Although Jefferies analyst Michael Yee noted that the "market is somewhat skeptical" of neurodegenerative disease research at the moment, Prothena Corp. plc CEO Gene Kinney told BioWorld that he expects there will be more, not fewer, of the deals like the potential $2.2 billion pact that his firm struck with Celgene Corp. "We're seeing a high level of interest in the space right now," he said, a contrast from the slacking caused years ago by some well-publicized blowups.

Dublin-based Prothena gained $100 million up front and a $50 million equity investment in the collaboration, which centers on three proteins, including tau, a cleaved form of TAR DNA-binding protein 43 (TDP-43), and an undisclosed target. Celgene, of Summit, N.J., holds an exclusive right to license clinical candidates in the U.S. at the time of IND filing and, if it does so, could expand the license to global rights at the end of phase I trials. If Celgene exercises the U.S. rights option, Prothena will collect about $80 million per program. Celgene then would have decision-making authority over development activities, and all regulatory, manufacturing and commercialization efforts for antibody products targeting the relevant target. If Celgene goes on to take worldwide rights, the firm will pay an exercise fee of $55 million per program.

The pair's research will span six years, though Celgene may extend the period for up to two more years by paying $10 million for each. Prothena stands to gain royalties on net sales of any resulting marketed products. Among the targets in the collaboration, tau is farthest along, Kinney said. "We're in the process of thinking about lead candidate selection," with TDP-43 "a little behind." Shares of the company (NASDAQ:PRTA) closed Wednesday at $38.72, up $4.87, or 14.4 percent.

Tau is well known for its involvement not only in Alzheimer's disease (AD) but also in progressive supranuclear palsy, frontotemporal dementia, chronic traumatic encephalopathy, and other disorders classed as tauopathies. Prothena has identified antibodies targeting novel epitopes on the tau protein that can block misfolded tau from binding to cells and inhibit cell-to-cell transmission, which prevents downstream functional toxic effects.

Kinney spoke of what scientists used to call the "religious wars" in AD, where some viewed amyloid beta as the main cause and others chose tau. "We've always believed, and we've generated some of the science and contributed to the literature [showing] that, in fact, it doesn't have to be an either-or situation, and most likely isn't," Kinney said. "Amyloid beta in various forms, when it binds to neurons and is internalized, can actually lead to phosphorylation of the tau protein in a way that's consistent with what you see in the pathogenic state in AD. In fact, these pathways are linked, and it's likely that they have an ongoing dynamic relationship. What it really comes down to is, can we show that it's sufficient to target one or the other, or either independently, or maybe at some point both together? We believe the answer is probably yes" on more than one of the questions, he said. "That opens the possibility at a later point in time to think about combining those approaches."

Attacking tau properly becomes the next hurdle. "This is our bread and butter, which is how we target misfolded proteins," Kinney said. He used a comparison to the amyloid beta peptide. "At least in the form that most people believe is important for AD, [the peptide] can be up to 42 amino acids long. One of the things we've learned by making antibodies to amyloid beta is that if you target one part of that peptide sequence, the amino terminus, the part on the far-end side, then you get some interesting biological characteristics. It's because of the way that a beta misfolds in the context of disease," first into a soluble state and then an insoluble state. "That end terminus tends to stay available through all the different misfolded states, so what you end up with is a set of antibodies" such as bapineuzumab, crenezumab and aducanumab that can recognize the soluble and insoluble forms, whereas with one such as solanezumab, which goes after the middle of the sequence, the soluble form is recognized but not the insoluble. "You're testing a fundamentally different hypothesis," he said.

Tau, on the other hand, involves more than 400 amino acids. "It's a much bigger protein, much more complex," Kinney said. "It can be phosphorylated, acetylated, truncated. There are all sorts of different forms of tau and areas of tau."

Prothena's approach is to "canvass that entire sequence. We make antibodies to the phosphorylated forms and then look for consistency of biology" to guide the next steps, rather than make quicker conclusions as some have done, he said. "We've found a new place where we can target tau that is fundamentally different from everything else out there," shunning the "a priori, biased approach."

'Long-term positive' for Celgene

TDP-43 is implicated in diseases including amyotrophic lateral sclerosis and the most common subtype of frontotemporal degeneration (FTD), called behavioral variant FTD. It's also linked to a proportion of AD and other TDP-43 proteinopathies. Here, too, Prothena research has generated helpful antibodies, specifically those targeting multiple epitopes on the TDP-43 protein. The company is using in vitro screening methodology to select those that may work best.

The journal Brain this week published research showing how TDP-43 regulates the alternative splicing of hnRNP A1 to yield an aggregation-prone variant in ALS. "While RNA binding proteins are a major focus of current ALS/FTD research, it is not well understood how these proteins interact and/or coordinate RNA processing and metabolism," the article said. Using in vitro models researchers at Université de Montréal in Canada showed how the two proteins function together.

Kinney said a similarity across the proteins in the Celgene deal is the phenomenon of cell-to-cell transmission. As he described the research, "you set up a system where you look at the misfolded protein in one neuron, and ask if it can spread to the next neuron. It can. What we think is happening is, either because it's making the cell sick or because the protein is normally released from the cell, [the misfolded protein] will get out into the extracellular space and then bind to the next cell. There's an internalization of those misfolded forms, which then templates more misfolding."

The process whereby they "spread and seed from cell to cell" represents a changed way of thinking about neurodegeneration, he said.

Although the third target was not disclosed, Oppenheimer analyst Jay Olson guessed "through the process of elimination" that it's sortilin. An article last year in the Journal of Experimental Medicine showed that a protein called SORLA, which stands for "sortilin-related receptor with LDLR class A repeats," can block amyloid beta from screwing up neurons. Research was done at the Sanford Burnham Prebys Medical Discovery Institute Neuroscience and Aging Research Center in La Jolla, Calif.

Kinney likened the "win-win" feature of the deal with Celgene to North Chicago-based Abbvie Inc.'s tie-up last October with Alector LLC, of South San Francisco, which he called "obvious. Abbvie is leveraging their expertise in inflammation and bringing that into the neuroscience space." He also mentioned Osaka, Japan-based Takeda Pharmaceutical Co. Ltd.'s pact earlier this year with Denali Therapeutics Inc., of South San Francisco. (See BioWorld, Oct. 25, 2017, and Jan. 8, 2018.)

Jefferies' Yee said in a report that Prothena's Celgene arrangement represents "an attractive deal and good news after a challenging past few months for the stock. We fully acknowledge the key major event coming in the second quarter, which is the phase II Pronto study in amyloid light chain amyloidosis," for which he predicted more than 60 percent probability of success. The candidate, NEOD-001, is described as the first monoclonal antibody that specifically targets misfolded light chain proteins.

For Celgene, the partnership "is consistent with their distributed model of R&D and adds new and developing resources in neuroscience," in Yee's view. "We note that while some of their previous collaborations had a neuro aspect or a neuro target, this is the first full neuro partnership we are aware of," a positive long-term factor, although "we appreciate the market is likely to remain mixed on Celgene for this" because of attitudes toward the space. What's more, "it remains hotly debated whether these targets (especially in AD) are worth heavily investing in," he said.

Citi is acting as financial advisor to Prothena and Latham & Watkins LLP is providing legal counsel to the firm. Morgan Lewis is serving as legal counsel to Celgene, shares of which (NASDAQ:CELG) closed Wednesday at $88.31, up 4 cents.