Prana Biotechnology (NASDAQ:PRAN) Potential Sympathy Play

Prana Biotechnology Limited (ADR) (NASDAQ:PRAN) shares were up 13.10% today. However, there were no company-related catalysts that may have sparked this move. This move may be due to traders buying in anticipation of PRAN continuing its momentum. Moreover, the stock could be a sympathy play with Cyclacel Pharmaceuticals (NASDAQ: CYCC), which was up over 70% today.

If you’ve never heard of Prana Biotech, it’s a publicly-traded biotechnology company that is developing therapies in an attempt to treat neurodegenerative disease. Now, the company has multiple drugs in its pipeline, with PBT2 leading its pipeline. PBT2 is currently being developed in order to treat Alzheimer’s and Huntington’s diseases. Moreover, the company has a drug candidate for Parkinson’s disease, as well as brain cancer. Prana Biotech also has a library of over 1,000 Metal Protein Attenuating Compounds, which could support new therapies for neurodegenerative diseases.

Potential Sympathy Play With CYCC

Since industries are simple baskets of publicly-traded companies conducting the same, or similar, business. That in mind, stocks could trade in the same direction, if their business is highly related. For example, this may have been the case with PRAN and CYCC today. Cyclacel Pharmaceuticals announced its preclinical data for CDK2/9 Inhibitor (CYC065), and it indicated the drug could potentially have therapeutic uses. Prana Biotech and Cyclacel have a similar business and products, which may be one of the reasons why Prana Biotech rose today.

What You Need to Know About PRAN

  • Prana Biotechnology had a 52-week range between $1.52 and $6.69.
  • Over the past seven days, PRAN has been up over 50%.
  • Additionally, the stock has returned over 100%, over the past .
  • PRAN has a price-to-book ratio of 1.3, while the industry average is 5.9.
  • The company has a trailing 12-month price-to-sales ratio of 263.4, while the biotech industry average is 6.2.

Look at the recent performance of PRAN here:


Source: TradingView

Now, compare this move with CYCC’s recent move:


Source: TradingView

Bull Case

PRAN has been up significantly recently, and some traders may be anticipating more momentum in the name. The stock also has an attractive price-to-book ratio, when compared to the biotech industry average. The company is also not a one-trick pony and has multiple drugs in its pipeline.

Bear Case

Prana Biotech shares have more than doubled over the past three months. Consequently, traders may thing it has moved too far, too fast, and may be due for a pullback. In addition, the company has a trailing 12-month price-to-sales ratio of 263.4, which is well above the biotech industry average, potentially indicating the stock is overvalued. Moreover, the company has a trailing 12-month return on equity (ROE) of -26.7%, while the industry average is 10.5%. Prana Biotech also has a trailing 12-month return on assets (ROA) of -24.7%, while the biotech industry has an average trailing 12-month ROA of 4.5%. That in mind, the company’s ROA and ROE may be an indication of PRAN’s inefficiency.

Last Word

Prana Biotechnology shares were up over 10% today, and this may be a sympathy play, in relation to Cyclacel’s rise due to its announcement of results of CYC065. Although this is one reason why some traders would be bullish, there are still some reasons why market participants may be bearish too.


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