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Prothena (PRTA) Q2 Earnings Lag Estimates, Pipeline in Focus

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Prothena Corporation plc (PRTA - Free Report) reported a loss of 98 cents per share for the second quarter of 2018, wider than the Zacks Consensus Estimate of a loss of 88 cents and the year-ago loss of 46 cents.

Quarterly revenues came in at $0.28 million, beating the Zacks Consensus by 29.77%. However, revenues reported were down from $26.8 million in the year-ago quarter. Revenues mainly came from its collaboration with Roche Holdings (RHHBY - Free Report) .

Prothena’s stock was trading down 7.7% in after-market trading following the announcement of the results. The company’s shares have lost 61.8% in the year so far, worse than the industry’s decline of 3.2%.

 

Quarter in Detail

R&D expenses were $31.4 million, down 7.6% year over year, primarily due to lower product manufacturing expenses and a lesser extent lower clinical trial costs.

General and administrative (G&A) expenses were relatively flat at $11.0 million.

As of Jun 30, 2018, Prothena had $490.3 million in cash, cash equivalents and restricted cash (including the $100 million upfront payment received from Celgene in April 2018).

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 and the open label extension studies.

On the other hand, Prothena is evaluating prasinezumab (PRX002/RG7935) in collaboration with Roche for the treatment of Parkinson’s disease. A phase II study, PASADENA, which is being conducted by Roche among patients suffering from Parkinson`s disease is continuing enrollment. Data from the study is expected in 2020.

Alongside, Prothena initiated a phase I study on PRX004 in patients with ATTR amyloidosis in the second quarter of 2018. The study continues to enroll patients. Prothena expects pharmacodynamic data from the lower doses of this study in 2019.

Prothena also entered into a global neuroscience research & development collaboration with Celgene Corporation (CELG - Free Report) 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 from 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. The preclinical tau program is expected to initiate cell line development of a lead candidate in 2019. In addition, the preclinical Aβ (Amyloid beta) program is also expected to initiate cell line development of a lead candidate in 2019.

Our Take

The wider-than-expected loss in the second quarter was disappointing. We expect investors’ focus to remain on pipeline updates as the company has no approved product in its portfolio yet.

Prothena Corporation plc Price, Consensus and EPS Surprise

 

Prothena Corporation plc Price, Consensus and EPS Surprise | Prothena Corporation plc Quote

Prothena has discontinued the development of its lead pipeline candidate, NEOD001. The decision came as a major blow to the investors as the company has a very limited number of candidates in its pipeline and NEOD001 was a lead candidate. Hence, investors will now focus on the ongoing phase II study on prasinezumab. Results from the mid-stage study on this candidate isn’t expected before 2020 though.

Zacks Rank & Stock to Consider

Prothena carries a Zacks Rank #4 (Sell).

A better-ranked stock in the healthcare sector is Gilead Sciences, Inc. (GILD - Free Report) , which sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead’s earnings per share estimates increased from $6.10 to $6.57 for 2018 over the last sixty days. Estimates for 2019 are also up by 14 cents.

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