NikG

Protalix Biotherapeutics $PLX Today we dig into a biotech stock that didn’t move, both globally and especially in Israel. These are two markets that performed very well overall, yet still left a few companies behind. Shall we begin? $PLX is a micro-cap biotech trading at a market cap of roughly $140M and an enterprise value of only ~$110M. The company is cash-flow balanced. We often use the term “under the radar” loosely, but $PLX truly redefines it. A simple search on Bloomberg shows that only three analysts cover the stock, all from very small and obscure research houses. The situation is so extreme that Bloomberg’s FA function shows estimates only through next year, and even those are barely meaningful. The company and the opportunity This is not the $PLX you may remember. About 6.5 years ago, after a series of business mistakes brought the company close to bankruptcy, $PLX hired an experienced executive from $TEVA Pharmaceutical Industries, Dror Bashan, as CEO. Since then, quietly and perhaps too quietly, he has turned the company around. Today, $PLX has three core assets. Asset #1: Gaucher disease drug This orphan drug is sold through two channels: 1.Direct sales to the Brazilian government, contributing a few million dollars annually to EBITDA. Helpful, but not transformational. 2.Sales through Pfizer ( $PFE). Here, two things went wrong: •The previous management signed a near-zero profitability agreement with Pfizer. •Pfizer does not actively promote the product in the U.S. and does not market it at all in Europe. With only tens of millions in revenue, the product is immaterial to Pfizer and, at first glance, shouldn’t excite us either. But there is a catch. That zero-margin contract expires in 2030. The current absurd situation will not continue. At a minimum, we estimate $5M+ in incremental annual profit starting in 2030. In a blue-sky scenario, $PLX could pressure Pfizer to return the product, potentially before contract expiration. That would be a company-changing event. For now, we treat this as upside optionality. Asset #2: Fabry disease ERT drug (ELFABRIO) ELFABRIO is sold by the large European pharma company Chiesi, with $PLX receiving royalties and milestones. The Fabry ERT market has three competitors, generates close to $2B annually, and grows at 5–7% per year. PLX expects Chiesi to reach ~20% market share by 2030, translating into roughly $100M of annual revenue to PLX, at approximately 90% operating margins. Asset #3: Gout drug $PLX is developing a gout therapy that aims to offer better efficacy and safety than the leading drug from Amgen, which has already surpassed $1B in annual sales and is heading toward ~$2B at peak. Phase 2 results are expected in 2027. If successful and perceived as a billion-dollar drug, $PLX ’s valuation would increase dramatically. Putting it all together With high probability, $PLX should reach roughly $100M in EBITDA by 2030 from its commercial assets alone (Fabry + Gaucher). Even discounting cash flows at 12% and assuming 23% tax, that business alone is worth approximately $450M. Add: •Tens of millions in milestones along the way •Upside from renegotiating or reclaiming the Gaucher product from Pfizer And you easily reach a $500M valuation. The gout drug, assuming only a 5% probability of success, is worth roughly $100M today, based on a conservative 3x peak sales multiple, discounted back. Summing everything conservatively gets you to ~$500M, or 3.5x the current valuation. Someone who clearly agrees with this math is the CEO, who continues to buy shares in the open market and even takes bonuses in stock. Bottom line You’re still reading? Go buy.