0001144204-19-014464 | 10-K | XBRL Viewer | Protalix Biotherapeutics INC

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2018	Mar. 01, 2019	Jun. 30, 2018
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Entity Registrant Name	Protalix BioTherapeutics, Inc.
Entity Central Index Key	0001006281
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 62.2
Trading Symbol	PLX
Entity Common Stock, Shares Outstanding		148,382,299
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Small Business	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 37,808	$ 51,163
Accounts receivable – Trade	4,729	1,721
Other assets	1,877	1,934
Inventories	8,569	7,833
Total current assets	52,983	62,651
NON-CURRENT ASSETS:
Funds in respect of employee right upon retirement	1,758	1,887
Property and equipment, net	6,390	7,676
Total assets	61,131	72,214
Accounts payable and accruals:
Trade	5,211	7,521
Other	10,274	9,310
Contracts liability	9,868
Convertible notes		5,921
Total current liabilities	25,353	22,752
LONG TERM LIABILITIES:
Convertible notes	47,966	46,267
Contracts liability	33,027	25,015
Liability for employee rights upon retirement	2,374	2,586
Other long term liabilities	5,292	5,051
Total long term liabilities	88,659	78,919
Total liabilities	114,012	101,671
COMMITMENTS (Note 6)
CAPITAL DEFICIENCY:
Common Stock, $0.001 par value: Authorized - as of December 31, 2017 and 2018,250,000,000 shares; issued and outstanding, respectively - as of December 31, 2017 and 2018, 143,728,797 shares and 148,382,299 shares, respectively	148	144
Additional paid-in capital	269,524	266,495
Accumulated deficit	(322,553)	(296,096)
Total capital deficiency	(52,881)	(29,457)
Total liabilities net of capital deficiency	$ 61,131	$ 72,214

CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001
Common Stock, Shares Authorized	250,000,000	250,000,000
Common Stock, issued	148,382,299	143,728,797
Common Stock, outstanding	148,382,299	143,728,797

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
COST OF GOODS SOLD	$ (9,302)	$ (15,231)	$ (8,398)
RESEARCH AND DEVELOPMENT EXPENSES	(35,534)	(32,170)	(30,412)
Less - grants	2,204	3,336	5,804
RESEARCH AND DEVELOPMENT EXPENSES, NET	(33,330)	(28,834)	(24,608)
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	(10,916)	(11,530)	(9,356)
OPERATING LOSS	(19,308)	(34,517)	(33,163)
FINANCIAL EXPENSES	(7,685)	(9,725)	(4,192)
FINANCIAL INCOME	536	188	589
LOSS FROM CHANGE IN FAIR VALUE OF CONVERTIBLE NOTES EMBEDDED DERIVATIVE		(38,061)	(6,473)
(LOSS) GAIN ON EXTINGUISHMENT OF CONVERTIBLE NOTES		(1,325)	14,063
FINANCIAL (EXPENSES) INCOME - NET	(7,149)	(48,923)	3,987
LOSS FROM CONTINUING OPERATIONS	(26,457)	(83,440)	(29,176)
LOSS FROM DISCONTINUED OPERATIONS			(189)
NET LOSS FOR THE YEAR	$ (26,457)	$ (83,440)	$ (29,365)
NET LOSS PER SHARE OF COMMON STOCK – BASIC AND DILUTED
Loss from continuing operations	$ (0.18)	$ (0.64)	$ (0.29)
Loss from discontinued operations			0.00
Net loss per share of common stock	$ (0.18)	$ (0.64)	$ (0.29)
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING LOSS PER SHARE OF COMMON STOCK, BASIC AND DILUTED	147,135,182	131,085,958	101,387,704
Goods [Member]
REVENUES	$ 8,978	$ 19,242	$ 9,199
License and R&D Services [Member]
REVENUES	$ 25,262	$ 1,836

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, 2015

$ 10,873

$ 100

$ 194,064

$ (183,291)

Balance (in shares) at Dec. 31, 2015

99,800,397

Issuance of common stock, net of issuance cost

6,848

$ 24

6,824

Issuance of common stock, net of issuance cost (in shares)

23,846,735

Share-based compensation related to stock options

920

Share-based compensation related to restricted stock award

^[1]

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

7,843

Equity component of convertible notes

685

Exercise of options granted to employee (including net exercise)

^[1]

Exercise of options granted to employee (including net exercise) (in shares)

479,110

Net loss from continuing operations

(29,176)

Net loss from discontinued operations

(189)

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

337

Reclassification of embedded derivative

43,634

Convertible notes conversions

18,654

$ 20

18,634

Convertible notes conversions (in shares)

19,594,712

Equity component of convertible notes

1,315

Net loss from continuing operations

(83,440)

Balance at Dec. 31, 2017

(29,457)

$ 144

266,495

(296,096)

Balance (in shares) at Dec. 31, 2017

143,728,797

Share-based compensation related to stock options

498

Share-based compensation related to restricted stock award

^[1]

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

29,898

Convertible notes conversions

1,369

$ 2

1,367

Convertible notes conversions (in shares)

2,009,968

Convertible notes payment

1,150

$ 2

1,148

Convertible notes payment (in shares)

2,613,636

Net loss from continuing operations

(26,457)

Balance at Dec. 31, 2018

$ (52,881)

$ 148

$ 269,524

$ (322,553)

Balance (in shares) at Dec. 31, 2018

148,382,299

[1]	Represents an amount of less than $1 thousand.

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (26,457)	$ (83,440)	$ (29,365)
Loss from discontinued operations			(189)
Loss from continuing operations	(26,457)	(83,440)	(29,176)
Adjustments required to reconcile net loss to net cash used in operating activities:
Share based compensation	514	337	988
Depreciation	1,671	1,920	1,983
Financial expenses (income), net (mainly exchange differences)	20	(40)	13
Changes in accrued liability for employee rights upon retirement	(18)	(18)	10
(Gain) loss on amounts funded in respect of employee rights upon retirement	(46)	(21)	7
Loss (gain) on sale of fixed assets		6	(7)
Loss (gain) on extinguishment of convertible notes		1,325	(14,063)
Net loss (income) in connection with convertible notes	213	(116)
Change in fair value of convertible notes embedded derivative		38,061	6,473
Amortization of debt issuance costs and debt discount	2,602	2,334	568
Issuance of shares for interest payment in connection with conversions of convertible notes	234	2,391
Changes in operating assets and liabilities:
Increase (decrease) in contract liability (including non-current portion)	17,880	24,178	(411)
(Increase) decrease in accounts receivable and other assets	(3,099)	25	(1,133)
Decrease (increase) in inventories	(736)	(2,588)	522
Increase (decrease) in accounts payable and accruals	(761)	4,902	2,139
Increase in other long term liabilities	241	750
Net cash used in continuing operations	(7,742)	(9,994)	(32,087)
Net cash used in discontinued operations			(11)
Net cash used in operating activities	(7,742)	(9,994)	(32,098)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(686)	(971)	(849)
Proceeds from sale of property and equipment		3	20
(Increase) decrease in restricted deposit	62	(146)	(106)
Amounts funded in respect of employee rights upon retirement, net	33	(5)	(32)
Net cash used in investing activities	(591)	(1,119)	(967)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payment for convertible notes	(4,752)	(10,961)
Net proceeds from issuance of convertible notes		9,542	19,681
Exercise of options	0	0	14
Net cash (used in) provided by financing activities	(4,752)	(1,419)	19,695
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(270)	414	277
NET DECREASE IN CASH AND CASH EQUIVALENTS	(13,355)	(12,118)	(13,093)
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	51,163	63,281	76,374
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF YEAR	37,808	51,163	63,281
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
Purchase of property and equipment	225	526	595
Issuance of common stock, net of issuance cost			6,848
Convertible note conversions	2,285	16,263
SUPPLEMENTARY DISCLOSURE ON CASH FLOWS
Interest paid	$ 4,585	$ 4,854	$ 3,659

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 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 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 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 Exclusive License and Supply 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 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 in 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 and $3.7 million for sales of alfataliglicerase to Fiocruz in 2017 and 2018, respectively.

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 financial statements as of December 31, 2018, 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.

Revision of Prior Year Financial Information

The Company has identified an error in the recognized revenue for the last quarter of 2017 and accordingly has revised certain items in its consolidated financial statements for December 31, 2017 presented herein. The impact of the revision on the balance sheet as of December 31, 2017 was a decrease in Contracts Liability and in Accumulated Losses by $1.8 million and the impact on the statements of operations for the year then ended was an increase in Revenues and a correspondent decrease in the Loss for the year by the same amount. Loss per share was reduced by $0.01 as a result of the revision. 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.

Basis of presentation

The Company’s financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).

Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Functional currency

The dollar is the currency of the primary economic environment in which the operations of the Company and its Subsidiaries are conducted. Most of the Company’s revenues are derived in dollars. Most of the Company’s expenses and capital expenditures are incurred in dollars, and the major source of the Company’s financing has been provided in dollars.

Transactions and balances originally denominated in dollars are presented at their original amounts. Balances in non-dollar currencies are translated into dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. For non-dollar transactions and other items (stated below) reflected in the statements of operations, the following exchange rates are used: (i) for transactions – exchange rates at the transaction dates or average rates; and (ii) for other items (derived from non-monetary balance sheet items such as depreciation and amortization, etc.) – historical exchange rates. Currency transaction gains and losses are recorded as financial income or expenses, as appropriate.

Cash equivalents

The Company considers all short-term, highly liquid investments, which include short-term bank deposits with original maturities of three months or less from the date of purchase, that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash, to be cash equivalents.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost of raw and packaging materials and purchased products is determined using the “moving average” basis.

Cost of finished products is determined as follows: the value of the raw and packaging materials component is determined primarily using the “moving average” basis; the value of the labor and overhead component is determined on an average basis over the production period.

Inventory is written down for estimated obsolescence based upon management assumptions about future demand and market conditions.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization.

The Company’s assets are depreciated by the straight-line method on the basis of their estimated useful lives as follows:

	Years
Laboratory equipment		5
Furniture		10-15
Computer equipment		3

Leasehold improvements are amortized by the straight-line method over the expected lease term, which is shorter than the estimated useful life of the improvements.

Impairment in value of long-lived assets

The Company tests long-lived assets for impairment if an indication of impairment exists. If the sum of expected future cash flows of definite life assets (undiscounted and without interest charges) is less than the carrying amount of such assets, the Company recognizes an impairment loss, and writes down the assets to their estimated fair values.

Income taxes

Deferred income taxes

Deferred taxes are determined utilizing the assets and liabilities method based on the estimated future tax effects of the differences between the financial accounting and tax bases of assets and liabilities under the applicable tax laws. Deferred tax balances are computed using the tax rates expected to be in effect when those differences reverse. A valuation allowance in respect of deferred tax assets is provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has provided a full valuation allowance with respect to its deferred tax assets. The Company used tax rates of 27%, 23% and 21%. See note 10.

Uncertainty in income taxes

Tax benefits recognized in the financial statements are those that the Company’s management deems at least more likely than not to be sustained, based on technical merits. The amount of benefits recorded for these tax benefits is measured as the largest benefit the Company’s management deems more likely than not to be sustained.

Revenue Recognition

On January 1, 2018, the Company adopted the new accounting standard, ASC 606, Revenue from Contracts with Customers (“ASC 606”), 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 statement.

