notes are amortized using the effective interest rate.

The debt discount and debt issuance costs regarding the issuance of the 2013 Notes are deferred and amortized over the 2013 Notes period (5 years).

During the three months ended March 31, 2018, note holders converted $1.0 million

aggregate principal amount of the 2016 Notes into a total of 1,338,707 shares of Common Stock, and cash payments of approximately $11,668, in the aggregate.

As of March 31, 2018, a total of $58.1 million aggregate principal amount of the 2016 Notes and $5.9 million aggregate principal amount of the

2013 Notes were outstanding.

REVENUES

3 Months Ended

Mar. 31, 2018

Income Statement [Abstract]

REVENUES

NOTE 5 – REVENUES (AS RESTATED)

The following table summarizes the Company’s disaggregation of revenues:

	March 31,
(U.S. dollars in thousands)	2018 (as restated)		2017
Pfizer	$	1,980	$	1,646
Brazil	$	2,573	$	1,243
Total revenues from selling goods	$	4,553	$	2,889
Revenues from license and R&D services	$	2,161

SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

General

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;

Basis of presentation

1. Restatement of previously issued condensed consolidated financial statements

2. Impacts of

restatement

The effects of the restatement on the line items within the Company’s condensed consolidated balance sheets as of March

2018

are as follows:

	March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments			As restated
CURRENT LIABILITIES:
Contracts liability	$	-		$	2,651		$	2,651
Total current liabilities		21,499			2,651			24,150
LONG TERM LIABILITIES:
Contracts liability		29,030			(6,648	)		22,382
Total long term liabilities		82,737			(6,648	)		76,089
Total liabilities		104,236			(3,997	)		100,239
CAPITAL DEFICIENCY	$	(39,439	)	$	3,997		$	(35,442	)

The effects of the restatement on the line items within the Company’s condensed consolidated statements of operations for the three months ended March 31, 2018 are as follows:

	Three Months Ended March 31, 2018
( U.S. dollars in thousands, except per share data)	As originally reported			Adjustments		As restated
REVENUES FROM LICENSE AGREEMENTS	$	-		$	2,161	$	2,161
OPERATING LOSS	$	(7,312	)	$	2,161	$	(5,151	)
LOSS FOR THE PERIOD	$	(9,400	)	$	2,161	$	(7,239	)
Net loss per share of common stock-basic and diluted	$	(0.06	)	$	0.01	$	(0.05	)

The effects of the restatement on the line items within the Company’s condensed consolidated statements of changes in capital deficiency for the three months ended March 31, 2018 are as follows:

	Three Months Ended March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments		As restated
Net loss	$	(9,400	)	$	2,161	$	(7,239	)
Balances as of March 31, 2018
Accumulated deficit		(307,332	)		3,997		(303,335	)
Total capital deficiency	$	(39,439	)	$	3,997	$	(35,442	)

	Three Months Ended March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments			As restated
Cash flows from operating activities:
Net loss	$	(9,400	)	$	2,161		$	(7,239	)
Increase in contracts liability		2,179			(2,161	)		18
Net cash used in operating activities	$	(9,413	)	$	-		$	(9,413	)

The impacts of the restatement have been reflected throughout the financial statements, including the applicable footnotes, as appropriate.

	December 31, 2017
( U.S. dollars in thousands)	As originally reported			Adjustments			As revised
Contracts liability	$	26,851		$	(1,836	)	$	25,015
Accumulated deficit		(297,932	)		1,836			(296,096	)

Net loss per share

Revenue Recognition

Revenue recognition (as restated)

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.

Revenue from Chiesi Agreement

Revenue from additional research and development services ordered by Chiesi, is recognized over time using the cost-to-cost method.

The Company's revenue recognition accounting policy prior to January 1, 2018, was materially the same.

Recently adopted standards

In May 2014, the

SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 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 March

2018

are as follows:

	March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments			As restated
CURRENT LIABILITIES:
Contracts liability	$	-		$	2,651		$	2,651
Total current liabilities		21,499			2,651			24,150
LONG TERM LIABILITIES:
Contracts liability		29,030			(6,648	)		22,382
Total long term liabilities		82,737			(6,648	)		76,089
Total liabilities		104,236			(3,997	)		100,239
CAPITAL DEFICIENCY	$	(39,439	)	$	3,997		$	(35,442	)

The effects of the restatement on the line items within the Company’s condensed consolidated statements of operations for the three months ended March 31, 2018 are as follows:

	Three Months Ended March 31, 2018
( U.S. dollars in thousands, except per share data)	As originally reported			Adjustments		As restated
REVENUES FROM LICENSE AGREEMENTS	$	-		$	2,161	$	2,161
OPERATING LOSS	$	(7,312	)	$	2,161	$	(5,151	)
LOSS FOR THE PERIOD	$	(9,400	)	$	2,161	$	(7,239	)
Net loss per share of common stock-basic and diluted	$	(0.06	)	$	0.01	$	(0.05	)

