Executive Summary / Key Takeaways

• Refocused Strategy Post-Birtamimab: Prothena has undergone a significant corporate restructuring, including a 63% workforce reduction, following the discontinuation of its lead wholly-owned program, birtamimab, in May 2025. This pivot sharpens the focus on its promising Alzheimer's pipeline (PRX012, PRX123) and robust partnered programs.
• Differentiated Alzheimer's Portfolio: The company's wholly-owned PRX012, an anti-amyloid beta antibody, is designed for once-monthly subcutaneous administration, aiming for best-in-class efficacy with reduced patient burden. Initial Phase 1 data is expected mid-2025, representing a critical near-term catalyst.
• Strong Partnered Programs: Collaborations with Roche (ROG), Bristol Myers Squibb (BMS), and Novo Nordisk (NVO) continue to advance high-potential assets like prasinezumab for Parkinson's (now in Phase 3 with Roche) and BMS-986446 for Alzheimer's (in Phase 2 with BMS), providing non-dilutive capital and leveraging external expertise.
• Financial Resilience Amidst Transition: Despite a significant Q2 2025 net loss of $(125.8) million and reduced revenue, Prothena maintains a solid cash position of $371.4 million as of June 30, 2025, projected to be around $301 million by year-end 2025, which management believes is sufficient for at least the next 12 months.
• High-Risk, High-Reward Biotech: The investment thesis hinges on the successful clinical development and eventual commercialization of its remaining pipeline, particularly PRX012, in highly competitive and evolving therapeutic areas, balanced against the inherent risks of drug development and the recent setback with birtamimab.

Prothena's Evolving Narrative: Precision in Protein Dysregulation

Prothena Corporation plc is a late-stage clinical biotechnology company dedicated to creating transformational therapies for devastating neurodegenerative and rare peripheral amyloid diseases caused by protein dysregulation. The company's core strategy blends the pursuit of wholly-owned programs, offering full commercial upside, with strategic partnerships that leverage external resources and expertise to advance a diverse pipeline. This approach is rooted in decades of scientific discovery and a deep understanding of disease pathology, aiming to deliver best-in-class or first-in-class treatments.

The biopharmaceutical industry, particularly in neurodegenerative diseases, is characterized by intense competition, high R&D costs, and significant regulatory hurdles. Major players like Biogen Inc. (BIIB), Roche Holding AG, and Eli Lilly and Company (LLY) command substantial market share and possess vast resources. Prothena, while smaller, carves out its niche through a biology-directed discovery engine, focusing on empirically validated epitopes and antibody designs that promise superior targeting and therapeutic profiles. This specialization is Prothena's competitive moat, enabling it to pursue precision medicine in areas where larger competitors may have broader, but less targeted, approaches.

Technological Edge: Precision in Protein Targeting

Prothena's foundational strength lies in its proprietary technology centered on understanding and targeting protein dysregulation. This involves meticulous empirical epitope mapping and designing antibodies that optimally interact with pathogenic proteins to slow or prevent disease. The company's pipeline exemplifies this approach, with several programs showcasing distinct technological advantages.

PRX012, Prothena's wholly-owned anti-amyloid beta (Aβ) antibody for Alzheimer's disease, is a prime example of this technological differentiation. Preclinical studies have demonstrated its superior binding characteristics, showing an approximately 10-fold greater affinity and avidity for fibrillar Aβ than aducanumab. This enhanced potency is designed to achieve more effective plaque clearance at lower doses, enabling a once-monthly subcutaneous (SC) administration. This SC delivery is a critical differentiator, aiming to significantly reduce treatment burden and improve patient access compared to existing intravenous (IV) anti-Aβ therapies. The design also anticipates smaller fluctuations in brain antibody concentrations, potentially offering a differentiated efficacy and safety profile, particularly concerning amyloid-related imaging abnormalities (ARIA).

