Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
AND RISK FACTORS SUMMARY

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the consolidated financial statements and the related notes included elsewhere in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2025. Some of the information contained in this discussion and analysis, particularly with respect to our plans and strategy for our business and related financing, includes forward-looking statements within the meanings of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including statements regarding expectations, beliefs, intentions or strategies for the future. When used in this report, the terms "anticipate," "believe," "estimate," "expect," "can," "continue," "could," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" and words or phrases of similar import, as they relate to our company, our subsidiary or our management, are intended to identify forward-looking statements. We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance, and we undertake no obligation to update or revise, nor do we have a policy of updating or revising, any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as may be required under applicable law. Forward-looking statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements as a result of several factors, including those set forth in this Quarterly Report on Form 10-Q.

Examples of the risks and uncertainties include, but are not limited to, the following:

Given these uncertainties, you should not place undue reliance on these forward-looking statements. Companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in advanced or late-stage clinical trials, even after obtaining promising earlier trial results or preliminary findings for such clinical trials. Even if favorable testing data is generated from clinical trials of a drug product, the FDA or foreign regulatory authorities may not accept or approve a marketing application filed by a pharmaceutical or biotechnology company for the drug product.

Our Business

Protalix BioTherapeutics, Inc. and its wholly-owned subsidiary, Protalix Ltd., are commercial stage biopharmaceutical companies focused on the discovery, development, production, and commercialization of innovative therapeutics for rare diseases with significant unmet needs. ProCellEx^®, our proprietary plant cell-based protein expression system, represents a new method for developing recombinant proteins in an industrial-scale manner.

Currently, our commercial products are both enzyme replacement therapies (ERTs):

We are committed to leveraging our track record of success as we progress with the development of treatments for rare and orphan diseases. In addition, we continuously work on the further development and enhancement of our ProCellEx technology. Accordingly, we are turning our focus to new, early-stage product candidates that treat indications for which there are high unmet needs in terms of efficacy and safety, including renal diseases. Treatments of interest are likely to address both genetic and non-genetic diseases. We intend to use our ProCellEx platform and PEGylation capabilities, as well as other modalities such as small molecules and antibodies, to take advantage of highly innovative opportunities. We are also exploring novel platform technologies.

Our product pipeline currently includes, among other candidates:

Our proprietary ProCellEx platform is being used to manufacture both our approved and marketed products as well as PRX-115 and PRX-119.

Given ongoing military actions in the Middle East, and the missile and other strikes within Israel, we have elected to store manufactured drug substance in multiple locations, both within and outside of Israel, to mitigate the risk of loss. Our facilities are deemed an "essential enterprise" which means they operate or can be operated for the purposes of state defense or public security or for the maintenance of essential supplies or services, allowing us to maintain operations during emergencies. To date, the impact of the military actions have not had a material adverse effect on our operations.

Recent Company Developments

Commercialization of Approved Products

Elelyso - Pfizer

We licensed to Pfizer the global rights to market and sell Elelyso in all markets, excluding Brazil, pursuant to the Amended Pfizer Agreement. Pursuant to the Amended Pfizer Agreement, we agreed to sell drug substance to Pfizer for the production of Elelyso for a fixed cost, subject to certain terms and conditions, through 2030. Any failure to comply with our supply commitments may subject us to substantial financial penalties. The Amended Pfizer Agreement includes customary provisions regarding cooperation for regulatory matters, patent enforcement, termination, indemnification and insurance requirements. We retain distribution rights to taliglucerase alfa in Brazil.

Our sales of Elelyso to Pfizer are made at a fixed price directly to Pfizer who maintains product in inventory, and we recognize revenue from those sales upon delivery. The timing of such sales does not directly reflect patient demand and, on a period-to-period basis, there may be variations in the orders placed by Pfizer resulting in variability in our period-to-period results. There may be periods during which no orders are placed by Pfizer, whether as a result of inventory de-stocking or other factors.