The effects of the restatement on the line items within the Company’s condensed consolidated statements of changes in capital deficiency for the three months ended March 31, 2018 are as follows:

	Three Months Ended March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments		As restated
Net loss	$	(9,400	)	$	2,161	$	(7,239	)
Balances as of March 31, 2018
Accumulated deficit		(307,332	)		3,997		(303,335	)
Total capital deficiency	$	(39,439	)	$	3,997	$	(35,442	)

	Three Months Ended March 31, 2018
( U.S. dollars in thousands)	As originally reported			Adjustments			As restated
Cash flows from operating activities:
Net loss	$	(9,400	)	$	2,161		$	(7,239	)
Increase in contracts liability		2,179			(2,161	)		18
Net cash used in operating activities	$	(9,413	)	$	-		$	(9,413	)

The impacts of the restatement have been reflected throughout the financial statements, including the applicable footnotes, as appropriate.

	December 31, 2017
( U.S. dollars in thousands)	As originally reported			Adjustments			As revised
Contracts liability	$	26,851		$	(1,836	)	$	25,015
Accumulated deficit		(297,932	)		1,836			(296,096	)

INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory at March 31, 2018 and December 31, 2017 consisted of the following:

	March 31,		December 31,
( U.S. dollars in thousands)	2018		2017
Raw materials	$	3,529	$	3,838
Work in progress		317		485
Finished goods		3,173		3,510
Total inventory	$	7,019	$	7,833

FAIR VALUE MEASUREMENT (Tables)

3 Months Ended

Mar. 31, 2018

2013 Notes and 2016 Notes [Member]

Fair Value Measurements, Recurring and Nonrecurring

The

following parameters were used:

	2013 Notes			2016 Notes
Stock price (USD)		0.5399			0.5399
Expected term (years)		0.46			3.63
Risk free rate		1.88	%		2.45	%
Volatility		62.44	%		70.96	%
Yield		12.89	%		12.44	%

REVENUES (Tables)

3 Months Ended

Mar. 31, 2018

Income Statement [Abstract]

Statements of operations

The following table summarizes the Company’s disaggregation of revenues:

	March 31,
(U.S. dollars in thousands)	2018 (as restated)		2017
Pfizer	$	1,980	$	1,646
Brazil	$	2,573	$	1,243
Total revenues from selling goods	$	4,553	$	2,889
Revenues from license and R&D services	$	2,161

SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
CURRENT LIABILITIES:
Contracts liability	$ 2,651
Total current liabilities	24,150	$ 22,752
LONG TERM LIABILITIES:
Contracts liability	22,382	25,015
Total long term liabilities	76,089	78,919
Total liabilities	100,239	101,671
CAPITAL DEFICIENCY	(35,442)	(29,457)	$ (68,470)	$ (9,957)
Previously Reported [Member]
CURRENT LIABILITIES:
Contracts liability	0
Total current liabilities	21,499
LONG TERM LIABILITIES:
Contracts liability	29,030	26,851
Total long term liabilities	82,737
Total liabilities	104,236
CAPITAL DEFICIENCY	(39,439)
Restatement Adjustment [Member]
CURRENT LIABILITIES:
Contracts liability	2,651
Total current liabilities	2,651
LONG TERM LIABILITIES:
Contracts liability	(6,648)	$ (1,836)
Total long term liabilities	(6,648)
Total liabilities	(3,997)
CAPITAL DEFICIENCY	$ 3,997

SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Significant Accounting Policies [Line Items]
OPERATING LOSS	$ (5,151)	$ (6,365)
LOSS FOR THE PERIOD	$ (7,239)	$ (59,148)
Net loss per share of common stock-basic and diluted	$ (0.05)	$ (0.48)
License and Service [Member]
Significant Accounting Policies [Line Items]
REVENUES FROM LICENSE AGREEMENTS	$ 2,161
Previously Reported [Member]
Significant Accounting Policies [Line Items]
OPERATING LOSS	(7,312)
LOSS FOR THE PERIOD	$ (9,400)
Net loss per share of common stock-basic and diluted	$ (0.06)
Previously Reported [Member] \| License and Service [Member]
Significant Accounting Policies [Line Items]
REVENUES FROM LICENSE AGREEMENTS	$ 0
Restatement Adjustment [Member]
Significant Accounting Policies [Line Items]
OPERATING LOSS	2,161
LOSS FOR THE PERIOD	$ 2,161
Net loss per share of common stock-basic and diluted	$ 0.01
Restatement Adjustment [Member] \| License and Service [Member]
Significant Accounting Policies [Line Items]
REVENUES FROM LICENSE AGREEMENTS	$ 2,161

