Don’t Buy Into In Prana’s Data Mining Strategy Print
By Brian Wilson   
Thursday, 17 July 2014 11:23

Despite the continuing pain in the biotech sector, Prana (PRAN) is up 15% at time of writing based on a press release issued yesterday about the company’s efforts to revive the failed Alzheimer’s drug PBT2.



Although this drug failed its Phase II trial due to its inability to lower beta-amyloid plaques in the brains of Alzheimer’s patients, apparently the company wants to revive the drug for a potential Phase III trial. They will be presenting more subgroup analysis later this year that will “help” investors better understand why the Phase II trial caused a giant selloff in PRAN earlier this year.

Because the company has a history of skewing data to look more positive than it actually is, we think the company will be focus on cherry-picked data that will make PBT2 look like a Alzheimer’s drug candidate that deserves financial backing for another trial. This might even be used to justify another ATM by the company, because Prana is starting to run out of cash. This type of behavior is particularly predatory towards retail investors who don't know how to properly interpret clinical trial data.

Investors should also remember that PBT2 failed (badly) as a Huntington’s Disease drug, although the company also attempted to pass off its initial Phase II data as "positive". Although the Phase II primary endpoint was met, it was based on safety and not efficacy. PBT2 failed all seven of its predetermined secondary efficacy endpoints.

Although a few sell-side analysts continue to cheer for Prana, it's important to consider that their firms may be looking to perform Prana's next ATM financing - thus creating a conflict of interest. Prana has virtually no buy-side support either.

I’d stay far away from PRAN for the foreseeable future. Bad science and an inherently bad drug do not make a compelling biotech investment opportunity. Investors who are interested in the Alzheimer's space may want to check out Acadia Pharmaceuticals (ACAD) instead.







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