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CORRESP
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CORRESP

    1290 AVENUE OF THE AMERICAS

NEW YORK, NY 10104-0050

TELEPHONE: 212.468.8000

FACSIMILE: 212.468.7900

WWW.MOFO.COM

    morrison & foerster llp

new york, san francisco,

los angeles, palo alto,

san diego, washington, d.c.

northern virginia,

orange county, denver,

sacramento, walnut creek

tokyo, london, beijing,

shanghai, hong kong,

singapore, brussels

    July 11, 2008

    Writer’s Direct Contact

     212.468.8163

    JTanenbaum@mofo.com

Ms. Vanessa Robertson

Staff Accountant

Division of Corporation Finance

United States Securities and Exchange Commission

100 F. Street, N.E.

Washington, D.C. 20549

    RE:

    Protalix BioTherapeutics, Inc.

Annual Report on Form 10-K, filed March 17, 2008

for the Fiscal Year Ended December 31, 2007

File No. 001-33357

Ladies and Gentlemen:

     On behalf of our client, Protalix BioTherapeutics, Inc., a Florida corporation (the
“Company”), transmitted herewith are responses to the Staff’s comments to the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2007 (the “Form 10-K”), which comments
were set forth in the Staff’s letter to the Company dated June 26, 2008 (the “Comment Letter”) to
Yossi Maimon, the Company’s Chief Financial Officer and Treasurer.

     For ease of reference, we have noted the Staff’s comments in bold faced type and the responses
in regular type.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations, page 58

Research and Development Expenses

    1.

    We believe that your disclosures about historical research and development expenses and
estimated future expenses related to your major research and development projects could be
enhanced for investors. Please refer to the Division of Corporation Finance “Current
issues and Rulemaking Projects Quarterly Update” under section VIII – Industry Specific
Issues – Accounting and Disclosure by Companies Engaged in Research and Development
Activities.
You can find it at the following website address:
http://www.sec.gov/divisions

    /corpfin/cfcrq032001.htm. Please revise your MD&A to disclose the following information
for each of your major research and development projects.

    a.

    The current status of the project;

    b.

    The costs incurred during each period presented and to date on
each project;

    c.

    The nature, timing and estimated costs of the efforts necessary
to complete each project;

    d.

    The anticipated completion dates of each project;

    e.

    The risks and uncertainties associated with completing
development on schedule, and the consequences to operations, financial position
and liquidity if each project is not completed timely; and finally

    f.

    The period in which material net cash inflows from significant
projects are expected to commence for each project.

    Regarding b., if you do not maintain any research and development costs by project, disclose
that fact and explain why management does not maintain and evaluate research and development
costs by project. Provide other quantitative or qualitative disclosure that indicates the
amount of the company’s resources being used on the project.

    Regarding c. and d., disclose the amount or range of estimated costs and timing to complete
the phase in process and each future phase. To the extent that information is not
estimable, disclose those facts and circumstances indicating the uncertainties that preclude
you from making a reasonable estimate.

    Response: The majority of the Company’s research and development expenses are currently
incurred in connection with the phase III clinical trial of the Company’s lead product
candidate, prGCD for the treatment of Gaucher disease. As disclosed in the Form 10-K, the
Company is also engaged in the research and development of three other projects, each of
which is in the research stage. When compared to the expenditures for the research and
development of prGCD, the Company believes that the expenditures for the other research and
development projects are immaterial to the business and prospects of the Company. For such
reasons, the Company does not record and maintain research and development costs on a per
project basis. In addition, due to the inherently unpredictable nature of the preclinical
and clinical development process, the Company is not able to estimate the future costs of
any of its research and development projects with any certainty, nor is the Company able to
predict the timing or receipt of net cash inflows for any project, if any. Based upon the
foregoing, the Company believes that it has disclosed the appropriate information regarding
its research and development expenses in the Management’s Discussion and Analysis of
Financial Condition and Results of Operations (the “MD&A”) section of the 10-K.

    Based upon the Staff’s comment, the Company intends to structure the Research and
Development Expense subsection in the MD&A

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    section of future annual reports in a manner similar to model disclosure set forth on
Exhibit A.

Report of Independent Registered Public Accounting Firm, page F-2

    2.

