Prana Biotechnology (PRAN) saw shares skyrocket as much 45 percent on Tuesday after the company returned data from a double-blind Phase II study for the efficacy of its experimental drug PBT2, a treatment for Huntington’s disease, met its primary end point. However, despite the positive result and the huge buying spree, some industry analysts appear to remain skeptical about Prana’s stock.
Primary Goals Met in Double-Blind PBT2 Study
The results of the study, which compared Huntington’s patients on a placebo, taking 100mg of PBT2, and 250 mg of PBT, showed statistically significant improvement between the placebo group and the two dosage groups.
"The observation of significant improvement in executive function [cognitition] with PBT2 in this clinical trial for Huntington disease and the previously reported Alzheimer's trial, suggests a common mechanism for neurodegeneration in these diseases based on metal interactions," said professor of neurology at Harvard Medical School and Prana's chief scientific adviser Dr. Rudy Tanzi. "In my opinion, these findings significantly elevate the potential for PBT2 as an effective therapy for both Huntington disease and Alzheimer's disease."
However, some industry observers were less convinced, some observing that cognative improvements among the PBT2 patients were minimal and that the study also failed to observe improvement in motor functions.
“No significant changes were seen in motor, functional, behavioural or global assessments in either PBT2 treatment group compared to placebo over the 26 week treatment period,” said Prana in its investor announcement.
This had The Street’s Adam Feuerstein up in arms.
“Last month, I said to be careful about how Prana Biotechnology reports results from its Huntington's disease drug study,” he wrote. “The company would likely issue a press release announcing positive results based on achieving the primary endpoint of safety and tolerability, even if the drug whiffed on the more important secondary efficacy endpoints. Sure enough, that's exactly what Prana did Tuesday, announcing 'successful' phase II study results…”
“Prana can spin results from the PBT2 ‘Reach2HD’ study any way it likes, but in the end, the drug failed,” Feuerstein continued. “A phase III study of PBT2 in Huntington's is planned, the company said Tuesday, but c'mon, this is just an exercise in futility. “
Markets Only Seem to See Positives
The markets, though, have clearly decided against Feuerstein and his other naysayers as the stock soared on Tuesday. Shares at market close on Friday were trading at $7.25 apiece, but they gapped up to $8.31 as soon as the bell rang Tuesday morning.
After a brief stumble early, the stock picked up momentum and didn’t look back, climbing to $10.65 a share by early afternoon. The trading was on extremely heavy volume, with over 15 million shares moved by 2 pm as compared with a daily average of just under 1.5 million.
Key Technical Barrier Also a Factor?
While it would be a mistake to attribute the climbing share price to anything other than the PBT2 results, a major technical factor may be overlooked as a result. Prana’s stock appears to have found a rising support line in early November, one that it had bounced off of in mid-November, late-November, and at the beginning of the year.
Shares for Prana had been on a bull run since the end of June, gaining 400 percent from that point to the end of January. However, since peaking on Jan. 31, the stock has gone into a heavy pullback, losing over 20 percent in the month of February prior to Tuesday.
However, Tuesday’s clinical results come just as Prana was hitting support again at $7.50. As such, it’s entirely possible that the positive clinical data paired with the share price appearing to hit support levels again to create a perfect storm for the day’s big run.
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