The Company’s revenue recognition accounting policy from January 1, 2018, following the adoption of the new revenue standard

A contract with a customer exists only when: the parties to the contract have approved it and are committed to perform their respective obligations, the Company can identify each party’s rights regarding the distinct goods or services to be transferred (“performance obligations”), the Company can determine the transaction price for the goods or services to be transferred, the contract has commercial substance and it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

Revenues are recorded in the amount of consideration to which the Company expects to be entitled in exchange for performance obligations upon transfer of control to the customer.

Revenues from selling products

The Company recognizes revenues from selling goods at a point in time when control over the product is transferred to customers (upon delivery).

Revenues from Chiesi Agreements

According to ASC 606, a performance obligation is a promise 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.

We 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 third quarter of 2018 in the amount of $6.2 million.

Our revenue recognition accounting policy prior to January 1, 2018, was materially the same.

Research and development costs

Research and development costs are expensed as incurred and consist primarily of personnel, subcontractors and consultants (mainly in connection with clinical trials), facilities, equipment and supplies for research and development activities. Grants received by the Israeli Subsidiary from the National Authority for Technological Innovation (“NATI”), which has replaced many of the functions of the Office of the Chief Scientist of Israel’s Ministry of Industry, Trade and Labor (the “OCS”), are recognized when the grant becomes receivable, provided there is reasonable assurance that the Company or the Subsidiaries will comply with the conditions attached to the grant and there is reasonable assurance the grant will be received. The grant is deducted from the research and development expenses as the applicable costs are incurred. In connection with purchases of assets, amounts assigned to intangible assets to be used in a particular research and development project that have no alternative future use are charged to research and development costs at the purchase date.

Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are consumed or the related services are performed.

Concentration of credit risks and trade receivable

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of bank deposits. The Company deposits these instruments with highly rated financial institutions, mainly in Israeli banks, and, as a matter of policy, limits the amounts of credit exposure to any one financial institution. The Company has not experienced any credit losses in these accounts and does not believe it is exposed to any significant credit risk on these instruments. The Company’s trade receivables represent amounts to be received from Pfizer, Brazil and Chiesi. The Company does not require Pfizer, Brazil or Chiesi to post collateral with respect to receivables.

Share-based compensation

The Company accounts for employee’s share-based payment awards classified as equity awards using the grant-date fair value method. The fair value of share-based payment transactions is recognized as an expense over the requisite service period.

The Company elected to recognize compensation cost for an award with only service conditions that has a graded vesting schedule using the accelerated method based on the multiple-option award approach.

When stock options are granted as consideration for services provided by consultants and other non-employees, the grant is accounted for based on the fair value of the stock options issued. Options granted are measured on a final basis at the end of the related service period and is recognized over the related service period using the straight-line method.

The Company elects to account for forfeitures as they occur.

Net (loss) earnings 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 23,532,492, 76,848,199 and 74,583,792 shares of Common Stock underlying outstanding options, restricted shares of Common Stock and shares issuable upon conversion of the convertible notes for the fiscal years ended December 31, 2016, 2017 and 2018, respectively, because the effect would be anti-dilutive.

Convertible notes

All outstanding convertible notes are accounted for using the guidance set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 815 requiring 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 accounted for the 2018 Notes (as defined in note 8a) as a liability, on an aggregated basis, in their entirety.

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, see note 8.

Issuance costs regarding the issuance of the 2021 Notes are amortized using the effective interest rate. The debt discount and debt issuance costs regarding the issuance of the 2018 Notes are deferred and amortized over the 2018 Notes period (5 years).

As of December 31, 2018, a total of $57.9 million aggregate principal amount of the 2021 Notes were outstanding. In addition, as of December 31, 2018, none of the 2018 Notes were outstanding.

Recently adopted standards

In May 2014, the FASB issued guidance on revenues from contracts with customers that superseded 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. On January 1, 2018, the Company adopted the new accounting standard, ASC 606, 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 November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a Consensus of the FASB Emerging Issues Task Force) (“ASU 2016-18”), which requires entities to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual reporting periods (including interim periods within those annual reporting periods) beginning after December 15, 2017. This standard, adopted as of January 1, 2018, had no material impact on the Company’s financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amended guidance requires changes in the fair value of equity investments to be recognized through net income, rather than other comprehensive income. This standard was adopted on January 1, 2018 and its adoption had no material impact on the Company’s financial statements.

Recently issued accounting pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). The new standard requires lessees to record assets and liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company plans to adopt the standard as of January 1, 2019 on a modified retrospective basis and will not restate comparative periods. The Company will elect the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allows the Company to carryforward the historical lease classification. The Company will make an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet. The Company will recognize those lease payments in the Statements of Operations on a straight-line basis over the lease period. The Company expects that adoption of the standard will result in recognition of approximately $5.9 million of lease assets and lease liabilities as of January 1, 2019 on the Company’s balance Sheets.

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting” that expands the scope of ASC Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of ASC Topic 718 to nonemployee awards except for certain exemptions specified in the amendment. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that fiscal year. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company does not expect to have a material impact on its financial statements.

COMMERCIALIZATION AGREEMENTS

12 Months Ended

Dec. 31, 2018

COMMERCIALIZATION AGREEMENTS [Abstract]

COMMERCIALIZATION AGREEMENTS

NOTE 2 - COMMERCIALIZATION AGREEMENTS

On November 30, 2009, Protalix Ltd. and Pfizer entered into the Pfizer Agreement (as amended in June 2013) pursuant to which Pfizer was granted an exclusive, worldwide license to develop and commercialize taliglucerase alfa, except for Israel and Brazil. Under the Pfizer Agreement Protalix was entitled to 40% of the results (profits or losses) earned on Pfizer’s sales of taliglucerase alfa.

In October 2015, the Company entered into the following agreements with Pfizer:

Amended Pfizer Agreement - Pursuant to the amendment, the Company granted Pfizer an exclusive license in the entire world, including Israel but excluding Brazil. Pfizer acquired all the information, knowledge and permission to manufacture and sell Elelyso.

Protalix also agreed to provide Pfizer with:

Manufacturing and supply of the drug substance for its incorporation into the licensed product in consideration of an agreed price per unit.

Assistance in arranging for the manufacture of the drug substance by Pfizer or by alternative supplier chosen by Pfizer in consideration of an agreed hourly rate plus reimbursement of expenses.

Stock Purchase Agreement - the Company issued 5,649,079 shares of Common Stock to Pfizer.

Promissory note – as of the date of the amendment, the Company owed Pfizer $4.3 million as a result of the accumulated losses incurred by the Collaboration Operation. Following the new agreements, the Company committed to pay Pfizer the principal sum of the debt at the earlier of (a) November 12, 2020 and (b) the date upon which it becomes due pursuant to any event of default, as defined. The promissory note is presented in “other long term liabilities.”

The Amended Pfizer Agreement resulted in a discontinued operation as defined under ASU 2014-08 because it represented a strategic shift for the Company that has a major effect on the entity’s operations and financial results.

Revenues from the Pfizer Agreements as well as revenues from sales of Elelyso in Israel were presented as discontinued operations. The impact of the discontinued operations in the results of 2016 is immaterial.

In October 2017, Protalix Ltd. entered into the Chiesi Ex-U.S. Agreement with respect to the commercialization of pegunigalsidase alfa (hereafter – the drug) for treatment of Fabry disease. Under the terms of the Chiesi Agreement, Protalix Ltd. granted to Chiesi exclusive licensing rights for the commercialization of the drug for all markets outside of the United States. At the effective date, Protalix Ltd. had maintained the exclusive commercialization rights to the drug in the United States, which rights were subsequently granted to Chiesi in July 2018.

Protalix Ltd. will be mainly responsible for (i) continuing the development of the drug until a regulatory approval is granted and (ii) manufacture and supply the drug to Chiesi, based on Chiesi’s requests.

The consideration consists of the following:

a. Upfront, non-refundable payment of $25.0 million.

b. Additional payments of up to $25.0 million in development costs, capped at $10.0 million per year.

c. Milestone payments of up to $320.0 million with respect to certain regulatory and commercial events as defined in the Chiesi Agreement.

d. Additional payments as consideration for the supply of the drug. The payment will vary from 15% to 35% of Chiesi’s average selling price of the drug, depending on the amount of annual sales.

e. Protalix will be the sole manufacturer of the drug.

Chiesi does not have sublicensing rights (except for certain territories).

In July 2018, Protalix Ltd. entered into the Chiesi U.S. Agreement with respect to the commercialization of the drug for treatment of Fabry disease. Under the terms of the Chiesi U.S. Agreement, Protalix Ltd. granted to Chiesi exclusive licensing rights for the commercialization of the drug for all markets in the United States.

The consideration consists of the following:

a. Upfront, non-refundable payment of $25.0 million.

b. Additional payments of up to $20.0 million in development costs, capped at $7.5 million per year.

c. Milestone payments of up to $760.0 million with respect to certain regulatory and commercial events as defined in the Chiesi Agreement.

d. Additional payments as consideration for the supply of the drug. The payment will vary from 15% to 40% of Chiesi’s average selling price of the drug, depending on the amount of annual sales.

e. Protalix will be the sole manufacturer of the drug.

Chiesi does not have sublicensing rights.

On June 18, 2013, the Company entered into the Brazil Agreement with Fiocruz for alfataliglicerase. 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.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 3 - PROPERTY AND EQUIPMENT

Composition of property and equipment grouped by major classifications is as follows:

	December 31,
( U.S. dollars in thousands)	2017			2018
Laboratory equipment	$	16,561		$	16,732
Furniture and computer equipment		2,438			2,565
Leasehold improvements		16,123			16,191
Equipment under construction		19			18
	$	35,141		$	35,506
Less – accumulated depreciation and amortization		(27,465	)		(29,116	)
	$	7,676		$	6,390

Depreciation in respect of property and equipment totaled approximately $2.0 million, $1.9 million and $1.7 million for the years ended December 31, 2016, 2017 and 2018, respectively.

INVENTORIES

12 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 4 - INVENTORIES

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

	December 31,
( U.S. dollars in thousands)	2017		2018
Raw materials	$	3,838	$	3,792
Work in progress		485
Finished goods		3,510		4,777
Total inventory	$	7,833	$	8,569

During the years ended December 31, 2017 and 2018, the Company recorded approximately $0.5 million and $1.1 million, respectively, for write-down of inventory under cost of goods sold.

LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT

12 Months Ended

Dec. 31, 2018

Defined Contribution Plan [Abstract]

LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT

NOTE 5 - LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT

The Israeli Subsidiary is required to make a severance payment upon dismissal of an employee or upon termination of employment in certain circumstances. The severance pay liability to the employees (based upon length of service and the latest monthly salary - one month’s salary for each year employed) is recorded on the Company’s balance sheets under “Liability for employee rights upon retirement.” The liability is recorded as if it were payable at each balance sheet date on an undiscounted basis.

The liability is funded in part from the purchase of insurance policies or by the establishment of pension funds with dedicated deposits in the funds. The amounts used to fund these liabilities are included in the Company’s balance sheets under “Funds in respect of employee rights upon retirement.” These policies are the Company’s assets. However, under labor agreements and subject to certain limitations, any policy may be transferred to the ownership of the individual employee for whose benefit the funds were deposited. In the years ended December 31, 2016, 2017 and 2018, the Company deposited approximately $164,000, $166,000 and $145,000, respectively, with insurance companies in connection with its severance payment obligations.

In accordance with the current employment agreements with certain employees, the Company makes regular deposits with certain insurance companies for accounts controlled by each applicable employee in order to secure the employee’s rights upon retirement. The Company is fully relieved from any severance pay liability with respect to each such employee after it makes the payments on behalf of the employee. The liability accrued in respect of these employees and the amounts funded, as of the respective agreement dates, are not reflected in the Company’s balance sheets, as the amounts funded are not under the control and management of the Company and the pension or severance pay risks have been irrevocably transferred to the applicable insurance companies (the “Contribution Plans”).

