Prothena Corporation PLC (NASDAQ:PRTA) shares plunged on Monday as the US biotech scrapped the further development of its lead drug after it failed in a crucial mid-stage study.
Dublin-based Prothena had high hopes for its treatment for AL amyloidosis – a rare disease that impairs proper tissue function and can lead to organ failure – but said Monday the drug missed both its primary and secondary endpoints.
'Deeply disappointed'
Given the results of the Phase IIb study, the company has axed all further development of the antibody drug, including a planned Phase III trial.
“We are deeply disappointed by this outcome, particularly for patients suffering from this devastating disease," said Chief Executive Gene Kinney said in a statement on Monday.
“We are surprised by the results from these two placebo-controlled studies and will continue to analyze the resulting data to share insights with our collaborators in the scientific, medical and advocacy communities.”
There is currently no cure for AL amyloidosis and NEOD001 had been granted orphan drug status by the US Food and Drug Administration and the European Medicines Agency to try to speed up the approval process.
Short-sellers set to profit
But several short-sellers – including Kerrisdale Capital and muddy Waters – had taken aim at Prothena, believing that the drug would ultimately fail and they are now set to profit from today’s share price fall.
Analysts have commented that the failure of NEOD001 was the worst-case scenario, with many suggesting the shares could fall to the level of cash.
Prothena has around US$480mln in the bank, which would work out to around US$12 a share.
In early deals on Monday, the stock was down 69% to US$11.41; only a couple of weeks ago, it was trading at more than US$40.