PROTALIX BIOTHERAPEUTICS, INC. (PLX)

[genisi]

I'm posting this one here rather than in TEVA's board since the main issue of this article is PLX.

The one that got away from Teva
10.4.07 | 13:28 By Yoram Gavison

http://www.haaretz.com/hasen/pages/ArticleContent.jhtml?itemNo=846962

The business development managers at Teva (TASE, Nasdaq: TEVA) have been working overtime ahead of the last leg in the race to buy Merck's generic drugs unit, which will cost as much as $6 billion. If Teva closes the deal, it will be the second-biggest in its history, after the January 2006 acquisition of Ivax Corp for nearly $8 billion.

The ruckus about Merck has among other things distracted attention from the one that got away.

In September 2006, Teva entered an agreement to co-develop two drugs based on technology developed by Protalix. Teva was to get exclusive marketing rights and Protalix was to get royalties on sales. But if the development flopped, then Teva's investment would simply be written off.

Protalix had developed an advanced technology to engineer plant cells by inserting human genes. The mutated plant cells would then make human protein coded by the genes, for use in drugs. The technology could be a gold-mine, especially given that patents protecting $100 billion worth drugs of biological origin expire by 2010.

Also, Protalix is close to the final testing stage of a drug to treat hereditary gout.

Unhappily for Teva's investors, the Israeli drug company did not invest in Protalix, but two of its top executives did, personally. Shortly before signing the agreement in Teva's name, chairman Eli Hurvitz and his deputy Philip Frost privately invested not-small amounts in the startup.
The Pontifax fund, which Hurvitz leads, invested $1.5 million in Protalix back in March 2005. As of the end of 2006, Pontifax owned 8.2% of Protalix.

Frost for his part heads an investment group that injected $16 million for 15% of Protalix's shares. The group also has an option to buy 5% more for $5.3 million.

Not content with that, Frost initiated a reverse merger, in which Protalix merged with a Wall Street-listed company he controlled.
If Teva had bought the Protalix shares itself, instead of its executives, it evidently wouldn't have been sorry. At the end of 2006, Frost owned Protalix shares worth $277 million, which is a handsome return on his investment of $21 million. Pontifax's shares in the biodrugs company is worth $158 million, and all it invested was $1.5 million.