The amounts of severance pay expenses were approximately $842,000, $906,000 and $781,000 for each of the years ended December 31, 2016, 2017 and 2018, respectively, of which approximately $675,000, $746,000 and $620,000 in the years ended December 31, 2016, 2017 and 2018, respectively, were in respect of the Contribution Plans. Gain (loss) on amounts funded in respect of employee rights upon retirement totaled approximately ($7,000), $21,000 and $46,000 for the years ended December 31, 2016, 2017 and 2018, respectively.

The Company expects to contribute approximately $748,000 in the year ending December 31, 2019 to insurance companies in connection with its severance liabilities for its operations for that year, approximately $604,000 of which will be contributed to one or more Contribution Plans.

During the five-year period following December 31, 2018, the Company expects to pay future benefits to three employees upon each such employee’s normal retirement age. The Company anticipates that the benefits payable will be approximately $248,000.

COMMITMENTS

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS

NOTE 6 - COMMITMENTS

Royalty Commitments

The Company is obligated to pay royalties to NATI on proceeds from the sale of products developed from research and development activities that were funded, partially, by grants from NATI or its predecessor, the Office of the Israeli Innovation Authority (IIA). At the time the grants were received, successful development of the related projects was not assured.

In the case of failure of a project that was partly financed as described above, the Company is not obligated to pay any such royalties or repay funding received from NATI or the IIA.

Under the terms of the applicable funding arrangements, royalties of 3% to 6% are payable on the sale of products developed from projects funded by NATI or the IIA, which payments shall not exceed, in the aggregate, 100% of the amount of the grant received (dollar linked), plus, commencing upon January 1, 2001, interest at an annual rate based on LIBOR. In addition, if the Company receives approval to manufacture products developed with government grants outside the State of Israel, it will be required to pay an increased total amount of royalties (possibly up to 300% of the grant amounts plus interest), depending on the manufacturing volume that is performed outside the State of Israel, and, possibly, an increased royalty rate.

Royalty expenses to NATI or the IIA are included in the statement of operations as a component of the cost of revenues both in continuing and discontinued operations and were approximately $288,000, $1,384,000 and $1,619,000 during the years ended December 31, 2016, 2017 and 2018, respectively.

At December 31, 2017 and 2018, the maximum total royalty amount payable by the Company under these funding arrangements is approximately $42.2 million and $41.9 million, respectively (without interest, assuming 100% of the funds are payable).

The Company is a party to certain research and license agreements. Under the agreements, the Company is obligated to pay royalties at varying rates from its future revenues. The aggregate royalties payable under all of the agreements is equal to a varying range of percentages of net sales of licensed products. Royalty expenses under the agreements are included in the statement of operations as a component of the cost of revenues both in continuing and discontinued operations and were approximately $286,000, $0 and $0 during the years ended December 31, 2016, 2017 and 2018, respectively.

Under each agreement, the Company is also obligated to pay milestone, licensing and other payments to the counterparties of the agreement. The payments under the agreements are for varying amounts and are subject to varying conditions. If all of the contingencies with respect to milestone payments under the research and license agreements are met, the aggregate milestone payments total payable would be approximately $14.3 million and would be payable, if at all, as the Company’s projects progress over the course of a number of years. Milestone payments of $300,000, $0 and $0 were made during the years ended December 31, 2016, 2017 and 2018, respectively.

None of the agreements has a fixed termination date. Subject to earlier termination for other reasons, each agreement terminates after a certain number of years following the first commercial sale of any licensed product under the agreement or after a certain number of years without the initiation of commercial sales of any product under the agreement.

Subcontracting Agreements

The Company has entered into sub-contracting agreements with several clinical providers and consultants in Israel, the United States and certain other countries in connection with its primary product development process. As of December 31, 2018, total commitments under said agreements were approximately $18.8 million.

Lease Agreements

The Company is a party to a number of lease agreements for its facilities, the latest of which has been extended until 2021. The Company has the option to extend certain of such agreements on two additional occasions for additional five-year periods each, for a total of 10 additional years. Under the leases, the aggregate monthly rental payments are approximately $63,000. As of December 31, 2018, the Company provided bank guarantees of approximately $402,000, in the aggregate, to secure the fulfillment of its obligations under the lease agreements. The future minimum lease payments required under the operating leases for such premises are approximately $758,000, $758,000 and $621,000, for fiscal years 2019 through 2021, respectively. Lease expenses totaled approximately $1.0 million, $775,000 and 783,000 for each of the years ended December 31, 2016, 2017 and 2018, respectively.

Vehicle Lease and Maintenance Agreements

The Company entered into several three-year lease and maintenance agreements for vehicles which are regularly amended as new vehicles are leased. The current monthly lease fees aggregate approximately $43,000. The expected lease payments for the years ending December 31, 2019, 2020 and 2021 are approximately $474,000, $333,000 and $82,000, respectively.

SHARE CAPITAL

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE CAPITAL

NOTE 7 - SHARE CAPITAL

Rights of the Company’s Common Stock

The Company’s Common Stock is listed on the NYSE American and on the Tel Aviv Stock Exchange. Each share of Common Stock is entitled to one vote. The holders of shares of Common Stock are also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. Since its inception, the Company has not declared any dividends.

Stock based compensation

On December 14, 2006, the Board of Directors adopted the Protalix BioTherapeutics, Inc. 2006 Stock Incentive Plan, as amended (the “Plan”). The Plan has since been amended to, among other things, increase the number of shares of common stock available under the Plan to 23,841,655 shares. The grant of options to Israeli employees under the Plan is subject to the terms stipulated by Sections 102 and 102A of the Israeli Income Tax Ordinance. Each option grant is subject to the track chosen by the Company, either Section 102 or Section 102A of the Israeli Income Tax Ordinance, and pursuant to the terms thereof, the Company is not allowed to claim, as an expense for tax purposes, the amounts credited to employees as a benefit, including amounts recorded as salary benefits in the Company’s accounts, in respect of options granted to employees under the Plan, with the exception of the work-income benefit component, if any, determined on the grant date. For Israeli non-employees, the share option plan is subject to Section 3(i) of the Israeli Income Tax Ordinance.

As of December 31, 2018, 7,303,119 shares of Common Stock remain available for grant under the Plan.

For purposes of determining the fair value of the options and restricted stock granted to employees and non-employees, the Company’s management uses the fair value of the Common Stock.

From January 1, 2016 through December 31, 2018, the Company granted options and shares of restricted stock to certain employees and non-employees as follows:

Options and restricted stock granted to employees:

Below is a table summarizing all of the options grants to employees during the year ended December 31, 2018:

Year of grant		No. of options granted		Exercise price		Vesting period		Fair value at grant (U.S. dollars in thousands)		Expiration period
	2018		4,000,000	$	0.56		4 years	$	1,200		10 years
	2018		2,360,000	$	0.51		4 years	$	700		10 years

Set forth below are grants made by the Company to employees (including related parties) during the three-year period ended December 31, 2018 (such grants appear in the table above):

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 of Common Stock were granted to the Company’s executive officers and options to purchase 2,360,000 shares of Common Stock were granted to other employees with an exercise price equal to $0.56 per share and $0.51 per share, respectively, under 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 assumptions: share price equal to $0.51; dividend yield of 0% for all years; expected volatility of 64.3%; risk-free interest rates of 2.9%; and expected life of six years.

b) The total unrecognized compensation cost of employee stock options at December 31, 2018 is approximately $1,524,000. The unrecognized compensation cost of employee stock options is expected to be recognized over a weighted average period of 1.18 years.

The total cash received from employees as a result of employee stock option exercises for the years ended December 31, 2016, 2017 and 2018 was approximately $14,000, $0 and $0, respectively. The Company did not realize any tax benefit in connection with these exercises.

Options granted to consultants, directors, and other service providers:

During the three years ended December 31, 2018 there were no options granted by the Company to its consultants, directors, and other service providers. In addition, during the three years ended December 31, 2018, there were no option exercises by any of the Company’s consultants, directors, and other service providers and, consequently, no shares of Common Stock were issued in connection with exercises of options by, nor was any cash received from, the Company’s consultants, directors, and other service providers during such period.

A summary of share option plans, and related information, under all of the Company’s equity incentive plans for the years ended December 31, 2016, 2017 and 2018 is as follows:

Options granted to employees:

	Year ended December 31,
	2016				2017				2018
			Weighted				Weighted				Weighted
	Number		average		Number		Average		Number		average
	of		exercise		of		Exercise		of		exercise
	options		price		options		Price		options		price
Outstanding at beginning of year		6,952,293	$	3.363		4,884,211	$	3.617		4,729,617	$	3.604
Changes during the year:
Granted										6,360,000		0.541
Forfeited and Expired		1,514,957		3.748		154,594		4.004		1,088,942		4.604
Exercised (*)		553,125		0.067
Outstanding at end of year		4,884,211	$	3.617		4,729,617	$	3.604		10,000,675	$	1.547
Exercisable at end of year		3,498,492	$	4.296		4,457,461	$	3.696		3,944,863	$	3.065

(*) The total intrinsic value of options exercised during the years ended December 31, 2016, 2017 and 2018, was approximately $213,000, $0 and $0, respectively.

Restricted stock granted to employees:

	Year ended December 31, 2016
	Number of shares of restricted stock
Outstanding at beginning of year		127,874
Changes during the year:
Vested		127,874
Forfeited		-
Outstanding at end of year		-

Options and restricted stocks granted to consultants, directors, and other service providers:

	Year ended December 31,
	2016				2017				2018
	Number				Number				Number
	of		Weighted		of		Weighted		of		Weighted
	options/		average		options/		average		options/		average
	restricted		exercise		restricted		exercise		restricted		exercise
	stock		price		stock		price		stock		price
Outstanding at beginning of Year		637,209	$	11.638		208,000	$	3.156		200,000	$	3.282
Changes during the year:
Expired		429,209		15.748		8,000		0.001		50,000		3.02
Vested restricted stock
Outstanding at end of year		208,000		3.156		200,000		3.282		150,000		3.37
Exercisable at end of year		170,500	$	3.109		200,000	$	3.282		150,000	$	3.37

The following tables summarize information concerning outstanding and exercisable options and restricted stock as of December 31, 2018:

December 31, 2018
Options outstanding						Options exercisable
Exercise prices		Number of options outstanding at end of year		Weighted average remaining contractual life		Number of options exercisable		Weighted average remaining contractual life
	n/a (Restricted Stock)						n/a		n/a
$	0.51		2,360,000		9.71		147,500		9.71
$	0.56		4,000,000		9.71		250,000		9.71
$	1.720		1,623,593		6.22		1,530,281		6.22
$	2.370		900,000		5.74		900,000		5.74
$	2.650		209,082		0.15		209,082		0.15
$	3.370		150,000		5.56		150,000		5.56
$	6.900		680,000		1.15		680,000		1.15
$	7.550		160,000		0.56		160,000		0.56
$	9.660		68,000		1.83		68,000		1.83
			10,150,675				4,094,863

The following table illustrates the effect of share-based compensation on the statement of operations:

	Year ended December 31,
(U.S. dollars in thousands)	2016		2017		2018
Research and development expenses	$	571	$	182	$	310
Selling, general and administrative expenses		417		155		204
	$	988	$	337	$	514

Private and 144A Offerings

On December 7, 2016, the Company exchanged with certain existing note holders $54.052 million aggregate principal amount of the Company’s outstanding 2018 Notes for, among other consideration, $40.186 million aggregate principal amount of the 2021 Notes (as described in note 8b) and for 23,846,735 shares of common stock. See also note 8b.

