Prothena(PRTA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes explaining the company's business, accounting policies, significant agreements, and recent restructuring activities Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets and shareholders' equity, primarily driven by a reduction in cash and cash equivalents and an accumulated deficit increase. Current liabilities increased significantly due to a restructuring liability | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :----------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $371,435 | $471,388 | $(99,953) | | Total current assets | $385,475 | $485,412 | $(99,937) | | Total assets | $399,066 | $547,108 | $(148,042) | | Total current liabilities | $67,807 | $48,501 | $19,306 | | Restructuring liability | $30,330 | $— | $30,330 | | Total liabilities | $74,735 | $60,182 | $14,553 | | Accumulated deficit | $(1,288,303) | $(1,102,341) | $(185,962) | | Total shareholders' equity | $324,331 | $486,926 | $(162,595) | Condensed Consolidated Statements of Operations The company experienced a significant net loss for the three and six months ended June 30, 2025, primarily due to a substantial decrease in collaboration revenue and the recognition of restructuring costs, despite a reduction in R&D expenses | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total revenue | $4,420 | $132,014 | $7,248 | $132,064 | | Research and development | $40,517 | $57,510 | $91,328 | $121,624 | | General and administrative | $15,910 | $16,127 | $33,508 | $33,591 | | Restructuring costs | $32,609 | $— | $32,609 | $— | | Net Income (loss) | $(125,767) | $66,886 | $(185,962) | $(5,353) | | Basic net income (loss) per share | $(2.34) | $1.24 | $(3.45) | $(0.10) | | Diluted net income (loss) per share | $(2.34) | $1.22 | $(3.45) | $(0.10) | Condensed Consolidated Statements of Cash Flows The company experienced a significant net decrease in cash, cash equivalents, and restricted cash for the six months ended June 30, 2025, primarily driven by cash used in operating activities, which increased compared to the prior year | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(99,703) | $(57,092) | | Net cash used in investing activities | $(128) | $(246) | | Net cash provided by (used in) financing activities | $(122) | $1,280 | | Net decrease in cash, cash equivalents and restricted cash | $(99,953) | $(56,058) | | Cash, cash equivalents and restricted cash, end of period | $372,295 | $564,984 | Condensed Consolidated Statements of Shareholders' Equity Total shareholders' equity decreased significantly from December 31, 2024, to June 30, 2025, primarily due to a substantial net loss incurred during the period, partially offset by share-based compensation | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | | :----------------------- | :------------------------------- | :--------------------------- | :-------------------- | | Total Shareholders' Equity | $486,926 | $324,331 | $(162,595) | | Accumulated Deficit | $(1,102,341) | $(1,288,303) | $(185,962) | | Share-based compensation | N/A | $23,367 (6 months) | N/A | Notes to Condensed Consolidated Financial Statements These notes provide detailed disclosures on the company's business, significant accounting policies, financial instrument fair values, balance sheet item composition, net loss per share calculations, commitments, significant collaboration agreements, shareholders' equity, share-based compensation, income taxes, and recent restructuring activities 1. Organization Prothena is a late-stage clinical biotechnology company focused on neurodegenerative and rare peripheral amyloid diseases, advancing a pipeline of therapeutic candidates through wholly-owned and partnered programs. The company reported an accumulated deficit of $1.3 billion and $371.4 million in cash and cash equivalents as of June 30, 2025, and anticipates needing additional capital for future operations and product development - Prothena is a late-stage clinical biotechnology company specializing in protein dysregulation for neurodegenerative and rare peripheral amyloid diseases[29] - Wholly-owned programs include PRX012 (amyloid beta) and PRX123 (dual Aβ-tau vaccine) for Alzheimer's disease[30] - Partnered programs include prasinezumab with Roche for Parkinson's disease, BMS-986446 and PRX019 with BMS for Alzheimer's and neurodegenerative diseases, and potential milestones from Novo Nordisk for ATTR amyloidosis business[30] - As of June 30, 2025, the company had an accumulated deficit of $1.3 billion and cash and cash equivalents of $371.4 million[32] - Management believes existing cash is sufficient for the next twelve months but anticipates needing additional capital for increased R&D, potential licenses/acquisitions, and regulatory approvals[33] 2. Summary of Significant Accounting Policies The financial statements are prepared in accordance with U.S. GAAP and Form 10-Q instructions, using estimates that may differ from actual results. A new accounting policy for restructuring charges was added in June 2025 following a corporate restructuring. The company operates as a single segment focused on protein dysregulation - Financial statements are prepared in accordance with U.S. GAAP and Form 10-Q, relying on management estimates[34][36] - A new accounting policy for restructuring charges was adopted in June 2025 due to a corporate restructuring[37][42] - The company manages its operations as a single segment focused on discovery and development of novel therapies for protein dysregulation[45] | Program | Three Months Ended June 