Prana Biotechnology Limited (ADR) (NASDAQ:PRAN)

dilutive financing

It's hard to think of a way to insult Prana in a way that I haven't before. In short, this company purports to have cures for Alzheimer's disease and Huntington's chorea, based on the farfetched principle that neurodegenerative disease is caused by defects in metabolism of trace metals. Thus far, the clinical evidence for efficacy of their developmental compound PBT2 is extremely weak. Sister company Adeona has had similar difficulties demonstrating any correlation between zinc/copper metabolism and cognitive function. In the absence of any type of flow of clinical data, Prana has resorted to strategic releases of rodent and in vitro data to maintain their share price.

The company has now begun recruitment of a phase II trial of PBT2 in Alzheimer's and seems to be in the final stages of preparation for a phase II trial of PBT2 in Huntington's. The cash position is unclear but seems to be about 9M, thanks to recent dilutive financings. Given the long duration of these trials and low likelihood of an eventual positive outcome, I expect several more rounds of dilutive financing prior to any significant catalyst. Meanwhile, the stock has been carried up with the recent optimistic wave passing through speculative biotech. I don't see a long lifespan for the froth on this wave.