Earnings Call Transcript - PRTA Q4 2022

Operator, Operator

Good afternoon. My name is Audra and I will be your conference operator today. At this time, I would like to welcome everyone to the Prothena's Fourth Quarter and Full Year 2022 Financial Results Conference Call. There will be a question-and-answer session to follow. Please be advised that this call is being recorded at the company's request. I would now like to turn the call over to Mr. Eric Endicott, Prothena's Senior Vice President, Corporate Affairs and Communications. Please go ahead.

Eric Endicott, SVP, Corporate Affairs and Communications

Thank you, operator. Good afternoon, everyone, and welcome to Prothena's investor conference call to review our business progress, our fourth quarter and full year 2022 financial results, and our 2023 financial guidance. Please review the press release we issued earlier today, which is available on our website at prothena.com and is also attached to a Form 8-K filed today with the SEC. On today's call, Dr. Gene Kinney, our President and Chief Executive Officer, will provide introductory remarks followed by an overview of Prothena's portfolio and development strategy as we continue advancing towards becoming a fully integrated commercial biotechnology company. Following Gene's opening remarks, Dr. Hideki Garren, our Chief Medical Officer, will provide an overview of the significant achievements and progress made in 2022 across our entire portfolio. Tran Nguyen, our Chief Financial Officer and Chief Strategy Officer, will then review our financial results for the fourth quarter and full year of 2022 and we'll discuss our 2023 financial guidance. Gene will then provide closing remarks and then we will open the call up for a Q&A session where Dr. Bogner Zago, our Chief Scientific Officer, and Susanna Mesa, our Senior Vice President, Strategy and Operations, will also be participants. Before we begin, I would like to remind you that during today's presentation, we will be making forward-looking statements that are subject to certain risks, uncertainties, and other factors that could cause actual results to differ materially from those referred to in any forward-looking statements. For a discussion of the risks and uncertainties associated with our forward-looking statements, please see our press release issued today, as well as our most recent filings with the SEC. We disclaim any obligation to update our forward-looking statements. And with that, I'd like to turn the call over to Gene.

