0001558370-22-017554 | 10-Q | XBRL Viewer | Protalix Biotherapeutics INC

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

3 Months Ended

9 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

TOTAL REVENUE

$ 14,183

$ 12,054

$ 39,021

$ 29,801

COST OF GOODS SOLD

^[1]

(7,074)

(3,703)

(17,195)

(13,201)

RESEARCH AND DEVELOPMENT EXPENSES

^[2]

(7,386)

(7,282)

(23,732)

(22,093)

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

^[3]

(2,848)

(2,954)

(8,613)

(9,263)

OPERATING LOSS

(3,125)

(1,885)

(10,519)

(14,756)

FINANCIAL EXPENSES

(639)

(2,410)

(1,879)

(6,613)

FINANCIAL INCOME

197

1,211

403

FINANCIAL EXPENSES, NET

(442)

(2,314)

(668)

(6,210)

OTHER INCOME

NET LOSS FOR THE PERIOD

$ (3,567)

$ (4,199)

$ (11,187)

$ (20,915)

LOSS PER SHARE OF COMMON STOCK - BASIC

$ (0.07)

$ (0.09)

$ (0.24)

$ (0.48)

LOSS PER SHARE OF COMMON STOCK - DILUTED

$ (0.07)

$ (0.09)

$ (0.24)

$ (0.48)

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

49,498,105

45,556,647

47,582,733

43,761,769

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

49,498,105

45,556,647

47,582,733

43,761,769

Goods

TOTAL REVENUE

$ 8,812

$ 4,506

$ 21,222

$ 12,260

License and R&D Services

TOTAL REVENUE

$ 5,371

$ 7,548

$ 17,799

$ 17,541

[1]	(1) Includes share-based compensation
[2]	(2) Includes share-based compensation
[3]	(3) Includes share-based compensation

INVENTORIES (Schedule of Inventory) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
INVENTORIES
Raw materials	$ 3,664	$ 3,166
Work in progress	2,619	3,262
Finished goods	8,279	11,526
Total inventory	$ 14,562	$ 17,954

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2022

INVENTORIES

Schedule of Inventory


	September 30,		December 31,
(U.S. dollars in thousands)	2022		2021
Raw materials	$	3,664	$	3,166
Work in progress		2,619		3,262
Finished goods		8,279		11,526
Total inventory	$	14,562	$	17,954

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (11,187)	$ (20,915)
Adjustments required to reconcile net loss to net cash used in operating activities:
Share-based compensation	1,546	1,957
Depreciation	811	859
Financial income, net (mainly exchange differences)	(1,083)	118
Changes in accrued liability for employee rights upon retirement	(391)	100
Loss (gain) on amounts funded in respect of employee rights upon retirement	6	(75)
Gain on sale of fixed assets		(51)
Loss on extinguishment of convertible notes		831
Amortization of debt issuance costs and debt discount	224	2,569
Changes in operating assets and liabilities:
Increase (decrease) in contracts liability (including non-current portion)	(5,547)	13,945
Increase in accounts receivable-trade and other assets	(5,692)	(4,075)
Changes in operating lease right of use assets	(30)	168
Decrease (increase) in inventories	3,392	(1,648)
Increase (decrease) in accounts payable and accruals	(4,438)	1,070
Decrease in other long term liabilities		(51)
Net cash used in operating activities	(22,389)	(5,198)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in bank deposits	(16,000)	(37,835)
Proceeds from sale of short-term deposits	6,000	20,000
Purchase of property and equipment	(415)	(1,011)
Proceeds from sale of property and equipment		53
Decrease in restricted deposit		359
Amounts paid (funded) in respect of employee rights upon retirement, net	427	(81)
Net cash used in investing activities	(9,988)	(18,515)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for convertible notes redemption and transactions costs		(25,990)
Payment for promissory note		(4,086)
Proceeds from issuance of common stock and warrants, net		37,625
Proceeds from issuance of common stock under the Sales Agreement, net	4,161	8,575
Exercise of warrants	2
Net cash provided by financing activities	4,163	16,124
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	(51)	(34)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(28,265)	(7,623)
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	38,985	18,265
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD	10,720	10,642
SUPPLEMENTARY INFORMATION ON INVESTING AND FINANCING ACTIVITIES NOT INVOLVING CASH FLOWS:
Purchase of property and equipment	205	387
Operating lease right of use assets obtained in exchange for new operating lease liabilities	396	309
Transactions costs in connection with the exchange of convertible notes		774
SUPPLEMENTARY DISCLOSURE ON CASH FLOWS
Interest paid	2,198	3,288
Interest received	$ 136	$ 445

SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2022

SIGNIFICANT ACCOUNTING POLICIES

General

Protalix BioTherapeutics, Inc. (collectively with its subsidiaries, the “Company”) and its wholly-owned subsidiaries, Protalix Ltd. and Protalix B.V. (collectively, 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 BioManguinhos alfataliglicerase in Brazil, Uplyso^® in 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 most advanced investigational drug in the Company’s product pipeline is pegunigalsidase alfa, or PRX-102, a therapeutic protein candidate for the treatment of Fabry disease, a rare, genetic lysosomal disorder, which is the subject of a phase III clinical program. The PRX-102 Phase III clinical program includes three separate studies, referred to as the BALANCE study, the BRIDGE study and the BRIGHT study, each of which has been completed. The studies were designed to evaluate the potential for improved efficacy and better quality of life for adult patients with Fabry disease and to evaluate the safety of the Company’s drug/therapy. In addition, the Phase III clinical program includes two extension studies in which subjects that participated in the Company’s phase I/II clinical trials and phase III clinical trials may enroll and continue to be treated with PRX-102.

On November 9, 2022, the Company, together with its development and commercialization partner for PRX-102, Chiesi Farmaceutici S.p.A. (“Chiesi”), resubmitted to the U.S. Food and Drug Administration (the “FDA”) a biologics license application (“BLA”) for PRX-102 for the potential treatment of adult patients with Fabry disease. The initial BLA for PRX-102 was submitted to the FDA on May 27, 2020 under the FDA’s Accelerated Approval pathway, and was subsequently accepted by the FDA and granted Priority Review designation. However, in April 2021, the FDA issued a Complete Response Letter (CRL) in response to the initial BLA. In preparation for the BLA resubmission, the Company and Chiesi participated in a Type A (End of Review) meeting with the FDA on September 9, 2021. As part of the meeting minutes provided by the FDA, which included the preliminary comments and meeting discussion, the FDA, in principle, agreed that the data package proposed to the FDA for a BLA resubmission has the potential to support a traditional approval of PRX-102 for the treatment of Fabry disease. The data package in the BLA resubmission, given the change in the regulatory landscape in the United States, includes the final two-year analyses of the Company’s phase III BALANCE clinical trial of PRX-102 (the “BALANCE study”), which were completed in July 2022, and long-term data from the Company’s open-label extension study of PRX-102 in adult patients treated with a 2 mg/kg every four weeks dosage of PRX-102.

On February 7, 2022, the Company, together with Chiesi, submitted a Marketing Authorization Application (“MAA”) for PRX-102 to the European Medicines Agency (“EMA”) which was subsequently validated by the EMA. The submission was made after the October 8, 2021 meeting the Company held, together with Chiesi, with the Rapporteur and Co-Rapporteur of the EMA regarding PRX-102.

The MAA submission includes a comprehensive set of preclinical, clinical and manufacturing data compiled from the Company’s completed and ongoing clinical studies evaluating PRX-102 as a potential alternation treatment for adult patients with Fabry disease. The submission was supported by the 12–month interim data analysis generated from the BALANCE study. Data generated from the Company’s completed phase III BRIDGE clinical trial (the “BRIDGE study”), the Company’s phase I/II clinical trial in naive or untreated patients, and from the Company’s extension studies with 1 mg/kg every two weeks were also included in the submission. In addition, the MAA includes data from the Company’s completed 12–month switch–over phase III BRIGHT clinical trial in adult patients with Fabry disease treated with a 2 mg/kg every four weeks dosage (the “BRIGHT study”) to support an additional potential treatment regimen for Fabry patients. As part of the EMA review process, Chiesi and the Company received the Day 120 list of questions in June 2022, and the full response package thereto was submitted to the EMA in September 2022 (following a 3-month clock-stop period). An essential portion of the response included the submission of the final analysis of the two-year

BALANCE study (the final Clinical Study Report), and an interim analysis of the Company’s long-term, open-label extension study of PRX-102 in adult patients with Fabry disease treated with the 2 mg/kg every four weeks dosage.

