(Updated with analyst comment and stock prices and adds background)
By Thomas Gryta
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Protalix BioTherapeutics (PLX) reported positive results of its Gaucher's disease treatment in a late-stage trial, adding to the competition facing Genzyme Corp.'s (GENZ) top-selling Cerezyme.
Both drugs treat the extremely rare condition by replacing a deficient enzyme that leads to fat cells building up in certain organs and bones, causing disability, complications and death in some circumstances. A production issue at Genzyme has caused a Cerezyme shortage until year-end, prompting the Food and Drug Administration to allow drugs from Protalix and Shire PLC (SHPGY) to be used in patients before agency approval, expected in mid-2010.
The positive data are lifting Protalix's shares by 6.6% to $9.46, after hitting a new 52-week high earlier Thursday. Genzyme fell 21 cents to $56.28.
"Although the expectations were high, we believe the efficacy and safety data more than lived up to these expectations," wrote Brian Abrahams, in a note to clients, raising his price target on the stock to $13 from $11. Protalix has proposed the brand name Uplyso for the drug.
Abrahams highlighted that the data also provide support for the potential of Protalix's manufacturing process, which uses genetically modified plant cells in plastic bags to produce the drug, as opposed to more traditional biotech methods using mammalian cells in large metal tanks.
The Protalix process is cheaper and may provide less opportunity for contamination like that which caused issues for Genzyme. Some, including Abrahams, believe the technology makes the company an attractive acquisition target.
The data also increase the competitive pressure on Genzyme, which is scrambling to reassure patients as it resumes full production of Cerezyme, which had 2008 sales of $1.24 billion. Shire reported positive late-stage data on velaglucerase in August, and Genzyme's situation has increased the expected approval timelines of both drugs.
"We continue to believe Cerezyme's long-term growth outlook will disappoint," said Robert Baird & Co. analyst Christopher Raymond, who is recommending that clients stay on the sidelines regarding Genzyme shares.
-Thomas Gryta; Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com