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Prothena (PRTA) Down 3.5% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Prothena Corporation plc (PRTA - Free Report) . Shares have lost about 3.5% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is PRTA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Prothena Q1 Loss Wider Than Expected, Sales Miss

Prothena reported a loss of $1.26 per share for the first quarter of 2018, wider than the Zacks Consensus Estimate of a loss of $1.23 and the year-ago loss of $0.99.

Quarterly revenues came in at $0.23 million, down from $0.26 million in the year-ago quarter. The Zacks Consensus Estimate was $31.45 million.

Quarter in Detail

R&D expenses were $34.7 million, up 35% year over year primarily due to due to higher consulting expenses, higher personnel costs, higher expense associated with PRX002/RG7935 and higher clinical trial costs.

General and administrative (G&A) expenses were $14.2 million, up 31.4% year over year.

Pipeline Updates

Prothena has discontinued the development of its lead pipeline candidate, NEOD001. The candidate, an antibody, was being evaluated for the treatment of AL amyloidosis. A phase IIb study, PRONTO, did not meet its primary or secondary endpoints. Hence, the company asked the independent data monitoring committee (“DMC”) of the phase III VITAL study to review a futility analysis of the ongoing VITAL study. Thereafter, the DMC recommended discontinuation of the VITAL study.

Hence, the company decided to discontinue all studies for the development of NEOD001, including the VITAL study as well as the open label extension studies.

On the other hand, Prothena is evaluating PRX002, in collaboration with Roche 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 triggered a $30-million milestone payment from Roche to Prothena. The study is continuing enrolment.

Alongside, Prothena is also working to advance PRX004 in a phase I study in patients with ATTR amyloidosis. A phase I study was initiated in the second quarter of 2018 and continues to enroll patients. Preliminary data is expected in 2019.

Prothena also entered into a global neuroscience research & development collaboration with Celgene Corporation to develop new therapies for a broad range of neurodegenerative diseases. The collaboration is focused on three targets implicated in the pathogenesis of several neurodegenerative diseases, inducing tau, TDP-43 and a third that is undisclosed. Per the terms, Prothena received a $100 million upfront payment and a $50 million equity investment by Celgene. The company is eligible to receive future potential exercise payments and milestone payments for each licensed program. Prothena is also eligible to receive additional royalties on net sales of any resulting marketed products.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. There have been two revisions higher for the current quarter compared to one lower. Last month, the consensus estimate has shifted by 26.4% due to these changes.

Prothena Corporation plc Price and Consensus

VGM Scores

At this time, PRTA has a poor Growth Score of F, however its Momentum is doing a lot better with an A. However, the stock was also allocated a grade of F on the value side, putting it in the bottom 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, PRTA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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