Prothena Corp Annual Report 2016

Plain-text annual report

PROTHENA CORP PLC FORM 10-K (Annual Report) Filed 02/27/17 for the Period Ending 12/31/16 Telephone CIK Symbol SIC Code Industry 011-353-1-236-2500 0001559053 PRTA 2834 - Pharmaceutical Preparations Biotechnology & Medical Research Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 ______________________________________ FORM 10-K ______________________________________(Mark One)xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the year ended December 31, 2016¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period from to Commission file number: 001-35676______________________________________ PROTHENA CORPORATION PUBLIC LIMITED COMPANY(Exact name of registrant as specified in its charter)______________________________________ Ireland 98-1111119(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification Number) Adelphi Plaza Upper George's StreetDún LaoghaireCo. Dublin, A96 T927, Ireland(Address of principal executive offices including Zip Code)Registrant’s telephone number, including area code: 011-353-1-236-2500Securities registered pursuant to Section 12(b) of the Act:Title of Each Class Name of Each Exchange on Which RegisteredOrdinary Shares, par value $0.01 per share The Nasdaq Global Select MarketSecurities registered pursuant to Section 12(g) of the Act: None ______________________________________Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes x No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. xIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Large accelerated filerxAccelerated filero Non-accelerated filer¨ (Do not check if a smaller reporting company)Smaller reporting companyoIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x As of June 30, 2016 , the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting sharesheld by non-affiliates of the registrant was approximately $1,200.9 million , based on the last reported sale of the registrant’s ordinary shares on the Nasdaq GlobalMarket on such date.35,028,721 of the Registrant’s ordinary shares, par value $0.01 per share, were outstanding as of February 10, 2017 . DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s Proxy Statement to be delivered to shareholders in connection with the registrant’s Annual General Meeting of Shareholders to beheld on May 17, 2017 are incorporated by reference into Part III of this Form 10-K. The registrant intends to file its Proxy Statement within 120 days after its fiscalyear ended December 31, 2016 .PROTHENA CORPORATION PLCAnnual Report on Form 10-KFor the Year Ended December 31, 2016TABLE OF CONTENTS PagePART I.1Item 1. Business1Item 1A. Risk Factors16Item 1B. Unresolved Staff Comments38Item 2. Properties38Item 3. Legal Proceedings39Item 4. Mine Safety Disclosures39PART II.40Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities40Item 6. Selected Financial Data43Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations45Item 7A. Quantitative and Qualitative Disclosures About Market Risk55Item 8. Financial Statements and Supplementary Data57Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure83Item 9A. Controls and Procedures83Item 9B. Other Information84PART III.84Item 10. Directors, Executive Officers and Corporate Governance84Item 11. Executive Compensation86Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.86Item 13. Certain Relationships and Related Transactions, and Director Independence86Item 14. Principal Accounting Fees and Services86PART IV.86Item 15. Exhibits, Financial Statement Schedules86SIGNATURES87EXHIBIT INDEX89PART IITEM 1. BUSINESSOverviewProthena Corporation plc is a global, late-stage clinical biotechnology company establishing fully-integrated research, development and commercialcapabilities. Fueled by its deep scientific understanding built over decades of research in protein misfolding and cell adhesion - the root causes of many serious orcurrently untreatable amyloid and inflammatory diseases - Prothena seeks to fundamentally change the course of progressive diseases associated with this biology.Our pipeline of antibody-based product candidates targets a number of potential indications including AL amyloidosis (NEOD001), Parkinson's disease andother related synucleinopathies (PRX002), inflammatory diseases, including psoriasis and psoriatic arthritis (PRX003) and ATTR amyloidosis (PRX004). Thecompany continues discovery of additional novel therapeutic candidates where our deep scientific understanding of disease pathology can be leveraged.We are a public limited company established on December 20, 2012 under the laws of Ireland. Our ordinary shares began trading on The Nasdaq GlobalMarket under the symbol “PRTA” on December 21, 2012 and currently trade on The Nasdaq Global Select Market.Our StrategyOur goal is to be a leading biotechnology company focused on the discovery, development and commercialization of novel immunotherapies for the treatmentof diseases that involve protein misfolding or cell adhesion. Key elements of our strategy to achieve this goal are to:•Concentrate our discovery and development efforts on diseases that involve protein misfolding or cell adhesion, where we have decades of scientificexpertise and experience.We leverage our core scientific expertise and proprietary technology to develop innovative antibody-based therapeutics for the potential treatment of majorunmet medical needs. Our scientists are exclusively focused on the biology of diseases caused by protein misfolding or cell adhesion and our approach leveragesthe unique insights derived from our immersion in these areas. Once we formulate a novel hypothesis or approach to a known target, we generate antibodies againstthat target. Specific and selective antibodies are characterized in vitro, then used to test the initial hypothesis in vivo using animal models of disease. We sometimesrely on the use of animal models that have been extensively developed by external laboratories. To establish early clinical proof of concept for our programs, weleverage our insight of disease pathology and, when possible, employ biomarker endpoints as a way to detect signals of biological activity. We may elect to startclinical testing of our antibodies in indications that have well-established endpoints in order to demonstrate proof of concept as a basis for further investment inclinical trials, either by us or potential partners.• Focus on diseases that lack effective therapies.We focus on the development and commercialization of therapies for serious and/or life-threatening diseases that currently lack effective therapies or in areaswhere current therapies have known limitations. Our efforts in AL amyloidosis, Parkinson’s disease, and inflammation are examples of this. In AL amyloidosis,misfolded proteins aggregate and form amyloid, which can accumulate in vital organs, disrupt their normal function and cause death. Today, there are no approvedtreatments that directly target and clear amyloid that builds up in organs. NEOD001 is intended to neutralize and clear disease-causing amyloid in AL amyloidosisand is the first immunotherapy directly targeting light chain amyloid to receive Fast Track designation from the U.S. Food and Drug Administration (the “FDA”).Similarly, in Parkinson’s disease, currently approved therapies focus on the alleviation of symptoms without addressing the underlying cause of the disease.Prothena is focusing its efforts to develop a therapeutic with the potential to slow the progression of Parkinson’s disease by targeting the α- synuclein protein.Synucleins are a family of proteins, of which there are three known members: α- synuclein, β-synuclein, and γ-synuclein. The α- and β-synuclein proteins arefound primarily in brain tissue. There is genetic evidence that α- synuclein plays a fundamental role in Parkinson’s disease, and an increasing body of evidencedemonstrates that pathogenic forms of α- synuclein can be propagated and transmitted from neuron to neuron. Prothena’s scientists have generated PRX002 - amonoclonal antibody targeting the pathogenic aggregated form of α- synuclein that is designed to slow or reduce the neurodegeneration associated with α-synuclein misfolding and/or its transmission. We are developing PRX002 in collaboration with Roche for the potential treatment of Parkinson’s disease and otherrelated synucleinopathies.1Finally, in inflammatory autoimmune diseases such as psoriatic arthritis, a subset of patients are unresponsive or intolerant to existing therapies, and sometherapies do not offer patients sufficient levels of symptom control. Prothena scientists, whose expertise in inflammatory disease stems from the development ofTysabri® for relapsing-remitting multiple sclerosis, have made key discoveries about a specific cell adhesion molecule and its role in initiating or perpetuating aninflammatory disease process. These discoveries are the basis of our strategy for PRX003, an investigational antibody that Prothena is developing as a new immunecell targeting approach to inflammatory disease.Moving forward, we intend to advance new discovery-stage monoclonal antibody therapeutics with first-in-class or best-in-class potential.•Strategically partner, collaborate, and leverage external resources.We will rely on strategic collaborations and a combination of internal and external resources to advance our objectives.Our robust discovery engine generates monoclonal antibodies that may be useful in treating unmet medical needs. For investigational therapeutic antibodyprograms targeting broad patient populations that may require large clinical trials and development investment, we may seek to collaborate or license theseprograms to biotechnology or pharmaceutical companies for development and/or commercialization. Our collaboration with Roche to develop PRX002 for thepotential treatment of Parkinson’s disease and other related synucleinopathies is a good example of this.We also collaborate with scientific and clinical experts in disease areas of interest to test and characterize our potential therapeutic antibody candidates and togain feedback and guidance on our programs.Although we rely on, and will expand as appropriate, strong internal talent with expertise in our core areas of focus, we also rely on external resources, asneeded, to execute efficiently on our clinical development and business objectives. We engage consultants who have certain functional and/or disease areaexpertise to help us execute specific activities related to our programs.•Pursue commercialization strategies to maximize the value of our product candidates or future potential products.As we move our drug candidates through development toward regulatory approval, we will evaluate several strategic options for commercialization. Theseoptions include building our own internal sales force; forging partnerships with other pharmaceutical or biotechnology companies, whereby we jointly sell andmarket the product; regional licensing for markets where we do not have expertise or infrastructure; and out-licensing our product, whereby another pharmaceuticalor biotechnology company sells and markets our product and pays us a royalty on sales. We evaluate options for each product based on a number of factorsincluding commercial synergies and expertise, capital necessary to execute on each option, size of the market to be addressed and the expertise and terms ofpotential offers from other pharmaceutical and biotechnology companies.Research and Development PipelineOur research and development pipeline includes three therapeutic antibody programs in clinical development: NEOD001 for the potential treatment of ALamyloidosis; PRX002, in collaboration with Roche, for the potential treatment of Parkinson’s disease and other related synucleinopathies; and PRX003 for thepotential treatment of inflammatory diseases including psoriasis and psoriatic arthritis. We also have a late-stage preclinical program for the potential treatment ofATTR amyloidosis.The following table summarizes the status of our clinical pipeline:2Our ProgramsNEOD001 for the Potential Treatment of AL AmyloidosisOur most advanced program is NEOD001, an investigational monoclonal antibody that specifically targets the amyloid that accumulates in AL amyloidosis.Systemic amyloidoses, including AL, AA and ATTR amyloidosis, are a complex group of diseases caused by misfolded amyloid proteins that aggregate anddeposit in tissue, resulting in progressive organ damage. The most common type, AL amyloidosis or primary systemic amyloidosis, results from hematologicaldisorder involving abnormal plasma cells. Plasma cells normally produce light chains that pair with heavy chains to make functional antibodies. But in ALamyloidosis, something goes awry - the cause remains unknown - whereby a subset of clonal plasma cells overproduce a single light chain, or fragment thereof, ingreat abundance. These amyloid light chains (AL) misfold to form toxic soluble and insoluble aggregates that deposit in vital organs such as heart, kidneys, and/orthe autonomic or peripheral nerves, causing extensive damage, and potentially organ failure and death. In some cases, patients have multiple organ involvement.AL amyloidosis is a rare, progressive and often fatal disease and there are no approved treatments that directly target the toxic forms of the AL protein thatbuild up in the organs. The Amyloidosis Foundation estimates that approximately 30,000 to 45,000 patients are living with AL amyloidosis in the United States andEuropean Union today. It is estimated that there are approximately 10,000 to 15,000 new cases of AL amyloidosis diagnosed annually in the United States andEuropean Union. The cause of AL amyloidosis remains poorly understood, and we believe this disease is significantly underdiagnosed.Current treatment for patients with AL amyloidosis may include autologous stem cell transplant or the administration of off-label chemotherapeutic and/oroncologic therapies. The goal of these treatments is to control the hematologic burden by targeting clonal plasma cells in order to decrease the production of newlight chain. These chemotherapeutic and/or oncologic agents are associated with known adverse event profiles and patients often become refractory to theirhematologic effect and/or relapse. In addition, the target of these therapies is the plasma cells responsible for production of light chain, rather than the toxic lightchain in circulation or built up in the organs. Restoring organ function is the goal in the treatment of AL amyloidosis and as such, there remains a significant unmetneed to directly target and remove the amyloid deposited on organs, to improve organ function and survival.NEOD001 is a monoclonal antibody that specifically targets the amyloid that accumulates in AL amyloidosis. Preclinical testing has demonstrated thatNEOD001 reacts only with a “cryptic” epitope that is exposed only in the misfolded form of the light chain. The proposed mechanism of action of NEOD001 is toneutralize circulating soluble aggregates and clear deposited insoluble aggregates from organs. NEOD001 received Fast Track designation from the FDA inDecember 2014.The purpose of the Fast Track designation is to make important new drugs available to patients earlier. The Fast Track program also provides a company withthe ability to submit sections of the Biologic License Application ("BLA") for review before the company submits the complete BLA. This enables the FDA toreview sections of the BLA as they are received, rather3than waiting until every section of the application is completed, and also allows for Priority Review, which can shorten the standard review of the final BLA to sixmonths. A drug program with Fast Track designation permits the company to have early and frequent communications with the FDA in the development andreview of the product candidate, potentially leading to faster drug approval.In addition, NEOD001 was granted orphan drug designation for the treatment of AL and AA amyloidosis by the FDA in 2012 and for the treatment of ALamyloidosis by the European Medicines Agency (the "EMA") in 2013.Clinical Development Program for NEOD001Consistent with a commitment to developing a disease-modifying therapy for patients with AL amyloidosis, Prothena is currently enrolling two global, multi-center, randomized, double-blind, placebo-controlled clinical studies for NEOD001: the PRONTO study (theprontostudy.com) is evaluating NEOD001 inpreviously-treated patients with AL amyloidosis and persistent cardiac dysfunction, and The VITAL Amyloidosis Study (thevitalstudy.com) is evaluatingNEOD001 in newly-diagnosed, treatment-naïve patients with AL amyloidosis and cardiac dysfunction.The VITAL Amyloidosis Study was initiated in December 2014 and is a Phase 3 global, multi-center, randomized, double-blind, placebo-controlled clinicaltrial for NEOD001 in patients with AL amyloidosis. The trial is designed to support global regulatory approvals. We intend to enroll approximately 230 newly-diagnosed, treatment-naïve patients with AL amyloidosis and cardiac dysfunction. Patients will be randomized on a 1:1 basis to receive 24 mg/kg of NEOD001 orplacebo via intravenous infusion every 28 days, with both groups receiving concurrent standard of care therapy.The composite primary endpoint is event-based, with all-cause mortality or cardiac hospitalizations as qualifying events. Secondary endpoints of the studyinclude evaluation of the cardiac functional biomarker NT-proBNP, the renal functional biomarker proteinuria, the quality of life evaluation Short Forum-36 (“SF-36”), Six-minute Walk Test, and Neuropathy Impairment Score-Lower Limb (“NIS-LL”), a composite clinical scoring scale used as a clinical endpoint inperipheral neuropathy studies. The study was designed with 90% power to detect as little as a 30% change in the event rate between the treatment and placebogroups with a two-sided alpha of 0.05.The PRONTO study was initiated in October 2015 and is a Phase 2b global, multi-center, randomized, double-blind, placebo-controlled clinical trial forNEOD001 in previously-treated patients with AL amyloidosis and persistent cardiac dysfunction. PRONTO is designed to enroll approximately 100 patients with aprimary diagnosis of AL amyloidosis and persistent cardiac dysfunction despite previous treatment with off-label, plasma cell directed therapy. Patients will berandomized on a 1:1 basis to receive 24 mg/kg of NEOD001 or placebo via intravenous infusion every 28 days.The primary endpoint is cardiac best response as assessed by NT-proBNP measured over 12 months. Secondary endpoints include evaluations of SF-36, Six-minute Walk Test, proteinuria and NIS-LL. The study was designed with 80% power to detect an absolute difference of 26.5% in NT-proBNP best response ratebetween the treatment and placebo groups with a two-sided alpha of 0.05.Cardiac, Renal and Peripheral Neuropathy Responses in Phase 1/2 Multiple Ascending Dose StudyThe VITAL Amyloidosis Study and the PRONTO study were initiated based on positive interim data from the Phase 1/2 multiple ascending dose clinicalstudy. In 2015, data from an interim assessment from the dose escalation phase of the Phase 1/2 clinical study were reported in oral presentations at both theAmerican Society for Clinical Oncology Annual Meeting (ASCO) and the 20th Congress of the European Hematology Association (EHA) and subsequentlypublished in February 2016 in the Journal of Clinical Oncology .In July 2016, we presented positive interim data from the Phase 1/2 clinical study from patients in both the dose escalation and expansion phases at theInternational Symposium on Amyloidosis (ISA), and in December 2016, results from the completed study were presented in an oral session at the AmericanSociety of Hematology (ASH) Annual Meeting.The Phase 1/2 study of NEOD001 enrolled patients with AL amyloidosis with persistent organ dysfunction who had been previously treated with standard-of-care plasma cell directed therapy. The Phase 1/2 study consisted of a dose escalation phase (n=27) and expansion phase (n=42) which evaluated safety, tolerability,pharmacokinetics and immunogenicity of NEOD001 as well as the specific clinical activity against cardiac and renal endpoints. The expansion phase of this studyalso evaluated clinical activity against neuropathy endpoints. The 42 patients in the expansion phase of the study were enrolled into three prospectively-definedcohorts as follows: 15 patients with predominantly cardiac dysfunction, 16 patients with renal dysfunction and 11 patients with predominantly peripheralneuropathy. All patients received 24 mg/kg of NEOD001 by intravenous infusion every 28 days.4Results of the Phase 1/2 study demonstrated that NEOD001 was safe and well-tolerated in patients with AL amyloidosis and persistent organ dysfunction. Inthis study, clinical assessments demonstrated improvements in three organ systems in previously treated patients with AL amyloidosis.In a best response analysis of patients in the Phase 1/2 study who received NEOD001, 53% or 19 of 36 total cardiac-evaluable patients demonstrated acardiac response, defined as more than 30% and 300 pg/mL decrease in levels of NT-proBNP. These cardiac best response rates compared favorably to cardiacresponse rates of 0% to 15% from available published historical data in patients previously treated with plasma cell directed therapy, and were consistent with thebest response rate of 57%, or 8 of 14 cardiac-evaluable patients, reported in the interim analysis of the dose escalation phase (n=27) of the NEOD001 Phase 1/2study published in the Journal of Clinical Oncology in February 2016.In a best response analysis of patients in the Phase 1/2 study who received NEOD001, 64%, or 23 of 36 total renal-evaluable patients, demonstrated a renalresponse, defined as a 30% decrease in proteinuria in the absence of estimated glomerular filtration rate (eGFR) worsening. These renal best response ratescompared favorably to renal response rates of 17% to 29% from published historical data in patients previously treated with plasma cell directed therapy, and wereconsistent with the best response rate of 60%, or 9 of 15 renal-evaluable patients, reported in the interim analysis of the dose-escalation phase (n=27) of theNEOD001 Phase 1/2 study published in the Journal of Clinical Oncology in February 2016.In addition, an improvement in peripheral neuropathy in patients in the prospectively defined peripheral neuropathy expansion cohort was demonstrated by amean 35% (median 23%) decrease in NIS-LL measured at month 10, indicating improvement to a third organ system in NEOD001-treated patients. Completeresolution of peripheral neuropathy, as measured by NIS-LL, was achieved in two patients in this cohort. Improvements in patient NIS-LL scores resulted in aresponse rate of 82% or nine of 11 patients in the peripheral neuropathy expansion cohort of the Phase 1/2 study. A response on the NIS-LL is defined as a lessthan 2-point increase on the 88-point scale.Safety, Tolerability, Pharmacokinetics and ImmunogenicityData from the Phase 1/2 study demonstrated that monthly infusions (every 28 days) of NEOD001 were safe and well-tolerated in patients with ALamyloidosis and persistent organ dysfunction. A total of 69 patients received more than 990 infusions, of up to 24 mg/kg, with a mean treatment duration of 12.8months. No hypersensitivity reactions or drug-related serious adverse events were reported and no anti-NEOD001 antibodies were detected. NEOD001 alsodemonstrated excellent pharmacokinetic properties, supporting a dose level of 24 mg/kg administered every 28 days. The most commonly reported treatment-emergent adverse events of those occurring in more than 10% of subjects, regardless of relationship to study drug, were fatigue, nausea, upper respiratory tractinfection, peripheral edema, diarrhea, anemia, increased blood creatinine, dizziness, cough, constipation, headache, vomiting, dyspnea, pain in extremity, backpain, muscle spasms, rash and urinary tract infection. No dose limiting toxicities were observed and no patient discontinued treatment due to drug-related adverseevents.PRX002 for the Potential Treatment of Parkinson’s Disease and other synucleinopathiesIn December 2013, we entered into a License, Development, and Commercialization Agreement (the “License Agreement”) with F. Hoffmann-La Roche Ltdand Hoffmann-La Roche Inc. (collectively, “Roche”) to develop and commercialize certain antibodies that target α- synuclein, including PRX002. Together withRoche, we aim to develop PRX002 as a disease-modifying treatment for Parkinson’s disease and potentially other synucleinopathies. For more information on theLicense Agreement, see the information below.α- synuclein is found extensively in neurons and is a major component of pathological inclusions that characterize several neurodegenerative disorders,including Parkinson’s disease, dementia with Lewy bodies, and multiple system atrophy, which collectively are termed synucleinopathies. While the normalfunction of α- synuclein is not well understood, the protein normally occurs in a soluble form. In synucleinopathies, the α- synuclein protein can misfold andaggregate to form soluble aggregates and insoluble fibrils that contribute to the pathology of the disease.There is genetic evidence for a causal role of α- synuclein in Parkinson’s disease. In rare cases of familial forms of Parkinson’s disease, there are mutations inthe synuclein protein sequence, or duplication and triplications of the relevant gene leading to high levels of α- synuclein production, which may cause α- synucleinprotein to form amyloid-like fibrils that contribute to the disease. There is also increasing evidence that this disease-causing α- synuclein can be propagated andtransmitted from neuron to neuron, resulting in an infection-like spread of neuronal death. Recent studies in cellular and animal models suggest that the spread ofα- synuclein-associated neurodegeneration can be disrupted by targeting aberrant forms of α- synuclein.5Parkinson’s disease is a degenerative disorder of the central nervous system that affects approximately seven to ten million people worldwide, making it thesecond most common neurodegenerative disease after Alzheimer's. The disease is characterized by the neuronal accumulation of aggregated α- synuclein in theCNS and peripheral nervous system that results in a wide spectrum of worsening progressive motor and non-motor symptoms. While diagnosis relies on motorsymptoms classically associated with Parkinson's disease, non-motor symptoms may present many years earlier. Current treatments for Parkinson's disease areprimarily directed at managing the early motor symptoms of the disease, mainly through the use of levodopa and dopamine agonists and only address a subset ofsymptoms such as motor impairment, dementia, or psychosis. Symptomatic therapies do not target the underlying cause of the disease and as the disease progressesand dopaminergic neurons continue to be lost, these drugs lose effectiveness, often leading to debilitating side effects as the disease progresses. The goal of ourapproach is to slow the progressive neurodegenerative consequences of disease, a current unmet need. PRX002 targets α- synuclein and may slow or reduce theneurodegeneration associated with synuclein misfolding and/or transmission.Clinical Development Program for PRX002Prior to initiating clinical trials, we tested the efficacy of PRX002 in various cellular and animal models of α- synuclein-related disease. In transgenic mousemodels of Parkinson’s disease, passive immunization with 9E4, the murine version of PRX002, reduced the appearance of α- synuclein pathology, protectedsynapses and improved performance by the mice in behavioral testing.During 2014, together with Roche, we advanced PRX002 into clinical development with the initiation of two Phase 1 studies. Results of the first study, aPhase 1 double-blind, placebo-controlled, single ascending dose trial, were presented in June 2015 as part of the late breaking session at the 19 th InternationalCongress of Parkinson's Disease and Movement Disorders and published in December 2016 in the journal Movement Disorders . The data demonstrated thatPRX002 was safe and well-tolerated in healthy volunteers, meeting the primary objective of the study. Further, results from this study showed that administrationof PRX002 led to a mean reduction of free serum α- synuclein levels of up to 96.5%. These overall results were statistically significant (p < 0.0001). Reduction offree serum α-synuclein, a protein potentially involved in the onset and progression of Parkinson's disease and the target of PRX002, was shown to be robust, rapid,and dose- and time-dependent after a single dose. No serious adverse events or hypersensitivity reactions were reported. PRX002 demonstrated favorablepharmacokinetic properties. The most common treatment emergent adverse events were headache, nausea, vessel puncture site pain, viral infection, and viral upperrespiratory tract infection. In this study, all PRX002-related adverse events were mild, no dose limiting toxicities were observed and no anti-drug antibodies weredetected.Results of the second study, a Phase 1b double-blind, placebo-controlled, multiple ascending dose study of PRX002 in patients with Parkinson’s disease thatwas designed to assess the safety, tolerability, pharmacokinetics and immunogenicity of PRX002, were announced in November 2016. The 80 patients withParkinson’s disease in this study were randomized into six escalating dose cohorts to receive PRX002 or placebo (2:1 randomization for 0.3, 1, 3 or 10 mg/kg, and3:1 randomization for 30 or 60 mg/kg). In this six-month study, patients received three monthly doses (intravenous infusion once every 28 days) of PRX002 orplacebo and were followed for an observational period of three months. All dose levels of PRX002 were found to have an acceptable safety and tolerability profilein patients with Parkinson’s disease, meeting the primary objective of the study. Robust central nervous system (CNS) penetration was demonstrated by a dose-dependent increase in PRX002 levels in cerebrospinal fluid (CSF), and a mean concentration of PRX002 in CSF of 0.3% relative to serum across all dose levels,which exceeded out expectations based on our preclinical experience. Data from the study also demonstrated rapid, dose- and time-dependent mean reduction inlevels of free serum alpha-synuclein of up to 97% after a single dose, which were statistically significant (p < 0.0001), and maintained following two additionalmonthly doses. No serious or severe treatment emergent adverse events (TEAEs) were reported in PRX002 treated patients. No TEAEs were observed in tenpercent or more of PRX002 treated patients. TEAEs greater than placebo in five percent or more of PRX002 treated patients, regardless of relationship to PRX002,included constipation, infusion related reactions (IRRs), diarrhoea, peripheral oedema, and post lumbar puncture syndrome. Mild-to-moderate IRRs, that allresolved, were limited to the 60 mg/kg dose cohort and were observed in four of 12 treated patients. No dose-limiting toxicities were observed. PRX002demonstrated acceptable pharmacokinetic properties.The results from these Phase 1 studies support advancing PRX002 into a Phase 2 clinical study.License, Development, and Commercialization Agreement with RocheIn December 2013, we entered into the License Agreement with Roche to develop and commercialize certain antibodies that target α- synuclein, includingPRX002, which are referred to in this report collectively as “Licensed Products.” The License Agreement became effective following the expiration of theapplicable Hart-Scott-Rodino waiting period on January 17, 2014, which triggered an upfront payment to us of $30.0 million from Roche, which we received inFebruary 2014.6Pursuant to the License Agreement, we are collaborating with Roche to research and develop antibody products targeting α- synuclein. Roche is providingfunding for this research collaboration, which is focused on optimizing early stage antibodies targeting α- synuclein, potentially including incorporation of Roche’sproprietary Brain Shuttle™ technology to increase delivery of therapeutic antibodies to the brain. Roche is primarily responsible for developing, obtaining andmaintaining regulatory approval for, and commercializing Licensed Products under the collaboration including PRX002. Roche will also become responsible forthe clinical and commercial manufacture and supply of Licensed Products within a defined time period following the effective date of the License Agreement.In addition to the $30.0 million upfront payment and a clinical milestone payment of $15.0 million paid in 2014, Roche is also obligated to pay:•up to $380.0 million upon the achievement of development, regulatory and various first commercial sales milestones;•up to an additional $175.0 million in ex-U.S. commercial sales milestones; and•tiered, high single-digit to high double-digit royalties in the teens on ex-U.S. annual net sales, subject to certain adjustments.In the U.S., Prothena and Roche will share all development and commercialization costs, as well as profits, all of which will be allocated 70% to Roche and30% to us, for PRX002 in the Parkinson’s disease indication, as well as any other licensed products and/or indications for which we opt in to co-develop and co-fund. We may opt out of the co-development and cost and profit sharing on any co-developed licensed products and instead receive U.S. commercial salesmilestones totaling up to $155.0 million and tiered, single-digit to high double-digit royalties in the teens based on U.S. annual net sales, subject to certainadjustments, with respect to the applicable licensed product. In addition, we have an option under the License Agreement to co-promote PRX002 in the U.S. in theParkinson’s disease indication. If we exercise such option, we may also elect to co-promote additional licensed products in the U.S. approved for Parkinson’sdisease or other indications calling on the same prescriber. Outside the U.S., Roche will have responsibility for developing and commercializing the licensedproducts.Under the License Agreement with Roche, we granted to Roche an exclusive, worldwide license to develop, make, have made, use, sell, offer to sell, importand export the Licensed Products. The License Agreement continues on a country-by-country basis until the expiration of all payment obligations thereunder. TheLicense Agreement may also be terminated (i) by Roche at will after the first anniversary of the effective date of the License Agreement, either in its entirety or ona Licensed Product-by-Licensed Product basis, upon 90 days’ prior written notice to us prior to first commercial sale and 180 days’ prior written notice to us afterfirst commercial sale, (ii) by either party, either in its entirety or on a Licensed Product-by-Licensed Product or region-by-region basis, upon written notice inconnection with a material breach uncured 90 days after initial written notice, and (iii) by either party, in its entirety, upon insolvency of the other party. TheLicense Agreement may be terminated by either party on a patent-by-patent and country-by-country basis if the other party challenges a given patent in a givencountry. Our rights to co-develop licensed products under the License Agreement will terminate if we commence certain studies for certain types of competitiveproducts. Our rights to co-promote licensed products under the License Agreement will terminate if we commence a Phase 3 study for such competitive products.PRX003 for the Potential Treatment of Inflammatory Diseases Including Psoriasis and Psoriatic ArthritisWe are developing PRX003, an investigational monoclonal antibody targeting CD146, also known as melanoma cell adhesion molecule (MCAM), expressedon the surface of pathogenic Th17 cells that are a primary cause of a variety of inflammatory diseases.CD146 is a cell adhesion molecule expressed on pathogenic Th17 cells that allows certain cells traveling in the bloodstream to leave the circulation and entertissues. Although Th17 cells represent fewer than 5 percent of T-cells, these cells appear to be disproportionately involved in propagation of inflammatory disease.Targeting the T cell, rather than any individual cytokine, may provide a highly specific way to impact multiple pathogenic processes while leaving the vastmajority of immune cells intact to carry out their normal function.CD146 functions like hook-and-loop fasteners, allowing Th17 cells to adhere to the blood vessel wall and migrate into tissues to initiate the inflammatoryprocess. Our research in the area of cell adhesion has uncovered unique insights into CD146’s function. Specifically, Prothena scientists discovered that laminin α 4is the binding partner for CD146 and developed PRX003 to bind to the specific epitope that blocks the interaction between CD146 and laminin α 4.7PRX003 is designed to occupy CD146, leading to downregulation which sequesters pro-inflammatory Th17 cells in the bloodstream and prevents theirmigration into tissue. PRX003 may also induce the demargination of Th17 cells that are already adherent to blood vessels and/or tissue.Autoimmune and/or autoinflammatory diseases arise from the body’s inappropriate immune response against substances and tissues normally present in thebody. In other words, the immune system mistakes some part of the body as a foreign pathogen and attacks its own cells. The National Institutes of Healthestimates 23.5 million Americans have an autoimmune disease, which are often chronic and debilitating.Psoriasis is a common and chronic autoimmune disease caused by changes in the life cycle of skin cells that cause them to build up on the surface of the skin.The extra skin cells form thick, silvery scales and itchy, dry, red patches that are sometimes painful.Psoriatic arthritis, a Th17-mediated disease where multiple cytokines contribute to pathology, is a potentially debilitating disease characterized by pain,stiffness and swelling in the joints and the surrounding ligaments and tendons. Psoriatic arthritis can be disabling and cause irreversible joint damage if leftuntreated. Psoriatic arthritis impacts as many as 1 million people in the US, EU5, and Japan. According to the National Psoriasis Foundation, nearly one in fourpeople with psoriasis may have undiagnosed psoriatic arthritis and as many as 45 percent of patients with psoriatic arthritis are currently dissatisfied with theircurrent treatment.Current treatment for many types of inflammatory diseases may entail the use of broad acting immunosuppressive agents that weaken the body’s ability tofight infection.Clinical Development Program for PRX003Our strategy is to pursue psoriasis initially to allow for potential rapid feedback on the biological activity of PRX003 and establish a solid clinical foundationto inform our decisions as we explore the full development potential of this antibody in psoriasis and other inflammatory indications.In June 2016, we announced data from a Phase 1 single ascending dose study of PRX003 in healthy volunteers, that was designed to assess the safety,tolerability, pharmacokinetics and immunogenicity of PRX003. The 40 healthy volunteers in this double-blind, placebo-controlled, single ascending dose studywere randomized 3:1 into five escalating dose cohorts (0.3 mg/kg, 1 mg/kg, 3 mg/kg, 10 mg/kg or 30 mg/kg) to receive either PRX003 or placebo. The datademonstrated that PRX003 was safe and well-tolerated following a single infusion, up to and including the highest dose level tested of 30 mg/kg. Data from thestudy also demonstrated that administration of PRX003 led to greater than 95% neutralization of CD146 at saturating drug exposures. The data showed astatistically significant (p<0.0001) dose-dependent duration of downregulation of CD146 on Th17 cells.In the second quarter of 2016, we initiated a randomized, double-blind, placebo-controlled, Phase 1b multiple ascending dose proof-of-biology study ofPRX003 designed to further assess the safety, tolerability, pharmacokinetics and immunogenicity of PRX003 in approximately 44 patients with psoriasis. If certainpre-specified criteria are met in this study, our strategy is to advance PRX003 into a Phase 2 clinical study in psoriatic arthritis.PRX004 for the Potential Treatment of ATTR AmyloidosisPRX004 is an investigational monoclonal antibody designed to specifically target and clear the misfolded (toxic) forms of the TTR amyloid protein found inATTR amyloidosis.Transthyretin-mediated amyloidosis (ATTR amyloidosis) is a rare, progressive and sometimes fatal disease characterized by deposition of aggregates ofmisfolded protein, or amyloid. There are three types of ATTR amyloidosis: hereditary ATTR with cardiomyopathy (hATTR-CM); wild-type ATTR which occurssporadically and also involves cardiomyopathy; and hereditary ATTR with polyneuropathy (hATTR-PN).The TTR protein is produced primarily in the liver and in its normal tetrameric form serves as a carrier for thyroxin and vitamin A. In hereditary hATTR-PNand hATTR-CM the body makes a mutant form of the TTR protein. There are more than 100 reported types of TTR mutations that promote amyloid fibrilformation, which most commonly affect the heart (hATTR-CM) and nervous system (hATTR-PN). Wild-type ATTR (wtATTR) is similar to hereditary ATTRexcept that the protein that is deposited is the misfolded, non-mutated transthyretin protein. The wild-type transthyretin protein is less prone to forming amyloiddeposits than the mutated form and patients usually develop the disease at 65 years of age or older.8Prothena has generated monoclonal antibodies that selectively bind to amyloidogenic (diseased) forms of the transthyretin (ATTR) protein. Preclinical datapublished in March 2016 in the journal Amyloid suggest that Prothena's antibodies have unique biological activity that may lead to the prevention of deposition,and enhancement of clearance, of ATTR in patients with both wild type and hereditary TTR-mediated amyloidosis.Currently in preclinical development, Prothena plans to advance PRX004 into the clinic as a potential therapy for ATTR amyloidosis.Our Discovery ProgramsOur pipeline also includes late discovery-stage programs for which we are testing the efficacy of antibodies in preclinical models of diseases related toamyloid or cell adhesion. If promising, we expect that these antibodies will advance to preclinical development. New target discovery will focus on the potentialtreatment of orphan indications involving protein misfolding or cell-adhesion where we can bring these therapies to patients expeditiously through our internalexpertise and resources. Existing late discovery-stage programs with non-orphan indications may be partnered or out-licensed.RegulationWe anticipate that if we commercialize any products, the U.S. market will be our most important market. For this reason, the laws and regulations discussedbelow focus on the requirements applicable to biologic products in the U.S.Government RegulationGovernmental authorities, including the FDA, the EMA and comparable regulatory authorities in other countries, regulate the design, development, testing,manufacturing, safety, efficacy, labeling, storage, record-keeping, advertising, promotion and marketing of pharmaceutical products, including biologics. The FDAdoes so under the U.S. Federal Food, Drug, and Cosmetic Act and its implementing regulations, and the U.S. Public Health Service Act and its implementingregulations. Non-compliance with applicable requirements can result in fines and other judicially imposed sanctions, including product seizures, import restrictions,injunctive actions and criminal prosecutions of both companies and individuals. In addition, administrative remedies can involve requests to recall violativeproducts; the refusal of the government to enter into supply contracts; or the refusal to approve pending product approval applications until manufacturing or otheralleged deficiencies are brought into compliance. The FDA and other comparable regulatory authorities also have the authority to cause the withdrawal of approvalof a marketed product or to impose labeling restrictions.The pricing of pharmaceutical products is regulated in many countries and the mechanism of price regulation varies. In the U.S., while there are limitedindirect federal government price controls over private sector purchases of drugs, it is not possible to predict future regulatory action or private sector initiatives onthe pricing of pharmaceutical products.Product ApprovalUnited States. In the U.S., our drug candidates are regulated as biologic pharmaceuticals, or biologics. The FDA regulates biologics under the U.S. Food,Drug, and Cosmetics Act, U.S. Public Health Service Act and its implementing regulations. Biologics are also subject to other federal, state and local statutes andregulations. The process required by the FDA before biologic product candidates may be marketed in the U.S. generally involves the following:•submission to the FDA of an Investigational New Drug Application ("IND"), which must become effective before human clinical trials may begin andmust be updated annually;•completion of extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with the FDA’s Good Laboratory Practice("GLP") regulations;•performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for each proposed indication, allperformed in accordance with FDA’s current good clinical practices ("cGCP") regulations;•submission to the FDA of a BLA for a new biologic, after completion of all pivotal clinical trials;9•satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities at which the product is produced and tested to assesscompliance with current good manufacturing practices ("cGMP") regulations; and•FDA review and approval of a BLA for a new biologic, prior to any commercial marketing or sale of the product in the U.S.Preclinical tests assess the potential safety and efficacy of a product candidate in in vitro and/or in vivo models. The results of these studies must be submittedto the FDA as part of an IND before human testing may proceed. An IND is a request for authorization from the FDA to administer an investigational drug orbiologic product to humans. The central focus of an IND submission is on the general investigational plan and the protocol(s) for human studies. The IND alsoincludes results of animal studies or other human studies, as appropriate, as well as manufacturing information, analytical data and any available clinical data orliterature to support the use of the investigational new drug. An IND must become effective before human clinical trials may begin. An IND will automaticallybecome effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to the proposed clinical trials. In such acase, the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions before clinical trials can begin.Accordingly, submission of an IND may or may not result in the FDA allowing clinical trials to commence.Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance withcGCPs, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. Clinical trials areconducted under protocols detailing, among other things, the objectives of the study, the parameters to be used in monitoring safety, and the efficacy criteria to beevaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. Additionally, approvalmust also be obtained from each clinical trial site’s Institutional Review Board ("IRB") before the trials may be initiated, and the IRB must monitor the study untilcompleted. There are also requirements governing the reporting of ongoing clinical trials and clinical trial results to public registries.The clinical investigation of a pharmaceutical, including a biologic, is generally divided into three phases. Although the phases are usually conductedsequentially, they may overlap or be combined. The three phases of an investigation are as follows:• Phase 1. Phase 1 includes the initial introduction of an investigational product into humans. Phase 1 clinical trials are typically closely monitored andmay be conducted in patients with the target disease or condition or in healthy volunteers. These studies are designed to evaluate the safety, dosage tolerance,metabolism and pharmacologic actions of the investigational product in humans, the side effects associated with increasing doses, and if possible, to gain earlyevidence on effectiveness. During Phase 1 clinical trials, sufficient information about the investigational product’s pharmacokinetics and pharmacological effectsmay be obtained to permit the design of well-controlled and scientifically valid Phase 2 clinical trials. The total number of participants included in Phase 1 clinicaltrials varies, but is generally in the range of 20 to 80;• Phase 2. Phase 2 includes controlled clinical trials conducted to preliminarily or further evaluate the effectiveness of the investigational product for aparticular indication(s) in patients with the disease or condition under study, to determine dosage tolerance and optimal dosage, and to identify possible adverseside effects and safety risks associated with the product. Phase 2 clinical trials are typically well-controlled, closely monitored, and conducted in a limited patientpopulation, usually involving no more than several hundred participants; and• Phase 3. Phase 3 clinical trials are generally controlled clinical trials conducted in an expanded patient population generally at geographically dispersedclinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the product has been obtained, and are intended to further evaluatedosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the investigational product, and to provide an adequate basis forproduct approval. Phase 3 clinical trials usually involve several hundred to several thousand participants.The clinical trial process can take three to ten years or more to complete, and there can be no assurance that the data collected will support FDA approval ofthe product. The FDA may place clinical trials on hold at any point in this process if, among other reasons, it concludes that clinical subjects are being exposed toan unacceptable health risk. Trials may also be terminated by IRBs, which must review and approve all research involving human subjects. Side effects or adverseevents that are reported during clinical trials can delay, impede or prevent marketing authorization.The results of the preclinical and clinical testing, along with information regarding the manufacturing of the product and proposed product labeling, areevaluated and, if determined appropriate, submitted to the FDA through a BLA. The application includes all relevant data available from pertinent preclinical andclinical trials, including negative or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry,manufacturing, controls and proposed10labeling, among other things. Data can come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or from anumber of alternative sources, including studies initiated by investigators.Once the BLA submission has been accepted for filing, the FDA’s standard goal is to review applications within ten months of the filing date or, in the caseof Priority Review, six months from the filing date. The review process is often significantly extended by FDA requests for additional information or clarification.The FDA reviews the BLA to determine, among other things, whether the proposed product is safe, pure and potent, which includes determining whether it iseffective for its intended use, and whether the product is being manufactured in accordance with cGMP, to assure and preserve the product’s identity, strength,quality, potency and purity. The FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the applicationshould be approved. The FDA is not bound by the recommendation of an advisory committee, but it typically follows such recommendations.The FDA has four program designations - Fast Track, Breakthrough Therapy, Accelerated Approval and Priority Review - to facilitate and expeditedevelopment and review of new drugs to address unmet medical needs in the treatment of serious or life-threatening conditions. The Fast Track designationprovides pharmaceutical manufacturers with opportunities for frequent interactions with FDA reviewers during the product’s development and the ability for themanufacturer to do a rolling submission of the BLA. A rolling submission allows completed portions of the application to be submitted and reviewed by the FDAon an ongoing basis. The Breakthrough Therapy designation provides manufacturers with all of the features of the Fast Track designation as well as intensiveguidance on implementing an efficient development program for the product and a commitment by the FDA to involve senior managers and experienced reviewstaff in the review. The Accelerated Approval designation allows the FDA to approve a product based on an effect on a surrogate or intermediate endpoint that isreasonably likely to predict a product’s clinical benefit and generally requires the manufacturer to conduct required post-approval confirmatory trials to verify theclinical benefit. The Priority Review designation means that the FDA’s goal is to take action on the BLA within six months, compared to ten months understandard review.After the FDA evaluates the BLA and conducts inspections of manufacturing facilities where the candidate product and/or its API will be produced, it mayissue an approval letter or a Complete Response Letter. An approval letter authorizes commercial marketing of the biologic with specific prescribing informationfor specific indications. A Complete Response Letter indicates that the review cycle of the application is complete and the application is not ready for approval. AComplete Response Letter may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. Even if such additional information is submitted, the FDA may ultimatelydecide that the BLA does not satisfy the criteria for approval. The FDA could approve the BLA with a Risk Evaluation and Mitigation Strategy ("REMS") plan tomitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods,patient registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling, development ofadequate controls and specifications, or a commitment to conduct one or more post-market studies or clinical trials. Such post- market testing may include Phase 4clinical trials and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.There can be no marketing in the U.S. of a biologic until a BLA has been submitted and approved by the FDA. Until an application is actually approved,there can be no assurance that the information requested and submitted will be considered adequate by the FDA.European Union . In Europe, there are several tracks for marketing approval, depending on the type of product for which approval is sought. Under thecentralized procedure, a company submits a single application to the EMA. The marketing application is similar to the NDA or BLA in the U.S. and is evaluated bythe Committee for Medicinal Products for Human Use (the "CHMP"), the expert scientific committee of the EMA. If the CHMP determines that the marketingapplication fulfills the requirements for quality, safety, and efficacy, it will submit a favorable opinion to the European Commission (the "EC"). The CHMPopinion is not binding, but is typically adopted by the EC. A marketing application approved by the EC is valid in all member states.In addition to the centralized procedure, the EC also has: (i) a nationalized procedure, which requires a separate application to and approval determination byeach country; (ii) a decentralized procedure, whereby applicants submit identical applications to several countries and receive simultaneous approval; and (iii) amutual recognition procedure, where applicants submit an application to one country for review and other countries may accept or reject the initial decision.Regardless of the approval process employed, various parties share responsibilities for the monitoring, detection, and evaluation of adverse events post-approval,including national authorities, the EMA, the EC, and the marketing authorization holder.11Post-Approval RequirementsAny products manufactured or distributed by us or on our behalf pursuant to FDA approvals are subject to continuing regulation by the FDA, includingrequirements for record-keeping, reporting of adverse experiences with the biologic, and submitting biological product deviation reports to notify the FDA ofunanticipated changes in distributed products. Additionally, any significant change in the approved product or in how it is manufactured, including changes informulation or the site of manufacture, generally require prior FDA approval. The packaging and labeling of all products developed by us are also subject to FDAapproval and ongoing regulation.Manufacturers are required to register their facilities with the FDA and certain state agencies, and are subject to periodic unannounced inspections by theFDA and certain state agencies for compliance with cGMP standards, which impose certain quality processes, manufacturing controls and documentationrequirements upon us and our third-party manufacturers in order to ensure that the product is safe, has the identity and strength, and meets the quality, purity andpotency characteristics that it purports to have. Certain states also impose requirements on manufacturers and distributors to establish the pedigree of product in thechain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product as it movesthrough the distribution chain. Noncompliance with cGMP or other requirements can result in issuance of warning letters, civil and criminal penalties, seizures, andinjunctive action.FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon us andany third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production andquality control to maintain compliance with cGMP and other aspects of regulatory compliance.The FDA and other federal and state agencies closely regulate the labeling, marketing and promotion of drugs. While doctors are free to prescribe anyproduct approved by the FDA for any use, a company can only make claims relating to safety and efficacy of a product that are consistent with FDA approval, andthe company is allowed to market a drug only for the particular use and treatment approved by the FDA. In addition, any claims we make for our products inadvertising or promotion must be appropriately balanced with important safety information and otherwise be adequately substantiated. Failure to comply with theserequirements can result in adverse publicity, warning letters, corrective advertising, injunctions, potential civil and criminal penalties, criminal prosecution, andagreements with governmental agencies that materially restrict the manner in which a company promotes or distributes drug products. Government regulators,including the Department of Justice and the Office of the Inspector General of the Department of Health and Human Services, as well as state authorities, recentlyhave increased their scrutiny of the promotion and marketing of drugs.The FDA also enforces the requirements of the U.S. Prescription Drug Marketing Act, which, among other things, imposes various requirements inconnection with the distribution of product samples to physicians. Sales, marketing and scientific/educational grant programs must comply with the U.S. Anti-Kickback Statute, the U.S. False Claims Act, and similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the U.S.Omnibus Budget Reconciliation Act of 1990, as amended. We may also be subject to the U.S. Physician Payment Sunshine Act (the "Sunshine Act") whichregulates disclosure of payments to healthcare professionals and providers.The U.S. Foreign Corrupt Practices Act (the “FCPA”) and U.K. Bribery Act prohibit companies and their representatives from offering, promising,authorizing or making payments to governmental officials (and certain private individuals under the U.K. Bribery Act) for the purpose of obtaining or retainingbusiness abroad. In many countries, the healthcare professionals we interact with may meet the definition of a government official for purposes of the FCPA.Failure to comply with domestic or non-domestic laws could result in various adverse consequences, including possible delay in approval or refusal to approve aproduct, recalls, seizures, withdrawal of an approved product from the market, the imposition of civil or criminal sanctions and the prosecution of executivesoverseeing our international operations.Orphan DrugsUnder the U.S. Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition, which is generallydefined as a disease or condition that affects fewer than 200,000 individuals in the U.S. Orphan drug designation must be requested before submitting a BLA. Inthe U.S., orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages, anduser-fee waivers. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA.Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first BLA applicant toreceive FDA approval for a particular active ingredient to treat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusivemarketing period in the U.S. for that product, for that indication.12During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same orphan indication, except inlimited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity or if FDA finds that the holder of the orphan drugexclusivity has not shown that it can assure the availability of sufficient quantities of the orphan drug to meet the needs of patients with the disease or condition forwhich the drug was designated. As a result, even if one of our drug candidates receives orphan exclusivity, the FDA can still approve other drugs that have adifferent active ingredient for use in treating the same indication or disease. Furthermore, the FDA can waive orphan exclusivity if we are unable to manufacturesufficient supply of our product.Pharmaceutical Coverage, Pricing and ReimbursementSales of our products will depend, in part, on the extent to which our products will be covered by third-party payors, such as federal, state and othergovernment health care programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly reducing reimbursementsfor medical products, drugs and services. In addition, the U.S. government, state legislatures and other governments have continued implementing cost containmentprograms, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results.Decreases in third-party reimbursement for our drug candidates or a decision by a third-party payor to not cover our drug candidates could reduce physician usageof our products once approved and have a material adverse effect on our sales, results of operations and financial condition.Other Healthcare LawsAlthough we currently do not have any products on the market, if our drug candidates are approved and we begin commercialization, we may be subject toadditional healthcare regulation and enforcement by the federal government and by authorities in the states and other jurisdictions in which we conduct ourbusiness. Such laws include, without limitation, anti-kickback, fraud and abuse, false claims, privacy and security and physician sunshine laws and regulations. Ifour operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including,without limitation, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, exclusion from participation in federal and statehealthcare programs and imprisonment, any of which could adversely affect our ability to operate our business and our financial results.Intellectual PropertyWe seek to protect our proprietary technology and other intellectual property that we believe is important to our business, including by seeking, maintainingand defending patents. We also rely on trade secrets and know-how to protect our business. We seek licenses from others as appropriate to enhance or maintain ourcompetitive position.Our intellectual property is primarily directed to immunological approaches to the treatment of diseases that involve amyloid or cell adhesion, and otherproprietary technologies and processes related to our lead product development candidates.We own or hold exclusive licenses to a number of issued U.S. patents and pending U.S. patent applications, as well as issued non-U.S. patents and pendingPatent Cooperation Treaty applications and non-U.S. counterparts. As of December 31, 2016, our patent portfolio included the following patents or patentapplications that we own or have exclusively licensed from other parties:•Approximately 4 patent families related to AL or AA amyloidosis, including our NEOD001 program;•Approximately 13 patent families related to Parkinson’s disease and other synucleinopathies, including our PRX002 program;•Approximately 12 patent families related to inflammatory diseases including psoriasis, including our PRX003 program;•Approximately 4 patent families related to ATTR amyloidosis, including our PRX004 program; and•Approximately 9 patent families related to other potential targets of intervention and diseases.The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, thepatent term is 20 years from the date of filing the non-provisional application. In the U.S., a patent’s term may be lengthened by patent term adjustment, whichcompensates a patentee for administrative delays by the U.S. Patent and Trademark Office in granting a patent, or may be shortened if a patent is terminallydisclaimed over an earlier-filed patent.13The term of a patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration of a U.S. patentas compensation for the patent term lost during the FDA regulatory review process. The U.S. Hatch-Waxman Act permits a patent term extension of up to fiveyears beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. A patent termextension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approveddrug may be extended. Moreover, a patent can only be extended once, and thus, if a single patent is applicable to multiple products, it can only be extended basedon one product. Similar provisions are available in Europe and other jurisdictions to extend the term of a patent that covers an approved drug. When possible,depending upon the length of clinical trials and other factors involved in the filing of a BLA, we expect to apply for patent term extensions for patents covering ourproduct candidates and their methods of use.The patents referenced above have expiration dates ranging from 2020 through 2037 (excluding any available patent term extensions).University of Tennessee License Agreement: Under a License Agreement with the University of Tennessee Research Foundation, we have exclusivelylicensed from the University of Tennessee its joint ownership interest in certain patents jointly owned with us. Those patents relate to our program targetingamyloidosis. Under that sublicensable, worldwide license, we are required to pay to the University of Tennessee an amount equal to 1% of net sales of any productcovered by any licensed patent, plus certain additional payments in the event that all or a portion of the license is sublicensed. To date, we have not paid or incurredany royalties to the University of Tennessee under our agreement. The agreement is effective on a country-by-country basis for the longer of (i) a period of twentyyears from the date of execution of the agreement, or (ii) in each country in which a valid claim for any licensed patent or patent application exists, expiration ofsuch valid claim. The agreement will terminate prior to the end of its term if we become insolvent unless the University of Tennessee elects to allow the agreementto remain in effect. The University of Tennessee may terminate the agreement prior to the end of its term upon our failure to make payment under the agreementwithin 120 days of notice of such failure or upon our material breach of the agreement, which breach has not been cured within 60 days of written notice of suchbreach. We may terminate the agreement prior to the end of its term if we have paid all amounts due to the University of Tennessee through the effective date ofthe termination and provide three months’ written notice to the University of Tennessee or upon material breach of the agreement by the University of Tennessee,which breach has not been cured within 60 days of written notice of such breach.University of California License Agreement: Under a License Agreement with The Regents of the University of California, we have exclusively licensedfrom the University of California its joint ownership interest in certain patents jointly owned with us. Those patents relate to our program targeting α- synuclein.Under that sublicensable, worldwide license, we are required to pay to the University of California an amount equal to 1% of net sales of any product covered byany licensed patent, plus certain additional payments for milestones achieved and sublicense revenue. To date, we have not paid or incurred any royalties to theUniversity of California under our agreement. The agreement is effective until the expiration date of the last to expire licensed patent. The obligation to payroyalties continues on a country-by-country basis until the expiration of the last to expire patent containing a valid claim covering the applicable product. Theagreement will terminate prior to the end of its term without prior written notice if (i) we, or third parties on our behalf or at our written urging, file a claimincluding an assertion that any portion of the licensed patents is invalid or unenforceable, or (ii) upon the filing of a petition for relief under the U.S. BankruptcyCode by or against us as a debtor or alleged debtor. The University of California may terminate the agreement prior to the end of its term upon our default, if wefail to cure the default within 60 days of written notice of such default. We may terminate the agreement prior to the end of its term upon a 90 day written notice tothe University of California.Elan License Agreement: Under an Amended and Restated Intellectual Property License and Contribution Agreement with Elan and certain of its affiliates,we have exclusively licensed from Elan and those affiliates certain patents and patent applications owned by them, and exclusively sublicensed from Elan andthose affiliates certain patents and patent applications owned by Janssen Alzheimer Immunotherapy. Those licenses are worldwide, fully paid, royalty-free,perpetual and irrevocable, and relate to our program targeting α- synuclein. Subsequent to entering into this Agreement, Elan was acquired by Perrigo Companyplc.CompetitionThe pharmaceutical industry is highly competitive. Our principal competitors consist of major international companies, all of which are larger and havegreater financial resources, technical staff, manufacturing, R&D and marketing capabilities than we have. We also compete with smaller research companies andgeneric drug and biosimilar manufacturers. The degree of competition varies for each of our programs.A drug may be subject to competition from alternative therapies during the period of patent protection or regulatory exclusivity and thereafter it may besubject to further competition from generic products or biosimilars. Governmental and other pressures toward the dispensing of generic products or biosimilarsmay rapidly and significantly reduce, slow or reverse the growth, sales and profitability of any product not protected by patents or regulatory exclusivity, and mayadversely affect our future results and financial condition. If we successfully discover, develop and commercialize any products, the launch of14competitive products, including generic or biosimilar versions of any such products, may have a material adverse effect on our revenues and results of operations.Our competitive position depends in part upon our ability to discover and develop innovative and cost-effective new products. If we fail to discover anddevelop new products, our business, financial condition and results of operations will be materially and adversely affected.ManufacturingWe do not own or operate facilities for the manufacture, packaging, labeling, storage, testing or distribution of preclinical or clinical supplies of any of ourdrug candidates. We instead contract with and rely on third-parties to manufacture, package, label, store, test and distribute all pre-clinical development and clinicalsupplies of our drug candidates, and we plan to continue to do so for the foreseeable future. We also rely on third-party consultants to assist us with managing thesethird-parties and with our manufacturing strategy.NEOD001 - Boehringer Ingelheim Biopharmaceuticals GmbH (“BI”) has manufactured and is contracted to continue to manufacture clinical supplies of ourdrug candidate NEOD001 for all of its clinical trials. We are dependent on BI to continue to manufacture these clinical supplies.We have contracted with Rentschler Biotechnologie GmbH (“Rentschler”) to develop the capability to manufacture and supply drug substance of NEOD001,and to so supply NEOD001 to us for worldwide commercial sale purposes if we apply for and obtain regulatory approval to market NEOD001. In order to be ableto use drug substance supplied by Rentschler for commercial purposes, we will need to first establish comparability of drug substance manufactured by Rentschlerwith clinical supplies manufactured by BI and used by us in clinical development of NEOD001.PRX002 - BI manufactured clinical supplies of our drug candidate PRX002 for our completed Phase 1a single ascending dose and Phase 1b multipleascending dose clinical trials. It is intended that Roche, with whom we are collaborating on development of PRX002, will manufacture clinical supplies for anyPhase 2 and subsequent clinical trials.PRX003 - BI is our third-party manufacturer of clinical supplies of our drug candidate PRX003. We are dependent on BI to continue to manufacture theseclinical supplies.PRX004 - Rentschler is our third party manufacturer of clinical supplies of our drug candidate PRX004. We are dependent on Rentschler to manufacturethese clinical supplies in order to initiate clinical trials for PRX004.Research and DevelopmentOur research and development expenses totaled $119.5 million , $58.4 million , and $38.5 million in 2016, 2015, and 2014, respectively. For moreinformation, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”EmployeesAs of December 31, 2016 , we had 96 employees, of whom 65 were engaged in research and development activities and the remainder were working ingeneral and administrative areas.Information about Segment and Geographic RevenueInformation about segment and geographic revenue is set forth in Note 2 to the Consolidated Financial Statements included in this report.Available informationOur principal executive office is at Adelphi Plaza, Upper George’s Street, Dún Laoghaire, Co. Dublin, A96 T927, Ireland, and our telephone number at thataddress is 011-353-1-236-2500. We are subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, inaccordance therewith, file periodic reports, proxy statements and other information with the U.S. Securities and Exchange Commission (the “SEC”). Such periodicreports, proxy statements and other information are available for inspection and copying at the SECs Public Reference Room at 100 F Street, NE., Washington, DC20549 or may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy statementsand other information regarding issuers that file electronically with the15SEC. We also post on the Investors page of our website, www.prothena.com, a link to our filings with the SEC, our Corporate Governance Guidelines and Code ofConduct, which applies to all directors and employees, and the charters of our Audit, Compensation and Nominating and Corporate Governance Committees of ourBoard of Directors. Our filings with the SEC are posted on our website and are available free of charge as soon as reasonably practical after they are filedelectronically with the SEC. Please note that information contained on our website is not incorporated by reference in, or considered to be a part of, this report. Youcan also obtain copies of these documents free of charge by writing or telephoning us at: Prothena Corporation plc, Adelphi Plaza, Upper George’s Street, DúnLaoghaire, Co. Dublin, A96 T927, Ireland, 011-353-1-236-2500, or through the Investors page of our website.ITEM 1A. RISK FACTORSYou should carefully consider the risks described below, together with all of the other information included in this Form 10-K, in considering our businessand prospects. Set forth below and elsewhere in this report and in other documents we file with the SEC are descriptions of certain risks, uncertainties and otherfactors that could cause our actual results to differ materially from those anticipated. If any of the following risks, other unknown risks or risks that we think areimmaterial occur, our business, financial condition, results of operations, cash flows or growth prospects could be adversely impacted, which could result in acomplete loss on your investment.Risks Relating to Our Financial Position, Our Need for Additional Capital and Our BusinessWe anticipate that we will incur losses for the foreseeable future and we may never sustain profitability.We may not generate the cash that is necessary to finance our operations in the foreseeable future. We incurred net losses of $160.1 million , $80.6 millionand $7.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. We expect to continue to incur substantial losses for the foreseeable futureas we:•conduct our Phase 3, Phase 2b and open label extension ("OLE") clinical trials for NEOD001, conduct our Phase 1b clinical trial for PRX003 andinitiate additional clinical trials for these and other programs;•develop and commercialize our product candidates, including NEOD001, PRX002, PRX003 and PRX004;•complete preclinical development of other product candidates and initiate clinical trials, if supported by positive preclinical data; and•pursue our early stage research and seek to identify additional drug candidates and potentially acquire rights from third parties to drug candidatesthrough licenses, acquisitions or other means.We must generate significant revenue to achieve and maintain profitability. Even if we succeed in discovering, developing and commercializing one or moredrug candidates, we may not be able to generate sufficient revenue and we may never be able to achieve or sustain profitability.We will require additional capital to fund our operations, and if we are unable to obtain such capital, we will be unable to successfully develop andcommercialize drug candidates.As of December 31, 2016 , we had cash and cash equivalents of $386.9 million . Although we believe, based on our current business plans, that our existingcash and cash equivalents will be sufficient to meet our obligations for at least the next twelve months, we anticipate that we will require additional capital in thefuture in order to continue the research and development, and eventually commercialization, of our drug candidates. Our future capital requirements will depend onmany factors that are currently unknown to us, including, without limitation:•the timing of initiation, progress, results and costs of our clinical trials, including our Phase 3, Phase 2b and OLE clinical trials for NEOD001, ourcontemplated Phase 2 clinical trial for PRX002, our Phase 1b clinical trial for PRX003 and our contemplated Phase 1 clinical trial for PRX004;•the timing, initiation, progress, results and costs of these and our other research, development and commercialization activities;•the results of our research and preclinical studies;16•the costs of clinical manufacturing and of establishing commercial manufacturing arrangements and other commercialization needs;•the costs of preparing, filing and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims;•our ability to establish research collaborations, strategic collaborations, licensing or other arrangements;•the costs to satisfy our obligations under potential future collaborations; and•the timing, receipt, and amount of revenues or royalties, if any, from any approved drug candidates.We have based our expectations relating to liquidity and capital resources on assumptions that may prove to be wrong, and we could use our available capitalresources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our productcandidates, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the development andcommercialization of our current product candidates.In the pharmaceutical industry, the research and development process is lengthy and involves a high degree of risk and uncertainty. This process is conductedin various stages and, during each stage, there is a substantial risk that product candidates in our research and development pipeline will experience difficulties,delays or failures. This makes it difficult to estimate the total costs to complete our ongoing clinical trials and to estimate anticipated completion dates with anydegree of accuracy, which raises concerns that attempts to quantify costs and provide estimates of timing may be misleading by implying a greater degree ofcertainty than actually exists.In order to develop and obtain regulatory approval for our product candidates we will need to raise substantial additional funds. We expect to raise any suchadditional funds through public or private equity or debt financings, collaborative agreements with corporate partners or other arrangements. We cannot assure youthat additional funds will be available when we need them on terms that are acceptable to us, or at all. General market conditions may make it very difficult for usto seek or obtain financing from the capital markets. If we raise additional funds by issuing equity securities, substantial dilution to existing shareholders wouldresult. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants andspecific financial ratios that may restrict our ability to operate our business. We may be required to relinquish rights to our technologies or drug candidates or grantlicenses on terms that are not favorable to us in order to raise additional funds through strategic alliances, joint ventures or licensing arrangements.If adequate funds are not available on a timely basis, we may be required to:•terminate or delay clinical trials or other development for one or more of our drug candidates;•delay arrangements for activities that may be necessary to commercialize our drug candidates;•curtail or eliminate our drug research and development programs that are designed to identify new drug candidates; or•cease operations.In addition, if we do not meet our payment obligations to third parties as they come due, we may be subject to litigation claims. Even if we are successful indefending against these claims, litigation could result in substantial costs and distract management, and may have unfavorable results that could further adverselyimpact our financial condition.The results of the United Kingdom’s referendum on withdrawal from the European Union could have a negative effect on global economic conditions,financial markets and our business.In June 2016, a majority of voters in the United Kingdom (the "UK") elected in a national referendum to withdraw from the European Union (the "EU"). Thereferendum was advisory, and the terms of any withdrawal are subject to a negotiation period that could last at least two years after the government of the UKformally initiates a withdrawal process. Nevertheless, the referendum has created significant uncertainty about the future relationship between the UK and the EU,including with respect to the laws and regulations that will apply as the UK determines which EU laws to replace or replicate in the event of a withdrawal. Thereferendum has also given rise to calls for the governments of other EU member states to consider withdrawal. These developments, or the perception that any ofthem could occur, have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, andmay significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors coulddepress economic17activity and restrict access to capital, which could have a material adverse effect on our business, financial condition and results of operations and reduce the priceof our ordinary shares.Our future success depends on our ability to retain key personnel and to attract, retain and motivate qualified personnel.We are highly dependent on key personnel, including Dr. Gene G. Kinney, our President and Chief Executive Officer. There can be no assurance that we willbe able to retain Dr. Kinney or any of our key personnel. The loss of the services of Dr. Kinney or any other person on whom we are highly dependent mightimpede the achievement of our research, development and commercial objectives.Recruiting and retaining qualified scientific and other personnel are critical to our growth and future success. Competition for qualified personnel in ourindustry is intense. We may not be able to attract and retain these personnel on acceptable terms given that competition. Failure to recruit and retain qualifiedpersonnel could have a material adverse effect on our business, financial condition, results of operations and growth prospects.Our collaborators, prospective collaborators and suppliers may need assurances that our financial resources and stability on a stand-alone basis are sufficientto satisfy their requirements for doing or continuing to do business with us.Some of our collaborators, prospective collaborators and suppliers may need assurances that our financial resources and stability on a stand-alone basis aresufficient to satisfy their requirements for doing or continuing to do business with us. If our collaborators, prospective collaborators or suppliers are not satisfiedwith our financial resources and stability, it could have a material adverse effect on our ability to develop our drug candidates, enter into licenses or otheragreements and on our business, financial condition or results of operations.Certain of our historical financial information is not necessarily representative of the results we would have achieved as a separate, publicly traded companyand may not be a reliable indicator of our future results.Prior to our separation from Elan on December 20, 2012, our financial results previously were included within the consolidated results of Elan. Therefore,certain historical financial information we have included or incorporated by reference in this report, to the extent it includes information for periods prior to ourseparation from Elan, might not reflect what our financial condition, results of operations and cash flows would have been had we been an independent, publiclytraded company during those periods presented or what our results of operations, financial position and cash flows will be in the future. This is primarily because:•our historical financial information reflects allocations for services historically provided to us by Elan, which allocations may not reflect the costs wewill incur for similar services in the future as an independent company;•subsequent to our separation from Elan, the cost of capital for our business has been and may continue to be higher than Elan’s cost of capital prior tothe separation because Elan’s cost of debt was lower than ours has been and will likely continue to be; and•our historical financial information does not reflect changes that we have incurred as a result of the separation from Elan, including changes in the coststructure, personnel needs, financing and operations of the contributed business as a result of the separation from Elan and from reduced economies ofscale.•our historical financial information reflects allocations for services historically provided to us by Elan, which allocations may not reflect the costs wewill incur for similar services in the future as an independent company;•subsequent to our separation from Elan, the cost of capital for our business has been and may continue to be higher than Elan’s cost of capital prior tothe separation because Elan’s cost of debt was lower than ours has been and will likely continue to be; and•our historical financial information does not reflect changes that we have incurred as a result of the separation from Elan, including changes in the coststructure, personnel needs, financing and operations of the contributed business as a result of the separation from Elan and from reduced economies ofscale.We are also responsible for the additional costs associated with being an independent, public company, including costs related to corporate governance andcompliance with the rules of The Nasdaq Stock Market ("Nasdaq") and the SEC. In addition, we incur costs and expenses, including professional fees, to complywith Irish corporate and tax laws and financial reporting requirements and costs and expenses incurred in connection with holding the meetings of our board ofdirectors in Ireland. Prior to our separation from Elan, our business was operated by Elan as part of its broader corporate organization, rather than as an independentcompany. Elan or one of its affiliates performed various corporate functions for us, including, but not limited to, legal, treasury, accounting, auditing, riskmanagement, information technology, human resources, corporate affairs, tax administration,18certain governance functions and external reporting. Our historical financial results for periods prior to our separation from Elan include allocations of corporateexpenses from Elan for these and similar functions. These allocations of cash and non-cash expenses are less than the comparable expenses we have incurred thusfar as a separate publicly traded company. Therefore, certain financial information in this report might not be indicative of our future performance as anindependent company.The agreements we entered into with Elan involve conflicts of interest and therefore may have materially disadvantageous terms to us.We entered into certain agreements with Elan in connection with our separation from Elan, which set forth the main terms of the separation and provided aframework for our initial relationship with Elan. These agreements may have terms that are materially disadvantageous to us or are otherwise not as favorable asthose that might be negotiated between unaffiliated third parties. In December 2013, Elan was acquired by Perrigo Company plc ("Perrigo"), and in February 2014Perrigo caused Elan to sell all of its shares of Prothena in an underwritten offering. As a result of the acquisition of Elan by Perrigo and the subsequent sale of all ofits shares of Prothena, Perrigo may be less willing to collaborate with us in connection with the agreements to which we and Elan are a party and other matters.We may be adversely affected by earthquakes or other natural disastersWe have a key facility and operations in the San Francisco Bay Area of Northern California, which in the past has experienced severe earthquakes. If anearthquake, other natural disaster or similar event were to occur and prevent us from using all or a significant portion of those operations or local criticalinfrastructure, or that otherwise disrupts our operations, it could be difficult or, in certain cases, impossible for us to continue our business for a substantial periodof time. We have disaster recovery and business continuity plans, but they may prove to be inadequate in the event of a natural disaster or similar event. We mayincur substantial expenses if our disaster recovery and business continuity plans prove to be inadequate. We do not carry earthquake insurance. Furthermore, thirdparties upon which we are materially dependent upon may be vulnerable to natural disasters or similar events. Accordingly, such a natural disaster or similar eventcould have an adverse effect on our business, financial condition or results of operations.Risks Related to the Discovery, Development and Regulatory Approval of Drug CandidatesOur success is largely dependent on the success of our research and development programs. Our drug candidates are in various stages of development and wemay not be able to successfully discover, develop, obtain regulatory approval for or commercialize any drug candidates.The success of our business depends substantially upon our ability to discover, develop, obtain regulatory approval for and commercialize our drugcandidates successfully. Our research and development programs are prone to the significant and likely risks of failure inherent in drug development. We intend tocontinue to invest most of our time and financial resources in our research and development programs.Although we have ongoing Phase 3, Phase 2b and OLE clinical trials for NEOD001, contemplate a Phase 2 clinical trial for PRX002, have an ongoing Phase1b clinical trial for PRX003 and contemplate a Phase 1 clinical trial for PRX004, there is no assurance that this work will support further development of thesedrug candidates. In addition, we currently do not, and may never, have any other drug candidates in clinical trials and we have not identified drug candidates formany of our research programs.Before obtaining regulatory approvals for the commercial sale of any drug candidate for a target indication, we must demonstrate with substantial evidencegathered in adequate and well-controlled clinical trials, and, with respect to approval in the U.S., to the satisfaction of the U.S. Food and Drug Administration (the"FDA") or, with respect to approval in other countries, similar regulatory authorities in those countries, that the drug candidate is safe and effective for use for thattarget indication. Satisfaction of these and other regulatory requirements is costly, time consuming, uncertain, and subject to unanticipated delays. Despite ourefforts, our drug candidates may not:•offer improvement over existing, comparable products;•be proven safe and effective in clinical trials; or•meet applicable regulatory standards.Positive results in preclinical studies of a drug candidate may not be predictive of similar results in humans during clinical trials, and promising results fromearly clinical trials of a drug candidate may not be replicated in later clinical trials. Interim results of a clinical trial do not necessarily predict final results. Anumber of companies in the pharmaceutical and biotechnology industries19have suffered significant setbacks in late-stage clinical trials even after achieving promising results in early-stage development. Accordingly, the results fromcompleted preclinical studies and clinical trials for our drug candidates may not be predictive of the results we may obtain in later stage trials or studies. Ourpreclinical studies or clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional preclinicalstudies or clinical trials, or to discontinue clinical trials altogether.Furthermore, we have not marketed, distributed or sold any products. Our success will, in addition to the factors discussed above, depend on the successfulcommercialization of our drug candidates, which may require:•obtaining and maintaining commercial manufacturing arrangements with third-party manufacturers;•collaborating with pharmaceutical companies or contract sales organizations to market and sell any approved drug; or•acceptance of any approved drug in the medical community and by patients and third-party payors.Many of these factors are beyond our control. We do not expect any of our drug candidates to be commercially available for several years and some or allmay never become commercially available. Accordingly, we may never generate revenues through the sale of products.If clinical trials of our drug candidates are prolonged, delayed, suspended or terminated, we may be unable to commercialize our drug candidates on a timelybasis, which would require us to incur additional costs and delay our receipt of any revenue from potential product sales.We cannot predict whether we will encounter problems with our Phase 3, Phase 2b or OLE clinical trials for NEOD001 , our Phase 1b clinical trial forPRX003 or any future clinical trials that will cause us or any regulatory authority to delay or suspend those clinical trials or delay the analysis of data derived fromthem. A number of events, including any of the following, could delay the completion of our planned clinical trials and negatively impact our ability to obtainregulatory approval for, and to market and sell, a particular drug candidate:•conditions imposed on us by the FDA or any other regulatory authority regarding the scope or design of our clinical trials;•delays in obtaining, or our inability to obtain, required approvals from institutional review boards ("IRBs") or other reviewing entities at clinical sitesselected for participation in our clinical trials;•insufficient supply or deficient quality of our drug candidates or other materials necessary to conduct our clinical trials;•delays in obtaining regulatory agency agreement for the conduct of our clinical trials;•lower than anticipated enrollment and retention rate of subjects in clinical trials for a variety of reasons, including size of patient population, nature oftrial protocol, the availability of other treatments for the relevant disease and competition from other clinical trial programs for similar indications;•serious and unexpected drug-related side effects experienced by patients in clinical trials; or•failure of our third-party contractors and collaborators to meet their contractual obligations to us in a timely manner.Clinical trials may also be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical trial may be suspended orterminated by us, the FDA, the IRBs at the sites where the IRBs are overseeing a trial, or a data safety monitoring board ("DSMB") overseeing the clinical trial atissue, or other regulatory authorities due to a number of factors, including:•failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;•inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;•varying interpretation of data by the FDA or other regulatory authorities;•requirement by the FDA or other regulatory authorities to perform additional studies;•failure to achieve primary or secondary endpoints or other failure to demonstrate efficacy;20•unforeseen safety issues; or•lack of adequate funding to continue the clinical trial.Additionally, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes.Amendments may require us to resubmit our clinical trial protocols to regulatory authorities and IRBs for reexamination, which may impact the cost, timing orsuccessful completion of a clinical trial.We do not know whether our clinical trials will be conducted as planned, will need to be restructured or will be completed on schedule, if at all. Delays in ourclinical trials will result in increased development costs for our drug candidates. In addition, if we experience delays in the completion of, or if we terminate, any ofour clinical trials, the commercial prospects for our drug candidates may be delayed or harmed and our ability to generate product revenues will be delayed orjeopardized. Furthermore, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to thedenial of regulatory approval of a drug candidate.The regulatory approval processes of the FDA and comparable authorities are lengthy, time consuming and inherently unpredictable, and if we are ultimatelyunable to obtain regulatory approval for our drug candidates, our business will be substantially harmed.The time required to obtain approval by the FDA and comparable regulatory authorities is inherently unpredictable but typically takes many years followingthe commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approvalpolicies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a drug candidate’s clinical developmentand may vary among jurisdictions. We have not obtained regulatory approval for any drug candidate and it is possible that none of our existing drug candidates orany drug candidates we may seek to develop in the future will ever obtain regulatory approval.Our drug candidates could fail to receive regulatory approval for many reasons, including the following:•the FDA or comparable regulatory authorities may disagree with the design or implementation of our clinical trials;•we may be unable to demonstrate to the satisfaction of the FDA or comparable regulatory authorities that a drug candidate is safe and effective for itsproposed indication;•the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable regulatory authorities for approval;•we may be unable to demonstrate that a drug candidate’s clinical and other benefits outweigh its safety risks;•the FDA or comparable regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;•the data collected from clinical trials of our drug candidates may not be sufficient to support the submission of a Biologic License Application ("BLA")or other submission or to obtain regulatory approval in the U.S. or elsewhere;•the FDA or comparable regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which wecontract for clinical and commercial supplies; or•the approval policies or regulations of the FDA or comparable regulatory authorities may significantly change in a manner rendering our clinical datainsufficient for approval.This lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to marketour drug candidates, which would significantly harm our business, results of operations and prospects. In addition, even if we were to obtain approval, regulatoryauthorities may approve any of our drug candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for ourproducts, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a drug candidate with a label that does notinclude the labeling claims necessary or desirable for the successful commercialization of that drug candidate. Any of the foregoing scenarios could materiallyharm the commercial prospects for our drug candidates.We rely on obtaining and maintaining orphan drug exclusivity for NEOD001, if approved, but cannot ensure that we will enjoy market exclusivity in aparticular market.NEOD001 has been granted orphan drug designation by the FDA for the treatment of AL and AA amyloidosis and by the European Medicines Agency (the"EMA") for the treatment of AL amyloidosis. Under the U.S. Orphan Drug Act, the FDA may21designate a product as an orphan drug if it is intended to treat a rare disease or condition, defined as a disease or condition that affects a patient population of fewerthan 200,000 in the U.S., or a patient population greater than 200,000 in the U.S. where there is no reasonable expectation that the cost of developing the drug willbe recovered from sales in the U.S. In the EU, the EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to promote the developmentof products that are intended for the diagnosis, prevention, or treatment of a life-threatening or chronically debilitating condition affecting not more than five in10,000 persons in the EU. Additionally, designation is granted for products intended for the diagnosis, prevention, or treatment of a life-threatening, seriouslydebilitating or serious and chronic condition when, without incentives, it is unlikely that sales of the drug in the EU would be sufficient to justify the necessaryinvestment in developing the drug or biological product or where there is no satisfactory method of diagnosis, prevention, or treatment, or, if such a method exists,the medicine must be of significant benefit to those affected by the condition.In the U.S., orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages,and user-fee waivers. In addition, if a product receives the first FDA approval for the indication for which it has orphan designation, the product is entitled toorphan drug exclusivity, which means the FDA may not approve any other application to market the same drug for the same indication for a period of seven years,except in limited circumstances, such as a showing of clinical superiority over the product with orphan exclusivity or where the manufacturer is unable to assuresufficient product quantity. In the EU, orphan drug designation entitles a party to financial incentives such as reduction of fees or fee waivers and ten years ofmarket exclusivity following drug or biological product approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met,including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.Even though we have obtained orphan drug designation for NEOD001 in the U.S. and the EU, we may not be the first to obtain marketing approval for anyparticular orphan indication due to the uncertainties associated with developing pharmaceutical products. Further, even if we obtain orphan drug designation for aproduct, that exclusivity may not effectively protect the product from competition from different drugs with different active moieties which may be approved forthe same condition. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives the drug any advantage in theregulatory review or approval process. Even if one of our drug candidates receives orphan exclusivity, the FDA may still approve other drugs that have a differentactive ingredient for use in treating the same indication or disease, or may approve an application to market the same drug for the same indication that showsclinical superiority over our product. Furthermore, the FDA may waive orphan exclusivity if we are unable to manufacture sufficient supply of our product.Even if our drug candidates receive regulatory approval in one country or jurisdiction, we may never receive approval or commercialize our products in othercountries or jurisdictions.In order to market drug candidates in a particular country or jurisdiction, we must establish and comply with numerous and varying regulatory requirementsof that country or jurisdiction, including with respect to safety and efficacy. Approval procedures vary among countries and can involve additional product testingand additional administrative review periods. The time required to obtain approval in other countries might differ from that required to obtain, for example, FDAapproval in the U.S. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the U.S. as well asother risks. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another country or jurisdiction, but a failure or delay inobtaining regulatory approval in one country may have a negative effect on the regulatory process in others. Failure to obtain regulatory approval in one country orjurisdiction or any delay or setback in obtaining such approval would impair our ability to develop other markets for our drug candidates.Both before and after marketing approval, our drug candidates are subject to ongoing regulatory requirements and continued regulatory review, and if we failto comply with these continuing requirements, we could be subject to a variety of sanctions and the sale of any approved products could be suspended.Both before and after regulatory approval to market a particular drug candidate, the manufacturing, labeling, packaging, adverse event reporting, storage,advertising, promotion, distribution and record keeping related to the product are subject to extensive, ongoing regulatory requirements. These requirementsinclude submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturingpractice ("cGMP") requirements and current good clinical practice ("cGCP") requirements for any clinical trials that we conduct post-approval. Any regulatoryapprovals that we receive for our drug candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to theconditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safetyand efficacy of the drug candidate. