One of Neil Woodford’s former problem stocks Prothena has seen its luck change following the controversial approval of an Alzheimer’s drug.
Shares in the US-listed biotech firm had been in the doldrums since April 2018 when the company pulled the plug on its lead drug used to treat a rare degenerative disease after disappointing clinical trial results. The announcement wiped 70% off its value in a single day and caused a major headache for Woodford who owned a 30% stake in the business.
But since early June Prothena’s share price has been on fire. By the middle of the month, it had doubled from $27 a share to over $58 and three months later in early September it was up at $72, a 480% increase on the start of the year.
Its share price spike happened around the time the US Food and Drug Administration controversially approved Biogen’s Alzheimer’s drug.
Prothena develops treatments for neurodegenerative disorders caused by abnormal proteins, including Alzheimer’s and has several drugs in its pipeline.
Lower bar set by FDA could be a boon for biotech
Although the FDA has come under fire for its accelerated clearing of Biogen’s drug Aduhelm, which was shot down by its own panel of outside experts, equity analysts at Goldman Sachs said the lower bar set by the US drug regulator could have “broad-ranging implications across healthcare”.
“As with any new drug launch a number of outstanding questions remain – including reimbursement dynamics, physician/patient uptake, duration of therapy, competition and ex-US regulatory decisions – but the Aduhelm approval and recent FDA regulatory commentary/progress for other Alzheimer’s antibodies suggests that a significant new therapeutic market could develop in the coming years,” they said in a note.
Citi rated Prothena’s shares as ‘Buy/High Risk’ in mid-July. Analysts noted that recent developments with its three lead programs, which include treatments for amyloidosis and Parkinson’s, “suggest the company is back on track to deliver meaningful catalysts over the next few years in major disease areas”.
They added its Alzheimer’s programs, headlined by PRX012, “carry significant potential,” not least of all because “multiple recent advances in the Alzheimer’s space that make the clinical development and regulatory pathways easier to navigate”.
Former investors in the Woodford Equity Income fund will not enjoy Prothena’s recent turnaround, however, as Woodford sold out months after his flagship vehicle suspended.
Neither will those who stuck by his Patient Capital trust, which was taken over by Schroders following the collapse of Woodford’s funds business. Managers Tim Creed and Ben Wick sold their inherited £17.5m stake in Prothena for liquidity purposes, according to the 2020 annual results for the Schroder UK Public Private trust.