In addition to PRX-102, the Company’s product pipeline currently includes, among other candidates:

(1)

alidornase alfa, or PRX-110, a proprietary plant cell recombinant human Deoxyribonuclease 1, or DNase, which has successfully completed a phase II efficacy and safety study; the Company is continuing to evaluate potential strategic marketing partnerships and collaboration programs with biotechnology and pharmaceutical companies for this product candidate for various respiratory indications;

(2)

PRX-115, the Company’s plant cell-expressed recombinant PEGylated uricase (urate oxidase) – a chemically modified enzyme to treat severe gout; and

(3)

PRX-119, the Company’s plant cell-expressed PEGylated recombinant human DNase I product candidate being designed to elongate half-life in the circulation for NETs-related diseases.

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 July 2, 2021, the Company entered into an At The Market Offering Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC, as the Company’s sales agent (the “Agent”) which was amended on May 2, 2022. Pursuant to the terms of the Sales Agreement, the Company may sell from time to time through the Agent shares of its common stock, par value $0.001 per share (the “Common Stock”), having an aggregate offering price of up to $20.0 million (the “ATM Shares”). Upon execution of the Sales Agreement, the Company terminated the ATM Equity Offering^SM Sales Agreement it had entered into on October 1, 2020 with BofA Securities, Inc. (“BofA Securities”). During the term of the sales agreement with BofA Securities, the Company sold a total of 3,296,123 shares of Common Stock for total gross proceeds of approximately $13.8 million. As of September 30, 2022, shares of Common Stock for total gross proceeds of approximately $15.6 million remain available to be sold under the Sales Agreement.

On October 19, 2017, Protalix Ltd. and Chiesi entered into an Exclusive License and Supply Agreement (the “Chiesi Ex-US Agreement”) pursuant to which Protalix Ltd. granted to Chiesi 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 US Agreement”) with respect to the commercialization of pegunigalsidase alfa in the United States.

Under each of the Chiesi Ex-US Agreement and the Chiesi US Agreement (collectively, the “Chiesi Agreements”), Chiesi made an upfront payment to Protalix Ltd. of $25.0 million in connection with the execution of each agreement. In addition, under the Chiesi Ex-US 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 US 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 additional payments of up to a maximum of $760.0 million, in the aggregate, in regulatory and commercial milestone payments. To date, Protalix Ltd. has received the full amount of development costs to which it is entitled under the Chiesi Agreements.

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-US 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 US 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.

On May 13, 2021, the Company signed a binding term sheet with Chiesi pursuant to which the Company and Chiesi amended the Chiesi Agreements in order to provide the Company with near-term capital. In accordance with the term

sheet, Chiesi made a $10.0 million payment to the Company in the second quarter of 2021 in exchange for a $25.0 million reduction in a longer term regulatory milestone payment in the Chiesi EX-US Agreement. All other regulatory and commercial milestone payments remain unchanged. The Company also agreed to negotiate certain manufacturing related matters.

Since its approval by the FDA, taliglucerase alfa has been marketed by Pfizer Inc. (“Pfizer”) under the initial Exclusive License and Supply Agreement (the “Pfizer Agreement”). In October 2015, Protalix Ltd. and Pfizer entered into an amended exclusive license and supply agreement (the “Amended Pfizer Agreement”) pursuant to which the Company sold to Pfizer its share in the collaboration created under the Pfizer Agreement for the commercialization of Elelyso. 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 BioManguinhos 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 BioManguinhos alfataliglicerase to Fiocruz and patients continue to be treated with BioManguinhos alfataliglicerase in Brazil.

The novel coronavirus disease (“COVID-19”), which was declared by the World Health Organization to be a global pandemic on March 11, 2020, has had numerous adverse effects on the global economy. To date, the Company’s clinical trials have not been adversely affected by COVID-19, although certain practices the Company adopted during the earlier stages of the pandemic in its offices and facilities in an effort to promote social distancing resulted in minor delays in the performance of administrative activities outside of the clinical programs. The Company does not know the length of time that the pandemic and related disruptions will continue, the impact of governmental regulations or easement of regulations in response to the strengthening or weakening of the pandemic, or the degree of overall potentially permanent changes in consumer behavior that may be caused by the pandemic.