Alfataliglicerase - Fundação Oswaldo Cruz (Fiocruz)

Elelyso, marketed as BioManguinhos alfataliglicerase in Brazil, is commercialized in Brazil through the Brazil Agreement with Fiocruz which became effective in January 2014. Gaucher patients in Brazil are entitled to receive ERT paid for by the Brazilian MoH. The Brazilian MoH clinical treatment guidelines (PCDT) state that BioManguinhos alfataliglicerase is the therapy of choice for newly diagnosed patients. BioManguinhos alfataliglicerase is currently estimated to be used by approximately 25% of Gaucher patients in Brazil.

The Brazil Agreement provides for a staged technology transfer that is intended to transfer to Fiocruz the capacity and skills required for the Brazilian government to construct its own manufacturing facility, at its sole expense, and to produce a sustainable, high-

quality, and cost-effective supply of BioManguinhos alfataliglicerase. Fiocruz has not satisfied certain purchase commitments under the Brazil Agreement. We continue to sell BioManguinhos alfataliglicerase for a fixed price through purchase orders and we continue to discuss with Fiocruz potential steps to maximize sales of BioManguinhos alfataliglicerase to the Brazilian MoH.

Our sales of BioManguinhos alfataliglicerase to Fiocruz are made at a fixed price directly to Fiocruz which maintains product in inventory, and we recognize revenue from those sales upon delivery. The timing of such sales does not directly reflect patient demand and, on a period-to-period basis, there may be variations in the orders placed by Fiocruz resulting in variability in our period-to-period results. There may be periods during which no orders are placed by Fiocruz, whether as a result of inventory de-stocking or other factors.

Elfabrio (pegunigalsidase alfa/PRX-102) - Chiesi Farmaceutici

Elfabrio is commercialized worldwide by Chiesi under the Chiesi Agreements. Under the Chiesi Ex-US Agreement, we granted to Chiesi an exclusive license for all markets outside of the United States to commercialize pegunigalsidase alfa. At execution of the Chiesi Ex-US Agreement, Chiesi made an upfront, non-refundable, non-creditable payment to Protalix Ltd. of $25.0 million, followed by additional payments of $25.0 million to cover development costs in the aggregate. Protalix Ltd. currently remains eligible to receive additional payments of up to a maximum of $270.0 million, in the aggregate and including the $25.0 million currently payable, subject to the satisfaction of certain regulatory and commercial milestones. Protalix Ltd. agreed to manufacture all of the pegunigalsidase alfa needed for all purposes under the agreement, subject to certain exceptions, and Chiesi agreed to purchase the pegunigalsidase alfa from Protalix Ltd., subject to certain terms and conditions. Chiesi is required to make payments to Protalix Ltd. ranging from 15% to 35% of its net sales under the Chiesi Ex-US Agreement, depending on the amount of annual sales, subject to certain terms and conditions, as consideration for product supply. The Chiesi Ex-US Agreement shall remain in effect until the later of (i) the expiration of the last enforceable Protalix patent right thereunder or (ii) the 15^th anniversary of the launch of sales of pegunigalsidase alfa on a country-by-country basis, subject to certain terms and conditions, unless earlier terminated in accordance with the terms and conditions thereof.

Under the Chiesi US Agreement we granted to Chiesi the exclusive license to develop and commercialize pegunigalsidase alfa in the United States. Protalix Ltd. received from Chiesi an upfront, non-refundable, non-creditable payment of $25.0 million from Chiesi and additional payments of $20.0 million to cover development costs. To date, we have received the complete amount of such development costs, and, following the approval of Elfabrio by the FDA, we received a milestone payment equal to $20.0 million. Protalix Ltd. currently remains eligible to receive additional payments of up to a maximum of $740.0 million, in the aggregate, subject to the satisfaction of certain regulatory and commercial milestones. Chiesi is required to make payments to Protalix Ltd. ranging from 15% to 40% of its net sales under the Chiesi US Agreement, depending on the amount of annual sales, subject to certain terms and conditions, as consideration for product supply. The Chiesi US Agreement shall remain in effect until the later of (i) the expiration of the last enforceable Protalix patent right thereunder or (ii) the 15^th anniversary of the launch in the US, unless earlier terminated in accordance with the terms and conditions thereof.