30, 2025 (in thousands) | | :-------- | :------------------------------------ | | Birtamimab | $19,433 | | PRX012 | $15,093 | | PRX019 | $1,824 | - Recent accounting pronouncements include ASU 2024-03 (Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures) effective 2027/2028 and ASU 2023-09 (Income Taxes) effective 2025[48][50] 3. Fair Value Measurements The company measures certain financial assets and liabilities at fair value on a recurring basis, primarily classifying cash equivalents within Level 1 of the fair value hierarchy due to the use of quoted market prices - Fair value measurements are categorized into a three-tier hierarchy: Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[51][55] - Cash equivalents, primarily money market funds, are classified within Level 1[53] - Money market funds held: $349.5 million at June 30, 2025, down from $440.3 million at December 31, 2024[53] 4. Composition of Certain Balance Sheet Items This note details the composition of prepaid expenses and other current assets, property and equipment (net), and other current liabilities, showing changes between June 30, 2025, and December 31, 2024 - Prepaid R&D expenses decreased from $12.0 million (Dec 2024) to $8.8 million (June 2025)[54] - Property and equipment, net, decreased from $3.1 million (Dec 2024) to $2.7 million (June 2025)[56] - Other current liabilities decreased from $15.8 million (Dec 2024) to $6.4 million (June 2025), primarily due to a reduction in payroll and related expenses[57] 5. Net Loss Per Ordinary Share The company reported a basic and diluted net loss per ordinary share of $(2.34) for Q2 2025 and $(3.45) for the six months ended June 30, 2025, compared to net income in Q2 2024 and a smaller net loss for the six months ended June 30, 2024. Potentially issuable shares were anti-dilutive due to the net loss | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(125,767) | $66,886 | $(185,962) | $(5,353) | | Basic net income (loss) per share | $(2.34) | $1.24 | $(3.45) | $(0.10) | | Diluted net income (loss) per share | $(2.34) | $1.22 | $(3.45) | $(0.10) | - Potentially issuable ordinary shares (stock options, RSUs) were not included in diluted EPS calculations for periods with net loss as their effect would be anti-dilutive[59] 6. Commitments and Contingencies The company has lease commitments for facilities in the U.S. and Ireland, with total operating lease liabilities of $9.8 million as of June 30, 2025. Other commitments include non-cancelable purchase obligations, restructuring plan obligations, and contractual obligations under license agreements, totaling $44.7 million - Total operating lease liability as of June 30, 2025: $9.781 million[65] | Year Ended December 31, | Operating Leases (in thousands) | | :---------------------- | :------------------------------ | | 2025 (6 months) | $1,678 | | 2026 | $3,301 | | 2027 | $3,269 | | 2028 | $2,523 | | Thereafter | $— | | Total | $10,771 | - Non-cancelable purchase commitments: $3.3 million[67] - Obligations under restructuring plan: $30.3 million, with $30.0 million expected in H2 2025[67] - Contractual obligations under license agreements: $0.3 million[67] 7. Significant Agreements This section details the company's key collaboration and license agreements with Roche, Bristol Myers Squibb (BMS), and Novo Nordisk, outlining payment structures, performance obligations, and revenue recognition Roche License Agreement Prothena has an exclusive worldwide license agreement with Roche for α-synuclein antibodies, including prasinezumab. Roche is responsible for development and commercialization, with Prothena eligible for milestones up to $620 million and tiered royalties. Roche announced advancement of prasinezumab into Phase 3 development for early-stage Parkinson's disease in June 2025, citing positive Phase 2b PADOVA study data - Roche is obligated to pay Prothena up to $290.0 million for development, regulatory, and first commercial sales milestones, up to $155.0 million for U.S. commercial sales milestones, and up to $175.0 million for ex-U.S. commercial sales milestones[73] - Prothena is eligible for tiered, high single-digit to high double-digit royalties in the teens based on U.S. and ex-U.S. annual net sales[73] - In June 2025, Roche announced advancement of prasinezumab into Phase 3 development for early-stage Parkinson's disease, based on Phase 2b PADOVA study data suggesting clinical benefit[161] - Phase 2b PADOVA trial results (Dec 2024): potential clinical effect on time to confirmed motor progression (HR=0.84, p=0.0657), more pronounced in levodopa-treated population (HR=0.79, p=0.0431)[162] - No milestones were achieved under the Roche License Agreement during the three and six months ended June 30, 2025 and 2024[80] Collaboration Agreement with Bristol Myers Squibb Prothena's collaboration with BMS involves exclusive licenses for antibodies targeting tau (BMS-986446) and an undisclosed target (PRX019). BMS exercised global rights for both, with Prothena receiving option exercise fees and eligible for significant regulatory and sales milestones, plus tiered royalties. Revenue for H1 2025 was from PRX019 Phase 1 clinical trial obligation - BMS exercised Global Rights for tau/BMS-986446 in July 2023, paying a $55.0 million option exercise fee. Prothena is eligible for up to $562.5 million in regulatory and commercial milestones and tiered royalties[98] - BMS exercised Global Rights for undisclosed/PRX019 in May 2024, paying an $80.0 million option exercise fee. Prothena is eligible for up to $617.5 million in development, regulatory, and