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Significant Accounting Policies [Line Items]
Net loss	$ (7,239)	$ (59,148)
Balance	(35,442)	(68,470)	$ (29,457)	$ (9,957)
Accumulated Deficit [Member]
Significant Accounting Policies [Line Items]
Net loss	(7,239)	(59,148)
Balance	(303,335)	$ (271,804)	$ (296,096)	$ (212,656)
Previously Reported [Member]
Significant Accounting Policies [Line Items]
Net loss	(9,400)
Balance	(39,439)
Previously Reported [Member] \| Accumulated Deficit [Member]
Significant Accounting Policies [Line Items]
Balance	(307,332)
Restatement Adjustment [Member]
Significant Accounting Policies [Line Items]
Net loss	2,161
Balance	3,997
Restatement Adjustment [Member] \| Accumulated Deficit [Member]
Significant Accounting Policies [Line Items]
Balance	$ 3,997

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net loss	$ (7,239)	$ (59,148)
Increase in contracts liability	18	1,088
Net cash used in operating activities	(9,413)	$ (8,426)
Previously Reported [Member]
Cash flows from operating activities:
Net loss	(9,400)
Increase in contracts liability	2,179
Net cash used in operating activities	(9,413)
Restatement Adjustment [Member]
Cash flows from operating activities:
Net loss	2,161
Increase in contracts liability	(2,161)
Net cash used in operating activities	$ 0

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

SIGNIFICANT ACCOUNTING POLICIES (Details 4) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Significant Accounting Policies [Line Items]
Contracts liability	$ 22,382	$ 25,015
Accumulated deficit		(296,096)
Previously Reported [Member]
Significant Accounting Policies [Line Items]
Contracts liability	29,030	26,851
Accumulated deficit		(297,932)
Restatement Adjustment [Member]
Significant Accounting Policies [Line Items]
Contracts liability	$ (6,648)	(1,836)
Accumulated deficit		$ 1,836

SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		3 Months Ended
	Oct. 19, 2017	Oct. 31, 2015	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017
Significant Accounting Policies [Line Items]
Common Stock, Par or Stated Value Per Share			$ 0.001	$ 0.001
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			73,800,491		78,142,133
Goods [Member]
Significant Accounting Policies [Line Items]
Revenues			$ 4,553		$ 2,889
Maximum [Member]
Significant Accounting Policies [Line Items]
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones	$ 320,000
Brazil [Member]
Significant Accounting Policies [Line Items]
Percentage Of Adult Gaucher Patients Treated With alfataliglicerase			10.00%
Brazil [Member] \| Goods [Member]
Significant Accounting Policies [Line Items]
Revenues			$ 2,573		$ 1,243
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%
Chiesi 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
Revenues				$ 1,800
Chiesi Agreement [Member] \| Minimum [Member]
Significant Accounting Policies [Line Items]
Payment On Net Sales Percentage	15.00%
Chiesi Agreement [Member] \| Maximum [Member]
Significant Accounting Policies [Line Items]
Payment On Net Sales Percentage	35.00%

INVENTORIES (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Raw materials	$ 3,529	$ 3,838
Work in progress	317	485
Finished goods	3,173	3,510
Total inventory	$ 7,019	$ 7,833

FAIR VALUE MEASUREMENT (Narrative) (Details) - Fair Value, Inputs, Level 3 [Member] $ in Millions	Mar. 31, 2018 USD ($)
4.5% Convertible Notes [Member]
Convertible Debt, Fair Value Disclosures	$ 5.7
4.50% Convertible Notes 2013 [Member]
Debt Instrument, Face Amount	5.9
7.50% Convertible Notes 2016 [Member]
Convertible Debt, Fair Value Disclosures	69.3
Debt Instrument, Face Amount	$ 58.1

FAIR VALUE MEASUREMENT (The liability component was valued based on the Income Approach) (Details) - Fair Value, Inputs, Level 3 [Member]	3 Months Ended
	Mar. 31, 2018 $ / shares
Four Point Five Percentage Convertible Notes [Member]
Stock price (USD)	$ 0.5399
Expected term (years)	5 months 16 days
Risk free rate	1.88%
Volatility	62.44%
Yield	12.89%
Seven Point Five Percentage Convertible Notes [Member]
Stock price (USD)	$ 0.5399
Expected term (years)	3 years 7 months 17 days
Risk free rate	2.45%
Volatility	70.96%
Yield	12.44%

CONVERTIBLE NOTES (Narrative) (Details) - USD ($)	3 Months Ended
CONVERTIBLE NOTES (Narrative) (Details) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Repayments of Convertible Debt		$ 6,726,000
2013 Notes [Member]
Long-term Debt, Gross	$ 5,900,000
Debt Instrument, Term	5 years
2016 Notes [Member]
Debt Conversion, Converted Instrument, Shares Issued	1,338,707
Repayments of Convertible Debt	$ 11,668
Long-term Debt, Gross	58,100,000
Debt Conversion, Original Debt, Amount	$ 1,000,000

REVENUES (Statements of operations) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Goods [Member]
Revenues	$ 4,553	$ 2,889
License and R&D services [Member]
Revenues	2,161
Pfizer [Member] \| Goods [Member]
Revenues	1,980	1,646
Brazil [Member] \| Goods [Member]
Revenues	$ 2,573	$ 1,243