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Why Is Prothena (PRTA) Up 12.6% Since Last Earnings Report?

Zacks Equity Research
In the latest trading session, Advanced Micro Devices (AMD) closed at $33.85, marking a -1.57% move from the previous day.

A month has gone by since the last earnings report for Prothena (PRTA). Shares have added about 12.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Prothena due for a pullback? 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 drivers.

Prothena’s Q4 Earnings Beat, Revenues Miss Estimates

Prothena 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.

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  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’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.

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.

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 -15.53% due to these changes.

VGM Scores

Currently, Prothena has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest 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.

Outlook

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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