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LICENSE AND SUPPLY AGREEMENT | 12 Months Ended
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Dec. 31, 2012
LICENSE AND SUPPLY AGREEMENT [Abstract] |
LICENSE AND SUPPLY AGREEMENT | NOTE 2 - LICENSE AND SUPPLY AGREEMENT On November 30, 2009, Protalix Ltd. and Pfizer entered into the Pfizer Agreement pursuant to which Pfizer was granted an exclusive, worldwide license to develop and commercialize taliglucerase alfa, except in Israel. Under the terms and conditions of the Pfizer Agreement, Protalix Ltd. retained the right to commercialize taliglucerase alfa in Israel. Under the Pfizer Agreement, Pfizer made an upfront payment to Protalix Ltd. of $60.0 million in connection with the execution of the agreement and shortly thereafter paid Protalix Ltd. an additional $5.0 million upon the Company's filing of a proposed pediatric investigation plan to the Pediatric Committee of the EMA. Protalix Ltd. received a $25.0 million milestone payment in connection with the approval of taliglucerase alfa by the FDA in May 2012. Protalix Ltd. is entitled to 40% of the results (profits or losses) earned on Pfizer's sales of taliglucerase alfa. Such result (profit or loss) will be calculated while, in addition to other adjustments, taking into account Protalix Ltd.'s cost of goods sold and Pfizer's commercial expenses, with certain expenses capped or borne solely by one party ("Collaboration Operation"). Of the losses incurred by the Collaboration Operation through December 31, 2011, 40% will be deducted from the cash payments to be paid to the Company as its share in the profits from future years, if any. This deduction will be limited to a certain percentage of any quarterly profit. As of December 31, 2012, the Company accrued a liability in respect of these losses equal to $8.5 million, out of which $5.4 million is classified as a long term liability, and the remainder is included in accounts payable and accruals-other. The Company has determined that the initial, non-refundable upfront license fee payment of $60.0 million together with the first $5.0 million payment will be recognized on a straight line basis as revenue over the estimated relationship period (approximately $4.6 million per year). The Company has estimated that the relationship period for its arrangement with Pfizer will be approximately 14 years (commencing upon the Company's receipt of the up-front license payment) based on the Company's last material patent relating to taliglucerase alfa to expire. The $25.0 million milestone payment received in connection with the FDA's approval of taliglucerase alfa in the United States was considered to be a substantive milestone for purposes of revenue recognition and, accordingly, was recorded as revenue during the period in which the milestone was achieved. The Company's deliverables under this collaboration include an exclusive license to taliglucerase alfa as an enzyme replacement therapy for the treatment of Gaucher disease, certain research and development services as required under the Pfizer Agreement for taliglucerase alfa and manufacturing of taliglucerase alfa. According to the terms and conditions of the Pfizer Agreement, the Company retained manufacturing rights and sells its products to Pfizer. In addition, Pfizer is required to reimburse the Company for certain costs it incurs in connection with certain development expenses for taliglucerase alfa. In connection with the payments received under the Pfizer Agreement, Protalix Ltd. is obligated to pay certain royalties. See Note 6a.

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