Gene Kinney, CEO

Thank you, Eric, and thank you all for joining us today to review our 2022 financial results and business highlights. We're excited to share Prothena's major achievements in 2022 and how we are advancing a portfolio of drug candidates targeting both neurodegenerative and rare peripheral amyloid diseases. At Prothena, we are driven by our mission to create impactful treatments for the millions of patients affected by diseases caused by protein dysregulation. This mission is enabled by our deep scientific expertise, which serves as a unifying thread between our business strategy, our portfolio development, and the dedication that propels us every day. Turning now to slide five, Prothena is a late-stage clinical biotechnology company with a robust pipeline, which includes four wholly-owned programs and five partner programs. This intentional mix allows us to build a diverse portfolio by leveraging partner payments while still maintaining full upside potential for our wholly-owned assets. For our Alzheimer's programs in 2022, we advanced both PRX012 and PRX005 into the clinic and expect to report top-line Phase 1 multiple ascending dose data from both programs this year. For PRX123, we have completed several IND-enabling studies and look forward to submitting an IND by year-end. Our Parkinson's disease program, prasinezumab, is being evaluated by Roche in both the Phase 2b PADOVA and open-label extension portion of the Phase 2 PASADENA study. We also have two rare peripheral amyloid disease programs: first, birtamimab, a wholly owned program, which is being evaluated in a confirmatory Phase 3 study, and NNC6019, formerly PRX004, which is being evaluated by Novo Nordisk in a Phase 2 study. Collectively, these achievements position us well for a transformational period over the next 24 months. And finally, I'll highlight that we remain well-funded to execute on our strategic objectives. We ended 2022 with a strong cash position of $713 million, which included $40 million received for a clinical milestone from Novo Nordisk. Our partnership with Novo, together with our Bristol Myers Squibb and Roche collaboration and our wholly owned programs, allows us to advance our robust pipeline with blockbuster potential, further supporting our goal to address the unmet medical needs of millions of patients affected by diseases caused by protein dysregulation. Our clinical expertise and differentiated approach enable us to advance best-in-class therapies that have the potential to transform the treatment landscape for protein dysregulation diseases. Our focus on developing treatments for neurodegenerative disorders includes therapeutic approaches for Alzheimer's disease and Parkinson's disease, which are sadly growing exponentially. Combined, these two diseases affect an estimated 60 million people globally, a number that is expected to increase rapidly with an aging population. This tremendous social and economic burden is not only experienced by patients, but also by family members, caregivers, and the overall healthcare system. In rare peripheral amyloid diseases, birtamimab and NNC6019 are being developed in targeted patient populations at high risk for early mortality, which underscores our commitment to developing therapies for patients with an urgent need for improved survival. Before I turn the call over to Hideki, I'd like to highlight several breakthroughs that occurred in 2022 that have meaningfully advanced the overall treatment landscape for Alzheimer's disease. Over the past several months, multiple milestones have been achieved in the Alzheimer's community. Notably, developments include the presentation last November at the clinical trials on Alzheimer's disease or CTAD conference of statistically significant and clinically meaningful results across the primary endpoint and all key secondary endpoints from Eisai and Biogen's confirmatory Phase 3 Clarity AD trial for lecanemab, an antibody that targets the immunoterminus of Abeta in patients with Alzheimer's disease to both clear plaques and neutralize soluble proto. In early January, lecanemab received accelerated approval from the FDA for the treatment of early Alzheimer's disease. Notably, the approval was based on Phase 2 data that demonstrated that lecanemab reduced the accumulation of Abeta plaque in the brain, which was noted by the agency as a surrogate endpoint reasonably likely to predict positive clinical outcomes. The results from Clarity AD, plus the accelerated approval of lecanemab, continue to support the Abeta treatment pathway in Alzheimer's disease and we believe pave the path for the next generation of plaque-clearing anti-Abeta antibodies, including PRX012, a potential best-in-class subcutaneous treatment for Alzheimer's disease. Another notable development at the CTAD conference was the many scientific advancements in the area of biomarkers. This included research from Dr. Randy Bateman's team at Washington University in St. Louis, which showed that cerebral spinal fluid levels of MTBR tau 243 closely tracked with tau PET, distinguishing amyloid-positive individuals with tau tangles from those without. Hideki will cover this exciting data in more detail shortly. At Prothena, we celebrate these advancements and strive to create novel treatments that further improve efficacy and quality of life for patients. Finding solutions to treat and prevent this disease is crucial. This is why we are advancing one of the most robust Alzheimer’s disease portfolios in the industry, guided by our comprehensive therapeutic strategy to address the unmet needs in Alzheimer's. Our portfolio is well positioned in light of these recent scientific advances in the field and positions Prothena as a leader in the transformation of Alzheimer's therapeutic approaches. We're currently advancing three product candidates, PRX012, PRX005, and PRX123, targeting key pathological pathways of the disease cascade, which have the potential to expand from next-generation disease-modifying treatments to combination and prevention paradigms. With that, I'll now turn the call over to Hideki to highlight the progress made across our robust R&D portfolio in 2022.

