Prothena Corporation (NASDAQ: PRTA) is a late-stage clinical company with a pipeline of novel investigational therapeutics for the potential treatment of diseases including amyloidosis, Alzheimer’s disease, Parkinson’s disease, and other neurodegenerative diseases.

On June 7, the U.S. Food and Drug Administration (FDA) approved Biogen’s (BIIB) treatment for Alzheimer’s disease, aducanumab. Following this development, Jeffries analyst Michael Yee believes that there is potentially more value to be realized from Prothena’s therapeutic drugs for Alzheimer’s disease in the pipeline, PRX005, and PRX012.

On June 15, Jeffries analyst Michael Yee reiterated a Buy on the stock and almost doubled the price target from $38 to $75. Let us look at why Yee is bullish on the stock.

First Quarter Results

In the first quarter, PRTA reported total revenues of $0.2 million, mainly from its collaboration and license revenue from Roche (UK: 0QOK), versus revenues of $0.1 million in the same quarter last year. The company’s losses, however, widened from $23.6 million in Q1 FY20 to $36.7 million in Q1 FY21.

Prothena has entered into a licensing, development, and commercialization agreement with Roche, where PRTA has granted Roche an exclusive, worldwide license to develop, manufacture, and sell Prasinezumab, a potential treatment for Parkinson’s disease.

PRX005

PRX005 is an investigational antibody that could be a potential treatment for Alzheimer’s disease that “targets tau, a protein implicated in diseases including AD, frontotemporal dementia (FTD), progressive supranuclear palsy (PSP), chronic traumatic encephalopathy (CTE), and other tauopathies.”

Prothena is developing PRX005 as part of its global collaboration with Bristol Myers-Squibb (BMY). PRTA expects a potential payment of $80 million from BMY if BMY exercises its U.S. license option in 2021 to develop and commercialize antibodies targeting the Tau protein. In February this year, the company presented “robust” preclinical data that supported the benefit of PRX005.

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Yee said in his research note to investors, “We could hear from BMY in Q3 on an opt-in and cash to be paid to PRTA for anti-tau asset PRX005. This should validate PRTA and may drive interest also for PRX-012 (anti-abeta) which BMY doesn't have rights to. Both are set to move into the clinic [clinical trials] in next 6+ mos with anti-Tau IND in Q3:21 and Abeta IND in early 2022 and Phase I starting.”

PRX012

PRX012 is a monoclonal antibody that targets “a key epitope within the N-terminus of Aβ [Amyloid beta]” and could be a potential treatment for Alzheimer’s disease. According to Yee, Prothena’s PRX012 is “very similar in binding (N-terminus region) to BIIB's aducanumab and LLY's (Eli Lilly) donanumab.”

Yee added, “Using PRTA's epitope discovery platform, they developed an 11x more potent binder to the N-terminus region of A-beta than aducanumab and should have strong A-beta reduction similar to BIIB and LLY (which have both shown greater reduction than other competitor products including ROG gantenerumab, in our view.”

PRTA expects to initiate the Phase 1 clinical trial for PRX012 in the first quarter of next year. (See Prothena Corp stock analysis on TipRanks)

Analyst’s Take

Yee is bullish on the stock for the following reason, “We are Buy-rated on Prothena as we see investor enthusiasm around an expansive pipeline of neuro and rare disease clinical candidates increasing over the coming 12-18 months. We think the scientific rationale behind their pipeline of assets has started to play out based on the positive clinical data the company has generated as well as industry developments in the space.”

Shares of PRTA have popped 110.3% in the past month.

Consensus among analysts is a Strong Buy based on 6 Buys. The PRTA average analyst price target of $50.17 implies approximately 3% upside potential from current levels.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.