Life Force Draining Out of Prana
On July 30th Prana Biotechnology Limited (PBT.AX)/(PRAN) released their quarterly cash flow report. With $4.3M left in cash and a current burn rate of $1.5M a quarter the life force is draining out of Prana.
Here’s a quick recap, mostly from the horses mouth, for anyone not familiar with the story. Prana Biotechnology was established to commercialise research into Alzheimer’s Disease and other major age-related neurodegenerative disorders. The Company was incorporated in 1997 and listed on the Australian Stock Exchange in March 2000, PBT.AX, and listed on NASDAQ in September 2002, PRAN. Researchers at prominent international institutions including The University of Melbourne, The Mental Health Research Institute (Melbourne) and Massachusetts General Hospital, a teaching hospital of Harvard Medical School, contributed to the discovery of Prana’s technology.
Prana’s key asset is PBT2 which succesfully complete PIIa trials in February 2008. Investors were expecting a partnering deal to be announced soon after and rumours about a deal surfaced on message board towards the end of 2008. However, it’s now 18 months since the P11a trial announcement and no deal has eventuated. Consequently, the share price dropped to a low of $0.125AUD in June.
Hold the phone. I started this post after the quarterly cash flow report, by which time the share price had recovered to $0.18 which is around the price Prana has traded since March 2009. Prana closed today up 17% to $0.24 (a double in six weeks leaving some punter cursing). The resurrection is due to the granting of a European patent last week and today’s US patent notice of allowance, basically a precursor to a patent grant. I thought about changing the title of this post, but it’s just too darn good a title to change now. For those who don’t know Prana is Sanskrit for “breath” and in Vedantic philosophy, it is the notion of a vital, life-sustaining force of living beings.
The patents are clearly good news for Prana and a small bone for investors to gnaw on, but if a partnering deal is not announced soon then this years AGM may be eventful.
Prana was awarded a key European patent for their Alzheimer’s drug PBT2 last week.
Prana Biotechnology today (August 5, 2009) announced that it has secured a key patent protecting its clinical drug asset PBT2, with the European Patent Office issuing a notice of Decision to Grant in Europe. The patent entitled ‘8-Hydroxyquinoline derivatives’ covers the composition of matter of selected families of 8-Hydroxyquinoline compounds, including PBT2 and the uses of such compounds for the treatment of neurological diseases, including Alzheimer’s Disease and Huntington’s Disease. The European patent has a twenty year term expiring on 16 July 2023, with a possible extension of term of up to 5 years under supplementary protection provisions.
Prana’s lead Alzheimer’s Disease compound, PBT2, has already completed a Phase IIa study in early Alzheimer’s Disease patients and has demonstrated safety and tolerability. In addition, PBT2 showed improvement in executive function, an important aspect of cognitive performance, and reduced the levels of Abeta in the spinal fluid of patients. Abeta is a key protein associated with Alzheimer’s Disease.
The trial results were published in The Lancet Neurology journal as well as presented at this year’s International Conference on Alzheimer’s Disease. PBT2 has been designed to be a disease modifying drug that prevents the formation of toxic forms of the Abeta protein in the synapses of the brain and to improve neurotransmission, resulting in improved cognition.
Geoffrey Kempler, Prana’s CEO, said “The decision of the European Office to grant this patent further protects Prana’s valuable clinical asset PBT2, and well positions us to enter larger clinical trials and advance towards commercialization with the aim of having the first disease modifying drug and provide hope to millions of Alzheimer’s sufferers and their families.”
Then today August 12 Prana received a notice of allowance for a key patent for PBT2 in the United States. read more The formal grant is expected by December 2009.
The US notice caused a huge spike in voume with around 1.1M shares of Prana changing hands on the day, around 12x the average daily volume of 93,000.
PBT2 is a good asset and pharmaceutical companies are desperate to fill their pipelines. While there are now some serious questions over Prana’s management to close a deal, shares of Prana offer an attractive speculation.
[Update: I came across a post on the Prana board at Hot Copper today which linked to an article on the top US ADRs with the most upside potential. I was stunned to see Prana at the top of the list.
1 Prana Biotechnology Limited (ADR) (NASDAQ:PRAN) 478.9%
The problem with lists like that is zero thought goes into preparing them, they are mechanical with no fact checking. With minimal effort I found the basis of Prana's possible upside was an old analysts price of $8 per ADR still listed at Marketwatch although no analysts were listed at following the company.]
Disclosure: I own shares in Prana either directly or indirectly.
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