Hideki Garren, Chief Medical Officer

Thank you, Gene. I'll start with PRX012, our next-generation patient-centric subcutaneously delivered investigational treatment for Alzheimer's disease, which targets a key epitope immunoterminus with high binding potency. Preclinical data have shown that PRX012 binds to the amyloid plaques with very high validity, consistent with the potential for more effective Abeta plaque clearance at lower doses than current approved NTA Abeta therapies, allowing for subcutaneous delivery in our clinical trials. PRX012 is designed with the patient in mind and we believe it has the potential to be best-in-class, transforming the treatment of Alzheimer's disease. In 2022, the FDA cleared the IND for this program and granted PRX012 fast track designation for the treatment of Alzheimer's disease. We then successfully initiated a randomized, double-blind, placebo-controlled Phase 1 single dose study evaluating the safety, tolerability, immunogenicity, and pharmacokinetics of PRX012 in healthy volunteers and in patients with Alzheimer's disease. The multiple ascending dose portion of this study has commenced, and we expect to report topline data from the initial dose level cohort by year-end 2023. We look forward to having a significant presence at the upcoming 2023 International Conference on Alzheimer's and Parkinson's Diseases or ADPD, which begins in late March. Among the events are an oral presentation featuring preclinical data showing the superior binding characteristics of PRX012 and the sponsor symposium featuring key thought leaders. PRX012 oral presentation will show a superior binding of nearly 20-fold higher affinity and avidity to Abeta405 when compared to lecanemab, and substantially more extensive clearance of pyroglutamate Abeta than plaque of Alzheimer's disease tissue compared to donanemab. Our goal with PRX012 is to offer greater patient accessibility and ease of compliance relative to approved therapies and other immunoterminus-targeted treatments currently in development. Compared to first-generation treatments, subcutaneous PRX012 is also expected to result in smaller fluctuations in antibody concentrations in the brain. I would like to turn now to PRX005, our anti-tau targeting monoclonal antibody. PRX005 is designed to be a best-in-class anti-MTBR-specific anti-tau antibody. Tau tangles, along with amyloid beta plaques, are pathological hallmarks of Alzheimer's disease, and research indicates that tau pathology correlates with the clinical and cognitive decline associated with the disease. Early research conducted by Prothena found that targeting specific regions within the MTBR resulted in more consistent and robust reductions in the pathogenic uptake of tau into neurons and the downstream neurotoxic effects. As Gene mentioned in his earlier remarks, Dr. Randy Bateman's presentation at CTAD 2022 shows MTBR fragments make up the bulk of tau tangles, and the CSF anti-MTBR tau243 correlated with tau imaging of the brain at a coefficient of 0.75. These are exciting data that further support the rationale for this target and will continue to inform the team. We recently reported topline data from the Phase 1 single ascending dose study evaluating PRX005 in 19 healthy volunteers. The results demonstrated dose-proportional drug concentrations in plasma with robust central nervous system penetration. Single doses from three dose level cohorts were generally safe and well-tolerated, meeting the primary objective of the study exposure in cerebrospinal fluid was measured in the high-dose cohort, and based on the robust exposure of PRX005 in the CSF, which is approximately 0.2% of peripheral levels, substantial target engagement is expected in the CNS. PRX005 has a desirable immunogenic profile with no persistent PRX005-induced anti-drug antibodies observed. We plan to present these results from the Phase 1 single ascending dose study at an upcoming medical conference. The multiple ascending dose portion of the Phase 1 study is ongoing. The purpose of the Phase 1 multiple ascending dose trial is to evaluate the safety, pharmacokinetics, pharmacodynamics, and immunogenicity following the administration of multiple doses of PRX005 in healthy adults and in patients with Alzheimer's disease. We anticipate that these results will help us determine the appropriate dose level for subsequent clinical studies. Topline results are expected by year-end 2023. PRX005 is one of three programs being developed in partnership with our colleagues at Bristol Myers Squibb. For our third Alzheimer's program, PRX123, a dual Abeta vaccine, we presented preclinical data at AD/PD 2022 that demonstrated the generation of anti-Abeta and anti-MTBR tau antibodies that enable phagocytosis of Abeta and neutralization of pathogenic tau. We look forward to filing an IND for PRX123 by year-end 2023. This program is exciting because it combines knowledge and mechanisms for both amyloid-beta and tau targeting in a single construct, essentially aligning with prevention as well as therapeutic strategy. Turning now to prasinezumab in Parkinson's disease, in 2022, Roche, our partner for prasinezumab, presented data from the Phase 2 PASADENA study at AD/PD 2022. These data are compelling because they support a potential effect on delaying motor progression in Parkinson's disease. In addition to the PADOVA study, Roche is now conducting the ongoing Phase 2b study in patients with early Parkinson's disease. Roche expects to report topline data from the PADOVA study in 2024. Now I'd like to discuss the birtamimab program for the treatment of Mayo Stage IV AL amyloidosis. Current treatments for AL amyloidosis target clonal plasma cells that overproduce light chains. While these therapies can reduce new protein production, they fail to directly address the amyloid that has already deposited and is causing organ toxicity and failure. Birtamimab is differentiated in that it is designed to deplete the amyloid and soluble aggregates most proximally associated with organ dysfunction. Prothena has advanced birtamimab into the ongoing confirmatory Phase 3 AFFIRM-AL study. The patients with Mayo Stage IV AL Amyloidosis are enrolled under a special protocol assessment or SPA agreement with the US FDA, with the primary endpoint of all-cause mortality at a significant level of less than or equal to 0.10. Patient enrollment continues to be on track, and the confirmatory Phase 3 AFFIRM-AL top-line data is expected in 2024. In December, at the American Society of Hematology 2022 Conference, we reported clinical data from the completed Phase 3 VITAL study, which demonstrated in a post-analysis of patients with Mayo Stage IV AL Amyloidosis a statistically significant survival benefit of 74% in patients taking birtamimab versus 49% of patients on placebo at nine months. This reflects a hazard ratio of 0.413 and a P-value of 0.021. The survival benefit of birtamimab remains consistent across all key baseline variables in Mayo Stage IV patients, reinforcing the strength of the survival data in these patients at a high risk of early mortality. Birtamimab was generally safe and well-tolerated in the overall population and in Mayo Stage IV patients. Lastly, regarding the ATTR Amyloidosis program, PRX004, which is being developed by Novo Nordisk and has been renamed NNC6019, has now advanced into an ongoing Phase 2 clinical study for the treatment of ATTR cardiomyopathy. Novo expects to report topline data from the Phase 2 study in 2024. At this time, I'd like to turn the call over to Tran for discussion of our 2022 financial performance and our 2023 financial guidance. Tran?