sales milestones and tiered royalties[100][189] - Collaboration revenue from BMS for Q2 2025 was $4.4 million and for H1 2025 was $7.2 million, related to partial performance of the PRX019 Phase 1 Clinical Trial Obligation[111][198] - Deferred revenue of $5.1 million as of June 30, 2025, relates to the outstanding PRX019 Phase 1 Clinical Trial Obligation[95][114] - BMS initiated a Phase 2 clinical trial for BMS-986446 in Q1 2024 for early Alzheimer's disease, with primary outcome measuring change in brain tau deposition[180] Novo Nordisk Share Purchase Agreement Novo Nordisk acquired Prothena's ATTR amyloidosis business, including coramitug, in July 2021 for an upfront payment and potential development and sales milestones up to $1.13 billion. Prothena has earned $100 million to date, but no additional milestones were achieved in H1 2025 or H1 2024 - Novo Nordisk acquired Prothena's ATTR amyloidosis business and pipeline, including coramitug, in July 2021[118][171] - Aggregate purchase price includes an upfront payment and development/sales milestone payments totaling up to $1.23 billion. Prothena has earned approximately $100 million to date[172] - No revenue was recognized from this agreement during the three and six months ended June 30, 2025 and 2024[124] - Novo Nordisk is conducting a Phase 2 clinical trial of coramitug in patients with ATTR amyloidosis with cardiomyopathy[173] 8. Shareholders' Equity As of June 30, 2025, Prothena had 53,826,982 ordinary shares outstanding. The company has equity incentive plans with 17,193,490 ordinary shares reserved for issuance. The company also has an Amended Distribution Agreement for at-the-market offerings, but no shares were sold under it in H1 2025 or H1 2024 - Ordinary shares outstanding: 53,826,982 as of June 30, 2025[124] - 17,193,490 ordinary shares are reserved for issuance under equity incentive plans[124] - No ordinary shares were sold or issued under the Amended Distribution Agreement for at-the-market offerings during the three and six months ended June 30, 2025 and 2024[128] 9. Share-Based Compensation Share-based compensation expense for H1 2025 was $23.4 million, slightly down from $24.4 million in H1 2024. This includes $2.1 million related to accelerated vesting of executive stock options due to restructuring in Q2 2025. The weighted-average grant date fair value of options decreased significantly from $19.21 in H1 2024 to $9.49 in H1 2025 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total share-based compensation expense | $12,418 | $12,041 | $23,367 | $24,424 | | R&D share-based compensation | $4,674 | $5,634 | $9,519 | $11,089 | | G&A share-based compensation | $5,663 | $6,407 | $11,767 | $13,335 | | Restructuring costs (share-based) | $2,081 | $— | $2,081 | $— | - Weighted average grant date fair value of stock options decreased from $19.21 (H1 2024) to $9.49 (H1 2025)[138] - Unearned share-based compensation related to unvested stock options at June 30, 2025, is $72.2 million, expected to be recognized over 2.79 years[135] 10. Income Taxes The company recorded an income tax expense of $44.8 million for Q2 2025 and $43.6 million for H1 2025, a significant increase from prior year benefits, primarily due to establishing a full valuation allowance of $44.9 million against federal deferred tax assets following the birtamimab clinical trial outcome and corporate restructuring | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Provision for (benefit from) income taxes | $44,802 | $(2,039) | $43,624 | $(4,240) | - The increase in income tax expense is primarily due to recording a $44.9 million valuation allowance against federal deferred tax assets in Q2 2025[147][214] - The valuation allowance was established due to uncertainty in realizing benefits from federal DTAs, influenced by the Phase 3 AFFIRM-AL clinical trial outcome for birtamimab and the announced corporate restructuring[147] - No tax benefit is recognized for Irish net operating losses due to a full valuation allowance[144][215] 11. Restructuring In June 2025, Prothena commenced a restructuring plan, incurring $32.6 million in charges for Q2 and H1 2025, primarily for employee termination benefits and contract termination costs, following the discontinuation of birtamimab development and a 63% workforce reduction - Restructuring plan commenced in June 2025 following the discontinuation of birtamimab development[150][192] - Aggregate restructuring charges: $32.6 million for the three and six months ended June 30, 2025[151][209] - Charges primarily consist of employee termination benefits (including $2.1 million share-based compensation) and contract termination costs for birtamimab commercial supplies[151][136] - Workforce reduction of approximately 63% announced in June 2025[193] - Restructuring liability of $30.3 million is included in current liabilities as of June 30, 2025, with most cash payments expected by Q4 2025[153][210] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Prothena's business, detailed updates on its clinical pipeline, and an analysis of its financial performance, liquidity, and capital resources for the three and six months ended June 30, 2025, compared to 2024 Overview Prothena is a late-stage clinical biotechnology company focused on neurodegenerative and rare peripheral amyloid diseases, leveraging its expertise in protein dysregulation to advance a pipeline of wholly-owned and partnered therapeutic candidates - Prothena is a late-stage clinical biotechnology company with expertise in protein dysregulation, developing