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity orfrequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with the regulatory requirements of the FDA and otherapplicable U.S. and other regulatory authorities could subject us to administrative or judicially imposed sanctions, including:22•restrictions on the marketing of our products or their manufacturing processes;•warning letters;•civil or criminal penalties;•fines;•injunctions;•product seizures or detentions;•import or export bans;•voluntary or mandatory product recalls and related publicity requirements;•suspension or withdrawal of regulatory approvals;•total or partial suspension of production; and•refusal to approve pending applications for marketing approval of new products or supplements to approved applications.The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our drugcandidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintainregulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability toachieve or sustain profitability.If side effects are identified during the time our drug candidates are in development or after they are approved and on the market, we may choose to or berequired to perform lengthy additional clinical trials, discontinue development of the affected drug candidate, change the labeling of any such products, orwithdraw any such products from the market, any of which would hinder or preclude our ability to generate revenues.Undesirable side effects caused by our drug candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in amore restrictive label or the delay or denial of regulatory approval by the FDA or other comparable regulatory authorities. The drug-related side effects could affectpatient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm ourbusiness, financial condition and prospects significantly. Even if any of our drug candidates receives marketing approval, as greater numbers of patients use a drugfollowing its approval, an increase in the incidence of side effects or the incidence of other post-approval problems that were not seen or anticipated during pre-approval clinical trials could result in a number of potentially significant negative consequences, including:•regulatory authorities may withdraw their approval of the product;•regulatory authorities may require the addition of labeling statements, such as warnings or contraindications;•we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product;•we could be sued and held liable for harm caused to patients; and•our reputation may suffer.Any of these events could substantially increase the costs and expenses of developing, commercializing and marketing any such drug candidates or couldharm or prevent sales of any approved products.We deal with hazardous materials and must comply with environmental laws and regulations, which can be expensive and restrict how we do business.Some of our research and development activities involve the controlled storage, use, and disposal of hazardous materials. We are subject to U.S. federal,state, local and other countries' and jurisdictions' laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials.Although we believe that our safety procedures for the handling and disposing of these materials comply with the standards prescribed by these laws andregulations, we cannot eliminate the risk of accidental contamination or injury from these materials. In the event of an accident, state or federal authorities maycurtail our23use of these materials, and we could be liable for any civil damages that result, which may exceed our financial resources and may seriously harm our business.Because we believe that our laboratory and materials handling policies and practices sufficiently mitigate the likelihood of materials liability or third-party claims,we currently carry no insurance covering such claims. An accident could damage, or force us to shut down, our operations.Risks Related to the Commercialization of Our Drug CandidatesEven if any of our drug candidates receives regulatory approval, if such approved product does not achieve broad market acceptance, the revenues that wegenerate from sales of the product will be limited.Even if any drug candidates we may develop or acquire in the future obtain regulatory approval, they may not gain broad market acceptance amongphysicians, healthcare payors, patients and the medical community. The degree of market acceptance for any approved drug candidate will depend on a number offactors, including:•the indication and label for the product and the timing of introduction of competitive products;•demonstration of clinical safety and efficacy compared to other products;•prevalence and severity of adverse side effects;•availability of coverage and adequate reimbursement from managed care plans and other third-party payors;•convenience and ease of administration; •cost-effectiveness;•other potential advantages of alternative treatment methods; and•the effectiveness of marketing and distribution support of the product.Consequently, even if we discover, develop and commercialize a product, the product may fail to achieve broad market acceptance and we may not be able togenerate significant revenue from the product.The success of PRX002 in the United States is dependent upon the strength and performance of our collaboration with Roche. If we fail to maintain ourexisting collaboration with Roche, such termination would likely have a material adverse effect on our ability to develop and commercialize PRX002 and ourbusiness. Furthermore, if we opt out of profit and loss sharing with Roche, our revenues from PRX002 will be reduced.The success of sales of PRX002 in the U.S. will be dependent on the ability of Roche to successfully develop in collaboration with us, and launch andcommercialize PRX002, if approved by the FDA, pursuant to the License Agreement we entered into in December 2013. Our collaboration with Roche is complex,particularly with respect to future U.S. commercialization of PRX002, with respect to financial provisions, allocations of responsibilities, cost estimates and therespective rights of the parties in decision making. Accordingly, significant aspects of the development and commercialization of PRX002 require Roche to executeits responsibilities under the arrangement, or require Roche’s agreement or approval, prior to implementation, which could cause significant delays that maymaterially impact the potential success of PRX002 in the U.S. In addition, Roche may under some circumstances independently develop products that competewith PRX002, or Roche may decide to not commit sufficient resources to the development, commercialization, marketing and distribution of PRX002. If we arenot able to collaborate effectively with Roche on plans and efforts to develop and commercialize PRX002, our business could be materially adversely affected.Furthermore, the terms of the License Agreement provide that Roche has the ability to terminate such arrangement for any reason after the first anniversaryof the License Agreement at any time upon 90 days’ notice (if prior to first commercial sale) or 180 days’ notice (if after first commercial sale). For example,Roche may determine that the outcomes of clinical trials have made PRX002 a less attractive commercial product and terminate our collaboration. If the LicenseAgreement is terminated, our business and our ability to generate revenue from sales of PRX002 could be substantially harmed as we will be required to develop,commercialize and build our own sales and marketing organization or enter into another strategic collaboration in order to develop and commercialize PRX002 inthe U.S. Such efforts may not be successful and, even if successful, would require substantial time and resources to carry out.The manner in which Roche launches PRX002, including the timing of launch and potential pricing, will have a significant impact on the ultimate success ofPRX002 in the U.S, and the success of the overall commercial arrangement with Roche. If launch of commercial sales of PRX002 in the U.S. by Roche is delayedor prevented, our revenue will suffer and our stock price may decline. Further, if launch and resulting sales by Roche are not deemed successful, our businesswould be harmed and our stock24price may decline. Any lesser effort by Roche in its PRX002 sales and marketing efforts may result in lower revenue and thus lower profits with respect to the U.S.The outcome of Roche’s commercialization efforts in the U.S. could also have a negative effect on investors’ perception of potential sales of PRX002 outside ofthe U.S., which could also cause a decline in our stock price.Furthermore, pursuant to the License Agreement, we are responsible for 30% of all development and commercialization costs for PRX002 for the treatmentof Parkinson’s disease in the U.S., and for any future Licensed Products and/or indications that we opt to co-develop, in each case unless we elect to opt out ofprofit and loss sharing. If we elect to opt out of profit and loss sharing, we will instead receive sales milestones and royalties, and our revenue, if any, fromPRX002 will be reduced.Our right to co-develop PRX002 and other Licensed Products under the License Agreement will terminate if we commence certain studies for a competitiveproduct that treats Parkinson’s disease or other indications that we opted to co-develop. In addition, our right to co-promote PRX002 and other Licensed Productswill terminate if we commence a Phase 3 study for a competitive product that treats Parkinson’s disease. Moreover, under the terms of the License Agreement, we rely on Roche to provide us estimates of their costs, revenue and revenue adjustments androyalties, which estimates we use in preparing our quarterly and annual financial reports. If the underlying assumptions on which Roche’s estimates were basedprove to be incorrect, actual results or revised estimates supplied by Roche that are materially different from the original estimates could require us to adjust theestimates included in our reported financial results. If material, these adjustments could require us to restate previously reported financial results, which could havea negative effect on our stock price.Our ability to receive any significant revenue from PRX002 will be dependent on Roche’s efforts and our participation in profit and loss sharing, and mayresult in lower levels of income than if we marketed or developed our product candidates entirely on our own. Roche may not fulfill its obligations or carry outmarketing activities for PRX002 as diligently as we would like. We could also become involved in disputes with Roche, which could lead to delays in ortermination of development or commercialization activities and time-consuming and expensive litigation or arbitration. If Roche terminates or breaches the LicenseAgreement, or otherwise decides not to complete its obligations in a timely manner, the chances of successfully developing, commercializing or marketingPRX002 would be materially and adversely affected.Outside of the United States, we are solely dependent on the efforts and commitments of Roche, either directly or through third parties, to further develop andcommercialize PRX002. If Roche’s efforts are unsuccessful, our ability to generate future product sales from PRX002 outside the United States would besignificantly reduced.Under our License Agreement, outside of the U.S., Roche has responsibility for developing and commercializing PRX002 and any future Licensed Productstargeting α- synuclein. As a consequence, any progress and commercial success outside of the U.S. is dependent solely on Roche’s efforts and commitment to theprogram. For example, Roche may delay, reduce or terminate development efforts relating to PRX002 outside of the U.S., or under some circumstancesindependently develop products that compete with PRX002, or decide not to commit sufficient resources to the commercialization, marketing and distribution ofPRX002.In the event that Roche does not diligently develop and commercialize PRX002, the License Agreement provides us the right to terminate the LicenseAgreement in connection with a material breach uncured for 90 days after notice thereof. However, our ability to enforce the provisions of the License Agreementso as to obtain meaningful recourse within a reasonable timeframe is uncertain. Further, any decision to pursue available remedies including termination wouldimpact the potential success of PRX002, including inside the U.S., and we may choose not to terminate as we may not be able to find another partner and any newcollaboration likely will not provide comparable financial terms to those in our arrangement with Roche. In the event of our termination, this may require us todevelop and commercialize PRX002 on our own, which is likely to result in significant additional expense and delay. Significant changes in Roche’s businessstrategy, resource commitment and the willingness or ability of Roche to complete its obligations under our arrangement could materially affect the potentialsuccess of the product. Furthermore, if Roche does not successfully develop and commercialize PRX002 outside of the U.S., our potential to generate futurerevenue outside of the U.S. would be significantly reduced.If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell approved products, we may beunable to generate product revenue.We do not currently have an organization for the sales, marketing and distribution of pharmaceutical products. In order to market any products that may beapproved by the FDA, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to performthese services.25We have entered into the License Agreement with Roche for the development of PRX002 and may develop our own sales force and marketing infrastructureto co-promote PRX002 in the U.S. for the treatment of Parkinson’s disease and any future Licensed Products approved for Parkinson’s disease in the U.S. If weexercise our co-promotion option and are unable to develop our own sales force and marketing infrastructure to effectively commercialize PRX002 or otherLicensed Products, our ability to generate additional revenue from potential sales of PRX002 or such products in the U.S. may be harmed. In addition, our right toco-promote PRX002 and other Licensed Products will terminate if we commence a Phase 3 study for a competitive product that treats Parkinson’s disease.For our other approved products, if we are unable to establish adequate sales, marketing and distribution capabilities, whether independently or with thirdparties, we may not be able to generate product revenue and may not become profitable.If government and third-party payors fail to provide coverage and adequate reimbursement rates for any of our drug candidates that receive regulatoryapproval, our revenue and prospects for profitability will be harmed.In both U.S. and non-U.S. markets, our sales of any future products will depend in part upon the availability of reimbursement from third-party payors. Suchthird-party payors include government health programs such as Medicare, managed care providers, private health insurers, and other organizations. There issignificant uncertainty related to the third-party coverage and reimbursement of newly approved drugs. Coverage and reimbursement may not be available for anydrug that we or our collaborators commercialize and, even if these are available, the level of reimbursement may not be satisfactory. Third-party payors often relyupon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Third-party payors are also increasingly attempting to containhealthcare costs by demanding price discounts or rebates limiting both coverage and the amounts that they will pay for new drugs, and, as a result, they may notcover or provide adequate payment for our drug candidates. We might need to conduct post-marketing studies in order to demonstrate the cost-effectiveness of anyfuture products to such payors’ satisfaction. Such studies might require us to commit a significant amount of management time and financial and other resources.Our future products might not ultimately be considered cost-effective. Adequate third-party reimbursement might not be available to enable us to maintain pricelevels sufficient to realize an appropriate return on investment in product development. If coverage and adequate reimbursement are not available or reimbursementis available only to limited levels, we or our collaborators may not be able to successfully commercialize any product candidates for which marketing approval isobtained.The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drugs vary widely from country to country. Current andfuture legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Somecountries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or licensingapproval is granted. In some countries, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval isgranted. As a result, we or our collaborators might obtain marketing approval for a drug in a particular country, but then be subject to price regulations that delaycommercial launch of the drug, possibly for lengthy time periods, and negatively impact our ability to generate revenue from the sale of the drug in that country.Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our drug candidates obtain marketing approval.U.S. and other governments continue to propose and pass legislation designed to reduce the cost of healthcare. In the U.S., we expect that there will continueto be federal and state proposals to implement similar governmental controls. In addition, recent changes in the Medicare program and increasing emphasis onmanaged care in the U.S. will continue to put pressure on pharmaceutical product pricing. For example, in 2010, the U.S. Patient Protection and Affordable CareAct, as amended by the U.S. Health Care and Education Reconciliation Act (collectively, the “Healthcare Reform Law”), was enacted. The Healthcare ReformLaw substantially changes the way healthcare is financed by both governmental and private insurers and significantly affects the pharmaceutical industry. Amongthe provisions of the Healthcare Reform Law of importance to the pharmaceutical industry are the following:•an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned amongthese entities according to their market share in certain government healthcare programs;•an increase in the minimum rebates a manufacturer must pay under the U.S. Medicaid Drug Rebate Program to 23.1% and 13.0% of the averagemanufacturer price for branded and generic drugs, respectively;•expansion of healthcare fraud and abuse laws, including the U.S. False Claims Act and the U.S. Anti-Kickback Statute, new government investigativepowers and enhanced penalties for non-compliance;•a new Medicare Part D coverage gap discount program, under which manufacturers must agree to offer 50 percent point-of-sale discounts off negotiatedprices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to becovered under Medicare Part D;26•extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed careorganizations;•expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals andby adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentiallyincreasing a manufacturer’s Medicaid rebate liability;•a licensure framework for follow-on biologic products;•expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;•new requirements under the federal Open Payments program and its implementing regulations;•a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and•a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, alongwith funding for such research.In addition, other legislative changes have been proposed and adopted since the Healthcare Reform Law was enacted. These changes include aggregatereductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect in 2013 and will stay in effect through 2024 unless additionalcongressional action is taken. In 2013, the U.S. American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several types ofproviders and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws mayresult in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and,accordingly, our financial operations.We expect that the Healthcare Reform Law, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorouscoverage criteria and in additional downward pressure on the price that we receive for any approved drug. Legislation and regulations affecting the pricing ofpharmaceuticals might change before our drug candidates are approved for marketing. Any reduction in reimbursement from Medicare or other governmenthealthcare programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcarereforms may prevent us from being able to generate revenue, attain profitability or commercialize our drugs. There can be no assurance that our drug candidates, if they are approved for sale in the U.S. or in other countries, will be considered medically reasonableand necessary for a specific indication, that they will be considered cost-effective by third-party payors, that coverage or an adequate level of reimbursement willbe available, or that third-party payors’ reimbursement policies will not adversely affect our ability to sell our drug candidates profitably if they are approved forsale.The markets for our drug candidates are subject to intense competition. If we are unable to compete effectively, our drug candidates may be renderednoncompetitive or obsolete.The research, development and commercialization of new drugs is highly competitive. We will face competition with respect to all drug candidates we maydevelop or commercialize in the future from pharmaceutical and biotechnology companies worldwide. The key factors affecting the success of any approvedproduct will be its indication, label, efficacy, safety profile, drug interactions, method of administration, pricing, coverage, reimbursement and level of promotionalactivity relative to those of competing drugs.Furthermore, many large pharmaceutical and biotechnology companies, academic institutions, governmental agencies and other public and private researchorganizations are pursuing the development of novel drugs that target the same indications we are targeting with our research and development program. We face,and expect to continue to face, intense and increasing competition as new products enter the market and advanced technologies become available. Many of ourcompetitors have:•significantly greater financial, technical and human resources than we have and may be better equipped to discover, develop, manufacture andcommercialize drug candidates;•more extensive experience in preclinical testing and clinical trials, obtaining regulatory approvals and manufacturing and marketing pharmaceuticalproducts;•drug candidates that have been approved or are in late-stage clinical development; and/or•collaborative arrangements in our target markets with leading companies and research institutions.27Competitive products may render our research and development program obsolete or noncompetitive before we can recover the expenses of developing andcommercializing our drug candidates. Furthermore, the development of new treatment methods and/or the widespread adoption or increased utilization of anyvaccine or development of other products or treatments for the diseases we are targeting could render any of our drug candidates noncompetitive, obsolete oruneconomical. If we successfully develop and obtain approval for a drug candidate, we will face competition based on the safety and effectiveness of the approvedproduct, the timing of its entry into the market in relation to competitive products in development, the availability and cost of supply, marketing and salescapabilities, coverage, reimbursement, price, patent position and other factors. Even if we successfully develop drug candidates but those drug candidates do notachieve and maintain market acceptance, our business will not be successful.Our drug candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated.Our drug candidates are regulated by the FDA as biologic products and we intend to seek approval for these products pursuant to the BLA pathway. The U.S.Biologics Price Competition and Innovation Act of 2009 (the "BPCIA") created an abbreviated pathway for the approval of biosimilar and interchangeable biologicproducts. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possibledesignation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. Under the BPCIA, an application for a biosimilar productcannot be approved by the FDA until 12 years after the original branded product was approved under a BLA. The law is complex and is still being interpreted andimplemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processesintended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects forour biologic products.We believe that any of our drug candidates approved as a biologic product under a BLA should qualify for the 12-year period of exclusivity. However, thereis a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our drug candidates to be referenceproducts for competing products, potentially creating the opportunity for generic competition sooner than anticipated. Moreover, the extent to which a biosimilar,once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biologic products is notyet clear, and will depend on a number of marketplace and regulatory factors that are still developing.We may be subject, directly or indirectly, to federal and state anti-kickback, fraud and abuse, false claims, physician payment transparency, health informationprivacy and security, and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputationalharm, administrative burdens and diminished profits and future earnings.If we obtain FDA approval for any of our drug candidates and begin commercializing those products in the U.S., our operations may be directly, or indirectlythrough our customers, subject to various federal and state fraud and abuse and other healthcare laws and regulations, including, without limitation, the U.S. Anti-Kickback Statute and the U.S. False Claims Act, which may constrain the business or financial arrangements and relationships through which we sell, market anddistribute any drugs for which we obtain marketing approval. In addition, we may be subject to physician payment transparency laws and patient privacyregulations of U.S. federal, state, local and other countries and jurisdictions in which we conduct our business. The laws that may affect our ability to operateinclude:•the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or payingremuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase orrecommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;•federal civil and criminal false claims laws and civil monetary penalty laws, including the False Claims Act, which impose criminal and civil penalties,including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, claims for paymentfrom Medicare, Medicaid, or other third-party payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligationto pay money to the federal government;•the U.S. Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), which created new federal criminal statutes that impose criminal andcivil liability for executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;•the U.S. Physician Payment Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment isavailable under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers forMedicare & Medicaid Services ("CMS") information related to “payments or other transfers of value” made to physicians, which is defined to includedoctors, dentists, optometrists,28podiatrists and chiropractors, and teaching hospitals and applicable manufacturers and applicable group purchasing organizations to report annually toCMS ownership and investment interests held by the physicians and their immediate family members. The period between August 1, 2013 andDecember 31, 2013 was the first reporting period, and manufacturers were required to report aggregate payment data by March 31, 2014, and wererequired to report detailed payment data and submit legal attestation to the accuracy of such data during Phase 2 of the program (which began in May2014). Thereafter, manufacturers must submit reports by the 90th day of each subsequent calendar year;•HIPAA, as amended by the U.S. Health Information Technology and Clinical Health Act, and its implementing regulations, which impose obligationson covered healthcare providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive, maintain ortransmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security andtransmission of individually identifiable health information; and•analogous state and other jurisdictions' laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketingarrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; stateand other jurisdictions' laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines andthe relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; stateand other jurisdictions' laws that require drug manufacturers to report information related to payments and other transfers of value to physicians andother healthcare providers or marketing expenditures; and state and other jurisdictions' laws governing the privacy and security of health information incertain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating complianceefforts.Further, the Healthcare Reform Law, among other things, amended the intent requirements of the U.S. Anti-Kickback Statute and the criminal statutesgoverning healthcare fraud. A person or entity can now be found guilty of violating the statute without actual knowledge of the statute or specific intent to violateit. In addition, the Healthcare Reform Law provided that the government may assert that a claim including items or services resulting from a violation of the U.S.Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the U.S. False Claims Act.Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs.It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case lawinvolving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of the laws described above orany other governmental regulations that apply to us, we may be subject to significant civil, criminal, and administrative penalties, including, without limitation,exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, damages, fines and the curtailment orrestructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. If any of the physicians orother healthcare providers or entities with whom we expect to do business, including our collaborators, is found not to be in compliance with applicable laws, itmay be subject to criminal, civil or administrative sanctions, including exclusions from participation in government healthcare programs, which could alsoadversely affect our business.If a successful product liability or clinical trial claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, wecould incur substantial liability.The use of our drug candidates in clinical trials and the sale of any products for which we obtain marketing approval will expose us to the risk of productliability and clinical trial liability claims. Product liability claims might be brought against us by consumers, health care providers or others selling or otherwisecoming into contact with our products. Clinical trial liability claims may be filed against us for damages suffered by clinical trial subjects or their families. If wecannot successfully defend ourselves against product liability claims, we could incur substantial liabilities. In addition, regardless of merit or eventual outcome,product liability claims may result in:•decreased demand for any approved drug candidates;•impairment of our business reputation;•withdrawal of clinical trial participants;•costs of related litigation;•distraction of management’s attention;29•substantial monetary awards to patients or other claimants; and•loss of revenues; and the inability to successfully commercialize any approved drug candidates.We currently have clinical trial liability insurance coverage for all of our clinical trials. However, our insurance coverage may not be sufficient to reimburseus for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintaininsurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If and when we obtain marketing approval for any ofour drug candidates, we intend to expand our insurance coverage to include the sale of commercial products; however, we may be unable to obtain this productliability insurance on commercially reasonable terms. On occasion, large judgments have been awarded in class action lawsuits based on drugs that hadunanticipated side effects. A successful product liability claim or series of claims brought against us could cause our ordinary share price to decline and, ifjudgments exceed our insurance coverage, could decrease our cash and adversely affect our business.Risks Related to Our Dependence on Third PartiesWe rely on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet established deadlines forthe completion of any such clinical trials.We do not have the ability to independently conduct clinical trials for our drug candidates, and we rely on third parties, such as consultants, contract researchorganizations, medical institutions and clinical investigators, to assist us with these activities. Our reliance on these third parties for clinical development activitiesresults in reduced control over these activities. Furthermore, these third parties may also have relationships with other entities, some of which may be ourcompetitors. Although we have and will enter into agreements with these third parties, we will be responsible for confirming that our clinical trials are conducted inaccordance with their general investigational plans and protocols. Moreover, the FDA and other comparable regulatory authorities require us to comply withregulations and standards, commonly referred to as cGCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reportedresults are credible and accurate and that the trial participants are adequately protected. Our reliance on third parties does not relieve us of these responsibilities andrequirements. If we or any of our third party contractors fail to comply with applicable cGCPs, the clinical data generated in our clinical trials may be deemedunreliable and the FDA or other comparable regulatory authorities may require us to perform additional clinical trials before approving our marketing applications.We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials complies withcGCP regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations. Our failure to comply with these regulationsmay require us to repeat clinical trials, which would delay the regulatory approval process. To date, we believe our consultants, contract research organizations and other third parties with which we are working have performed well; however, ifthese third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with applicable regulations, we may be required toreplace them. Although we believe that there are a number of other third-party contractors we could engage to continue these activities, we may not be able to enterinto arrangements with alternative third-party contractors or to do so on commercially reasonable terms, which may result in a delay of our planned clinical trials.Accordingly, we may be delayed in obtaining regulatory approvals for our drug candidates and may be delayed in our efforts to successfully develop our drugcandidates.In addition, our third-party contractors are not our employees, and except for remedies available to us under our agreements with such third-party contractors,we cannot control whether or not they devote sufficient time and resources to our ongoing clinical, nonclinical and preclinical programs. If third-party contractorsdo not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of theclinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical trials may beextended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our drug candidates. As a result, ourresults of operations and the commercial prospects for our drug candidates would be harmed, our costs could increase and our ability to generate revenues could bedelayed.If we do not establish additional strategic collaborations, we may have to alter our research and development plans.Our drug research and development programs and potential commercialization of our drug candidates will require substantial additional cash to fundexpenses. Our strategy includes potentially collaborating with additional leading pharmaceutical and biotechnology companies to assist us in furtheringdevelopment and potential commercialization of some of our drug candidates, in some or all geographies. It may be difficult to enter into one or more of suchcollaborations in the future. We face significant competition in seeking appropriate collaborators and these collaborations are complex and time-consuming tonegotiate and document. We may not be able to negotiate collaborations on acceptable terms, or at all, in which case we may have to curtail the development of aparticular drug candidate, reduce or delay its development program or one or more of our other development30programs, delay its potential commercialization or increase our expenditures and undertake development or commercialization activities at our own expense. If weelect to increase our expenditures to fund development or commercialization activities on our own, we will need to obtain additional capital, which may not beavailable to us on acceptable terms, or at all. If we do not have sufficient funds, we will not be able to bring our drug candidates to market and generate productrevenue.We have no manufacturing capacity and depend on third-party manufacturers to supply us with preclinical and clinical trial supplies of all of our drugcandidates, and we will depend on third-party manufacturers to supply us with any drug products for commercial sale if we obtain marketing approval from theFDA or any other comparable regulatory authority for any of our drug candidates.We do not own or operate facilities for the manufacture, packaging, labeling, storage, testing or distribution of preclinical or clinical supplies of any of ourdrug candidates. We instead contract with and rely on third parties to manufacture, package, label, store, test and distribute pre-clinical and clinical supplies of ourdrug candidates, and we plan to continue to do so for the foreseeable future. We also rely on third-party consultants to assist us with managing these third-partiesand with our manufacturing strategy. If any of these third-parties fail to perform these activities for us, preclinical or clinical development of our drug candidatescould be delayed, which could have an adverse effect on our business, financial condition, results of operations and growth prospects.If the FDA or any other comparable regulatory authority approves any of our drug candidates for commercial sale, we expect to continue to rely, at leastinitially, on third-parties to manufacture, label, store, test and distribute commercial supplies of such approved drug product. Significant scale-up of manufacturingmay require additional comparability validation studies, which the FDA or other comparable regulatory authorities must review and approve. Our third-partymanufacturers might not be able to successfully establish such comparability or increase their manufacturing capacity in a timely or economic manner, or at all. Ifour third-party manufacturers are unable to successfully establish comparability or increase their manufacturing capacity for any drug product, and we are unable totimely establish our own manufacturing capabilities, the commercial launch of that drug product could be delayed or there could be a shortage in supply, whichcould have an adverse effect on our business, financial condition, results of operations and growth prospects.Our third-party manufacturers' facilities could be damaged by fire, power interruption, information system failure, natural disaster or other similar event,which could cause a delay or shortage in supplies of our drug candidates, which could have an adverse effect on our business, financial condition, results ofoperations and growth prospects.Our drug candidates require, and any future drug product will require, precise, high quality manufacturing, labeling, storage and testing that meet stringentcGMP, other regulatory requirements and other standards. Our third-party manufacturers are subject to ongoing periodic and unannounced inspections by the FDAand other comparable regulatory authorities to ensure compliance with these cGMPs, other regulatory requirements and other standards. We do not have controlover, and are dependent upon, our third-party manufacturers’ compliance with these cGMPs, regulations and standards. Any failure by a third-party manufacturerto comply with these cGMPs, regulations or standards or that compromises the safety of any of our drug candidates or any drug product could cause a delay orsuspension of production of preclinical or clinical supplies of our drug candidates or commercial supplies of drug products, cause a delay or suspension ofpreclinical or clinical development, product approval and commercialization of our drug candidates or drug products, result in seizure or recall of clinical orcommercial supplies, result in fines and civil penalties, result in liability for any patient injury or death or otherwise increase our costs, any of which could have anadverse effect on our business, financial condition, results of operations and growth prospects. If a third-party manufacturer cannot or fails to perform itscontractual commitments, does not have sufficient capacity to meet our preclinical, clinical or eventual commercial requirements or fails to meet cGMPs,regulations or other standards, we may be required to replace it or qualify an additional third-party manufacturer. Although we believe there are a number ofpotential alternative manufacturers, the number of manufacturers with the necessary manufacturing and regulatory expertise and facilities to manufacture biologicslike our antibodies is limited. In addition, we could incur significant additional costs and delays in identifying and qualifying any new third-party manufacturer, dueto the technology transfer to such new manufacturer and because the FDA and other comparable regulatory authorities must approve any new manufacturer prior tomanufacturing our drug candidates. Such approval would require successful technology transfer, comparability and other testing and compliance inspections.Transferring manufacturing to a new manufacturer could therefore interrupt supply, delay our clinical trials and any commercial launch and/or increase our costsfor our drug candidates, any of which could have an adverse effect on our business, financial condition, results of operations and growth prospects.Boehringer Ingelheim Biopharmaceuticals GmbH (“BI”) has manufactured and is contracted to continue to manufacture clinical supplies of our drugcandidate NEOD001 for its clinical trials. We are dependent on BI to continue to manufacture these clinical supplies. We have contracted with RentschlerBiotechnologie GmbH (“Rentschler”) to develop the capability to manufacture and supply drug substance of NEOD001, and to so supply NEOD001 to us forworldwide commercial sale purposes if we apply for and obtain regulatory approval to market NEOD001. In order to be able to use drug substance supplied byRentschler31for commercial purposes, we will need to first establish comparability of drug substance manufactured by Rentschler with clinical supplies manufactured by BI andused by us in clinical development of NEOD001.BI also manufactured clinical supplies of our drug candidate PRX002 for our completed Phase 1a single ascending dose and Phase 1b multiple ascendingdose trials. It is intended that Roche, with whom we are collaborating on development of PRX002, will manufacture clinical supplies for the contemplated Phase 2and any subsequent clinical trials.BI is also our third-party manufacturer of clinical supplies of our drug candidate PRX003. We are dependent on BI to continue to manufacture these clinicalsupplies.Rentschler is also our third-party manufacturer of clinical supplies of our drug candidate PRX004. We are dependent on Rentschler to manufacture theseclinical supplies in order to initiate clinical trials for PRX004.We depend on third-party suppliers for key raw materials used in our manufacturing processes, and the loss of these third-party suppliers or their inability tosupply us with adequate raw materials could harm our business.We rely on third-party suppliers for the raw materials required for the production of our drug candidates. Our dependence on these third-party suppliers andthe challenges we may face in obtaining adequate supplies of raw materials involve several risks, including limited control over pricing, availability, quality anddelivery schedules. We cannot be certain that our suppliers will continue to provide us with the quantities of these raw materials that we require or satisfy ouranticipated specifications and quality requirements. Any supply interruption in limited or sole sourced raw materials could materially harm our ability tomanufacture our products until a new source of supply, if any, could be identified and qualified. Although we believe there are currently several other suppliers ofthese raw materials, we may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any performancefailure on the part of our suppliers could delay the development and potential commercialization of our drug candidates, including limiting supplies necessary forclinical trials and regulatory approvals, which would have a material adverse effect on our business.Risks Related to Our Intellectual PropertyIf we are unable to adequately protect or enforce the intellectual property relating to our drug candidates our ability to successfully commercialize our drugcandidates will be harmed.Our success depends in part on our ability to obtain patent protection both in the U.S. and in other countries for our drug candidates. Our ability to protect ourdrug candidates from unauthorized or infringing use by third parties depends in substantial part on our ability to obtain and maintain valid and enforceable patents.Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims madeunder these patents, our ability to obtain, maintain and enforce patents is uncertain and involves complex legal and factual questions. Accordingly, rights under anyissued patents may not provide us with sufficient protection for our drug candidates or provide sufficient protection to afford us a commercial advantage againstcompetitive products or processes.In addition, we cannot guarantee that any patents will issue from any pending or future patent applications owned by or licensed to us or our affiliates. Evenif patents have issued or will issue, we cannot guarantee that the claims of these patents are or will be valid or enforceable or will provide us with any significantprotection against competitive products or otherwise be commercially valuable to us. Patent applications in the U.S. are maintained in confidence for up to 18months after their filing. In some cases, however, patent applications remain confidential in the U.S. Patent and Trademark Office (the "USPTO") for the entiretime prior to issuance as a U.S. patent. Similarly, publication of discoveries in the scientific or patent literature often lags behind actual discoveries. Consequently,we cannot be certain that we or our licensors or co-owners were the first to invent, or the first to file patent applications on, our drug candidates or their use asdrugs. In the event that a third party has also filed a U.S. patent application relating to our drug candidates or a similar invention, we may have to participate ininterference or derivation proceedings declared by the USPTO to determine priority of invention in the U.S. The costs of these proceedings could be substantial andit is possible that our efforts would be unsuccessful, resulting in a loss of our U.S. patent position. Furthermore, we may not have identified all U.S. and non-U.S.patents or published applications that affect our business either by blocking our ability to commercialize our drugs or by covering similar technologies.Composition-of-matter patents on the biological or chemical active pharmaceutical ingredient are generally considered to be the strongest form of intellectualproperty protection for pharmaceutical products, as such patents provide protection without regard to any method of use. We cannot be certain that the claims inour patent applications covering composition-of-matter of our product candidates will be considered patentable by the USPTO and courts in the U.S. or by thepatent offices and courts in other countries, nor can we be certain that the claims in our issued composition-of-matter patents will not be found invalid orunenforceable if challenged. Method-of-use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor frommaking and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors donot actively32promote their product for our targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contributeto the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement ordefense of our issued patents. In 2011, the U.S. Leahy-Smith America Invents Act (the "Leahy-Smith Act") was signed into law. The Leahy-Smith Act includes anumber of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affectpatent litigation, and switch the U.S. patent system from a “first-to-invent” system to a “first-to-file” system. Under a “first-to-file” system, assuming the otherrequirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whetheranother inventor had made the invention earlier. The USPTO subsequently developed new regulations and procedures to govern administration of the Leahy-SmithAct, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-to-file provisions, only became effective in2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and itsimplementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issuedpatents, all of which could have a material adverse effect on our business and financial condition.We may be subject to a third-party preissuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, interpartes review, post-grant review, or other patent office proceedings or litigation, in the U.S. or elsewhere, challenging our patent rights or the patent rights ofothers. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties tocommercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize productswithout infringing third party patent rights.We may not be able to protect our intellectual property rights throughout the world.The laws of some jurisdictions do not protect intellectual property rights to the same extent as in the U.S. and many companies have encountered significantdifficulties in protecting and defending such rights in other jurisdictions. If we encounter such difficulties in protecting or are otherwise precluded from effectivelyprotecting our intellectual property rights in other jurisdictions, our business prospects could be substantially harmed.We license patent rights from third-party owners. Such licenses may be subject to early termination if we fail to comply with our obligations in our licenseswith third parties, which could result in the loss of rights or technology that are material to our business.We are a party to licenses that give us rights to third-party intellectual property that is necessary or useful for our business, and we may enter into additionallicenses in the future. Under these license agreements we are obligated to pay the licensor fees, which may include annual license fees, milestone payments,royalties, a percentage of revenues associated with the licensed technology and a percentage of sublicensing revenue. In addition, under certain of such agreements,we are required to diligently pursue the development of products using the licensed technology. If we fail to comply with these obligations and fail to cure ourbreach within a specified period of time, the licensor may have the right to terminate the applicable license, in which event we could lose valuable rights andtechnology that are material to our business.If the licensor retains control of prosecution of the patents and patent applications licensed to us, we may have limited or no control over the manner in whichthe licensor chooses to prosecute or maintain its patents and patent applications and have limited or no right to continue to prosecute any patents or patentapplications that the licensor elects to abandon.Litigation regarding patents, patent applications and other proprietary rights may be expensive and time consuming. If we are involved in such litigation, itcould cause delays in bringing drug candidates to market and harm our ability to operate.Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. Although we are not currently aware of anylitigation or other proceedings or third-party claims of intellectual property infringement related to our drug candidates, the pharmaceutical industry ischaracterized by extensive litigation regarding patents and other intellectual property rights. Other parties may hold or obtain patents in the future and allege thatthe use of our technologies infringes these patent claims or that we are employing their proprietary technology without authorization.In addition, third parties may challenge or infringe upon our existing or future patents. Proceedings involving our patents or patent applications or those ofothers could result in adverse decisions regarding:•the patentability of our inventions relating to our drug candidates; and/or33•the enforceability, validity or scope of protection offered by our patents relating to our drug candidates.Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings,which could have a material adverse effect on us.If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validityof the patents in court. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. Inaddition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patentsdeclared invalid, we may:•incur substantial monetary damages;•encounter significant delays in bringing our drug candidates to market; and/or•be precluded from participating in the manufacture, use or sale of our drug candidates or methods of treatment requiring licenses.If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our businessmay be adversely affected.Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing onother marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition by potential partners orcustomers in our markets of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may notbe able to compete effectively and our business may be adversely affected.We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.We rely on trade secrets to protect our proprietary technologies, especially where we do not believe patent protection is appropriate or obtainable; however,trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators, sponsoredresearchers, and other advisors to protect our trade secrets and other proprietary information. These agreements may not effectively prevent disclosure ofconfidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others mayindependently discover our trade secrets and proprietary information. Costly and time consuming litigation could be necessary to enforce and determine the scopeof our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.Many of our employees were previously employed at universities, Elan or Elan subsidiaries, or other biotechnology or pharmaceutical companies, includingour competitors or potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their workfor us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information,of any such employee’s former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to payingmonetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation couldresult in substantial costs and be a distraction to management.Risks Related to Our Ordinary SharesThe market price of our ordinary shares may fluctuate widely.Our ordinary shares commenced trading on The Nasdaq Global Market on December 21, 2012 and currently trade on The Nasdaq Global Select Market. Wecannot predict the prices at which our ordinary shares may trade. The market price of our ordinary shares may fluctuate widely, depending upon many factors,some of which may be beyond our control, including:•our ability to obtain financing as needed;•progress in and results from our ongoing or future clinical trials;•our collaboration with Roche pursuant to the License Agreement to develop and commercialize PRX002, as well as any future Licensed Productstargeting α- synuclein;34•failure or delays in advancing our preclinical drug candidates or other drug candidates we may develop in the future, into clinical trials;•results of clinical trials conducted by others on drugs that would compete with our drug candidates;•issues in manufacturing our drug candidates;•regulatory developments or enforcement in the U.S. and other countries;•developments or disputes concerning patents or other proprietary rights;•introduction of technological innovations or new commercial products by our competitors;•changes in estimates or recommendations by securities analysts, if any, who cover our company;•public concern over our drug candidates;•litigation;•future sales of our ordinary shares;•general market conditions;•changes in the structure of healthcare payment systems;•failure of any of our drug candidates, if approved, to achieve commercial success;•economic and other external factors or other disasters or crises;•period-to-period fluctuations in our financial results;•overall fluctuations in U.S. equity markets;•our quarterly or annual results, or those of other companies in our industry;•announcements by us or our competitors of significant acquisitions or dispositions;•the operating and ordinary share price performance of other comparable companies;•investor perception of our company and the drug development industry;•natural or environmental disasters that investors believe may affect us; or•fluctuations in the budgets of federal, state and local governmental entities around the world.These and other external factors may cause the market price and demand for our ordinary shares to fluctuate substantially, which may limit or preventinvestors from readily selling their ordinary shares and may otherwise negatively affect the liquidity of our ordinary shares. In particular, stock markets in generalhave experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adverselyaffect the trading price of our ordinary shares. In the past, when the market price of a stock has been volatile, some holders of that stock have instituted securitiesclass action litigation against the company that issued the stock. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defendingthe lawsuit. Such a lawsuit could also divert the time and attention of our management.Your percentage ownership in Prothena may be diluted in the future.As with any publicly traded company, your percentage ownership in us may be diluted in the future because of equity issuances for acquisitions, capitalraising transactions or otherwise. We may need to raise additional capital in the future. If we are able to raise additional capital, we may issue equity or convertibledebt instruments, which may severely dilute your ownership interest in us. In addition, we intend to continue to grant option awards to our directors, officers andemployees, which would dilute your ownership stake in us. As of December 31, 2016 , the number of ordinary shares available for issuance pursuant to outstandingand future equity awards under our equity plan was 6,349,145 .35If we are unable to maintain effective internal controls, our business could be adversely affected.We are subject to the reporting and other obligations under the U.S. Securities Exchange Act of 1934, as amended, including the requirements of Section 404of the U.S. Sarbanes-Oxley Act, which require annual management assessments of the effectiveness of our internal control over financial reporting. The rulesgoverning the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation,testing and possible remediation to meet the detailed standards under the rules. During the course of its testing, our management may identify material weaknessesor deficiencies which may not be remedied in time to meet the deadline imposed by the Sarbanes-Oxley Act. These reporting and other obligations place significantdemands on our management and administrative and operational resources, including accounting resources.Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financialreporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements forexternal purposes in accordance with accounting principles generally accepted in the U.S. During the course of our review and testing of our internal controls, wemay identify deficiencies and be unable to remediate them before we must provide the required reports. Furthermore, if we have a material weakness in our internalcontrols over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated. We or ourindependent registered public accounting firm, when required, may not be able to conclude on an ongoing basis that we have effective internal control overfinancial reporting, which could harm our operating results, cause investors to lose confidence in our reported financial information and cause the trading price ofour stock to fall. We cannot provide assurance that a material weakness will not occur in the future, or that we will be able to conclude on an ongoing basis that we haveeffective internal controls over financial reporting in accordance with Section 404 and the related rules and regulations of the SEC when required. A materialweakness in internal control over financial reporting is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there isa reasonable possibility that a material misstatement of a company's annual or interim consolidated financial statements will not be prevented or detected on atimely basis by the company's internal controls. If we cannot in the future favorably assess, or our independent registered public accounting firm, when required, isunable to provide an unqualified attestation report on, the effectiveness of our internal controls over financial reporting, investor confidence in the reliability of ourfinancial reports may be adversely affected, which could have a material adverse effect on our share price. In addition, any failure to report our financial results onan accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from the Nasdaq Global Select Market or other adverse consequences thatwould have an adverse effect on our business, financial position and results of operations.If we were treated as a passive foreign investment company for U.S. federal income tax purposes, it could result in adverse U.S. federal income taxconsequences to United States holders of our ordinary shares .Significant potential adverse U.S. federal income tax implications generally apply to U.S. investors owning shares of a passive foreign investment company(“PFIC”), directly or indirectly. In general, we would be a PFIC for a taxable year if either (i) 75% or more of its income constitutes passive income (the “incometest”) or (ii) 50% or more of our assets produce passive income (the “asset test”). Changes in the composition of our active or passive income, passive assets or fairmarket value may cause us to become a PFIC. A separate determination must be made each taxable year as to whether we are a PFIC (after the close of eachtaxable year).We do not believe we were a PFIC for U.S. federal income tax purposes for our taxable years ended December 31, 2016, 2015 or 2014. However, theapplication of the PFIC rules is subject to uncertainties in a number of respects, and we cannot assure that the U.S. Internal Revenue Service (the “IRS”) will nottake a contrary position. We also cannot assure that we will not be a PFIC for U.S. federal income tax purposes for any future taxable year.We may not be able to successfully maintain our tax rates, which could adversely affect our business and financial condition, results of operations and growthprospects.We are incorporated in Ireland and maintain subsidiaries or offices in Ireland, the U.S. and other jurisdictions. We are able to achieve a low average tax ratethrough the performance of certain functions and ownership of certain assets in tax-efficient jurisdictions, together with intra-group service agreements. However,changes in tax laws in any of these jurisdictions could adversely affect our ability to do so in the future. Taxing authorities, such as the IRS, actively audit andotherwise challenge these types of arrangements, and have done so in our industry. We are subject to reviews and audits by the IRS and other taxing authoritiesfrom time to time, and the IRS or other taxing authority may challenge our structure and inter-group arrangements. Responding to or defending against challengesfrom taxing authorities could be expensive and time consuming, and could divert management’s time and focus away from operating our business. We cannotpredict whether and when taxing authorities will conduct an audit, challenge our tax structure or the cost involved in responding to any such audit or challenge. Ifwe are unsuccessful, we may be36required to pay taxes for prior periods, interest, fines or penalties, and may be obligated to pay increased taxes in the future, all of which could have an adverseeffect on our business, financial condition, results of operations or growth prospects.Future changes to the tax laws relating to multinational corporations could adversely affect us.Under current law, we are treated as a foreign corporation for U.S. federal tax purposes. However, changes to the U.S. Internal Revenue Code, U.S. TreasuryRegulations or other IRS guidance thereunder could adversely affect our status as a foreign corporation or otherwise affect our effective tax rate. In addition, theU.S. Congress, the IRS, the Organization for Economic Co-operation and Development and other governments and agencies in jurisdictions where we do businesshave recently focused on issues related to the taxation of multinational corporations, and specifically in the area of “base erosion and profit shifting,” wherepayments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the U.S. and othercountries in which we do business could change on a prospective or retroactive basis, and any such changes could have an adverse effect on our business, financialcondition, results of operations or growth prospects.Irish law differs from the laws in effect in the United States and may afford less protection to holders of our ordinary shares.It may not be possible to enforce court judgments obtained in the U.S. against us in Ireland based on the civil liability provisions of the U.S. federal or statesecurities laws. In addition, there is uncertainty as to whether the courts of Ireland would recognize or enforce judgments of U.S. courts obtained against us or ourdirectors or officers based on the civil liabilities provisions of the U.S. federal or state securities laws or hear actions against us or those persons based on thoselaws. We have been advised that the U.S. currently does not have a treaty with Ireland providing for the reciprocal recognition and enforcement of judgments incivil and commercial matters. Therefore, a final judgment for the payment of money rendered by any U.S. federal or state court based on civil liability, whether ornot based solely on federal or state securities laws, would not automatically be enforceable in Ireland.As an Irish incorporated company, we are governed by the Irish Companies Act 2014 (the "Companies Act"), which differ in some material respects fromlaws generally applicable to U.S. corporations and shareholders, including, among others, differences relating to interested director and officer transactions andshareholder lawsuits. Likewise, the duties of directors and officers of an Irish company generally are owed to the company only. Shareholders of Irish companiesgenerally do not have a personal right of action against directors or officers of the company and may exercise such rights of action on behalf of the company onlyin limited circumstances. Accordingly, holders of our ordinary shares may have more difficulty protecting their interests than would holders of securities of acorporation incorporated in a jurisdiction of the U.S.Irish law differs from the laws in effect in the United States with respect to defending unwanted takeover proposals and may give our board of directors lessability to control negotiations with hostile offerors.We are subject to the Irish Takeover Panel Act, 1997, Takeover Rules, 2013. Under those Irish Takeover Rules, our Board is not permitted to take any actionthat might frustrate an offer for our ordinary shares once our Board has received an approach that may lead to an offer or has reason to believe that such an offer isor may be imminent, subject to certain exceptions. Potentially frustrating actions such as (i) the issue of ordinary shares, options or convertible securities,(ii) material acquisitions or disposals, (iii) entering into contracts other than in the ordinary course of business or (iv) any action, other than seeking alternativeoffers, which may result in frustration of an offer, are prohibited during the course of an offer or at any earlier time during which our Board has reason to believe anoffer is or may be imminent. These provisions may give our Board less ability to control negotiations with hostile offerors and protect the interests of holders ofordinary shares than would be the case for a corporation incorporated in a jurisdiction of the U.S.Irish law requires that our shareholders renew every five years the authority of our Board of Directors to issue shares and to do so for cash without applyingthe statutory pre-emption right, and if our shareholders do not renew these authorizations by September 26, 2017 (or any renewal is subject to limitations), ourability to raise additional capital to fund our operations would be limited.As an Irish incorporated company, we are governed by the Companies Act. The Companies Act requires that every five years our shareholders renew theseparate authorities of our Board to (a) allot and issue shares and (b) opt out of the statutory pre-emption right that otherwise applies to share issuances for cash(which pre-emption right would require that shares issued for cash be offered to our existing shareholders on a pro rata basis before the shares may be issued tonew shareholders). Our Constitution currently authorizes our Board to issue ordinary shares up to the amount of our authorized share capital, and to opt out of thestatutory pre-emption right for such issuances. Under Irish law, these authorizations expire on September 26, 2017, five years after the adoption of ourConstitution. Irish law requires that our shareholders renew the authority for our Board to issue ordinary shares by a resolution approved by not less than 50% ofthe votes cast at a general meeting of our shareholders. Irish law requires that our shareholders renew the authority of our Board to opt out of the statutory pre-emption right in share issuances for cash by a resolution approved by not less than 75% of the votes cast at a general meeting of our shareholders. If theseauthorizations are not37renewed before September 26, 2017, or are renewed with limitations, our Board would be limited in its ability to issue shares, which would limit our ability to raiseadditional capital to fund our operations, including the research, development and potential commercialization of our product candidates.Transfers of our ordinary shares may be subject to Irish stamp duty.Transfers of our ordinary shares effected by means of the transfer of book entry interests in DTC should not be subject to Irish stamp duty. However, if ashareholder holds our ordinary shares directly rather than beneficially through DTC any transfer of those ordinary shares could be subject to Irish stamp duty(currently at the rate of 1% of the higher of the price paid or the market value of the ordinary shares acquired). Payment of Irish stamp duty is generally a legalobligation of the transferee. The potential for stamp duty could adversely affect the price of your ordinary shares.We do not anticipate paying cash dividends, and accordingly, shareholders must rely on ordinary share appreciation for any return on their investment.We anticipate losing money for the foreseeable future and, even if we do ever turn a profit, we intend to retain future earnings, if any, for the development,operation and expansion of our business. Thus, we do not anticipate declaring or paying any cash dividends for the foreseeable future. Therefore, the success of aninvestment in our ordinary shares will depend upon appreciation in their value and in order to receive any income or realize a return on your investment, you willneed to sell your Prothena ordinary shares. There can be no assurance that our ordinary shares will maintain their price or appreciate in value.Dividends paid by us may be subject to Irish dividend withholding tax.Although we do not currently anticipate paying cash dividends, if we were to do so in the future, a dividend withholding tax (currently at a rate of 20%) mayarise. A number of exemptions from dividend withholding tax exist such that shareholders resident in the U.S. and shareholders resident in other countries that haveentered into a double taxation treaty with Ireland may be entitled to exemptions from dividend withholding tax subject to the completion of certain dividendwithholding tax declaration forms.Shareholders entitled to an exemption from Irish dividend withholding tax on any dividends received from us will not be subject to Irish income tax inrespect of those dividends, unless they have some connection with Ireland other than their shareholding (for example, they are resident in Ireland). Shareholderswho receive dividends subject to Irish dividend withholding tax will generally have no further liability to Irish income tax on those dividends.Prothena ordinary shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.Irish capital acquisitions tax ("CAT") could apply to a gift or inheritance of our ordinary shares irrespective of the place of residence, ordinary residence ordomicile of the parties. This is because our ordinary shares will be regarded as property situated in Ireland. The person who receives the gift or inheritance hasprimary liability for CAT. Gifts and inheritances passing between spouses are exempt from CAT. It is recommended that each shareholder consult his or her owntax advisor as to the tax consequences of holding our ordinary shares or receiving dividends from us.ITEM 1B. UNRESOLVED STAFF COMMENTS.None.ITEM 2. PROPERTIESOur corporate headquarters are located in Dublin, Ireland and our U.S. operations are located in South San Francisco, California.In Dublin, Ireland, we occupy approximately 6,258 square feet of office under a lease which expires in August 2025.In South San Francisco, California, we occupy approximately 129,000 square feet of office and laboratory space (the “New Facility”) under a lease whichexpires in December 2023.In December 2016, we vacated approximately 50,400 square feet of office and laboratory space at a facility in South San Francisco, California, under a leasewhich expires in November 2020 (the "Former Facility"), 14,000 square feet of which is occupied by a third party under a sublease which expires in December2017. In July 2016, we, Merck and the landlord for the Former Facility entered into a Consent to Assignment and Amendment to Lease, effective as of July 5,2016, pursuant to which38the landlord consented to the Assignment Agreement and the assignment by us and the assumption by Merck of our interest as tenant in the lease to the FormerFacility (the “Assignment”), and agreed to release (a) us from all of its obligations as tenant under the lease of the Former Facility and (b) us from all of itsobligations as guarantor under that certain Guaranty of Lease dated as of December 21, 2012, in each case that accrue after the Assignment. The Assignmentoccurred in January 2017.We believe that our facilities are sufficient to meet our current needs.ITEM 3. LEGAL PROCEEDINGSWe are not party to any material pending legal proceedings. We may at times be party to ordinary routine litigation incidental to our business. Whenappropriate in management’s estimation, we may record reserves in our financial statements for pending legal proceedings.ITEM 4. MINE SAFETY DISCLOSURESNot Applicable.39PART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES.Market Information for Ordinary SharesOur ordinary shares commenced trading on The Nasdaq Global Market under the symbol “PRTA” on December 21, 2012 and currently trade on The NasdaqGlobal Select Market. The following table sets forth the high and low intraday per share sale prices of our ordinary shares as reported by Nasdaq during each of theprevious eight quarters. Price Range Per Share High LowFiscal 2016 Fourth quarter $68.18 $40.58Third quarter $64.50 $35.04Second quarter $51.45 $33.53First quarter $67.32 $28.20Fiscal 2015 Fourth quarter $76.42 $40.47Third quarter $70.52 $42.20Second quarter $55.97 $30.14First quarter $45.00 $18.76On February 10, 2017 , the closing price of our ordinary shares was $52.01 .HoldersThere were approximately 1,265 shareholders of record of our ordinary shares as of February 10, 2017 . Because many of our shares are held by brokers andother institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these record holders.Dividend PolicyWe have not paid dividends in the past and do not anticipate paying dividends in the foreseeable future. Any future determination to pay dividends will be atthe discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as theBoard of Directors deems relevant.Under Irish law, dividends and distributions may only be made from distributable reserves. Distributable reserves generally means accumulated realizedprofits, to the extent not previously utilized by distribution or capitalization, less accumulated realized losses, to the extent not previously written off in a reductionor re-organization of capital. In addition, no distribution or dividend may be made unless the net assets of Prothena are equal to, or in excess of, the aggregate ofour called up share capital plus undistributable reserves and the distribution does not reduce our net assets below such aggregate. Undistributable reserves includeundenominated capital, the share premium account, the capital redemption reserve fund and the amount by which Prothena’s accumulated unrealized profits, so faras not previously utilized by any capitalization, exceed our accumulated unrealized losses, so far as not previously written off in a reduction or reorganization ofcapital.The determination as to whether or not we have sufficient distributable reserves to fund a dividend must be made by reference to the “relevant financialstatements” of Prothena. The “relevant financial statements” are either the last set of unconsolidated annual audited financial statements or other financialstatements properly prepared in accordance with the Irish Companies Act 2014, which give a “true and fair view” of our unconsolidated financial position andaccord with accepted accounting practice. The relevant financial statements must be filed in the Companies Registration Office (the official public registry forcompanies in Ireland).40Securities Authorized for Issuance Under Equity Compensation PlansSee Item 12 of Part III of this Form 10-K regarding information about securities authorized for issuance under our equity compensation plans.Performance Graph (1) The following graph shows a comparison from December 21, 2012 through December 31, 2016 of cumulative total return on assumed investment of $100.00in cash in our ordinary shares, the Nasdaq Composite Index and the Nasdaq Biotechnology Index. Such returns are based on historical results and are not intendedto suggest future performance. Points on the graph represent the performance as of end of each business day.COMPARISON OF 49 MONTH CUMULATIVE TOTAL RETURNAmong Prothena Corporation plc, the Nasdaq Composite Index, and the Nasdaq Biotechnology IndexCumulative TotalReturn as of 12/21/2012 12/31/2012 6/30/2013 12/31/2013 6/30/2014 12/31/2014 6/30/2015 12/31/2015 6/30/2016 12/31/2016ProthenaCorporation plc $100 $102 $179 $368 $313 $288 $732 $946 $486 $683Nasdaq CompositeIndex $100 $100 $113 $138 $146 $157 $165 $166 $160 $178NasdaqBiotechnologyIndex $100 $99 $126 $164 $186 $220 $268 $246 $187 $192(1) The information under the heading “Performance Graph” shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes ofSection 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, and shall not be deemed incorporated byreference into any filing of Prothena Corporation plc under the Securities Act of 1933, as amended.Recent Sales of Unregistered SecuritiesNone.Use of ProceedsNone.Purchases of Equity Securities by the Issuer and Affiliated PurchasersNone.Irish Law MattersAs we are an Irish public limited company, the following matters of Irish law are relevant to the holders of our ordinary shares.41Irish Restrictions on Import and Export of CapitalExcept as indicated below, there are no restrictions on non-residents of Ireland dealing in Irish domestic securities, which includes ordinary shares of Irishcompanies. Dividends and redemption proceeds also continue to be freely transferable to non-resident holders of such securities. The Irish Financial Transfers Act,1992 gives power to the Minister for Finance of Ireland to restrict financial transfers between Ireland and other countries and persons. Financial transfers arebroadly defined and include all transfers that would be movements of capital or payments within the meaning of the treaties governing the member states of theEuropean Union. The acquisition or disposal of interests in shares issued by an Irish incorporated company and associated payments falls within this definition. Inaddition, dividends or payments on redemption or purchase of shares and payments on a liquidation of an Irish incorporated company would fall within thisdefinition. At present, the Financial Transfers Act prohibits financial transfers involving the late Slobodan Milosevic and associated persons, Burma (Myanmar),Belarus, certain persons indicted by the International Criminal Tribunal for the former Yugoslavia, the late Osama bin Laden, Al-Qaida, the Taliban ofAfghanistan, Democratic Republic of Congo, Democratic People’s Republic of Korea (North Korea), Iran, Iraq, Côte d’Ivoire, Lebanon, Liberia, Zimbabwe,Sudan, Somalia, Republic of Guinea, Afghanistan, Egypt, Eritrea, Libya, Syria, Tunisia, certain known terrorists and terrorist groups, and countries that harborcertain terrorist groups, without the prior permission of the Central Bank of Ireland.Irish Taxes Applicable to U.S. HoldersWithholding Tax on DividendsWhile we have no current plans to pay dividends, dividends on our ordinary shares would generally be subject to Irish Dividend Withholding Tax ("DWT") atthe standard rate of income tax (currently 20%), unless an exemption applies.Dividends on our ordinary shares that are owned by residents of the U.S. and held beneficially through the Depositary Trust Company ("DTC") will not besubject to DWT provided that the address of the beneficial owner of the ordinary shares in the records of the broker is in the U.S.Dividends on our ordinary shares that are owned by residents of the U.S. and held directly (outside of DTC) will not be subject to DWT provided that theshareholder has completed the appropriate Irish DWT form and this form remains valid. Such shareholders must provide the appropriate Irish DWT form to ourtransfer agent at least seven business days before the record date for the first dividend payment to which they are entitled.If any shareholder who is resident in the U.S. receives a dividend subject to DWT, he or she should generally be able to make an application for a refund fromthe Irish Revenue Commissioners on the prescribed form.While the U.S./Ireland Double Tax Treaty contains provisions regarding withholding, due to the wide scope of the exemptions from DWT available underIrish domestic law, it would generally be unnecessary for a U.S. resident shareholder to rely on the treaty provisions.Income Tax on DividendsA shareholder who is neither resident nor ordinarily resident in Ireland and who is entitled to an exemption from DWT generally has no additional liability toIrish income tax or to the universal social charge on a dividend from us unless that shareholder holds their ordinary shares in connection with a trade or businesscarried on by such shareholder in Ireland through a branch or agency.A shareholder who is neither resident nor ordinarily resident in Ireland and who is not entitled to an exemption from DWT generally has no additionalliability to Irish income tax or to the universal social charge on a dividend from us. The DWT deducted by us discharges the liability to Irish income tax and to theuniversal social charge. This however is not the case where the shareholder holds their ordinary shares in connection with a trade or business carried on by suchshareholder in Ireland through a branch or agency.Irish Tax on Capital GainsA shareholder who is neither resident nor ordinarily resident in Ireland and does not hold their shares in connection with a trade or business carried on bysuch shareholder in Ireland through a branch or agency should not be within the charge to Irish tax on capital on a disposal of our shares.Capital Acquisitions TaxIrish Capital Acquisitions Tax ("CAT") is comprised principally of gift tax and inheritance tax. CAT could apply to a gift or inheritance of our ordinaryshares irrespective of the place of residence, ordinary residence or domicile of the parties. This42is because our ordinary shares are regarded as property situated in Ireland as our share register must be held in Ireland. The person who receives the gift orinheritance has primary liability for CAT.CAT is currently levied at a rate of 33% above certain tax-free thresholds. The appropriate tax-free threshold is dependent upon (i) the relationship betweenthe donor and the donee and (ii) the aggregation of the values of previous gifts and inheritances received by the donee from persons within the same category ofrelationship for CAT purposes. Gifts and inheritances passing between spouses are exempt from CAT. Our shareholders should consult their own tax advisers as towhether CAT is creditable or deductible in computing any domestic tax liabilities.Stamp DutyIrish stamp duty may be payable in respect of transfers of our ordinary shares (currently at the rate of 1% of the price paid or the market value of the sharesacquired, if greater).Shares Held Through DTCA transfers of our ordinary shares from a seller who holds shares through DTC, to a buyer who holds the acquired shares through DTC should not be subjectto Irish stamp duty.Shares Held Outside of DTC or Transferred Into or Out of DTCA transfer of our ordinary shares (i) by a seller who holds shares outside of DTC to any buyer, or (ii) by a seller who holds the shares through DTC to a buyerwho holds the acquired shares outside of DTC, may be subject to Irish stamp duty.Shareholders wishing to transfer their shares into or out of DTC may do so without giving rise to Irish stamp duty provided that there is no change in thebeneficial ownership of such shares and the transfer into or out of DTC is not effected in contemplation of a subsequent sale of such shares to a third party. In orderto benefit from this exemption from Irish stamp duty, the seller must confirm to us that there is no change in the ultimate beneficial ownership of the shares as aresult of the transfer and there is no agreement for the sale of the shares by the beneficial owner to a third party being contemplated.ITEM 6. SELECTED FINANCIAL DATAThe following selected consolidated financial information has been derived from our audited consolidated financial statements. The information set forthbelow is not necessarily indicative of results of future operations and should not be relied upon as an indicator of our future performance. The selected consolidatedfinancial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and theConsolidated Financial Statements and notes thereto included in Item 8 of this Form 10-K in order to fully understand factors that may affect the comparability ofthe information presented below.On December 20, 2012, we separated from Elan Corporation, plc ("Elan"). Therefore, certain of our historical results of operations presented below may notbe reflective of our financial position, results of operations and cash flows had we operated as a stand-alone public company for periods prior to December 21,2012. The financial data presented below for periods prior to December 31, 2012 has been prepared on a “carve-out” basis from the consolidated financialstatements of Elan to represent our financial position and performance as if we had existed on a stand-alone basis prior to December 21, 2012. Central support costshave been allocated to us for the purposes of preparing the selected financial data below based on our estimated usage of the resources. Our estimated usage of thecentral support resources was determined by estimating our portion of the most appropriate driver for each category of central support costs such as headcount orlabor hours, depending on the nature of the costs. We believe that such allocations have been made on a reasonable basis, but may not necessarily be indicative ofall of the costs that would have been incurred if we had operated on a standalone basis.The following tables set forth our selected consolidated financial data for the periods indicated below (amounts in thousands except for per share amounts).43 Year Ended December 31, 2016 2015 2014 2013 2012Consolidated Statement of Operations Data: Collaboration revenue $1,055 $1,607 $50,320 $— $—Revenue—related party — — 534 676 2,658Total revenue 1,055 1,607 50,854 676 2,658Operating expenses: Research and development 119,534 58,439 38,452 26,052 34,139General and administrative 41,056 23,105 19,051 15,051 9,929Total operating expenses 160,590 81,544 57,503 41,103 44,068Loss from operations (159,535) (79,937) (6,649) (40,427) (41,410)Other income (expense): Interest income, net 556 196 79 71 5Other income (expense), net 15 (170) 231 (225) —Total other income (expense) 571 26 310 (154) 5Loss before income taxes (158,964) (79,911) (6,339) (40,581) (41,405)Provision for income taxes 1,144 701 811 415 6Net loss $(160,108) $(80,612) $(7,150) $(40,996) $(41,411)Basic and diluted net loss per share (1) $(4.66) $(2.66) $(0.29) $(2.20) $(2.84)Shares used to compute basic and diluted net loss per share 34,351 30,326 24,672 18,615 14,593 Year Ended December 31, 2016 2015 2014 2013 2012Consolidated Balance Sheet Data: Cash and cash equivalents and restricted cash $390,979 $370,586 $293,579 $176,677 $124,860Total assets 459,976 385,236 304,116 182,410 129,283Other non-current liabilities 53,498 2,351 2,188 1,734 1,055Total liabilities 94,573 24,567 14,227 9,140 2,799Shareholders’ equity 365,403 360,669 289,889 173,270 126,484_________________(1) Prior to December 21, 2012, we operated as part of Elan and not as a separate stand-alone entity. As a result, we did not have any ordinary shares outstanding priorto December 21, 2012. The calculation of basic and diluted net loss per share assumes that the 14,496,929 ordinary shares issued to Elan shareholders in connectionwith the separation from Elan have been outstanding for the year ended December 31, 2012 and that the 3,182,253 ordinary shares issued to Elan upon separationhave been outstanding since December 20, 2012.44ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThis Annual Report on Form 10-K, including under Item 1- Business and in this Management’s Discussion and Analysis of Financial Condition and Resultsof Operations, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statementsrelate to, among other things, our strategy; the possible clinical benefits of NEOD001, PRX002 and PRX003; a contemplated Phase 2 study for PRX002 and apossible Phase 2 study for PRX003; the contemplated clinical development of PRX004; research and development ("“R&D”) and general and administrative(“G&A”) expenses in 2017; and the sufficiency of our cash and cash equivalents. Forward-looking statements may include words such as “aim,” “anticipate,”“assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective” “plan,” “predict,” “potential,”“positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or thenegative of these terms or other comparable terminology. Forward-looking statements are subject to risks and uncertainties, and actual events or results may differmaterially. Factors that could cause our actual results to differ materially include, but are not limited to, the risks and uncertainties listed below as well as thosediscussed under Item 1A - Risk Factors of this Form 10-K.•our ability to obtain additional financing in future offerings;•our operating losses;•our ability to successfully complete research and development of our drug candidates;•our ability to develop, manufacture and commercialize products;•our collaboration with Roche pursuant to the License Agreement;•our ability to protect our patents and other intellectual property;•our ability to hire and retain key employees;•tax treatment of our separation from Elan and subsequent distribution of our ordinary shares;•our ability to maintain financial flexibility and sufficient cash, cash equivalents, and investments and other assets capable of being monetized to meet ourliquidity requirements;•potential disruptions in the U.S. and global capital and credit markets;•government regulation of our industry;•the volatility of our ordinary share price;•business disruptions; and•the other risks and uncertainties described in Item 1A - Risk Factors of this Form 10-K.We undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that arises after the date of this report.This discussion should be read in conjunction with the Consolidated Financial Statements and Notes presented in Item 8 of this Form 10-K.OverviewProthena Corporation plc is a global, late-stage clinical biotechnology company establishing fully-integrated research, development and commercialcapabilities. Fueled by its deep scientific understanding built over decades of research in protein misfolding and cell adhesion - the root causes of many serious orcurrently untreatable amyloid and inflammatory diseases - Prothena seeks to fundamentally change the course of progressive diseases associated with this biology.Our pipeline of antibody-based product candidates target a number of potential indications including AL amyloidosis (NEOD001), Parkinson’s disease andother related synucleinopathies (PRX002), inflammatory diseases including psoriasis and psoriatic arthritis (PRX003) and ATTR amyloidosis (PRX004). TheCompany continues discovery of additional novel therapeutic candidates where our deep scientific understanding of disease pathology can be leveraged.We are a public limited company formed under the laws of Ireland. We separated from Elan Corporation, plc (“Elan”) on December 20, 2012. After theseparation from Elan, and the related distribution of the Company's ordinary shares to Elan's shareholders, our ordinary shares began trading on The Nasdaq GlobalMarket under the symbol “PRTA” on December 21, 2012 and currently trade on The Nasdaq Global Select Market.45Recent DevelopmentsNEOD001 for the Potential Treatment of AL AmyloidosisNEOD001 is an investigational monoclonal antibody that targets circulating misfolded soluble light chain and deposited insoluble amyloid for the potentialtreatment of AL amyloidosis.Results from the dose-escalation portion (n=27) of the Phase 1/2 clinical study of NEOD001 in patients with AL amyloidosis and persistent organdysfunction were published in the Journal of Clinical Oncology in February 2016. In July 2016, we presented positive interim data from the Phase 1/2 clinicalstudy from patients in both the dose escalation and expansion phases (N=69) at the International Symposium on Amyloidosis (ISA); and in December 2016, resultsfrom the completed study were presented in an oral session at the American Society of Hematology (ASH) Annual Meeting.Results from this Phase 1/2 study demonstrated that NEOD001 was safe and well-tolerated in patients with AL amyloidosis and persistent organ dysfunction.The analysis showed that a total of 69 patients across the dose-escalation and expansion portions of the study received more than 990 infusions of up to 24 mg/kg,with a mean treatment duration of 12.8 months. In a best response analysis of patients in the Phase 1/2 study who received NEOD001, 53% or 19 of 36 totalcardiac-evaluable patients demonstrated a cardiac response, defined as more than 30% and 300 pg/mL decrease in levels of NT-proBNP. These cardiac bestresponse rates compared favorably to cardiac response rates of 0% to 15% from available published historical data in patients previously treated with plasma celldirected therapy, and were consistent with the best response rate of 57%, or 8 of 14 cardiac-evaluable patients, reported in the interim analysis of the doseescalation phase (n=27) of the NEOD001 Phase 1/2 study published in the Journal of Clinical Oncology in February 2016.In a best response analysis of patients in the Phase 1/2 study who received NEOD001, 64%, or 23 of 36 total renal-evaluable patients, demonstrated a renalresponse, defined as a 30% decrease in proteinuria (a renal function biomarker) in the absence of estimated glomerular filtration rate (eGFR) worsening. Theserenal best response rates compared favorably to renal response rates of 17% to 29% from published historical data in patients previously treated with plasma celldirected therapy, and were consistent with the best response rate of 60%, or 9 of 15 renal-evaluable patients, reported in the interim analysis of the dose-escalationphase (n=27) of the NEOD001 Phase 1/2 study published in the Journal of Clinical Oncology in February 2016.In addition, an improvement in peripheral neuropathy in patients in the prospectively defined peripheral neuropathy expansion cohort was demonstrated by amean 35% (median 23%) decrease in the Neuropathy Impairment Score-Lower Limb (“NIS-LL”) measured at month 10, indicating improvement to a third organsystem in NEOD001-treated patients. Complete resolution of peripheral neuropathy, as measured by NIS-LL, was achieved in two patients in this cohort.Improvements in patient NIS-LL scores resulted in a response rate of 82% or 9 of 11 patients in the peripheral neuropathy expansion cohort of the Phase 1/2 study.A response on the NIS-LL is defined as a less than 2-point increase on the 88-point scale.In August 2016, we published a study in the journal Amyloid that further supports NEOD001’s proposed mechanism of action and features preclinical datademonstrating the binding and phagocytosis clearance properties of NEOD001 and the related murine form of the antibody in tissue samples from multiple organsof patients with AL amyloidosis.PRX002 for the Potential Treatment of Parkinson’s Disease and other synucleinopathiesPRX002 is an investigational monoclonal antibody targeting alpha-synuclein designed to slow the progressive neurodegeneration associated with synucleinmisfolding and/or the cell-to-cell transmission of the pathogenic forms of synuclein in Parkinson’s disease and other synucleinopathies. PRX002, also known asRG7935, is the focus of a worldwide collaboration between Prothena and Roche.In November 2016, we announced data from a Phase 1b multiple ascending dose study of PRX002 in patients with Parkinson’s disease that was designed toassess the safety, tolerability, pharmacokinetics and immunogenicity of PRX002. The 80 patients with Parkinson’s disease in this Phase 1b double-blind, placebo-controlled, multiple ascending dose study were randomized into six escalating dose cohorts to receive PRX002 or placebo (2:1 randomization for 0.3, 1, 3 or 10mg/kg, and 3:1 randomization for 30 or 60 mg/kg). All dose levels of PRX002 were found to have an acceptable safety and tolerability profile in patients withParkinson’s disease, meeting the primary objective of the study. Robust central nervous system (“CNS”) penetration was demonstrated by a dose-dependentincrease in PRX002 levels in cerebrospinal fluid (“CSF”), and a mean concentration of PRX002 in CSF of 0.3% relative to serum across all dose levels, whichexceeded our expectations based on our preclinical experience. Data from the study also demonstrated rapid, dose- and time-dependent mean reduction in levels offree serum alpha-synuclein of up to 97% after a single dose, which were statistically significant (p < 0.0001), and maintained following two additional46monthly doses. The data from the Phase 1b multiple ascending dose study supports advancing PRX002 into a Phase 2 clinical study .PRX003 for the Potential Treatment of Inflammatory Diseases, Including Psoriasis and Psoriatic ArthritisPRX003 is an investigational monoclonal antibody that targets CD146, also known as melanoma cell adhesion molecule (MCAM), for the potential treatmentof inflammatory diseases, including psoriasis and psoriatic arthritis.In June 2016, we presented results of a Phase 1 single ascending dose study of PRX003 in an oral session at The European League Against Rheumatism(EULAR) 17 th Annual European Congress of Rheumatology that demonstrated target engagement. The data demonstrated that PRX003 was safe and well-toleratedfollowing a single infusion, up to and including the highest dose level tested of 30 mg/kg. In addition, results from this study showed that administration ofPRX003 led to greater than 95 percent neutralization of CD146 at saturating drug exposures. The data also showed a statistically significant (p<0.0001) dose-dependent duration of downregulation of CD146 on Th17 cells.In the second quarter of 2016, we initiated a randomized, double-blind, placebo-controlled, Phase 1b multiple ascending dose proof-of-biology study ofPRX003 designed to further assess the safety, tolerability, pharmacokinetics and immunogenicity of PRX003 in patients with psoriasis.In September 2016, we announced a strategy to advance a Phase 2 clinical study of PRX003 in patients with psoriatic arthritis based on certain pre-specifiedcriteria being met in the ongoing Phase 1b multiple ascending dose proof-of-biology study of PRX003 in patients with psoriasis.PRX004 for the Potential Treatment of ATTR amyloidosisPRX004 is an investigational monoclonal antibody designed to specifically target and clear the misfolded (toxic) forms of TTR amyloid protein for thepotential treatment of ATTR amyloidosis.In March 2016, we published preclinical data in the journal Amyloid suggesting that our antibodies have unique biological activity that may lead to theprevention of deposition, and enhancement of clearance, of ATTR in patients with both wild type and hereditary TTR-mediated amyloidosis.January 2016 OfferingIn January 2016, we completed an underwritten public offering of an aggregate of 2,587,500 of our ordinary shares at a public offering price of $53.00 perordinary share. The Company received aggregate net proceeds of approximately $128.6 million, after deducting the underwriting discount and estimated offeringcosts.Critical Accounting Policies and EstimatesManagement’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have beenprepared in accordance with the accounting principles generally accepted in the U.S. ("GAAP"). The preparation of these consolidated financial statements requiresus to make estimates and assumptions for the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We believe the following policiesto be critical to the judgments and estimates used in the preparation of our financial statements.Revenue RecognitionRevenue is recognized when earned and non-refundable, when payment is reasonably assured, and when there is no future obligation with respect to therevenue, in accordance with the terms prescribed in the applicable contract.Multiple Element ArrangementsOur revenues are generated primarily through our license, development and commercialization agreement. These types of agreements generally containmultiple elements, or deliverables, which may include (i) licenses to our technology, (ii) R&D activities to be performed on behalf of the collaborative partner, and(iii) in certain cases, services or obligations in connection with the manufacturing or supply of preclinical and clinical material. Payments to us under thesearrangements typically include one or more of the following: non-refundable, upfront license fees; funding of research and/or development efforts; milestonepayments; and royalties on future product sales.47Revenue under license, development and commercialization agreements is recognized based on the performance requirements of the contract. Determinationsof whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgmentsregarding the fixed nature of the fees charged for deliverables and the collectability of those fees. Should changes in conditions cause management to determinethat these criteria are not met for any new or modified transactions, revenue recognized could be adversely affected.We recognize revenue related to license, development and commercialization agreements in accordance with the provisions of FASB ASC Topic 605-25,“Revenue Recognition - Multiple-Element Arrangements.” We evaluate all deliverables within an arrangement to determine whether or not they provide value on astand-alone basis. Based on this evaluation, the deliverables are separated into units of accounting. The arrangement consideration that is fixed or determinable atthe inception of the arrangement is allocated to the separate units of accounting based on their relative selling prices. We may exercise significant judgment indetermining whether a deliverable is a separate unit of accounting, as