The company has discontinued the development of its lead drug
Prothena Corporation (NASDAQ:PRTA) said it is discontinuing the development of its drug NEOD001, used to treat patients with AL Amyloidosis. The end of the program comes after the company's lead drug failed in both a mid-stage study and a late-stage trial, and PRTA stock has plummeted 68.1% to trade at $11.76 -- earlier tagging a four-year low of $11.05.
The shares are easily on track for their worst day ever, but Prothena was struggling on the charts heading into today's trading -- down almost 50% from their late-September annual high of $70 to last Friday's close at $36.84.
Recent downside has come amid increased selling pressure from shorts. Short interest shot up more than 31% in the two most recent reporting periods to 4.33 million shares -- accounting for 11.3% of the stock's available float. While short sellers are likely cheering today's bear gap, they will be sidelined for the time being, with PRTA on the short-sale restricted list.
However, the spiraling stock is now at risk for a round of bearish brokerage notes, which could spark even more selling. All but one of the nine analysts following Prothena stock maintain a "buy" rating -- with not one "sell" recommendation on the books -- and the average 12-month price target sits all the way up at $73.09.