Prothena's 70% Plunge Vindicates Short Call From Carson BlockBy
Somewhere, Carson Block is popping the bubbly as short target Prothena Corp.’s tough year just got much worse.
The Dublin-based biotechnology company announced Monday that its mid-stage study of a rare protein disease didn’t reach its target and that development of its lead drug NEOD001 will be discontinued. The shares lost more than two-thirds of their value after having already fallen 30 percent in the prior 12 months.
Muddy Waters Capital founder Carson Block attacked Prothena last June, saying NEOD001 didn’t help patients much more than existing therapies. Five months later, Kerrisdale Capital Management’s Sahm Adrangi predicted that the drug would fail the Phase 2b study, dubbed "Pronto.” Investor concerns only grew from there as within weeks, they learned that results from a late-stage study of NEOD001 would take a year longer than planned. And then the chief medical officer abruptly resigned in February.
Despite the rocky year and expectations for a study update in the second quarter, short interest in Prothena had fallen to about 13 percent of float as of April 20, down from a high of 18 percent in November, according to data compiled by IHS Markit Ltd.