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Prothena's (PRTA) Q4 Earnings Beat, Revenues Miss Estimates

Zacks Equity Research

Prothena Corporation PRTA reported mixed results for the fourth quarter of 2018. The company reported a loss of 56 cents per share, narrower than the Zacks Consensus Estimate of a loss of 96 cents and the year-ago loss of $1.24.

Quarterly revenues came in at $0.19 million, missing the Zacks Consensus of $0.28 million. However, revenues were down from $0.22 million in the year-ago quarter. Revenues mainly came from the company’s collaboration with Roche Holdings RHHBY.

The company’s shares have lost 12.1% in the past six months compared with the industry’s decline of 11.8%.

 

Quarter in Detail

R&D expenses were $16.5 million, down 50.7% year over year, primarily due to lower product manufacturing expenses, reduced clinical trial costs, and decreased personnel and consulting costs.

General and administrative (G&A) expenses came in at $8 million, down from $14 million in the year-ago quarter.

As of Dec 31, 2018, Prothena had $427.6 million in cash, cash equivalents and restricted cash.

Pipeline Updates

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 ongoing and data from the study is expected in 2020.

Also, Prothena initiated a phase I study on PRX004 in patients with hereditary ATTR amyloidosis in the second quarter of 2018. The study continues to enroll patients.  Preliminary data from lower dose cohorts, including safety, tolerability and pharmacodynamics, are expected in the fourth quarter of 2019.

Prothena has a global neuroscience research & development collaboration with Celgene Corp. CELG 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 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 and report preclinical data in the fourth quarter of 2019.

Prothena entered into a multi-target license and option agreement with Bioasis Technologies Inc. Per the terms, Prothena made an upfront payment of $1 million to Bioasis. Prothena is currently exploring the application of Bioasis’ 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.

2018 Results

Revenues came in at $0.9 million, missing the Zacks Consensus Estimate of $1 million. Loss per share of $3.93 was narrower than the Zacks Consensus Estimate of a loss of $4.38.

Our Take

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

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 one. Hence, investors will now focus on the ongoing phase II study on prasinezumab, though results from the mid-stage study on this candidate is not expected before 2020.

Zacks Rank & Stock to Consider

Prothena currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector is Bristol-Myers Squibb BMY, which sports a Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bristol-Myers’earnings per share estimates have increased from $4.07 to $4.16 for 2019 in the past 60 days. The company delivered a positive earnings surprise in all the trailing four quarters, with average of 14.26%.

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