therapeutics for neurodegenerative and rare peripheral amyloid diseases[156] - Wholly-owned programs include PRX012 (amyloid beta) and PRX123 (dual Aβ-tau vaccine) for Alzheimer's disease[157] - Partnered programs include prasinezumab with Roche for Parkinson's disease, BMS-986446 and PRX019 with BMS for Alzheimer's and neurodegenerative diseases, and potential milestones from Novo Nordisk for ATTR amyloidosis business[157] Prasinezumab for the Potential Treatment of Parkinson's Disease and Other Synucleinopathies Prasinezumab, an anti-alpha-synuclein antibody partnered with Roche, is advancing to Phase 3 development for early-stage Parkinson's disease. This decision follows positive trends and potential clinical benefit observed in the Phase 2b PADOVA study, particularly in levodopa-treated patients, and supported by long-term follow-up data from the PASADENA trial - Prasinezumab is an investigational humanized monoclonal antibody that targets alpha-synuclein for Parkinson's disease and other synucleinopathies[159] - In June 2025, Roche announced advancement of prasinezumab into Phase 3 development for early-stage Parkinson's disease, citing data from the Phase 2b PADOVA study and longer-term follow-up[161] - Phase 2b PADOVA trial (Dec 2024 topline results): showed potential clinical effect on the primary endpoint of time to confirmed motor progression (HR=0.84, p=0.0657), with a more pronounced effect in levodopa-treated patients (HR=0.79, p=0.0431)[162] - Consistent positive trends across multiple secondary and exploratory clinical endpoints were observed, including 30-40% relative reduction in motor progression at 104 weeks[162] Coramitug (formerly PRX004) for the Potential Treatment of ATTR Amyloidosis Coramitug, an investigational antibody designed to deplete amyloid in ATTR amyloidosis, was acquired by Novo Nordisk in July 2021. Novo Nordisk is conducting a Phase 2 clinical trial for coramitug in ATTR cardiomyopathy, building on positive Phase 1 safety and tolerability data - Coramitug is an investigational antibody designed to deplete amyloid associated with disease pathology in hereditary and wild-type ATTR amyloidosis[164][169] - Proposed mechanism of action: deplete circulating non-native TTR and promote clearance of insoluble amyloid fibrils[169] - In July 2021, Novo Nordisk acquired Prothena's ATTR amyloidosis business, including coramitug[171] - Novo Nordisk is conducting a Phase 2 clinical trial of coramitug in 105 patients with ATTR amyloidosis with cardiomyopathy[173] BMS-986446 (formerly PRX005) for the Potential Treatment of Alzheimer's Disease BMS-986446, an anti-tau antibody partnered with BMS, is designed to target MTBR-tau in Alzheimer's disease. BMS initiated a Phase 2 clinical trial in Q1 2024 to evaluate its efficacy, safety, and tolerability in early Alzheimer's, following positive Phase 1 safety and pharmacokinetic results - BMS-986446 is an anti-tau antibody targeting the MTBR region of tau, implicated in Alzheimer's disease pathology[174] - In July 2023, Prothena entered into an exclusive global license agreement for BMS-986446 with BMS, receiving a $55 million option exercise fee[175] - Phase 1 SAD trial showed BMS-986446 to be generally safe and well tolerated, with dose-proportional plasma drug concentrations and robust CSF exposure[177] - In Q1 2024, BMS initiated a Phase 2 clinical trial (NCT06268886) to evaluate efficacy, safety, and tolerability in approximately 310 participants with early Alzheimer's disease, with brain tau deposition as the primary outcome[180] - In Q2 2025, BMS initiated a Phase 1 clinical trial to assess pharmacokinetics, tolerability, and absolute bioavailability of subcutaneous BMS-986446[179] PRX012 for the Potential Treatment of Alzheimer's Disease PRX012 is Prothena's wholly-owned investigational anti-Aβ antibody for Alzheimer's disease, designed for subcutaneous administration. It has FDA Fast Track designation, and ongoing Phase 1 trial data from initial multiple dose cohorts supports once-monthly subcutaneous treatment and dose escalation, with initial data expected in August 2025 - PRX012 is a wholly-owned investigational antibody targeting amyloid beta (Aβ) for Alzheimer's disease, designed for subcutaneous administration[181][183] - Preclinical studies showed PRX012 has higher binding strength to amyloid than aducanumab and neutralizes soluble, toxic Aβ species[182] - FDA granted Fast Track designation for PRX012 in April 2022[183] - Phase 1 data from single ascending dose and initial multiple dose cohort (70 mg) supports single-injection once-monthly subcutaneous treatment and dose escalation[184] - Initial data from the ongoing Phase 1 trial is expected in August 2025[184] PRX123, a Dual Aβ-Tau Vaccine for the Potential Treatment and Prevention of Alzheimer's Disease PRX123 is Prothena's wholly-owned dual vaccine candidate for Alzheimer's disease, targeting both Aβ and tau proteins. It has received FDA Fast Track designation, and preclinical data demonstrated its ability to generate polyclonal responses for amyloid clearance and tau transmission blockade - PRX123 is a wholly-owned dual vaccine targeting key epitopes within both Aβ and tau proteins for Alzheimer's disease[185] - Preclinical studies showed PRX123 generated polyclonal responses against Aβ and tau, promoting amyloid clearance and blocking tau transmission[186][187] - FDA cleared the IND application and granted Fast Track designation for PRX123 in January 2024[187] PRX019 for the Potential Treatment of Neurodegenerative Diseases PRX019 is an investigational antibody for