Tran Nguyen, CFO and Chief Strategy Officer

Thanks, Hideki. Today, we reported results that were either in line or favorable to our 2022 financial guidance. Please refer to our press release for a detailed breakdown of our financial results. As Gene mentioned during his opening remarks, last year we strengthened our capital position, first with our strong partnership with Novo Nordisk, where we received $40 million related to the Phase 2 trial of NNC6019 for the potential treatment of ATTR cardiomyopathy. Additionally, in December 2022, we received net proceeds of $172.4 million raised through an underwritten public follow-on offering of 3.25 million ordinary shares. In terms of our 2022 financial performance relative to guidance, we had net cash used in operating and investing activities of $109.3 million, which was in line with our guidance of $108 to $120 million. Net loss was $116.9 million, which was favorable to our guidance of $121 million to $137 million. As of December 31, 2022, Prothena had $712.6 million in cash, cash equivalents, and restricted cash, which exceeded our guidance of $522 million. As of February 17, 2023, Prothena had approximately 52.6 million ordinary shares outstanding. Additionally, we continue to have a clean capital structure with zero debt. Turning to our 2023 financial guidance, we expect our full year 2023 net cash used in operating and investing activities to be between $213 million and $229 million. We expect to end the year with approximately $512 million in cash, cash equivalents, and restricted cash, which represents the midpoint of the range. The estimated full year 2023 net cash used in operating and investing activities is primarily driven by an estimated net loss of $250 million to $275 million, which includes an estimated $46 million of non-cash share-based compensation expense. With that, I'll turn the call back over to Gene to discuss our upcoming milestones. Gene?

Gene Kinney, CEO

Thank you, Tran. Before we talk about our 2023 milestones, I want to first acknowledge and thank our talented Prothena employees for their ongoing commitment to advancing our protein dysregulation science to make a real impact for the patients and families we serve. I'd also like to thank the patients, their families, physicians, and study site staff who participate in our studies. Without their support, we could not elucidate the potential impact of the new medicines we're developing. Over the past year, our team has delivered on multiple milestones further advancing Prothena as a leader in addressing devastating diseases caused by protein dysregulation. As you heard today, our dedication to our mission combined with our diversified best-in-class portfolio and our scientific heritage and human talent have made possible multiple meaningful achievements in 2022 and have positioned Prothena well for a transformational period ahead. As new data becomes available on the clinical regulatory and commercial landscape in the Alzheimer's field, we believe our programs are well-positioned to revolutionize the care of patients suffering from this devastating disease. To that end, we can expect the following key milestones in 2023 and 2024: First, preclinical data demonstrating the superior binding characteristics of PRX012 at the upcoming AD/PD 2023 annual meeting. Second, the multiple ascending dose portion of the Phase 1 PRX012 study has commenced, and we are on track to report topline data from the initial cohort by the end of 2023. Third, the Phase 1 multiple ascending dose study for PRX005 is ongoing with topline data expected by year-end 2023, further elucidating the potential of targeting the MTBR tau in treating Alzheimer's. Fourth, for PRX123, we are looking forward to submitting an IND by the end of 2023. Fifth, for prasinezumab, we expect that Roche will report topline data from the Phase 2b PADOVA study in 2024. Sixth, in our rare peripheral amyloid portfolio, we continue to enroll patients in our Phase 3 AFFIRM-AL study of birtamimab and continue to anticipate top-line data from that study in 2024. Finally, for NNC6019, we expect that our partner, Novo Nordisk, will report topline Phase 2 data in patients with ATTR cardiomyopathy in 2024. I'm proud of the progress that Prothena has made in 2022. We have a robust portfolio with multiple wholly-owned assets and strong collaborations. We are well capitalized, have a robust cash position, and remain focused on executing during the next 24 months. We expect to make additional progress across our R&D pipeline this year, and we look forward to continuing to provide additional portfolio updates when appropriate. So with that, we'll now open the call for questions. Operator?

Operator, Operator

Thank you. We'll go first to Michael Yee at Jefferies.