well as in estimating the selling prices of such unit of accounting. A change in such judgmentcould result in a significant change in the period in which revenue is recognized.To determine the selling price of a separate deliverable, we use the hierarchy as prescribed in ASC Topic 605-25 based on vendor-specific objective evidence("VSOE"), third-party evidence ("TPE") or best estimate of selling price ("BESP"). VSOE is based on the price charged when the element is sold separately and isthe price actually charged for that deliverable. TPE is determined based on third party evidence for a similar deliverable when sold separately and BESP is theestimated selling price at which we would transact a sale if the elements of collaboration and license arrangements were sold on a stand-alone basis to the buyer.We may not be able to establish VSOE or TPE for the deliverables within collaboration and license arrangements, as we may not have a history of entering intosuch arrangements or selling the individual deliverables within such arrangements separately. In addition, there may be significant differentiation in thesearrangements, which indicates that comparable third party pricing may not be available. We may determine that the selling price for the deliverables withincollaboration and license arrangements should be determined using BESP. The process for determining BESP involves significant judgment on our part andincludes consideration of multiple factors such as estimated direct expenses and other costs, and available data.Payments or full reimbursements resulting from our R&D efforts for those arrangements where such efforts are considered as deliverables are recognized asthe services are performed and are presented on a gross basis so long as there is persuasive evidence of an arrangement, the fee is fixed or determinable, andcollection of the related receivable is reasonably assured. However, such funding is recognized as a reduction of R&D expense when we engage in a R&D projectjointly with another entity, with both entities participating in project activities and sharing costs and potential benefits of the project. Accordingly, reimbursementof R&D expenses pursuant to the cost-sharing provisions of our agreements with Roche is recognized as a reduction to R&D expense.Milestone RevenueWe account for milestones under ASU No. 2010-17, "Milestone Method of Revenue Recognition". Under the milestone method, contingent considerationreceived from the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is defined as anevent (i) that can only be achieved based in whole or in part on either the entity’s performance or on the occurrence of a specific outcome resulting from theentity’s performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, and (iii) that wouldresult in additional payments being due to the entity. At the inception of an agreement that includes milestone payments, we evaluate whether each milestone issubstantive and at risk to both parties on the basis of the contingent nature of the milestone. This evaluation includes an assessment of whether (a) the considerationis commensurate with either (1) the entity’s performance to achieve the milestone, or (2) the enhancement of the value of the delivered item(s) as a result of aspecific outcome resulting from the entity’s performance to achieve the milestone, (b) the consideration relates solely to past performance, and (c) the considerationis reasonable relative to all of the deliverables and payment terms within the arrangement. We evaluate factors such as the scientific, regulatory, commercial andother risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone and whetherthe milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement in making this assessment. The conclusion as to whethermilestone payments are substantive involves management judgment regarding the factors noted above.We generally classify each of our milestones into one of three categories: (i) clinical milestones, (ii) regulatory and development milestones, and (iii)commercial milestones. Clinical milestones are typically achieved when a product candidate advances or completes a defined phase of clinical research. Forexample, a milestone payment may be due to us upon the initiation of a clinical trial for a new indication. Regulatory and development milestones are typicallyachieved upon acceptance of the submission for marketing approval of a product candidate or upon approval to market the product candidate by the FDA or otherregulatory authorities. For example, a milestone payment may be due to us upon filing of a Biologics License Application ("BLA") with the FDA. Commercialmilestones are typically achieved when an approved pharmaceutical product reaches certain defined levels of net royalty sales by the licensee of a specified amountwithin a specified period.48Commercial milestone payments and milestone payments that are not deemed to be substantive will be accounted for as a contingent revenue payment withrevenue recognized when all contingencies are lifted, which is expected to be upon achievement of the milestone, assuming all revenue recognition criteria are met.Profit Share RevenueFor agreements, with profit sharing arrangements, we will record our share of the pre-tax commercial profit as collaboration revenue when the profit sharingcan be reasonably estimated and collectability is reasonably assured. If profit sharing estimates are materially different from actual results it could impact theamount of revenue recognized in future periods. If the profit share cannot be reasonably estimated or collectability of the profit share amount is not reasonablyassured, our portion of the profit share it could impact the amount of revenue recognized in future periods.Royalty RevenueWe will recognize revenue from royalties based on licensees' sales of our products or products using its technologies. Royalties are recognized as earned inaccordance with the contract terms when royalties from licensees can be reasonably estimated and collectability is reasonably assured. If we can no longer estimateroyalty revenue or our estimates are materially different from actual results it could impact the amount of revenue recognized in future periods.Build-to-Suit Lease AccountingIn certain lease arrangements, we are involved in the construction of the building. To the extent we are involved with structural improvements of theconstruction project or take construction risk prior to the commencement of a lease, Financial Accounting Standards Board, or FASB, Accounting StandardsCodification, or ASC, 840-40, “Leases – Sale-Leaseback Transactions (Subsection 05-5)”, requires us to be considered the owner for accounting purposes of thesetypes of projects during the construction period. Therefore, we record an asset in property and equipment, net on the consolidated balance sheets, includingcapitalized interest costs, for the replacement cost of the pre-existing building plus the amount of estimated construction costs and tenant improvements incurred bythe landlord and us as of the balance sheet date. We record a corresponding build-to-suit lease obligation on our consolidated balance sheets representing theamounts paid by the lessor.Once construction is complete, we consider the requirements for sale-leaseback accounting treatment, including evaluating whether all risks of ownershiphave been transferred back to the landlord, as evidenced by a lack of continuing involvement in the leased property. If the arrangement does not qualify for sale-leaseback accounting treatment, the building asset remains on our consolidated balance sheets at its historical cost, and such asset is depreciated over its estimateduseful life of 30 years. We bifurcate our lease payments into a portion allocated to the building, and a portion allocated to the parcel of land on which the buildinghas been built. The portion of the lease payments allocated to the land are treated for accounting purposes as operating lease payments, and therefore recorded asrent expense in the consolidated statements of operations. The portion of the lease payments allocated to the building is further bifurcated into a portion allocated tointerest expense and a portion allocated to reduce the build-to-suit lease obligation.The interest rate used for the build-to-suit lease obligation represents our estimated incremental borrowing rate, adjusted to reduce any built in loss.The initial recording of these assets and liabilities is classified as non-cash investing and financing items, respectively, for purposes of the consolidatedstatements of cash flows.The most significant estimates used by management in accounting for build-to-suit leases and the impact of these estimates are as follows:•Expected lease term- Our expected lease term includes the contractual lease period. The expected lease term is used in determining the depreciable life ofthe asset or the straight-line rent recognition period for the portion of the lease payment allocable to the land component.•Incremental borrowing rate- We estimate our incremental borrowing rate. For build-to-suit leases recorded on our consolidated balance sheets with arelated build-to-suit lease obligation, the incremental borrowing rate is used in allocating our rental payments between interest expense and a reduction ofthe outstanding build-to-suit lease obligation.•Fair market value of leased asset- The fair market value of a build-to-suit lease property is based on replacement cost of the pre-construction shell andcomparable market data. Fair market value is used in determining the amount of the property asset and related build-to-suit lease obligation to berecognized on our consolidated balance sheet for build-to-suit leases.49Research and DevelopmentWe expense R&D costs as incurred. R&D expenses include, but are not limited to, salary and benefits, share-based compensation, clinical trial activities,drug development and manufacturing prior to FDA approval and third-party service fees, including clinical research organizations and investigative sites. Werecognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such aspatient enrollment, clinical site activations, or information provided to us by our vendors on their actual costs incurred. The objective of our accrual policy is tomatch the recording of the expenses in our Consolidated Financial Statements to the actual services we have received and efforts we have expended. As such,expense accruals related to clinical trials are recognized based on our estimate of the degree of completion of the events specified in the specific clinical study ortrial contract. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and arereflected in our Consolidated Financial Statements as prepaid or accrued research and development. Amounts due may be fixed fee, fee for service, and mayinclude upfront payments, monthly payments, and payments upon the completion of milestones or receipt of deliverables.Share-based CompensationWe account for our share-based compensation in accordance with the fair value recognition provisions of current authoritative guidance. Share-based awards,including stock options, are measured at fair value as of the grant date and recognized to expense over the requisite service period (generally the vesting period),which we have elected to amortize on a straight-line basis. Since share-based compensation expense is based on awards ultimately expected to vest, it has beenreduced by an estimate for future forfeitures. Forfeitures are estimated based on expected turnover and historical experience. We estimate forfeitures at the time ofgrant and revise our estimate, if necessary, in subsequent periods. We estimate the fair value of options granted using the Black-Scholes option valuation model.Significant judgment is required in determining the proper assumptions used in these models. The assumptions used include the risk free interest rate, expectedterm, expected volatility and expected dividend yield. We base our assumptions on historical data when available or when not available, on a peer group ofcompanies. Prior to 2015, the expected volatility was based on historical stock volatilities of several of our publicly traded comparable companies over a periodequal to the expected life of the options, as we did not have a long enough trading history to use the volatility of our own ordinary shares. Starting in 2015, theexpected volatility was based on a combination of historical volatility for our shares and the historical volatilities of several of our publicly traded comparablecompanies. These peer companies are publicly traded, have similar industry, life cycle, revenue and market capitalization. In addition, since we do not havesufficient historical employee share option exercise data, the simplified method has been used to estimate the expected life of all options.These assumptions consist of estimates of future market conditions, which are inherently uncertain, and therefore subject to our judgment and therefore anychanges in assumptions could significantly impact the future grant date fair value of share-based awards.Total share-based compensation expense for the years ended December 31, 2016, 2015 and 2014 was $24.9 million , $10.4 million , and $5.6 million ,respectively.The information contained in Note 2 to the Consolidated Financial Statements under the heading “Recent Accounting Pronouncements” is herebyincorporated by reference into this Part II, Item 7.Results of OperationsComparison of Years Ended December 31, 2016, 2015 and 2014Revenue Year Ended December 31, Percentage Change2016 2015 2014 2016/2015 2015/2014(Dollars in thousands) Collaboration revenue$1,055 $1,607 $50,320 (34)% (97)%Revenue—related party— — 534 — % (100)%Total revenue$1,055 $1,607 $50,854 (34)% (97)%Total revenue was $1.1 million , $1.6 million and $50.9 million for the years ended December 31, 2016, 2015 and 2014 , respectively.Collaboration revenue includes reimbursements under our License Agreement with Roche, which became effective January 2014 . The portion of theamounts recognized as collaboration revenue for the milestone and the development reimbursements50were based on the relative selling price method in applying multiple element accounting. See Note 8 to the Consolidated Financial Statements “Roche LicenseAgreement” for more information.Collaboration revenue for the year ended December 31, 2016 consisted of reimbursement for research service of $1.1 million . Collaboration revenue for theyear ended December 31, 2015 consisted of the following amounts from Roche under the License Agreement: reimbursement for development costs of $5.1million (of which $0.2 million was recognized as collaboration license revenue) and reimbursement for research services of $1.4 million . Conversely,collaboration revenue for the year ended December 31, 2014 consisted of the following amounts: a one-time, non-refundable, non-creditable upfront payment of$30.0 million (which was recognized as collaboration license revenue), a clinical milestone payment from Roche of $15.0 million (of which $13.3 million wasrecognized as collaboration revenue), reimbursement for development costs of $6.0 million (of which $5.3 million was recognized as collaboration licenserevenue) and reimbursement for research services of $1.7 million .Related-party revenue for the year ended December 31, 2014 was comprised of fees earned from the provision of research and development services to Elan.Total related-party revenue decreased by $142,000, or 21%, during the year ended December 31, 2014, compared to the corresponding period of the prior year.Since our research and development services agreement with Elan terminated in December 2014, we did not have any related-party revenue in the years endedDecember 31, 2016 and 2015.Operating Expenses Year Ended December 31, Percentage Change2016 2015 2014 2016/2015 2015/2014(Dollars in thousands) Research and development$119,534 $58,439 $38,452 105% 52%General and administrative41,056 23,105 19,051 78% 21%Total operating expenses$160,590 $81,544 $57,503 97% 42%Total operating expenses consist of research and development ("R&D") expenses and general and administrative ("G&A") expenses. Our operating expensesfor the years ended December 31, 2016, 2015 and 2014 were $160.6 million , $81.5 million , and $57.5 million , respectively.Our R&D expenses primarily consist of personnel costs and related expenses, including share-based compensation, external costs associated with preclinicalactivities and drug development related to our drug programs, including NEOD001, PRX002, PRX003, PRX004, our discovery programs, and in 2014 includedcost of providing research services to Elan. Pursuant to our License Agreement with Roche, we make payments to Roche for our share of the developmentexpenses incurred by Roche related to PRX002 program, which is included in our R&D expense. We also recorded reimbursements from Roche for developmentand supply services based on the relative percentages as an offset to R&D expense.Our G&A expenses primarily consist of professional service expenses and personnel costs and related expenses, including share-based compensation.Research and Development ExpensesOur R&D expenses increased by $61.1 million , or 105% , for the year ended December 31, 2016 , compared to the prior year. The increase for the yearended December 31, 2016 compared to the prior year was primarily due to an increase in external expenses related to product manufacturing related to NEOD001and to a lesser extent PRX003 and PRX004 and higher clinical trial costs associated primarily with the NEOD001 program and to a lesser extent the PRX003program, higher personnel costs (including share-based compensation expenses) and higher consulting expenses.Our R&D expenses increased by $20.0 million , or 52% , for the year ended December 31, 2015 , compared to the prior year. The increase for the year endedDecember 31, 2015 compared to the prior year was primarily due to an increase in external expenses related to clinical trial costs associated with the NEOD001program and to a lesser extent the PRX003 and PRX002 programs, higher personnel costs (including share-based compensation expenses) and higher consultingexpenses, which were offset in part by lower external expenses related to product manufacturing.Our research activities are aimed at developing new drug products. Our development activities involve the translation of our research into potential newdrugs. R&D expenses include personnel costs and related expenses, external expenses associated with preclinical and drug development, materials, equipment andfacilities costs that are allocated to clearly related R&D activities.51The following table sets forth the R&D expenses for our major programs (specifically, any program with successful first dosing in a Phase 1 clinical trial,which were NEOD001, PRX002 and PRX003) and other R&D expenses for the years ended December 31, 2016, 2015 and 2014 , and the cumulative amounts todate (in thousands): Year Ended December 31, Cumulative to Date 2016 2015 2014 NEOD001 (1) $81,405 $33,872 $8,203 $150,716PRX002 (2) 6,554 7,472 9,373 44,336PRX003 (3) 15,135 8,580 13,670 49,440Other R&D (4) 16,440 8,515 7,206 $119,534 $58,439 $38,452 (1) Cumulative R&D costs to date for NEOD001 include the costs incurred from the date when the program has been separately tracked in preclinicaldevelopment. Expenditures in the early discovery stage are not tracked by program and accordingly have been excluded from this cumulative amount.(2) Cumulative R&D costs to date for PRX002 and related antibodies include the costs incurred from the date when the program has been separately tracked inpreclinical development. Expenditures in the early discovery stage are not tracked by program and accordingly have been excluded from this cumulativeamount. PRX002 cost include payments to Roche for our share of the development expenses incurred by Roche related to PRX002 programs and is net ofreimbursements from Roche for development and supply services recorded as an offset to R&D expense and, in 2014, net of $1.7 million in offset to R&Dexpenses for a portion of the $15.0 million milestone received from Roche. For the years ended December 31, 2016, 2015 and 2014 , $3.6 million , $4.9million and $2.4 million , respectively, were recorded as an offset to R&D expenses.(3) Cumulative R&D costs to date for PRX003 include the costs incurred from the date when the program has been separately tracked in preclinical development.Expenditures in the early discovery stage are not tracked by program and accordingly have been excluded from this cumulative amount.(4) Other R&D is comprised of preclinical development and discovery programs that have not progressed to first patient dosing in a Phase 1 clinical trial, and for2014 also includes research costs we incurred in providing research services to Elan.We expect our R&D expenses to increase in 2017 primarily due to increased spending for the NEOD001 program in connection with the ongoing VITALPhase 3 clinical trial and the PRONTO Phase 2b clinical trial.General and Administrative ExpensesOur G&A expenses increased by $18.0 million , or 78% , for the year ended December 31, 2016 , compared to the prior year, primarily due to higherpersonnel costs, including share-based compensation expenses (which for the year ended December 31, 2016 includes $7.7 million and $1.0 million of share-basedcompensation expense related to the accelerated vesting of stock options and payments due to our former CEO's estate upon his death and accelerated vesting ofstock options and payments due to our former Chief Commercial Officer under a separation agreement, respectively) and higher consulting expenses.Our G&A expenses increased by $4.1 million , or 21% , for the year ended December 31, 2015 , compared to the prior year, primarily due to higherpersonnel costs, including share-based compensation expenses and legal fees associated with being a growing company.We expect our G&A expenses to continue to increase in 2017 in support of our anticipated R&D growth with increases in personnel, legal and expensesassociated with commercial planning activities.Other Income (Expense) Year Ended December 31, Percentage Change2016 2015 2014 2016/2015 2015/2014(Dollars in thousands) Interest income, net$556 $196 $79 184 % 148 %Other income (expense), net15 (170) 231 (109)% (174)%Total Other Income$571 $26 $310 2,096 % (92)%52Interest income, net increased by $360,000 , or 184% , for the year ended December 31, 2016 , compared to the prior year, primarily due to $1.2 millionhigher interest income associated with higher balances in our cash and money market accounts offset by $0.9 million in interest expense associated with our built-to-suit property. Other income (expense), net for the year ended December 31, 2016 were primarily due to foreign exchange gains from transactions with vendorsdenominated in Euros.Interest income increased by $117,000 , or 148% , for the year ended December 31, 2015 , compared to the prior year, primarily due to higher balances in ourcash and money market accounts. Other income (expense), net for the year ended December 31, 2015 were primarily due to foreign exchange losses fromtransactions with vendors denominated in Euros.Provision for Income Taxes Year Ended December 31, Percentage Change2016 2015 2014 2016/2015 2015/2014(Dollars in thousands) Provision for income taxes$1,144 $701 $811 63% (14)%The tax provisions were $1.1 million , $0.7 million , and $0.8 million for the years ended December 31, 2016, 2015 and 2014 , respectively. The taxprovisions for all periods presented reflect U.S. federal taxes associated with recurring profits attributable to intercompany services that our U.S. subsidiaryperforms for the Company. No tax benefit has been recorded related to tax losses recognized in Ireland and any deferred tax assets for those losses are offset by avaluation allowance.The provision for income taxes increased by $0.4 million for the year ended December 31, 2016, compared to the prior year, due to higher profits generatedfrom our U.S. subsidiary.Liquidity and Capital ResourcesOverview December 31, 2016 2015Working capital$350,287 $355,187Cash and cash equivalents386,923 370,586Total assets459,976 385,236Total liabilities94,573 24,567Total shareholders’ equity365,403 360,669Working capital was $350.3 million as of December 31, 2016 , a decrease of $4.9 million from working capital of $355.2 million as of December 31, 2015 .This decrease in working capital during the year ended December 31, 2016 was principally attributable to higher accounts payable and accrued R&D expensespartially offset by a higher net cash and cash equivalents balance resulting from the net proceeds of $128.6 million from our public offering in January 2016.As of December 31, 2016 , we had $386.9 million in cash and cash equivalents. Although we believe, based on our current business plans, that our existingcash and cash equivalents will be sufficient to meet our obligations for at least the next twelve months, we anticipate that we will require additional capital in thefuture in order to continue the research and development of our drug candidates and preparation for commercialization. As of December 31, 2016 , $62.5 million ofour outstanding cash and cash equivalents related to U.S. operations that management asserts was permanently reinvested. We do not intend to repatriate thesefunds. However, if these funds were repatriated back to Ireland we would incur a withholding tax from the dividend distribution.We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate theamounts of increased capital outlays and operating expenses associated with completing the development of our product candidates. Our future capitalrequirements will depend on numerous factors, including, without limitation, the timing of initiation, progress, results and costs of our clinical trials; the results ofour research and preclinical studies; the costs of clinical manufacturing and of establishing commercial manufacturing arrangements; the costs of preparing, filingand prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims; the costs and timing of capital asset purchases;our ability to establish research collaborations,53strategic collaborations, licensing or other arrangements; the costs to satisfy our obligations under current and potential future collaborations; and the timing,receipt, and amount of revenues or royalties, if any, from any approved drug candidates. Pursuant to the License Agreement with Roche, in the U.S., we and Rocheshare all development and commercialization costs, as well as profits, all of which will be allocated 70% to Roche and 30% to us, for PRX002 in the Parkinson’sdisease indication, as well as any other Licensed Products and/or indications for which we opt in to co-develop and co-fund. In order to develop and obtainregulatory approval for our potential products we will need to raise substantial additional funds. We expect to raise any such additional funds through public orprivate equity or debt financings, collaborative agreements with corporate partners or other arrangements. We cannot assume that such additional financings will beavailable on acceptable terms, if at all, and such financings may only be available on terms dilutive to our shareholders.Cash Flows for the Year Ended December 31, 2016, 2015 and 2014The following table summarizes, for the periods indicated, selected items in our Consolidated Statements of Cash Flows (in thousands): Year Ended December 31, 2016 2015 2014Net cash used in operating activities$(117,269) $(62,455) $(683)Net cash used in investing activities(16,644) (1,382) (499)Net cash provided by financing activities154,306 140,844 118,084Net increase in cash, cash equivalents and restricted cash$20,393 $77,007 $116,902Cash Used in Operating ActivitiesNet cash used in operating activities was $117.3 million for the year ended December 31, 2016 , primarily due to use of $160.6 million for operatingexpenses (adjusted to exclude non-cash charges), which was partially offset by an increase in accounts payable and accrued liabilities.Net cash used in operating activities was $62.5 million for the year ended December 31, 2015 , primarily due to use of $81.5 million for operating expenses(adjusted to exclude non-cash charges), which was partially offset by an increase in accrued liabilities.Net cash used in operating activities was $0.7 million for the year ended December 31, 2014, primarily due to receipt of the upfront payment of $30.0million, the clinical milestone payment of $15.0 million and reimbursement for research and development costs of $7.0 million from Roche, recognized as revenue,offset by $57.5 million in expenses (adjusted to exclude non-cash charges) and increases in accrued liabilities.Cash Used in Investing ActivitiesNet cash used in investing activities was $16.6 million , $1.4 million and $0.5 million for the years ended December 31, 2016, 2015 and 2014 , respectively.Net cash used in investing activities for the year ended December 31, 2016 related to $16.6 million of purchases of property and equipment. Net cash used ininvesting activities for the years ended December 31, 2015 and 2014 related primarily to purchases of property and equipment.Cash Provided by Financing ActivitiesNet cash provided by financing activities was $154.3 million for the year ended December 31, 2016 , primarily from the net proceeds of $128.6 million fromour January 2016 public offering, $14.2 million from our landlord for tenant improvement allowance related to our build-to-suit lease, and $11.5 million fromissuance of ordinary shares upon exercise of stock options and excess tax benefit from stock option exercises.Net cash provided by financing activities was $140.8 million for the year ended December 31, 2015, primarily from the net proceeds of $131.5 million fromour April 2015 public offering, proceeds from issuance of ordinary shares upon exercise of stock options of $5.6 million and excess tax benefit from stock optionexercises of $3.9 million.Net cash provided by financing activities for the year ended December 31, 2014 was $118.1 million, primarily from net proceeds from our June 2014 publicoffering and to a lesser extent from issuance of ordinary shares upon exercise of stock options and excess tax benefit from stock option exercises.54Off-Balance Sheet ArrangementsAt December 31, 2016 , we were not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect onour financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.Contractual ObligationsOur main contractual obligations as of December 31, 2016 consist of minimum cash payments under a build-to-suit lease obligation of $39.0 million ,operating leases of $10.2 million , purchase obligations of $22.9 million (of which $15.2 million is included in accrued current liabilities) and contractualobligations under license agreements of $1.5 million (of which $0.1 million is included in accrued current liabilities). Purchase obligations represent our non-cancelable purchase commitments to suppliers. Operating leases represent our future minimum rental commitments under our non-cancelable operating leases.In August 2015 , we entered into an agreement to lease 6,258 square feet of office space in Dublin, Ireland. This lease has a term of 10 years fromcommencement and provides for an option to terminate the lease at the end of the fifth year of the term. It is also subject to a rent review every five years. As aresult of this noncancelable operating lease, we are obligated to make lease payments totaling approximately €2.0 million , or $2.1 million as converted using anexchange rate as of December 31, 2016 , over the term of the lease, assuming current lease payments. Of this obligation, approximately $1.9 million remainsoutstanding as of December 31, 2016 .In March 2016 , we entered into a noncancelable operating sublease to lease 128,751 square feet of office and laboratory space in South San Francisco,California. We are obligated to make lease payments totaling approximately $39.2 million over the lease term. Of this obligation, approximately $39.0 millionremains outstanding as of December 31, 2016 .The following is a summary of our contractual obligations as of December 31, 2016 (in thousands): Total 2017 2018 2019 2020 2021 ThereafterOperating leases (1) (3) $10,237 $2,235 $2,314 $2,398 $2,275 $217 $798Minimum cash payments underbuild-to-suit lease obligation (1) 39,022 3,275 4,915 5,803 5,979 6,165 12,885Purchase obligations 22,917 22,716 111 58 32 — —Contractual obligations underlicense agreements (2) 1,530 210 130 130 100 100 860Total $73,706 $28,436 $7,470 $8,389 $8,386 $6,482 $14,543 (1) See Note 7, "Commitments and Contingencies" to our consolidated financial statements.(2 ) Excludes future obligations pursuant to the cost-sharing arrangement under our License Agreement with Roche. Amounts of such obligations, if any, cannot bedetermined at this time.(3) As a result of the January 2017 Assignment of the Former SSF Facility, our operating lease commitments will be lowered by $8.4 million over the periods reflected inthe table above. In addition, we will not receive the future minimum payments from the Sublease of $0.3 million . See Note 14, Subsequent Events.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKForeign Currency RiskOur business is primarily conducted in U.S. dollars except for our agreements with contract manufacturers for clinical supplies which are denominated inEuros. We recorded a gain on foreign currency exchange rate differences of approximately $21,000 during the year ended December 31, 2016 , a loss of $170,000and a gain of $234,000 during the years ended December 31, 2015 and 2014, respectively. At this time, we do not believe that our foreign exchange risk ismaterial. However, if we continue or increase our business activities that require the use of foreign currencies, we may incur losses if the Euro and other suchcurrencies strengthen against the U.S. dollar.Interest Rate RiskOur exposure to interest rate risk is limited to our cash equivalents, which consist of accounts maintained in money market funds. We have assessed thatthere is no material exposure to interest rate risk given the nature of money market funds. In general,55money market funds are not subject to interest rate risk because the interest paid on such funds fluctuates with the prevailing interest rate. Accordingly, our interestincome fluctuates with short-term market conditions.In the future, we anticipate that our exposure to interest rate risk will primarily be related to our investment portfolio. We intend to invest any surplus fundsin accordance with a policy approved by our board of directors which will specify the categories, allocations, and ratings of securities we may consider forinvestment. The primary objectives of our investment policy are to preserve principal and maintain proper liquidity to meet our operating requirements. Ourinvestment policy also specifies credit quality standards for our investments and limits the amount of credit exposure to any single issue, issuer or type ofinvestment.Credit RiskOur receivable from Roche as of December 31, 2016 and 2015 are amounts due from Roche entities located in the U.S. and Switzerland under our LicenseAgreement with Roche. We do not believe that our credit risk is significant.Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents and accounts receivable. We place ourcash and cash equivalents with high credit quality financial institutions and pursuant to our investment policy, we limit the amount of credit exposure with any onefinancial institution. Deposits held with banks may exceed the amount of insurance provided on such deposits. We have not experienced any losses on our depositsof cash and cash equivalents.56ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageConsolidated Financial Statements: Reports of Independent Registered Public Accounting Firm58Consolidated Balance Sheets as of December 31, 2016 and 201560Consolidated Statements of Operations for the years ended December 31, 2016, 2015, and 201461Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015, and 201462Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2016, 2015, and 201463Notes to the Consolidated Financial Statements6357Report of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersProthena Corporation plc:We have audited the accompanying consolidated balance sheets of Prothena Corporation plc and subsidiaries as of December 31, 2016 and 2015 , and the relatedconsolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2016 . Theseconsolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financialstatements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basisfor our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Prothena Corporation plc andsubsidiaries as of December 31, 2016 and 2015 , and the results of their operations and their cash flows for each of the years in the three‑year period endedDecember 31, 2016 , in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Prothena Corporation plc’s internalcontrol over financial reporting as of December 31, 2016 , based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 24, 2017 expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting./s/ KPMG LLPSan Francisco, CaliforniaFebruary 24, 201758Report of Independent Registered Public Accounting FirmThe Board of Directors and StockholdersProthena Corporation plc:We have audited Prothena Corporation plc’s internal control over financial reporting as of December 31, 2016 , based on criteria established in Internal Control -Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Prothena Corporation plc’smanagement is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control overfinancial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinionon the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance withthe policies or procedures may deteriorate.In our opinion, Prothena Corporation plc maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016 , based oncriteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO).We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets ofProthena Corporation plc and subsidiaries as of December 31, 2016 and 2015 , and the related consolidated statements of operations, shareholders’ equity, and cashflows for each of the years in the three-year period ended December 31, 2016 , and our report dated February 24, 2017 expressed an unqualified opinion on thoseconsolidated financial statements./s/ KPMG LLPSan Francisco, CaliforniaFebruary 24, 201759Prothena Corporation plc and SubsidiariesConsolidated Balance Sheets(in thousands, except share and per share data) December 31, 2016 2015Assets Current assets: Cash and cash equivalents$386,923 $370,586Receivable from Roche178 509Prepaid expenses and other current assets4,261 6,308Total current assets391,362 377,403Non-current assets: Property and equipment, net56,452 3,862Deferred tax assets5,913 2,850Restricted cash4,056 —Other non-current assets2,193 1,121Total non-current assets68,614 7,833Total assets$459,976 $385,236Liabilities and Shareholders’ Equity Current liabilities: Accounts payable$13,069 $4,519Accrued research and development19,073 12,794Income taxes payable, current378 —Other current liabilities8,555 4,903Total current liabilities41,075 22,216Non-current liabilities: Income taxes payable, non-current98 98Deferred rent2,080 2,127Build-to-suit lease obligation, non-current51,320 —Other liabilities— 126Total non-current liabilities53,498 2,351Total liabilities94,573 24,567Commitments and contingencies (Note 7) Shareholders’ equity: Euro deferred shares, €22 nominal value:— —Authorized shares — 10,000 at December 31, 2016 and 2015 Issued and outstanding shares — none at December 31, 2016 and 2015 Ordinary shares, $0.01 par value:348 317Authorized shares — 100,000,000 at December 31, 2016 and 2015 Issued and outstanding shares — 34,752,116 and 31,744,102 at December 31, 2016 and 2015, respectively Additional paid-in capital654,266 489,455Accumulated deficit(289,211) (129,103)Total shareholders’ equity365,403 360,669Total liabilities and shareholders’ equity$459,976 $385,236 See accompanying Notes to Consolidated Financial Statements.60Prothena Corporation plc and SubsidiariesConsolidated Statements of Operations(in thousands, except per share data) Year Ended December 31, 2016 2015 2014Collaboration revenue $1,055 $1,607 $50,320Revenue—related party — — 534Total revenue 1,055 1,607 50,854Operating expenses: Research and development 119,534 58,439 38,452General and administrative 41,056 23,105 19,051Total operating expenses 160,590 81,544 57,503Loss from operations (159,535) (79,937) (6,649)Other income (expense): Interest income, net 556 196 79Other income (expense), net 15 (170) 231Total other income 571 26 310Loss before income taxes (158,964) (79,911) (6,339)Provision for income taxes 1,144 701 811Net loss $(160,108) $(80,612) $(7,150)Basic and diluted net loss per share $(4.66) $(2.66) $(0.29)Shares used to compute basic and diluted net loss per share 34,351 30,326 24,672See accompanying Notes to Consolidated Financial Statements.61Prothena Corporation plc and SubsidiariesConsolidated Statements of Cash Flows(in thousands) Year Ended December 31, 2016 2015 2014Operating activities Net loss$(160,108) $(80,612) (7,150)Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization2,427 806 743Share-based compensation24,929 10,414 5,597Excess tax benefit from share-based award exercises(1,019) (3,855) (242)Deferred income taxes(3,248) (963) (990)Interest expense under build-to-suit lease transaction863 — —(Gain) loss on disposal of fixed asset— 20 (19)Loss on sublease— 261 —Changes in operating assets and liabilities: Receivable from Roche331 1,220 (1,729)Receivable from related party— 30 28Prepaid and other assets3,363 (937) (2,352)Accounts payable, accruals and other liabilities15,193 11,161 5,431Net cash used in operating activities(117,269) (62,455) (683)Investing activities Purchases of property and equipment(16,644) (1,382) (526)Proceeds from disposal of fixed assets— — 27Net cash used in investing activities(16,644) (1,382) (499)Financing activities Proceeds from issuance of ordinary shares in public offering, net128,777 131,341 117,348Proceeds from issuance of ordinary shares upon exercise of stock options10,516 5,648 494Excess tax benefit from share-based award exercises1,019 3,855 242Proceeds from tenant improvement allowance under build-to-suit lease14,163 — —Reduction of build-to-suit lease obligation(169) — —Net cash provided by financing activities154,306 140,844 118,084Net increase in cash, cash equivalents and restricted cash20,393 77,007 116,902Cash, cash equivalents and restricted cash, beginning of the year370,586 293,579 176,677Cash, cash equivalents and restricted cash, end of the period$390,979 $370,586 $293,579 Supplemental disclosures of cash flow information Cash paid for income taxes, net of refunds$575 $442 $1,588 Supplemental disclosures of non-cash investing and financing activities Acquisition of property and equipment included in accounts payable and accrued liabilities$575 $185 $—Amounts capitalized under build-to-suit lease transaction$36,805 $— $—Interest capitalized during construction period for build-to-suit lease transaction$1,179 $— $—Receivable from option exercises$— $— $6Stock option shortfall$(258) $— $—Offering costs included in accounts payable and accrued liabilities$— $18 $— See accompanying Notes to Consolidated Financial Statements.62Prothena Corporation plc and SubsidiariesConsolidated Statements of Shareholders' Equity(in thousands, except share data) Ordinary Shares Additional Paid-in Capital Accumulated Deficit Total Shareholders' Equity Shares Amount Balances at December 31, 201321,856,261 219 214,392 (41,341) 173,270Issuance of ordinary shares in public offering, net of issuance costsof $5.5 million5,462,500 54 117,375 — 117,429Share-based compensation— — 5,597 — 5,597Excess tax benefit from share-based award exercises— — 242 — 242Issuance of ordinary shares upon exercise of stock options69,244 1 500 — 501Net loss— — — (7,150) (7,150)Balances at December 31, 201427,388,005 274 338,106 (48,491) 289,889Issuance of ordinary shares in public offering, net of issuance costsof $8.9 million3,795,000 38 131,443 — 131,481Share-based compensation— — 10,414 — 10,414Excess tax benefit from share-based award exercises— — 3,855 — 3,855Issuance of ordinary shares upon exercise of stock options561,097 5 5,637 — 5,642Net loss— — — (80,612) (80,612)Balances at December 31, 201531,744,102 317 489,455 (129,103) 360,669Issuance of ordinary shares in public offering, net of issuance costsof $8.5 million2,587,500 26 128,610 — 128,636Share-based compensation— — 24,929 — 24,929Excess tax benefit from share-based award exercises— — 761 — 761Issuance of ordinary shares upon exercise of stock options420,514 5 10,511 — 10,516Net loss— — — (160,108) (160,108)Balances at December 31, 201634,752,116 $348 $654,266 $(289,211) $365,403 See accompanying Notes to Consolidated Financial Statements.Notes to the Consolidated Financial Statements1.OrganizationDescription of BusinessProthena Corporation plc and its subsidiaries (“Prothena” or the “Company”) is a global, late-stage clinical biotechnology company establishing fully-integrated research, development and commercial capabilities. Fueled by its deep scientific understanding built over decades of research in protein misfolding andcell adhesion - the root causes of many serious or currently untreatable amyloid and inflammatory diseases - Prothena seeks to fundamentally change the course ofprogressive diseases associated with this biology.The Company's pipeline of antibody-based product candidates target a number of potential indications including AL amyloidosis (NEOD001), Parkinson’sdisease and other related synucleinopathies (PRX002), inflammatory diseases including psoriasis and psoriatic arthritis (PRX003) and ATTR amyloidosis(PRX004). The Company continues discovery of additional novel therapeutic candidates where its deep scientific understanding of disease pathology can beleveraged.The Company is a public limited company formed under the laws of Ireland. The Company separated from Elan Corporation, plc (“Elan”) on December 20,2012. After the separation from Elan, and the related distribution of the Company's ordinary shares to Elan’s shareholders, the Company's ordinary sharescommenced trading on The Nasdaq Global Market under the symbol “PRTA” on December 21, 2012 and currently trade on The Nasdaq Global Select Market.Liquidity and Business RisksAs of December 31, 2016 , the Company had an accumulated deficit of $289.2 million and cash and cash equivalents of $386.9 million .Based on the Company's business plans, management believes that the Company's cash and cash equivalents at December 31, 2016 are sufficient to meet itsobligations for at least the next twelve months. To operate beyond such period, or if the Company elects to increase its spending on development programssignificantly above current long-term plans or enters into potential licenses and or other acquisitions of complementary technologies, products or companies, theCompany may need additional capital. The Company expects to continue to finance future cash needs that exceed its cash from operating activities primarilythrough its current cash and cash equivalents, its collaboration with Roche, and to the extent necessary, through proceeds from public or private equity or debtfinancings, loans and other collaborative agreements with corporate partners or other arrangements.The Company is subject to a number of risks, including but not limited to: the uncertainty of the Company's research and development (“R&D”) effortsresulting in future successful commercial products; obtaining regulatory approval for its product candidates; its ability to successfully commercialize its productcandidates, if approved; significant competition from larger organizations; reliance on the proprietary technology of others; dependence on key personnel;uncertain patent protection; dependence on corporate partners and collaborators; and possible restrictions on reimbursement from governmental agencies andhealthcare organizations, as well as other changes in the healthcare industry.2.Summary of Significant Accounting PoliciesBasis of Preparation and Presentation of Financial InformationThese Consolidated Financial Statements have been prepared in accordance with the accounting principles generally accepted in the U.S. (“GAAP”) and withthe instructions for Form 10-K and Regulations S-X statements. The Consolidated Financial Statements of Prothena Corporation plc are presented in U.S. dollars,which is the functional currency of the Company. These Consolidated Financial Statements include the accounts of the Company and its consolidated subsidiaries.All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the Consolidated Financial Statements have beenreclassified to conform to the current year presentation.Use of EstimatesThe preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make judgments, estimates and assumptions thataffect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. On an ongoing basis, management evaluates its estimates,including critical accounting policies or estimates related to revenue recognition, share-based compensation and research and development expenses. The Companybases its estimates on historical experience and on various other market specific and other relevant assumptions that management believes to be reasonable underthe circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that63are not readily apparent from other sources. Because of the uncertainties inherent in such estimates, actual results may differ materially from these estimates.Significant Accounting PoliciesCash and Cash EquivalentsThe Company considers all highly liquid investments held at financial institutions, such as commercial paper, money market funds, and other money marketsecurities with original maturities of three months or less at date of purchase to be cash equivalents.Restricted CashCash accounts that are restricted to withdrawal or usage are presented as restricted cash. As of December 31, 2016 , the Company had $4.1 million ofrestricted cash held by a bank in a certificate of deposit as collateral to a standby letter of credit under a build-to-suit lease. This amount is classified as a non-current asset in the Company's Consolidated Balance Sheet. See Note 6 to the Consolidated Financial Statements regarding “Build-to-Suit Lease Accounting” formore information.Property and Equipment, netProperty and equipment, net are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets. Maintenance and repairs are charged to expense as incurred, and improvements and bettermentsare capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gainor loss is reflected in operations in the period realized. Depreciation and amortization periods for the Company’s property, plant and equipment are as follows: Useful LifeMachinery and equipment 4-7 yearsLeasehold improvements Shorter of expected useful life or lease termPurchased computer software 4 yearsBuild-to-suit property 30 yearsImpairment of Long-lived AssetsLong-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable or the estimated useful life is no longer appropriate. If circumstances require that a long-lived asset be tested for possible impairment, the Companycompares the undiscounted cash flows expected to be generated by the asset to the carrying amount of the asset. If the carrying amount of the long-lived asset is notrecoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. The Companydetermines fair value using the income approach based on the present value of expected future cash flows. The Company’s cash flow assumptions considerhistorical and forecasted revenue and operating costs and other relevant factors. There were no impairment charges recorded during the years ended December 31,2016, 2015 and 2014 .LeasesAt the inception of a lease, the Company evaluates the lease agreement to determine whether the lease is an operating, capital or build-to-suit lease using thecriteria in ASC 840, “Leases.”Certain lease agreements also require the Company to make additional payments for taxes, insurance, and other operating expenses incurred during the leaseperiod, which are expensed as incurred.Operating LeasesFor operating leases, the Company recognizes rent expense on a straight-line basis over the lease term and records the difference between cash rent paymentsand the recognition of rent expense as a deferred liability. Where lease agreements contain rent escalation clauses, rent abatements and/or concessions, such as rentholidays, the Company applies them on a straight-line basis over the lease term. Tenant improvement allowances are recorded as a deferred rent liability and areamortized over the term of the lease as a reduction to rent expense.Build-to-Suit LeasesIn certain lease arrangements, the Company is involved in the construction of the building. To the extent the Company is involved with the structuralimprovements of the construction project or takes construction risk prior to the commencement of a64lease, ASC 840-40, “Leases – Sale-Leaseback Transactions (Subsection 05-5),” requires the Company to be considered the owner for accounting purposes of thesetypes of projects during the construction period. Therefore, the Company records an asset in property and equipment, net on the Consolidated