prta-20210331

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, 2021


☐			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 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 44,175,792 as of May 4, 2021.

PROTHENA CORPORATION PLC

Form 10-Q – QUARTERLY REPORT

For the Quarter Ended March 31, 2021

TABLE OF CONTENTS


			Page

PART I. FINANCIAL INFORMATION			1
Item 1. Financial Statements (unaudited)			1
Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020			1
Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020			2
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020			3
Condensed Consolidated Statements of Shareholders' Equity for the three months ended March 31, 2021 and 2020			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			30
Item 4. Controls and Procedures			31

PART II. OTHER INFORMATION			32
Item 1. Legal Proceedings			32
Item 1A. Risk Factors			32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			64
Item 3. Defaults Upon Senior Securities			64
Item 4. Mine Safety Disclosures			64
Item 5. Other Information			64
Item 6. Exhibits			65

SIGNATURES			66

EXHIBIT INDEX			65

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, objectives, and expectations as of the date hereof, are estimates based on our best judgment. These statements relate to, among other things, our goal of building a protein dysregulation platform; the treatment potential and proposed mechanisms of action of drug candidates; plans for future clinical studies of our drug candidates; our collaborations with Roche and Bristol Myers Squibb 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.

Forward-looking statements are subject to risks and uncertainties, and actual events or results may differ materially. 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:

•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 with third parties, including Roche and Bristol Myers Squibb;

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

•our ability to hire and retain key employees;

•tax treatment of our separation from Elan and subsequent distribution of our ordinary shares;

•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;

•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

•business disruptions.

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.

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 in our ordinary shares.

•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.

•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.

•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 collaborations with Roche and Bristol-Myers Squibb and may enter into additional collaborations in the future, and we might not realize the anticipated benefits of such collaborations.

•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.

•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,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	342,993	$	295,380
Accounts receivable	1		15
Prepaid expenses and other current assets	7,955		2,537
Restricted cash, current	1,352		1,352
Total current assets	352,301		299,284
Non-current assets:
Property and equipment, net	2,295		2,551
Operating lease right-of-use assets	16,411		17,811
Deferred tax assets	7,022		11,644
Restricted cash, non-current	1,352		1,352
Other non-current assets	338		333
Total non-current assets	27,418		33,691
Total assets	$	379,719	$	332,975
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	4,212	$	4,117
Accrued research and development	9,355		9,044
Income taxes payable, current	—		36
Lease liability, current	5,617		5,512
Other current liabilities	4,272		7,139
Total current liabilities	23,456		25,848
Non-current liabilities:
Deferred revenue, non-current	110,242		110,242
Lease liability, non-current	10,884		12,326
Other liabilities	553		553
Total non-current liabilities	121,679		123,121
Total liabilities	145,135		148,969
Commitments and contingencies (Note 6)
Shareholders’ equity:
Euro deferred shares, €22 nominal value:	—		—
Authorized shares — 10,000 at March 31, 2021 and December 31, 2020
Issued and outstanding shares — none at March 31, 2021 and December 31, 2020
Ordinary shares, $0.01 par value:	442		399
Authorized shares — 100,000,000 at March 31, 2021 and December 31, 2020
Issued and outstanding shares — 44,175,792 and 39,921,413 at March 31, 2021 and December 31, 2020, respectively
Additional paid-in capital	1,053,906		966,636
Accumulated deficit	(819,764)		(783,029)
Total shareholders’ equity	234,584		184,006
Total liabilities and shareholders’ equity	$	379,719	$	332,975

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,
	2021		2020
Collaboration revenue	$	110	$	141
License revenue	50		—
Total revenue	160		141
Operating expenses:
Research and development	21,144		15,248
General and administrative	11,125		9,741
Total operating expenses	32,269		24,989
Loss from operations	(32,109)		(24,848)
Other income (expense):
Interest income, net	11		1,137
Other income (expense), net	23		(24)
Other income, net	34		1,113
Loss before income taxes	(32,075)		(23,735)
Provision for (benefit from) income taxes	4,660		(166)
Net loss	$	(36,735)	$	(23,569)
Basic and diluted net loss per share	$	(0.91)	$	(0.59)
Shares used to compute basic and diluted net loss per share	40,250		39,909

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,
	2021		2020
Operating activities
Net loss	$	(36,735)	$	(23,569)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	304		384
Share-based compensation	6,176		5,536
Deferred income taxes	4,622		(495)
Amortization of right-of-use assets	1,400		1,345
Changes in operating assets and liabilities:
Accounts receivable	14		(106)
Prepaid and other assets	(5,259)		(4,278)
Accounts payable, accruals and other liabilities	(2,851)		(748)
Operating lease liabilities	(1,337)		(1,236)
Net cash used in operating activities	(33,666)		(23,167)
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	78,367		—
Proceeds from issuance of ordinary shares upon exercise of stock options	2,960		151
Net cash provided by financing activities	81,327		151
Net increase (decrease) in cash, cash equivalents and restricted cash	47,613		(23,038)
Cash, cash equivalents and restricted cash, beginning of the year	298,084		378,427
Cash, cash equivalents and restricted cash, end of the period	$	345,697	$	355,389

Supplemental disclosures of cash flow information
Cash paid for income taxes, net	$	402	$	417

Supplemental disclosures of non-cash investing and financing activities
Acquisition of property and equipment included in accounts payable and accrued liabilities	$	—	$	24
Receivable from option exercises	$	123	$	—
Offering costs included in accounts payable and accrued liabilities	$	313	$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statement of financial position that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows.


