prta-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

_____________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-35676

______________________________________

PROTHENA CORPORATION PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

______________________________________


Ireland						98-1111119
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)


77 Sir John Rogerson’s Quay, Block C
Grand Canal Docklands
Dublin 2,	D02 VK60,	Ireland
(Address of principal executive offices including Zip Code)

Registrant’s telephone number, including area code: 011-353-1-236-2500

______________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Ordinary Shares, par value $0.01 per share	PRTA	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of ordinary shares outstanding was 52,751,775 as of April 28, 2023.

PROTHENA CORPORATION PLC

Form 10-Q – QUARTERLY REPORT

For the Quarter Ended March 31, 2023

TABLE OF CONTENTS


			Page

PART I. FINANCIAL INFORMATION			1
Item 1. Financial Statements (unaudited)			1
Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2021			1
Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022			2
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022			3
Condensed Consolidated Statements of Shareholders' Equity for the three months ended March 31, 2023 and 2022			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk			31
Item 4. Controls and Procedures			32

PART II. OTHER INFORMATION			33
Item 1. Legal Proceedings			33
Item 1A. Risk Factors			33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			67
Item 3. Defaults Upon Senior Securities			67
Item 4. Mine Safety Disclosures			67
Item 5. Other Information			67
Item 6. Exhibits			68

SIGNATURES			69

EXHIBIT INDEX			68

Note Regarding Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may include words such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.

These forward-looking statements, which reflect our beliefs, assumptions, expectations, estimates, forecasts, and projections about our business and the industry in which we operated as of the date hereof, are estimates based on our best judgment. These statements relate to, among other things, our goal to continue building a biology-directed engine targeting protein dysregulation; the treatment potential, designs, proposed mechanisms of action, and potential administration of our drug candidates; plans for future clinical studies of our drug candidates; our potential to advance, initiate, and complete investigational new drug (“IND”) enabling studies for our discovery and preclinical programs; our collaborations with F.Hoffman-La Roche Ltd and Hoffmann-La Roche Inc. (together “Roche”), Bristol Myers Squibb Company (“BMS”), and Novo Nordisk, and amounts we may receive under such collaborations; the sufficiency of our cash position to fund advancement of a broad pipeline; and our anticipated need for additional capital.

These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that could cause our actual results to differ materially include, but are not limited to, the risks and uncertainties set forth below, those discussed under Part II Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q, and in our other filings with the U.S. Securities and Exchange Commission.

Except as required by law or by the rules and regulations of the U.S. Securities and Exchange Commission, we undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that arises after the date of this Quarterly Report on Form 10-Q, including without limitation:

•our ability to obtain additional financing in future offerings and/or obtain funding from future collaborations;

•our operating losses;

•our ability to successfully complete research and development of our drug candidates;

•our ability to develop, manufacture and commercialize products;

•our collaborations and other agreements with third parties, including Roche, BMS, and Novo Nordisk;

•our ability to protect our patents and other intellectual property;

•our ability to hire and retain key employees;

•our ability to maintain financial flexibility and sufficient cash, cash equivalents and investments and other assets capable of being monetized to meet our liquidity requirements;

•the timing, receipt, and amount of any capital investments, cost-sharing contributions or reimbursements, milestone payments, or royalties that we might receive under current or potential future collaborations, including any milestone payments pursuant to our agreement with Novo Nordisk;

•potential disruptions in the U.S. and global capital and credit markets;

•government regulation of our industry;

•the volatility of the market price of our ordinary shares;

•the outbreak of the novel strain of coronavirus SARS-CoV-2 and the emergence of variant strains;

•the Russian invasion of Ukraine; and

•business disruptions.

Summary of Risks Affecting Our Business

Our business is subject to numerous risks and uncertainties. The following summary highlights some of the risks you should consider with respect to our business and prospects. These risks are described more fully in Part II Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q which includes a more complete discussion of the risks summarized below as well as a discussion of other risks related to our business, our prospects, and your investment.

•We anticipate that we will incur losses for the foreseeable future and we may never sustain profitability.

•We will require additional capital to fund our operations, and if we are unable to obtain such capital, we will be unable to successfully develop and commercialize drug candidates.

•Our success is largely dependent on the success of our research and development programs; our drug candidates are in various stages of development and we may not be able to successfully discover, develop, obtain regulatory approval for, or commercialize any drug candidates.

•We have entered into agreements to develop and bring to market drug candidates with Roche, BMS, and Novo Nordisk and may enter into additional agreements in the future, and we might not realize the anticipated benefits of such agreements, including receiving anticipated milestone payments pursuant to these agreements.

