Prothena (PRTA) Tumbles 18% In A Year: What Lies Ahead?

Shares of Prothena Corporation (NASDAQ:PRTA) lost 18.1% over a year as against the industry’ gain of 3.1%.

The company suffered a setback in 2017 when the company decided not to continue with the development of psoriasis candidate, PRX003. Although the primary objectives of a phase Ib multiple ascending dose (MAD) study on PRX003 were achieved, advancing PRX003 into mid-stage clinical development required a well-defined relationship between biological activity and meaningful clinical effects and these prerequisites were not met. As a result of failed data on PRX003, Prothena will focus on advancing NEOD001 (phase IIb and phase III), PRX002 (phase II) and PRX004 (expected to enter phase I by mid-2018).

The company is evaluating its lead candidate NEOD001 in the phase III VITAL Amyloidosis study in newly diagnosed treatment-naïve patients with AL amyloidosis and cardiac dysfunction. Enrolment has been completed in the VITAL study. Prothena is also evaluating the candidate in a phase IIb study, PRONTO, in previously treated patients with AL amyloidosis and persistent cardiac dysfunction. The company completed enrolment in this study and top-line results from the study are expected following the 12-month study period in the second quarter of 2018.

Prothena is evaluating PRX002, in collaboration with Roche Holdings (OTC:RHHBY) for the treatment of Parkinson’s disease and other related synucleinopathies. The company initiated a phase II study, PASADENA, on PRX002, in patients suffering from Parkinson`s disease which led to a $30-million milestone payment from Roche to Prothena. The study is continuing enrolment.

While the pipeline progress is encouraging, the company depends heavily on the success of its two candidates.

Moreover, Prothena is highly dependent on its collaboration partners for the development of its candidates. The company itself does not have enough resources to conduct studies on its candidates independently. Hence, if any of its partners terminates a deal or fails to develop a candidate successfully or receive regulatory approvals for the same, Prothena’s growth prospects will be severely hampered. Moreover, these agreements are the only source of funds for the company.

Moreover, Prothena’s NEOD001 is likely to face competition from other therapies upon approval. In addition, Alnylam Pharmaceuticals (NASDAQ:ALNY) is evaluating patisiran for the treatment of hereditary targeting transthyretin (TTR)-mediated amyloidosis (hATTR amyloidosis) patients with polyneuropathy (hATTR-PN; also known as familial amyloidotic polyneuropathy/FAP).

Zacks Rank & Key Pick

Prothena currently carries a Zacks Rank #4 (Sell).

A better-ranked health care stock in the same space is Exelixis, Inc. (NASDAQ:EXEL) . The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Exelixis’ earnings per share estimates have moved up from 72 cents to 73 cents for 2018 over the last 60 days. The company delivered a positive earnings surprise in the last four quarters, with an average beat of 572.92%.

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