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RBC Capital keeps Sector Perform rating on Prothena shares despite CMO exit

EditorTanya Mishra
Published 09/30/2024, 01:46 PM
PRTA
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RBC Capital has maintained a Sector Perform rating for Prothena Corp (NASDAQ: PRTA) with a steady price target of $24.00. Prothena's stock experienced a significant decline, dropping approximately 20% today.

The downturn is attributed to two recent developments. Firstly, the company announced the departure of its Chief Medical Officer (CMO) late last Friday, which was closely followed by multiple anticipated updates from their product pipeline, including prasinezumab, birtamimab, and a potential update on '012.

Secondly, a recent publication on September 26th in Science highlighted alleged scientific misconduct related to the preclinical development of several drugs, including Prothena's prasinezumab.

RBC Capital's stance remains cautious regarding the upcoming updates on Prothena's key pipeline components – prasinezumab, birtamimab, and '012. Despite the recent news of the CMO's exit and the allegations of scientific misconduct, the firm believes the current decline in Prothena's share price may be an overreaction. According to the analyst, these events have not significantly altered the risk/reward balance for the company's stock.

In other recent news, Prothena Corporation has undergone significant changes in its executive leadership, with Chad Swanson taking over as the new Chief Development Officer. The comes as the company continues to make strides in its pipeline programs. Prothena reported second-quarter financial results for 2024, which showed operating expenses of $73.6 million and a cash balance of $564 million. The company has updated its full-year 2024 guidance, now anticipating a net loss in the range of $120 million to $135 million.

Oppenheimer adjusted its stock price target for Prothena, reducing it to $62.00 from $66.00, while maintaining an Outperform rating. RBC Capital also adjusted Prothena's price target, reducing it from $28.00 to $24.00, maintaining a Sector Perform rating. This reflects a cautious stance on the company's pipeline programs, including '012, prasinezumab, and birtamimab.

Prothena's improved financial outlook is largely due to an $80 million payment from Bristol Myers (NYSE:BMY) Squibb for global rights to PRX019. The company also entered into a licensing agreement with Bristol Myers Squibb for PRX019, which includes potential milestone payments of up to $617.5 million and royalties on net sales. Lastly, Piper Sandler reiterated an Overweight rating on Prothena shares, highlighting the potential of PRX019.

InvestingPro Insights

Prothena Corp's recent market performance and financial metrics provide additional context to the challenges discussed in the article. According to InvestingPro data, the company's stock has seen a significant decline, with a 1-year price total return of -58.45% as of the most recent data. This aligns with the article's mention of the recent 20% drop and overall market concerns.

Despite these setbacks, Prothena has shown impressive revenue growth, with a 276.98% increase over the last twelve months as of Q2 2024. This substantial growth could potentially offset some investor concerns about the recent developments.

InvestingPro Tips highlight two important aspects:

1. Prothena's stock price is significantly below its 52-week high, currently at 29.5% of that peak. This could indicate a potential opportunity for investors who believe in the company's long-term prospects despite recent setbacks.

2. Analysts have set a fair value of $56 for Prothena's stock, which is considerably higher than its current trading price. This suggests that experts still see potential upside, aligning with RBC Capital's decision to maintain its rating and price target.

These insights, along with 11 additional tips available on InvestingPro, can provide investors with a more comprehensive view of Prothena's financial health and market position as they navigate the uncertainties highlighted in the article.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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