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10-Q
PROTALIX BIOTHERAPEUTICS, INC. filed this Form 10-Q on 05/10/2017
Entire Document
 

 

 

Issuance costs regarding the issuance of our 7.5% convertible notes were allocated to the liability, equity component, derivative and shares of common stock based on their relative fair values. Issuance costs that were allocated to liability will be amortized using the effective interest rate, other than issuance costs that were allocated to derivative, which were expensed immediately.

 

During the three months ended March 31, 2017, a total conversions notice of $7.7 million principal amount of the Company’s 7.5% notes were received, of which $4.4 million principal amount was settled during the period via an issuance of 525,800 shares and cash payments of $6.1 million in the aggregate.

 

Results of Operations

 

Three months ended March 31, 2017 compared to the three months ended March 31, 2016

 

Revenues

 

We recorded revenues of $2.9 million during the three months ended March 31, 2017, an increase of $2.2 million from revenues of $679,000 for the three months ended March 31, 2016. The increase resulted primarily from an increase in the amount of products sold in Brazil.

 

Cost of Revenues

 

Cost of revenues was $2.1 million for the three months ended March 31, 2017, an increase of $1.6 million from cost of revenues of $523,000 for the three months ended March 31, 2016.

 

Research and Development Expenses, Net

 

Research and development expenses were $4.6 million for the three months ended March 31, 2017, a decrease of $1.4 million, or 23%, from $6.0 million for the three months ended March 31, 2016. The decrease resulted primarily from a decrease of $667,000 in materials used in our development.

 

We expect research and development expenses for our various development programs to continue to be our primary expense.

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses were $2.5 million for the three months ended March 31, 2017, an increase of $542,000, or 27%, from $2.0 million for the three months ended March 31, 2016. The increase resulted primarily from an increase of $303,000 in sales and marketing expenses.

 

Financial Expenses, net

 

Financial expenses net were $52.8 million for the three months ended March 31, 2017 compared to financial expenses net of $662,000 for the three months ended March 31, 2016. During the three months ended on March 31, 2017 financial expense included a charge of $52.3 million as a result of the re-measurement of the fair value of the 7.5% convertible notes embedded derivative resulting mainly from the increase in the market value of our shares during the first quarter of 2017. In addition, financial expenses is composed primarily from interest expense on convertible notes of $1.3 million and $776,000 for the periods ended March 31, 2017 and 2016, respectively.

 

Liquidity and Capital Resources

 

Sources of Liquidity

 

As a result of our significant research and development expenditures and the lack of significant revenue from sales of taliglucerase alfa, we have generated operating losses from our continuing operations since our inception. To date, we have funded our operations primarily with proceeds equal to $31.3 million from the sale of shares of convertible preferred and ordinary shares of Protalix Ltd., and an additional $14.1 million in connection with the exercise of warrants issued in connection with the sale of such shares, through December 31, 2008. In addition, on October 25, 2007, we generated gross proceeds of $50 million in connection with an underwritten public offering of our common stock and on each of March 23, 2011 and February 22, 2012, we generated gross proceeds of $22.0 million and $27.2 million, respectively, in connection with underwritten public offerings of our common stock.

 

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