Prothena(PRTA) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) The company reported a net loss of $77.5 million for the six months ended June 30, 2022, a significant increase from a net loss of $9.1 million in the same period of 2021, driven by decreased collaboration revenue and increased operating expenses Condensed Consolidated Balance Sheets Total assets decreased to $549.6 million as of June 30, 2022, from $609.4 million at year-end 2021, primarily due to a reduction in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $508,795 | $579,094 | | Total current assets | $521,294 | $584,809 | | Total assets | $549,589 | $609,366 | | Total current liabilities | $40,107 | $33,452 | | Total liabilities | $142,290 | $143,324 | | Total shareholders' equity | $407,299 | $466,042 | Condensed Consolidated Statements of Operations The company reported net losses of $41.2 million and $77.5 million for Q2 and H1 2022, respectively, driven by a sharp decline in collaboration revenue and increased operating expenses Statements of Operations Summary (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,312 | $60,071 | $2,465 | $60,231 | | Research and development | $31,569 | $21,090 | $58,831 | $42,234 | | General and administrative | $12,952 | $11,032 | $24,787 | $22,157 | | Net income (loss) | $(41,244) | $27,642 | $(77,534) | $(9,093) | | Diluted net income (loss) per share | $(0.88) | $0.58 | $(1.66) | $(0.21) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $72.7 million for H1 2022, a significant shift from cash provided in H1 2021, leading to a $70.3 million decrease in cash and equivalents Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(72,678) | $2,953 | | Net cash used in investing activities | $(183) | $(48) | | Net cash provided by financing activities | $2,562 | $101,546 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(70,299) | $104,451 | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, financial position, and significant collaboration agreements, confirming sufficient cash for the next twelve months despite an accumulated deficit - As of June 30, 2022, the company had an accumulated deficit of $793.6 million and cash and cash equivalents of $508.8 million[33] - Management believes the company's cash and cash equivalents as of June 30, 2022, are sufficient to meet its obligations for at least the next twelve months[34] - The company has significant collaboration agreements with Roche, Bristol Myers Squibb (BMS), and is entitled to potential milestone payments from Novo Nordisk[31] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 98% revenue decrease in Q2 2022 due to a non-recurring milestone, increased operating expenses, and the sufficiency of $508.8 million in cash for future operations Overview Prothena is a late-stage clinical biotechnology company focused on neurodegenerative and rare amyloid diseases, with wholly-owned and partnered programs in its pipeline - Birtamimab is in a confirmatory Phase 3 AFFIRM-AL study for AL amyloidosis under a Special Protocol Assessment (SPA) with the FDA[173] - Prasinezumab, partnered with Roche, is being evaluated in a Phase 2b PADOVA study for early Parkinson's disease[177] - The company's Alzheimer's portfolio includes PRX012 (anti-Aβ antibody), with an IND cleared in March 2022, and PRX005 (anti-tau antibody), partnered with Bristol Myers Squibb[184][190] Results of Operations Total revenue for Q2 2022 decreased by 98% to $1.3 million due to a non-recurring milestone, while R&D expenses increased by 50% to $31.6 million Revenue Comparison (in thousands) | Period | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $1,312 | $60,071 | $2,415 | $60,181 | | Total revenue | $1,312 | $60,071 | $2,465 | $60,231 | Operating Expense Comparison (in thousands) | Period | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $31,569 | $21,090 | $58,831 | $42,234 | | General and administrative | $12,952 | $11,032 | $24,787 | $22,157 | | Total operating expenses | $44,521 | $32,122 | $83,618 | $64,391 | - The increase in R&D expenses for Q2 2022 was primarily due to higher personnel costs, increased clinical trial expenses for PRX012 and birtamimab, and higher manufacturing costs for birtamimab, PRX019, and PRX123 programs[207] Liquidity and Capital Resources Working capital decreased by $70.2 million to $481.2 million, with $508.8 million in cash deemed sufficient for the next twelve months, despite $72.7 million net cash used in operations Key Liquidity Metrics (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Working capital | $481,187 | $551,357 | | Cash and cash equivalents | $508,795 | $579,094 | - Net cash used in operating activities was $72.7 million for the six months ended June 30, 2022, compared to net cash provided by operating activities of $3.0 million in the prior year period[222][223] - The company expects full year 2022 net cash used in operating and investing activities to be approximately $120 million to $132 million[232] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risks are minimal, primarily related to foreign currency exposure in Euros, interest rate fluctuations on money market funds, and credit risk managed through high-quality financial institutions - The company's business is primarily conducted in U.S. dollars, with some foreign currency exposure through agreements denominated in Euros and other currencies[233] - Interest rate risk is limited as cash equivalents are held in money market funds, where interest income fluctuates with short-term market conditions[234] - Credit risk is managed by placing cash with high-credit-quality financial institutions and limiting exposure per institution[236] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective to provide reasonable assurance of timely information recording, processing, and reporting[237] - No changes in internal control over financial reporting occurred during the second fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[238] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[242] Item 1A. Risk Factors The company faces significant risks including a history of losses, need for capital, COVID-19 impacts, R&D program dependence, reliance on partners, regulatory challenges, and intellectual property protection - The company anticipates incurring losses for the foreseeable future and may never achieve profitability, with an accumulated deficit of $793.6 million as of June 30, 2022[244] - The COVID-19 pandemic has adversely affected business, including delaying clinical trial site initiations for the Phase 3 birtamimab trial, and could continue to disrupt clinical development programs[252] - The company's success is highly dependent on its research programs and collaborations with Roche and BMS, which are subject to risks such as partners not committing sufficient resources or terminating agreements[269][275] - The company relies on third parties for conducting clinical trials and for all manufacturing of its drug candidates, creating risks related to performance, compliance, and supply chain continuity[352][357] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the reporting period - None[432] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - None[432] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not Applicable[434] Item 5. Other Information No other material information is reported for the period - None[435] Item 6. Exhibits This section lists filed exhibits, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and XBRL interactive data files[437]