Michael Yee, Analyst

Hey guys, good afternoon. Thanks for the update. I’ll keep it to one question. I believe you’ve started the MAD portion in Alzheimer’s patients in the first cohort for PRX012. Later this year, when you have data, can you explain what you’re looking for after selecting patients for six months? Are you aiming for a specific level of amyloid PET reduction? Also, how should we interpret that data and compare it to other Alzheimer’s antibodies? Thank you.

Gene Kinney, CEO

Yeah. Really important question, Mike, and thanks for asking. So, let me just start by saying that obviously in the multiple ascending dose study, our primary objective is to continue to establish safety and tolerability over the six-month period. We'll be looking at pharmacokinetics and immunogenicity. And as you pointed out, interestingly, we'll be looking at the pharmacodynamic marker of brain amyloid reduction using PET as the tool to do that. Maybe I can hand it first to Tran, and then maybe Hideki, you can make a comment as well in terms of what our expectations are and how we're thinking about this first dose cohort relative to other examples of anti-amyloid agents that have shown amyloid reduction by PET. Tran?

Tran Nguyen, CFO and Chief Strategy Officer

Thanks, Gene. As you know, Mike, we targeted and modeled the first dose of the MAD Phase 1 to be at the C average concentration level of 10 mg per kg aducanumab. We believe the first initial dose level cohort will be active, but of course – and Hideki can go into this – we have other dose level cohorts to dial in, in optimal dose for registrational trials later. But again, we're not looking for comparative data. We're looking for active data. And so, we'll use the SAD data and also some from the MAD data to further elucidate doses behind the first dose.

Hideki Garren, Chief Medical Officer

And I'll just add – remember, this is a Phase 1 study, so the primary endpoint is safety. We'll, of course, look at pharmacokinetics and pharmacodynamics as both Gene and Tran have alluded to. Importantly, we'll have additional dose cohorts to look at bracketing that dose.

Operator, Operator

We'll go next to Neena Bitritto-Garg at Citi.

Neena Bitritto-Garg, Analyst

Hey guys. Thanks for taking my question. Just to follow up on the question that was just asked. Could you give us a little bit more detail on exactly how many patients we might expect to see data for PRX012 later this year? And then, also if you can provide any color on – just any more specifics on kind of exactly the PET metrics that you'll look at, whether you'll be able to provide us with metrics like the proportion of patients who are amyloid negative or whether we should expect to see results kind of on the cental scale and how we should think about that. Thanks.

Gene Kinney, CEO

Yeah. Thanks, Neena. Great questions. So maybe I can hand it over to Hideki to talk a little bit about the multiple dose study design and some of the elements of that, and you can talk a little bit – maybe Hideki as well about just some of the parameters that we're evaluating from a PET perspective.

Hideki Garren, Chief Medical Officer

Yeah. So we have – in this first cohort, we have enough patients in order to meet our endpoints. The main parameters will be safety, pharmacokinetics, and pharmacodynamics as measured by amyloid PET. We will also have MRI to look for any safety issues as well. And so, those are the main parameters. We have optional biomarkers as well, so we'll have a very robust dataset. Remember again that the primary endpoint is safety in this Phase 1 MAD.

Tran Nguyen, CFO and Chief Strategy Officer

We will have enough patients in the MAD cohorts to conduct a statistical analysis concerning the amyloid PET data from a pharmacodynamic perspective. We will also examine various analyses of SUBR reads.

Gene Kinney, CEO

Yeah. I mean the other thing I'll just point out, Neena, as a follow-up to your question, is I don't want to lose sight of the fact that the single-dose data is something that we'll also be talking about this year, and we think that's of importance as well. As you know, with PRX012, given its binding characteristics and its development as a subcutaneous approach with the target product profile of once monthly subcutaneous delivery, we think the single-dose data could be quite informative just to tell us how closely we've come to our target product profile. So, we think all that data will be important. And again, the anticipation is, we'll talk about that altogether.

Operator, Operator

And next, we'll move to Charles Duncan at Cantor Fitzgerald.

Charles Duncan, Analyst

Yeah. Hi, guys. Thanks for taking the question, and congrats on good year progress. I also had a question on PRX012 and probably a two-part one. That is, with regard to the single dose data, could you be presenting that at AAIC or CTAD? And then the second part is, when you talk about subcutaneous and being patient-centric best-in-class, what exactly are you going to be considering to evaluate whether or not you hit that target product profile?