Balance Sheets,including capitalized interest costs, for the replacement cost of the pre-existing building plus the amount of estimated construction costs and tenant improvementsincurred by the landlord and the Company as of the balance sheet date. The Company records a corresponding build-to-suit lease obligation on its ConsolidatedBalance Sheets representing the amounts paid by the lessor.Once construction is completed, the Company considers the requirements for sale-leaseback accounting treatment, including evaluating whether all risks ofownership have been transferred back to the landlord, as evidenced by a lack of continuing involvement in the leased property. If the arrangement does not qualifyfor sale-leaseback accounting treatment, the building asset remains on the Company’s Consolidated Balance Sheets at its historical cost, and such asset isdepreciated over its estimated useful life. The Company bifurcates its lease payments into a portion allocated to the building and a portion allocated to the parcel ofland on which the building has been built. The portion of the lease payments allocated to the land is treated for accounting purposes as operating lease payments,and therefore is recorded as rent expense in the consolidated statements of operations. The portion of the lease payments allocated to the building is furtherbifurcated into a portion allocated to interest expense and a portion allocated to reduce the build-to-suit lease obligation. The interest rate used for the build-to-suitlease obligation represents the Company’s estimated incremental borrowing rate at inception of the lease, adjusted to reduce any built in loss. The initial recordingof these assets and liabilities is classified as non-cash investing and financing items, respectively, for purposes of the consolidated statements of cash flows.Revenue RecognitionRevenue is recognized when earned and non-refundable, when payment is reasonably assured, and when there is no future obligation with respect to therevenue, in accordance with the terms prescribed in the applicable contract.Multiple Element ArrangementsThe Company's revenues are generated primarily through its license, development and commercialization agreement. These types of agreements generallycontain multiple elements, or deliverables, which may include (i) licenses to the Company's technology, (ii) R&D activities to be performed on behalf of thecollaborative partner, and (iii) in certain cases, services or obligations in connection with the manufacturing or supply of preclinical and clinical material. Paymentsto the Company under these arrangements typically include one or more of the following: non-refundable, upfront license fees; funding of research and/ordevelopment efforts; milestone payments; and royalties on future product sales.Revenue under license, development and commercialization agreements is recognized based on the performance requirements of the contract. Determinationsof whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments.The Company recognizes revenue related to license, development and commercialization agreements in accordance with the provisions of FinancialAccounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 605-25 , “Revenue Recognition - Multiple-Element Arrangements.”The Company evaluates all deliverables within an arrangement to determine whether or not they provide value on a stand-alone basis. Based on this evaluation, thedeliverables are separated into units of accounting. The arrangement consideration that is fixed or determinable at the inception of the arrangement is allocated tothe separate units of accounting based on their relative selling prices.To determine the selling price of a separate deliverable, the Company uses the hierarchy as prescribed in ASC Topic 605-25 based on vendor-specificobjective evidence (VSOE), third-party evidence (TPE) or best estimate of selling price (BESP). VSOE is based on the price charged when the element is soldseparately and is the price actually charged for that deliverable. TPE is determined based on third party evidence for a similar deliverable when sold separately andBESP is the estimated selling price at which the Company would transact a sale if the elements of collaboration and license arrangements were sold on a stand-alone basis to the buyer.Payments or full reimbursements resulting from the Company's R&D efforts for those arrangements where such efforts are considered as deliverables arerecognized as the services are performed and are presented on a gross basis so long as there is persuasive evidence of an arrangement, the fee is fixed ordeterminable, and collection of the related receivable is reasonably assured. However, such funding is recognized as a reduction of R&D expense when theCompany engages in a R&D project jointly with another entity, with both entities participating in project activities and sharing costs and potential benefits of theproject.Milestone RevenueThe Company accounts for milestones under ASU No. 2010-17 , Milestone Method of Revenue Recognition. Under the milestone method, contingentconsideration received from the achievement of a substantive milestone is recognized in its entirety65in the period in which the milestone is achieved. A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity’sperformance or on the occurrence of a specific outcome resulting from the entity’s performance, (ii) for which there is substantive uncertainty at the date thearrangement is entered into that the event will be achieved, and (iii) that would result in additional payments being due to the entity. At the inception of anagreement that includes milestone payments, the Company evaluates whether each milestone is substantive and at risk to both parties on the basis of the contingentnature of the milestone. This evaluation includes an assessment of whether (a) the consideration is commensurate with either (1) the entity’s performance toachieve the milestone, or (2) the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity’s performance toachieve the milestone, (b) the consideration relates solely to past performance, and (c) the consideration is reasonable relative to all of the deliverables and paymentterms within the arrangement. The Company evaluates factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve aparticular milestone, the level of effort and investment required to achieve such milestone and whether the milestone consideration is reasonable relative to alldeliverables and payment terms in the arrangement in making this assessment.The Company generally classifies each of its milestones into one of three categories: (i) clinical milestones, (ii) regulatory and development milestones, and(iii) commercial milestones. Clinical milestones are typically achieved when a product candidate advances into or completes a defined phase of clinical research.For example, a milestone payment may be due to the Company upon the initiation of a clinical trial for a new indication. Regulatory and development milestonesare typically achieved upon acceptance of the submission for marketing approval of a product candidate or upon approval to market the product candidate by theFDA or other regulatory authorities. For example, a milestone payment may be due to the Company upon filing of a BLA with the FDA. Commercial milestonesare typically achieved when an approved pharmaceutical product reaches certain defined levels of net royalty sales by the licensee of a specified amount within aspecified period.Commercial milestone payments and milestone payments that are not deemed to be substantive will be accounted for as a contingent revenue payment withrevenue recognized when all contingencies are lifted, which is expected to be upon achievement of the milestone, assuming all revenue recognition criteria are met.Profit Share RevenueFor agreements, with profit sharing arrangements, the Company will record its share of the pre-tax commercial profit as collaboration revenue when the profitsharing can be reasonably estimated and collectability is reasonably assured.Royalty RevenueThe Company will recognize revenue from royalties based on licensees' sales of the Company's products or products using the Company's technologies.Royalties are recognized as earned in accordance with the contract terms when royalties from licensees can be reasonably estimated and collectability is reasonablyassured.Research and DevelopmentResearch and development costs are expensed as incurred and include, but are not limited to, salary and benefits, share-based compensation, clinical trialactivities, drug development and manufacturing prior to FDA and other regulatory approval and third-party service fees, including clinical research organizationsand investigative sites. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion ofspecific tasks using data such as patient enrollment, clinical site activations, or information provided to the Company by its vendors on their actual costs incurred.The objective of the Company's accrual policy is to match the recording of the expenses in its Consolidated Financial Statements to the actual services received andefforts expended. As such, expense accruals related to clinical trials are recognized based on its estimate of the degree of completion of the events specified in thespecific clinical study or trial contract. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern ofcosts incurred, and are reflected in the Consolidated Financial Statements as prepaid or accrued research and development. Amounts due may be fixed fee, fee forservice, and may include upfront payments, monthly payments, and payments upon the completion of milestones or receipt of deliverables.Acquired In-Process Research and Development ExpenseThe Company has acquired and may continue to acquire the rights to develop and commercialize new drug candidates from third parties. The upfrontpayments to acquire license, product or rights, as well as any future milestone payments, are immediately expensed as research and development provided that thedrug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.66Share-based CompensationTo determine the fair value of share-based payment awards, the Company uses the Black-Scholes option-pricing model. The determination of fair value usingthe Black-Scholes option-pricing model is affected by the Company’s share price as well as assumptions regarding a number of complex and subjective variables.Share-based compensation expense is recognized on a straight-line basis over the requisite service period for each award. Further, share-based compensationexpense recognized in the Consolidated Statements of Operations is based on awards expected to vest and therefore the amount of expense has been reduced forestimated forfeitures. If actual forfeitures differ from estimates at the time of grant they will be revised in subsequent periods. The Company bases its assumptionson historical data when available or when not available, on a peer group of companies. If factors change and different assumptions are employed in determining thefair value of share-based awards, the share-based compensation expense recorded in future periods may differ significantly from what was recorded in the currentperiod (see Note 10 for further information).Income TaxesThe Company files its own U.S. and foreign income tax returns and income taxes are presented in the Consolidated Financial Statements using the asset andliability method prescribed by the accounting guidance for income taxes. Deferred tax assets (“DTAs”) and liabilities are determined based on the differencebetween the financial statement and tax basis of assets and liabilities using the enacted tax rates projected to be in effect for the year in which the differences areexpected to reverse. Net deferred tax assets are recorded to the extent the Company believes that these assets will more likely than not be realized. In making suchdetermination, all available positive and negative evidence is considered, including scheduled reversals of deferred tax liabilities, projected future taxable income,tax planning strategies and recent financial operations.Estimates are required in determining the Company’s provision for income taxes. Some of these estimates are based on management’s interpretations ofjurisdiction-specific tax laws or regulations. Various internal and external factors may have favorable or unfavorable effects on the future effective income tax rateof the business. These factors include, but are not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws orregulations, changes in estimates of prior years’ items, past and future levels of R&D spending and changes in overall levels of income before taxes.The tax benefit from an uncertain tax position is recognized only if it is more likely than not the tax position will be sustained on examination by the taxingauthorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on thelargest benefit that has a greater than 50% likelihood of being realized upon settlement. Changes in recognition or measurement are reflected in the period in whichthe change in judgment occurs. Interest and penalties related to unrecognized tax benefits are accounted for in income tax expense.Net Income (loss) per Ordinary ShareBasic net income (loss) per ordinary share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number ofordinary shares outstanding during the period. Diluted net income per ordinary share is computed by giving effect to all dilutive potential ordinary shares includingoptions. However, potentially issuable ordinary shares are not used in computing diluted net loss per ordinary share as their effect would be anti-dilutive due to theloss recorded. In this case, diluted net loss per share is equal to basic net loss per share.Comprehensive LossComprehensive income (loss) is comprised of net income (loss) and other comprehensive income (loss). The Company has no components of othercomprehensive income (loss). Therefore net income (loss) equals comprehensive income (loss) for all periods presented and, accordingly, the ConsolidatedStatements of Comprehensive Income (Loss) is not presented in a separate statement.Segment and Concentration of RisksThe Company operates in one segment. The Company’s chief operating decision maker (the “CODM”), its Chief Executive Officer, manages the Company’soperations on a consolidated basis for purposes of allocating resources. When evaluating the Company’s financial performance, the CODM reviews all financialinformation on a consolidated basis.Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and accounts receivable. TheCompany places its cash equivalents with high credit quality financial institutions and by policy, limits the amount of credit exposure with any one financialinstitution. Deposits held with banks may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its depositsof cash and cash equivalents and its credit risk exposure is up to the extent recorded on the Company's consolidated balance sheet.67Receivable from Roche as of December 31, 2016 and 2015 are amounts due from Roche entities located in the U.S. and Switzerland under the LicenseAgreement that became effective January 22, 2014. Revenue recorded in the Statements of Operations consists of collaboration revenue related to the upfrontpayment from Roche under the License Agreement, payment from Roche upon achievement of a clinical milestone and reimbursement for research anddevelopment services and fees earned from the provision of nonclinical research support to Elan, primarily in the areas of safety, toxicology and regulatory. Creditrisk exposure is up to the extent recorded on the Company's Consolidated Balance Sheet.As of December 31, 2016, $55.7 million of the Company's long-lived assets were held in the U.S. and $0.8 million were in Ireland. As of December 31,2015, $3.1 million of the Company's long-lived assets were held in the U.S. and $0.8 million were in Ireland. As of December 31, 2014, all of the Company's long-lived assets were held in the U.S.The Company does not own or operate facilities for the manufacture, packaging, labeling, storage, testing or distribution of preclinical or clinical supplies ofany of its drug candidates. The Company instead contracts with and rely on third-parties to manufacture, package, label, store, test and distribute all pre-clinicaldevelopment and clinical supplies of our drug candidates, and it plans to continue to do so for the foreseeable future. The Company also relies on third-partyconsultants to assist in managing these third-parties and assist with its manufacturing strategy.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09 (ASU 2014-09), Revenue from Contractswith Customers. ASU 2014-09 supersedes the revenue recognition requirements in Revenue Recognition (Topic 605). The new standard requires an entity torecognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. To achieve that core principle, anentity must identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transactionprice to the performance obligations in the contract, and recognize revenue when (or as) the entity satisfies the performance obligation. ASU 2014-09 is effectivefor annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is January 1, 2018.Early adoption is permitted after January 1, 2017. The standard allows for two transition methods - retrospectively to each prior reporting period presented orretrospectively with the cumulative effect of initially applying the standard recognized at the date of initial adoption. The Company expects to adopt therequirements of the new standard effective January 1, 2018 using the retrospective with the cumulative effect transition method. In March 2016, the FASB issuedASU No. 2016-08 “Revenue from Contracts with Customers: Principal vs. Agent Considerations,” to help provide interpretive clarifications on the new guidancefor ASC Topic 606. In April 2016, the FASB issued ASU No. 2016-10 “Revenue from Contracts with Customers: Identifying Performance Obligations andLicensing” to clarify the guidance for identifying performance obligations and accounting for licenses of intellectual property. In May 2016, the FASB issued ASUNo. 2016-12 “Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients,” to improve the guidance on collectibility, noncashconsideration, and completed contracts at transition. The Company continues to evaluate the impact that the adoption of these standards will have on itsconsolidated financial statements in connection with the Roche License Agreement.In February 2016, the FASB issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (ASC Topic 842), which will require lessees to recognizeassets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation ofexpenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP,which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet.ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted for all entities.The standard requires that entities use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparativeperiod in the financial statements. Entities have the option to use certain relief. Full retrospective application is prohibited. Note 7 Commitments and Contingenciesprovides details on the Company's current lease arrangements. The Company is evaluating the provisions of ASC Topic 842 to determine the impact the adoptionof ASU 2016-02 will have on its consolidated financial statements however, the Company anticipates recognition of additional assets and corresponding liabilitiesrelated to leases on its consolidated balance sheets.In March 2016, the FASB issued Accounting Standards Update 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting,which modifies certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards, and classification in thestatement of cash flows. Currently, excess tax benefits or deficiencies from the Company's equity awards are recorded as additional paid-in capital in itsConsolidated Balance Sheets. Upon adoption, the Company will record any excess tax benefits or deficiencies from its equity awards in its ConsolidatedStatements of Operations in the reporting periods in which stock options are exercised. This guidance also requires excess tax benefits and deficiencies to bepresented as an operating activity on the statement of cash flows and allows an entity to make an accounting policy election to either estimate expected forfeituresor to account for them as they occur. The ASU is effective for reporting periods beginning after December 15, 2016, with early adoption permitted. The Companywill adopt this ASU in the first quarter of 2017. Since the68Company has a valuation allowance on certain of its U.S. deferred tax assets as of December 31, 2016 the Company does not expect an impact on its retainedearnings upon adoption. The Company will continue to estimate expected forfeitures upon adoption. Subsequent to adoption the Company's income tax expensewill be impacted by fluctuations in stock price between the grant dates and the exercise dates of its option awards.In August 2016, the FASB issued Accounting Standards Update 2016-15 (ASU 2016-15), Statement of Cash Flows - Classification of Certain Cash Receiptsand Cash Payments, which clarifies existing guidance related to accounting for cash receipts and cash payments and classification of statement of cash flow. Thisguidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The Company isevaluating the impact the adoption of ASU 2016-15 will have on its consolidated financial statements.In November 2016, the FASB issued Accounting Standards Update 2016-18 (ASU 2016-18), Statement of Cash Flows - Restricted Cash. Under the newguidance, the statement of cash flows will show the changes in the total cash, cash equivalents and amounts generally described as restricted cash. As a result,entities will no longer have to determine how to classify transfers to or from restricted cash within the statement of cash flows. An entity will be required toreconcile the total cash, cash equivalents and amounts generally described as restricted cash on the statement of cash flows to amounts in the balance sheet anddisclose the nature of any restriction on its cash, cash equivalents or amounts generally described as restricted cash. This guidance is effective for fiscal years, andinterim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The guidance will be applied retrospectively. If it isimpractical for an entity to do so, the entity will apply the guidance prospectively as of the earliest date that is practicable. The Company early adopted ASU 2016-18 in the three months ended December 31, 2016. The presentation was adjusted for all years presented, and as a result all periods presented in the statement ofcash flows now include restricted cash along with cash and cash equivalents.3.Fair Value MeasurementsThe Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents. Fair value is an exit price,representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fairvalue is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:Level 1 — Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.Level 2 —Include other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instrumentsin markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can bederived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a presentvalue using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.Level 3 —Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions.The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fairvalue. The carrying amounts of certain financial instruments, such as cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximatefair value due to their relatively short maturities, and low market interest rates, if applicable.Based on the fair value hierarchy, the Company classifies its cash equivalents within Level 1. This is because the Company values its cash equivalents usingquoted market prices. The Company’s Level 1 securities consist of $307.3 million and $320.5 million in money market funds included in cash and cash equivalentsat December 31, 2016 and 2015 , respectively.4.Composition of Certain Balance Sheet ItemsProperty and Equipment, netProperty and equipment, net consisted of the following (in thousands): December 31, 2016 2015Machinery and equipment$9,629 $6,210Leasehold improvements2,769 2,828Purchased computer software363 167Build-to-suit property51,359 — 64,120 9,205Less: accumulated depreciation and amortization(7,668) (5,343)Property and equipment, net$56,452 $3,862Depreciation expense was $2.4 million , $0.8 million and $0.7 million for the years ended December 31, 2016, 2015 and 2014 , respectively. Thedepreciation expense for the year ended December 31, 2016 includes incremental depreciation of $1.2 million associated with the acceleration of the useful life ofcertain leasehold improvements and other assets that were at the Company's former South San Francisco facility. See Note 7, Commitments and Contingencies.Other Current LiabilitiesOther current liabilities consisted of the following (in thousands): December 31, 2016 2015Payroll and related expenses$6,629 $3,774Professional services435 325Deferred rent363 284Other1,128 520Other current liabilities$8,555 $4,9035.Net Loss Per Ordinary ShareBasic net income (loss) per ordinary share is calculated by dividing net income (loss) by the weighted-average number of ordinary shares outstanding duringthe period. Shares used in diluted net income per ordinary share would include the dilutive effect of ordinary shares potentially issuable upon the exercise of stockoptions outstanding. However, potentially issuable ordinary shares are not used in computing diluted net loss per ordinary share as their effect would be anti-dilutive due to the loss recorded during the years ended years ended December 31, 2016, 2015 and 2014 , and therefore diluted net loss per share is equal to basicnet loss per share.Net loss per ordinary share was determined as follows (in thousands, except per share amounts): Year Ended December 31, 2016 2015 2014Numerator: Net loss$(160,108) $(80,612) $(7,150)Denominator: Weighted-average ordinary shares outstanding34,351 30,326 24,672Net loss per share: Basic and diluted net loss per share$(4.66) $(2.66) $(0.29)The equivalent ordinary shares not included in diluted net loss per share because their effect would be anti-dilutive are as follows (in thousands):69 Year Ended December 31, 2016 2015 2014Stock options to purchase ordinary shares4,064 3,142 2,6126. Build-to-Suit LeaseIn March 2016 , the Company entered into a noncancelable operating sublease (the "Lease") to lease 128,751 square feet of office and laboratory space inSouth San Francisco, California (the “Current SSF Facility”). Subsequently, in April 2016, the Company took possession of the Current SSF Facility. The Leaseincludes a free rent period and escalating rent payments and has a term that expires on December 31, 2023 , unless terminated earlier. The Company's obligation topay rent commenced on August 1, 2016. The Company is obligated to make lease payments totaling approximately $39.2 million over the lease term. The Leasefurther provides that the Company is obligated to pay to the sublandlord and master landlord certain costs, including taxes and operating expenses. Expected futurelease payments under the build-to-suit lease as of December 31, 2016 are included in Note 7, “Commitments and Contingencies.”In connection with this Lease, the Company received a tenant improvement allowance of $14.2 million from the sublandlord and the master landlord, for thecosts associated with the design, development and construction of tenant improvements for the Current SSF Facility. The Company is obligated to fund all costsincurred in excess of the tenant improvement allowance. The scope of the tenant improvements did not qualify as “normal tenant improvements” under the leaseaccounting guidance. Accordingly, for accounting purposes, the Company is the deemed owner of the building during the construction period and the Companycapitalized $36.5 million within property and equipment, net, including $1.2 million for capitalized interest and recognized a corresponding build-to-suit obligationin other non-current liabilities in the Consolidated Balance Sheets as of December 31, 2016 . The Company has also recognized structural and non-structural tenantimprovements totaling $14.9 million for the year ended December 31, 2016 as an addition to the build-to-suit lease property for amounts incurred by the Companyduring the construction period, of which $14.2 million were reimbursed by the landlord during the year ended December 31, 2016 through the tenant improvementallowance. The Company increased its financing obligation for the additional building costs reimbursements received from the landlord during the constructionperiod. In addition, for the year ended December 31, 2016 , the Company recorded rent expense associated with the ground lease of $0.4 million in theConsolidated Statements of Operations. Total interest, which represents the cost of financing obligation under the Lease agreement, was $2.0 million for the yearended December 31, 2016 , of which $0.9 million was recognized within the Consolidated Statement of Operations.During the fourth quarter of 2016, construction on the build-to-suit lease property was substantially completed and the build-to-suit lease property wasplaced in service. As such, the Company evaluated the Lease to determine whether it had met the requirements for sale-leaseback accounting, including evaluatingwhether all risks of ownership have been transferred back to the landlord, as evidenced by a lack of continuing involvement in the build-to-suit lease property. TheCompany determined that the construction project did not qualify for sale-leaseback accounting and will instead be accounted for as a financing lease, given theCompany’s expected continuing involvement after the conclusion of the construction period. As a result, the build-to-suit lease property remains on the Company’sConsolidated Balance Sheets as of December 31, 2016 at its historical cost of $51.4 million and is being depreciated over its estimated useful life starting in thefourth quarter of 2016. As of December 31, 2016, the total amount of the build-to-suit lease obligation was $51.3 million , which is classified as a non-currentliability on the Consolidated Balance Sheets. The Company expects to derecognize the build-to-suit lease property and financing lease obligation at the end of thelease term.The Company obtained a standby letter of credit in April 2016 in the initial amount of $4.1 million , which may be drawn down by the sublandlord in theevent the Company fails to fully and faithfully perform all of its obligations under the Lease and to compensate the sublandlord for all losses and damages thesublandlord may suffer as a result of the occurrence of any default on the part of Company not cured within the applicable cure period. This standby letter of creditis collateralized by a certificate of deposit of the same amount which is classified as restricted cash. As of December 31, 2016 , none of the standby letter of creditamount has been used.7.Commitments and ContingenciesLease CommitmentsDublinIn August 2015 , the Company entered into an agreement to lease 6,258 square feet of office space in Dublin, Ireland. This lease has a term of 10 years fromcommencement and provides for an option to terminate the lease at the end of the fifth year of the term. It is also subject to a rent review every five years. As aresult of this noncancelable operating lease, the Company is obligated to make lease payments totaling approximately €2.0 million , or $2.1 million as convertedusing exchange rate as of December 31, 2016 , over the term of the lease, assuming current lease payments. Of this obligation, approximately $1.9 million remainsoutstanding as of December 31, 2016 .Former SSF FacilityAs of December 31, 2016, the Company leased 50,400 square feet of office and research and development space located South San Francisco, California (the“Former SSF Facility”), which lease expires on November 30, 2020 . The operating lease for the Former SSF Facility has an annual rent payment of approximately$2.1 million .In December 2014 , the Company entered into a noncancelable operating sublease (the "Sublease") with a third party to sublease a portion of its Former SSFFacility to that party. This Sublease has a three -year term which commenced in January702015 , with options to extend for another year. The Company recognized a loss of $0.4 million in 2015 for the cash difference between the total paymentsassociated with the lease, including executory costs, and the amount of Sublease rental receipts over the Sublease term.In July 2016, the Company, entered into an Agreement to Assign Lease (the “Assignment Agreement”) with Merck Sharp & Dohme Corp. (“Merck”), awholly owned subsidiary of Merck & Co., Inc., under which the Company agreed to assign to Merck, and Merck agreed to assume from the Company, all of theCompany’s right, title and interest as tenant in the lease for the Former SSF Facility.In addition, the Company, Merck and the landlord for the Former SSF Facility entered into a Consent to Assignment and Amendment to Lease, effective asof July 5, 2016, pursuant to which the landlord consented to the Assignment Agreement and the assignment by the Company and the assumption by Merck of theCompany's interest as tenant in the lease to the Former SSF Facility (the “Assignment”), and agreed to release the Company from all of its obligations as tenantunder the lease of the Former SSF Facility including under that certain Guaranty of Lease dated as of December 21, 2012, that accrue after the Assignment.Under the Assignment Agreement, Merck will pay to the Company the amount of $500,000 as consideration for the assignment of the Company’s interest astenant in the lease and the amount of $100,000 as consideration for the Company’s transfer to Merck of certain furniture, fixtures and equipment located at theFormer SSF Facility. Under the Assignment Agreement, the Assignment will occur five ( 5 ) business days after the date when the Company provides writtennotice to Merck that the Company has vacated and decommissioned the Former SSF Facility and certain other customary conditions are satisfied. The Companyvacated the Former SSF Facility in December 2016 when it moved to the Current SSF Facility.In connection with the Company's pending Assignment of the Former SSF Facility, the Company accelerated depreciation related to the leaseholdimprovements and certain assets that were expected to remain at the Former SSF Facility. The incremental depreciation associated with acceleration of the usefullife was $1.2 million for the year ended December 31, 2016 . The Assignment occurred in January 2017.Future minimum payments under the above-described noncancelable operating leases and future minimum rentals to be received under the Sublease as ofDecember 31, 2016 , are as follows (in thousands):Year Ended December 31, Operating Leases 1 Sublease Rental 12017 $2,235 $(316)2018 2,314 —2019 2,398 —2020 2,275 —2021 217 —Thereafter 798 —Total $10,237 $(316) (1) As a result of the January 2017 Assignment of the Former SSF Facility, the Company's operating lease commitments will be lowered by $8.4 million overthe periods reflected in the table above. In addition, the Company will not receive the future minimum payments from this Sublease of $0.3 million . See Note14, Subsequent Events.The Company recognizes rent expense for its operating leases on a straight-line basis over the noncancelable lease term and records the difference betweencash rent payments and the recognition of rent expense as a deferred rent liability. Where leases contain escalation clauses, rent abatements, and/or concessions,such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line rent expense over the leaseterm. The Company records the tenant improvement allowance for operating leases as deferred rent and associated expenditures as leasehold improvements that arebeing amortized over the shorter of their estimated useful life or the term of the lease. The Company records payments received from the Sublease as offset againstthe current period rent expense. Rent expense was $2.2 million , $1.9 million , and $1.8 million for the years ended December 31, 2016, 2015 and 2014,respectively .Current SSF FacilityIn March 2016 , the Company entered into a noncancelable operating sublease of 128,751 square feet of office and laboratory space in South San Francisco,California (the “Current SSF Facility”) which expires in December 31, 2023 . The Company is71considered the "accounting owner" of the Current SSF Facility as a build-to-suit property and has recorded a build-to-suit lease obligation on its consolidatedbalance sheet. Additional information regarding the build-to-suit lease is included in Note 6. "Build-To-Suit Lease." Future minimum payments under build-to-suitlease obligation as of December 31, 2016 , are as follows (in thousands):Year Ended December 31, Expected CashPayments Under Build-To-Suit LeaseObligation2017 $3,2752018 4,9152019 5,8032020 5,9792021 6,165Thereafter 12,885Total $39,022Indemnity ObligationsThe Company has entered into indemnification agreements with its current, and former, directors and officers and certain key employees. These agreementscontain provisions that may require the Company, among other things, to indemnify such persons against certain liabilities that may arise because of their status orservice and advance their expenses incurred as a result of any indemnifiable proceedings brought against them. The obligations of the Company pursuant to theindemnification agreements continue during such time as the indemnified person serves the Company and continues thereafter until such time as a claim can bebrought. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited;however, the Company has a director and officer liability insurance policy that limits its exposure and enables the Company to recover a portion of any futureamounts paid. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal.Accordingly, the Company had no liabilities recorded for these agreements as of December 31, 2016 and 2015 .Other CommitmentsIn the normal course of business, the Company enters into various firm purchase commitments primarily related to research and development activities. As ofDecember 31, 2016 , the Company had non-cancelable purchase commitments to suppliers for $22.9 million of which $15.2 million is included in accrued currentliabilities, and contractual obligations under license agreements of $1.5 million of which $0.1 million is included in accrued current liabilities. The following is asummary of the Company's non-cancelable purchase commitments and contractual obligations as of December 31, 2016 (in thousands): Total 2017 2018 2019 2020 2021 ThereafterPurchase Obligations $22,917 $22,716 $111 $58 $32 $— $—Contractual obligations under licenseagreements (1) 1,530 210 130 130 100 100 860Total $24,447 $22,926 $241 $188 $132 $100 $860 (1) Excludes future obligations pursuant to the cost-sharing arrangement under the Company's License Agreement with Roche. Amounts of such obligations, ifany, cannot be determined at this time.8.Roche License AgreementOverviewIn December 2013 , the Company entered into the License Agreement with Roche to develop and commercialize certain antibodies that target α- synuclein,including PRX002, which are referred to collectively as “Licensed Products.” Upon the effectiveness of the License Agreement in January 2014, the Companygranted to Roche an exclusive, worldwide license to develop, make, have made, use, sell, offer to sell, import and export the Licensed Products. The Companyretained certain rights to conduct development of the Licensed Products and an option to co-promote PRX002 in the U.S. During the term of the LicenseAgreement, the Company and Roche will work exclusively with each other to research and develop antibody products targeting α- synuclein72potentially including incorporation of Roche’s proprietary Brain Shuttle™ technology to potentially increase delivery of therapeutic antibodies to the brain. TheLicense Agreement provides that Roche would make an upfront payment to the Company of $30.0 million , which was received in February 2014, and the clinicalmilestone payment of $15.0 million triggered by the initiation of the Phase 1 study for PRX002 in the clinic, which was received in May 2014.For PRX002, Roche is also obligated to pay:• up to $380.0 million upon the achievement of development, regulatory and various first commercial sales milestones;• up to an additional $175.0 million in ex-U.S. commercial sales milestones; and• tiered, high single-digit to high double-digit royalties in the teens on ex-U.S. annual net sales, subject to certain adjustments.Roche bears 100% of the cost of conducting the research activities under the License Agreement. In the U.S., the parties will share all development andcommercialization costs, as well as profits, all of which will be allocated 70% to Roche and 30% to the Company, for PRX002 in the Parkinson’s diseaseindication, as well as any other Licensed Products and/or indications for which the Company opts in to participate in co-development and co-funding. After thecompletion of specific clinical trial activities, the Company may opt out of the co-development and cost and profit sharing on any co-developed Licensed Productsand instead receive U.S. commercial sales milestones totaling up to $155.0 million and tiered, single-digit to high double-digit royalties in the teens based on U.S.annual net sales, subject to certain adjustments, with respect to the applicable Licensed Product.The Company filed an Investigational New Drug Application ("IND") with the FDA for PRX002 and subsequently initiated a Phase 1 study in 2014.Following the Phase 1 study, Roche will be primarily responsible for developing, obtaining and maintaining regulatory approval for, and commercializing LicensedProducts. Roche will also become responsible for the clinical and commercial manufacture and supply of Licensed Products within a defined time period followingthe effective date of the License Agreement.In addition, the Company has an option under the License Agreement to co-promote PRX002 in the U.S. in the Parkinson’s disease indication. If theCompany exercises such option, it may also elect to co-promote additional Licensed Products in the U.S. approved for Parkinson’s disease. Outside the U.S.,Roche will have responsibility for developing and commercializing the Licensed Products. Roche bears all costs that are specifically related to obtaining ormaintaining regulatory approval outside the U.S. and will pay the Company a variable royalty based on annual net sales of the Licensed Products outside the U.S.While Roche will record product revenue from sales of the Licensed Products, the Company and Roche will share in the net profits and losses of sales of thePRX002 for the Parkinson's disease indication in the U.S. on a 70% / 30% basis with the Company receiving 30% of the profit and losses provided that theCompany has not exercised its opt-out right.The License Agreement continues on a country-by-country basis until the expiration of all payment obligations under the License Agreement. The LicenseAgreement may also be terminated (i) by Roche at will after the first anniversary of the effective date of the License Agreement, either in its entirety or on aLicensed Product-by-Licensed Product basis, upon 90 days’ prior written notice to the Company prior to first commercial sale and 180 days’ prior written notice toProthena after first commercial sale, (ii) by either party, either in its entirety or on a Licensed Product-by-Licensed Product or region-by-region basis, upon writtennotice in connection with a material breach uncured 90 days after initial written notice, and (iii) by either party, in its entirety, upon insolvency of the other party.The License Agreement may be terminated by either party on a patent-by-patent and country-by-country basis if the other party challenges a given patent in a givencountry. The Company’s rights to co-develop Licensed Products under the License Agreement will terminate if the Company commences certain studies for certaintypes of competitive products. The Company’s rights to co-promote Licensed Products under the License Agreement will terminate if the Company commences aPhase 3 study for such competitive products.The License Agreement cannot be assigned by either party without the prior written consent of the other party, except to an affiliate of such party or in theevent of a merger or acquisition of such party, subject to certain conditions. The License Agreement also includes customary provisions regarding, among otherthings, confidentiality, intellectual property ownership, patent prosecution, enforcement and defense, representations and warranties, indemnification, insurance,and arbitration and dispute resolution.Collaboration AccountingThe License Agreement was evaluated under ASC 808, "Collaborative Agreements". At the outset of the contract, the Company concluded that thisagreement does not qualify as a collaboration under ASC 808 as a result of the Company not sharing significant risks due to the net profit and loss split whereRoche incurs substantially more of the costs of the collaboration as well as the Company's opt-out provision. The Company believes that Roche is the principal inthe sales transactions with third parties73as it is the primary obligor, bearing inventory and credit risk. The Company will record its share of pre-tax commercial profit generated from the collaboration withRoche, as collaboration revenue when the profit share can be reasonably estimated and collectability is reasonably assured. Prior to commercialization of aLicensed Product, the Company's portion of the expenses related to the License Agreement reflected on its income statement will be limited to R&D expenses.After commercialization, if the Company opts-in to co-detail commercialization expenses related to commercial capabilities, including the establishment of a fieldsales force and other activities to support the Company’s commercialization efforts, will be recorded as SG&A expense and will be factored into the computationof the profit and loss share. The Company will record the portion of the net receivable related to commercialization activities as collaboration revenue.Multiple Element AccountingThe License Agreement was evaluated under ASC 605-25, "Multiple Element Arrangements". The License Agreement includes the following deliverables:(1) an exclusive royalty bearing license, with the right to sublicense to develop and commercialize certain antibodies that target α- synuclein, including PRX002delivered at the effective date; (2) the Company's obligation to supply clinical material as requested by Roche for a period up to twelve months; (3) the Company'sobligation to provide manufacturing related services to Roche for a period up to twelve months; (4) the Company's obligation to provide development activitiesunder the development plan including the preparation and filing of the IND and initiation of the Phase I clinical trial estimated to be carried out over the next twoyears; and (5) the Company's obligation to provide indeterminate research services for up to three years at rates that are not significantly discounted and fullyreimbursable by Roche.All of the deliverables were deemed to have stand-alone value and to meet the criteria to be accounted for as separate units of accounting under ASC 605-25.Factors considered in the determination included, among other things, for the license, the research and development capabilities of Roche and Roche’s sublicenserights, and for the remaining deliverables the fact that they are not proprietary and can be and have been provided by other vendors.The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable excluding refund rights, concessions or performancebonuses. As such, the Company will exclude from such allocable consideration the milestone payments and royalties regardless of the probability of receiptbecause such payments are not considered fixed or determinable. Such milestone payments and royalties will be evaluated separately as the related contingenciesare resolved. Consideration for research services were not allocated as the amount is not fixed and determinable and is not at a significant incremental discount.There are no refund rights, concessions or performance bonuses to consider.The Company allocated the fixed and determinable consideration to the license and other deliverables using the relative selling price method based on thebest estimate of selling price for the license and third party evidence for the remaining deliverables. The best estimate of selling price for the license was based on adiscounted cash flow model. The key assumptions used in the discounted cash flow model used to determine the best estimate of selling price for the licensegranted to Roche under the License Agreement included the market opportunity for commercialization of PRX002 in the U.S. and the Royalty Territory (for jointlyfunded products the Royalty Territory is worldwide except for the U.S. for all Licensed Products that are not jointly funded the Royalty Territory is worldwide), theprobability of successfully developing and commercializing PRX002, the remaining development costs for PRX002, and the estimated time to commercializationof PRX002.The Company’s discounted cash flow model included several market conditions and entity-specific inputs, including the likelihood that clinical trials will besuccessful, the likelihood that regulatory approval will be obtained and the product commercialized, the appropriate discount rate, the market locations, size andpotential market share of the product, the expected life of the product, and the competitive environment for the product. The market assumptions were generatedusing a patient-based forecasting approach, with key epidemiological, market penetration, dosing, compliance, length of treatment, and pricing assumptions derivedfrom primary and secondary market research, referenced from third-party sources.The Company concluded that a change in the assumptions used to determine the BESP of the license deliverable would not have a significant effect on theallocation of arrangement consideration. Based on the relative selling price method, the amount that the Company recognized on the effective date of the agreementconcurrent with the delivery of the license and know-how was limited to the lesser of the amount otherwise allocable using the relative selling price method, whichbased on the discounted cash flow model was determined to be $35.6 million , or the non-contingent amount which was the $30.0 million upfront fee. As theremaining deliverables are delivered, any consideration received will be allocated to license revenue and the other deliverables based on their relative percentagesuntil such time as the full allocated consideration of $35.6 million has been recognized as license revenue, and the balance of the monetary consideration will berecorded as an offset against R&D expenses. The Company recognized the $30.0 million upfront payment as collaboration license revenue in the first quarter of2014.Under this agreement, the Company recognizes research reimbursement as collaboration revenue as earned. The Company recognized $1.1 million ascollaboration revenue for research reimbursement from Roche for the year ended December 31, 2016 ,74as compared to $1.4 million for the year ended December 31, 2015 and $1.7 million for the year ended December 31, 2014 . Cost sharing payments to Roche arerecorded as R&D expenses. The Company recognized $3.1 million in R&D expenses for payments made to Roche during the year ended December 31, 2016 , ascompared to $2.9 million for the year ended December 31, 2015 and $1.4 million for the year ended December 31, 2014 . Reimbursement for development costsfrom Roche under the cost-sharing arrangement were allocated between license revenue and an offset to R&D expenses based on the relative selling price methoduntil the full allocated consideration of $35.6 million was recognized as license revenue, after which the full reimbursement is recorded as an offset to R&Dexpenses. In the year ended December 31, 2015, the Company reached the full allocated consideration of $35.6 million recognized as license revenue; accordingly,future development revenue will be recorded as an offset to R&D expenses. Reimbursement for development costs from Roche during the year ended December31, 2016 was $3.6 million , which was recognized as an offset to R&D expenses. Reimbursement for development costs from Roche during the year endedDecember 31, 2015 was $5.1 million , of which $0.2 million was recognized as collaboration license revenue and $4.9 million , respectively were recognized as anoffset to R&D expenses. Reimbursement for development costs from Roche during the year ended December 31, 2014 was $6.0 million , of which $5.3 millionwas recognized as collaboration license revenue and $0.7 million , respectively were recognized as an offset to R&D expenses.Milestone AccountingIn April 2014, the Company together with Roche initiated a Phase 1 clinical trial of PRX002. As a result of this initiation, the Company received a $15.0million milestone payment from Roche under the License Agreement. The Company concluded