On July 24, 2017, the Company entered into a Note Purchase Agreement with certain institutional investors relating to the private issuance and sale by the Company of $10 million in aggregate principal amount of its 2021 Notes. The 2021 Notes were issued pursuant to the base indenture dated December 7, 2016. Concurrently, the Company exchanged with certain existing note holders $9.0 million aggregate principal amount of the Company’s outstanding 2018 Notes for $8.55 million aggregate principal amount of newly issued 2022 Notes (as described in note 8c). See also note 8c.

On May 22, 2018, the Company agreed to a privately negotiated exchange with certain existing note holders to exchange $3,423,000 aggregate principal amount of the Company’s outstanding 2018 Notes for 2,613,636 shares of the Company’s common stock and $2.23 million in cash to cover outstanding principal and accrued interest on the exchanged 2018 Notes. See also note 8a.

CONVERTIBLE NOTES

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

CONVERTIBLE NOTES

NOTE 8 - CONVERTIBLE NOTES

4.5% Convertible Notes (“2018 Notes”)

On September 18, 2013, the Company completed a private placement of $69.0 million in aggregate principal amount of Senior Convertible Notes (the “2018 Notes”), including $9.0 million aggregate principal amount of 2018 Notes related to the initial purchaser’s over-allotment option, which was exercised in full. On September 15, 2018, the 2018 Notes matured and have been paid in full.

In connection with the completion of the offering of the 2018 Notes, the Company had entered into an indenture with The Bank of New York Mellon Trust Company, N.A., as trustee, governing the 2018 Notes. The 2018 Notes accrued interest at a rate of 4.50% per year, payable semiannually in arrears. In December 2016, $54.1 million aggregate principal amount of 2018 Notes were exchanged for 2021 Notes and shares of common stock (see also note 8b) and in July 2017, $9.0 million aggregate principal amount of 2018 Notes were exchanged for 2022 Notes as defined in note 8c (see also note 8c).

The initial conversion rate for the 2018 Notes was 173.6593 shares of the Common Stock for each $1,000 principal amount of 2018 Notes (equivalent to an initial conversion price of approximately $5.76 per share of the Common Stock), and was subject to adjustment for certain events but will not be adjusted for any accrued and unpaid interest.

On June 2018, the Company exchanged $3.423 million aggregate principal amount of the Company’s 2018 Notes for 2,613,636 shares of Common Stock and approximately $2.23 million in cash and delivered the necessary funds under the indenture governing the 2018 Notes to effectively discharge such notes, which was $2.53 million. On September 15, 2018, the 2018 Notes matured and were paid in full.

The following table sets forth total interest expense recognized for the years ended December 31, 2016, 2017 and 2018 related to the 2018 Notes:

	Year ended December 31,
(U.S. Dollars in thousands)	2016		2017		2018
Contractual interest expense	$	2,943	$	501	$	139
Amortization of debt issuance costs and debt discount		421		71		15
Gain from early redemption						(32	)
Total	$	3,364	$	572	$	122

7.5% Convertible Notes (“2021 Notes”)

On December 1, 2016, the Company entered into a note purchase agreement with institutional investors, which held part of the 2018 Notes (the “2016 Purchasers”), relating to the sale by the Company of $22.5 million aggregate principal amount of 7.50% Senior Secured Convertible Notes due 2021 in a private placement pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”). Concurrently with the consummation of the private placement of the 2021 Notes, the Company entered into a privately negotiated exchange agreement (the “2016 Exchange Agreement”) with certain existing note holders identified therein to exchange $54.1 million aggregate principal amount of the Company’s outstanding 2018 Notes for (i) $40.186 million aggregate principal amount of 2021 Notes, (ii) 23,846,735 shares of Common Stock and (iii) cash, equal to the accrued and unpaid interest on the 2018 Notes and any fractional shares. The closing date of the purchase agreement and the 2016 Exchange Agreement was December 7, 2016. The issuance of the 2021 Notes and shares in the exchange and the private placement were made in reliance on the exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof. The net proceeds from the private placement were $19.7 million, after deducting the placement agent’s fees and the Company’s estimated offering expenses.

In connection with the completion of the exchange and the private placement, the Company entered into an indenture (the “2016 Indenture”) with The Bank of New York Mellon Trust Company, N.A., as trustee, governing the 2021 Notes. The 2021 Notes accrue interest at a rate of 7.50% per year, payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2017. A portion of the interest payable may be made in shares of Common Stock at the Company’s election. The Notes will mature on November 15, 2021.

On July 24, 2017, the Company entered into another note purchase agreement with certain institutional investors relating to the private issuance and sale by the Company of $10.0 million in aggregate principal amount of its 2021 Notes. The 2021 Notes were issued pursuant to the 2016 Indenture dated (December 7, 2016). The net proceeds from this purchase agreement were $9.5 million, after deducting the Company’s offering expenses.

Holders may convert their 2021 Notes at any time. The initial conversion rate for the 2021 Notes is 1,176.4706 shares of the Common Stock for each $1,000 principal amount of 2021 Notes (equivalent to an initial conversion price of approximately $0.85 per share of the Common Stock). Upon conversion, the Company may settle the 2021 Notes by paying or delivering, as the case may be, cash, shares of Common Stock or a combination thereof, at the Company’s election.

During the year ended December 31, 2018, note holders converted $1.15 million aggregate principal amount of the 2021 Notes into a total of 1,537,415 shares of Common Stock and cash payments of approximately $15,887, in the aggregate. As of December 31, 2018, a total of $57.9 million aggregate principal amount of the 2021 Notes were outstanding.

Prior to the maturity date, the Company may redeem in cash:

any or all of the 2021 Notes if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days exceeds 150% of the conversion price on each applicable trading day, or

all of the 2021 Notes then outstanding if the aggregate principal amount of the 2021 Notes then outstanding is less than 15% of the aggregate principal amount of the notes issued.

No redemption was made during the years 2017 and 2018.

The 2021 Notes are guaranteed by the Restricted Subsidiaries (as defined in the 2016 Indenture) and are secured by a first-priority security interest in all of the present and after-acquired assets of the Company and each of the Restricted Subsidiaries (the “Collateral”), including, but not limited to, (i) 100% of the capital stock of the Guarantors (as defined in the 2016 Indenture) and each Restricted Subsidiary of the Company that is held by the Company or any Restricted Subsidiary, (ii) intellectual property, including all copyrights, copyright licenses, patents, patent licenses, software, trademarks, trademark licenses and trade secrets and other proprietary information, including, but not limited to, domain names, (iii) all cash, deposit accounts, securities accounts, commodities accounts and contract rights, (iv) all real property and leased property, subject to applicable minimum thresholds, as set forth in the 2016 Indenture, and (v) all other tangible and intangibles of the Company and the Guarantors. In connection with the grant of such liens, the Company entered into certain agreements with both Wilmington Savings Fund Society, FSB, as collateral agent in the United States, and with Altshuler Shaham Trusts Ltd., as security trustee in Israel. The 2016 Indenture restricts the ability of the Company, the Subsidiaries and any future subsidiaries to make certain investments, including transfers of the Company’s assets that constitute collateral securing the 2016 Notes, in its existing and future foreign subsidiaries, subject to certain exceptions.

Upon (i) the occurrence of a fundamental change (as defined in the 2016 Indenture) or (ii) if the Company calls the 2021 Notes for redemption as described below (either event, a “make-whole fundamental change”) and a holder elects to convert its 2021 Notes in connection with such make-whole fundamental change, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares (the “Additional Shares”). In no event will the conversion rate exceed the maximum conversion rate, which is 1,787.3100 shares per $1,000 principal amount of 2021 Notes, which amount is inclusive of repayment of the principal of the 2021 Notes.

If a fundamental change occurs at any time, holders will have the right, at their option, to require the Company to purchase for cash any or all of the 2021 Notes, or any portion of the principal amount thereof, that is equal to $1,000 or an integral multiple of $1,000 in excess thereof, on a date of the Company’s choosing that is not less than 20 calendar days nor more than 35 calendar days after the date of the applicable fundamental change company notice. The price the Company is required to pay for a 2021 Note is equal to 100% of the principal amount of such 2021 Note plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

For accounting purposes, since the terms of the 2018 Notes and the 2021 Notes are substantially different, the 2016 Exchange Agreement was considered as an extinguishment, which in essence means recording a gain due to the 2018 Notes that were exchanged for the 2021 Notes recorded at fair value as of the closing date. The gain on extinguishment of $14.1 million was recognized.

As the settlement upon conversion was subject to compliance with the listing standards of the NYSE American, until the Company’s stockholders’ approval was obtained, the Company was prohibited by these rules from issuing shares in excess of 20% of its outstanding shares (calculated as of December 1, 2016). The accounting guidance assumed that the conversion will be settled in cash and, as such, is precluded from equity classification for any part of the 2021 Notes that may have cash settlement. As such, that part of the conversion feature was accounted for as a derivative which is bifurcated from the debt host contract and was measured at fair value through the statement of operations until the Company’s stockholders approved, in April 2017, the issuance of shares in excess of 20% of its outstanding shares. On April 12, 2017, the Company’s stockholders approved the issuance of shares of the Company’s Common Stock in excess of 20% of the Company’s outstanding shares of Common Stock to settle conversion requests and pay interest on the Company’s issued 2021 Notes. As a result, the Company reclassified the embedded derivative to additional paid in capital. During 2017, the measurement of the derivative resulted in a non-cash charge to the Company’s statement of operations of $38,061 thousand. The conversion feature of the 2021 Notes issued in July 2017 is accounted for as equity, which is bifurcated from the debt host contract. With respect to the remainder of the 2021 Notes, for which the conversion feature qualifies for equity classification (since upon conversion the Company at its election may settle the 2021 Notes by paying cash, shares of Common Stock or a combination of cash and shares of Common Stock) separate liability (debt) and equity (conversion option) components of such 2021 Notes were recorded. The Company measures the liability according to amortized cost using the effective interest method.

The Company prepared a valuation of the fair value of the 2021 Notes (a Level 3 valuation) for the issuance dates. The value of the 2021 Notes was estimated by implementing the binomial model. The liability component was valued based on the Income Approach. The following parameters were used:

	December 7, 2016			July 24, 2017
Stock price (USD)		0.3			0.77
Expected term		4.94			4.32
Risk free rate		1.86	%		1.74	%
Volatility		54.12	%		63.79	%
Yield		13.98	%		11.56	%

The following table sets forth total interest expense recognized related to the 2021 Notes:

	Year Ended December 31,
(U.S. Dollars in thousands)	2016			2017			2018
Contractual interest expense	$	313		$	4,434		$	4,359
Debt discount amortization		147			2,309			2,587
Gain on extinguishment		(14,063	)
Change in fair value of convertible note embedded derivative		6,473			38,061
Interest payment in connection with conversions					3,918			234
Loss (Income) in connection with conversions					(1,643	)		245
Total	$	(7,130	)	$	47,079		$	7,425

4.5% Convertible Notes Due 2022 (“2022 Notes”)

On July 24, 2017, the Company entered into a privately negotiated exchange agreement (the “2017 Exchange Agreement”) with certain existing note holders identified therein to exchange $9.0 million aggregate principal amount of the Company’s outstanding 2018 Notes for (i) $8.55 million aggregate principal amount of the Company’s 4.5% convertible promissory notes due 2022, (ii) $275,000 in cash consideration and (iii) cash, equal to the accrued and unpaid interest on the exchanged 2018 Notes.

