Staff Writer

Shares of Protalix BioTherapeutics Inc. dipped 13.7 percent on Tuesday after the biotech unveiled a $115 million profit-sharing deal with Pfizer Inc. for Gaucher's disease drug Uplyso (taliglucerase alfa).

Oppenheimer & Co. analyst Brian Abrahams attributed the stock slide not necessarily to the deal terms, but to disappointment that Pfizer didn't acquire Protalix outright. (See BioWorld Today, Nov. 5, 2009.)

Acquisition rumors started to fly last month as newspapers reported that New York-based Pfizer had visited Protalix's headquarters in Carmiel, Israel. But while those rumors didn't come to fruition, executives from both companies emphasized the potential for their relationship to grow, and Abrahams maintained that Protalix's platform "could be attractive for a potential acquirer down the line."

For now, Pfizer agreed to pay $60 million up front and $55 million in regulatory milestones to Protalix. Those milestone payments should be realized relatively quickly, considering that Uplyso's rolling new drug application is expected to be completed this month, and the product has fast-track status with the FDA.

Pfizer will take the lead on worldwide commercialization except in Protalix's home country of Israel. Revenues and expenses will be split 60/40, with Pfizer taking the larger share.

For Pfizer, the Protalix deal represents the big pharma's "first partnership to meet an unmet need in the orphan drug space," said Andrew Curtis, Pfizer's director of biosimilars and orphan drugs.

Many in the drug industry have predicted that as pharma's biggest products go off patent, the blockbuster model will give way to an increased focus on high-priced niche markets. Gaucher's disease would appear to fit the new model perfectly. The inherited condition affects about 1 in 20,000 live births, yet Genzyme Corp.'s market-leading treatment Cerezyme (imiglucerase) runs about $200,000 per year and generated sales of $1.2 billion in 2008.

Curtis told BioWorld Today that Pfizer started seriously analyzing orphan drug opportunities earlier this year, and Protalix's name "quickly rose to the top." He added that in addition to Uplyso, Pfizer is "very appreciative" of Protalix's plant cell-based platform, which could be used to manufacture cheaper biologics.

Protalix President and CEO David Aviezer echoed that his firm found in Pfizer a partner willing "to work with us on the development of other drugs." The Uplyso deal is "just the beginning," he said.

Abrahams wrote in a research note that he believes the Uplyso deal includes a standstill agreement that would prevent Pfizer from acquiring Protalix for several years after the drug's launch, but he noted that "such agreements could be renegotiated." He also pointed to Jerusalem-based Teva Pharmaceutical Industries Ltd. as another potential acquirer that could make good use of Protalix's platform.

Protalix uses genetically engineered carrot cells to make its recombinant proteins, like glucocerebrosidase for Gaucher's. Uplyso is the first Gaucher's enzyme replacement therapy to use a plant-based expression platform; Genzyme's Cerezyme, the only marketed product, and Shire plc's velaglucerase alfa, which is under FDA review, are both produced in mammalian systems.

Some analysts have predicted that Protalix's approach may generate significant cost-savings and allow the product to be priced lower than the competition. Yet Cowen & Co. analyst Phil Nadeau wrote in a research note that doctors "would like to see significantly more data and patient experience than [Protalix's] Phase III program has produced, especially in light of the concerns over immunogenicity."

Protalix's 31-patient Phase III trial met its primary endpoint, mean reduction in spleen volume after nine months, and showed a lower rate of antibody development than Cerezyme, although not quite as low as velaglucerase. (See BioWorld Today, Oct. 16, 2009.)

Both Uplyso and velaglucerase have gained additional patient exposure through Emergency Use Authorizations that allowed the drugs to fill shortfalls caused when Genzyme halted production of Cerezyme at its Allston Landing plant after a virus infected two of the six bioreactors. (See BioWorld Today, June 17, 2009.)

Genzyme announced Tuesday that it had resumed shipments of Cerezyme from its Allston plant and that worldwide demand will be met within the first quarter of next year. Abrahams predicted that most patients on a drug holiday will return to Cerezyme, but those who switched to Uplyso or velaglucerase through the emergency access programs "are likely to stay on these developmental therapies."

Meanwhile, Leerink Swann analyst Joshua Schimmer noted that Protalix's deal with Pfizer is the least of Genzyme's concerns, which have lately included FDA rejections for Pompe drug Lumizyme and leukemia drug Clolar (clofarabine), disappointing data with advanced phosphate binder and manufacturing issues affecting Cerezyme and Fabry drug Fabrazyme (agalsidase beta). (See BioWorld Today, Nov. 19, 2009.)

Despite the resumed Cerezyme shipments and upbeat projections from Genzyme, Schimmer wrote in a research note that a recent letter outlining 50 problems at Allston suggests "a complete disconnect between how GENZ and the FDA see the world."

Shares of Protalix (AMEX:PLX) fell $1.35, to close at $8.51 on Tuesday. Shares of Genzyme (NASDAQ:GENZ) rose 41 cents to close at $51.11.

Published  December 2, 2009