that the $15.0 million clinical milestone triggered upon theinitiation of the Phase 1 study from PRX002 in the clinic is consistent with the definition of a substantive milestone included in ASU No. 2010-17, "MilestoneMethod of Revenue Recognition". Factors considered in this determination included scientific and regulatory risk that must be overcome to achieve each milestone,the level of effort and investment required to achieve the milestone, and the monetary value attributed to the milestone.Accordingly, the Company recognized payments related to the achievement of this milestone when the milestone was achieved. The milestone payment wasallocated to the units of accounting based on the relative selling price method for income statement classification purposes. In the year ended December 31, 2014 ,the Company recognized $13.3 million of the $15.0 million milestone payment as collaboration revenue and $1.7 million as an offset to R&D expenses.The clinical and regulatory milestones under the License Agreement after the point at which the Company could opt-out are not considered to be substantivedue to the fact that active participation in the development activities that generate the milestones is not required by the License Agreement, and the Company canopt-out of these activities. There are no refund or claw-back provisions and the milestones are uncertain of occurrence even after the Company has opted out. Basedon this determination, these milestones will be recognized similar to the commercial milestone, which will be accounted for as contingent revenue payments withrevenue recognized upon achievement of the milestone assuming all revenue recognition criteria are met. The Company did not achieve any of the clinical andregulatory milestones under the License Agreement during the years ended December 31, 2016 and 2015 .9.Shareholders' EquityOrdinary SharesAs of December 31, 2016 , the Company had 100,000,000 ordinary shares authorized for issuance with a par value of $0.01 per ordinary share and34,752,116 ordinary shares issued and outstanding. Each ordinary share is entitled to one vote and, on a pro rata basis, to dividends when declared and theremaining assets of the Company in the event of a winding up.Euro Deferred SharesAs of December 31, 2016 , the Company had 10,000 Euro Deferred Shares authorized for issuance with a nominal value of €22 per share. No Euro DeferredShares are outstanding at December 31, 2016 . The rights and restrictions attaching to the Euro Deferred Shares rank pari passu with the ordinary shares and aretreated as a single class in all respects.February 2014 OfferingIn February 2014 , Elan Science One Limited ("ESOL"), an indirect wholly owned subsidiary of Perrigo, sold 3,182,253 ordinary shares of Prothena at aprice to the public of $26.00 per ordinary share, before the underwriting discount. As a result, ESOL and Perrigo no longer own any ordinary shares of Prothena.The Company did not receive any of the proceeds from the offering, and the total number of the Company's ordinary shares outstanding did not change as aresult of this offering. The Company paid the costs associated with the sale of these ordinary shares75(other than the underwriting discount, fees and disbursements of counsel for the selling shareholder) pursuant to a Subscription and Registration Rights Agreementdated November 8, 2012 by and between the Company, Elan and ESOL.June 2014 OfferingIn July 2014, the Company completed an underwritten public offering of an aggregate of 5,462,500 of its ordinary shares at a public offering price of $22.50per ordinary share. The Company received aggregate net proceeds of approximately $117.4 million (of which $102.5 million and $14.9 million was received inJune 2014 and July 2014, respectively), after deducting the underwriting discount and estimated offering costs.April 2015 OfferingIn April 2015 , the Company completed an underwritten public offering of an aggregate of 3,795,000 of its ordinary shares at a public offering price of$37.00 per ordinary share. The Company received aggregate net proceeds of approximately $131.5 million , after deducting the underwriting discount andestimated offering costs of $8.9 million .January 2016 OfferingIn January 2016 , the Company completed an underwritten public offering of an aggregate of 2,587,500 of its ordinary shares at a public offering price of$53.00 per ordinary share. The Company received aggregate net proceeds of approximately $128.6 million , after deducting the underwriting discount andestimated offering costs.10.Share-Based CompensationAmended and Restated 2012 Long Term Incentive Plan (“LTIP”)Employees and consultants of the Company, its subsidiaries and affiliates, as well as members of the Board, are eligible to receive equity awards under theLTIP. The LTIP provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights (“SARS”),restricted shares, restricted share units ("RSUs"), cash or stock-based performance awards and other share-based awards to eligible individuals. Options under theLTIP may be granted for periods up to ten years. All options issued to date have had a ten year life.The Company granted 1,508,725 , 1,155,300 , and 720,500 share options during the years ended December 31, 2016, 2015 and 2014 , respectively, under theLTIP. The Company's option awards generally vest over four years. In May 2016, the Company's shareholders approved an increase of 1,850,000 additionalordinary shares authorized for issuance under the LTIP. The aggregate number of ordinary shares authorized for issuance under the LTIP is 7,400,000 ordinaryshares, and as of December 31, 2016 , 2,284,938 ordinary shares remain available for grant and options to purchase 4,064,207 ordinary shares granted from theLTIP were outstanding with a weighted-average exercise price of approximately $27.19 per share.Share-based Compensation ExpenseThe Company estimates the fair value of share-based compensation on the date of grant using an option-pricing model. The Company uses the Black-Scholesmodel to value share-based compensation, excluding RSUs, which the Company values using the fair market value of its ordinary shares on the date of grant. TheBlack-Scholes option-pricing model determines the fair value of share-based payment awards based on the share price on the date of grant and is affected byassumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the Company’s share price, volatility over theexpected life of the awards and actual and projected employee stock option exercise behaviors. Since the Company does not have sufficient historical employeeshare option exercise data, the simplified method has been used to estimate the expected life of all options. The expected volatility was based on a combination ofhistorical volatility for the Company's stock and the historical volatilities of several of the Company's publicly traded comparable companies. Although the fairvalue of share options granted by the Company is estimated by the Black-Scholes model, the estimated fair value may not be indicative of the fair value observedin a willing buyer and seller market transaction.As share-based compensation expense recognized in the Consolidated Financial Statements is based on awards ultimately expected to vest, it has beenreduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ fromestimates. Forfeitures were estimated based on estimated future turnover and historical experience.Share-based compensation expense will continue to have an adverse impact on the Company’s results of operations, although it will have no impact on itsoverall financial position. The amount of unearned share-based compensation currently estimated to be expensed from now through the year 2020 related tounvested share-based payment awards at December 31, 2016 is $41.7 million . The weighted-average period over which the unearned share-based compensation isexpected to be recognized is 2.6676years . If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate and/or increase anyremaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation will increase to theextent that the Company grants additional equity awards.Share-based compensation expense recorded in these Consolidated Financial Statements for the years ended December 31, 2016, 2015 and 2014 was basedon awards granted under the LTIP. The following table summarizes share-based compensation expense for the periods presented (in thousands): Year Ended December 31, 2016 2015 2014Research and development (1)$7,094 $4,301 $2,270General and administrative (2)17,835 6,113 3,327Total share-based compensation expense$24,929 $10,414 $5,597_________________(1) Includes $nil , $42,000 , and $108,000 for the years ended December 31, 2016, 2015 and 2014 , respectively, of share-based compensation expense relatedto options granted to a consultant.(2) Includes $6.5 million , $nil and $nil for the years ended December 31, 2016, 2015 and 2014 respectively, of share-based compensation expense related tothe accelerated vesting of stock options to the Company's former CEO upon his death. Also includes $0.6 million , $nil and $nil for the years endedDecember 31, 2016, 2015 and 2014 respectively, of share-based compensation expense related to the accelerated vesting of stock options to the Company'sformer Chief Commercial Officer. Such accelerations were part of the original terms and did not constitute modification of options.For the years ended December 31, 2016, 2015 and 2014 , the Company recognized tax benefits from share-based awards of $4.3 million , $1.7 million and$1.0 million , respectively.The fair value of the options granted to employees and non-employee directors during the years ended December 31, 2016, 2015 and 2014 was estimated asof the grant date using the Black-Scholes option-pricing model assuming the weighted-average assumptions listed in the following table: Year Ended December 31, 2016 2015 2014Expected volatility75.2% 76.3% 84.4%Risk-free interest rate1.5% 1.7% 1.8%Expected dividend yield—% —% —%Expected life (in years)6.0 6.0 6.0Weighted average grant date fair value$26.41 $23.12 $19.97The fair value of employee stock options is being amortized on a straight-line basis over the requisite service period for each award. Each of the inputsdiscussed above is subjective and generally requires significant management judgment to determine.The following table summarizes the Company’s stock option activity during the year ended December 31, 2016 :77 Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands)Outstanding at December 31, 20153,142,364 $21.36 8.14 $146,917Granted1,508,725 40.08 Exercised(420,514) 25.01 Canceled(166,368) 39.32 Outstanding at December 31, 20164,064,207 $27.19 6.79 $92,640Vested and expected to vest at December 31, 20163,631,166 $25.64 6.52 $87,944Vested at December 31, 20162,159,203 $17.86 4.99 $68,196During the years ended December 31, 2016, 2015 and 2014 , the total intrinsic value of options exercised was $12.8 million , $25.5 million and $1.5 million ,determined as of the date of exercise. The following table summarizes information about the Company's share options outstanding as of December 31, 2016 : Options Outstanding Options ExercisableRange of Exercise Prices Number of Options Weighted - Average Remaining Contractual Life (Years) WeightedAverage ExercisePrice Number of Options WeightedAverage ExercisePrice$6.03 $6.03 383,334 0.75 $6.03 383,334 $6.036.41 6.41 521,959 6.08 6.41 509,443 6.416.65 22.14 435,909 6.57 11.55 352,611 10.2322.16 26.47 46,050 7.49 23.50 22,194 23.5927.81 27.81 697,887 6.59 27.81 366,255 27.8129.52 34.44 423,887 7.44 30.84 288,108 30.9534.61 34.61 769,869 7.64 34.61 139,844 34.6137.02 52.21 447,250 9.14 44.82 57,809 42.0252.78 62.22 266,396 9.67 55.30 13,957 54.5667.64 67.64 71,666 8.54 67.64 25,648 67.64$6.03 $67.64 4,064,207 6.79 $27.19 2,159,203 $17.86 11. Income TaxesThe Company files its U.S. and Irish income tax returns and income taxes are presented in the Consolidated Financial Statements using the asset and liabilitymethod prescribed by the accounting guidance for income taxes.Income (loss) before provision for income taxes by country for each of the fiscal periods presented is summarized as follows (in thousands): Year Ended December 31, 2016 2015 2014Ireland $(164,797) $(83,009) $(9,714)U.S. 5,833 3,098 3,375Loss before provision for income taxes $(158,964) $(79,911) $(6,339)78Components of the provision for income taxes for each of the fiscal periods presented consisted of the following (in thousands): Year Ended December 31, 2016 2015 2014Current: U.S. Federal $4,464 $1,663 $1,855U.S. State 1 1 1Ireland — — —Total current provision $4,465 $1,664 $1,856Deferred: U.S. Federal $(3,321) $(963) $(1,045)U.S. State — — —Ireland — — —Total deferred benefit (3,321) (963) $(1,045)Total provision for income taxes $1,144 $701 $811Excess tax benefits associated with share-based compensation deductions are credited to shareholders' equity. The reductions in income taxes payableresulting from share-based compensation deductions that were credited to stockholder's equity were approximately $0.8 million , $3.9 million , and $0.2 million forthe years ended December 31, 2016, 2015 and 2014 , respectively.The provision for income taxes differs from the statutory tax rate of 12.5% applicable to Ireland primarily due to Irish net operating losses for which a taxprovision benefit is not recognized and due to U.S. income taxed at different rates. Following is a reconciliation between income taxes computed at the Irishstatutory tax rate and the provision for income taxes for each of the fiscal periods presented (in thousands): Years Ended December 31, 2016 2015 2014Taxes at the Irish statutory tax rate of 12.5% $(19,870) $(9,989) $(792)Income tax at rates other than applicable statutory rate 813 446 705Change in valuation allowance 25,200 12,594 2,444Share-based payments 422 214 74Tax credits (5,384) (2,712) (1,643)Other (37) 148 23Provision for income taxes $1,144 $701 $811Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposesand the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets as of December 31, 2016 and 2015 are as follows(in thousands):79 December 31, 2016 2015Deferred tax assets: Net operating losses $47,218 $26,676Tax credits 4,937 2,473Accruals 1,174 1,117Share-based compensation 8,966 3,769Gross deferred tax assets 62,295 34,035Valuation allowance (56,382) (31,185)Net deferred tax assets 5,913 2,850Deferred tax liability — —Net deferred tax assets $5,913 $2,850The Company's deferred tax assets are composed primarily of its Irish subsidiaries' net operating loss carryovers, state net operating loss carryforwardsavailable to reduce future taxable income of the Company's U.S. subsidiary, federal and state tax credit carryforwards, share-based compensation and othertemporary differences. The Company maintains a valuation allowance against certain U.S. federal and state and Irish deferred tax assets. Each reporting period, theCompany evaluates the need for a valuation allowance on its deferred tax assets by jurisdiction.Recognition of deferred tax assets is appropriate when realization of such assets is more likely than not. Based upon the weight of available evidence,especially the uncertainties surrounding the realization of deferred tax assets through future taxable income, the Company believes it is not yet more likely than notthat the deferred tax assets will be fully realizable. Accordingly, the Company has provided a valuation allowance of $56.4 million against its deferred tax assets asof December 31, 2016 primarily in relation to deferred tax assets arising from tax credits and net operating losses. The deferred tax assets recognized net of thevaluation allowance, $5.9 million as of December 31, 2016 , consist of U.S. federal temporary differences. Due to consistent U.S. operating income, the Companyexpects to realize such deferred tax assets. The net increase of $25.2 million in the valuation allowance during the year ended December 31, 2016 was primarilydue to net operating losses of the Company's Irish entities, and to a lesser extent from share-based compensation, US federal and state tax credits.As of December 31, 2016 , certain of the Company's Irish entities had trading loss carryovers of $339.2 million and non-trading loss carryovers of $9.7million , each of which can be carried forward indefinitely but are limited to the same trade/trades. In addition, as of December 31, 2016 , the Company had statenet operating loss carryforwards of approximately $41.5 million , which are available to reduce future taxable income for the Company's U.S. subsidiary, if any. Ifnot utilized, the state net operating loss carryforward begins expiring in 2032 .The Company also has federal and California research and development credit carryforwards of $5.3 million and $5.4 million , respectively, at December 31,2016 . The federal research and development credit carryforwards will expire starting in 2035 if not utilized. The California tax credits can be carried forwardindefinitely.As a result of certain realization requirements of ASC Topic 718, "Compensation - Stock Compensation" the table of deferred tax assets does not includecertain deferred tax assets as of December 31, 2016 that arose directly from tax deductions related to equity compensation that are greater than the compensationrecognized for financial reporting. Upon adoption of ASU No. 2016-09, the tax attributes not currently recognized will be recorded as deferred tax assets, and theCompany expects that such amounts to be offset by a valuation allowance. See Note 2, Summary of Significant Accounting Policy.Cumulative unremitted earnings of the Company’s U.S. subsidiary total approximately $11.2 million at December 31, 2016 The Company's U.S. subsidiary'scash balance at December 31, 2016 is committed for its working capital needs. No taxes have been provided for the unremitted earnings as any tax basisdifferences relating to investments in this overseas subsidiary are considered to be permanent in duration. Unremitted earnings may be subject to U.S. withholdingtaxes (potentially at 5% ) and Irish taxes (potentially at a rate of 12.5% ) if they were to be distributed as dividends. However, Ireland allows a credit against Irishtaxes for U.S. tax withheld and as of December 31, 2016 the Company's current year net operating losses in Ireland are sufficient to offset any potential dividendincome received from its U.S. subsidiary.80A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands): 2016 2015Gross Unrecognized Tax Benefits at January 1$1,061 $383Additions for tax positions taken in the current year1,346 678Reductions for tax positions taken in the prior year(1) —Gross Unrecognized Tax Benefits at December 31$2,406 $1,061If recognized, none of the Company's unrecognized tax benefits as of December 31, 2016 would reduce its annual effective tax rate, primarily due tocorresponding adjustments to its deferred tax valuation allowance. As of December 31, 2016 , the Company has not recorded a liability for potential interest orpenalties. The Company also does not expect its unrecognized tax benefits to change significantly over the next 12 months.The tax years 2012 to 2016 remain subject to examination by the U.S taxing authorities and the tax years 2011 to 2016 remain subject to examination by theIrish taxing authorities.12. Employee Retirement PlanIn the United States, the Company provides a qualified retirement plan under section 401(k) of the Internal Revenue Code (“IRC”) under which participantsmay contribute up to 100% of their eligible compensation, subject to maximum deferral limits specified by the IRC. In addition, the Company contributes 3% ofeach participating employee’s eligible compensation, subject to limits specified by the IRC, on a quarterly basis. Further, the Company may make an annualdiscretionary matching and/or profit sharing contribution as determined solely by the Company. The Company recorded total expense for matching contributions of$0.6 million , $0.4 million and $0.3 million for the years ended December 31, 2016, 2015 and 2014 , respectively.In Ireland, the Company operates a defined contribution plan in which it contributes up to 7.5% of an employee’s eligible earnings. The Company recordedexpense of $92,000 , $51,000 and $19,000 in the years ended December 31, 2016, 2015 and 2014 , respectively, in connection with its contributions under the Irishdefined contribution plan.13. Related PartiesPrior to December 21, 2012, the Company operated as part of Elan and not as a separate stand-alone entity. Effective December 20, 2012, the ProthenaBusiness separated from Elan. In connection with the separation, a wholly owned subsidiary of Elan acquired an 18% interest in the Company (as calculatedimmediately following the separation). Elan was subsequently acquired by Perrigo, in December 2013, and such 3,182,253 ordinary shares were held by ESOL, anindirect wholly owned subsidiary of Perrigo, as of December 31, 2013.February 2014 OfferingIn February 2014 , ESOL, sold 3,182,253 ordinary shares of Prothena at a price to the public of $26.00 per ordinary share, before the underwriting discount.As a result, ESOL and Perrigo no longer own any ordinary shares of Prothena.The Company did not receive any of the proceeds from the offering, and the total number of the Company's ordinary shares outstanding did not change as aresult of this offering. The Company paid the costs associated with the sale of these ordinary shares (other than the underwriting discount, fees and disbursementsof counsel for the selling shareholder) pursuant to a Subscription and Registration Rights Agreement dated November 8, 2012 by and between the Company, Elanand ESOL.R&D Services AgreementIn December 2012, as amended in March 2013, the Company entered into a Research and Development Services Agreement (“RDSA”) with Elan pursuantto which the Company provided certain R&D services to Elan. Either party was entitled to terminate the RDSA at any time by notice in writing to the other party ifthere has been an uncured material breach by the other party or if the other party becomes insolvent or if the other party is in breach of any of its confidentialityobligations under the agreement. This RDSA expired in December 2014 at the end of its two -year term.The services provided for under the RDSA included support for the ELND005 program (which include the provision of expert advice and opinion in theareas of nonclinical safety/toxicology and pharmacology, regulatory support for nonclinical sections of pertinent documents, conducting and interpreting externallyconducted nonclinical studies, and support in respect of81the identification and maintenance of nonclinical expert advisors as required). These services were substantially similar to research services performed by theCompany for Elan prior to the separation and distribution.The payment terms of the RDSA provided that Elan would pay the Company: (i) a fixed charge of $500,000 per year based on a charge for two of theCompany’s employees providing the services at a rate of $250,000 each per annum, (ii) if the $500,000 fixed charge has been paid in any year, a variable charge of$250,000 per year for any additional employee that provides services for such year (calculated pro rata based on the number of days the employee provides servicesin such year), (iii) research costs including direct overheads, and (iv) a mark-up of 10% applied to the fixed charge, variable charge (if any) and research costs suchthat the total payment reflects a cost-plus standard.The related party revenue of $0.5 million recognized by the Company for the year ended December 31, 2014 consisted of fees arising from R&D servicesprovided to Elan. There were no related party revenue recognized by the Company for the years ended December 31, 2016 and 2015.Consulting AgreementCarol D. Karp commenced employment with the Company as its Chief Regulatory Officer on December 14, 2016. Prior to that, Ms. Karp providedconsulting services to the Company under a written Consulting Agreement. That Consulting Agreement terminated as of December 13, 2016, before Ms. Karpjoined the Company. During fiscal year 2016 through December 13, 2016, the Company paid to Ms. Karp a total of $304,150 (not including expensereimbursements) under the Consulting Agreement.14. Subsequent EventsIn January 2017, in accordance with the Assignment Agreement between the Company and Merck, as discussed in Note 7, Commitments andContingencies, the Company assigned to Merck the Company's lease on the Former SSF Facility. As a result of the assignment, the Company will recognize a gainof approximately $2.3 million on early lease retirement resulting from the recognition of the remaining deferred rent liability. The Company’s operating leasecommitments will be reduced by approximately $8.4 million over the original lease term and the Company will not receive the future minimum payments from itsSublease of $0.3 million as a result of the Assignment.15. Selected Quarterly Financial Information (Unaudited)The following table presents selected unaudited consolidated financial data for each of the eight quarters in the two-year period ended December 31, 2016 . Inthe Company's opinion, this unaudited information has been prepared on the same basis as the audited information and includes all adjustments (consisting of onlynormal recurring adjustments) necessary for a fair statement of the financial information for the period presented. Net loss per share - basic and diluted, for the fourquarters of each fiscal year may not sum to the total for the fiscal year because of the different number of shares outstanding during each period (in thousands,except per share data): Quarter First Second Third FourthYear Ended December 31, 2016 Revenues$265 $333 $286 $171Operating expenses$27,675 $40,493 $42,974 $49,448Net loss$(27,521) $(40,445) $(43,239) $(48,903)Net loss per share - basic$(0.81) $(1.18) $(1.26) $(1.41)Net loss per share - diluted$(0.81) $(1.18) $(1.26) $(1.41)Year Ended December 31, 2015 Revenues$593 $278 $429 $307Operating expenses$15,622 $18,313 $23,090 $24,519Net income (loss)$(15,202) $(18,277) $(22,976) $(24,157)Net income (loss) per share - basic$(0.55) $(0.59) $(0.73) (0.76)Net income (loss) per share - diluted$(0.55) $(0.59) $(0.73) $(0.76)82ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTSNone.ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our chief executive officer ("CEO") and chief financial officer ("CFO") evaluated the effectiveness of ourdisclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of theperiod covered by this Form 10-K. Based on this evaluation, our CEO and CFO concluded that, as of December 31, 2016 , our disclosure controls and proceduresare designed and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Actis recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated andcommunicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.Management’s Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of theExchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our CEO and CFO, and effected by our Board ofDirectors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:•Pertain to the maintenance of records that accurately and fairly reflect in reasonable detail the transactions and dispositions of the assets of our company;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management anddirectors; and•Provide reasonable assurances regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial adverse effect on our financial statements.Our management assessed our internal control over financial reporting as of December 31, 2016 , the end of our fiscal year. Management based itsassessment on criteria established in "Internal Control-Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of the TreadwayCommission. Based on management's assessment of our internal control over financial reporting, management concluded that, as of December 31, 2016 , ourinternal control over financial reporting was effective. The effectiveness of our internal control over financial reporting as of December 31, 2016 has been auditedby KPMG LLP, an independent registered public accounting firm, as stated in its report which is included in Item 8 of this Annual Report on Form 10-K.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of theExchange Act during our fourth fiscal quarter ended December 31, 2016 that materially affected, or are reasonably likely to materially affect, our internal controlover financial reporting.Limitations on Effectiveness of Controls and ProceduresInternal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence andcompliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumventedby collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timelybasis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possibleto design into the process safeguards to reduce, though not eliminate, this risk.Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance ofachieving the desired control objectives. In addition, the design of disclosure controls and procedures83must reflect the fact that there are resource constraints and that management necessarily applies its judgment in evaluating the benefits of possible controls andprocedures relative to their costs.ITEM 9B. OTHER INFORMATIONNone.PART IIICertain information required by Part III is incorporated herein by reference from our definitive proxy statement relating to our Annual General Meeting ofShareholders to be held on May 17, 2017 (our "Proxy Statement").ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEExcept for the information about our executive officers and Code of Conduct shown below, the information appearing in our Proxy Statement under thefollowing headings is incorporated herein by reference:•Election of Directors•Section 16(a) Beneficial Ownership Reporting Compliance84Executive Officers of the RegistrantFollowing is certain information regarding our executive officers as of February 24, 2017 .Name Age Position(s) SinceGene G. Kinney, Ph.D. 48 President and Chief Executive Officer, Director 2016A. W. Homan 57 Chief Legal Officer 2014Carol D. Karp 64 Chief Regulatory Officer 2016Martin Koller, M.D. 66 Chief Medical Officer 2013Tran B. Nguyen 43 Chief Financial Officer 2013Tara Nickerson, Ph.D. 44 Chief Business Officer 2014Karin L. Walker 53 Chief Accounting Officer and Controller 2013Gene G. Kinney, Ph.D., has served as our President and Chief Executive Officer as well as a member of our Board of Directors since 2016. Prior to that,he was our Chief Operating Officer for part of 2016, and prior to that he was our Chief Scientific Officer and Head of Research and Development from 2012 to2016. From 2009 to 2012, Dr. Kinney held various positions with Elan Pharmaceuticals, Inc.: Senior Vice President of Pharmacological Sciences (from 2011 to2012) and Vice President, Pharmacology (from 2009 to 2011) for Elan Pharmaceuticals, Inc; and while in those positions, he also served as Head of NonclinicalResearch for Janssen Alzheimer Immunotherapy R&D. From 2001 to 2009, Dr. Kinney was Senior Director, Head of Central Pharmacology and acting lead forBioanalytics & Pathology at the Merck Research Laboratories, where he contributed to the strategic direction and oversight of drug discovery activities and led anumber of non-clinical discovery and clinical development programs targeted for the treatment of neurodegenerative and psychiatric conditions. Dr. Kinney alsoheld positions at Bristol-Myers Squibb and was an Assistant Professor at the Emory University School of Medicine, Department of Psychiatry and BehavioralSciences. He earned his BA from Bloomsburg University and his MA and PhD from Florida Atlantic University.A. W. Homan has served as our Chief Legal Officer since 2014. Prior to joining Prothena, Mr. Homan was Senior Vice President, General Counsel andSecretary of Complete Genomics, Inc. (a laboratory services company), a position he held from 2012 until its sale in 2013. He was Senior Vice President, GeneralCounsel and Secretary of Varian, Inc. (a scientific instruments company), from 1999 until it was acquired in 2010. Prior to that, Mr. Homan was Associate GeneralCounsel at Varian Associates, Inc., and also worked at a leading San Francisco law firm. He earned BA from Virginia Tech and his JD (law degree) from theUniversity of Virginia.Carol D. Karp has served as our Chief Regulatory Officer since 2016. Prior to joining Prothena, she was an independent regulatory consultant tobiotechnology and pharmaceutical companies. Prior to that, from 2013 to 2014, Ms. Karp was Senior Vice President, Regulatory Affairs and Compliance atEsperion Therapeutics, Inc. (a biotechnology company). From 2010 to 2013, she was Vice President, Head of Global Regulatory Affairs, Pharmacovigilance &Risk Management at Janssen Alzheimer Immunotherapy, a Johnson & Johnson Company (a biopharmaceutical company). Prior to that, Ms. Karp held seniorregulatory positions at Janssen Alzheimer Immunotherapy, CV Therapeutics, Inc., PowderJect Technologies, VIVUS, Inc., Cygnus, Inc. and JanssenPharmaceutica. She earned her BA in Biology from the University of Rochester.Martin Koller, M.D., has served as our Chief Medical Officer since 2013. Prior to joining Prothena, he served as Chief Medical Officer of SonexaTherapeutics, Inc. (a pharmaceutical company), a position he held from 2009 to 2013. From 2007 to 2009, Dr. Koller was an independent consultant to varioussmall and medium sized pharmaceutical and biotechnology companies. From 2002 to 2007, he was Vice President of Clinical Development at ElanPharmaceuticals, Inc., overseeing a national, and then international, drug development group. Dr. Koller is a board-certified neurologist who has been involvedwith a number of Investigational New Drugs and New Drug Applications in several indications (including Alzheimer’s disease, multiple sclerosis, cervicaldystonia, pain, anti-epileptics, migraine, stroke, anxiety and depression). Dr. Koller earned his BA from Franklin and Marshall College, his MD from theUniversity of Maryland at Baltimore and his MPH with an emphasis in epidemiology from the University of Texas at Houston.Tran B. Nguyen has served as our Chief Financial Officer since 2013. Prior to joining Prothena, Mr. Nguyen was Vice President, Chief Financial Officer(from 2010 to 2011) and then Senior Vice President, Chief Financial Officer of Somaxon Pharmaceuticals, Inc., from 2011 until its sale in 2013. He was VicePresident, Chief Financial Officer and Investor Relations at Metabasis Therapeutics, Inc. (a biopharmaceutical company) from 2009 until its sale in 2010. From2007 to 2009, Mr. Nguyen was a Vice President in the Healthcare Investment Banking group at Citi Global Markets, Inc., and from 2004 to 2007 he served invarious capacities as a healthcare investment banker at Lehman Brothers, Inc. Mr. Nguyen serves on the board of directors of85Sierra Oncology, Inc. (a clinical-stage oncology company). He earned his BA in Economics and Psychology from Claremont McKenna College and his MBA fromthe Anderson School of Management at the University of California, Los Angeles.Tara Nickerson, Ph.D., has served as our Chief Business Officer since 2014. Prior to that, she was our Head of Corporate and Business Development andSecretary, positions she held since 2012. Dr. Nickerson previously held various positions with Elan Pharmaceuticals, Inc., including Vice President and Head ofBusiness Development (during 2012), Senior Director of Corporate Strategy and Strategic Alliances (from 2007 to 2012) and Director, Corporate Strategy andStrategic Alliances (from 2005 to 2007). During her tenure at Elan, she was responsible for opportunity evaluation, diligence, negotiations and contracting for Elanexternal opportunities, and established a broad network of collaborations for Elan with academic investigators, not-for-profit disease-focused foundations andindustry collaborators. Dr. Nickerson was previously a Senior Scientist at Axys Pharmaceuticals, where she led preclinical programs developing novel smallmolecule based therapeutics for oncology. Dr. Nickerson earned her BSc and PhD in Experimental Medicine from McGill University and her MBA from theUniversity of California, Berkeley’s Haas School of Business.Karin L. Walker has served as our Chief Accounting Officer and Controller since 2013. Prior to joining Prothena, Ms. Walker was Vice President,Finance and Chief Accounting Officer of Affymax, Inc. (a biopharmaceutical company), a position she held from 2012 to 2013. From 2009 to 2012, she was VicePresident, Finance and Corporate Controller at Amyris Inc. (a biotechnology company). From 2006 to 2009, Ms. Walker was Vice President, Finance andCorporate Controller for CV Therapeutics, Inc. (a biopharmaceutical company). She also held senior financial leadership positions at Knight Ridder Digital,Accellion, Niku Corporation, Financial Engines, Inc. and NeoMagic Corporation. Ms. Walker earned her BS in business from the California State PolytechnicUniversity, San Luis Obispo, and is a certified public accountant.Code of ConductWe have a Code of Conduct that applies to all of our directors, executive officers and employees, including our principal executive officer, principal financialofficer, principal accounting officer or controller, or persons performing similar functions. Our Code of Conduct is available on the Company’s website athttp://ir.prothena.com. We will provide to any person without charge, upon request, a copy of that Code of Conduct; such a request may be made by sending it toour Company Secretary, Prothena Corporation plc, Adelphi Plaza, Upper George's Street, Dún Laoghaire, Co. Dublin, A96 T927, Ireland. If we make anyamendment to, or waiver from, a provision of our Code of Conduct that we are required to disclose under SEC rules, we intend to satisfy that disclosurerequirement by posting such information to our website at http://ir.prothena.com.ITEM 11. EXECUTIVE COMPENSATIONThe information appearing in our Proxy Statement under the following headings is incorporated herein by reference:•Executive Compensation•Director Compensation•Report of the Compensation Committee of the Board of DirectorsITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe information appearing in our Proxy Statement under the following headings is incorporated herein by reference:•Equity Compensation Plan Information•Security Ownership of Certain Beneficial Owners and ManagementITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information appearing in our Proxy Statement under the following headings is incorporated herein by reference:•Certain Transactions with Related Persons•Proposal No. 1 - Election of DirectorsITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe information appearing in our Proxy Statement under the following headings is incorporated herein by reference:•Proposal No. 2 - Ratification of Appointment of Independent Registered Public Accounting Firm - Fees Paid to KPMG•Proposal No. 2 - Ratification of Appointment of Independent Registered Public Accounting Firm - Pre-Approval Policies and ProceduresWith the exception of the information specifically incorporated by reference in Part III to this Form 10-K from our Proxy Statement, our Proxy Statementshall not be deemed to be filed as part of this Form 10-K.PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a) The following documents are filed as part of this report on Form 10-K:(1)Financial Statements. Reference is made to the Index to the registrant’s Financial Statements under Item 8 in Part II of this Form 10-K.(2)Financial Statement Schedules. Financial statement schedules have been omitted because the required information is not present or not present in theamounts sufficient to require submission of the schedule or because the information is already included in the consolidated financial statements ornotes thereto.(3)Exhibits. The exhibits listed on the accompanying index to exhibits in Item 15(b) below are filed as part of, or hereby incorporated by reference into,this report on Form 10-K.(b) Exhibits.The exhibits listed in the Exhibit Index hereto are incorporated or filed herewith.86SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Reporton Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. Dated:February 24, 2017Prothena Corporation plc(Registrant) /s/ Gene G. Kinney Gene G. Kinney President and Chief Executive Officer /s/ Tran B. Nguyen Tran B. Nguyen Chief Financial Officer87POWER OF ATTORNEYKNOW ALL PERSONS BY THESE PRESENTS, that each person whose individual signature appears below hereby authorizes and appoints Gene G.Kinney and Tran B. Nguyen, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true andlawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in eachcapacity stated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documentsin connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authorityto do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute orsubstitutes may lawfully do or cause to be done by virtue thereof.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrantand in the capacities and on the dates indicated. Name Title Date /s/Gene G. Kinney President and Chief Executive Officer February 24, 2017Gene G. Kinney, Ph.D. (Principal Executive Officer) and Director /s/Tran B. Nguyen Chief Financial Officer February 24, 2017Tran B. Nguyen (Principal Financial Officer) /s/Karin L. Walker Chief Accounting Officer and Controller February 24, 2017Karin L. Walker (Principal Accounting Officer) /s/Lars G. Ekman Chairman of the Board February 24, 2017Lars G. Ekman, M.D., Ph.D. /s/Richard T. Collier Director February 24, 2017Richard T. Collier /s/Shane M. Cooke Director February 24, 2017Shane M. Cooke /s/K. Anders O. Härfstrand Director February 24, 2017K. Anders O. Härfstrand, M.D., Ph.D. /s/Christopher S. Henney Director February 24, 2017Christopher S. Henney, D.Sc., Ph.D. /s/Dennis J. Selkoe Director February 24, 2017Dennis J. Selkoe, M.D. 88EXHIBIT INDEX Previously Filed ExhibitNo. Description Form File No.Filing DateExhibitFiledHerewith 2.1 Demerger Agreement, dated as of November 8, 2012, between ElanCorporation, plc and Prothena Corporation plc 10/A 001-3567611/30/20122.1 2.2(a) Amended and Restated Intellectual Property License and ContributionAgreement, dated as of December 20, 2012, by and among NeotopeBiosciences Limited, Elan Pharma International Limited, and ElanPharmaceuticals, Inc. 8-K 001-3567612/21/20122.1 2.2(b) Amendment Number One to the Amended and Restated IntellectualProperty License and Contribution Agreement, effective as ofDecember 20, 2012, among Neotope Biosciences Limited, Elan PharmaInternational Limited, Elan Pharmaceuticals, LLC, Elan Corporation,plc, and Crimagua Limited S-1/A 333-1912189/30/20132.2(b) 2.3 Intellectual Property License and Conveyance Agreement, dated as ofDecember 20, 2012, among Neotope Biosciences Limited, Elan PharmaInternational Limited and Elan Pharmaceuticals, Inc. 8-K 001-3567612/21/20122.2 3.1 Amended and Restated Memorandum and Articles of Association(Constitution) of Prothena Corporation plc 8-K 001-356765/25/20163.1 4.1 Reference is made to Exhibit 3.1 10.1(a) Tax Matters Agreement, dated as of December 20, 2012, between ElanCorporation, plc and Prothena Corporation plc 8-K 001-3567612/21/201210.1 10.1(b) Amendment No. 1 to Tax Matters Agreement, dated as of June 25,2013, between Elan Corporation, plc and Prothena Corporation plc 10-Q 001-356768/13/201310.2 10.2 Subscription and Registration Rights Agreement, dated as of November8, 2012, among Prothena Corporation plc, Elan Corporation, plc andElan Science One Limited 10/A 001-3567611/30/201210.3 10.3 License Agreement, dated as of December 31, 2008, between theUniversity of Tennessee Research Foundation and ElanPharmaceuticals, Inc. 10/A 001-3567611/30/201210.14 10.4† License, Development, and Commercialization Agreement, dated as ofDecember 11, 2013, among Neotope Biosciences Limited and ProthenaBiosciences Inc, F. Hoffmann-La Roche Ltd. and Hoffmann-La RocheInc. 10-K/A 001-356766/6/201410.4 89 Previously Filed ExhibitNo. Description Form File No.Filing DateExhibitFiledHerewith 10.5† Master Process Development and Clinical Supply Agreement, dated asof June 23, 2010, as amended August 1, 2011, among Elan PharmaInternational Limited, Neotope Biosciences Limited and BoehringerIngelheim Pharma GmbH & Co. KG 10-Q 001-356768/13/201310.3 10.6† Commercial Supply Contract, dated as of November 9, 2016, betweenProthena Therapeutics Limited and Rentschler Biotechnologie GmbH X 10.7(a) Lease Agreement, dated as of March 18, 2010, between Are-SanFrancisco No. 33, LLC and Elan Pharmaceuticals, Inc. 10/A 001-3567611/30/201210.6 10.7(b) First Amendment to Lease, dated as of November 18, 2011, betweenAre-San Francisco No. 33, LLC and Elan Pharmaceuticals, Inc. 10/A 001-3567611/30/201210.7 10.7(c) Second Amendment to Lease, dated as of June 1, 2012, between Are-San Francisco No. 33, LLC and Elan Pharmaceuticals, Inc. 10/A 001-3567611/30/201210.8 10.7(d) Third Amendment to Lease, dated as of October 3, 2012, between Are-San Francisco No. 33, LLC and Elan Pharmaceuticals, Inc. 10/A 001-3567611/30/201210.9 10.7(e) Assignment of Tenant’s Interest in Lease and Assumption of LeaseObligations, dated as of December 2, 2012, between ElanPharmaceuticals, Inc. and Prothena Biosciences Inc 10/A 001-3567611/30/201210.10 10.7(f) Fourth Amendment to Lease, dated as of November 30, 2013, betweenARE-San Francisco No. 33, LLC and Prothena Biosciences, Inc 8-K 001-3567612/5/201310.1 10.8(a) Sublease, dated as of March 22, 2016, between Prothena BiosciencesInc and Amgen Inc. 10-Q 001-356765/4/201610.2(a) 10.8(b) Consent to Sublease Agreement, dated as of March 28, 2016, amongProthena Biosciences Inc, Amgen Inc. and HCP BTC, LLC 10-Q 001-356765/4/201610.2(b) 10.9# Prothena Corporation plc Amended and Restated 2012 Long TermIncentive Plan 8-K 001-356765/25/201610.1 10.10# Prothena Corporation plc Incentive Compensation Plan 8-K 001-3567612/21/201210.6 10.11# Prothena Biosciences Inc Amended and Restated Severance Plan 8-K 001-3567612/15/201510.1 10.12# Form of Deed of Indemnification between Prothena Corporation plc andits Directors and Officers 8-K 001-3567612/11/201410.1 90 Previously Filed ExhibitNo. Description Form File No.Filing DateExhibitFiledHerewith 10.13# Form of Option Award Agreement between Prothena Corporation plcand its Non-Employee Directors (used beginning January 29, 2013) S-8 333-1965726/6/201499.2 10.14# Form of Option Award Agreement between Prothena Corporation plcand its Named Executive Officers (used beginning January 29, 2013until February 4, 2014) S-8 333-1965726/6/201499.3 10.15# Form of Option Award Agreement between Prothena Corporation plcand its Named Executive Officers (used beginning February 4, 2014) 10-K 001-356763/13/201510.11 10.16# Employment Agreement, dated January 22, 2013, between ProthenaBiosciences Inc and Dale B. Schenk 8-K 001-356761/25/201310.1 10.17# Offer letter, dated March 20, 2013, between Prothena Biosciences Incand Tran B. Nguyen 8-K 001-356763/28/201310.1 10.18# Offer letter, dated December 22, 2012, between Prothena BiosciencesInc and Gene G. Kinney 10-K 001-356763/29/201310.18 10.19# Employment Agreement, dated September 30, 2016, between ProthenaBiosciences Inc and Gene G. Kinney 8-K 001-3567611/4/201610.1 10.20# Offer letter, dated March 19, 2013, between Prothena Biosciences Incand Martin Koller 8-K 001-356763/28/201310.2 10.21# Retirement transition letter, dated November 21, 2016, betweenProthena Biosciences Inc and Martin Koller 8-K 001-3567611/28/201610.1 10.22# Offer letter, dated December 14, 2012, between Prothena BiosciencesInc and Tara Nickerson 10-K 001-356763/29/201310.2 10.23# Promotion letter, dated February 5, 2014, between Prothena BiosciencesInc and Tara Nickerson 8-K 001-356763/3/201410.1 10.24# Offer letter, dated April 19, 2013, between Prothena Biosciences Incand Karin L. Walker 8-K 001-356765/22/201310.1 10.25# Offer letter, dated April 11, 2014, between Prothena Biosciences Incand A. W. Homan 10-Q 001-356768/5/201410.5 10.26# Offer letter, dated January 20, 2016, between Prothena Biosciences Incand David B. McNinch 10-Q 001-356765/4/201610.1 10.27# Separation Agreement, dated December 15, 2016, between ProthenaBiosciences Inc and David B. McNinch X 10.28# Offer letter, dated December 5, 2016, between Prothena Biosciences Incand Carol D. Karp X 21.1 List of Subsidiaries X 91 Previously Filed ExhibitNo. Description Form File No.Filing DateExhibitFiledHerewith23.1 Consent of KPMG LLP, independent registered public accounting firm X 24.1 Power of Attorney(see signature page hereto) X 31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a)and 15d-14(a) of the Securities Exchange Act of 1934, as adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a)and 15d-14(a) of the Securities Exchange Act of 1934, as adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1* Certification of Principal Executive Officer and Principal FinancialOfficer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002 X 101.INS+ XBRL Instance Document X 101.SCH+ XBRL Taxonomy Extension Schema Document X 101.CAL+ XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF+ XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB+ XBRL Taxonomy Extension Label Linkbase Document X 101.PRE+ XBRL Taxonomy Extension Presentation Linkbase Document X_______________*Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, orotherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or otherdocument filed under the Securities Act of 1933, as amended, except as otherwise specifically stated in such filing.#Indicates management contract or compensatory plan or arrangement.†Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been filed separatelywith the SEC.+XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933, as amended, and Section 18 of the SecuritiesExchange Act of 1934, as amended, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which itrelates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.92Confidential Treatment Requested by Prothena Corporation plcExhibit 10.6Commercial Supply Contract(the “ Contract ”)betweenProthena Therapeutics LimitedAdelphi PlazaUpper George's StreetDún LaoghaireCo. DublinA96 T927Ireland(“ Customer ”)andRentschler Biotechnologie GmbHErwin-Rentschler-Str. 21, 88471 Laupheim,Germany(“ Rentschler ”)each or together called the “ Party/Parties ”.WHEREAS , Rentschler and Customer have entered into a Master Development Services Agreement dated August 10, 2015(the “ MDSA ”) for certain development and manufacturing services for clinical purposes for Customer’s Product (as definedbelow);WHEREAS , Rentschler and Customer entered into a non-binding Letter of Intent dated August 11, 2015, to set forth the Parties’intentions in relation to the terms and conditions governing the commercial supply of Product; andWHEREAS , Customer desires to have Rentschler manufacture Product for supply to Customer, all on the terms and conditionsset forth below.NOW, THEREFORE , in consideration of the mutual covenants and obligations set forth herein, and for other good and valuableconsideration, the receipt and sufficiency of which is hereby acknowledged, Rentschler and Customer agree as follows:1.Definitions1.1.“Affiliate” means any corporation or other entity that controls, is controlled by, or is under common control with, aParty hereto. An entity shall be regarded as in control of another corporation or entity if it (a) owns or directly orindirectly controls more than fifty percent (50%) of the voting securities or other ownership interest of the othercorporation or entity, or (b) possesses, directly or indirectly, the power to direct or cause the direction ofmanagement or policies of the entity in question (whether through ownership interests, by contract or otherwise).Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc1.2.“Applicable Law” shall mean all laws, statutes, ordinances, codes, rules, and regulations that have been enactedby a Government Authority and are in force as of the Effective Date or come into force during the Term, in eachcase to the extent that the same are applicable to the performance by the Parties of their respective obligationsunder this Contract.1.3.“Batch” means each single Manufacturing run of Product at [***] litre scale.1.4.“Batch Capacity” has the meaning set forth in Section 2.2.1.5.“[***]” has the meaning set forth in Section 1.23.1.6.“Binding Forecast” has the meaning set forth in Section 3.3.1.7.“BLA” or “Biologics License Application” means a request for permission from the FDA to introduce, or deliverfor introduction, a biologic product into interstate commerce (21 CFR 601.2).1.8.“Calendar Quarter” means the respective periods of three consecutive calendar months ending on March 31, June30, September 30 and December 31 in each calendar year.1.9.“Cell Line” means the [***] with the designation NEOD001.1.10.“Certificate of Analysis” means, with respect to a Batch, that complete and accurate document setting forth themeasured and observable characteristics of each Batch as required by the applicable Purchase Order,Specifications and Quality Agreement, as dated, executed and provided to Customer by Rentschler.1.11.“Claim” has the meaning set forth in Section 12.5.1.12.“Collaboration Intellectual Property” has the meaning set forth in Section 15.5.1.1.13.