pbt - an investment view (imo)

Hi All,

As a really LTH, taking the emotion out of the situation this is what i see:

The Science & The Drug (IMO)

1. There is a growing body of evidence through a number of scientific journals supporting the MOA for PBT2
2. First drug ever to show dose related improvements in HD
3. Fundamentally the drug works as expected (amyloid reduction seen in all trials), cognitive gains seen in larger audience trials (i.e. the majority of patients; IMAGINE was the smallest study)
4. Disease modifying behaviour observed in all cases (even IMAGINE with hippocampal brain volume preservation trend)
5. Safety can almost be ruled out as a risk factor to move the drug forward now

Problems (IMO)

1. IMAGINE was funded through a grant to predominantly validate new bio-markers. This made sense in 2008 in the incubational understanding phase of the application of PiB-PET but this no longer stands and the IMAGINE trial has disproved rather then proved a new bio-marker
2. There is a misconception a ~40 patient trial in IMAGINE trying to validate a new biomarker would have the same results as a trial double its size with a different analysis profile as in EURO and REACH
3. There is no ability to test EF gains in IMAGINE through an insufficient patient population and trial design (which is in present day the bigger factor)
4. Corporate communication although well intended to alert the shareholders to the poor IMAGINE results didn't manage this message well or the release to marker (i.e. ASX would have been a more controlled drop then the NASDAQ) - in addition the blunt messaging in the announcement didn't correlate well with some good messages in the conf call
5. The placebo affect was not aligned to expectation: As per Rudy Tanzi's comments this is the first trial he's ever seen the Placebo group improve amyloid reduction in, with all other trials showing increases, if the imagine placebo had functioned as expected the under-powered IMAGINE trial would have met endpoints, although in all likelihood the company wouldn't have used this trial design in Phase 3 favouring cognitive gains as the key endpoint


Opportunities (IMO)

1. Prana should now be looking like a potential good partner/buyout for a larger Pharma. With its current undervalued SP it puts a partner/buyer in a better negotiation position for a company with an asset that will likely be supported for Orphan status and Phase 3 by FDA for HD.
2. A informed larger Pharma will not look only at the trial results but the data of the cumulative set of results and findings on PBT to assess if they think the drug actually works. Its based on this that a decision to partner will be made.
3. Big pharma support will likely lead to improvements in trial design and execution as well as better overall corporate communications reducing some of the media bashing (which in the case of HD Reach seemed like it was for no apparent reason)

Possible SP Movers (IMO)

1. Confirming HD Orphan Status
2. Confirming HD Phase 3
3. Partnering for AD/HD/both
4. Any relevant interim updates from the extension study

IMO this is not down and out yet, any of the above SP movers could see some serious movement in the SP.


GLTAH
D

PS: I'm not a scientist or investment guru so please do your own research, the above is just my thoughts and opinions.