Why Prothena Corp plc Skyrocketed 43% in July

By Todd CampbellMarketsFool.com

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What: Ahead of second-quarter financial results and key trial data for its Parkinson's disease drug, shares in Prothena Corp. plc (NASDAQ: PRTA) soared 43.2% in July,according toS&P Global Market Intelligence.

So what: Prothena was spun out of Elan plc in 2012 to develop monoclonal antibodies to treat diseases of the central nervous system, including Parkinson's.

Last year, management reported that its PRX002 successfully reduced levels ofalpha-synuclein, a protein associated with Parkinson's disease. In trials, PRX002, which is being co-developed by Roche Holdings, cutalpha-synuclein levels by as much as 96%.

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Since unnaturally high levels of alpha-synuclein are thought to contribute to Parkinson's disease symptoms, the ability to reduce levels of the protein could offer Parkinson's disease patients new hope. Results from a phase1b study, testing multiple ascending doses in patients with Parkinson's disease, are expectedin the fourth quarter of 2016, and if those results are positive, they may add support to the idea that PRX002 could mark a big advance in treatment someday.

Earlier this month, Prothena updated investors on other drugs in its development pipeline.

Enrollment in a phase 3 trial evaluating the company'sNEOD001, a monoclonal antibody for the potential treatment of AL amyloidosis (a disease characterized by the buildup of certain proteins in vital organs), is expected to be complete in Q2 2017. Results from a phase 2b study of NEOD001 could be available as early as late 2017.

Management also hopes to provide additional insight into plans for a phase 2 study ofPRX003 in inflammatory diseases, including psoriasis, in September.

Image source: Prothena Corp plc.

Now what: If PRX002 pans out,Prothena could earn as much as $555 million in milestones and 30% royalties from Roche on eventual U.S. sales. Since there's a significant unmet need for new therapies that can address Parkinson's disease, the data expected later this year is very important to Prothena's future success.

While the clinical-stage status of this company makes owning shares risky, the company should have plenty of financial flexibility to continue to advance drugs through trials. Exiting Q2, management reports$447 million in cash, cash equivalents, and restricted cash, and no debt.

Nevertheless, this is a high-risk, high-reward company that's probably best-suited only to investors able to withstand the chance of trial failure.

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Todd Campbell has no position in any stocks mentioned.Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. Like this article? Follow him onTwitter where he goes by the handle@ebcapital to see more articles like this.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.