Similarly, BMS-986446 (partnered with BMS) is an anti-tau antibody specifically designed to bind with high affinity to the R1, R2, and R3 repeats within the microtubule binding region (MTBR) of tau. This targeted approach, informed by research showing MTBR fragments correlate with dementia stages and tau tangles, aims to block tau uptake and neurotoxicity. Phase 1 data showed robust central nervous system (CNS) penetration, with approximately 0.2% of peripheral levels reaching the CSF, indicating substantial target engagement. Coramitug (partnered with Novo Nordisk) further illustrates this precision, employing a "depleter" mechanism to remove resident amyloid in ATTR amyloidosis, specifically targeting a region of transthyretin not available in its normal homotetrameric structure. This differentiates it from stabilizers and silencers that focus on new protein production.

Prothena's R&D strategy is to leverage this deep scientific expertise to develop antibodies "born to be subcutaneous," as described by management, rather than adapting IV antibodies. This upfront design philosophy aims to overcome challenges related to bioavailability and stability in high-concentration solutions, which are crucial for SC delivery. This focus on innovative delivery and highly specific targeting provides Prothena with a competitive edge, allowing it to potentially offer more patient-centric and effective therapies in crowded markets.

A History of Strategic Evolution and Recent Restructuring

Prothena's journey began in 2012, quickly establishing key partnerships that would shape its future. A significant collaboration with Roche in 2013 for prasinezumab (Parkinson's disease) provided early validation and non-dilutive capital. Subsequent agreements with Celgene (CELG) (now BMS) in 2018 expanded its neurodegenerative pipeline, including programs targeting tau and an undisclosed target. The strategic divestiture of its ATTR amyloidosis business to Novo Nordisk in 2021 further demonstrated a willingness to monetize assets and focus resources, yielding a substantial upfront payment and future milestones.

However, the path of biotechnology is rarely linear. A pivotal moment occurred in May 2025 with the discontinuation of birtamimab's development for AL amyloidosis. Despite a Special Protocol Assessment (SPA) with the FDA and prior promising survival signals in Mayo Stage IV patients, the confirmatory Phase 3 AFFIRM-AL trial did not meet its primary or secondary endpoints. This outcome triggered a swift and decisive corporate restructuring in June 2025, resulting in an approximate 63% reduction in workforce and aggregate restructuring charges of approximately $32.6 million for the three and six months ended June 30, 2025. This painful but necessary pivot aims to "substantially reduce our operating costs to those necessary to support our remaining wholly-owned programs, obligations to partnered programs, and anticipated business development activities."

Financial Performance and Liquidity: A Transitionary Period

The impact of this strategic shift is evident in Prothena's recent financial performance. For the three months ended June 30, 2025, total revenue plummeted to $4.4 million from $132.1 million in the prior year period, and for the six months, it fell to $7.2 million from $132.1 million. This significant decline was primarily due to the recognition of substantial collaboration revenue in Q2 2024, including $107.0 million from the PRX019 Global License Agreement with BMS and $25.0 million related to BMS's material rights for the TDP-43 Collaboration Target.

Operating expenses, however, increased by 21% to $89.0 million in Q2 2025, largely driven by the $32.6 million in restructuring costs. Research and development (R&D) expenses saw a notable decrease, falling by 30% to $40.5 million in Q2 2025 and 25% to $91.3 million for the six months, reflecting lower clinical trial and manufacturing expenses, particularly for PRX012 and birtamimab. The company reported a net loss of $(125.8) million for Q2 2025 and $(186.0) million for the six months, exacerbated by a $44.9 million valuation allowance against federal deferred tax assets.

Despite these losses, Prothena maintains a solid liquidity position. As of June 30, 2025, cash and cash equivalents stood at $371.4 million, with an accumulated deficit of $1.30 billion. Management believes this cash is sufficient to meet obligations for at least the next twelve months. The company's capital structure remains clean with zero debt, a notable advantage in a capital-intensive industry.

Outlook and Catalysts: A Leaner, Focused Future

Prothena's forward outlook is now firmly centered on its remaining pipeline assets and the strategic leveraging of its partnerships. Management projects full-year 2025 net cash used in operating and investing activities to be between $170 million and $178 million, with an estimated year-end cash, cash equivalents, and restricted cash balance of approximately $301 million. The estimated net loss for 2025 is between $197 million and $205 million, including $41 million of non-cash share-based compensation.

