The US Food and Drug Administration (FDA) is due to decide today whether to approve the treatment developed by Protalix Biotherapeutics Inc. (AMEX:PLX; TASE: PLX) for Gaucher's disease, Ulypso. Yesterday, there was a huge volume of trading in Protalix shares on Wall Street, and on the Tel Aviv Stock Exchange the share price has opened up a positive arbitrage gap versus New York. On eof the main reasons for the fall in the share price on Wall Street yesterday was that US institutional broker Auriga cut its recommendation for the sharefrom "Buy" to "Hold", with a price target of $8, representing a premium of 15% on yesterday's closing price.
Auriga said that against the background of the rally preceding the FDA announcement, in which Protalix's share price has risen by more than 40% so far this year, the risk-reward equation was no longer in investors' favor.
"We have observed pre-approval run-up on PLX and now the share price is at a level where we believe the risk/reward is no longer favorable. Betting on FDA's decision in particular with regards to questions on CMC (Chemistry, Manufacturing and Control) is risky as much of the information is not publically available; they are mostly communications between the FDA and the company. We believe Taliglucerase will eventually be approved. However, we are less certain about the timing. We therefore advise clients to take profit and stay on the sideline in anticipation of the PDUFA event on May 1, 2012. Odds of FDA approval are difficult to gauge," writes analyst Difei Yound.
Published by Globes [online], Israel business news - www.globes-online.com - on May 1, 2012
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