neurodegenerative diseases, developed in collaboration with BMS. The FDA cleared its IND in December 2023, and Prothena entered a global license agreement with BMS in May 2024, receiving an $80 million option exercise fee and eligibility for significant milestones. A Phase 1 clinical trial was initiated in November 2024 - PRX019 is an investigational antibody for neurodegenerative diseases, developed in collaboration with BMS[188] - FDA cleared the IND application for PRX019 in December 2023[189] - In May 2024, Prothena entered an exclusive global license agreement for PRX019 with BMS, receiving an $80.0 million option exercise fee[189] - Prothena is eligible for up to $617.5 million in development, regulatory, and sales milestones, plus tiered royalties[189] - A Phase 1 first-in-human clinical trial for PRX019 was initiated in November 2024[190] Our Discovery and Preclinical Programs Prothena is advancing several discovery and preclinical-stage programs for neurological diseases, with a focus on internal expertise for new target discovery and potential partnering or out-licensing for existing late discovery/preclinical programs - Advancing several discovery and preclinical-stage programs for neurological diseases with unmet medical needs[191] - New target discovery will focus on internal expertise and resources[191] - Existing late discovery-stage or preclinical-stage programs may be partnered or out-licensed[191] Discontinuation of Birtamimab Development In May 2025, Prothena discontinued the development of birtamimab for AL amyloidosis, following the failure of its Phase 3 AFFIRM-AL clinical trial to meet primary or secondary endpoints - Discontinuation of birtamimab development announced in May 2025[192] - Decision based on Phase 3 AFFIRM-AL clinical trial results, which did not meet primary or secondary endpoints[192] Workforce Reduction In June 2025, Prothena announced an approximate 63% reduction in its workforce to significantly cut operating costs, focusing resources on remaining wholly-owned programs, partnered obligations, and anticipated business development - Approximate 63% reduction in workforce announced in June 2025[193] - Purpose: substantially reduce operating costs to support remaining wholly-owned programs, partnered obligations, and business development[193] Critical Accounting Policies and Estimates The company's financial statements rely on estimates and assumptions in accordance with U.S. GAAP. There were no significant changes to critical accounting policies or estimates during the six months ended June 30, 2025, except for the addition of the restructuring accounting policy - Financial statements prepared in accordance with U.S. GAAP require judgments, estimates, and assumptions[194] - No significant changes to critical accounting policies or estimates during H1 2025, except for the new restructuring accounting policy[195] Recent Accounting Pronouncements The company is evaluating the impact of new FASB ASUs: ASU 2024-03 (Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures) effective 2027/2028, and ASU 2023-09 (Income Taxes) effective 2025 - Evaluating ASU 2024-03 (Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures), effective for annual periods ending December 31, 2027, and interim periods beginning January 1, 2028[48][49] - Evaluating ASU 2023-09 (Income Taxes), effective for annual periods ending December 31, 2025[50] Results of Operations This section provides a comparative analysis of the company's revenue, operating expenses, and other income/expense for the three and six months ended June 30, 2025, versus 2024, highlighting significant changes in collaboration revenue, restructuring costs, and income tax expense Revenue Total revenue significantly decreased by 97% for Q2 2025 and 95% for H1 2025 compared to the prior year, primarily due to a substantial reduction in collaboration revenue from BMS, which recognized large license fees in H1 2024 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (QoQ) | Change (YoY) | | :----------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | :----------- | :----------- | | Collaboration revenue | $4,420 | $132,014 | $7,198 | $132,014 | (97)% | (95)% | | Total revenue | $4,420 | $132,014 | $7,248 | $132,064 | (97)% | (95)% | - Collaboration revenue for H1 2025 was from partial performance of the PRX019 Phase 1 Clinical Trial Obligation[198] - Collaboration revenue for H1 2024 included $107.0 million from the PRX019 Global License Agreement and PRX019 Phase 1 Clinical Trial Obligation, and $25.0 million related to BMS's material rights for the TDP-43 Collaboration Target[198] - Deferred revenue of $5.1 million as of June 30, 2025, relates to remaining PRX019 Phase 1 Clinical Trial Obligations[199] Operating Expenses Total operating expenses increased by 21% for Q2 2025 and 1% for H1 2025 compared to the prior year, primarily driven by $32.6 million in restructuring costs, which offset decreases in R&D and G&A expenses | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (QoQ) | Change (YoY) | | :---------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | :----------- | :----------- | | Total operating expenses | $89,036 | $73,637 | $157,445 | $155,215 | 21% | 1% | - Restructuring costs of $32.6 million were incurred in Q2 and H1 2025, with none in the prior year periods[201] Research and Development Expenses R&D expenses decreased by 30% for Q2 2025 and 25% for H1 2025 compared to the prior year, primarily due to lower clinical trial expenses for PRX012, reduced manufacturing expenses, and lower personnel costs | Program | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (QoQ) | Change (YoY) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | :----------- | :----------- | | Total R&D | $40,517 | $57,510 | $91,328 | $121,624 | (30)% | (25)% | | Birtamimab (NEOD001) | $19,433 | $21,565 | $45,347 | $42,749 | (10)% | 6% | | PRX012 | $15,093 | $31,994 | $33,168 | $69,807 | (53)% | (53)% | | PRX019 | $1,824 | $676 | $3,926 | $1,457 | 170% | 170% | - Decrease in R&D primarily due to lower clinical trial expenses for PRX012, lower manufacturing expense, and lower personnel expenses[205] General and Administrative Expenses General and administrative expenses remained relatively stable, with a slight decrease of 1% for Q2 2025 and less than 1% for H1 2025 compared to the same periods in the prior year | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (QoQ) | Change (YoY) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | :----------- | :----------- | | General and administrative | $15,910 | $16,127 | $33,508 | $33,591 | (1)% | (0.2)% | Restructuring Costs The company incurred $32.6 million in restructuring costs for Q2 and H1 2025, with no comparable costs in the prior year, following the discontinuation of birtamimab development and a workforce reduction | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :---------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Restructuring costs | $32,609 | $— | $32,609 | $— | - Restructuring charges primarily consist of employee termination benefits and contract termination costs[210] - Substantially all cash payments are expected by the end of Q4 2025[210] Other Income (Expense) Total other income, net, decreased by 44% for Q2 2025 and 42% for H1 2025 compared to the prior year, primarily due to lower interest income from cash and money market accounts resulting from lower yields and cash balances. Foreign exchange losses also increased | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (QoQ) | Change (YoY) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | :----------- | :----------- | | Interest income | $3,794 | $6,521 | $8,142 | $13,686 | (42)% | (41)% | | Other expense, net | $(143) | $(51) | $(283) | $(128) | 180% | 121% | | Total other income, net | $3,651 | $6,470 | $7,859 | $13,558 | (44)% | (42)% | - Decrease in interest income due to lower yields and lower cash balances[211] - Other expense, net, primarily foreign exchange losses from euro-denominated transactions[212] Provision for (benefit from) Income Taxes The company recorded a significant income tax expense of $44.8 million for Q2 2025 and $43.6 million for H1 2025, a substantial increase from prior year benefits. This was primarily due to establishing a $44.9 million valuation allowance against federal deferred tax assets in Q2 2025, influenced by the birtamimab clinical trial outcome and corporate restructuring | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Provision for (benefit from) income taxes | $44,802 | $(2,039) | $43,624 | $(4,240) | - Increase in income tax expense primarily due to recording a $44.9 million valuation allowance for federal deferred tax assets in Q2 2025[214] - The valuation allowance was established due to the outcome of the Phase 3 AFFIRM-AL clinical trial for birtamimab and the announced corporate restructuring[147] Liquidity and Capital Resources Prothena's working capital decreased by $119.2 million to $317.7 million as of June 30, 2025, with cash and cash equivalents at $371.4 million. The company expects existing cash to cover obligations for at least 12 months but anticipates needing additional capital for future R&D and commercialization, to be financed through collaborations or equity/debt Overview (Liquidity) Working capital decreased by $119.2 million to $317.7 million as of June 30, 2025, primarily due to $99.7 million cash used in operating activities. Cash and cash equivalents stood at $371.4 million. The company believes current cash is sufficient for the next 12 months but will require additional capital for future R&D and commercialization, potentially through collaborations or financings | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :---------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Working capital | $317,668 | $436,911 | $(119,243) | | Cash and cash equivalents | $371,435 | $471,388 | $(99,953) | - Existing cash and cash equivalents are believed sufficient for at least the next twelve months[217] - Additional capital will be required for future R&D, potential licenses/acquisitions, and regulatory approvals, expected to be financed through collaborations or equity/debt financings[217] Cash Flows Net cash used in operating activities significantly increased to $99.7 million for H1 2025 from $57.1 million in H1 2024, primarily due to ongoing R&D and G&A expenses. Net cash used in investing activities remained low, while financing activities shifted from a net cash provider to a net cash user | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(99,703) | $(57,092) | | Net cash used in investing activities | $(128) | $(246) | | Net cash provided by (used in) financing activities | $(122) | $1,280 | | Net decrease in cash, cash equivalents and restricted cash | $(99,953) | $(56,058) | | Cash, cash equivalents and restricted cash, end of period | $372,295 | $564,984 | - Net cash used in operating activities for H1 2025 was primarily due to ongoing R&D and G&A activities[223] Off-Balance Sheet Arrangements As of June 30, 2025, Prothena was not a party to any material off-balance sheet arrangements - No material off-balance