Prana Biotechnology Limited (ADR) (NASDAQ:PRAN) is an early third-quarter runner in the biotechnology space. The company currently trades for $2.89 a share, having reached highs mid-session on Monday in and around $3.20 a piece. To add some perspective, Prana opened the year at $1.63 and traded at $2 a share as recently as mid-June.So, on a year-to-date basis, the company is looking at a 77% gain.A large portion of this run has come over the last few days, driven primarily by the appointment of a New Chief Medical Officer and Head of Clinical Development, combined with a renewed focus on an asset that has the potential to serve up numerous development-related catalysts across the coming 24 months.With this in mind, we are maintaining a bullish thesis on Prana, even in light of the recent run.Here is a look at the asset in question and a discussion of what we are looking at as potentially compounding the recent action and driving this one higher near term.Some may already know this company as a developer of various neurodegenerative assets, most notably in target indications of Huntington's and Alzheimer's disease. While these assets remain in the pipeline, they are very much on the back burner right now and, from a near-term valuation perspective, they don't hold much weight.What does, on the other hand, is the company's Parkinson's disease asset – a drug called PBT434.This is the current primary focus and it's this asset that the above-mentioned new hire, a Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) alumni called David Stamler, M.D, has been brought on board to develop.Parkinson's disease is a huge unmet need in the US right now. The current standard of care treatments in this space, which is primarily dominated by L-dopa, alleviate symptoms to a degree but are associated with some pretty nasty side effects and – longer-term – really don't work to impact severity.With PBT434, Prana is attempting to address the underlying disease as opposed to the symptoms (as is the case with the current standard of care treatments) and specifically it is attempting to do so by targeting what is called alpha-synuclein. Alpha-synuclein is a protein in the brain that accumulates in Parkinson's disease sufferers, with said accumulation correlating with severity. PBT434 inhibits this accumulation and the idea behind this mechanism of action is that through this inhibition, the drug can temper the progression of the disease over time.A large number of animal model studies have supported this hypothesis, as well as also demonstrating that PBT434 might play a role in the prevention of the loss of nerve cells in the region of the brain primarily affected in Parkinson’s disease – what's called the substantia nigra.The same animal models also linked this surrogate mechanism of action to clinical benefit, demonstrating that a reduction in alpha-synuclein accumulation can result in a parallel improvement in motor skills. That's incredibly important.It goes without saying, then, that if the company can carry this drug into clinical trials and demonstrate a similar outcome in humans as it has been able to do in mice, there is room for substantial revaluation on said demonstration.The reason that this company is gaining strength right now is that the hiring of Stamler suggests management intends to get PBT434 into the clinic very near term. Early 2017 communication suggests before year end 2017, but this was prior to the latest hire. We think the company is looking to move faster than it first expected and that we could see a protocol submission during the third quarter and a trial initiation at some point late third quarter, early fourth quarter 2017.Initiation, followed by any interim report and – eventually – topline from a phase 1 proof of concept study brings with it the catalyst and, by proxy, the potential for upside reevaluation on anything supportive of the early-stage numbers.This is a young biotech company, so standard capital risk applies here. Prana is going to need cash to get this program underway (something it has very little of right now) and early shareholders are going to have to shoulder this requirement in the form of dilution. This isn't anything new to regular investors at this end of the space, but it should be taken into consideration ahead of any accumulation.We will be updating our subscribers as soon as we know more. For the latest updates on PRAN, sign up below!Image courtesy of Mike Seyfang via FlickrDisclosure: We have no position in PRAN and have not been compensated for this article.
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