As the terms of the 2018 Notes and the 2022 Notes were substantially different, the 2017 Exchange Agreement was considered an extinguishment of debt, which in essence means recording a loss due to the 2018 Notes that were exchanged for the 2022 Notes recorded at fair value as of the closing date. The Company recognized a loss of $1.3 million due to the extinguishment.

The Company prepared a valuation of the fair value of the 2022 Notes (a Level 3 valuation) for the issuance date. The value of the 2022 Notes was estimated by implementing the binomial model. The liability component was valued based on the Income Approach. The following parameters were used:

	July 24, 2017
Stock price (USD)		0.77
Expected term		4.57
Risk free rate		1.78	%
Volatility		62.68	%
Yield		15.21	%

The Company accounts for the convertible notes as a liability, on an aggregated basis, in their entirely. The debt discount and debt issuance costs are deferred and amortized over the applicable convertible period.

All of the 2022 Notes were converted during the year ended December 31, 2017 into 11,239,641 shares of Common Stock.

The following table sets forth total interest expense recognized related to the 2022 Notes:

(U.S. Dollars in thousands)	Year Ended December 31, 2017
Contractual interest expense	$	55
Debt premium amortization		(46	)
Loss on extinguishment		1,325
Total	$	1,334

FAIR VALUE MEASUREMENT

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

NOTE 9 - FAIR VALUE MEASUREMENT

The Company 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 $57.9 million 2021 Notes as of December 31, 2018 is approximately $56.6 million based on a level 3 measurement.

The Company prepared a valuation of the fair value of the 2021 Notes (a Level 3 valuation) as of December 31, 2018. The value 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:

	2021 Notes
Stock price (USD)		0.31
Expected term		2.88
Risk free rate		2.44	%
Volatility		75.94	%
Yield		13.34	%

- 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

TAXES ON INCOME

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

TAXES ON INCOME

NOTE 10 - TAXES ON INCOME

The Company

Protalix BioTherapeutics, Inc. is taxed according to U.S. tax laws. The Company’s income is taxed in the United States at the rate of up to 27%.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted into law. The new legislation represents fundamental and dramatic modifications to the U.S. tax system. The Act contained several key tax provisions that impacted the Company including the reduction of the maximum U.S. federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Other significant changes under the Act included, among others, a one-time repatriation tax on accumulated foreign earnings, a limitation of net operating loss deduction to 80% of taxable income, and indefinite carryover of post-2017 net operating losses. The Act also repealed the corporate alternative minimum tax for tax years beginning after December 31, 2017. Losses generated prior to January 1, 2018 will still be subject to the 20-year carryforward limitation and the alternative minimum tax. Other impacts due to the Act included the repeal of the domestic manufacturing deduction, modification of taxation of controlled foreign corporations, a base erosion anti-abuse tax, modification of interest expense limitation rules, modification of limitation on deductibility of excessive executive compensation, and taxation of global intangible low-taxed income.

Modification of interest expense limitation rules under the Act provides generally that for taxable years 2018-2021 interest expense deduction shall be limited to 30% of the EBITDA and for taxable years 2022 onwards to 30% of EBIT. Disallowed interest deduction may be carried forward indefinitely. The Company believes that any potential impact (if applicable) of this limitation will be offset by utilization of available net operating losses.

U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted.

The Company believes that all future profits of its subsidiaries will be indefinitely reinvested or that there is no expectation to distribute any taxable dividends from these subsidiaries. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is estimated as an immaterial amount.

Protalix Ltd.

The Israeli Subsidiary is taxed according to Israeli tax laws:

Tax rates

The income of the Israeli Subsidiary, other than income from “Approved Enterprises,” is taxed in Israel at the regular corporate tax rates which were 26.5% for fiscal year 2015.

In January 2016, the Law for the Amendment of the Income Tax Ordinance (No.216) was published, enacting a reduction of corporate tax rate beginning in 2016 and thereafter, from 26.5% to 25%.

In December 2016, the Economic Efficiency Law (Legislative Amendments for Implementing the Economic Policy for the 2017 and 2018 Budget Years), 2016 was published, introducing a gradual reduction in corporate tax rate from 25% to 23%. However, the law also included a temporary provision setting the corporate tax rate in 2017 at 24%. As a result, the corporate tax rate was 23% in 2018 and will be 23% in 2019 and thereafter.

Capital gain is subject to capital gain tax according to the corporate tax rate for the year during which the assets are sold.

The Law for the Encouragement of Capital Investments, 1959 (the “Encouragement of Capital Investments Law”)

Under the Encouragement of Capital Investments Law, including Amendment No. 60 to the Encouragement of Capital Investments Law as published in April 2005, by virtue of the “Approved Enterprise” or “Benefited Enterprise” status the Israeli Subsidiary is entitled to various tax benefits as follows:

Reduced tax rates

Income derived from the Approved Enterprise during a 10-year period commencing upon the year in which the enterprise first realizes taxable income is tax exempt, provided that the maximum period to which it is restricted by the Encouragement of Capital Investments Law has not elapsed.

The Israeli Subsidiary has an “Approved Enterprise” plan since 2004 and “Benefited Enterprise” plan since 2009. The period of benefits in respect of the main enterprise of the Company has not yet commenced. The period during which the Company is entitled to benefits in connection with the Benefited Enterprise expires in 2021.

If the Israeli Subsidiary subsequently pays a dividend out of income derived from the “Approved Enterprise” or “Benefited Enterprise” during the tax exemption period, it will be subject to tax on the gross amount distributed (including the company tax on these amounts), at the rate which would have been applicable had such income not been exempted.

Accelerated depreciation

The Israeli Subsidiary is entitled to claim accelerated depreciation, as provided by Israeli law, in the first five years of operation of each asset, in respect of buildings, machinery and equipment used by the Approved Enterprise and the Benefited Enterprise.

Conditions for entitlement to the benefits

The Israeli Subsidiary’s entitlement to the benefits described above is subject to its fulfilling the conditions stipulated by the law, rules and regulations published thereunder, and the instruments of approval for the specific investment in an approved enterprise. Failure by the Israeli Subsidiary to comply with these conditions may result in the cancellation of the benefits, in whole or in part, and the Subsidiary may be required to refund the amount of the benefits with interest. The Israeli Subsidiary received a final implementation approval with respect to its “Approved Enterprise” from the Investment Center.

Amendment of the Law for the Encouragement of Capital Investments, 1959

In recent years, several amendments have been made to the Encouragement of Capital Investments Law which have enabled new alternative benefit tracks, subject to certain conditions.

The Encouragement of Capital Investments Law was amended as part of the Economic Policy Law for the years 2011-2012, which was passed by the Israeli Knesset on December 29, 2010. The amendment sets alternative benefit tracks to those currently in effect under the provisions of the Encouragement of Capital Investments Law. On December 29, 2016, Amendment 73 to the Encouragement of Capital Investments Law was published. This amendment sets new benefit tracks, inter alia, “Preferred Technological Enterprise” and “Special Preferred Technological Enterprise” (the “Capital Investments Law Amendment”).

The Company elected not to have the Capital Investments Law Amendment apply to the Company.

Tax losses carried forward to future years

As of December 31, 2018, the Company had aggregate net operating loss (“NOL”) carry-forwards equal to approximately $

211

million that are available to reduce future taxable income as follows:

The Company

The Company’s carry-forward NOLs, equal to approximately $

million (as of December 31, 2017, approxi

tely

million

), may

be restricted under Section

382

of the Internal Revenue Code (“IRC”). IRC Section

382

applies whenever a corporation with NOL experiences an ownership change. As a result of IRC Section

382

, the taxable income for any post change year that may be offset by a pre-change NOL may not exceed the general IRC Section

382 limitation, which is the fair market value of the pre-change entity multiplied by the IRC long-term tax exempt rate.

Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considered all available evidence, including past operating results, the most recent projections for taxable income, and prudent and feasible tax planning strategies. The Company reassesses its valuation allowance periodically and if future evidence allows for a partial or full release of the valuation allowance, a tax benefit will be recorded accordingly.

Protalix Ltd.

At December 31, 2018, the Israeli Subsidiary had approximately $

185

million (as of December 31, 2017, approximately $182 million) of carry-forward NOLs that are available to reduce future taxable income with no limited period of use.

Deferred income taxes:

The components of the Company’s net deferred tax assets at December 31, 2017 and 2018 were as follows:

	December 31,
(U.S. dollars in thousands)	2017			2018
In respect of:
Timing Differences of Protalix Ltd.	$	11,761		$	6,678
Timing Differences of Protalix BioTherapeutics, Inc.		(426	)		(501	)
Net operating loss carry forwards		47,033			49,436
Valuation allowance		(58,368	)		(55,613	)
		-			-

Deferred taxes are computed using the tax rates expected to be in effect when those differences reverse.

Reconciliation of the theoretical tax expense to actual tax expense

The main reconciling item between the statutory tax rate of the Company and the effective rate is the provision for a full valuation allowance in respect of tax benefits from carry forward tax losses due to the uncertainty of the realization of such tax benefits (see above).

Tax assessments

In accordance with the Income Tax Ordinance, as of December 31, 2018, all of Protalix Ltd.’s tax assessments throug

h tax year

2013

are

considered final.

A summary of open tax years by major jurisdiction is presented below:

Jurisdiction:		Years:
Israel		2014 - 2018
United States (*)		2014 - 2018

(*) Includes federal, state and local (or similar provincial jurisdictions) tax positions.

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

12 Months Ended

Dec. 31, 2018

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION [Abstract]

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

NOTE 11 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

Balance sheets:

	December 31,
(U.S. dollars in thousands)	2017		2018
a. Other assets:
Institutions	$	394	$	574
State of Israel (see note 6a)		195		190
Restricted deposit		623		561
Prepaid expenses		433		453
Assets of discontinued operation		215
Sundry		74		99
	$	1,934	$	1,877

	December 31,
(U.S. dollars in thousands)	2017		2018
b. Accounts payable and accruals – other:
Payroll and related expenses	$	1,386	$	1,099
Interest payable		645		555
Provision for vacation		1,650		1,658
Accrued expenses		4,802		6,368
Royalties payable		301		369
Property and equipment suppliers		526		225
	$	9,310	$	10,274

Statements of operations:

	December 31,
(U.S. dollars in thousands)	2016		2017		2018
Revenues from selling goods:
Pfizer	$	5,226	$	12,181	$	5,320
Brazil	$	3,973	$	7,061	$	3,658
	$	9,199	$	19,242	$	8,978
Revenue from license and R&D services			$	1,836	$	25,262

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2018

RELATED PARTY TRANSACTIONS

NOTE 12 - RELATED PARTY TRANSACTIONS

	Year ended December 31,
(U.S. dollars in thousands)		2016		2017		2018
Compensation (including share based compensation) to the non-executive directors	$	560	$	499	$	467

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 13 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date on which the consolidated financial statements were available to be issued and no subsequent events were identified.

SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 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;

Revision of Prior Year Financial Information

Basis of presentation

The Company’s financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).

Use of estimates in the preparation of financial statements

Functional currency

Cash equivalents

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost of raw and packaging materials and purchased products is determined using the “moving average” basis.

Inventory is written down for estimated obsolescence based upon management assumptions about future demand and market conditions.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation and amortization.

The Company’s assets are depreciated by the straight-line method on the basis of their estimated useful lives as follows:

	Years
Laboratory equipment		5
Furniture		10-15
Computer equipment		3

Leasehold improvements are amortized by the straight-line method over the expected lease term, which is shorter than the estimated useful life of the improvements.