sheet arrangements as of June 30, 2025[227] Contractual Obligations As of June 30, 2025, Prothena's total contractual obligations amounted to $44.7 million, primarily comprising obligations under its restructuring plan ($30.3 million), operating leases ($10.8 million), and purchase obligations ($3.3 million) | Obligation Type | Total (in thousands) | 2025 (in thousands) | 2026 (in thousands) | 2027 (in thousands) | 2028 (in thousands) | 2029 (in thousands) | Thereafter (in thousands) | | :------------------------------ | :------------------- | :------------------ | :------------------ | :------------------ | :------------------ | :------------------ | :------------------------ | | Operating leases | $10,771 | $1,678 | $3,301 | $3,269 | $2,523 | $— | $— | | Purchase obligations | $3,339 | $3,216 | $123 | $— | $— | $— | $— | | Obligations under restructuring plan | $30,330 | $30,039 | $291 | $— | $— | $— | $— | | Contractual obligations under license agreements | $309 | $59 | $70 | $70 | $55 | $55 | $— | | Total | $44,749 | $34,992 | $3,785 | $3,339 | $2,578 | $55 | $— | - Expected full year 2025 net cash used in operating and investing activities: approximately $170 million to $178 million[231] Item 3. Quantitative and Qualitative Disclosures About Market Risk Prothena is exposed to market risks from foreign currency exchange rates and interest rates. Foreign currency losses increased in H1 2025, while interest rate risk is limited due to investments in money market funds. The company also faces credit risk from cash and cash equivalents held in financial institutions Foreign Currency Risk The company's business is primarily in U.S. dollars, but agreements with contract manufacturers for drug supplies are mainly in euros, leading to foreign currency exchange rate losses - Foreign currency exchange rate losses: approximately $283,000 for H1 2025, up from $128,000 for H1 2024[233] - Increased exposure to losses if the euro strengthens against the U.S. dollar[233] Interest Rate Risk Prothena's interest rate risk is limited to cash equivalents in money market funds, which fluctuate with prevailing interest rates. The company's investment policy prioritizes principal preservation and liquidity - Exposure to interest rate risk is limited to cash equivalents in money market funds[234] - Money market funds are generally not subject to interest rate risk as interest fluctuates with prevailing rates[234] - Investment policy objectives: preserve principal and maintain proper liquidity[235] Credit Risk The company faces credit risk from cash and cash equivalents held in high-credit-quality financial institutions, with deposits exceeding federally insured limits - Credit risk primarily from cash and cash equivalents held with high credit quality financial institutions[236] - Deposits exceed federally insured limits, exposing the company to risk in case of financial institution default[236] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate financial reporting. No material changes in internal control over financial reporting were identified Evaluation of Disclosure Controls and Procedures As of June 30, 2025, management, with CEO and CFO participation, concluded that disclosure controls and procedures are designed and effective to provide reasonable assurance for timely and accurate reporting of required information - CEO and CFO evaluated disclosure controls and procedures as of June 30, 2025[237] - Conclusion: disclosure controls and procedures are designed and effective to provide reasonable assurance for timely and accurate reporting[237] Changes in Internal Control over Financial Reporting No changes in internal control over financial reporting were identified during Q2 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - No material changes in internal control over financial reporting identified during Q2 2025[238] Limitations on Effectiveness of Controls and Procedures Internal control over financial reporting has inherent limitations, including human diligence, judgment lapses, collusion, and management override, which mean there is a risk that material misstatements may not be prevented or detected timely - Internal controls have inherent limitations, subject to human diligence, judgment lapses, and breakdowns[239] - Risk of material misstatements not being prevented or detected timely due to inherent limitations[239] - Controls are designed to provide reasonable assurance, considering resource constraints and cost-benefit evaluations[240] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, other information, and exhibits Item 1. Legal Proceedings Prothena is not currently a party to any material legal proceedings but may be involved in ordinary routine litigation incidental to its business - Not currently a party to any material legal proceedings[243] - May be party to ordinary routine litigation incidental to business[243] Item 1A. Risk Factors This section outlines significant risks to Prothena's business, including financial position, need for additional capital, challenges in drug development and regulatory approval, commercialization hurdles, dependence on third parties, intellectual property protection, and risks related to its ordinary shares Risks Relating to Our Financial Position, Our Need for Additional Capital, and Our Business Prothena anticipates incurring losses and requiring substantial additional capital for the foreseeable future, with existing cash sufficient for only the next 12 months. The company faces risks from global economic conditions, business disruptions (e.g., public