Protalix Biotherapeutics Inc (NYSEMKT:PLX) took a midweek hit this week, and currently trades at a little over $1 a share – down more than 20% off early week highs. The company released some data, data that we highlighted as being a key value driver mid month in March, but it's not the numbers that have sent PPS tumbling. Instead, it's the usual suspects over at our competitors The Street. Specifically, Adam Feuerstein, with a piece he published in response to the news titled Protalix Cystic Fibrosis Drug Study Results Worsen Over Time.Our response to the data is very much positive, and we see the dip induced by the above mentioned as being a nice opportunity to pick up a discount exposure ahead of wider markets realizing they are listening to the wrong source, and the company revaluing to accommodate this realization.With this in mind, and to add a bit of balance to the situation, let's pick apart Feuerstein's interpretation and show where he's gone wrong.As a very brief introduction to the situation (we've covered this one a lot, so we recommend newer readers taking a look at past coverage to catch up here), Protalix has developed a cystic fibrosis drug called AirDNASE, which it's trying to prove is better than one of the current standard of care therapies in the space, a drug called Pulmozyme, marketed by Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY). There's a $700 million market potential if AirDNASE hits the shelves.A phase II study (the one we're looking at here) just wrapped up. Protalix put out interim results from the study back in January (which were positive, but which were again misinterpreted by Feuerstein at the time). In January, the interim came from 13 patients, and the drug produced an increase in lung function of 4.1 points.The latest data adds an extra 3 patients to this (so total, 16) and the increase in lung function came in at 3.4 points.Here's Feuerstein's take:
"So, Protalix analyzed data on three additional patients between January and today and the alidornase alfa lung function score went down. Protalix says this is a positive result, but the data got worse."
There's so much wrong with this interpretation.First, the data didn’t get worse or the score go down. That's just plain incorrect. Sure, the average across the patients dipped, but to say that the results worsen (or worsen over time, as implied by the title) implies a total misunderstanding of what the trial was looking at. These are patients on a set dosing schedule. Add a couple of patients to the overall, and the average might change. This is not the same as the efficacy for the drug for an individual patient changing.Second, this is a 16 patient study. Feuerstein says it himself – it's a tiny sample. The difference between 13 and 16 patients in this data is negligible. The trend is the same, and in small sample studies, that's what matters. If the numbers had improved on the back of going from 13 to 16 patients (say from 4.1 to 5), and Protalix was to try and spin it as a meaningful improvement based on just adding 3 patients to the data set, Feuerstein would have been all over the company for trying to spin interpretation.So say we forgive him these errors, surely there's nothing more?Well, take a look at this statement, again pulled directly from The Street's hit piece:
"Importantly, the phase IIb study discussed Wednesday did not compare alidornase alfa to Pulmozyme."
(For reference, alidornase alfa is the scientific name for AirDNASE)Again, that's just plain wrong. The entire study was set up to compare the two drugs. Patients who were taking Pulmozyme were tested to find a baseline score. These patients then underwent washout (to get the Pulmozyme out of their system) and took AirDNASE for four weeks. They were then tested to get a post treatment score. This is the definition of comparing pre washout drug (Pulmozyme) to investigative asset (AirDNASE).Sure, a side by side trial would be more insightful (one side Pulmozyme, one arm AirDNASE), but at 16 patients total, and with on control, there's no way the results could hit statistical significance. Protalix recognizes this, and that's why it set up the study as it did. Shareholders recognize this. The scientific community recognizes this. Feuerstein doesn’t, or chooses not to let on to his readers that he does. We're betting on the latter.We're not saying this outcome isn’t trouble free. The patient sample is, as Feuerstein states, tiny, and there's going to have to be a strong ramp up in patients tested in the next study before Protalix can hope to underpin a registration application to the FDA. Ramping up trial size brings uncertainty to the table, and that adds risk to the equation.What we are saying, however, is that this data is positive, strong even, and that markets (led blindly by misinterpretation over at The Street) have gotten it completely wrong.Not that that's a bad thing, of course. We're all up for discounted exposures.We will be updating our subscribers as soon as we know more. For the latest updates on PLX, sign up below!Disclosure: We have no position in PLX and have not been compensated for this article.
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