Gene Kinney, CEO

Yeah. Thank you for the question. So, first, I think with respect to where the data will be discussed, obviously we will wait until we actually are able to speak to that. That requires not just us targeting a certain meeting, but an abstract being submitted and accepted. Typically, we wouldn't talk about where we would discuss those data until such time as we announce that publicly. I think for the single-dose data, the current expectation should be that we'll speak about the single dose data along with that first cohort of multiple dose data. So, that's the current communication around that. So that's I think the right expectation to have currently. I'll mention just from a subcutaneous perspective, and maybe I can ask Wagner to talk about some of the characteristics of PRX012, which we think enable this. It really is about a target product profile, and what we set out to do with PRX012 was to develop an antibody that by design would lend itself to subcutaneous administration. And that, of course, requires a number of key characteristics being met. It was an intensive screening campaign to develop antibodies with the right characteristics. What we are looking for now in our clinical studies is obviously to understand if we have met that. At the highest level, we are most eager to have a once monthly subcutaneous delivery that provides the same level of occupancy of Abeta as some of these first-generation antibodies, which may require much more intensive delivery because of their less optimal profile and characteristics. If you think about once monthly subcutaneous with one single syringe, that's really what we're going for. That's the optimal target product profile for us. We think that enables potentially patient access. For patients that have a potential to benefit from these types of treatments, we want to make sure that patients can actually receive these types of treatments. We think moving to that kind of target profile makes a lot of sense in that regard. So maybe Wagner, if you could just give a little bit of overview on some of the key characteristics that we looked at as we were developing and ultimately selecting PRX012 to meet that target profile.

Wagner Zago, Chief Scientific Officer

Yeah. Absolutely, Gene. So for PRX012, we talk about affinity a lot. That's a very intuitive feature that if you increase the potency of an antibody, you can dose at much lower doses to reach the same level of target occupancy and the same level of clearance that other antibodies there are lower potency would do. But subcutaneous, an antibody requires additional features. It's not only to be more potent, but remember that this antibody is going to be delivered in a different compartment in the periphery. From that compartment, from subcutaneous to the blood, there's a barrier. As Gene was saying, when we designed PRX012 and screened many antibodies, we included in the design and in the screen all those additional features that a subcutaneous antibody needs to have. One is bioavailability, stability not only in the high concentration solution, but the stability in that same compartment where it's delivered. All of that was part of the screening process that made PRX012 rise to the top. This is different than a campaign where you normally start with an IV antibody and try to make it subcutaneous. You might encounter some challenges at that point, and we didn’t want to. As Gene said, PRX012 was born to be a subcutaneous antibody. With the risk that preclinically, so as was said before, the importance of a Phase 1 for us is to confirm that our assumptions to clinically are correct in patients, that bioavailability exposure, all of that is read early. That’s very important for us because we can tweak our models and ensure that the doses we selected for the MAD, for example, are appropriate doses, that they are active. Not only that, but they will lead to target engagement that will be meaningful for the target product profile.

Operator, Operator

We'll take our next question from Jay Olson at Oppenheimer.

Jay Olson, Analyst

Hey guys, congrats on the progress and thank you for taking the question. Can you talk about how you see the reimbursement landscape evolving for Alzheimer's therapeutics, especially with yesterday's comments from CMS and also since PRX012 is designed to be delivered as a subcutaneous, and then also maybe in the context of your broader Alzheimer's portfolio with PRX005 and also your dual tau amyloid vaccine. Thank you.

Gene Kinney, CEO

Yeah. Jay, really good question. Thank you. Maybe I'll ask Tran to also speak to this, but just as a quick kind of overview. I think the announcement yesterday, we felt generally was encouraging. Within the current NCD, the response to the Alzheimer's Association request to reconsider the prior decision. Obviously, it was a little disappointing that that wasn't entertained, but at the same time I think it was encouraging that CMS came out and did suggest that on full approval, within the former NCD construct, they would look to think about almost immediate reimbursement in a much broader context. We think that's positive. We think that's a way to actually increase the reimbursement footprint in the near term while still having the ability to reconsider the full NCD moving forward. That said, as you appropriately pointed out, a subcutaneous approach, particularly those that may be envisioned to occur in the home, could actually be in Part D as opposed to Part B in the Medicare scheme. Of course, that has different consequences with respect to NCD, National Coverage Determinations. We think that actually positions PRX012 quite well for potential reimbursement in that context. The other question that you were kind of asking a little bit, maybe around the accelerated approval pathway and what that continues to look like, and of course, we were encouraged by the accelerated approval of lecanemab. In particular, the fact that the basis of approval there was based on the Phase 2 data, and the basis of that approval was really on amyloid plaque reduction, measured by PET. We think that that accelerated pathway, from our perspective, provided that you can meet the key elements of the accelerated approval pathway, which is a serious disease and an unmet medical need, we think that that continues and remains open as a potential path for PRX012. But at the same time, we're looking at our program in a holistic way. We're thinking about it end-to-end, how do we move this molecule forward through the clinic in a way that's most appropriately ambitious, but at the same time, provides us with the broadest data package on which to enter the commercial market. So, we do think about that from an end-to-end perspective, but maybe Tran, I can ask you to comment a little bit further on the decision yesterday that CMS kind of published and how you see the field.