We manufacture Elfabrio drug substance and, after the fill\finish process is complete, we sell the resulting drug product to Chiesi under both agreements. Operationally, Chiesi conducts its own internal commercial forecasting to guide inventory needs. To date, Chiesi has placed bulk orders for Elfabrio. As a result, the orders we receive from Chiesi may not be timed in relation to Chiesi's pace of patient acquisition and retention. Accordingly, our sales of Elfabrio to Chiesi may not reflect patient demand for Elfabrio as we sell the fulfilled orders to Chiesi's inventory. In addition, on a period-to-period basis, there may be variations in the orders placed by Chiesi resulting in variability in our period-to-period results as we, in turn, recognize revenues from sales of Elfabrio upon delivery of the drug product to Chiesi. There may be periods during which no orders are placed by Chiesi, whether as a result of inventory de-stocking or other factors. We do not anticipate that these Chiesi ordering patterns will change until the demand characteristics for Elfabrio stabilize, the launch of Elfabrio matures and Elfabrio's share of the market for Fabry disease treatment grows both inside the US and outside the US.

Intellectual Property

A key element of our overall strategy is to establish a broad portfolio of patents to protect our proprietary technology, proprietary product and product candidates and their methods of use. As of March 31, 2026, we hold a broad portfolio of 15 patent families consisting of approximately 68 patents in Europe, the United States, Israel, and additional countries worldwide, as well as approximately 38 pending patent applications.

Research & Development

We are committed to leveraging our track record of success as we develop treatments for rare and orphan diseases. In addition, we are continuously further developing and enhancing our ProCellEx technology. Accordingly, we are turning our focus to new, early-stage

product candidates that treat indications for which there are high unmet needs in terms of efficacy and safety, including renal diseases. We currently intend that our treatments will address both genetic and non-genetic diseases. We currently intend to use our ProCellEx platform and PEGylation/chemical capabilities, as well as other modalities such as small molecules and antibodies, to take advantage of highly innovative opportunities. We are also exploring novel platform technologies to expand our pipeline.

In addition, we continuously work on the further development of our ProCellEx plant cell expression technology and bioreactor system.

Critical Accounting Policies

Our significant accounting policies are more fully described in Note 1 to our consolidated financial statements appearing in this Quarterly Report. There have been no material changes to our critical accounting policies since we filed our Annual Report on Form 10-K for the year ended December 31, 2025.

The discussion and analysis of our financial condition and results of operations is based on our financial statements, which we prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Results of Operations

The following table sets forth certain statements of operations data:

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Three months ended March 31, 2026 compared to the three months ended March 31, 2025

Revenues from Selling Goods

Revenues from selling goods consisted of the following:

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Revenues from selling goods for the three months ended March 31, 2026 reflects a decrease of 26% compared to revenues from selling goods for the three months ended March 31, 2025. The decrease in sales to Pfizer resulted primarily from a timing shift in Pfizer's purchases for the three months ended March 31, 2026 compared to increased purchases of Elelyso by Pfizer in the three months ended March 31, 2025 to address unexpected manufacturing issues at Pfizer. The decrease in sales to Fiocruz (Brazil) are due to the timing of deliveries. The total decrease in revenues from selling goods for the period was partially offset by an increase in sales to Chiesi.

Revenues from License and R&D Services

Revenues from license and R&D services were as follows:

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The increase in revenues from license and R&D services for the three months ended March 31, 2026 compared to license and R&D services for the three months ended March 31, 2025 resulted from the $25.0 million milestone we received from Chiesi in connection with the approval of the E4W dosage in the EU. Revenues from license and R&D services are comprised primarily of revenues we recognized in connection with the Chiesi Agreements. We expect to generate minimal revenues from license and R&D services now that we have completed the clinical development of Elfabrio.

