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SHARE CAPITAL | 12 Months Ended
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Dec. 31, 2017
SHARE CAPITAL [Abstract] |
SHARE CAPITAL | NOTE 7 - SHARE CAPITAL
| a. | Rights of the Company’s Common Stock
The Company’s Common Stock is listed on the NYSE American and on the Tel Aviv Stock Exchange. Each share of Common Stock is entitled to one vote. The holders of shares of Common Stock are also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. Since its inception, the Company has not declared any dividends.
| b. | Stock based compensation
On December 14, 2006, the Board of Directors adopted the Protalix BioTherapeutics, Inc. 2006 Stock Incentive Plan, as amended (the “Plan”). The Plan has since been amended to, among other things, increase the number of shares of common stock available under the Plan to 13,841,655 shares. The grant of options to Israeli employees under the Plan is subject to the terms stipulated by Sections 102 and 102A of the Israeli Income Tax Ordinance. Each option grant is subject to the track chosen by the Company, either Section 102 or Section 102A of the Israeli Income Tax Ordinance, and pursuant to the terms thereof, the Company is not allowed to claim, as an expense for tax purposes, the amounts credited to employees as a benefit, including amounts recorded as salary benefits in the Company’s accounts, in respect of options granted to employees under the Plan, with the exception of the work-income benefit component, if any, determined on the grant date. For Israeli non-employees, the share option plan is subject to Section 3(i) of the Israeli Income Tax Ordinance. As of December 31, 2017, 2,554,075 shares of Common Stock remain available for grant under the Plan. For purposes of determining the fair value of the options and restricted stock granted to employees and non-employees, the Company’s management uses the fair value of the Common Stock. From January 1, 2015 through December 31, 2017, the Company granted options and shares of restricted stock to certain employees and non-employees as follows:
| 1. | Options and restricted stock granted to employees:
| a) | Below is a table summarizing all of the options grants to employees during the year ended December 31, 2015:
Year of grant |  | No. of options granted |  | Exercise price |  | Vesting period |  | Fair value at grant (U.S. dollars in thousands) |  | Expiration period |
| 2015 |  |  | 1,909,000 |  | $ | 1.72 |  |  | 4 years |  | $ | 1,900 |  |  | 10 years |
Set forth below are grants made by the Company to employees (including related parties) during the three-year period ended December 31, 2017 (such grants appear in the table above): On March 23, 2015, the Company’s compensation committee approved the grant of a 10-year option to purchase 1,909,000 shares of Common Stock to its officers and other employees with an exercise price equal to $1.72 per share under the Plan. The options vest over a four-year period; the first 25% shares vest on the first anniversary of the grant date and the remaining shares vest in 12 equal quarterly increments over the subsequent three-year period. Vesting of the options granted to certain executive officers is subject to acceleration in full upon a Corporate Transaction or a Change in Control, as those terms are defined in the Plan. The Company estimated the fair value of the options on the date of grant using the Black-Scholes option-pricing model to be approximately $1.9 million based on the following weighted average assumptions: dividend yield of 0% for all years; expected volatility of 61.7%; risk-free interest rates of 1.6%; and expected life of six years.
| b) | The total unrecognized compensation cost of employee stock options at December 31, 2017 is approximately $130,000. The unrecognized compensation cost of employee stock options is expected to be recognized over a weighted average period of 0.54 years.
The total cash received from employees as a result of employee stock option exercises for the years ended December 31, 2015, 2016 and 2017 was approximately $534,000, $14,000 and $0, respectively. The Company did not realize any tax benefit in connection with these exercises.
| 2. | Options granted to consultants, directors, and other service providers:
During the three years ended December 31, 2017 there were no option grants by the Company to its consultants, directors, and other service providers. In addition, during the three years ended December 31, 2017, there were no option exercises by any of the Company’s consultants, directors, and other service providers and, consequently, no shares of Common Stock were issued in connection with exercises of options by, nor was any cash received from, the Company’s consultants, directors, and other service providers during such period.
| 3. | A summary of share option plans, and related information, under all of the Company’s equity incentive plans for the years ended December 31, 2015, 2016 and 2017 is as follows:
| a. | Options granted to employees:
|  | Year ended December 31, |
|  | 2015 |  | 2016 |  | 2017 |
|  |  |  |  | Weighted |  |  |  |  | Weighted |  |  |  |  | Weighted |
|  | Number |  | average |  | Number |  | Average |  | Number |  | average |
|  | of |  | exercise |  | of |  | Exercise |  | of |  | exercise |
|  | options |  | price |  | options |  | Price |  | options |  | price |
Outstanding at beginning of year |  |  | 5,870,309 |  | $ | 3.770 |  |  | 6,952,293 |  | $ | 3.363 |  |  | 4,884,211 |  | $ | 3.617 |
Changes during the year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Granted |  |  | 1,909,000 |  |  | 1.72 |  |  |  |  |  |  |  |  |  |  |  |  |
Forfeited and Expired |  |  | 277,016 |  |  | 5.395 |  |  | 1,514,957 |  |  | 3.748 |  |  | 154,594 |  |  | 4.004 |
Exercised (*) |  |  | 550,000 |  |  | 0.972 |  |  | 553,125 |  |  | 0.067 |  |  |  |  |  |  |
Outstanding at end of year |  |  | 6,952,293 |  | $ | 3.363 |  |  | 4,884,211 |  | $ | 3.617 |  |  | 4,729,617 |  | $ | 3.604 |
Exercisable at end of year |  |  | 4,477,043 |  | $ | 4.182 |  |  | 3,498,492 |  | $ | 4.296 |  |  | 4,457,461 |  | $ | 3.696 |
(*) The total intrinsic value of options exercised during the years ended December 31, 2015, 2016 and 2017, was approximately $675,000, $213,000 and $0, respectively.