The Company believes that its cash and cash equivalents and short-term bank deposits as of September 30, 2022 are sufficient to satisfy the Company’s capital needs for at least 12 months from the date that these financial statements are issued. In addition, under the terms of the Company’s outstanding 7.50% Senior Secured Convertible Notes due 2024 (the “2024 Notes”), the Company is required to maintain a minimum cash balance of at least $7.5 million.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (of a normal recurring nature) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2021, filed by the Company with the U.S. Securities and Exchange Commission (the “Commission”). The comparative balance sheet at December 31, 2021 has been derived from the audited financial statements at that date. There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the year ended December 31, 2021.

Loss per share

Basic and diluted loss per share (“LPS”) are computed by dividing net loss by the weighted average number of shares of Common Stock attributable to common stockholders outstanding for each period. The calculation of diluted LPS does

not include 33,922,624 and 33,295,154 shares of Common Stock underlying outstanding options and shares of Common Stock issuable upon conversion of the outstanding 2024 Notes and the exercise of outstanding warrants for the three and nine months ended September 30, 2022, respectively, and 27,962,842 and 26,847,081 shares of Common Stock underlying outstanding options and shares of Common Stock issuable upon conversion of the Company’s then outstanding 7.50% Senior Secured Convertible Notes due 2021 (the “2021 Notes”) and the exercise of outstanding warrants for the three and nine months ended September 30, 2021, respectively, because their effect would be anti-dilutive.

Revenue recognition

Revenue recognition

The Company accounts for revenue pursuant to Accounting Standards Codification, Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, 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.

1. 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).

Revenue from Chiesi Agreements

The Company has identified two performance obligations in Chiesi agreements as follows: (1) the license and research and development services and (2) the contingent performance obligation regarding future manufacturing.

The Company determined that the license together with the research and development services should be combined into single performance obligation since Chiesi cannot benefit from the license without the research and development services. The research and development services are highly specialized and are dependent on the supply of the drug.

The future manufacturing is contingent on regulatory approvals of the drug and the Company deems these services to be separately identifiable from other performance obligations in the contract. Manufacturing services post-regulatory approval are not interdependent or interrelated with the license and research and development services.

The transaction price was comprised of fixed consideration and variable consideration (capped research and development reimbursements). Under ASC 606, the consideration to which the Company would be entitled upon the achievement of contractual milestones, which are contingent upon the occurrence of future events, are a form of variable consideration. The Company estimates variable consideration using the most likely method. Amounts included in the transaction price are recognized only when it is probable that a significant reversal of cumulative revenues will not occur. Prior to recognizing revenue from variable consideration, the Company uses significant judgment to determine the probability of significant reversal of such revenue.

Since the customer benefits from the research and development services as the entity performs the service, 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.

Revenue from R&D services

Revenue from the research and development services is recognized over time using the cost-to-cost method since the customer benefits from the research and development services as the entity performs the service.

SUBSEQUENT EVENTS (Details) - USD ($)			1 Months Ended	3 Months Ended	9 Months Ended
SUBSEQUENT EVENTS (Details) - USD ($)	Oct. 26, 2022	Oct. 13, 2022	Nov. 13, 2022	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021
Subsequent Event [Line Items]
Issuance of common stock under the Sales Agreement, net				$ 1,520,000	$ 4,161,000	$ 8,575,000
Subsequent Event
Subsequent Event [Line Items]
Issuance of common stock under the Sales Agreement, net			$ 530,442
Issuance of common stock under the Sales Agreement, net (in shares)			506,990
Subsequent Event \| Pfizer Agreement [Member]
Subsequent Event [Line Items]
Proceeds From Sale Of Products			$ 2,300,000
Subsequent Event \| Chiesi Agreements \| Alfataliglicerase
Subsequent Event [Line Items]
Proceeds from expense reimbursements	$ 1,200,000
Subsequent Event \| Brazil Agreement with Fiocruz
Subsequent Event [Line Items]
Proceeds From Sale Of Products		$ 1,700,000