	Three Months Ended March 31,
	2021		2020
Cash and cash equivalents	$	342,993	$	352,685
Restricted cash, current	1,352		—
Restricted cash, non-current	1,352		2,704
Total cash, cash equivalents and restricted cash, end of the period	$	345,697	$	355,389

Prothena Corporation plc and Subsidiaries

Condensed Consolidated Statements of Shareholders' Equity

(in thousands, except share data)

(unaudited)


	Three Months Ended March 31, 2021
	Ordinary Shares			Additional Paid-in Capital		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount
Balances at December 31, 2020	39,921,413	$	399	$	966,636	$	(783,029)	$	184,006
Share-based compensation	—	—		6,176		—		6,176
Issuance of ordinary shares upon exercise of stock options	229,379	3		3,080		—		3,083
Issuance of ordinary shares in public offering, net of issuance costs of $5.5 million	4,025,000	40		78,014		—		78,054
Net loss	—	—		—		(36,735)		(36,735)
Balances at March 31, 2021	44,175,792	$	442	$	1,053,906	$	(819,764)	$	234,584


	Three Months Ended March 31, 2020
	Ordinary Shares			Additional Paid-in Capital		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount
Balances at December 31, 2019	39,898,561	399		944,407		(671,885)		272,921
Share-based compensation	—	—		5,536		—		5,536
Issuance of ordinary shares upon exercise of stock options	12,852	—		151		—		151
Net loss	—	—		—		(23,569)		(23,569)
Balances at March 31, 2020	39,911,413	$	399	$	950,094	$	(695,454)	$	255,039

See accompanying Notes to Consolidated Financial Statements.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1.Organization

Description of Business

Prothena Corporation plc (“Prothena” or the “Company”) is a late-stage clinical company with a robust pipeline of novel investigational therapeutics built on protein dysregulation expertise with the potential to change the course of devastating rare peripheral amyloid and neurodegenerative diseases.

Fueled by its deep scientific expertise built over decades of research, the Company is advancing a pipeline of therapeutic candidates for a number of indications and novel targets for which its ability to integrate scientific insights around neurological dysfunction and the biology of misfolded proteins can be leveraged. The Company’s wholly-owned programs include birtamimab for the potential treatment of AL amyloidosis, PRX004 for the potential treatment of ATTR amyloidosis, and a portfolio of programs for the potential treatment of Alzheimer’s disease including PRX012 that targets Aβ (Amyloid beta). The Company’s partnered programs include prasinezumab, in collaboration with Roche for the potential treatment of Parkinson’s disease and other related synucleinopathies, and programs that target tau (PRX005), TDP-43 and an undisclosed target in collaboration with Bristol Myers Squibb for the potential treatment of Alzheimer’s disease, amyotrophic lateral sclerosis (ALS).

The Company was formed on September 26, 2012, under the laws of Ireland and re-registered as an Irish public limited company on October 25, 2012. The Company's ordinary shares began trading on The Nasdaq Global Market under the symbol “PRTA” on December 21, 2012, and currently trade on The Nasdaq Global Select Market.

Liquidity and Business Risks

As of March 31, 2021, the Company had an accumulated deficit of $819.8 million and cash and cash equivalents of $343.0 million.

In March 2021, the Company sold an aggregate of 4,025,000 ordinary shares for net proceeds of approximately $78.1 million, after deducting the underwriting discount and estimated offering expenses, in an underwritten public offering.

Based on the Company's business plans, management believes that the Company’s cash and cash equivalents at March 31, 2021, are sufficient to meet its obligations for at least the next twelve months. To operate beyond such period, or if the Company elects to increase its spending on research and development programs significantly above current long-term plans or enters into potential licenses and or other acquisitions of complementary technologies, products or companies, the Company may need additional capital. The Company expects to continue to finance future cash needs that exceed its cash from operating activities primarily through its current cash and cash equivalents, its collaborations with Roche and Bristol Myers Squibb, and, to the extent necessary, through proceeds from public or private equity or debt financings, loans and other collaborative agreements with corporate partners or other arrangements.

The Company is subject to a number of risks, including but not limited to: the uncertainty of the Company’s research and development (“R&D”) efforts resultin

SEC Form 10-Q filed by Prothena Corporation plc