Prothena

Description

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.

Ask a question about our investment in Prothena

Fund exposure
Income Focus Fund 1.23%
Equity Income Fund 1.70%
Patient Capital Trust 2.34%

As at 28 February 2019

Segmentation
Geography United States
Industry Health Care
Themes Healthcare innovation

Source: Woodford

Commentary

WPCT 2017 annual report case study

Treating the untreatable

Degenerative diseases such as Alzheimer’s, Parkinson’s and Huntington’s are caused by the body’s once-healthy proteins and cells breaking down, taking on different shapes and becoming toxic. This is Prothena’s focus – researching and developing drugs for diseases, many of which are currently untreatable, caused by these misfolded proteins and cell adhesion disorders.

Spun out of Elan in 2012, the company’s leading drug development candidate was for AL amyloidosis, a rare and often fatal organ disease affecting fewer than 10,000 patients a year. It announced in April 2018 that its Pronto trial, investigating NEOD001 in AL amyloidosis, was unsuccessful. As a result, Prothena has halted all spending on NEOD001 immediately, including the termination of the ongoing Vital study, which had been due to read-out next year.

The company still has an early and mid-stage clinical pipeline. It 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, in a deal potentially worth $2.2bn). The company also has its own, unpartnered assets about to enter the clinic and, with more than $500m on its balance sheet, it is very well-funded.

24 April 2018

Read the full report

Pronto trial

We have just heard from Prothena that the Pronto trial has not met its primary endpoint.

Neil Woodford
23 April 2018

Collaboration with Celgene

Yesterday, Prothena announced a global collaboration with the US biotechnology company, Celgene, for novel therapies for patients with neurodegenerative diseases. The deal involves an upfront cash payment of $100m plus a $50m equity investment from Celgene. Beyond that, there are potential milestone payments, plus royalties once the therapies are commercialised.

The multi-year agreement focuses on three preclinical programs and Prothena remains responsible for all development through to and including Phase 1 studies. Beyond that, Celgene must opt-in, with additional milestone payments along the way to keep the rights (up to $133m per target) – once Celgene have opted-in, it becomes responsible for all subsequent development.

This is a hugely validating deal for Prothena, which represents the successful monetisation of some of its lower-profile, earlier-stage assets. The total long-term value of the upfront payment and milestones could be in excess of $2bn before any royalties on future sales are taken into consideration. This compares to Prothena’s current market cap of $1.3bn (it has more than $400m of cash on its balance sheet already).

Prothena’s neuroscience expertise has always been a key element of my investment thesis. This significantly value-accretive deal acknowledges that expertise and cleverly monetises part of its pipeline to which the market had, until now, ascribed no value. In my view, this collaboration with Celgene, a leading and innovative US biotech, is a meaningful endorsement of Prothena’s research and development engine. We now look forward to the read-out of the company’s Pronto trial, which is due imminently.

Neil Woodford
21 March 2018

Brief thoughts on full year results

Financial results are typically not that relevant for biotechnology companies that are yet to generate meaningful revenues, let alone profits but they are often an opportunity to update investors on the business’s progress. In doing so, Prothena has today provided an encouraging update, reiterating that the Pronto study for NEOD001 (its main asset) is on track to report top-line data in the second quarter of 2018. No external factors can affect that now.

In anticipation of a positive read-out, there has been increasing operational readiness within the business, with Prothena spending more on building the necessary commercialisation infrastructure and hiring experienced individuals for key positions, including safety, quality, manufacturing and commercial. Meanwhile, PRX002, the company’s potential treatment for early Parkinson’s disease which is being developed in collaboration with Roche, is progressing well, with patient enrolment for its phase II Pasadena study continuing.

The company also took the opportunity to provide more detail on the recent departure of its chief medical officer but this doesn’t have any impact on the Pronto / Vital trials, as these studies were designed before Sarah Noonberg joined, nor on the broader investment case in Prothena.

Although we expect the company to raise some cash to commercialise NEOD001, with more than $400m of cash on its balance sheet at the end of December 2017, Prothena is in a very good financial position. Overall, the results were positive and, despite the shares’ recent volatility, our conviction in the investment case for Prothena remains as strong as ever.

Saku Saha
15 February 2018

Neil's View

There is a significant margin for success (for NEOD001) on the primary endpoint despite all the recent noise.15 February 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

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

© 2019 Woodford Investment Management Ltd.
All rights reserved.

Are you sure?

By disagreeing you will no longer have access to our site and will be logged out.

Privacy Preference Center

Experience Tracking

Lets our analytics service track you across our different websites and enables data sharing among our different marketing tools.

AMCV_[Tracker ID]@AdobeOrg (Adobe), [Tracker ID]@AdobeOrg (Adobe)
Adobe Analytics (helps us provide you with more relevant experiences and content based on your likely interests). Cookies: demdex, dextp, dpm, DST, DSTJS
Twitter personalisation (by better understanding how devices are related, Twitter can use information from one device to help personalize the Twitter experience on another device). Cookies: personalization_id
Heap Analytics (provides metrics on user behaviour and actions throughout the site). Cookies: _gid, _hp2_id.[Tracker ID],_hp2_props.[Tracker ID], _ga, _mkto_trk, optimizelyBuckets, optimizelyEndUserId, optimizelySegments, raygun4js-userid, _attribution_referrer, _csrf
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: _tmae ,ev_sync_dd,ev_sync_yh,everest_g_v2,gglck

Traffic Metrics

Allows Woodford to aggregate information on website usage and popular content

_ga, _gid
Google Analytics (tracks and reports website traffic and user behaviour): Cookie: CONSENT
New Relic (application and server performance monitoring – allows us to spot problems with our website code and improve them to keep things running smoothly). Cookie: JSESSIONID
Adobe Analytics (provides you with more relevant experiences and marketing messages based on your likely interests). Cookies: __qca,__smToken, _ga, _mkto_trk, _rtbmedia

Search History

Populates the 'recent searches' section of the website navigation.

wf__recent_searches_untracked

Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?