SHARE CAPITAL (Details)					1 Months Ended	3 Months Ended	9 Months Ended
SHARE CAPITAL (Details)	Sep. 07, 2022 USD ($) item $ / shares shares	Aug. 01, 2022 USD ($) item $ / shares shares	Jun. 30, 2022 USD ($) item $ / shares shares	Feb. 25, 2022 USD ($) shares	Nov. 13, 2022 USD ($) shares	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) shares	Aug. 02, 2022 shares	Jun. 29, 2022 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Shares Authorized			120,000,000			144,000,000	144,000,000	120,000,000	144,000,000
Issuance of common stock under the Sales Agreement, net \| $						$ 1,520,000	$ 4,161,000	$ 8,575,000
Subsequent Event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock under the Sales Agreement, net \| $					$ 530,442
Issuance of common stock under the Sales Agreement, net (in shares)					506,990
ATM Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock under the Sales Agreement, net \| $						$ 1,600,000	$ 4,400,000
Issuance of common stock under the Sales Agreement, net (in shares)						1,445,656	3,841,479
2006 Employee Stock Incentive Plan \| Option to purchase shares of common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock price (USD) \| $ / shares						$ 1.03	$ 1.03
Exercise price (USD) \| $ / shares						$ 1.03	$ 1.03
Risk free rate							3.32%
Volatility							85.94%
Dividend yield							0.00%
Expected life (Years)							6 years
Number of shares authorized for issuance under share-based payment arrangement			8,475,171							5,725,171
2006 Employee Stock Incentive Plan \| New employee \| Option to purchase shares of common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of award		10 years
Granted (in shares)		160,000
Exercise Price (in dollars per share) \| $ / shares		$ 1.06
Vesting Period		4 years
Number of equal quarterly increments \| item		16
Grant Date Fair Value \| $		$ 124,000
2006 Employee Stock Incentive Plan \| Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock granted (in shares)				637,531
Value of restricted stock granted \| $				$ 523,000
2006 Employee Stock Incentive Plan \| Chief Financial Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock granted (in shares)				121,951
Value of restricted stock granted \| $				$ 100,000
2006 Employee Stock Incentive Plan \| New director \| Option to purchase shares of common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of award			10 years
Granted (in shares)			40,000
Exercise Price (in dollars per share) \| $ / shares			$ 1.09
Vesting Period			4 years
Number of equal quarterly increments \| item			16
Grant Date Fair Value \| $			$ 32,000
2006 Employee Stock Incentive Plan \| Certain Officers, Directors And Other Employees \| Option to purchase shares of common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of award	10 years
Granted (in shares)	3,280,000
Exercise Price (in dollars per share) \| $ / shares	$ 1.03
Vesting Period	4 years
Number of equal quarterly increments \| item	16
Grant Date Fair Value \| $	$ 2,500,000

SIGNIFICANT ACCOUNTING POLICIES (Additional Information) (Details) $ / shares in Units, $ in Thousands					1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 02, 2021 USD ($) $ / shares shares	May 13, 2021 USD ($)	Jul. 23, 2018 USD ($)	Oct. 19, 2017 USD ($)	Oct. 31, 2015	Sep. 30, 2022 USD ($) agreement $ / shares shares	Sep. 30, 2021 $ / shares shares	Sep. 30, 2022 USD ($) agreement $ / shares shares	Sep. 30, 2021 USD ($) $ / shares shares
Significant Accounting Policies [Line Items]
Common Stock, Par or Stated Value Per Share (in dollars per share) \| $ / shares						$ 0.001	$ 0.001	$ 0.001	$ 0.001
Stock issuance proceeds								$ 4,161	$ 8,575
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount \| shares						33,922,624	27,962,842	33,295,154	26,847,081
2021 Notes
Significant Accounting Policies [Line Items]
Interest rate (as a percent)							7.50%		7.50%
2024 Notes
Significant Accounting Policies [Line Items]
Interest rate (as a percent)						7.50%		7.50%
Maintain of Minimum Cash Balance						$ 7,500		$ 7,500
Amended Pfizer Agreement \| Protalix Bio Therapeutics Incorporation \| Brazil
Significant Accounting Policies [Line Items]
Collaborative Arrangement Revenues Expenses Sharing Percentage					100.00%
Chiesi US Agreement and Chiesi Ex-US Agreement
Significant Accounting Policies [Line Items]
Non-refundable Payment Receivable			$ 25,000	$ 25,000
Chiesi Agreements
Significant Accounting Policies [Line Items]
Performance obligation number \| agreement						2		2
Chiesi US Agreement
Significant Accounting Policies [Line Items]
Additional Amounts Payable To Cover Development Costs			20,000
Maximum entitlement of development costs to cover per year			7,500
Additional amount payable for achievement of regulatory and commercial milestones			$ 760,000
Chiesi US Agreement \| Minimum
Significant Accounting Policies [Line Items]
Payment On Net Sales Percentage			15.00%
Chiesi US Agreement \| Maximum
Significant Accounting Policies [Line Items]
Payment On Net Sales Percentage			40.00%
Chiesi Ex-US Agreement
Significant Accounting Policies [Line Items]
Additional Amounts Payable To Cover Development Costs				25,000
Maximum entitlement of development costs to cover per year				10,000
Additional amount payable for achievement of regulatory and commercial milestones				$ 320,000
Change in amount receivable for achievement of regulatory and commercial milestones		$ 25,000
Agreement Amendment Payment Receivable		$ 10,000
Chiesi Ex-US Agreement \| Minimum
Significant Accounting Policies [Line Items]
Payment On Net Sales Percentage				15.00%
Chiesi Ex-US Agreement \| Maximum
Significant Accounting Policies [Line Items]
Payment On Net Sales Percentage				35.00%
ATM Shares
Significant Accounting Policies [Line Items]
Common Stock, Par or Stated Value Per Share (in dollars per share) \| $ / shares	$ 0.001
Sale of stock, maximum offering price	$ 20,000							$ 15,600
Number of shares issued (in shares) \| shares	3,296,123
Stock issuance proceeds	$ 13,800