Tran Nguyen, CFO and Chief Strategy Officer

Yeah. I know I think, just to build on what you said is, I mean, clearly the letter pointed to the fact that they understood that there is more data, meaning how we read it was the Phase 3 data. I think during this review, they didn't look at that. What they said is, in order to work expeditiously to get broader coverage for patients, they wanted to work within the existing NCD and the CED that they put out there. They have broadened that what they basically communicated that they will broaden that upon full approval. They do mention a registry. There is a registry that the Alzheimer's Association has. And so, we'll see how what the details of that are. But at this point, they are broadening it. They're saying, hey, between the review of full approval, we'll review the data. At least in that period, you'll get broader coverage potentially through a registry. After real-world data is collected and after a review of the Phase 3 data, they would go back and take a look at potentially changing that to something even broader than that. I think what they were working with was, do we start from kind of a zero, which is, okay, it'll take nine to 12 months for a new NCD process versus broadening through a registry. We do see it as CMS working with FDA, and I think they understand that FDA's job is to approve or to make the decision on the approval of lecanemab. Once that happens, they can then review the data and do what they need to do. But again, we see that as very encouraging. Again, we will work with regulators and to build on what Gene was saying about our path to patients. There are potential paths forward for us that Gene just covered, but ultimately we need to talk to regulators about that. We do feel that accelerated approval is based on unmet need. As you know, there are millions of patients in the prodromal to mild stage of the disease. We think that even according to estimates of a hundred thousand patients in a year after three years of marketing, that's an underpenetrated market, so to speak. There will be an unmet need, and we will work hard to figure out what our path to patients are. We will come back and update you all when that happens. Thank you.

Operator, Operator

We'll go next to Brian Abrahams at RBC Capital Markets.

Brian Abrahams, Analyst

Hi, there. Good afternoon. Thanks for taking my question, and congrats on all the progress. I'm curious, how are you guys envisioning the future dosing paradigm for Alzheimer's beta amyloid antibodies? Do you think this will be finite dosing with amyloid checks, chronic dosing, or some sort of induction maintenance? I'm curious how that might shape your 012 development strategy with regards to potentially enabling the most robust safety data set for a potential accelerated approval. Thanks.

Gene Kinney, CEO

Yeah. Thanks, Brian. So, yeah, I think you're exactly right. There are a couple of different monoclonals out there that target slightly different species of amyloid beta and are talking about the dosing paradigms slightly differently. From our perspective, as we think about targeting the most pervasive form of amyloid in the brain, in its misfolded or dysregulated state, it is a chronic treatment paradigm. I think we're aligned with, for example, many of the things that you hear from the folks at ASI and some of the analysis they've done, particularly in their Phase 2 data set where they had a gap year and weren’t dosing patients who actually showed that some of the key biomarkers were starting to revert back to worsening during that time. I think there are other approaches out there that target a subspecies of amyloid beta post-translational modification where there may actually be less of that material in the CNS, but at the same time, I'll ask Wagner to comment on that as well. I think under those conditions, it may make sense to stop treating after a period of time that that particular species has been eliminated or at least substantially reduced. But that may not be true in the context of all treatments, and it may or may not lead in long term to a better treatment profile. That's something that we'll find out after longer longitudinal beta sets have come in across multiple compounds and particularly multiple compounds that target Abeta in slightly different ways. Our current view of the data is that chronic treatment is likely needed. The amyloid beta is a key toxic insult in the CNS in the context of Alzheimer's disease. Not only does it cause problems on its own, but it leads to dysregulation of other key proteins such as tau. One of the key reasons we talk about PRX123 as dual amyloid beta tau targeting agents is because we believe that those biologies are on target pathways. We know, for example, that amyloid beta can lead to tau regulation, which leads directly to neuronal dysregulation. We do think that ultimately Abeta will continue to provide a toxic insult if it's left unchecked, and therefore it needs to be part of a foundational treatment as we think about disease modification. So maybe Wagner can expand on some of that science.

