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Prothena Restructures Resources, to Cut Workforce by 57%

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Shares of Prothena Corporation (PRTA - Free Report) were down 1.62% a day after the company announced a reorganization plan. Prothena’s stock has lost 67.3% in the last six months, worse than the industry’s decline of 7.8%.

The company has decided to reduce its workforce by approximately 57% as a result of the discontinuation of the lead candidate, NEOD001.

We remind investors that NEOD001, an antibody, was being evaluated for the treatment of AL amyloidosis. A phase IIb study, PRONTO, did not meet its primary or secondary endpoints. Hence, the company asked the independent data monitoring committee (“DMC”) of the phase III VITAL study to review a futility analysis of the ongoing VITAL study. Thereafter, the DMC recommended discontinuation of the VITAL study. Consequently, the company decided to discontinue all studies for the development of NEOD001, including the VITAL study as well as the open label extension studies.

Earlier, Prothena announced disappointing results from a phase Ib multiple ascending dose (MAD) study of pipeline candidate, PRX003 in psoriasis patients. The primary objectives of the study were achieved. However, advancing PRX003 into mid-stage clinical development required a well-defined relationship between biological activity and meaningful clinical effects and these prerequisites were not met.

Prothena expects its workforce to be approximately 63 positions after the plan is executed.

The company plans to align its resources on advancing its remaining candidates of its neuroscience pipeline, PRX002/RG7935, being developed in collaboration with Roche (RHHBY - Free Report) and its proprietary program PRX004 as well as its discovery-stage pipeline. The discovery-stage lineup includes a proprietary program targeting Aβ and three programs being advanced as part of a neuroscience R&D collaboration with Celgene , including tau, TDP-43 and an undisclosed target.

Consequently, Prothena revised its full-year 2018 financial guidance and now expects its 2018 net cash burn from operating and investing activities to be $40 to $50 million.

Zacks Rank & Stock to Consider

Prothena currently carries a Zacks Rank #3 (Hold).

A better-ranked stock in the healthcare sector is Ligand Pharmaceuticals  , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Ligand’s earnings per share estimates were revised upward from $4.09 to $4.37 for 2018 over the past 60 days. The company came up with a positive earnings surprise in all of the trailing four quarters with an average beat of 31.79%.

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