PRTA

Prothena($PRTA): Stock Plunges 60% Over 10 Months Despite Major Shareholder's $2.76M Purchase As Cash Burn Accelerates

05/02/2025 14:42

Prothena Corporation ($PRTA) has seen its stock price plummet by more than half over the past 10 months, despite major shareholder William Scully making significant stock purchases last winter that failed to halt the downward trend. According to recent SEC filings, Scully acquired a total of 207,436 shares worth approximately $2.76 million through four separate transactions between December 18, 2024, and January 14, 2025. His purchase prices ranged from $12.79 to $15.91 per share, substantially higher than the current price of $9.20. Notably, on January 14, 2025, he executed a single large purchase of 100,000 shares worth about $1.28 million. Despite Scully's bullish moves, Prothena's stock has continued its steep decline. From trading around $24 in mid-July 2024, the share price has experienced a series of step-downs, reaching $9.20 by the end of April 2025. Particularly sharp drops occurred in late September 2024 and mid-November 2024, with the downward momentum continuing into 2025. Dublin-headquartered Prothena is a late-stage clinical biotechnology company focused on developing therapies for diseases caused by protein dysregulation, with primary emphasis on neurodegenerative diseases and amyloidosis. Its key pipeline includes Birtamimab (Phase 3) for AL amyloidosis, Prasinezumab (Phase 2b) for Parkinson's disease, Coramitug (Phase 2) for transthyretin amyloidosis, and BMS-986446 (Phase 2) for Alzheimer's disease. The company has strategic partnerships with F. Hoffmann-La Roche and Bristol Myers Squibb to advance these therapies. However, Prothena's recent financial performance has significantly underperformed market expectations. In its Q4 2024 earnings report, the company posted revenue of just $2.12 million, far below the anticipated $7.53 million. Earnings per share came in at -$1.08, worse than the expected -$1.02. On an annual basis, the company recorded $135.16 million in revenue against a net loss of $147.03 million, resulting in a disappointing profit margin of -90.50%. Particularly concerning is the 74% year-over-year increase in cash burn rate. While Prothena maintains substantial cash reserves of $471.39 million, providing approximately 3.3 years of runway at current spending levels, the accelerating burn rate is troubling investors. This is especially significant in the biotech industry, where costs typically escalate dramatically as clinical trials advance to later stages. Scully's substantial purchases suggest he believes the stock offers long-term value at current prices. However, SEC filings indicate that all his transactions include a disclaimer of beneficial ownership, suggesting he has a financial interest but not full ownership rights. Additionally, the timing of his purchases at relatively higher price points indicates his moves may not necessarily have predicted the market bottom. In summary, while Prothena possesses strengths in its promising drug pipeline and robust cash position, its increasing cash burn rate and disappointing performance metrics make a short-term stock recovery challenging. The continued price decline despite insider buying signals that the market is still weighing Prothena's immediate financial challenges more heavily than its long-term potential. Investors would be wise to approach cautiously until positive catalysts emerge, such as favorable clinical trial results or enhanced partnerships.

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