What happened
Shares of Prothena Corporation (PRTA +0.68%), a clinical-stage biotechnology company focused on the development of therapies that treat diseases involving protein misfolding or cell adhesion, tumbled as much as 25% during Monday's trading session following the late Friday announcement that its Chief Medical Officer was leaving the company.
So what
According to the company's press release, Sarah Noonberg, MD, PhD, is resigning from her position as CMO and will provide transitional support for the company until March 15, 2018. Martin Koller, the company's former CMO, will step into Noonberg's role of providing leadership for ongoing clinical programs while the search for a replacement is ongoing.
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Normally, the departure of an executive isn't that big of a deal, but given that Prothena has no marketable products, the departure of the CMO could signal trouble in paradise with regard to Prothena's pipeline. In particular, investors might be worried about upcoming phase 2b results concerning NEOD001 (the Pronto trial), a potential first-in-class treatment for AL amyloidosis.
In AL amyloidosis, plasma cells from bone marrow produce light-chain proteins that misfold, creating amyloid light chains that deposit on organs and impede normal organ function. A top-line readout from Pronto is due in the second quarter.
Now what
No one is a big fan of question marks, and the sudden resignation of Prothena's CMO is exactly that.
While the company has a handful of novel experimental therapies that could command strong pricing power and market share, it's also a long way from generating revenue, and currently is losing a lot of money conducting clinical trials. Prothena lost $105.5 million through the first nine months of fiscal 2017, and this burn rate doesn't show any signs of slowing in the quarters to come. Though it has $460.1 million in cash and cash equivalents, this cash pile will dwindle as new products enter the clinical phase.
In other words, shareholders would likely be best served by waiting on the sidelines for the Pronto data in the upcoming quarter to ensure that Noonberg's departure wasn't an ominous sign of poor data to come.