Impairment in value of long-lived assets

Income taxes

Deferred income taxes

Uncertainty in income taxes

Revenue Recognition

The Company’s revenue recognition accounting policy from January 1, 2018, following the adoption of the new revenue standard

Revenues are recorded in the amount of consideration to which the Company expects to be entitled in exchange for performance obligations upon transfer of control to the customer.

Revenues from selling products

The Company recognizes revenues from selling goods at a point in time when control over the product is transferred to customers (upon delivery).

Revenues from Chiesi Agreements

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

Our revenue recognition accounting policy prior to January 1, 2018, was materially the same.

Research and development costs

Concentration of credit risks and trade receivable

Share-based compensation

The Company elects to account for forfeitures as they occur.

Net (loss) earnings per share

Convertible notes

As of December 31, 2018, a total of $57.9 million aggregate principal amount of the 2021 Notes were outstanding. In addition, as of December 31, 2018, none of the 2018 Notes were outstanding.

Recently adopted standards

Recently issued accounting pronouncements

SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Schedule of Useful Life

The Company’s assets are depreciated by the straight-line method on the basis of their estimated useful lives as follows:

	Years
Laboratory equipment		5
Furniture		10-15
Computer equipment		3

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Composition of property and equipment grouped by major classifications is as follows:

	December 31,
( U.S. dollars in thousands)	2017			2018
Laboratory equipment	$	16,561		$	16,732
Furniture and computer equipment		2,438			2,565
Leasehold improvements		16,123			16,191
Equipment under construction		19			18
	$	35,141		$	35,506
Less – accumulated depreciation and amortization		(27,465	)		(29,116	)
	$	7,676		$	6,390

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

Schedule of Inventory

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

	December 31,
( U.S. dollars in thousands)	2017		2018
Raw materials	$	3,838	$	3,792
Work in progress		485
Finished goods		3,510		4,777
Total inventory	$	7,833	$	8,569

SHARE CAPITAL (Tables)

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Options and Restricted Stocks Granted

Below is a table summarizing all of the options grants to employees during the year ended December 31, 2018:

Year of grant		No. of options granted		Exercise price		Vesting period		Fair value at grant (U.S. dollars in thousands)		Expiration period
	2018		4,000,000	$	0.56		4 years	$	1,200		10 years
	2018		2,360,000	$	0.51		4 years	$	700		10 years

Summary of Stock Option Activity - Options Granted to Employees

Options granted to employees:

	Year ended December 31,
	2016				2017				2018
			Weighted				Weighted				Weighted
	Number		average		Number		Average		Number		average
	of		exercise		of		Exercise		of		exercise
	options		price		options		Price		options		price
Outstanding at beginning of year		6,952,293	$	3.363		4,884,211	$	3.617		4,729,617	$	3.604
Changes during the year:
Granted										6,360,000		0.541
Forfeited and Expired		1,514,957		3.748		154,594		4.004		1,088,942		4.604
Exercised (*)		553,125		0.067
Outstanding at end of year		4,884,211	$	3.617		4,729,617	$	3.604		10,000,675	$	1.547
Exercisable at end of year		3,498,492	$	4.296		4,457,461	$	3.696		3,944,863	$	3.065

(*) The total intrinsic value of options exercised during the years ended December 31, 2016, 2017 and 2018, was approximately $213,000, $0 and $0, respectively.

Summary of Restricted Stock Activity - Options Granted to Employees

Restricted stock granted to employees:

	Year ended December 31, 2016
	Number of shares of restricted stock
Outstanding at beginning of year		127,874
Changes during the year:
Vested		127,874
Forfeited		-
Outstanding at end of year		-

Schedule of Options Granted to Service Providers

Options and restricted stocks granted to consultants, directors, and other service providers:

	Year ended December 31,
	2016				2017				2018
	Number				Number				Number
	of		Weighted		of		Weighted		of		Weighted
	options/		average		options/		average		options/		average
	restricted		exercise		restricted		exercise		restricted		exercise
	stock		price		stock		price		stock		price
Outstanding at beginning of Year		637,209	$	11.638		208,000	$	3.156		200,000	$	3.282
Changes during the year:
Expired		429,209		15.748		8,000		0.001		50,000		3.02
Vested restricted stock
Outstanding at end of year		208,000		3.156		200,000		3.282		150,000		3.37
Exercisable at end of year		170,500	$	3.109		200,000	$	3.282		150,000	$	3.37

Schedule of Information about Share Options Outstanding

The following tables summarize information concerning outstanding and exercisable options and restricted stock as of December 31, 2018:

December 31, 2018
Options outstanding						Options exercisable
Exercise prices		Number of options outstanding at end of year		Weighted average remaining contractual life		Number of options exercisable		Weighted average remaining contractual life
	n/a (Restricted Stock)						n/a		n/a
$	0.51		2,360,000		9.71		147,500		9.71
$	0.56		4,000,000		9.71		250,000		9.71
$	1.720		1,623,593		6.22		1,530,281		6.22
$	2.370		900,000		5.74		900,000		5.74
$	2.650		209,082		0.15		209,082		0.15
$	3.370		150,000		5.56		150,000		5.56
$	6.900		680,000		1.15		680,000		1.15
$	7.550		160,000		0.56		160,000		0.56
$	9.660		68,000		1.83		68,000		1.83
			10,150,675				4,094,863

Schedule of Stock-Based Compensation Expense in Statement of Operations

The following table illustrates the effect of share-based compensation on the statement of operations:

	Year ended December 31,
(U.S. dollars in thousands)	2016		2017		2018
Research and development expenses	$	571	$	182	$	310
Selling, general and administrative expenses		417		155		204
	$	988	$	337	$	514

CONVERTIBLE NOTES (Tables)

12 Months Ended

Dec. 31, 2018

Seven Point Five Percentage Convertible Notes [Member]

Fair Value Measurements, Recurring and Nonrecurring

	December 7, 2016			July 24, 2017
Stock price (USD)		0.3			0.77
Expected term		4.94			4.32
Risk free rate		1.86	%		1.74	%
Volatility		54.12	%		63.79	%
Yield		13.98	%		11.56	%

Four Point Five Percentage Convertible Notes One [Member]

Fair Value Measurements, Recurring and Nonrecurring

	July 24, 2017
Stock price (USD)		0.77
Expected term		4.57
Risk free rate		1.78	%
Volatility		62.68	%
Yield		15.21	%

Notes 2018 [Member]

Schedule of Interest Expense Recognized

The following table sets forth total interest expense recognized for the years ended December 31, 2016, 2017 and 2018 related to the 2018 Notes:

	Year ended December 31,
(U.S. Dollars in thousands)	2016		2017		2018
Contractual interest expense	$	2,943	$	501	$	139
Amortization of debt issuance costs and debt discount		421		71		15
Gain from early redemption						(32	)
Total	$	3,364	$	572	$	122

Notes 2021 [Member]

Schedule of Interest Expense Recognized

The following table sets forth total interest expense recognized related to the 2021 Notes:

	Year Ended December 31,
(U.S. Dollars in thousands)	2016			2017			2018
Contractual interest expense	$	313		$	4,434		$	4,359
Debt discount amortization		147			2,309			2,587
Gain on extinguishment		(14,063	)
Change in fair value of convertible note embedded derivative		6,473			38,061
Interest payment in connection with conversions					3,918			234
Loss (Income) in connection with conversions					(1,643	)		245
Total	$	(7,130	)	$	47,079		$	7,425

Notes 2022 [Member]

Schedule of Interest Expense Recognized

The following table sets forth total interest expense recognized related to the 2022 Notes:

(U.S. Dollars in thousands)	Year Ended December 31, 2017
Contractual interest expense	$	55
Debt premium amortization		(46	)
Loss on extinguishment		1,325
Total	$	1,334

FAIR VALUE MEASUREMENT (Tables)

12 Months Ended

Dec. 31, 2018

Notes 2021 [Member]

Fair Value Measurements, Recurring and Nonrecurring

The following parameters were used:

	2021 Notes
Stock price (USD)		0.31
Expected term		2.88
Risk free rate		2.44	%
Volatility		75.94	%
Yield		13.34	%

TAXES ON INCOME (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets

The components of the Company’s net deferred tax assets at December 31, 2017 and 2018 were as follows:

	December 31,
(U.S. dollars in thousands)	2017			2018
In respect of:
Timing Differences of Protalix Ltd.	$	11,761		$	6,678
Timing Differences of Protalix BioTherapeutics, Inc.		(426	)		(501	)
Net operating loss carry forwards		47,033			49,436
Valuation allowance		(58,368	)		(55,613	)
		-			-

Schedule of Open Tax Years

A summary of open tax years by major jurisdiction is presented below:

Jurisdiction:		Years:
Israel		2014 - 2018
United States (*)		2014 - 2018

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Tables)

12 Months Ended

Dec. 31, 2018

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION [Abstract]

Supplemental Information, Balance Sheets

Balance sheets:

	December 31,
(U.S. dollars in thousands)	2017		2018
a. Other assets:
Institutions	$	394	$	574
State of Israel (see note 6a)		195		190
Restricted deposit		623		561
Prepaid expenses		433		453
Assets of discontinued operation		215
Sundry		74		99
	$	1,934	$	1,877

	December 31,
(U.S. dollars in thousands)	2017		2018
b. Accounts payable and accruals – other:
Payroll and related expenses	$	1,386	$	1,099
Interest payable		645		555
Provision for vacation		1,650		1,658
Accrued expenses		4,802		6,368
Royalties payable		301		369
Property and equipment suppliers		526		225
	$	9,310	$	10,274

Supplemental Information, Statements of Operations

Statements of operations:

	December 31,
(U.S. dollars in thousands)	2016		2017		2018
Revenues from selling goods:
Pfizer	$	5,226	$	12,181	$	5,320
Brazil	$	3,973	$	7,061	$	3,658
	$	9,199	$	19,242	$	8,978
Revenue from license and R&D services			$	1,836	$	25,262

RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Related Party Transactions

	Year ended December 31,
(U.S. dollars in thousands)		2016		2017		2018
Compensation (including share based compensation) to the non-executive directors	$	560	$	499	$	467

SIGNIFICANT ACCOUNTING POLICIES (Useful Lives of Property and Equipment) (Details)	12 Months Ended
	Dec. 31, 2018
Laboratory Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Furniture [Member] \| Minimum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	10 years
Furniture [Member] \| Maximum [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	15 years
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	3 years

SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended			12 Months Ended
	Jul. 23, 2018	Oct. 19, 2017	Oct. 31, 2015	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2019
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				74,583,792	76,848,199	23,532,492
Tax Rate Assumption Related To Deferred Tax Difference Reversal				The Company used tax rates of 27%, 23% and 21%.
Net Loss Per Share				$ (0.18)	$ (0.64)	$ (0.29)
Accounting Standards Update 2016-02 [Member]
Significant Accounting Policies [Line Items]
Finance Lease, Right-of-Use Asset							$ 5.9
Finance Lease, Liability							$ 5.9
Revision Adjustment [Member]
Significant Accounting Policies [Line Items]
Contract With Customer Liability And Accumulated Losses					$ 1.8
Net Loss Per Share					$ 0.01
Seven Point Five Percentage Convertible Notes 2021 [Member]
Significant Accounting Policies [Line Items]
Debt Instrument Carrying Amount				$ 57.9
Brazil [Member]
Significant Accounting Policies [Line Items]
Percentage Of Adult Gaucher Patients Treated With alfataliglicerase				10.00%
Pfizer Agreement [Member]
Significant Accounting Policies [Line Items]
Proceeds From Exchange For Rights To Royalties			$ 36.0
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 US Agreement [Member]
Significant Accounting Policies [Line Items]
Upfront Nonrefundable Noncreditable Payment Receivable	$ 25.0	$ 25.0
Additional Amounts Payable To Cover Development Costs	20.0
Maximum Entitlement Of Development Costs To Cover Per Year	7.5
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones	$ 760.0
Contract with Customer, Asset, Cumulative Catch-up Adjustment to Revenue, Modification of Contract				$ 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		25.0
Additional Amounts Payable To Cover Development Costs		25.0
Maximum Entitlement Of Development Costs To Cover Per Year		10.0
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones		$ 320.0
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%
Brazil Agreement [Member]
Significant Accounting Policies [Line Items]
Supply Commitment In Year 2017					$ 24.3
Fiocruz [Member]
Significant Accounting Policies [Line Items]
Revenues				$ 3.7	$ 7.1