SHARE CAPITAL

9 Months Ended

Sep. 30, 2022

SHARE CAPITAL

SHARE CAPITAL

NOTE 5 – SHARE CAPITAL

Authorized Capital

On June 30, 2022, the Company held its 2022 Annual Meeting of Stockholders (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders, among other matters, approved an amendment to the Company’s Certificate of Incorporation, as amended, to increase the number of shares of Common Stock authorized for issuance from 120,000,000 to 144,000,000 (the “Charter Amendment”). The Charter Amendment was filed with the Secretary of State of the State of Delaware on August 2, 2022.

Stock based compensation

On February 25, 2022, the Company granted, with the approval of the Company’s compensation committee, the following:

637,531 shares of restricted Common Stock to its President, Chief Executive Officer under the Company’s Amended and Restated 2006 Employee Stock Incentive Plan, as amended (the “Plan”). The Company estimated the fair value of the restricted stock on the date of grant to be approximately $523,000.

II.

121,951 shares of restricted Common Stock to its Sr. Vice President, Chief Financial Officer under the Plan. The Company estimated the fair value of the restricted stock on the date of grant to be approximately $100,000.

On June 30, 2022, the Company’s stockholders, among other matters, adopted amendments to the Plan to increase the number of shares of Common Stock available under the Plan from 5,725,171 shares to 8,475,171 shares and to amend certain other terms of the Plan.

On June 30, 2022, the Company granted 10-year options to purchase 40,000 shares of Common Stock to a new director serving on the Company’s Board of Directors under the Plan. The options have an exercise price equal to $1.09 per share and vest over a four-year period in 16 equal quarterly increments. Vesting of the options granted to the director is subject to automatic 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 $32,000.

On August 1, 2022, the Company granted 10-year options to purchase 160,000 shares of Common Stock to a new employee of the Company under the Plan. The options have an exercise price equal to $1.06 per share and vest over a four-year period in 16 equal quarterly increments. The Company estimated the fair value of the options on the date of grant using the Black-Scholes option-pricing model to be approximately $124,000.

On September 7, 2022, the Company granted, with the approval of the Company’s compensation committee, 10-year options to purchase 3,280,000 shares of Common Stock, in the aggregate, to certain of the Company’s officers, directors and other employees under the Plan. The options have an exercise price equal to $1.03 per share and vest over a four-year period in 16 equal quarterly increments. Vesting of the options granted to executive officers and directors is subject to automatic 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 aggregate fair value of the options on the date of grant using the Black-Scholes option-pricing model to be approximately $2.5 million.

