Prothena (PRTA) Reports Wider-than-Expected Loss In Q1

Prothena Corporation plc (NASDAQ:PRTA) reported a loss of 81 cents per share in the first quarter of 2016, much wider than both the Zacks Consensus Estimate of a loss of 70 cents and the year-ago loss of 55 cents. A significant increase in R&D expenses led to the wider loss.

Quarterly revenue came in at $0.3 million, down 55% from the year-ago quarter, and consisted entirely of collaboration revenues. The plunge was mainly due to higher collaboration revenues recognized in the year-ago quarter from the agreement with Roche Holding (SIX:ROG) AG (OTC:RHHBY) .

Quarter in Detail

Research and development (R&D) expenses were $20.5 million, up a substantial 93.8% year over year primarily due to increased expenses related to pipeline development, manufacturing, and higher personnel costs.

General and administrative (G&A) expenses were $7.2 million, reflecting a 42.2% year-over-year rise. The increase was primarily due to higher personnel costs.

During the quarter, Prothena completed a successful public offering of shares and generated net proceeds of $128.6 million through the issuance of approximately 2.6 million ordinary shares.

Pipeline Update

Prothena continues to progress with the candidates in its pipeline. The company initiated a randomized, registration-directed, global phase IIb trial, PRONTO, on NEOD001 in previously-treated patients with AL amyloidosis and persistent cardiac dysfunction. Top-line results from the trial are expected in late 2017 or early 2018.

Meanwhile, NEOD001 is also being evaluated in the phase III VITAL Amyloidosis study in newly diagnosed treatment-naïve patients with AL amyloidosis and cardiac dysfunction. Patient enrollment in the study is expected to be complete in the second quarter of 2017.

The company also initiated a double-blind, placebo-controlled, multiple ascending dose phase Ib study on PRX003 in patients with psoriasis. Top-line results from the study are expected in the second half of 2017. In addition, the company is evaluating PRX003 in a phase I single ascending dose study in healthy volunteers for the treatment of inflammatory diseases, including psoriasis. Data from the study are expected in the second quarter of 2016.

Moreover, Prothena is evaluating PRX002 in a phase I study in collaboration with Roche for the treatment of Parkinson’s disease and other related synucleinopathies. Top-line data from the study are expected in the fourth quarter of 2016.

2016 Outlook

Prothena expects 2016 net cash burn from operating and investing activities in the range of $105–$115 million.

Our Take

The wider-than-expected loss in the first quarter was disappointing. Nevertheless, the company’s efforts on developing its pipeline are encouraging. We expect investor focus to remain on further updates from its late-stage candidate, NEOD001.

Prothena currently carries a Zacks Rank #4 (Sell). A couple of better-ranked stocks in the healthcare sector are Shire plc (NASDAQ:SHPG) and Nektar Therapeutics (NASDAQ:NKTR) . Both the stocks carry a Zacks Rank #2 (Buy).