Prana Biotechnology Limited (ADR) (NASDAQ:PRAN)

CAPS Rating: 2 out of 5

The Company develops therapeutic drugs designed to treat the underlying causes of degeneration of the brain and the eye as the aging process progresses, initially focusing on Alzheimer's disease.

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Member Avatar asilverp (60.28) Submitted: 8/28/2014 12:40:26 PM : Underperform Start Price: $2.10 PRAN Score: +14.13

dubious company with even more dubious statistics. High probability of it being a long term loser.

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Member Avatar zzlangerhans (99.85) Submitted: 4/13/2014 1:18:25 AM : Outperform Start Price: $1.91 PRAN Score: -14.84

Wow, Prana, what a story and what a lesson in biopharma for anyone prepared to learn.

Figure 1: Five year chart of Prana share price from Yahoo Finance. Open this in a second window or second screen to refer to as you read the pitch. http://finance.yahoo.com/echarts?s=PRAN+Interactive#symbol=PRAN;range=5y

The two obvious dates that stand out are September 17, 2012 and March 31, 2014. The latter is the day the stock crashed due to negative results from the IMAGINE phase II trial of PBT2 in Alzheimer's. But what happened in September 2012 that led from a steady state in the low 1's to a parabolic move over 10?

I won't bother going into too much detail about Prana's platform or the nature of their clinical trials for Huntington's and Alzheimer's. Ultimately, none of that is central to the Prana story. What's much more important are human qualities such as greed and gullibility.

I've been following Prana since 2007 and always found their scientific rationale farfetched and their long-term prospects dubious. I always figured that if there was any genuine substance to their unorthodox approach to dementia, large pharmaceutical companies would have tried the same thing or would at least be lining up to partner with Prana or buy the company out entirely. Nevertheless, there were never any serious discussions of potential partnerships and institutional ownership of the stock was always negligible. That's not typically a predictor of a revolutionary new cure for one of the most destructive illnesses in existence.

Prana claimed positive results from a phase IIa trial in Alzheimer's in 2008, but the data seemed spun typical of microcap biopharmas trying to rope in flocks of retail investors. Still no partnership, no buyout, no institutional ownership. Four and a half more years and the share price stayed in that boring microcap range with occasional yips on breathless PR's of mouse data. I red thumbed the yips, collected my points, and didn't devote much thought to the company. In September 2012 Prana issued a press release reporting the company had been mentioned in an interview with an MLV analyst in the Life Sciences Report.

Figure 2: http://pranabio.com/news/further-information-pranas-pbt2-clinical-trials-cited-as-most-advanced-in-addressing-neurodegeneration-from-the-metal-equilibrium-perspective#.U0oQMld5Frp

Note the liberal use of asterisks in the press release. Following the asterisks will tell you that MLV had an ongoing broker relationship with Prana at the time of the interview. What about Life Sciences Report? I can't say I know much about it, except that it is a free online newsletter that has to get it's operational funds from somewhere. If you read their disclaimer, they admit to receiving fees from companies featured in their articles. Ergo, their business model is to provide advertising for public companies in the form of articles and interviews. MLV works for Prana, MLV or Prana pays a fee to Life Sciences Report, Life Sciences Report features an "interview" with an MLV analyst, and Prana issues the PR. It's worthwhile to note that companies with legitimate cures for diseases like Alzheimer's do not need to pay for press coverage nor do they issue PR's regarding comments by analysts who cover them, especially when the analyst's brokerage firm does financing deals for them.

In retrospect, the rise in Prana's baseline share price from 1.5 to 2.3 looks puny compared to the subsequent parabolic move in 2013. I interpreted it as another yip and dropped a red thumb, which I was destined to hold until last month's collapse. However, I see that promotional move as setting the stage for the price movement in July 2013. That was when the company announced they had completed the phase II trial of PBT2 in Huntington's and would announce results in October of that year. In September the run-up lost momentum after the company announced (with no explanation) that results would be delayed until Q1 2014, but inexplicably resumed its climb in November. Prana continued to juice the share price with well-timed, misleading, and ultimately meaningless PR's like this one: http://pranabio.com/news/pranas-pbt2-reverses-memory-loss-in-normal-aging

Eventually, the Huntington's data arrived in February, a full seven months after completion of the trial and four months later than originally promised. I found the reason for the delay immediately obvious - despite claims of positive results the trial had only met the unimportant primary endpoint of safety and tolerability (as would a glass of water) and achieved statistical significance in one of eight cognitive measurements. The company had taken a few extra months to massage the data every way it could and plan their presentation of the data in such a way to keep the flames of hope alive. Amazingly, it worked. Greedy and gullible retail Prana investors continued to focus on pie in the sky three figure price targets as the leading edge of the momo contingent was dumping their shares onto new marks. One month later, unspinnably bad Alzheimer's phase II data was released and we know how the chapter ends.

I say chapter and not story because I don't think this is the end for Prana. Management has already stated their intention to proceed with a phase III trial and they're cynical enough to proceed with it. Retail investors have short memories and gluttonous appetites for sky pie, so I think there's another good run in there. A few more PR's about mouse brains should help to erase the memories of the predictable collapse. The only questions are how low Prana can now go (it's always amazing to watch a stock endlessly declining after being such a superstar a few short weeks ago), and how long it will be dead money before the next run. I'm dropping my green thumb here but I wouldn't be surprised if I have to close it for a 50 point loss and out in another outperform below 1.