Cost of Revenues

Cost of revenues were as follows:

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Cost of revenues for the three months ended March 31, 2026 represents a decrease of 50% from cost of revenues for the three months ended March 31, 2025. The decrease resulted primarily from a decrease in sales to Pfizer and Fiocruz (Brazil) which was partially offset by an increase in sales to Chiesi.

Research and Development Expenses

Research and development expenses were as follows:

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Total increase in research and developments expenses for the three months ended March 31, 2026 represents an increase of 56% compared to research and developments expenses for the three months ended March 31, 2025. The increase in research and development expenses resulted primarily from preparations for and the initiation of our RELEASE study.

We expect to continue to incur significant, increasing research and development expenses as we progress with the RELEASE study and commence more advanced stages of preclinical and clinical trials for certain of our other product candidates.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses were as follows:

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Selling, general, and administrative expenses for the three months ended March 31, 2026 represents an increase of 17% compared to selling, general, and administrative expenses for the three months ended March 31, 2025. The increase resulted primarily from an increase of $0.4 million in salary and related expenses.

Financial Income (Expenses), Net

Financial expenses, net were as follows:

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The difference in financial expenses, net for the three months ended March 31, 2026 compared to financial income, net for the three months ended March 31, 2025 resulted primarily from $0.3 million in recorded expenses due to exchange rate fluctuations between the US Dollar and the New Israel Shekel, and a decrease of $0.1 million in interest income.

Income Taxes (Tax Benefit)

Income taxes (tax benefit) were as follows:

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We recorded tax expenses of approximately $2.8 million for the three months ended March 31, 2026 and a tax benefit of approximately $(0.1) million for the three months ended March 31, 2025. The tax expenses resulted primarily from taxes on income mainly derived from global intangible low-taxed income (GILTI) resulting primarily from limitations under IRC Section 174. On July 4, 2025, tax reform legislation was enacted in the United States through the passage of H.R.1, The One Big Beautiful Bill Act, which includes significant corporate tax changes, including a restoration of the current deductibility of domestic research expenditures beginning in 2025 under Section 174A, with transition options for previously capitalized amounts. Foreign research expenditures continue to require capitalization subject to the mandatory 15-year amortization period under existing IRC Section 174. We implemented the permitted transition options.

Liquidity and Capital Resources

Our sources of liquidity include our cash balances and short-term bank deposits. At March 31, 2026, we had $51.1 million in cash and cash equivalents and short-term bank deposits. We have primarily financed our operations through sales proceeds, equity and debt financings, business collaborations, and grants funding.

On February 27, 2023, we entered into an At The Market Offering Agreement, or the Sales Agreement, with H.C. Wainwright & Co., LLC, as the sales agent, or the Agent, which provided for the sale, from time to time through the Agent, shares of Common Stock having an aggregate offering price of up to $20.0 million. On March 17, 2025, the Sales Agreement was amended to increase the aggregate gross sales price of shares of Common Stock available for offer and sale under the Sales Agreement by $20.0 million. We have no obligation to sell any shares of Common Stock under the Sales Agreement, and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement in accordance with its terms. The Agent is entitled to a commission of up to 3.0% of the aggregate gross proceeds from the shares of Common Stock sold under the Sales Agreement. During the three months ended March 31, 2025, we sold, in the aggregate 1,325,179 shares of Common Stock under the Sales Agreement generating gross proceeds equal to approximately $3.0 million (issuance costs were $0.1 million). We did not make any sales during the three months ended March 31, 2026. As of March 31, 2026, approximately $15.7 million in shares of Common Stock remain available to be sold under the Sales Agreement.

During the three months ended March 31, 2025, we issued 908,000 shares of Common Stock, in the aggregate, in connection with the exercise of warrants issued in 2020 generating proceeds equal to approximately $2.1 million from such exercises. The remaining warrants expired on March 11, 2025. Accordingly, as of March 12, 2025, no warrants remain outstanding.

