Prothena Corporation plc — Q1 2024 Form 10-Q Summary
Business context and reporting period
Prothena is an Ireland-incorporated, late-stage clinical biotechnology company focused on therapeutics for neurodegenerative and rare amyloid diseases. Its wholly owned programs include birtamimab for AL amyloidosis and PRX012 and PRX123 for Alzheimer’s disease. Partnered programs include prasinezumab with Roche and BMS-986446, TDP-43 and PRX019 programs with Bristol Myers Squibb. Novo Nordisk holds the former ATTR amyloidosis business, including NNC6019, and Prothena remains eligible for contingent milestones.
This unaudited Form 10-Q covers the three months ended March 31, 2024, compared with the three months ended March 31, 2023. The company had 53.8 million ordinary shares outstanding as of May 1, 2024.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Total revenue | $0.05 million | $2.17 million | Down 98% |
| Collaboration revenue | None | $2.12 million | Down 100% |
| Research and development expense | $64.1 million | $44.8 million | Up 43% |
| General and administrative expense | $17.5 million | $13.7 million | Up 27% |
| Total operating expenses | $81.6 million | $58.5 million | Up 39% |
| Loss from operations | $81.5 million | $56.3 million | Worsened |
| Net loss | $72.2 million | $46.9 million | Worsened 54% |
| Net loss per share | $1.34 | $0.89 | Worsened |
| Net cash used in operating activities | $73.1 million | $47.5 million | Higher use |
Revenue consisted primarily of $50,000 in license and intellectual property revenue in each period. Management expects 2024 revenue to decline from 2023 because the prior year included primarily nonrecurring revenue.
Interest income was $7.2 million, up from $6.7 million, reflecting higher interest rates and cash balances invested in money market funds. The income tax benefit was $2.2 million, compared with $2.9 million in the prior-year period.
Cash and cash equivalents were $546.5 million at March 31, 2024, compared with $618.8 million at December 31, 2023. Cash, cash equivalents and restricted cash totaled $548.7 million. Working capital was $522.6 million, versus $582.4 million at year-end. The company reported no material debt; liabilities primarily comprised lease liabilities, accounts payable, accrued expenses and $67.4 million of long-term deferred revenue.
Shareholders’ equity was $502.4 million, down from $561.4 million at December 31, 2023, primarily because of the quarterly net loss. The accumulated deficit was $1.05 billion.
Material changes and operating developments
- R&D expense increased by $19.4 million, driven primarily by higher clinical trial costs for PRX012 and birtamimab, increased personnel costs and manufacturing expenses.
- Birtamimab R&D expense increased to $21.2 million from $13.8 million, while PRX012 expense increased to $37.8 million from $17.7 million.
- PRX012 Phase 1 development continued following topline data supporting once-monthly subcutaneous treatment and dose escalation.
- PRX123 received FDA IND clearance and Fast Track designation in January 2024.
- BMS initiated a Phase 2 trial of BMS-986446 in approximately 475 patients with early Alzheimer’s disease.
- Collaboration revenue from BMS was zero because all revenue related to the prior Tau US Development Services obligation had been recognized by December 31, 2023. Long-term deferred revenue remained $67.4 million for outstanding BMS rights and options.
- No ordinary shares were sold under the company’s amended at-the-market facility during the quarter. Stock option exercises generated approximately $0.9 million of proceeds.
- The former South San Francisco lease and related sublease expired in late 2023. The associated $1.4 million restricted cash balance was released in May 2024.
Guidance, outlook, risks and unusual items
Management believes existing cash and cash equivalents are sufficient to meet obligations for at least the next twelve months, but expects to require additional capital to continue development and potential commercialization. The company expects full-year 2024 net cash used in operating and investing activities of approximately $208 million to $225 million. Management expects 2024 R&D expense to be relatively flat with 2023 and G&A expense to increase, principally because of higher personnel costs and share-based compensation.
Enrollment in the Phase 3 AFFIRM-AL trial of birtamimab is described as on track. Full topline results are expected between the fourth quarter of 2024 and the second quarter of 2025. The FDA Special Protocol Assessment does not guarantee approval or a favorable outcome.
Key risks include continued operating losses, the need for additional financing and potential shareholder dilution, uncertain clinical and regulatory outcomes, reliance on Roche, BMS and Novo Nordisk, third-party clinical and manufacturing providers, intellectual property challenges, supply-chain disruptions, cybersecurity and data-privacy risks, geopolitical and site-level clinical-trial disruptions, and market and interest-rate volatility. The company has not received regulatory approval for any drug candidate and has no product sales.
Contractual obligations at March 31, 2024 included $14.3 million of operating lease commitments, $11.4 million of non-cancelable purchase obligations and $0.3 million of license-related obligations. No material legal proceedings were reported. Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting.
Several officers and directors adopted or maintained Rule 10b5-1 trading arrangements covering potential sales of company shares. The filing also notes that the SEC’s climate disclosure rules were stayed and that the company is evaluating applicable accounting and disclosure updates.
Most important facts for investors to verify
- Whether AFFIRM-AL enrollment remains on track and whether topline data are delivered within the stated fourth-quarter 2024 to second-quarter 2025 window.
- The company’s actual quarterly cash burn, remaining cash runway and timing and terms of any future equity, debt or collaboration financing.
- Progress, safety and efficacy data for PRX012, PRX123 and other wholly owned programs.
- BMS and Roche development decisions, including progress for BMS-986446 and prasinezumab and any related milestone or royalty potential.
- Whether Novo Nordisk achieves development or commercial milestones that could generate additional payments, which remain contingent and are not included in current revenue.
- The sustainability of the company’s cash-equivalent balances, including exposure to uninsured bank deposits and money market funds.
- Potential dilution from the $250 million at-the-market facility, outstanding options and future capital raises.
- Third-party manufacturing capacity, clinical supply continuity and intellectual property protection for key drug candidates.