The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:


Stock price (USD)	1.03
Exercise price (USD)	1.03
Risk free rate	3.32	%
Volatility	85.94	%
Dividend yield	0	%
Expected life (Years)	6

At-the-Market (ATM) Offering

During the nine and three months ended September 30, 2022, the Company sold, in the aggregate, 3,841,479 and 1,445,656 shares of Common Stock, respectively, under the Sales Agreement. The Company generated aggregate gross proceeds equal to approximately $4.4 million and $1.6 million, respectively, in connection with such sales.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

REVENUES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
REVENUES (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Revenues	$ 14,183	$ 12,054	$ 39,021	$ 29,801
Goods
Revenues	8,812	4,506	21,222	12,260
Goods \| Pfizer
Revenues	4,541	1,135	11,279	7,883
Goods \| Brazil
Revenues	1,708	3,200	7,162	4,188
Goods \| Chiesi
Revenues	2,563	171	2,781	189
License and R&D Services
Revenues	$ 5,371	$ 7,548	$ 17,799	$ 17,541

- Definition

Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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+ Details

COMMITMENTS (Details)	Aug. 29, 2022
Chiesi Agreements
Commitments And Contingencies [Line Items]
Extended term of agreement	7 years

FAIR VALUE MEASUREMENT (Additional Information) (Details) - Level 3 - 2024 Notes $ in Thousands	Sep. 30, 2022 USD ($)
Debt Instrument Carrying Amount	$ 28,750
Debt Instrument Fair Value	$ 30,900

SHARE CAPITAL (Tables)

9 Months Ended

Sep. 30, 2022

SHARE CAPITAL

Schedule of Stock Option Valuation Assumptions


Stock price (USD)	1.03
Exercise price (USD)	1.03
Risk free rate	3.32	%
Volatility	85.94	%
Dividend yield	0	%
Expected life (Years)	6

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
CURRENT ASSETS:
Cash and cash equivalents	$ 10,720	$ 38,985
Short-term bank deposits	10,091
Accounts receivable - Trade	8,651	3,442
Other assets	1,736	1,285
Inventories	14,562	17,954
Total current assets	45,760	61,666
NON-CURRENT ASSETS:
Funds in respect of employee rights upon retirement	1,418	2,077
Property and equipment, net	4,677	4,962
Operating lease right of use assets	4,854	4,960
Total assets	56,709	73,665
Accounts payable and accruals:
Trade	5,639	6,986
Other	12,870	16,433
Operating lease liabilities	1,000	1,207
Contracts liability	14,793	8,550
Total current liabilities	34,302	33,176
LONG TERM LIABILITIES:
Convertible notes	28,111	27,887
Contracts liability		11,790
Liability for employee rights upon retirement	1,779	2,472
Operating lease liabilities	4,031	4,376
Total long term liabilities	33,921	46,525
Total liabilities	68,223	79,701
COMMITMENTS
CAPITAL DEFICIENCY	(11,514)	(6,036)
Total liabilities net of capital deficiency	$ 56,709	$ 73,665

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2022

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 7 – SUBSEQUENT EVENTS

During October and November 2022, the Company sold, in the aggregate, 506,990 shares of Common Stock under the Sales Agreement. The Company generated aggregate gross proceeds equal to approximately $530,442 in connection with such sales.

On October 13, 2022, the Company collected approximately 1.7 million from sales to Brazil. In October and November 2022, the Company collected approximately $2.3 million, in the aggregate, from sales to Pfizer. On October 26, 2022, the Company collected approximately $1.2 million from expense reimbursements in connection with its collaboration with Chiesi.

FAIR VALUE MEASUREMENT (Schedule of Fair Value Assumptions) (Details) - 2024 Notes - Level 3	Sep. 30, 2022 $ / shares Y
Share Price.
Debt Instrument, Measurement Input \| $ / shares	1.04
Expected term
Debt Instrument, Measurement Input \| Y	1.92
Risk free rate
Debt Instrument, Measurement Input	4.26
Volatility
Debt Instrument, Measurement Input	75.32
Yield
Debt Instrument, Measurement Input	14.18

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2022	Nov. 10, 2022
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2022
Entity File Number	001-33357
Entity Registrant Name	PROTALIX BIOTHERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	65-0643773
Entity Address, Address Line One	2 University Plaza
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Hackensack
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07601
City Area Code	201
Local Phone Number	696-9345
Title of 12(b) Security	Common stock, $0.001 par value
Trading Symbol	PLX
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		50,665,598
Entity Central Index Key	0001006281
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Cost of goods sold
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation	$ 36	$ 65	$ 58	$ 217
Research and development expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation	114	154	275	524
Selling, general and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Share-based compensation	$ 272	$ 344	$ 1,213	$ 1,216

FAIR VALUE MEASUREMENT

9 Months Ended

Sep. 30, 2022

FAIR VALUE MEASUREMENT

FAIR VALUE MEASUREMENT

NOTE 3 – FAIR VALUE MEASUREMENT

The Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value is based on the price that would be received from the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

The fair value of the financial instruments included in the working capital of the Company is usually identical or close to their carrying value.

