A month has gone by since the last earnings report for Prothena (PRTA). Shares have lost about 12.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prothena due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Prothena Reports Narrower-Than-Expected Loss in Q3
Prothena reported loss of 70 cents per share for third-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of $1.05 and the year-ago loss of $1.37.
Quarterly revenues came in at $0.25 million, missing the Zacks Consensus by 2.67%. However, revenues reported were up from $0.22 million in the year-ago quarter. Revenues mainly came from the company’s collaboration with Roche Holdings.
The company’s shares have lost 65.3% in the year so far, worse than the industry’s decline of 15.9%.
Quarter in Detail
R&D expenses were $18.5 million, down 55.2% year over year, primarily due to lower product manufacturing expenses and lesser extent lower clinical trial costs.
General and administrative (G&A) expenses came in at $9.2 million, down from $12.4 million in the year-ago quarter.
As of Sep 30, 2018, Prothena had $455.6 million in cash, cash equivalents and restricted cash.
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.
Also, 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. The company expects pharmacodynamic data from the lower doses of this study in 2019.
Prothena has 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 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 likely to initiate cell line development of a lead candidate in 2019.
Prothena entered into a multi-target license and option agreement with Bioasis Technologies Inc. Per the terms, Prothena will make an upfront payment of $1 million to Bioasis. In exchange, Prothena will explore the application of Bioasis’s xB3 platform technology to increase the delivery of therapeutics across the blood-brain barrier (BBB) for neuroscience disorders. Moreover, the company has the option to exercise exclusive worldwide rights to additional therapeutic products incorporating Bioasis’s BBB technology for neuroscience targets.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -52.38% due to these changes.
Currently, Prothena has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Prothena has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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