Protalix BioTherapeutics, Inc.

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

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

The Company’s commercial product portfolio consists of two enzyme replacement therapies (ERTs):

On March 31, 2026, following the approval of the E4W dosing regimen for Elfabrio in the EU, the Company received a $25.0 million milestone payment from its commercialization partner for Elafabrio, Chiesi Farmaceutici S.p.A. (“Chiesi”).

In addition, the Company’s product pipeline currently includes, among other candidates:

The Company is committed to leveraging its record of success as the Company develops treatments for rare and orphan diseases. In addition, the Company is continuously further developing and enhancing its ProCellEx technology. Accordingly, the Company is turning its 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. The Company currently intends to focus on treatments that will address both genetic and non-genetic diseases. The Company plans to use its ProCellEx platform and PEGylation capabilities, as well as other modalities such as small molecules and antibodies, to take advantage of highly innovative opportunities. The Company is also exploring novel platform technologies. Consistent with its strategy, the Company continuously evaluates potential strategic marketing partnerships, as well as collaboration programs with biotechnology and pharmaceutical companies and academic research institutions. Except with respect to Elfabrio and Elelyso, the Company holds the worldwide commercialization rights to its other proprietary development candidates.

Because the Company’s operations are conducted in the State of Israel, the Company’s business and operations face risks related to the military, economic, political, and geopolitical conditions in Israel. Since October 2023, Israel has suffered from missile and other similar attacks and has been engaged in military activity on a number of fronts, including with the Hamas and other terrorist groups in the Gaza Strip, with Hezbollah in Lebanon, in Iran, with the Houthis terrorist group that controls parts of Yemen, and others, and both civilian and military targets in Israel have been attacked. In addition, Israel and the U.S. have conducted strikes against Iranian military and nuclear infrastructure which involved Iranian counterattacks as well as Hezbollah attacks on Israel. These situations remain volatile, with the potential for escalation at any time. The Company’s facilities are deemed an “essential enterprise,” which means it operates or can be operated for the purposes of state defense or public security or for the maintenance of essential supplies or services, allowing the

Company to maintain operations during emergencies. The Company has elected to store manufactured drug substance in multiple locations, both within and outside of Israel, to mitigate the risk of loss. It is currently not possible to predict the duration or severity of the above conflicts or the effects of such conflicts, or any of them, on the Company’s operations. As of the issuance of these financial statements, the impacts of the military actions described above have not had a material adverse effect on the Company’s business, results of operations, and financial condition.

The Company expects to continue to incur significant expenditures in the near future due to research and development efforts with respect to its product candidates. The Company believes that its cash and cash equivalents and short-term bank deposits are sufficient to satisfy the Company’s capital needs for at least 12 months from the date that these financial statements are issued.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments (of a normal recurring nature) considered necessary for a fair statement of the results for the interim periods presented have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2025, filed by the Company with the U.S. Securities and Exchange Commission (the “Commission”) on March 18, 2026. The comparative balance sheet at December 31, 2025 has been derived from the audited financial statements at that date. There have been no material changes in our significant accounting policies as described in our consolidated financial statements for the year ended December 31, 2025.

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock, par value $0.001 per share (“Common Stock”), outstanding for each period.

In computing diluted earnings per share, basic earnings per share are adjusted to take into account the potential dilution that could occur upon: (i) the exercise of options and non-vested restricted stock granted under employee stock compensation plans using the treasury stock method; and (ii) the exercise of warrants using the treasury stock method.

Recently issued accounting pronouncements, not yet adopted

In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.

In December 2025, the FASB issued ASU 2025-10 “Government Grants (Topic 832)” to establish authoritative guidance on the accounting for government grants received by business entities. This update is effective beginning with the Company’s 2029 fiscal year annual reporting period, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11 to amend the guidance in “Interim Reporting” (Topic 270). The update provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. The ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. The Company is currently evaluating the effects that ASU 2025-11 will have on its interim consolidated financial statements and related disclosures.