COMMERCIALIZATION AGREEMENTS (Narrative) (Details) - USD ($) $ in Millions	1 Months Ended
	Jul. 23, 2018	Oct. 19, 2017	Oct. 31, 2015	Nov. 30, 2009
Protalix Bio Therapeutics Incorporation [Member]
Collaborative Arrangement Profit Share Percentage				40.00%
Pfizer [Member]
Stock Issued During Period, Shares, New Issues			5,649,079
Debt Instrument, Face Amount			$ 4.3
Chiesi US Agreement [Member]
Upfront Nonrefundable Noncreditable Payment Receivable	$ 25.0	$ 25.0
Additional Amounts Payable To Cover Development Costs	20.0
Maximum Entitlement Of Development Costs To Cover Per Year	7.5
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones	$ 760.0
Chiesi US Agreement [Member] \| Maximum [Member]
Payment On Net Sales Percentage	40.00%
Chiesi US Agreement [Member] \| Minimum [Member]
Payment On Net Sales Percentage	15.00%
Chiesi Ex US Agreement [Member]
Upfront Nonrefundable Noncreditable Payment Receivable		25.0
Additional Amounts Payable To Cover Development Costs		25.0
Maximum Entitlement Of Development Costs To Cover Per Year		10.0
Additional AmountPayable For Achievement Of Regulatory And Commercial Milestones		$ 320.0
Chiesi Ex US Agreement [Member] \| Maximum [Member]
Payment On Net Sales Percentage		35.00%
Chiesi Ex US Agreement [Member] \| Minimum [Member]
Payment On Net Sales Percentage		15.00%

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 35,506	$ 35,141
Less - accumulated depreciation and amortization	(29,116)	(27,465)
Property, Plant and Equipment, Net	6,390	7,676
Laboratory Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	16,732	16,561
Furniture And Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	2,565	2,438
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	16,191	16,123
Equipment Under Construction [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 18	$ 19

PROPERTY AND EQUIPMENT (Narrative) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation	$ 1,671	$ 1,920	$ 1,983

INVENTORIES (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Raw materials	$ 3,792	$ 3,838
Work in progress		485
Finished goods	4,777	3,510
Total inventory	$ 8,569	$ 7,833

INVENTORIES (Details Textual) - USD ($) $ in Millions	12 Months Ended
INVENTORIES (Details Textual) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Inventory Write-down	$ 1.1	$ 0.5

LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Employee severance obligation payments	$ 145,000	$ 166,000	$ 164,000
Contributions	620,000	746,000	675,000
Severance expense	781,000	906,000	842,000
Net gain (loss) for the period	46,000	$ 21,000	$ (7,000)
Benefits Payable During Next Five Years	248,000
Contribution to Insurance Companies [Member]
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year	748,000
Contribution to Defined Contribution Plans [Member]
Defined Benefit Plan, Expected Future Employer Contributions, Next Fiscal Year	$ 604,000

COMMITMENTS (Narrative) (Details) - USD ($)	12 Months Ended
COMMITMENTS (Narrative) (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Commitments And Contingencies [Line Items]
Subcontracting commitment amount	$ 18,800,000
Milestone Potential Payable	14,300,000
Milestone Payment, Amount Paid	0	$ 0	$ 300,000
OCS [Member]
Commitments And Contingencies [Line Items]
Royalty expense included in cost of revenue	1,619,000	1,384,000	288,000
Research And License Agreements [Member]
Commitments And Contingencies [Line Items]
Royalty expense included in cost of revenue	0	0	286,000
Lease Agreements [Member]
Commitments And Contingencies [Line Items]
Monthly rent/lease expense	63,000
Future minimum lease payments, 2019	758,000
Future minimum lease payments, 2020	758,000
Future minimum lease payments, 2021	621,000
Cash deposited as bank guarantee	402,000
Lease/rent expense	783,000	775,000	$ 1,000,000
Vehicle Lease And Maintenance Agreements [Member]
Commitments And Contingencies [Line Items]
Monthly rent/lease expense	43,000
Future minimum lease payments, 2019	474,000
Future minimum lease payments, 2020	333,000
Future minimum lease payments, 2021	$ 82,000
Minimum [Member] \| OCS [Member]
Commitments And Contingencies [Line Items]
Royalties based on sale of products developed from funded projects, percentage	3.00%
Maximum [Member] \| OCS [Member]
Commitments And Contingencies [Line Items]
Royalties based on sale of products developed from funded projects, percentage	6.00%
Accrued royalties	$ 41,900,000	$ 42,200,000
Percentage of Royalties to Grant Received	100.00%	100.00%	100.00%
Maximum [Member] \| Products Manufactured Outside Of Israel [Member]
Commitments And Contingencies [Line Items]
Percentage of Royalties to Grant Received	300.00%	300.00%	300.00%

SHARE CAPITAL (Summary of Option and Restricted Stock Granted to Employees) (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2018 USD ($) $ / shares shares
Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted \| shares	4,000,000
Exercise price \| $ / shares	$ 0.56
Vesting period	4 years
Fair value at grant \| $	$ 1,200
Expiration period	10 years
Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted \| shares	2,360,000
Exercise price \| $ / shares	$ 0.51
Vesting period	4 years
Fair value at grant \| $	$ 700
Expiration period	10 years

SHARE CAPITAL (Options Granted to Employees) (Details) - Options And Restricted Stock Granted To Employees [Member] - $ / shares

12 Months Ended

Dec. 31, 2018

Dec. 31, 2017

Dec. 31, 2016

Number of options

Outstanding at beginning of year

4,729,617

4,884,211

6,952,293

Granted

6,360,000

Forfeited and Expired

1,088,942

154,594

1,514,957

Exercised

^[1]

553,125

Outstanding at end of year

10,000,675

4,729,617

4,884,211

Exercisable at end of year

3,944,863

4,457,461

3,498,492

Weighted average exercise price

Outstanding at beginning of year

$ 3.604

$ 3.617

$ 3.363

Granted

0.541

Forfeited and Expired

4.604

4.004

3.748

Exercised

^[1]

0.067

Outstanding at end of year

1.547

3.604

3.617

Exercisable at end of year

$ 3.065

$ 3.696

$ 4.296

[1]	The total intrinsic value of options exercised during the years ended December 31, 2016, 2017 and 2018, was approximately $213,000, $0 and $0, respectively.

SHARE CAPITAL (Restricted Stock Granted to Employees) (Details) - Employees [Member]	12 Months Ended
	Dec. 31, 2016 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at beginning of year	127,874
Vested	127,874
Forfeited	0
Outstanding at end of year	0

SHARE CAPITAL (Options and Restricted Stocks Granted to Consultants, Directors and Other Service Providers) (Details) - Options and Restricted Stocks Granted To Consultants Directors And Other Service Providers [Member] - $ / shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Number of options/ restricted stock
Outstanding at beginning of year	200,000	208,000	637,209
Expired	50,000	8,000	429,209
Vested restricted stock			0
Outstanding at end of year	150,000	200,000	208,000
Exercisable at end of year	150,000	200,000	170,500
Weighted average exercise price
Outstanding at beginning of year	$ 3.282	$ 3.156	$ 11.638
Expired	3.02	0.001	15.748
Outstanding at end of year	3.37	3.282	3.156
Exercisable at end of year	$ 3.37	$ 3.282	$ 3.109

SHARE CAPITAL (Summary of Outstanding and Restricted Stocks) (Details) - Options and Restricted Stock [Member]	12 Months Ended
	Dec. 31, 2018 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Number of options and restricted stock outstanding at end of year	10,150,675
Number of options exercisable at end of year	4,094,863
0.51 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 0.51
Number of options and restricted stock outstanding at end of year	2,360,000
Weighted average remaining contractual life	9 years 8 months 16 days
Number of options exercisable at end of year	147,500
Weighted average remaining contractual life, exercisable	9 years 8 months 16 days
0.56 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 0.56
Number of options and restricted stock outstanding at end of year	4,000,000
Weighted average remaining contractual life	9 years 8 months 16 days
Number of options exercisable at end of year	250,000
Weighted average remaining contractual life, exercisable	9 years 8 months 16 days
1.720 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 1.720
Number of options and restricted stock outstanding at end of year	1,623,593
Weighted average remaining contractual life	6 years 2 months 19 days
Number of options exercisable at end of year	1,530,281
Weighted average remaining contractual life, exercisable	6 years 2 months 19 days
2.370 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 2.370
Number of options and restricted stock outstanding at end of year	900,000
Weighted average remaining contractual life	5 years 8 months 26 days
Number of options exercisable at end of year	900,000
Weighted average remaining contractual life, exercisable	5 years 8 months 26 days
2.650 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 2.650
Number of options and restricted stock outstanding at end of year	209,082
Weighted average remaining contractual life	1 month 24 days
Number of options exercisable at end of year	209,082
Weighted average remaining contractual life, exercisable	1 month 24 days
3.370 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 3.370
Number of options and restricted stock outstanding at end of year	150,000
Weighted average remaining contractual life	5 years 6 months 22 days
Number of options exercisable at end of year	150,000
Weighted average remaining contractual life, exercisable	5 years 6 months 22 days
6.900 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 6.900
Number of options and restricted stock outstanding at end of year	680,000
Weighted average remaining contractual life	1 year 1 month 24 days
Number of options exercisable at end of year	680,000
Weighted average remaining contractual life, exercisable	1 year 1 month 24 days
7.550 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 7.550
Number of options and restricted stock outstanding at end of year	160,000
Weighted average remaining contractual life	6 months 22 days
Number of options exercisable at end of year	160,000
Weighted average remaining contractual life, exercisable	6 months 22 days
9.660 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price \| $ / shares	$ 9.660
Number of options and restricted stock outstanding at end of year	68,000
Weighted average remaining contractual life	1 year 9 months 29 days
Number of options exercisable at end of year	68,000
Weighted average remaining contractual life, exercisable	1 year 9 months 29 days

SHARE CAPITAL (Share Based Compensation Expense Allocation) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Allocated Share-based Compensation Expense	$ 514	$ 337	$ 988
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Allocated Share-based Compensation Expense	310	182	571
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Allocated Share-based Compensation Expense	$ 204	$ 155	$ 417