Wagner Zago, Chief Scientific Officer

Yeah. To echo what you just said, Gene, I think the – what determines the period of treatment is likely what the mechanism is. If you have an antibody that binds to a multitude of toxic forms from all the very small solid aggregates, although OID, you likely need that antibody to be delivered chronically because those small toxic forms can be formed very quickly in the brain of patients. Even you remove completely the most compact forms of the plaque, and that's what we visualize when you do a PET scan, it doesn't mean that you don't have amorphous material around that can accelerate the formation of more amyloid and make even more solid aggregates. If your antibody binds all those forms, all the pathogenic forms, we see that as a chronic treatment. Now if the antibodies are binding to a post-translational modification that requires time to happen once you got rid of the initial material, then there is, of course, a lag between that and the formation of a new pathogenic form. It probably wouldn't make sense to have an antibody around if you don't have the target. Again, it all depends on the mechanism of action of the antibody. An end-terminal antibody that binds to all pathogenic forms like lecanemab, like PRX012 – we think that it makes perfect sense to position as a chronic treatment.

Tran Nguyen, CFO and Chief Strategy Officer

Just to build on what Gene and Wagner were saying, and clearly, we're going to follow the data here. I think the Phase 3 data from Clarity AD, given what Wagner just said about hitting all the species that could be pathogenic, not just the post-translational modification, pyroglutamate Abeta, we know what that results in by the Phase 3 Clarity. We’re excited to see the Phase 3 Trialblazer 2 trial from donanemab. We’ll look at that data in terms of the trial design they have, where they dose to amyloid negative and stop. We’ll see how that affects clinical endpoints because that’ll be a great learning and it’ll tell us how to design our registrational trials going forward.

Operator, Operator

And we’ll move to our next question from Jason Butler at JMP Securities.

Jason Butler, Analyst

Hi, thanks for taking the question. Just had one on PRX005. Just wondering if you could give some comments about what you're looking to take away from the MAD results later this year. I guess what you've taken from the SAD results in terms of target engagement and how you're thinking about it going forward, and how do you think about biomarkers specifically as you mentioned how tau 243 CSF and how you could include that in the program? Thanks.

Gene Kinney, CEO

Thank you, Jason, for the question. To share a bit about our journey to the MTBR region, tau is a complex protein with six splice variants and over 440 amino acids in some of those variants. It was crucial for us to understand how to target this protein to alleviate some of the negative effects associated with its dysregulation. The team led by Wagner did an excellent job in investigating approaches to target this protein, including immunoterminus-targeting antibodies and carbo determinist-targeting antibodies. We discovered that a specific area within the MTBR region produced consistently strong biological effects. We were further encouraged by emerging work in the field that highlighted the importance of these MTBR regions and their fragments. For instance, Mark Diamond's research indicated that these MTBR fragments play a vital role in the cellular transmission of dysregulated tau. Additionally, as we noted earlier, Randy Bateman's research at Wash U showed that when examining these MTBR fragments in the cerebrospinal fluid (CSF), they correlate much better with tau PET imaging and potential levels of dementia in Alzheimer's patients. Regarding your question about the multiple dose study, the primary aim is safety and tolerability. However, we are also keen on assessing CSF target engagements, particularly concerning these MTBR fragments. Hideki or Wagner, would you like to discuss the nature of the fragments we plan to evaluate and their potential pharmacodynamic effects in the central nervous system, specifically in the CSF?

Hideki Garren, Chief Medical Officer

Yeah. I just wanted to reiterate that we're very pleased with the SAD results that we announced earlier. It's very safe, tolerable, and the CSF data shows we have 0.2% penetration, which we're extremely pleased with because that really indicates substantial target engagement. As far as the MAD data, as Wagner mentioned, we will have not only safety, but we'll have the CSF data in terms of MTBR engagement from the CSF and Alzheimer's patients. All of this data we expect by end of the year.

Operator, Operator

At this time, there are no further questions. I will turn the call back over to Gene Kinney for closing remarks.

Gene Kinney, CEO

Well, thanks, operator. I want to thank you all for joining us on the call today. We appreciate your interest in Prothena, and over the coming months we look forward to sharing further updates on our programs. Thank you all.

Operator, Operator

That does conclude today's conference call. Thank you for your participation. You may now disconnect.