We have just heard from Prothena that the Pronto trial, investigating NEOD001 in AL Amyloidosis, has not met its primary endpoint. This is an extremely disappointing outcome and one which has surprised the company, with a much bigger and more significant placebo effect being observed than anything seen in prior trials would have suggested. As a result, Prothena has announced that it will halt all spending on NEOD001 immediately, including the termination of the ongoing Vital study, which had been due to read-out next year.
Over recent months, Prothena’s share price has been volatile with the market pricing in the prospect of a trial failure but, despite this, we should expect the market to react badly in the short term to today’s announcement. We have always been clear why we have backed Prothena and, given the positive progress throughout the development of this drug, we have been increasingly confident it would be successful. Such trial results are symptomatic of early-stage investing, however, and with specific regard to biotech companies, trial outcomes are binary. Nevertheless, the result of this trial is undoubtedly a blow and we will be working with the company and its management team on its strategy beyond Pronto.
Prothena has options. It 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). 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.
The market may not acknowledge the monetary value of these attractions in the near term, but they are important valuation anchors for us, which allow us to maintain conviction in the long-term investment case, as Neil explains in the video below.