BST Special Position Update: April 2, 2014
April 2, 2014
Shares of PRAN have plunged more than 75% over the past couple of days. The stock is down after the biotech reported disappointing top-line results from the phase 2 trial of PBT2 in Alzheimer’s disease.
The drug failed to meet the study’s primary and secondary endpoints.
In other words, it did not show a statistically significant reduction in the levels of beta-amyloid plaques in the brains of Alzheimer’s patients. And there was no improvement of brain metabolic activity, cognition, and function.
While Alzheimer’s patients did experience a reduction in overall levels of beta-amyloid plaques, it wasn’t statistically significant compared to the placebo group. As the company described it… “the results were confounded by an atypical reduction of levels… in the placebo group as well.”
The results are puzzling to say the least. It wasn’t too long ago that PBT2 showed beneficial effects on the brains of patients with Huntington disease in a different phase 2 trial.
Management has offered a couple of different explanations as to why the study failed.
First off, they suggest PBT2 may target soluble species of Abeta, including toxic oligomers, rather than plaques. Unfortunately, the scans conducted during the trial do not pick up Abeta oligomers, so further research on this point will have to be done.
Second, it’s possible that the data are the result of an inconclusive imaging readout in a small sample size of just 42 participants.
Despite the huge setback this failed trial presents, PRAN intends to continue developing PBT2 for both Alzheimer’s and Huntington’s.
Management points to the “strong body of evidence for the efficacy of PBT2 in Alzheimer’s disease. And they refer to the suggestion of a beneficial effect on brain volumes first seen in the Huntington’s phase 2 trial.
Prana is now consulting with experts in the field to determine the next steps for PBT2 in Alzheimer’s. And they plan to move forward with a confirmatory study for Huntington disease.
Based on the above, we think there is a good chance for a recovery in PRAN’s share price.
But given the highly speculative and volatile nature of the stock at present, we’re not comfortable recommending you buy more shares. As such, we’re maintaining our Hold rating on the stock.
Action To Take
- None at this time.
Category: BST Update