    Auditor association with the cumulative data is required on an annual basis as long as the
registrant is in the development stage. There is no reference to the cumulative data in the
accountant’s report. In addition, it does not appear as though a waiver for this requirement
was granted by the Office of the Chief Accountant within the Division of Corporation Finance.
Please advise whether a waiver was obtained and provide us a copy or include the appropriate
accountant report. To be granted a waiver it must be impracticable for you to obtain an audit
opinion on the cumulative data. A written submission explaining why it is impracticable must
be provided to the Office of the Chief Accountant within the Division of Corporation Finance
to obtain a waiver.

    RESPONSE: The omission of the reference to the cumulative data in the Report of the
Independent Registered Accounting Firm included in the Company’s Financial Statements for
the fiscal year ended December 31, 2007 is due to a typographical error. The Company’s
accountants provided an opinion on the cumulative data in their report for the 2006
financial statements and intended to include the cumulative data in the 2007 integrated
audit opinion. A copy of the corrected Report of the Independent Registered Accounting Firm
included in the Company’s Financial Statements for the fiscal year ended December 31, 2007
is attached hereto as Exhibit B.

Note 4 — Commitments, page F-18

    3.

    Please revise your disclosure to include all of the milestone payments you will be required
to pay under certain research and license agreements. Please include the events that would
trigger these payments. Also tell us why you did not include these amounts in your
contractual obligation table. Finally, please include the length of and the termination
provisions for all of your material agreements.

    RESPONSE: As discussed with the Staff, most of the payments under the Company’s research and
license agreements are in the form of royalties on the net sales of an approved product, if
any. There are few provisions in such agreements which obligate the Company or its
wholly-owned subsidiary, Protalix Ltd., to make milestone payments or other similar payments
other than the royalties. The Company believes that the amounts of these payments,
individually and in the aggregate, are immaterial to the business and prospects of the
Company due to the relatively small amounts of the payments, the contingent nature of the
payments, the fact that certain of the payments are payable in the future and the fact that
certain of the payments are creditable against future royalty payments.

    For the foregoing reasons, the Company does not believe that additional disclosure regarding
the milestone payments and other payments is necessary for the protection of

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    investors. Such payments, if all of the contingencies are met, amount to approximately $1.3
million and would be payable, if at all, as the Company’s projects progress over the course
of a number of years. In addition, the Commission has previously granted confidential
treatment for the amount and timing of all such payments. For the same reasons, the Company
did not include any of the payments in the contractual obligation table set forth in the
MD&A section of the Form 10-K.

    Based upon the Staff’s comments, the Company intends to include disclosure regarding the
aggregate amount of the milestone and other payments in the financial statements it prepares
in future annual reports. Also, to the extent applicable, the Company intends to include
disclosure regarding the length of and termination provisions of its research and license
agreements in the financial statements it prepares in future annual reports.

    4.

    Please explain how the $1,724,000 commitment under your sub-contracting agreements relates to
the purchase obligations of $4,086,000 included in your contractual obligations table.

    RESPONSE: The purchase obligations of approximately $4,086,000 disclosed in the contractual
obligation table in the MD&A of the Form 10-K includes the Company’s commitments of
approximately $1,724,000, as of December 31, 2007, under certain of the Company’s research
and development agreements as disclosed in Note 4 of the Company’s Financial Statements for
the fiscal year ended December 31, 2007. The remaining approximately $2,362,000 disclosed
in the contractual obligation table represents open purchase orders which the Company had
issued to certain suppliers and other vendors that were outstanding as of December 31, 2007.

Note 5—Share Capital, page F-20

    5.

    Please provide us a chronology of facts, circumstances and events explaining the change in
fair value of the common stock issued during 2006 of approximately $1.50 per share to the
trading value immediately after the merger of approximately $27 per share.

    RESPONSE: As discussed in Note 5(b) of the Company’s Financial Statements for the fiscal
year ended December 31, 2007, the description of share capital in the Company’s historical
financial statements reflects the historical financial statements of Protalix Ltd., and have
been retroactively restated to reflect the implicit conversion ratio related to the exchange
of ordinary shares of Protalix Ltd. for shares of the Company’s common stock, par value
$.001 per share (the “Common Stock”), in connection with the merger of the Company with a
wholly-owned subsidiary of the Company, which was consummated on December 31, 2006 (the
“Merger”). In August 2006, Protalix Ltd. sold 163,774 of its ordinary shares to investors
for aggregate proceeds equal to $15,000,000 or $91.59 per ordinary share. On the same date,
Protalix Ltd. entered into a merger agreement with the Company and a wholly-owned subsidiary
of the Company. After giving retroactive effect to the conversion ratio in the Merger,
which was approximately 1 for 61.08, the offering was conducted at approximately $1.50 per
share (after giving effect to the 10-

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    for-1 reverse stock split which went into effect on December 29, 2006, as discussed below
(the “Reverse Stock Split”)).