NOTE 2 - INVENTORIES

Inventories at June 30, 2026 and December 31, 2025 consisted of the following:

NOTE 3 – LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT

Prior to the three months ended June 30, 2026, Protalix Ltd., the Company’s Israeli subsidiary, was required in certain circumstances to make a severance payment upon retirement of certain employees. The Company recorded the liability resulting from this obligation on its balance sheets under “Liability for employee rights upon retirement.” The Company funded this liability, in part, through the purchase of insurance policies or by the establishment of pension funds, and the amounts so funded were recorded in the Company’s balance sheets under “Funds in respect of employee rights upon retirement.” During the three months ended June 30, 2026, the Company amended its agreements with the relevant employees to be consistent with the Company’s agreements with the remainder of its employees. Giving effect to such amendments, the Company makes deposits to certain insurance companies or pension funds for accounts controlled by each applicable employee in order to secure the employee’s rights upon retirement in lieu of severance. Accordingly, the Company no longer has any remaining funds or liabilities for employee rights upon retirement recognized in its balance sheet and has no subsequent liabilities for severance. The liability accrued and the amounts funded are not recorded in the Company’s balance sheets as the amounts funded are not under the Company’s control or management, and the liability has been irrevocably transferred to the applicable insurance companies or pension funds.

NOTE 4 – FAIR VALUE MEASUREMENT

The Company discloses fair value measurements for financial assets and liabilities. Fair value is based on the price that would be received from the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

The fair value of the financial instruments included in the working capital of the Company is identical or close to their carrying value.

NOTE 5 – STOCK TRANSACTIONS

During the six months ended June 30, 2026, the Company issued, in the aggregate,145,661 shares of Common Stock in connection with the exercise of options to purchase 145,661 shares of Common Stock by certain current and former employees of the Company. The Company received cash proceeds equal to $0.2 million in connection with such exercises.

NOTE 6 – EARNINGS (LOSS) PER SHARE

Basic and diluted earnings (loss) per share attributable to common stockholders were calculated as follows:

Diluted earnings per share do not include 1,351,303 and 1,947,890 shares of Common Stock underlying outstanding stock options for the six and three months ended June 30, 2026, respectively, because the effect would be anti-dilutive.

Diluted loss per share do not include 12,936,429 shares of Common Stock underlying outstanding stock options, unvested shares of restricted stock, and warrants for the six months ended June 30, 2025, and 2,365,709 shares of Common Stock underlying outstanding stock options for the three months ended June 30, 2025, because the effect would be anti-dilutive.

NOTE 7 – TAXES ON INCOME

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 for domestic research expenditures beginning in 2025, with transition options for previously capitalized amounts.

expenses incurred outside of Israel may, under certain conditions, also qualify), effective from tax year 2026. Subject to certain conditions, eligible companies may apply the credit against Israeli income tax liabilities or the Israeli qualified domestic minimum top-up tax, or, alternatively, to receive a government grant if the credit is not utilized or if the company choose irrevocably to receive a grant instead of the credit.

The R&D Law requires income from a “Preferred Enterprise” or a “Preferred Technological Enterprise” in order to be eligible for the tax credit, and does not include reference to the historic “Approved Enterprise” track.

Following analysis, and after considering, inter alia, (i) the existing tax regime in Israel, including the benefits described above, (ii) the Company’s existing net operating loss carryforwards (“NOLs”), (iii) the ability to apply for additional governmental grants for capital investments, (iv) the short-, medium- and long-term benefits as compared with the longer-term benefit available under the Company’s current structure, and (v) the 7.5% flat tax rate applicable to “Preferred Technological Income” of a “Preferred Technological Enterprise” (“PTE”), the Company elected to waive its “Approved Enterprise” status and to have the Investment Law, as amended, apply to it under the PTE benefit track. As a result, the Company is eligible to, and intends to, file for grants under the R&D Law (as noted above, the R&D Law includes an option pursuant to which a qualifying company entitled to a tax credit that has not utilized such credit by the tax year ending three years following the year in which the related R&D activity was performed or if the Company chooses irrevocably, to receive the full amount of the unused credit as a grant payment instead of the credit).

Government grants and refundable tax credits, such as those provided under the recently enacted R&D Law, are recognized as a reduction of the related expense when there is reasonable assurance that the Company will comply with the required conditions and that the incentive will be received. For the six and three months ended June 30, 2026, the Company recorded$2.1 million as a reduction of research and development expenses and as a long-term asset.

NOTE 8 –SEGMENT INFORMATION

*Other expenses included in net income include raw materials, rent, and utilities, and others.

NOTE 9 –SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

NOTE 10 – SUBSEQUENT EVENTS

Since the end of the quarter ended June 30, 2026, the Company collected approximately $14.9 million from sales to Chiesi and approximately $1.5 million from sales to Pfizer.