Protalix BioTherapeutics (NYSEMKT:PLX) just hit a home run. The Israel-based biopharmaceutical company announced on Thursday that its Elelyso drug received marketing authorization in its home country. The Israeli Ministry of Health granted approval for use of the drug in the long-term treatment of adults with type 1 Gaucher disease. 

Why Israel matters
Does gaining approval in Israel really matter? After all, the nation barely nudges its way into the top 100 most-populated countries in the world. The answer to the question, though, is "yes." The approval by the Israeli Ministry of Health does matter to Protalix for a couple of reasons.

First, the company only owns full rights to Elelyso in one country. Guess which country that is. Pfizer (NYSE:PFE) bought an exclusive license to market the drug worldwide -- except for Israel. While Protalix receives 40% of net profits from Pfizer's sales, the company doesn't have to share profits for sales in Israel.

Second, Gaucher disease is a rare inherited disease that affects only about 10,000 people in the world. Type 1, the most common form of Gaucher disease, occurs at higher frequencies in individuals with Ashkenazi Jewish ancestry.

Although Israel has a relatively small population overall, it claims one of the largest Jewish populations in the world along with the U.S. Ashkenazi Jews make up the biggest Jewish demographic group in Israel.

The Israeli approval followed bad news elsewhere. In June, the Committee for Medicinal Products for Human Use recommended against approval for sale of Elelyso in Europe. The committee's decision stemmed solely from orphan market exclusivity previously granted to the VPRIV Gaucher disease drug made by Shire PLC (NASDAQ: SHPG).

Elelyso received FDA approval for sale in the U.S. in May, though. Pfizer and Protalix have also filed marketing authorization applications in Brazil and Australia. 

Protalix benefited from other good news recently. Sanofi (NASDAQ:SNY) announced that it was delaying shipments of Cerezyme, another drug used to treat Gaucher disease, because of supply constraints. 

Although Elelyso is its only drug currently on the market, Protalix hopes for success elsewhere in its product pipeline. It received clearance from the FDA in August for the initiation of phase 1 and 2 studies of PRX-102, a drug targeting treatment of Fabry disease. The company also collaborates with Teva Pharmaceuticals (NYSE:TEVA) in development of other therapeutic proteins.

Investors should keep their eyes on trends with short interest in small-cap biotech firms like Protalix. While the short-sellers can be totally off-base at times, a significant trend one way or the other in short interest can be revealing.

In the case of Protalix, bets against the stock are on a slight downswing. Short interest is down around 5% in the past month and down more than 12% since May 31.

With the good news in Israel and supply shortages for Sanofi, Protalix stock should be poised for some upward movement. My hunch is that the stock, as it stands now, could be a solid single for investors. On the other hand, Protalix might be a good fit with acquisition plans for a major player like Pfizer. If that happens, shareholders will be the ones scoring the home run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.