Prothena Corporation plc
- Company Name
- Prothena Corporation plc
- Stock Symbol
- Class Period
- October 15, 2015 to April 20, 2018
- Motion Deadline
- September 14, 2018
- Southern District of New York
The complaint charges Prothena and certain of its officers with violations of the Securities Exchange Act of 1934. Prothena is a development-stage biotechnology company. Prothena’s principal asset is NEOD001, a monoclonal antibody designed to treat amyloid light chain amyloidosis (“AL amyloidosis”), a debilitating disease that can lead to organ failure and death.
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Prothena’s development of and prospects for NEOD001. Specifically, defendants misleadingly cited the “best response” results of Prothena's ongoing Phase 1/2 clinical study of NEOD001 as evidence that the drug was effective and provided a strong basis for late-stage Phase 2b and Phase 3 studies of NEOD001, while withholding relevant trial data showing that NEOD001 was not an effective treatment for AL amyloidosis. As a result of defendants’ failure to disclose this adverse information, the price of Prothena common stock was artificially inflated to a high of $75.31 per share during the Class Period.
On June 29, 2017, investment research firm Muddy Waters published a report questioning whether NEOD001 was effective and openly accusing Prothena of presenting the early trial data in a misleading manner and “selectively design[ing] their trial to skew results.” On this news, the price of Prothena stock fell 10% in intraday trading. On November 8, 2017, another investment firm reported on why Prothena’s Phase 1/2 study results were misleading, stating that the Company’s best response measure “is a poor indicator of efficacy” and presents “a blatant apples-to-oranges” comparison with prior studies. The price of Prothena stock fell nearly 8% on this news. On February 2, 2018, Prothena announced that its Chief Medical Officer had resigned, which, according to Seeking Alpha, “bodes ill for Phase 2 data on lead candidate NEOD001.” This news caused the price of Prothena stock to fall another 19%.
Then on April 23, 2018, Prothena announced it was ending all development of NEOD001 after data from its Phase 2b study showed that NEOD001 had failed to reach either its primary or secondary endpoint. Based on the Phase 2b data, the independent data monitoring committee determined that it would be futile to continue the Phase 3 study and recommended that it be abandoned. In truth, NEOD001 was not an effective treatment for AL amyloidosis and the early trial results did not provide an adequate basis for the late-stage Phase 2b and Phase 3 studies. On this news, the price of Prothena stock fell over $25 per share, or 69%, to close at $11.50 per share on April 23, 2018.