| b. | Restricted stock granted to employees:
|  | Year ended December 31, |
|  | 2015 |  | 2016 |
|  | Number of restricted stock |
Outstanding at beginning of year |  |  | 386,124 |  |  | 127,874 |
Changes during the year: |  |  |  |  |  |  |
Vested |  |  | 255,749 |  |  | 127,874 |
Forfeited |  |  | 2,501 |  |  | - |
Outstanding at end of year |  |  | 127,874 |  |  | - |
| c. | Options and restricted stocks granted to consultants, directors, and other service providers:
|  | Year ended December 31, |
|  | 2015 |  | 2016 |  | 2017 |
|  | Number |  |  |  |  | Number |  |  |  |  | Number |  |  |  |
|  | of |  | Weighted |  | of |  | Weighted |  | of |  | Weighted |
|  | options/ |  | average |  | options/ |  | average |  | options/ |  | average |
|  | restricted |  | exercise |  | restricted |  | exercise |  | restricted |  | exercise |
|  | stock |  | price |  | stock |  | price |  | stock |  | price |
Outstanding at beginning of Year |  |  | 1,208,592 |  | $ | 6.136 |  |  | 637,209 |  | $ | 11.638 |  |  | 208,000 |  | $ | 3.156 |
Changes during the year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Expired |  |  | 466,883 |  |  | 0.001 |  |  | 429,209 |  |  | 15.748 |  |  | 8,000 |  |  | 0.001 |
Vested restricted stock |  |  | 104,500 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding at end of year |  |  | 637,209 |  |  | 11.638 |  |  | 208,000 |  |  | 3.156 |  |  | 200,000 |  |  | 3.282 |
Exercisable at end of year |  |  | 549,709 |  | $ | 12.954 |  |  | 170,500 |  | $ | 3.109 |  |  | 200,000 |  | $ | 3.282 |
| d. | The following tables summarize information concerning outstanding and exercisable options and restricted stock as of December 31, 2017:
December 31, 2017 |
Options outstanding |  | Options exercisable |
Exercise prices |  | Number of options outstanding at end of year |  | Weighted average remaining contractual life |  | Number of options exercisable |  | Weighted average remaining contractual life |
| n/a (Restricted Stock) |  |  |  |  |  |  |  |  | n/a |  |  | n/a |
$ | 1.720 |  |  | 1,720,685 |  |  | 7.22 |  |  | 1,617,279 |  |  | 7.22 |
$ | 2.350 |  |  | 40,000 |  |  | 0.81 |  |  | 40,000 |  |  | 0.81 |
$ | 2.370 |  |  | 900,000 |  |  | 6.74 |  |  | 731,250 |  |  | 6.74 |
$ | 2.650 |  |  | 211,682 |  |  | 1.15 |  |  | 211,682 |  |  | 1.15 |
$ | 3.020 |  |  | 50,000 |  |  | 0.10 |  |  | 50,000 |  |  | 0.10 |
$ | 3.370 |  |  | 150,000 |  |  | 6.56 |  |  | 150,000 |  |  | 6.56 |
$ | 5.000 |  |  | 949,250 |  |  | 0.10 |  |  | 949,250 |  |  | 0.10 |
$ | 6.900 |  |  | 680,000 |  |  | 2.15 |  |  | 680,000 |  |  | 2.15 |
$ | 7.550 |  |  | 160,000 |  |  | 2.65 |  |  | 160,000 |  |  | 2.65 |
$ | 9.660 |  |  | 68,000 |  |  | 2.83 |  |  | 68,000 |  |  | 2.83 |
|  |  |  | 4,929,617 |  |  |  |  |  | 4,657,461 |  |  |  |
| e. | The following table illustrates the effect of share-based compensation on the statement of operations:
|  | Year ended December 31, |
(U.S. dollars in thousands) |  | 2015 |  | 2016 |  | 2017 |
Research and development expenses |  | $ | 904 |  | $ | 571 |  | $ | 182 |
Selling, general and administrative expenses |  |  | 898 |  |  | 417 |  |  | 155 |
|  | $ | 1,802 |  | $ | 988 |  | $ | 337 |
| c. | Private and 144A Offerings
| 1. | On October 12, 2015, the Company completed a private offering of 5,649,079 shares of the Company’s common stock to Pfizer. See also note 2.
| 2. | On December 7, 2016, the Company exchanged with certain existing note holders $54.052 million aggregate principal amount of the Company’s outstanding 4.50% Convertible Senior Notes due 2018 for, among other consideration, $40.186 million aggregate principal amount of convertible notes due 2021 (as described in note 8b) and for 23,846,735 shares of common stock. See also note 8b.
| 3. | On July 24, 2017, the Company entered into a Note Purchase Agreement with certain institutional investors relating to the private issuance and sale by the Company of $10 million in aggregate principal amount of its 7.5% secured convertible promissory notes due 2021. The 7.5% convertible notes were issued pursuant to the base indenture dated December 7, 2016 (the existing 2016 Notes). Concurrently, the Company exchanged with certain existing note holders $9.0 million aggregate principal amount of the Company’s outstanding 4.50% Convertible Senior Notes due 2018 for $8.55 million aggregate principal amount of newly issued 4.50% Senior Convertible Notes due 2022. See also note 8c.

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