UPDATE 3-Protalix drug success puts new pressure on Genzyme

* Company says drug could be approved in mid-2010

* Drug would compete with Genzyme’s Cerezyme

* Shares rise nearly 9 percent (Updates with comments from analysts, CEO)

BOSTON, Oct 15 (Reuters) - Israeli biotechnology company Protalix Biotherapeutics Inc PLX.A said on Thursday its experimental drug to treat Gaucher disease, a rare genetic disorder, was successful in a late-stage clinical trial.

If approved, the drug, Uplyso, would compete with Genzyme Corp's GENZ.O biggest-selling drug, Cerezyme.

Protalix, whose shares rose nearly 9 percent, said it expects to complete its marketing application with the U.S. Food and Drug Administration by the end of this year, and could have the drug on the market by mid-2010.

The company said it will have enough capacity to supply 1,000 patients at launch. Gaucher is a rare disease that affects about 5,000 people around the world. Sales of Cerezyme were $1.2 billion last year.

Protalix said it is expanding its manufacturing capacity and will have enough product to supply 2,500 patients by the end of next year.

Patients with Gaucher are deficient in an enzyme that breaks down a certain type of fat molecule, leading to potentially deadly organ damage. To date, Cerezyme has been the world’s dominant supplier.

But a viral contamination at Genzyme's manufacturing plant in Boston earlier this year has caused shortages of Cerezyme, which prompted the U.S. Food and Drug Administration to allow Protalix and British drugmaker Shire Plc SHP.L to supply patients with their own drugs before they have received official approval.

“We see Shire and Protalix as real competitors in the space and remain skeptical that Genzyme will be able to win back all of its patients once its manufacturing issues are resolved,” said Geoffrey Meacham, an analyst at J.P. Morgan.

Protalix, which makes its product using genetically engineered carrot cells, said a late-stage, Phase III trial of Uplyso, which is known generically as taliglucerase alfa and was previously referred to as prGCD, reduced spleen volume by a statistically significant amount after nine months.

The differences were experienced by patients who took a higher dose of 60 units per kilogram, as well as patients who took a lower dose of 30 units per kilogram.

Most biotech drugs are produced using mammalian cells. Investors have been watching to see if the carrot cell production method would cause patients to have a negative immune system reaction.

About 6 percent of patients developed antibodies to the drug -- compared to a rate of 15 percent for Cerezyme.

“This should remove any remaining concerns about immunogenicity potential of plant-produced protein,” said Brian Abrahams, an analyst at Oppenheimer & Co. “We believe this data validates the broad potential of Protalix’s technology platform and makes it an attractive acquisition candidate.

David Aviezer, the company’s chief executive officer, said in an interview he expects Protalix to sign a partnership agreement with another pharmaceuticals company by the end of this year.

“There is a lot of interest from what we consider good partners,” Aviezer said. “We are talking to several.”

One advantage Protalix hopes to have over its rivals is that it believes it can produce its drug cheaper. It grows its cells in disposable 800-liter bags instead of steel bioreactors, cutting down on cleaning and steaming costs.

“We expect our product to be less expensive than Cerezyme,” he said, “though we expect Genzyme and Shire to be in the market as well.”

Shares of Protalix rose 8.7 percent to $9.65 in early trading on the American Stock Exchange. Shares of Genzyme fell 4 cents to $56.45 on Nasdaq.

Additional reporting by Jennifer Robin Raj, editing by Dave Zimmerman