SHARE CAPITAL (Narrative) (Details) - USD ($)			1 Months Ended		12 Months Ended
SHARE CAPITAL (Narrative) (Details) - USD ($)	Sep. 13, 2018	Dec. 07, 2016	May 22, 2018	Jul. 24, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 02, 2016	Dec. 14, 2006
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock available for issuance					7,303,119				23,841,655
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized					$ 1,524,000
Proceeds from Stock Options Exercised					0	$ 0	$ 14,000
Debt Conversion, Converted Instrument, Amount					2,285,000	$ 16,263,000
Debt Conversion, Converted Instrument, Shares Issued		23,846,735				11,239,641
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value					$ 0	$ 0	$ 213,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition					1 year 2 months 5 days
4.5% Convertible Notes [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Debt Conversion, Converted Instrument, Amount			$ 2,230,000
Debt Conversion, Converted Instrument, Shares Issued			2,613,636
Principal amount		$ 54,052,000	$ 3,423,000	$ 9,000,000
Debt Instrument Maturity Year				2018 years
Convertible Notes Due Two Thousand Twenty One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Principal amount		$ 40,186,000
Seven Point Five Percentage Convertible Notes [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Debt Conversion, Converted Instrument, Shares Issued							1,176.4706
Principal amount				$ 10,000,000				$ 22,500,000
Debt Instrument Maturity Year				2021 years
Four Point Five Percentage Convertible Notes One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Principal amount				$ 8,550,000
Debt Instrument Maturity Year				2022 years
Officers And Certain Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	2,360,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.51
Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Based Compensation Arrangement By Share Based Payment Award Grant Date Fair Value					$ 1,200,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	4,000,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price					$ 0.56
Non-executive Officers [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Strike Price	$ 0.51
Option to purchase shares of common stock [Member]
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	$ 1,900,000
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, Net of Forfeitures	6,360,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Option to purchase shares of common stock [Member] \| Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.56

CONVERTIBLE NOTES (Schedule of Interest Expense Recognized) (Details) - 2018 Notes [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Contractual interest expense	$ 139	$ 501	$ 2,943
Amortization of debt issuance costs and debt discount	15	71	421
Gain from early redemption	(32)
Total	$ 122	$ 572	$ 3,364

CONVERTIBLE NOTES (Fair Value Income Approach) (Details) - Fair Value, Inputs, Level 3 [Member] - $ / shares		1 Months Ended	12 Months Ended
	Dec. 07, 2016	Jul. 24, 2017	Dec. 31, 2018
Four Point Five Percentage Convertible Notes 2022 [Member]
Stock price (USD)		$ 0.77
Expected term		4 years 6 months 25 days
Risk free rate		1.78%
Volatility		62.68%
Yield		15.21%
Seven Point Five Percentage Convertible Notes [Member]
Stock price (USD)	$ 0.3	$ 0.77
Expected term	4 years 11 months 8 days	4 years 3 months 25 days	2 years 10 months 17 days
Risk free rate	1.86%	1.74%	2.44%
Volatility	54.12%	63.79%	75.94%
Yield	13.98%	11.56%	13.34%

CONVERTIBLE NOTES (Schedule Of Debt Interest Expenses) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Loss (gain) on extinguishment		$ 1,325	$ (14,063)
Change in fair value of convertible note embedded derivative		(38,061)	(6,473)
Notes 2021 [Member]
Contractual interest expense	$ 4,359	4,434	313
Debt discount amortization	2,587	2,309	147
Loss (gain) on extinguishment			(14,063)
Change in fair value of convertible note embedded derivative		38,061	6,473
Interest payment in connection with conversions	234	3,918
Income in connection with conversions	245	(1,643)
Total	$ 7,425	47,079	$ (7,130)
Notes 2022 [Member]
Contractual interest expense		55
Debt discount amortization		(46)
Loss (gain) on extinguishment		1,325
Total		$ 1,334

CONVERTIBLE NOTES (Narrative) (Details) - USD ($)		1 Months Ended			12 Months Ended
CONVERTIBLE NOTES (Narrative) (Details) - USD ($)	Dec. 07, 2016	Jun. 30, 2018	Jul. 24, 2017	Apr. 30, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 02, 2016	Sep. 18, 2013
Number of shares for basis conversion									173.6593
Net proceeds from issuance of convertible notes			$ 9,500,000			$ 9,542,000	$ 19,681,000
Principal amount, related to the initial purchaser's over-allotment option									$ 9,000,000
Debt Conversion, Converted Instrument, Amount					$ 2,285,000	16,263,000
Gain (Loss) on Extinguishment of Debt						$ (1,325,000)	14,063,000
Percentage Of Excess Shares Outstanding					20.00%
Debt Conversion, Converted Instrument, Shares Issued	23,846,735					11,239,641
Repayments of Convertible Debt					$ 4,752,000	$ 10,961,000
Stockholders Approval Description For Common Stock Issuance				the issuance of shares in excess of 20% of its outstanding shares. On April 12, 2017, the Company’s stockholders approved the issuance of shares of the Company’s Common Stock in excess of 20% of the Company’s outstanding shares of Common Stock to settle conversion requests and pay interest on the Company’s issued 2021 Notes
Embedded Derivative, Gain (Loss) on Embedded Derivative, Net						(38,061,000)	$ (6,473,000)
Convertible Notes Payable [Member]
Principal amount									$ 69,000,000
Seven Point Five Percentage Convertible Notes [Member]
Principal amount			$ 10,000,000					$ 22,500,000
Interest rate					7.50%			7.50%
Conversion price per share					$ 0.85
Base value for conversion rate					$ 1,000	$ 1,000
Gain (Loss) on Extinguishment of Debt					$ 14,100,000
Maximum Debt Instrument Convertible Conversion Share Number							$ 1,787.3100
Debt Conversion, Converted Instrument, Shares Issued							1,176.4706
Debt Instrument Maturity Year			2021 years
4.5% Convertible Notes [Member]
Principal amount		$ 3,423,000	$ 9,000,000				$ 54,100,000
Debt Conversion, Converted Instrument, Amount		$ 2,230,000
Debt Conversion, Converted Instrument, Shares Issued		2,613,636
Repayments of Convertible Debt		$ 2,530,000
Convertible Notes Due Two Thousand Twenty One [Member]
Principal amount	$ 40,186,000
Convertible Notes 2013 [Member]
Interest rate									4.50%
Conversion price per share									$ 5.76
Seven Point Five Percentage Convertible Notes 2021 [Member]
Debt Instrument, Redemption, Description						Prior to the maturity date, the Company may redeem in cash: a) any or all of the 2021 Notes if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days exceeds 150% of the conversion price on each applicable trading day, or b) all of the 2021 Notes then outstanding if the aggregate principal amount of the 2021 Notes then outstanding is less than 15% of the aggregate principal amount of the notes issued.
Debt Conversion, Converted Instrument, Shares Issued					1,537,415
Repayments of Convertible Debt					$ 15,887
Long-term Debt, Gross					57,900,000
Debt Conversion, Original Debt, Amount					$ 1,150,000
Four Point Five Percentage Convertible Notes 2022 [Member]
Principal amount			$ 8,550,000
Maturity							Nov. 15, 2021
Interest rate			4.50%
Gain (Loss) on Extinguishment of Debt						$ (1,300,000)
Repayments of Convertible Debt			$ 275,000
Debt Instrument Maturity Year			2022 years
Four Point Five Percentage Convertible Notes 2018 [Member]
Principal amount			$ 9,000,000

FAIR VALUE MEASUREMENT (The liability component was valued based on the Income Approach) (Details) - 2021 Notes [Member] - Fair Value, Inputs, Level 3 [Member] - $ / shares		1 Months Ended	12 Months Ended
	Dec. 07, 2016	Jul. 24, 2017	Dec. 31, 2018
Stock price (USD)			$ 0.31
Expected term	4 years 11 months 8 days	4 years 3 months 25 days	2 years 10 months 17 days
Risk free rate	1.86%	1.74%	2.44%
Volatility	54.12%	63.79%	75.94%
Yield	13.98%	11.56%	13.34%

FAIR VALUE MEASUREMENT (Narrative) (Details) - Fair Value, Inputs, Level 3 [Member] - Seven Point Five Percentage Convertible Notes [Member] $ in Millions	Dec. 31, 2018 USD ($)
Convertible Debt, Fair Value Disclosures	$ 56.6
Debt Instrument, Face Amount	$ 57.9

TAXES ON INCOME (Deferred Income Taxes) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
In respect of:
Timing Differences of Protalix Ltd.	$ 6,678	$ 11,761
Timing Differences of Protalix BioTherapeutics, Inc.	(501)	(426)
Net operating loss carry forwards	49,436	47,033
Valuation allowance	(55,613)	(58,368)
Deferred Tax Assets, Net of Valuation Allowance, Total	$ 0	$ 0

TAXES ON INCOME (Open Tax Years) (Details)

12 Months Ended

Dec. 31, 2018

ISRAEL [Member] | Minimum [Member]

Income Tax Contingency [Line Items]

Open tax year

2014

ISRAEL [Member] | Maximum [Member]

Income Tax Contingency [Line Items]

Open tax year

2018

UNITED STATES | Minimum [Member]

Income Tax Contingency [Line Items]

Open tax year

2014

^[1]

UNITED STATES | Maximum [Member]

Income Tax Contingency [Line Items]

Open tax year

2018

^[1]

[1]	Includes federal, state and local (or similar provincial jurisdictions) tax positions.

TAXES ON INCOME (Narrative) (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Dec. 22, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Line Items]
Statutory income tax rate			27.00%	35.00%
Net operating loss carry forwards			$ 211
Effective Income Tax Rate Reconciliation, Limitation of Net Operating Lost Deduction			80.00%
Effective Income Tax Rate Reconciliation, The Maximum Percentage of Interest			30.00%
Restricted Amount [Member]
Income Tax Disclosure [Line Items]
Net operating loss carry forwards			$ 26	$ 23
Domestic Tax Authority [Member]
Income Tax Disclosure [Line Items]
Statutory income tax rate			21.00%
Protalix Ltd. [Member]
Income Tax Disclosure [Line Items]
Statutory income tax rate		23.00%
Net operating loss carry forwards			$ 185	$ 182
Protalix Ltd. [Member] \| Scenario, Plan [Member]
Income Tax Disclosure [Line Items]
Statutory income tax rate			23.00%
Protalix Ltd. [Member] \| Law for Amending the Israel Income Tax Ordinance, Tax Thereafter [Member]
Income Tax Disclosure [Line Items]
Statutory income tax rate			23.00%	24.00%	25.00%	26.50%
Minimum [Member]
Income Tax Disclosure [Line Items]
Statutory income tax rate	23.00%
Maximum [Member]
Income Tax Disclosure [Line Items]
Statutory income tax rate					25.00%

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Other Assets) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Other assets:
Institutions	$ 574	$ 394
State of Israel (see note 6a)	190	195
Restricted deposit	561	623
Prepaid expenses	453	433
Assets of discontinued operation		215
Sundry	99	74
Other assets	$ 1,877	$ 1,934

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Accounts Payable and Accruals, Other) (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Accounts payable and accruals - other:
Payroll and related expenses	$ 1,099	$ 1,386
Interest payable	555	645
Provision for vacation	1,658	1,650
Accrued expenses	6,368	4,802
Royalties payable	369	301
Property and equipment suppliers	225	526
Accounts Payable, Current	$ 10,274	$ 9,310

SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION (Statements Of Operations) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
License and R&D Services [Member]
Revenues	$ 25,262	$ 1,836
Goods [Member]
Revenues	8,978	19,242	$ 9,199
Pfizer [Member] \| Goods [Member]
Revenues	5,320	12,181	5,226
BRAZIL \| Goods [Member]
Revenues	$ 3,658	$ 7,061	$ 3,973

RELATED PARTY TRANSACTIONS (Compensation) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Compensation To The non-executive Directors [Member]
Related Party Transaction [Line Items]
Compensation (including share based compensation) to the non-executive directors	$ 467	$ 499	$ 560