Biotech Stock Mailbag: Prana Biotech

I have a shorter Biotech Stock Mailbag this week due to a mild but still-annoying flu epidemic that ran through every member of my household. I'll try to answer a few more reader questions in subsequent days on my new Biotech Beat blog.

David T. emails to ask about Australian-based Prana Biotech (PRAN):

Just wondering if you have looked into Prana Biotech? It has an Alzheimer's trial that will be announced in March. There has been a big run up over the last few weeks. Just wondering if you have been following it.

Prana is conducting simultaneous phase II studies of its experimental drug PBT2 in Huntington's disease and Alzheimer's disease. As David said, Prana has guided to announcing results from the Alzheimer's study in March, but the outcome of the Huntington's study should be made public first. The exact guidance from Prana is "early 2014," so let's focus there.

I don't have a high-conviction prediction either way for Prana's Huntington's data except to say it's a tough-to-treat disease and a high-risk study. In my daily encounters with the biotech buyside, I haven't found many professional investors who believe Prana's drug will work. I'd say sentiment generally runs negative. The stock has been relatively under-owned by U.S.-based healthcare funds.

Prana's stock price (the Nasdaq-listed ADR) has been on a roll, which I'd chalk up to the customary run-up into anticipated clinical data. The stock was at $6.27 on Jan. 14 and closed Thursday at $8.85. Prana's market value has essentially doubled since November. Company executives are in the U.S. now on a "non deal road show" hosted by Credit Suisse.

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