Prothena is a US-based biotechnology company focused on discovering, developing and commercialising therapies directed specifically to disease-causing proteins. I’ve known the company and its management team very well since it spun out of Elan in 2012. In fact, as a shareholder in Elan for several years prior to Prothena’s spin-off, my knowledge of its technology pre-dates its existence as a standalone company.
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. The company is developing 3 main therapies, each in multi-billion dollar indications.
Prothena’s lead asset, NEOD001, is a potential therapy for AL Amyloidosis, an orphan disease caused by the accumulation of certain misfolded and inherently toxic proteins, which can negatively affect the functioning of human organs. In July, Prothena released very compelling clinical data from its phase I/II extension study in previously treated patients, which confirmed further evidence of both safety and efficacy of the treatment. Most encouragingly, however, the drug has demonstrated excellent response rates in the cardiac, renal and external nervous systems – the three organ systems most impacted by the disease. Indeed, the lead investigator from the Mayo Clinic, a globally acclaimed medical centre, described the consistent cardiac and renal response rates as unprecedented. The company’s NEOD001 programme is expected to complete its phase IIb study in early 2018, followed by results from the confirmatory phase III study in newly diagnosed patients. Based on the compelling early signs of efficacy and the design of the ongoing phase IIb study, I am very confident that Prothena’s potential treatment for AL Amyloidosis can be a huge success, both commercially and in changing patients’ lives for the better.
The company’s second pipeline asset is PRX002, a potential therapy for treating Parkinson’s disease which is being developed in partnership with Roche. Earlier this month, the company announced highly encouraging data from its phase Ib study, which demonstrated that the antibody is safe and, importantly, that it can reach the brain. Current treatments for Parkinson’s are limited in that they only tackle the symptoms of the disease because it has thus far been impossible to get drugs into the brain to treat the causes of the disease. This is still an early-stage asset but, demonstrating that PRX002 can reach the brain therefore makes it a potentially disease-modifying therapy for a terrible condition that affects millions of patients around the world.
Prothena’s pipeline also includes PRX003, a potential treatment for psoriatic arthritis, a debilitating condition which manifests through painful joint inflammation. The company has recently announced its plans to progress PRX003 into phase II following positive results from earlier clinical trials.
Overall, the progress Prothena has made in recent years is incredibly exciting. I have been impressed by the company’s ability to identify proteins of interest and neatly execute the early-stage development of its potential therapies in a relatively short time-frame. The speed with which it has identified and progressed the three assets currently under development suggests that there could be more to follow in time.
Prothena has been a position in the Woodford Patient Capital Trust since it launched and, thus far, it has been the greatest positive contributor to performance. Looking even further back, since the first patient dosed in its first in-man study for NEOD001 in late April 2013, the share price has risen by over 700% in dollar terms (significantly more in sterling terms) 1.
The company’s extraordinary progress and its positive share price performance are the principle reasons why its position has grown so significantly, making it the biggest position I’ve ever held in percentage terms, in any portfolio. I believe strong performers should be allowed to run in a portfolio and continue to view Prothena’s weighting as appropriate, in the context of the trust’s mandate and the considerable conviction that I have in the investment case.
Looking forward, Prothena’s commercial prospects look more compelling than ever before. From a fundamental perspective, the AL Amyloidosis opportunity on its own, would warrant a valuation far above that of today’s, in my view. Indeed, given the pace at which the company has developed its Parkinson’s and psoriatic arthritis programmes recently, the size of those commercial opportunities could also justify an investment in Prothena in their own right too.
In the world of equity investment, nothing is certain, but I am convinced that this business is poised to deliver incredibly attractive long-term returns to its shareholders and to improve the lives of patients suffering from these awful, debilitating diseases.