Prothena’s Pronto failure raises pipeline doubts

Prothena’s AL amyloidosis project NEOD001 is undoubtedly dead. The question now is whether its failure is bad news for the company’s remaining pipeline assets, which also rely on targeting misfolded proteins (see table below).

The fact that one of Prothena’s most significant investors, Neil Woodford, has rushed to the group’s defence might provide little comfort to its backers, as his involvement in biotechs is now seen by some as the kiss of death. Despite his protests about Prothena’s remaining attractions, investors piled out of the company today, sending its stock down 69% this morning.

Celgene, which signed up three of Prothena’s preclinical assets last month for a cool $150m up front, is no doubt kicking itself that it did not wait a few more weeks and save itself some money (Amid mounting questions, Celgene keeps spending, March 21, 2018). Still, at least these projects, which take aim at tau, TDP-43 and an undisclosed target in neurodegeneration, are still standing, something that cannot be said for NEOD001.

Prothena’s lead candidate is heading for the scrapheap after the failure of the phase IIb Pronto trial in AL amyloidosis, which prompted the discontinuation of its phase III study, Vital, on the advice of an independent data monitoring committee. EvaluatePharma sellside consensus had forecast 2022 NEOD001 sales of $436m.

Prothena’s next most-advanced candidate, PRX002, has no forecasts attached, and in any case most of any proceeds from this project will go to Prothena’s partner Roche under a 70/30 US profit split arrangement.

The Pasadena trial of PRX002, which is being led by Roche, has a primary completion date of March 2020, according to Clinicaltrials.gov.

Meanwhile, Prothena has a wholly owned project, PRX004, which is due to start phase I soon in the increasingly competitive field of hereditary amyloidosis. The rest of its projects are still at the discovery stage.

Prothena executives, speaking on a conference call today, were adamant that NEOD001’s failure would not have a knock-on effect on its pipeline, particularly PRX004.

The group’s chief scientific officer, Wagner Zago, pointed out that amyloid diseases were “caused by different proteins that aggregate differently and cause pathology in different ways”. Still, with results some way off, it will be a while before this is put to the test.

What next for Woodford?

NEOD001’s failure will be particularly hard for Mr Woodford’s biotech fund, Woodford Patient Capital Trust (WPCT). Even before today’s blow-up the fund was nursing heavy losses from ill-chosen investments like Northwest Biotherapeutics and Circassia, and it came bottom of all biotech-focused investment trusts last year.

But Mr Woodford had spoken out in Prothena’s defence even as other investors abandoned the stock after delays in trial readouts and the untimely resignation of Prothena’s chief medical officer. That Celgene was willing to do a deal with Prothena worth $150m up front, albeit not for NEOD001, but before the Vital and Pronto readouts, suggested that Mr Woodford might have been vindicated.

Today it is back to business as usual for WPCT, with a video on the investor’s website showing Mr Woodford, once hailed as one of the UK’s top investment gurus, bemoaning the Pronto failure as “a surprise”. In its mid-2017 report WPCT reported that Prothena comprised 14.3% of the assets it held.

It is not clear what happened to WPCT’s stake when the Celgene deal was done in March, but the share price surge might have provided an excellent opportunity to start selling it down. That said, in today’s video Mr Woodford insisted: “We will remain supporters of this business.”

WPCT’s Prothena stake had been built up at an average price of around $40 per share, and Mr Woodford separately held Prothena via other investment vehicles. After today’s collapse, which saw Prothena hit lows of $12, it is hard not to see the Pronto failure as a disaster for the company and for Mr Woodford alike.