As of September 30, 2022, the carrying amounts of short-term deposits approximate their fair values due to the stated interest rates, which approximate market rates.

Based on a Level 3 measurement, as of September 30, 2022, the fair value of the $28.75 million aggregate principal amount of the Company’s outstanding 2024 Notes is approximately $30.9 million. The value of these notes was estimated by implementing the binomial model. The liability component was valued based on the Income Approach. The following parameters were used:


	2024 Notes
Stock price (USD)	1.04
Expected term	1.92
Risk free rate	4.26	%
Volatility	75.32	%
Yield	14.18	%

- 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

INVENTORIES

9 Months Ended

Sep. 30, 2022

INVENTORIES

INVENTORIES

NOTE 2 - INVENTORIES

Inventories at September 30, 2022 and December 31, 2021 consisted of the following:


	September 30,		December 31,
(U.S. dollars in thousands)	2022		2021
Raw materials	$	3,664	$	3,166
Work in progress		2,619		3,262
Finished goods		8,279		11,526
Total inventory	$	14,562	$	17,954

REVENUES (Tables)

9 Months Ended

Sep. 30, 2022

REVENUES

Schedule of Company's Disaggregation of Revenues


	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2022		2021		2022		2021
Pfizer	$	4,541	$	1,135	$	11,279	$	7,883
Brazil	$	1,708	$	3,200	$	7,162	$	4,188
Chiesi	$	2,563	$	171	$	2,781	$	189
Total revenues from selling goods	$	8,812	$	4,506	$	21,222	$	12,260
Revenues from license and R&D services	$	5,371	$	7,548	$	17,799	$	17,541

COMMITMENTS

9 Months Ended

Sep. 30, 2022

COMMITMENTS

COMMITMENTS

NOTE 6 – COMMITMENTS

On August 29, 2022, the Company entered into a Fill/Finish Agreement (the “F/F Agreement”) and a Letter Agreement (the “Letter Agreement”), in each case with Chiesi. The Company agreed to supply Chiesi with drug substance for PRX-102 and, following relevant technology and technical information transfer activities, Chiesi has agreed, among other things, to provide the Company with commercial fill/finish services for PRX-102, including to support the anticipated global launch of PRX-102. The F/F Agreement shall continue in force until December 31, 2025, unless terminated earlier in accordance with the terms of the F/F Agreement and the term may be extended by mutual agreement for an additional period of seven years upon mutual written agreement prior to expiration of the initial term.

SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2022

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

General

In addition to PRX-102, the Company’s product pipeline currently includes, among other candidates:

(1)

(2)

PRX-115, the Company’s plant cell-expressed recombinant PEGylated uricase (urate oxidase) – a chemically modified enzyme to treat severe gout; and

(3)

PRX-119, the Company’s plant cell-expressed PEGylated recombinant human DNase I product candidate being designed to elongate half-life in the circulation for NETs-related diseases.

Basis of presentation

Loss per share

Revenue recognition

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.

1. 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).

Revenue from Chiesi Agreements

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

Revenue from R&D services

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY) (Parenthetical) - $ / shares	Sep. 30, 2022	Aug. 02, 2022	Jun. 30, 2022	Sep. 30, 2021
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Common Stock, Par or Stated Value Per Share	$ 0.001			$ 0.001
Common Stock, Shares Authorized	144,000,000	144,000,000	120,000,000	120,000,000

REVENUES

9 Months Ended

Sep. 30, 2022

REVENUES

REVENUES

NOTE 4 – REVENUES

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2022		2021		2022		2021
Pfizer	$	4,541	$	1,135	$	11,279	$	7,883
Brazil	$	1,708	$	3,200	$	7,162	$	4,188
Chiesi	$	2,563	$	171	$	2,781	$	189
Total revenues from selling goods	$	8,812	$	4,506	$	21,222	$	12,260
Revenues from license and R&D services	$	5,371	$	7,548	$	17,799	$	17,541