    On August 21, 2006, the closing price of the Common Stock quoted on the OTC Bulletin
Board® (the “OTCBB”) was $3.90 per share (which is a pre-Reverse Stock Split
number). From August 22, 2006 through December 29, 2006, the closing price of the Common
Stock declined to $1.67 per share (which is a pre-Reverse Stock Split number) with very low
volume. On many days during such period, there was no trading in the Common Stock at all.
In connection with the closing of the Merger, the Company completed a 10-for-1 reverse stock
split on December 29, 2006. Accordingly, on January 3, 2007, the first trading day after
the effective date of the Reverse Stock Split and the closing of the Merger, the opening
price of the Common Stock, as quoted on the OTCBB, was $14.00 per share. The closing price
of the Common Stock on that date was $27 per share. All of the corporate events discussed
in this response have been disclosed by the Company in either the Form 10-K or in other
filings made with the Commission. All of the Company’s officers and directors entered into
lock-up agreements in connection with the Merger and were restricted from selling more than
10% of their holdings in the Company. To the Company’s knowledge, none of the Company’s
officers or directors sold any shares of Common Stock during fiscal year 2007.

    6.

    You state in Note 5 and on pages 56-57 that you used various methods to determine the fair
value of your common stock. It appears as though your stock was trading prior to the March
12, 2007 date that it was listed on the American Stock Exchange. In addition, it appears you
used the $5 per share offering price in October 2007 to value equity issuances granted before
that including for issuances during the third quarter ended September 30, 2007 even though
there was a trading price of your stock during that period. Please tell us how your use of
valuation methods during the first and third quarters of 2007 rather than the trading price of
your stock to value equity issuances for compensation expense/consulting expense, etc.
complies with FAS 123R.

    RESPONSE: Prior to March 12, 2007, the Common Stock was quoted on the OTCBB. On March 12,
2007, the Common Stock was accepted for listing on the American Stock Exchange (the “AMEX”).
During the quarter ended March 31, 2007 (the “First Quarter”), more than 99% of the
outstanding shares of Common Stock were restricted or otherwise subject to contractual
lock-up agreements, and were not available for sale in the public market, the number of
trades in the public market were infrequent and the average daily volume was very low. The
average daily trading volume of the Common Stock during the First Quarter was 983 shares,
with a value of approximately $22,000 (representing approximately 0.001% of the Company’s
market capitalization at the time). There were 22 days during the First Quarter in which
there were no trades of the Common Stock at all. During the First Quarter, the closing
price of the Common Stock ranged from $15.75 to $31.32, reflecting market capitalizations
well in excess of the valuation of Protalix Ltd. prior to the Merger. The Company does not
believe that there was any business or clinical development justifying the increase in its
valuation. In preparing its quarterly financial statements for the First Quarter, the
Company determined

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    that it was not appropriate to use the quoted price of the Common Stock to establish the
fair value of the options granted to the Company’s consultants and non-employees because the
prices quoted did not reflect an active market for the Common Stock. In lieu of the prices
quoted on the OTCBB, and later reported by the AMEX, the fair value was established by the
Company’s management in good faith, based on a retrospective valuation of the fair value of
the Common Stock at the end of the First Quarter and in consultation with a third-party
specialist. The Company decided that too much time had passed since the last financing by
Protalix Ltd. in August 2006 for the Company to use the valuation to calculate fair value.
Rather, the Company based its valuation on the valuation of Bio-Cell Ltd., an Israeli public
company traded on the Tel-Aviv Stock Exchange (“Bio-Cell”). As of March 31, 2007, Bio-Cell
held approximately 20% of the outstanding shares of the Company’s Common Stock and did not
have any other significant assets other than its interest in the Company. The Company’s
management took the position that there was an active market in Bio-Cell’s shares as the
average daily trading volume of Bio-Cell’s shares on the Tel-Aviv Stock Exchange was