Several key catalysts are on the horizon:

• PRX012 (Alzheimer's Disease): Initial data from the Phase 1 ASCENT clinical trials is expected around mid-year 2025, with additional updates throughout the year. This data will be crucial for identifying the optimal dose regimen for future registration-enabling trials, potentially positioning PRX012 as a dominant player in the early Alzheimer's market due to its SC delivery and high potency.
• Prasinezumab (Parkinson's Disease) with Roche: Roche announced in June 2025 its decision to advance prasinezumab into Phase 3 development for early-stage Parkinson's disease, a significant validation of the program's potential. This follows positive trends from the Phase 2b PADOVA study.
• Coramitug (ATTR Amyloidosis) with Novo Nordisk: The Phase 2 signal detection trial is expected to complete in H1 2025, with Novo Nordisk anticipating results and next steps in H2 2025.
• BMS-986446 (Alzheimer's Disease) with BMS: The Phase 2 TargetTau-1 trial is ongoing, with completion expected in 2027. BMS also initiated a Phase 1 SC trial in Q2 2025.
• PRX019 (Neurodegenerative Diseases) with BMS: The Phase 1 trial is expected to complete in 2026.

The recent enactment of the One Big Beautiful Bill Act in the U.S. is expected to decrease Prothena's tax expense for the remainder of 2025, primarily due to changes in R&D capitalization requirements, offering a modest tailwind.

Competitive Landscape and Strategic Positioning

Prothena operates in highly competitive therapeutic areas, facing established giants and innovative biotechs. In Alzheimer's, it competes with Biogen and Eli Lilly, whose products like lecanemab and donanemab are advancing. Prothena's PRX012 aims to differentiate through its once-monthly subcutaneous delivery and superior binding affinity, addressing the critical unmet need for reduced treatment burden and improved accessibility. While Biogen and Lilly benefit from larger commercial infrastructures and broader portfolios, Prothena's focused R&D and patient-centric design for PRX012 could yield a significant market advantage if clinical success is achieved.

In Parkinson's disease, the collaboration with Roche for prasinezumab positions Prothena against other companies developing alpha-synuclein-targeting therapies. Roche's decision to move into Phase 3 underscores the program's competitive viability, leveraging Roche's global development and commercialization capabilities. Similarly, the partnership with Novo Nordisk for coramitug in ATTR amyloidosis pits Prothena's depleter mechanism against stabilizers (like Pfizer (PFE)'s Tafamidis and BridgeBio (BBIO)'s acoramidis) and silencers (like Alnylam (ALNY)'s patisiran). Coramitug's unique ability to remove existing amyloid could be crucial for more advanced patients, potentially complementing existing therapies.

Prothena's competitive strategy is to leverage its innovation speed and specialized antibody platforms to achieve "significantly higher targeting precision" and "faster innovation cycles" in niche, high-value segments. While its financial metrics (e.g., negative operating and net profit margins, lower cash flow) reflect its clinical-stage status compared to profitable giants like Biogen (Gross Profit Margin 76%, Operating Profit Margin 23%) or Roche (Gross Profit Margin 33%, Operating Profit Margin 3%), its strategic partnerships provide crucial capital efficiency. The recent restructuring, though a setback for birtamimab, represents a strategic streamlining to focus resources on the most promising assets, aiming to improve future financial performance and market positioning.

Conclusion

Prothena is at a critical juncture, having made a decisive strategic pivot following the discontinuation of birtamimab. While this event and the associated restructuring have impacted near-term financials, the company has refocused its efforts on a pipeline of highly differentiated assets, particularly its wholly-owned Alzheimer's programs and robust partnered initiatives. The core investment thesis for Prothena now rests on the successful clinical advancement of PRX012, with its potential for best-in-class efficacy and patient-friendly subcutaneous delivery, and the continued progress of its partnered programs like prasinezumab and BMS-986446.

The company's deep scientific expertise in protein dysregulation and its ability to design highly targeted antibodies remain its most significant competitive advantages. With key clinical readouts anticipated in 2025 and a leaner operational structure, Prothena aims to translate its technological leadership into tangible commercial success. Investors should closely monitor the upcoming PRX012 data, the progress of Roche's Phase 3 prasinezumab trial, and Novo Nordisk's plans for coramitug, as these catalysts will be instrumental in validating Prothena's refocused strategy and its long-term potential in the competitive biopharmaceutical landscape.