We believe that our cash and cash equivalents and short-term bank deposits are sufficient to satisfy our capital needs for at least 12 months from the date this report is issued.

Cash Flows

Our cash flows for each of the three months ended March 31, 2026 and 2025 were as follows:

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Net cash provided by operations was $22.0 million for the three months ended March 31, 2026. The net income for the three months ended March 31, 2026 of $18.3 million was increased by a $6.4 million decrease in accounts receivable-trade and other assets, $0.5 million in share-based compensation, $0.2 million in financial expenses, net, $0.4 million in depreciation and a $0.8 million increase in accounts payable and accruals, and was offset a $4.7 million increase in inventories.

Net cash provided by investing activities was $4.2 million for the three months ended March 31, 2026 and consisted primarily of $10.0 million short-term deposit withdrawal partially offset by a $5.0 million investment in bank deposits and $0.8 million in the purchase of property and equipment.

Net cash provided by financing activities was $0.2 million for the three months ended March 31, 2026 and resulted from the exercise of options.

Net cash used in operations was $5.1 million for the three months ended March 31, 2025. The net loss for the three months ended March 31, 2025 of $3.6 million was increased by a $1.3 million decrease in accounts payable and accruals, a $2.3 million increase in accounts receivable-trade and other assets and $0.4 million in financial income, net and was offset by $0.5 million in share-based compensation, a $1.7 million decrease in inventories, and $0.3 million in depreciation.

Net cash used in investing activities for the three months ended March 31, 2025 was $0.3 million and consisted primarily of the purchase of property and equipment.

Net cash provided by financing activities for the three months ended March 31, 2025 was $5.1 million and consisted of $2.9 million in proceeds from the issuance of Common Stock under the Sales Agreement, net and $2.2 million from the exercise of warrants and options.

Future Funding Requirements

Since our inception, we have incurred significant research and development expenditures which have not been offset by revenues. We have not generated significant revenues from sales of Elelyso or Elfabrio. We have generated operating losses from our continuing operations since our inception although the revenues generated in the years ended December 31, 2023 and 2024, and in the three months ended March 31, 2026, exceeded our expenditures for the same periods.

As we increase our research and developments efforts with respect to our current and future product candidates, we expect to continue to incur significant expenditures. We cannot anticipate the costs or the timing of the occurrence of such costs. Although we expect the revenues generated from the sales of Elfabrio and Elelyso will increase, such revenues may not be sufficient to fund the expenditures. To the extent we need to obtain additional financing in excess of such anticipated revenues, it may be difficult for us to do so given the volatility of the price of our Common Stock. Our material cash needs for the next 24 months will include, among other expenses, (i) costs of preclinical and clinical trials, in particular those of our RELEASE study, (ii) employee salaries, (iii) payments for rent and operation of our manufacturing facilities, (iv) fees to our consultants and legal advisors, patent advisors and fees for service providers in connection with our research and development efforts and (v) expansion of additional manufacturing space within our current facility and (vi) tax payments. We believe that the funds currently available to us are sufficient to satisfy our capital needs for at least 12 months from the date this report is issued.

As discussed above, we may be required to raise additional capital to develop our product candidates and continue research and development activities. Our ability to raise capital, and the amounts of necessary capital, will depend on many other factors, including:

We expect to finance our future cash needs through sales of Elfabrio and Elelyso, corporate collaborations, licensing or similar arrangements, public or private equity offerings and/or debt financings. We currently do not have any commitments for future external funding, except with respect to the milestone payments that may become payable under the Chiesi Agreements.

Effects of Currency Fluctuations

Currency fluctuations could affect us through increased or decreased acquisition costs for certain goods and services and salaries expenses. For the three months ended March 31, 2026 the currency fluctuations were immaterial.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements as of each of March 31, 2026 and December 31, 2025.