health crises, geopolitical turmoil, natural disasters), and cybersecurity threats, all of which could adversely impact its operations and financial stability - Anticipates incurring losses for the foreseeable future; accumulated deficit of $1.3 billion as of June 30, 2025[245] - Requires additional capital beyond the next 12 months to fund operations, R&D, and commercialization[247] - Ability to raise capital may be adversely impacted by global economic conditions, geopolitical conflicts, and pandemics[251] - Business disruptions (e.g., public health crises, geopolitical turmoil, natural disasters) can adversely affect operations, clinical trials, manufacturing, and financial markets[259][260] - Information technology systems are vulnerable to cyberattacks, potentially leading to business disruption, loss of intellectual property, or unauthorized data disclosure[261] - Subject to evolving U.S. and foreign privacy and data protection laws (e.g., HIPAA, CCPA, EU GDPR), increasing compliance costs and potential liability[262][267] Risks Related to the Discovery, Development, and Regulatory Approval of Drug Candidates Prothena's success is highly dependent on its R&D programs, which face inherent risks of failure, delays, or termination in clinical trials. Regulatory approval processes are lengthy and unpredictable, and even if approved, drug candidates may face limitations or post-approval requirements. Side effects or environmental compliance issues could further hinder development and commercialization - Success depends on successful discovery, development, regulatory approval, and commercialization of drug candidates, which is highly uncertain[271] - Clinical trials are prone to difficulties, delays, or failures due to efficacy, safety, enrollment, or design issues[271][283] - Positive nonclinical or early clinical results may not predict success in later stages[275] - Regulatory approval processes are lengthy, time-consuming, and unpredictable, with no assurance of approval for any drug candidate[293] - Undesirable side effects could interrupt/delay clinical trials, result in restrictive labels, or lead to withdrawal from the market[302] - Compliance with environmental laws for hazardous materials in R&D is required, with risks of accidental contamination or injury[304] Risks Related to the Commercialization of Our Drug Candidates Even if approved, Prothena's drug candidates may not achieve broad market acceptance due to competition, pricing, or reimbursement issues. The company's revenue from prasinezumab is highly dependent on Roche's development and commercialization efforts, and its own ability to establish sales and marketing capabilities for other products is crucial. Healthcare reforms and intense market competition pose significant threats to profitability - Approved drug candidates may not gain broad market acceptance due to factors like efficacy, safety, reimbursement, and competition[308][309] - Success of prasinezumab in the U.S. is dependent on Roche's development and commercialization efforts, with risks of termination or insufficient resource commitment[310][311][319] - Prothena lacks a fully-scaled sales, marketing, and distribution organization and must build or partner for commercialization[323][325] - Government and third-party payers may not provide adequate coverage and reimbursement, impacting revenue and profitability[326] - U.S. and other governments propose legislation (e.g., ACA, IRA) to reduce healthcare costs, potentially leading to lower drug prices and reduced reimbursement[329][332][336] - Markets for drug candidates are subject to intense competition from companies with greater resources and more advanced pipelines[338][339] - Biologic products may face biosimilar competition sooner than anticipated if exclusivity periods are shortened or FDA interpretations change[343][346] - Orphan Drug Designation benefits (e.g., market exclusivity) may not be maintained or may be waived[347][348] - Fast Track designation does not guarantee faster development, regulatory review, or marketing approval[349][350] - Subject to healthcare laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA, Physician Payments Sunshine Act), with non-compliance risking sanctions, penalties, and reputational harm[351][352] - Product liability and clinical trial claims could result in substantial uninsured liabilities, decreased demand, and reputational damage[353][354] Risks Related to Our Dependence on Third Parties Prothena heavily relies on third parties for clinical trials, manufacturing, and raw material supply. Failure of these third parties to perform satisfactorily, meet deadlines, or comply with regulations could cause significant delays, increased costs, and harm to business operations. Establishing new collaborations or finding alternative suppliers/manufacturers can be challenging and costly - Reliance on third parties (CROs, medical institutions, clinical investigators) to conduct clinical trials, leading to reduced control and potential delays if they fail to perform[358][359] - Dependence on Roche, Novo Nordisk, and BMS for further development and manufacturing of partnered drug candidates (prasinezumab, coramitug, BMS-986446)[287][288][368][369][370] - No internal manufacturing capacity; reliance on third-party manufacturers for nonclinical, clinical, and commercial supplies of drug candidates[362][363] - Risks associated with third-party manufacturers include failure to scale up, facility damage, non-compliance with cGMPs, and supply interruptions[364][365][366](index=366&type=ch