I wish I could say I was a winner here but I actually lost as well. I had some puts that expired worthless and also closed a short for a substantial loss last fall. It's very hard to both time the collapse of these pyramid schemes and to hold a short position in the face of a rising share price and the spectre of unlimited losses. Had I invested further in puts ahead of Huntington's data I would have lost more. These situations are tough to profit from even when one has enormous confidence that one is correct in the long run. I can say for sure that many did profit here. Prana recapitalized themselves and now has 20M in cash with a share price under 2 (compared to 6M with a similar share price when the game began). MLV got their commissions and probably traded the run-up, either within their proprietary accounts or via tips to favored clients. Life Science Reports got their fees. I'm sure a lot of smarter, more experienced momo traders did well also. Needless to say, retail got killed again here although you won't see many of the losers advertising it. They're either withdrawing from the biopharma sector or perusing Seeking Alpha for the next great stock idea.

If I could crystallize the lesson to be learned here, it is to be suspicious of changes in company valuation that do not correspond to fundamental changes in a company's prospects for successful commercialization of a drug candidate. Increasing price targets from sellside analysts do not change value. Seeking Alpha articles do not change value. A rising share price does not change value (it changes valuation). Don't be a muppet.

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Member Avatar Crystalball (95.03) Submitted: 3/31/2014 10:02:35 AM : Outperform Start Price: $2.98 PRAN Score: -47.70

Wow, I can't resist the chance to load up after a sell off like this one. Shares will recover with time.

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Member Avatar gpag0nz (< 20) Submitted: 1/22/2014 12:49:00 PM : Outperform Start Price: $7.99 PRAN Score: -89.89

If their new drug gets through to market it will be the next PCYC

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Member Avatar Slyfox666 (< 20) Submitted: 12/11/2013 1:11:06 PM : Underperform Start Price: $6.37 PRAN Score: +85.71

Not profitable at this time (negative PE ratio). Need to wait until it has positive earnings before buying.

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Member Avatar cavemantrader (46.62) Submitted: 12/9/2013 11:44:28 AM : Outperform Start Price: $7.02 PRAN Score: -87.16

Is there a management team that does everything right, that could be called perfect? Maybe just one -- they work at PRAN

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Member Avatar somedaysoon (< 20) Submitted: 11/23/2013 10:16:55 AM : Outperform Start Price: $4.80 PRAN Score: -75.06

PRAN, pbt.ax

Disease modifying therapy. Metal Attenuating Protein Compounds. The future in medicine.

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Member Avatar pcguy (< 20) Submitted: 11/23/2013 2:29:53 AM : Outperform Start Price: $4.80 PRAN Score: -75.06

Prana has been on a roll lately with continual release of supporting research, top 10 neuroscience project accolades, news leak http://www.youtube.com/watch?v=pVNcjb3UEnY, and wrapping up two clinical trials in the near term. Granted the news release had some mixup, the patient response was from pbt2. With pII trial release for HD (much smaller catalyst) and AD (huge for this small market cap) this stock is setting up to explode. Successful trial results in a multi-billion dollar market with one of a kind solution will send this stock soaring. We have seen accumulation in the last couple of days so news will easily send this stock to new levels. PRAN has already undergone a mock runup per se before HD delay so indications suggest a steady climb from January to trial results in May with only one possible decline if HD results are released early and are unfavorable (but that is not the star market for PBT2).

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Member Avatar jerrykf8 (< 20) Submitted: 10/20/2013 8:58:46 AM : Outperform Start Price: $4.02 PRAN Score: -71.87

outperform

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Member Avatar OU812again (55.02) Submitted: 9/16/2013 10:12:06 AM : Outperform Start Price: $4.33 PRAN Score: -77.80

Anticipation of positive outcome from studies due early 2014.

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Member Avatar harold1891 (< 20) Submitted: 7/25/2013 9:08:32 PM : Outperform Start Price: $3.04 PRAN Score: -61.25

Prana has finished stage 11 trial Huntingtons with
110 patients, probably successful. Their big
gambit is on Alshymers, where results of their trial
11 will end 12/13. They work with Mass Gen Hosp.
The Alsheimer foundation is behind them.

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Member Avatar phatchips767 (< 20) Submitted: 3/28/2012 8:16:24 PM : Outperform Start Price: $1.72 PRAN Score: -39.17

australian pharma. company works with alzheimers cures. mf rated it 5 stars , pe was -12.

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Member Avatar sohiab (< 20) Submitted: 2/27/2008 2:41:51 PM : Outperform Start Price: $4.56 PRAN Score: -114.91

Leading edge company doing amazing things in research.

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Member Avatar dgoldmeier (34.10) Submitted: 4/14/2007 9:29:52 AM : Outperform Start Price: $2.98 PRAN Score: -86.97

An interesting biotech. Smartpeople at thehelm, an ability to raise cash to continue trials and pipeline development. A likely takeover target.

Results 1 - 14 of 14

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