•If clinical trials of our drug candidates are prolonged, delayed, suspended, or terminated, we may be unable to commercialize our drug candidates on a timely basis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.

•The COVID-19 pandemic has adversely affected our business and could have a material adverse effect on our liquidity, results of operations, financial condition, or business, including our nonclinical and clinical development programs.

•Even if any of our drug candidates receives regulatory approval, if such approved product does not achieve broad market acceptance, the revenues that we generate from sales of the product will be limited.

•If we are unable to adequately protect or enforce the intellectual property relating to our drug candidates our ability to successfully commercialize our drug candidates will be harmed.

•Our future success depends on our ability to retain key personnel and to attract, retain, and motivate qualified personnel.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Prothena Corporation plc and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share data)


	March 31,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	686,184	$	710,406
Prepaid expenses and other current assets	14,159		8,692
Total current assets	700,343		719,098
Non-current assets:
Property and equipment, net	1,924		1,731
Operating lease right-of-use assets	4,719		6,277
Deferred tax assets	21,433		18,204
Restricted cash, non-current	2,212		2,212
Other non-current assets	10,955		10,513
Total non-current assets	41,243		38,937
Total assets	$	741,586	$	758,035
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	12,523	$	9,270
Accrued research and development	14,156		10,794
Deferred revenue, current	9,323		11,442
Lease liability, current	4,885		6,473
Other current liabilities	7,997		12,168
Total current liabilities	48,884		50,147
Non-current liabilities:
Deferred revenue, non-current	85,293		85,293
Other liabilities	—		553
Total non-current liabilities	85,293		85,846
Total liabilities	134,177		135,993
Commitments and contingencies (Note 6)
Shareholders’ equity:
Euro deferred shares, €22 nominal value:	—		—
Authorized shares — 10,000 at March 31, 2023 and December 31, 2022
Issued and outstanding shares — none at March 31, 2023 and December 31, 2022
Ordinary shares, $0.01 par value:	527		521
Authorized shares — 100,000,000 at March 31, 2023 and December 31, 2022
Issued and outstanding shares 52,678,178 and 52,103,608 at March 31, 2023 and December 31, 2022, respectively
Additional paid-in capital	1,486,749		1,454,524
Accumulated deficit	(879,867)		(833,003)
Total shareholders’ equity	607,409		622,042
Total liabilities and shareholders’ equity	$	741,586	$	758,035

See accompanying Notes to Condensed Consolidated Financial Statements.

Prothena Corporation plc and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Collaboration revenue	$	2,119	$	1,103
Revenue from license and intellectual property	50		50
Total revenue	2,169		1,153
Operating expenses:
Research and development	44,756		27,262
General and administrative	13,738		11,835
Total operating expenses	58,494		39,097
Loss from operations	(56,325)		(37,944)
Other income (expense):
Interest income	6,690		53
Other expense, net	(141)		(70)
Total other income (expense), net	6,549		(17)
Loss before income taxes	(49,776)		(37,961)
Benefit from income taxes	(2,912)		(1,671)
Net loss	$	(46,864)	$	(36,290)
Basic net loss per ordinary share	$	(0.89)	$	(0.78)
Diluted net loss per ordinary share	$	(0.89)	$	(0.78)
Shares used to compute basic net loss per share	52,501		46,704
Shares used to compute diluted net loss per share	52,501		46,704

See accompanying Notes to Condensed Consolidated Financial Statements.

Prothena Corporation plc and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Operating activities
Net loss	$	(46,864)	$	(36,290)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	201		182
Share-based compensation	8,790		7,660
Deferred income taxes	(3,229)		(2,521)
Reduction in the carrying amount of right-of-use assets	1,558		1,459
Changes in operating assets and liabilities:
Prepaid and other assets	(5,935)		(7,104)
Deferred revenue	(2,119)		(1,104)
Accounts payable, accruals and other liabilities	1,728		1,745
Operating lease liabilities	(1,588)		(1,442)
Net cash used in operating activities	(47,458)		(37,415)
Investing activities
Purchases of property and equipment	(48)		(22)
Net cash used in investing activities	(48)		(22)
Financing activities
Proceeds from issuance of ordinary shares in public offering, net	20,722		—
Payment of issuance costs associated with ordinary shares issued in at-the market offering	(40)		(151)
Proceeds from issuance of ordinary shares upon exercise of stock options