There is a significant margin for success (for NEOD001) on the primary endpoint despite all the recent noise.15 February 2018
US-based biotechnology company, focused on discovering, developing and commercialising therapies directed specifically to disease-causing proteins. The company has a technology platform and a world-leading specialism in misfolding proteins, which are implicated in a number of different neurological disorders.
This research platform has been validated by two major pharmaceutical companies – Roche (which is partnering Prothena in PRX002 in Parkinson’s disease, currently in Phase II trials) and Celgene (which has recently collaborated with Prothena on three earlier stage clinical assets). The company also has its own, unpartnered assets including PRX004 (currently enrolling patients with ATTR amyloidosis in a Phase I study) and other preclinical assets. With more than $400m on its balance sheet, the company is very well-funded and has enough cash to see it through its major milestones.
Investment case summary
The position in Prothena is the product of a long-standing relationship with the company and its management team, which pre-dates its existence as an independent company (it was spun out of Elan in 2012 at a share price of c. $7 and it has been invested in the funds managed by Neil Woodford ever since). We rate the Prothena management team, and its expertise in misfolded proteins and central nervous system biology, highly.
In April 2018, Prothena confirmed that the Pronto trial in its lead asset, NEOD001, had failed to meet its primary endpoint. The company immediately halted all spending on the asset. Prothena can no longer be viewed as a late-clinical-stage biotechnology company, therefore, but it still has an early and mid-stage clinical pipeline, including two programmes in partnership with major pharmaceutical companies. The company’s current market cap is barely higher than the value of the cash on its balance sheet, implying that the market does not believe it will generate any value from its technology. We have a different view and, although we acknowledge that the failure of NEOD001 was a disappointment, we continue to see an opportunity for significant long-term growth, as the company advances its neuroscience pipeline.
|Income Focus Fund||1.07%|
|Equity Income Fund||1.50%|
|Patient Capital Trust||2.36%|
As at 30 November 2018
I rate the Prothena team very highly – it’s expertise in misfolded proteins and central nervous system disease biology is in my view second to none.22 November 2017
My high conviction in Prothena’s long-term prospects is based upon a solid grasp of the fundamentals of the business and confidence in a leadership team that has repeatedly demonstrated the ability to discover and develop novel drugs.17 November 2016