Bethel Finance: Despite FDA delay, Oppenheimer see 70% Protalix upside

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Bethel Finance news:

Oppenheimer & Co. Inc. reiterated its "Outperform" recommendation and target price of $9 for Protalix Biotherapeutics Inc. on the grounds that the three-month extension by the US Food and Drug Administration (FDA) for the company's Gaucher's disease treatment, Uplyso (taliglucerase alfa) is perfectly normal. It noted that he FDA considered the company's submission of additional clinical information in November a major amendment.

The target price reflects a 70% upside on yesterday's closing price after the share price plummeted on news of the postponement.

Oppenheimer analysts Dr. Bret Holley and Eric Chang said, "While the delay is a minor disappointment, we do not believe it suggests any fundamental issues with the new drug application (NDA). We continue to believe Uplyso has a strong probability of approval, as the drug has efficacy/safety in line with approved enzyme replacement therapies. We would take advantage of weakness in Protalix on this news to position ahead of likely US/EU/Israel approvals in the first half of 2012."

Holley and Chang added, "We believe Uplyso has strong market potential in Gaucher disease. With only Cerezyme/Vpriv on the market, we believe physicians are eager for alternative therapies. This has been underscored by recurring Cerezyme shortages. Additionally, we believe PLX's plant-based manufacturing platform will allow the company to gain share against competitors through discount pricing.

"We estimate Uplyso sales of $260 million in 2015. As Uplyso will be third to market, we model conservative penetration vs. Cerezyme/Vpriv in the US/EU. With the commercial strength of Pfizer Inc. (NYSE: PFE; LSE: PFZ), we model stronger Uplyso adoption in ex-US/EU regions, which are more price-sensitive. Additional Cerezyme shortages would represent upside to our sales estimates."

Protalix's share price fell 12.9% on the American Stock Exchange yesterday to $5.39, giving a market cap $461 million. The share price rose 6.7% in morning trading on the TASE today to NIS 20.17, correcting for yesterday's 18.5% drop.