“cGMP” means Current Good Manufacturing Practices as promulgated under each of the following as in effect onthe Effective Date and as amended or revised after the Effective Date: (a) the EU cGMP Guidelines, (b) the U.S.Food, Drug & Cosmetics Act (21 U.S.C. § 301 et seq. ) and related U.S. regulations, including 21 Code of FederalRegulations (Chapters 210 and 211) and other FDA regulations, policies, or guidelines in effect at a particular timefor the manufacture, testing and quality control of investigational drugs; and (c) the ICH guide Q7a “ICH GoodManufacturing Practice Guide for Active Pharmaceutical Ingredients” as applied to investigational drugs (section 19of such guide).1.14.“Commercial Intellectual Property” means all intellectual property which arises out of or in connection withRentschler’s activities performed under this Contract.1.15.“Confirmation of Compliance” means Rentschler´s complete and accurate certificate, executed and delivered toCustomer in connection with each Batch of Product, confirming that such Batch of Product was manufacturedaccording to cGMPs, the applicable process and applicable laws at the place of manufacturing, and setting forth anydeviations therefrom and the results of final investigations thereof.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc1.16.“Consumables” has the meaning set forth in Section 2.5.1.17.“Contract Year” shall mean a year beginning on the Effective Date, or an anniversary of the Effective Date duringthe Term, and ending one (1) year after such respective date.1.18.“Controlled” means with respect to any intellectual property right, the possession (whether by ownership orlicense, other than pursuant to this Contract) by a Party of the ability to grant to the other Party access and/or alicense as provided herein under such right without violating the terms of any agreement or other arrangements withany third party existing before or after the Effective Date.1.19.“Customer Confidential Information” has the meaning set forth in Section 17.2.1.20.“Customer Embodiment” has the meaning set forth in Section 15.5.1.1.21.“Customer Indemnitees” has the meaning set forth in Section 12.6.1.22.“Customer Intellectual Property” has the meaning set forth in Section 15.4.1.23.“Customer Technology” means (i) [***] , and (ii) all [***] (a) [***] , and/or (b) [***] . [***] shall include any [***]pursuant to [***] and any [***] that is [***] pursuant to [***] .1.24.“Dispute” has the meaning as set forth in Section 5.3.1.25.“Dispute Notice” has the meaning as set forth in Section 5.3.1.26.“DMF” means the drug master file for the Product.1.27.“DSP Services” has the meaning as mentioned in Section 10.1.1.28.“Effective Date” means the 9th day of November, 2016.1.29.“EMA” means European Medicines Agency.1.30.“EU cGMP Guidelines” has the meaning as set forth in Section 4.3.1.31.“Executives” has the meaning set forth in Section 5.3.1.32.“Exit Fee” has the meaning set forth in Section 10.2.1.33.“Facility " has the meaning as set forth in Section 18.2.1.1.34.“FDA” means the U.S. Food and Drug Administration.1.35.“For-Cause Audits” has the meaning set forth in Section 7.4.2.1.36.“Government Authority” shall mean any supranational, national, regional, state or local government, court,governmental agency, authority, board, bureau, instrumentality, regulatory body, or other government entity,including without limitation any of the foregoing that is involved in the granting of approvals, licenses,Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcregistrations, or authorizations for development and commercialization of the Product.1.37.“IND” or “Investigational New Drug Application” means a request for authorization from the FDA to administeran investigational new drug or biological product to humans.1.38.“Initial Technology Transfer” has the meaning set forth in Section 2.2.1.39.“Initial Term” has the meaning set forth in Section 19.1.1.40.“Initiation Notice” has the meaning as set forth in Section 20.3.1.41.“Long Range Forecast” means the forecast levels set forth in Section 3.3.1.42.“Losses” has the meaning set forth in Section 12.5.1.43.“MAA” or “Marketing Authorization Application” means a request for permission from the EMA and EuropeanCommission to bring a newly developed medicinal product to market.1.44.“Manufacture", “Manufactured” or "Manufacturing” shall mean the manufacture of the Product for commercialpurposes.1.45.“Non-Conforming Product” has the meaning as set forth in Section 6.3.1.46.“Other Intellectual Property” has the meaning set forth in Section 15.6.1.47.“Price” means the payment for the Manufacture as set forth in Section 9.1.1.48.“Product” means the [***] NEOD001, [***] drug substance.1.49.“Project Intellectual Property” shall have the meaning given in the MDSA.1.50.“Project Manager” has the meaning set forth in Section 4.2.1.51.“Purchase Order” shall have the meaning set forth in Section 3.5.1.52.“Quality Agreement” shall have the meaning set forth in Section 4.4.1.53.“Release” means, with respect to a Batch of Product, the release of the Product arising from such Batch toCustomer in accordance with the terms of the Quality Agreement.1.54.“Renewal Term” has the meaning set forth in Section 19.1.1.55.“Rentschler Confidential Information” has the meaning set forth in Section 17.1.1.56.“ Rentschler Indemnitees ” has the meaning set forth in Section 12.5.1.57.“Rentschler Intellectual Property” has the meaning set forth in Section 15.5.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc1.58.“Rentschler's Qualified Person” means the person(s) in Rentschler who will provide the requisite certification forrelease of Product as required by Applicable Law and pharmaceutical regulations further defined in EU GMP GuideAnnex 16.1.59.“Rentschler Technology” means [***] (a) [***] pursuant to [***] , and/or (b) [***] .1.60.“Representatives" has the meaning set forth in Section 5.1.1.61.“[***]” has the meaning set forth in Section 3.8.1.62.“Scale Up Date” means the date of completion of the last process performance qualification Batch.1.63.“Second Source” has the meaning as set forth in Section 3.4.1.64.“Specifications” means all the tests, analytical methods and/or limits, and the results thereof, as applicable,mutually agreed by the Parties in writing, with which the respective Product has to conform to be consideredacceptable by Customer.1.65.“Steering Committee ” has the meaning set forth in Section 5.1.1.66.“Target Amount” means the expected amount of Product resulting from one production Batch. The Target Amountwill be agreed by the Parties following completion of the process performance qualification Batches.1.67.“Technology” means all cDNA, cell lines, cell banks, master cell banks, constructs, reagents, cell culture media,antibodies and/or other tangible materials, methods, techniques, processes, trade secrets, patent rights, copyrights,know-how, data, documentation, regulatory submissions, specifications and other intellectual property rights of anykind.1.68.“Technology Transfer” has the meaning as set forth in Section 20.1.1.69.“Term” has the meaning as set forth in Section 19.1.1.70.“Transfer Request” has the meaning set forth in Section 20.1.1.71.“Transferred IP” has the meaning as set forth in Section 15.5.3.1.72.“USP Services” has the meaning as set forth in Section 10.1.1.73.“USP/DSP Reservation ” has the meaning as set forth in Section 10.1.2.Commercial Terms2.1.Scope . This Contract sets forth the terms and conditions under which Rentschler will manufacture commercialquantities of the Product for Customer. The Parties agree that these terms and conditions are applicable to eachPurchase Order placed during the Term.2.2.Rentschler Obligations . Rentschler shall cooperate with Customer in performing the transfer to Rentschler of theprocess and Cell Line and any associatedConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcTechnology necessary for the purpose of Manufacturing Product in commercial quantities under this Contract,including the transfer of the [***] to Rentschler pursuant to the MDSA (such activities, the “ Initial TechnologyTransfer ”). Rentschler shall implement at the Facility the ability to Manufacture Product for sale solely to theCustomer in accordance with the Specification, cGMP, and the DMF at commercial scale in order that Rentschlerhas the capacity to produce (as further defined by the forecasting process described in Section 3.3. a quantity of atleast [***] Batches in each [***] period following the Scale-Up Date (the “ Batch Capacity ”). Rentschler will alsoperform the Manufacturing in compliance with the marketing authorization and in accordance with the Specificationsfor such Manufacturing, which shall be mutually agreed by the Parties no later than [***] prior to the first vial thaw forthe first process qualification Batch, and set forth once agreed and updated thereafter in writing accordance with amutually agreed change control system as set forth in the Quality Agreement, and attached thereafter as a scheduleto the Quality Agreement. Customer shall inform Rentschler about any contemplated change in the marketingauthorization or other regulatory requirements for Product which may have an impact on the Manufacture.2.3.Customer Obligations . Unless agreed to in writing by Rentschler, Customer is solely responsible for:2.3.1providing complete and accurate requirements to enable the Parties to define the Specifications;2.3.2providing Rentschler with complete and accurate information and requirement of the marketing authorization(also the Material Data Safety Sheet) necessary to perform the Manufacturing;2.3.3maintaining the DMF; and2.3.4performing such other obligations as Rentschler may reasonably request from time to time as are necessary tosupport Rentschler’s Manufacturing of Product pursuant to this Contract.2.4.No Default . Rentschler will not be liable to Customer nor be deemed to have breached this Contract to the extentthat such liability or alleged breach is the result of errors, delays or other consequences arising from (i) Customer’sfailure to provide documents or information in a timely manner, or (ii) breach of Customer's obligations. If Customerdelays or suspends the forecasted quantities the consequences as listed in Section 10. shall apply.2.5.Procurement Services . Rentschler will undertake for Customer, but in its own name and on its own behalf, toprocure all resins, media, consumables and materials necessary for Manufacturing (collectively “ Consumables ”).Customer will reimburse Rentschler within [***] following the presentation of an itemized invoice, for all out-of-pocket costs actually incurred by Rentschler for procurement of such Consumables, (which shall be passed throughto Customer), plus a handling fee (to be applied solely to the cost of such Consumables, excluding any taxes, feesor charges applicable thereto) according to the following terms:a) cell culture media and chromatographic resins: a handling fee of [***] will apply.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcb) a tiered handling fee shall apply to other materials and consumables based on the number of Batchesincluded in the Binding Forecast for the [***] period commencing in the month in which the materials wereprocured by Rentschler:Number of Batches Forecasted in[***] period following the date ofpurchase of materialsHandling Fee[***][***][***][***][***][***]c) Rentschler will use its [***] to place any purchase order for all Consumables to match any necessary leadtime provided by the suppliers of such Consumables. For any delay or default of the supplier outside thereasonable control of Rentschler, Rentschler shall not be responsible, provided that Rentschler shall notifyCustomer promptly in writing of any such delay or default, and the Parties shall discuss in good faith and agreeupon the steps to be taken to mitigate such delay or default. In any event, Rentschler shall use its [***] to workwith such supplier, or an alternative supplier, to procure the necessary Consumables as soon as practicallypossible.3.Preferred Supplier, Contingency and Forecasts3.1.Price . Rentschler shall supply all Product Manufactured pursuant to this Contract at the Price, as further set forth inSection 9.3.2.Minimum Purchase Quantity . During each [***] period of the Term, beginning with Customer’s receipt of the firstmarketing authorisation until expiration or termination of this Contract, Customer shall include within its BindingForecast, and place Purchase Orders for, a minimum quantity of the [***] , or (b) [***] , at the agreed price (the “Minimum Purchase Obligation ”). Such Minimum Purchase Obligation shall not be deemed to be a warranty or aguarantee by Rentschler to provide any such capacity, provided that if Customer submits a Binding Forecast andplaces Purchase Orders for [***] in each such [***] period, Customer will be deemed to have fulfilled the MinimumPurchase Obligation, and shall have no further obligation to purchase any specified quantity of Product fromRentschler during the respective [***] period. Further, if Rentschler fails to provide the capacity for the supply ofProduct (including as a result of a rejection by Rentschler of a Long Range Forecast or any portion thereof for theapplicable period that was within the Batch Capacity), and/or to supply such Product against such Purchase Ordersfor any reason, Customer shall have no obligation to place additional Purchase Orders during such [***] period orany subsequent period to make up the shortfall in quantity caused by Rentschler’s failure to provide capacity orsupply the quantity of Product ordered by Customer.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc3.3.Long Range Forecast . At least [***] before the first market supply is intended, Customer will provide a good faithrolling forecast covering [***] , which Customer will update quarterly, specifying the Product, the ordered quantityand the expected delivery dates (“ Long Range Forecast ”). If Rentschler does not object within [***] after thereceipt of the initial Long Range Forecast and each subsequent quarterly Long Range Forecast, the Long RangeForecast shall be deemed accepted, and following the date upon which the Initial Technology Transfer iscompleted, (a) the first [***] of each Long Range Forecast shall become binding for both Parties as to the aggregatequantity of Product for which Purchase Orders must be placed during [***] (the “ Binding Forecast ”), and thesecond [***] of each Long Range Forecast shall be non-binding (b) Rentschler may not reject any updated LongRange Forecast for any quantity of Product that is (i) for months [***] of the updated Long Range Forecast less thanor equal to the immediately preceding Long Range Forecast, for the corresponding period, and (ii) for months [***]of such updated Long Range Forecast within the Batch Capacity, and (c) Rentschler shall be required to supply toCustomer any quantity of Product included in a Binding Forecast that is less than or equal to the Long RangeForecast provided by Customer for the applicable period. Any cancellation or reduction in the quantity of Productpurchased during the period of the Binding Forecast by Customer will be subject to Section 10.2. For clarity, (A) noportion of the Long Range Forecast will become a Binding Forecast until such time as the Initial TechnologyTransfer has been completed so that Product is able to be Manufactured at commercial scale, unless Customernotifies Rentschler in writing that it wishes to place a Binding Forecast prior to completion of the Initial TechnologyTransfer, and (B) if the Initial Technology Transfer has not been completed to Customer’s reasonable satisfaction inorder to enable the Manufacture of commercial quantities of Product by June 30, 2017, Section 19.4 will apply. Forthe avoidance of doubt, and without limiting any of the foregoing, Rentschler is not obligated to reserve resourcesas long as the Long Range Forecast is not a Binding Forecast.3.4.Second Source . At any time during the Term, and subject to Section 3.2., Customer shall have the right to utilizeone or more second source(s) of Manufacture for Product (a “ Second Source ”). Such Second Source may be anythird party manufacturer designated by Customer. Upon Customer’s written request, Rentschler shall cooperate withCustomer and shall use its best efforts to support Customer in its efforts to source from any Second Source,including by performing Technology Transfer to such Second Source as set forth in Section 20., at Customer’sexpense.3.5.Purchase Order . Customer shall order Product by written or electronic purchase orders (or by any other meansmutually agreed by the Parties) in a form to be mutually agreed by the Parties (each a “ Purchase Order ”). EachPurchase Order shall be binding as far as it is in line with the Binding Forecast, and any cancellation thereof shallbe subject to Section 10. Each Purchase Order shall set forth the quantity of Product to be ordered and therequested delivery date. Rentschler shall deliver the amount of Product specified in each Purchase Order no laterthan the dates specified therein. The initial Purchase Order of Product by Customer shall be provided before or withthe initial Binding Forecast. Prior to the beginning of each Calendar Quarter, but at least [***] prior to the earliestdesired date of delivery, Customer shall place binding Purchase Orders for Product consistent with the BindingForecast.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc3.6.Conflicts . Any Purchase Order placed by Customer shall not deviate from, change, modify or amend the terms ofthis Contract, unless specifically agreed by the Parties in writing. To the extent that there is any conflict orinconsistency between this Contract and any Binding Forecast, Purchase Order, or any other document pertainingto the Manufacture or supply of Product, the terms of this Contract shall govern.3.7.Failure to Supply Product . Rentschler shall use its [***] to fulfill all binding Purchase Orders. In the event thatRentschler fails to deliver at least [***] of the Target Amount of Product ordered in a particular Purchase Order inaccordance with the terms of such Purchase Order, and such failure is caused by Rentschler´s [***] , Customershall have the right to take any and all steps necessary to cover any such shortfall in the supply of Product and tomodify any then outstanding Purchase Orders without penalty. Notwithstanding the foregoing, Customer agrees thatexcept in the case of [***] by Rentschler, any shortfall in the delivered quantity of Product shall be [***] , providedthat Rentschler shall use its best efforts to [***] , including without limitation by [***] . Rentschler shall notifyCustomer in writing of the expected timing of [***] , which shall be delivered [***] within [***] following the date offailed supply.3.8.[***] . During the Term, Customer shall [***] at Customer’s premises or at the premises of Customer’s third partydesignee, which may be Rentschler or a Rentschler Affiliate) [***] Product [***] by Rentschler (the [***] ). Customershall prepare, in its sole discretion, a policy governing [***] , and shall, upon written request by Rentschler, makesuch policy available to Rentschler for review, provided that such policy shall be the Confidential Information ofCustomer, and Customer may redact any commercially sensitive information from such policy prior to making itavailable to Rentschler. Customer shall consider in good faith any reasonable comments by Rentschler in relation tosuch [***] policy. If Customer requests that [***] , such [***] shall be provided on the terms set forth in Section 8.4.Professional Services, cGMP, Quality Agreement4.1.Personnel . Rentschler will assign a sufficient number of professionally qualified personnel to perform theManufacture in a professional and workmanlike manner in accordance with recognized industry standards . EachParty shall fully and reasonably cooperate with the other Party to provide appropriate information and assistance tothe other Party in connection with the Manufacture, responding in a reasonable and timely manner with respect toall reasonable requests for information and approval.4.2.Project Managers . Each Party shall appoint a project manager, who shall have sufficient authority, experience andknowledge to execute the responsibilities of the appointing Party (each, a “ Project Manager ”). The ProjectManagers shall be the principal point of contact between the Parties with respect to daily implementation of theManufacture and for the other activities contemplated by this Contract. The Project Manager for each Party shall beidentified in writing to the other Party within [***] after the Effective Date. Each Party may change its ProjectManager upon written notice to the other Party. Commencing the Effective Date the Project Managers shall meet atleast [***] per Calendar Quarter during the Term and as otherwise agreed by the Parties either by video conferenceorConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plctelephonically until the earlier of the date of first commercial sale of the Product or termination of this Contract. TheProject Managers shall keep the Parties fully informed regarding the status of activities under this Contract duringthe Term.4.3.cGMP Compliance . Where the German Pharmaceuticals Act, the German Regulation for Manufacturing ofMedicinal Products and Active Ingredients and the Guidelines to Good Manufacturing Practice of MedicinalProducts for Human and Veterinary Use of the European Union (“ EU cGMP Guidelines ”) or the applicablePurchase Order or other Applicable Law requires Rentschler to do so, Rentschler shall comply with cGMP asregulated under the EU cGMP Guidelines and under Title 21, Parts 210, 211, 600 and 610 of the Code of FederalRegulations of the United States of America, as amended from time to time, and the International Committee onHarmonization and other comparable guidelines, directives or standards required by governmental authorities in theUnited States and European Union. If Customer requests Rentschler to comply with cGMP as regulated under otherjurisdictions, Customer will provide Rentschler with information required to comply with such cGMP rules and theParties will mutually agree prior to the Manufacture of Product under such cGMP rules, if and how the additionalrequirement can be met.4.4.Quality Agreement . Within [***] following the Effective Date, or a date otherwise agreed between the Parties, theParties will conclude a contract, or amend an existing contract covering quality assurance and quality control for theProduct that may already be in place between the Parties, that defines in detail the responsibilities of each Partywith respect to quality assurance and quality control issues relating to Manufacture of Product under cGMPconditions (the “ Quality Agreement ”). In the event of a conflict between the Quality Agreement and this Contractconcerning compliance with cGMP or issues relating to quality assurance and quality control, the provisions of theQuality Agreement shall govern. As regards other conflicts, this Contract shall prevail. Rentschler shall maintaincomplete and accurate written records to verify compliance with this Section 4.4. and Customer may audit suchrecords in accordance with Section 7.4.4.5.Specifications . Any changes to the Specifications during the Term shall be mutually agreed in accordance withprocedures to be set forth in the Quality Agreement. Customer shall not make any changes to the Specificationswithout the prior written permission of Rentschler, which shall not be unreasonably withheld. In the event thatCustomer makes any changes to the Specifications without Rentschler’s prior written consent, Customer shall besolely responsible for the consequences of such changes and for any claim for damages or indemnification arisingdirectly therefrom.4.6.Consents and Permits . Rentschler shall obtain and maintain all governmental licenses and permits necessary toestablish and operate the Facility for performance hereunder, including but not limited to those required by the FDAor any Government Authority in any jurisdiction. Rentschler shall operate the Facility in compliance with allApplicable Laws and Rentschler shall promptly notify Customer in writing if any applicable regulatory agency orGovernment Authority issues a finding that materially affects Rentschler’s ability to perform under this Contract.4.7.Subcontracting . Rentschler may not, without Customer’s express written consent, subcontract any of theManufacturing hereunder to a third party.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc5.Steering Committee5.1.Representatives . The Parties shall form a Steering Committee which shall comprise a minimum of [***] and anequal number of representatives (“ Representatives ") from each of Rentschler and Customer, and each Party shallnotify the other of its elected Representatives (the “ Steering Committee ”). Each Representative shall carry anequal vote and proxy votes may be granted by Representatives to their fellow Representative(s) if they are unableto attend meetings. The Steering Committee will take action by unanimous consent of its Representatives. EachParty shall be entitled to change their respective nominated Representatives at any time and shall promptly givewritten notice of the change to the other Party.5.2.Meetings . The Steering Committee may meet in person or by telephone. The Steering Committee shall meet atsuch times as the Steering Committee determines reasonably necessary, but no less than once per CalendarQuarter (unless the Parties mutually agree otherwise), one of which shall be an in-person meeting.5.3.Dispute Resolution . Should the Steering Committee be unable to reach agreement on any issue (a “ Dispute ”), theDispute shall be referred for resolution by one or more meetings between a member of the senior managementteam from each Party (the “ Executives ”), which meeting(s) may be by teleconference. Each Executive shall act ingood faith and discuss the issues relating to the Dispute to seek a resolution amicably acceptable to both Parties. Incase such Executives cannot agree within [***] after such meeting(s), then before resorting to arbitration orlitigation, unless injunctive relief is required by either Party (as set forth in Section 24.3.) when either Party shall befree to resort to litigation, the Parties shall use their reasonable efforts to negotiate in good faith and settle amicablythe Dispute. If the Dispute cannot be settled through negotiations by the Executives, either Party may give to theother a notice in writing (a “ Dispute Notice ”). Within [***] of the Dispute Notice being given the Parties shall eachrefer the Dispute to their respective Chief Executive Officers who shall attempt to resolve the Dispute.6.Delivery6.1.Delivery Terms . The place of performance is the Facility. Delivery of all Products by Rentschler shall be made [***](Incoterms 2010). Transfer of title and risk of loss of Product subject to a given Purchase Order shall occur whenRentschler notifies Customer in writing that the Product has been Released and is ready for dispatch. Followingnotification of Release, Rentschler may either (a) place Product with a common carrier for delivery to Customer or toa third party as directed by Customer, or (b) store the applicable Product at the Facility or other mutually agreedlocation upon the conditions of storage (including the applicable fees) set forth in Section 8. For Product that is notdirected to storage, Rentschler shall package and arrange for shipment of Products to the delivery addressspecified by Customer, all in accordance with the instructions of Customer.6.2.Cooperation . Without prejudice to the [***] delivery terms, Rentschler will reasonably support Customer in thepreparation and management of shipments to Customer or third party as directed by Customer. Each shipment ofcGMP Product will follow the criteria and contain the documents set forth in the QualityConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcAgreement. The Parties shall cooperate reasonably to obtain all customs licenses or permits or export certificatesnecessary to ship the Product.6.3.Non-Conforming Product . Customer may reject some or all of a Batch of Product if (a) Rentschler fails to [***] , (b)the Batch does not [***] , or has been [***] , or (c) the Batch, if intended for human use, was not [***] at the place ofManufacturing (the Product described in (a) through (c), “ Non-Conforming Product ”). Non-Conforming Productrejected by Customer shall be subject to Section 11.6.4.Recalls . Customer shall have the sole discretion to withdraw or recall any Product, and shall be responsible fordirecting all administrative and regulatory actions relating thereto. In the event that Customer withdraws or recallsany Product Manufactured and supplied by Rentschler, Rentschler shall cooperate with Customer as reasonablyrequested in connection with any such withdrawal or recall, including complying with all applicable laws andregulations. Rentschler shall reimburse to Customer the cost of any recall to the extent due to Rentschler’s [***] , orRentschler’s [***] or [***] , and shall also, at Customer’s election (subject to the remainder of this Section 6.4.),either [***] , as set forth in Section 11.2. for Non-Conforming Product, provided that Customer may only [***] underSection 11.2.(b) if Rentschler is unable to schedule and deliver the replacement Product within [***] following thedate of determination of Non-Conformance. Rentschler’s liability under this Section 6.4. shall be [***] . Rentschlershall also be responsible for the costs to return any recalled or withdrawn Product from Customer to Rentschlerwhich, shall be also subject [***] .7.Regulatory Matters, Audits and Inspections7.1.Regulatory Filings . Customer shall have sole responsibility for all submissions and filings with any regulatoryauthority, including without limitation any IND, BLA, MAA, comparability filing or other similar filing. Notwithstandinganything contained in this Contract to the contrary, Rentschler shall not initiate or participate in any communicationswith the FDA or any other domestic or foreign governmental authority concerning the subject matter hereof unlessrequired by law or requested to do so by Customer, and then only upon prior consultation with Customer.7.2.Storage of Product Samples . Rentschler shall retain and store samples of all cGMP Product released byRentschler’s Qualified Person with a Certificate of Analysis under this Contract for such period as may be requiredby applicable regulatory requirements applicable in Europe and the United States of America to the Manufacture ofcGMP Product for human use. In the absence of a definitive time period, such period shall be [***] from the date ofRelease or delivery. If the Parties agree, Rentschler shall retain such samples for a longer period at Customer’scost.7.3.Records . Rentschler shall maintain suitable written records to verify compliance with the provisions of this Contractrelating to cGMP, including without limitation Sections 2.2., 4.3., 7.2., 8.2. and 18.2.4., as well as compliance withthe Quality Agreement.7.4.cGMP Compliance Audit . Customer and/or its duly authorized Representatives (which may include any collaboratoror partner of Customer) can conduct an inspection or audit of the Facility and the Manufacturing process andservicesConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcbeing provided hereunder by representatives with appropriate qualifications or experience, [***] per year (with theexception of For-Cause Audits (as defined below), or any audit or inspection requested by the FDA or otherregulatory authority), as required by or to verify compliance with cGMP, the Specifications, the Quality Agreementand applicable law in a manner that is customary in the biopharmaceutical contract business.7.4.1.Customer will request an appointment for regular audits or inspections with Rentschler at the latest [***] beforeand agree on the dates, the scope, and further details as the case may be.7.4.2.Rentschler will without undue delay (in any event not to exceed [***] ) allow for audits caused by events whichcould put the quality of Customer’s Product at risk (“ For-Cause Audits ”).7.4.3.For regular audits and inspections (other than For Cause Audits) permitted under Section 7.4., Customer andits duly authorized representatives will have reasonable access to Facility used to Manufacture the respectiveProduct, during operating hours and during active Manufacturing of the respective Product, to inspect theFacility and Manufacturing process.7.5.Inspection . If any Governmental Authority conducts or gives notice to Rentschler of its intent to conduct aninspection of the Facility or take any other regulatory action with respect to the Manufacture hereunder, Rentschlerwill promptly give Customer notice thereof, including all information and copies of correspondence pertinent theretoand will use their reasonable efforts to obtain approval for Customer or its authorized representative to take part inthe inspection. Customer shall bear any costs of such inspection for any authority located, except for inspectionsperformed by authorities of the EU or by FDA.8.Storage8.1.Storage . Rentschler shall upon request by Customer store Product, including any mutually agreed [***] at itsFacility or other mutually agreed location as set forth in this Section 8.8.2.Storage Terms . The Price for Product is exclusive of costs of storage of Products Manufactured by Rentschler forCustomer. If Customer requests Rentschler to store any quantity of Product, the storage capacities have to beagreed with Rentschler. As long as sufficient storage capacities are available Rentschler will store such Productappropriately according to cGMP and Applicable Laws in as many storage bins as reasonably required. Customershall be responsible, at its expense, for insuring Product while in storage at Rentschler’s facilities. Rentschler willinvoice Customer per used storage unit at the end of each Calendar Quarter. One storage unit is defined as onepalette, one shelf, one storing position and/or one freezing compartment. The storage prices are as follows:Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcStorage AreaStorage ConditionsPrice per storage unit andCalendar QuarterHigh Rack Warehouse15-25°C[***]Cooling Warehouse2-8°C[***]Freezing Warehouse-20°C[***]Deep Freezer-70°C[***]Cell Bank StorageN 2 vapour phase[***]8.3.Storage Fee Review . Rentschler can adjust the storage prices [***] according to the percentage increase [***] .Rentschler shall inform Customer of such increase within [***] of such increase.9.Price and Payments, Records of Consumables9.1.Price . The Price for the Product is set forth in Schedule 1. Following Manufacture of the first [***] for commercialsupply, [***] .9.2.Payment Terms . Payments must be made in [***] and are payable within [***] from date of invoice. Invoices are tobe issued according to the following instalments:a) [***] of the agreed payment upon removal of the vial of cells from the cGMP working cell bank that is suitable forManufacture of the applicable Batch, from frozen storage.b) [***] of the agreed payment upon Rentschler’s Release of the respective Batch.9.3.Price Adjustment . The Price for Product may increase [***] , commencing on [***] . Any increase will be based on[***] of the [***] and [***] , provided however, that the aggregate of any such increases shall not increase the Priceof Product more than [***] per year.9.4.Books and Records . Rentschler shall keep complete, true and accurate books and records necessary for thecalculation of (a) the amounts invoiced for Consumables purchased by Rentschler under Section 2.5., including theapplicable handling fees and any discounts, rebates or similar price reductions directly relating to suchConsumables, and (b) any other amounts invoiced by Rentschler to Customer under this Contract during the Term.Upon Customer’s request, Rentschler shall promptly provide Customer with copies of the records of the supply ofConsumables to Rentschler by third parties, in order that Customer can verify the amounts invoiced to Customerhereunder, and the handling fees charged by Rentschler on such Consumables pursuant to Section 2.5. IfCustomer identified any undisputed discrepancy between the amounts charged to Customer by Rentschler for suchConsumables, and the amount that should have beenConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plccharged under Section 2.5., Rentschler shall, within [***] of being notified by Customer of the discrepancy, refund toCustomer the amount of such overpayment.10.Reservation, Exit Fee10.1.Reservation of Manufacturing Capacity . Customer acknowledges and agrees that immediately followingCustomer’s placement of Purchase Orders or upon the commencement of a Binding Forecast period that requireseither (a) Manufacture including upstream processing, during which proteins are produced by cells geneticallyengineered to contain the gene which will express the protein of interest (“ USP Services ”) and/or (b) Manufactureincluding downstream processing, during which the produced protein is isolated and purified (“ DSP Services ”),Rentschler will make a binding reservation of Manufacturing capacity at the applicable Rentschler cGMP facility fora time period that will enable Manufacture of Product for delivery on the dates as shown in the respective PurchaseOrder (the “ USP/DSP Reservation ”). If the dates or time lines in the Purchase Order are amended by mutualagreement of the Parties in writing pursuant to Section 3.4., Rentschler shall also change the USP/DSP Reservationto reflect the amended Purchase Order.10.2.Exit Fees . If Customer cancels any Purchase Order, or does not submit a Purchase Order following a BindingForecast, or requests a reduction in the quantity of Product to be Manufactured by Rentschler that is the subject of aBinding Forecast, the associated USP/DSP Reservation shall also be cancelled, and in such case, Customer shallbe liable for an exit fee (the “ Exit Fee ”) as follows:Time period between cancellation andthe start date of the USP/DSPReservationExit Fee (percentage of the Priceapplicable to the Product in thecancelled Purchase Order)[***][***][***][***][***] [***]Notwithstanding the foregoing, Rentschler shall use its commercially reasonable efforts to rescheduleManufacturing services at its cGMP Facility in order to fill any cancelled USP/DSP Reservation. Rentschler shall beentitled to the Exit Fees set forth in this Section 10.2. for the cancellation of the USP/DSP Reservation only ifRentschler cannot use the Manufacturing capacity covered by the cancelled USP/DSP Reservation for anotherorder for Customer or any third party customer of Rentschler. No Exit Fee shall be due for the cancellation of anyservices other than the USP/DSP Reservation, with the exception of Consumables that cannot be used for otherpurposes or third party services that have already been provided or are unable to be cancelled, which shall becharged to Customer in accordance with Section 2.5.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc11.Inspections, Defective Product11.1.Inspection of Product . Rentschler shall conduct an outgoing inspection in accordance with the provisions of theQuality Agreement. Upon receipt of each shipment of Product, Customer, or a third party designated by Customerfor receipt of Product, shall conduct an acceptance inspection in accordance with the Specification as well as avisual inspection. Customer shall inform Rentschler of the result(s) of the pharmaceutical inspection, including thejudgment of acceptance or rejection in writing within [***] after the receipt of such shipment of Product. If Customerfails to notify Rentschler of a rejection within such [***] , the shipment of Product shall be deemed accepted byCustomer.11.2.Remedies for Non-Conforming Product . If Rentschler supplies Non-Conforming Product (as defined in Section6.3.), Rentschler will, at Customer’s option (subject to the remainder of this Section 11.2., either (a) as soon aspractically possible, [***] the Non-Conforming Product [***] that [***] , at [***] , or (b) [***] for the Batch of Non-Conforming Product [***] . Notwithstanding the foregoing, and subject to Section 12.1., Customer may only, [***] ,elect [***] following the date of determination of Non-Conformance.11.3.NO WARRANTY . TO THE EXTENT PERMITTED BY LAW, THE PRODUCT IS DELIVERED TO CUSTOMER “ASIS” AND EXCEPT AS SET FORTH IN THIS CONTRACT, INCLUDING WITH RESPECT TO RENTSCHLER’SREPRESENTATIONS AND WARRANTIES UNDER SECTION 18., RENTSCHLER MAKES NO WARRANTIES,REPRESENTATIONS OR GUARANTEES NOR ANY TERMS AND/OR CONDITIONS OF ANY KINDWHATSOEVER, EITHER EXPRESS OR IMPLIED WHETHER BY STATUTE, COMMON LAW, CUSTOM,COURSE OF DEALING OR OTHERWISE, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OFMERCHANTABILITY, NON-INFRINGEMENT, FITNESS FOR A PARTICULAR PURPOSE.12.Limitation of Liability and Indemnification12.1.The limitations set forth in [***] shall not apply to a Party’s liability to the other for [***] , or to any liability of eitherParty to the other Party or any third party [***] .12.2.The Parties [***] any liability to the other Party for [***] or [***] as well as [***] or [***] , and for [***] .12.3.Except as set forth in [***] , each Party’s overall liability to the other Party arising out of or in connection with thisContract, [***] , shall be limited to [***] but in no case [***] .12.4.Customer’s claims against [***] . Rentschler’s claims against [***] . Any claim [***] will become [***] .12.5.Customer shall indemnify, defend and hold Rentschler, its Affiliates and their respective officers, employees andagents (“ Rentschler Indemnitees ”) harmless from and against any losses, liabilities, damages, costs, fees andexpenses (including reasonable attorneys’ fees) (“ Losses ”) resulting from [***] :Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc(a) the [***] , including [***] any of the foregoing activities;(b) [***] , except to the extent such [***] ; or(c) [***] ,provided that [***] with respect to [***] to the extent that [***] pursuant to Section 12.6.12.6.Rentschler shall indemnify, defend and hold Customer, its Affiliates and their respective officers, employees andagents (“ Customer Indemnitees ”) harmless from and against any Losses resulting from [***] :(a) any [***] any [***] as a result of [***] ;(b) [***] , to the extent such [***] ; or(c) [***] ,provided that [***] with respect to [***] to the extent that [***] pursuant to Section 12.5.12.7.For the purposes of this Contract, including Sections 12.5. and 12.6., [***] if (i) it [***] , or (ii) it [***] .13.Costs of further Use and Liability for Administrative Procedures13.1.Administrative Costs and Fees . All costs concerning the further use or importation by Customer of any Productresulting from the Services are to be borne by Customer, including any administration fees connected with themarketing of the Product, even if the respective administrative authority should charge Rentschler directly. For anysuch fees invoiced to Rentschler directly, Customer shall reimburse Rentschler (or pay to Rentschler, if notified inadvance of when such fee becomes due) any fees that Rentschler is required to remit on Customer’s behalfpursuant to this Section 13.1. [***] following a valid invoice for such fees, unless the Parties otherwise agree analternative payment period in writing at the time Customer is notified of the applicable fee. Customer will informRentschler about any administrative requirement applicable to Rentschler of any country Customer is marketing itsProduct as soon as possible.13.2.Cooperation . If Rentschler’s cooperation is required in administrative procedures in procedures of admission,customs or of importation, Customer indemnifies Rentschler from any liability which may arise out of thiscooperation. That applies, in particular, in cases, where Rentschler, on Customer’s request, makes statements orapplications at or towards any Governmental Authority or where Rentschler participates in making those statementsor applications.14.Use of Intellectual Property Rights14.1.Rentschler hereby grants to Customer a [***] to [***] as described below and [***] solely to [***] , unless expresslyotherwise agreed.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc14.2.If the performance of the Services requires the use of [***] , Customer hereby grants to Rentschler a [***] (or, in thecase of the [***] .15.Reports, Ownership, Inventions15.1.Rentschler shall provide Customer with copies of all Batch documentation.15.2.In return for reasonable compensation, Rentschler shall supply Customer with data, results and information requiredto comply with any request of any applicable regulatory body or to comply with such regulatory body’s requirement.15.3.For the avoidance of doubt, all documents generated as a result of Rentschler’s performance under this Contractand delivered to Customer by Rentschler under this Contract, data related thereto and all regulatory filings andapprovals for the respective Product will be the sole and exclusive property of Customer.15.4.Intellectual property that (i) [***] , and (ii) [***] will be [***] shall control patent prosecution and maintenance thereof.[***] agrees to assign and hereby assigns to [***] all right title and interest it may have in any [***] . [***] shallprovide reasonable assistance to [***] for any action which may be necessary to assign or otherwise transfer anyrights to [***] . [***] shall notify [***] within [***] days of becoming aware of such [***] .15.5.Intellectual property that (i) [***] , and (ii) [***] , and (iii) [***] will be [***] shall control patent prosecution andmaintenance thereof.15.5.1.Intellectual property that (i) [***] , and (ii) [***] , including without limitation [***] shall be [***] and will be [***]except as set forth [***] . In any case [***] , including without limitation [***] , the Parties shall reasonablycooperate in the preparation, filing, prosecution and maintenance of such patent application.15.5.2.[***] shall control patent prosecution and maintenance of [***] , shall pay all costs associated therewith, shallkeep [***] reasonably apprised of the status thereof, and at the request of [***] shall copy its designated patentcounsel on all prosecution correspondence with patent offices and provide it a reasonable opportunity tocomment thereon. [***] will reasonably consider the input of [***] designated patent counsel, if any, with respectto the prosecution of any Claims in such [***] and shall reasonably cooperate to effect the filing of [***] . [***]agrees to assign and hereby assigns to Customer all right, title and interest it may have in any [***] .15.5.3.If a patent [***] that (i) [***] and/or (ii) [***] hereby assigns and shall promptly execute any documentsnecessary to assign the patent or patent application to [***] . Thereafter, [***] shall control patent prosecutionand maintenance thereof and shall pay all costs associated therewith. [***] will reasonably consider the input of[***] designated patent counsel with respect to the prosecution of any Claims in such [***] , as requested by[***] .15.6.Any intellectual property arising in connection with the [***] shall be [***] .Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc15.7.The Parties shall be obligated to [***] arising under the [***] shall be the responsibility of the Party [***] , followingthe [***] as set forth in this Contract and an invoice for same from [***] . For clarity, [***] agrees to [***] and invoice[***] .15.8.[***] shall have the [***] . [***] shall assist [***] , upon request [***] in taking any action to [***] and shall [***] ,including any [***] shall be used [***] of [***] .16.Documents16.1.Ownership . All documents which Rentschler receives from Customer for the purpose of activities pursuant to thisContract remain the property of Customer.16.2.Retention . Except as otherwise set forth herein, [***] after the completion of the respective Services, Rentschlermay destroy the pertaining documentation.16.3.Archives . Rentschler may in each case archive a copy of all other documents and data produced at or inconnection with the Manufacture in copy, and will not use this archive copy for any purposes other than to abide bythe relevant commercial and tax law provisions or to the extent to which these documents and this data are suitableas proof of a circumstance on the basis of which an otherwise mandatory existing liability of Rentschler, in particularpursuant to the Product Liability Act, the Medical Devices Act or the Pharmaceuticals Act, could be excluded.Rentschler agrees to notify Customer in writing a reasonable amount of time prior to any planned destruction of anyof the above referenced documents and provide Customer with the opportunity to control the disposition of suchdocuments. Customer shall bear all costs incurred by Rentschler in complying with any such written instructionsfurnished by Customer.16.4.Exceptions . Notwithstanding anything to the contrary in this Contract, Rentschler shall not be required to destroyany computer files stored securely by Rentschler that are created during automatic system back-up.17.Confidentiality17.1.The following information of Rentschler is confidential:17.1.1.all technical and non-technical information relating to the products and the business of Rentschler and itssubcontractors performing parts of the Manufacture for the benefit of Customer including without limitation anyand all information concerning: Rentschler´s toll manufacturing business and process development includingbut not limited, Rentschler Technology, Rentschler Intellectual Property ;17.1.2.any information, that a reasonable person conversant with the circumstances of the exchange of informationunder this Contract would deem to be confidential;17.1.3.any information, that Customer obtains willingly or accidentally during a visit or audit of the Facility and thatconcerns any of the information as laid out under 17.1.1. or 17.1.2.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc(17.1.1. – 17.1.3. inclusive “ Rentschler Confidential Information ”)17.2.The following information of Customer is confidential:17.2.1.all technical and non-technical information relating to the Product and the business of Customer includingwithout limitation any and all information concerning: Customer Technology, Customer Intellectual Property,Collaboration Intellectual Property and any other information generated under this Contract in connection withthe Manufacture;17.2.2.any information of Customer that a reasonable person conversant with the circumstances of the exchange ofinformation under this Contract would deem to be confidential.(17.2.1. and 17.2.2. together “ Customer Confidential Information ”)17.3.The Parties will keep the Confidential Information of the respective other Parties secret. Customer will useRentschler Confidential Information, and Rentschler will use Customer Confidential Information only to the extentrequired for the performance of the Contract.17.4.Each Party shall limit the disclosure of the other Party’s Confidential Information to officers or employees whoreasonably require the same in performance of activities related to this Confidential Information in order to performthe Services, additionally, (i) in case of Rentschler to the employees of Rentschler, Inc., 400 Oser Ave., Suite 1650,Hauppauge, NY 11788, USA, and these officers and employees are obligated to treat the same as confidential in thesame manner and to the same extent as provided herein, and (ii) in case of Customer, to its Affiliates and theirdirectors, officers and employees, and its consultants. The receiving Party will use its best efforts to ensure that anyconsultant, employee, director or officer to whom it discloses Confidential Information will retain such information instrict confidence. Notwithstanding the foregoing, Customer may disclose Rentschler Confidential Information,including the existence and terms and conditions of this Contract to (a) its potential and actual collaborators andpartners, as long as these are not engaged in direct competition with Rentschler, in connection with the developmentand commercialization of the Product, and (b) potential or actual investment bankers, acquirers, lenders or investors,and (c) advisors of Customer or any of the foregoing in (a) and (b) as far as such are bound to confidentiality terms.17.5.Rentschler is allowed to share the Confidential Information on a strictly need to know basis solely with those thirdparty suppliers which are indicated in the respective Purchase Orders as permitted recipients of the ConfidentialInformation and who are under written obligations of confidentiality no less stringent than those herein.17.6.The Parties acknowledge that Rentschler’s internal software and technical systems are maintained and operated byRentschler SE, located at Erwin-Rentschler-Straße 21, 88471 Laupheim, Germany. During maintenance or operationof Rentschler´s internal software and hardware systems by Rentschler SE, Rentschler SE may come in contact withConfidential Information, as may information technology service providers engaged to repair Rentschler´s internalsoftware or technical systems. These persons’ exposure to Confidential Information in the ordinary course of theirservices shall not constitute a breach of this Contract, provided,Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plchowever, that Rentschler SE and the respective information technology service provider act in good faith and arebound to obligations of confidentiality at least equal to those contained herein.17.7.Additionally, the receiving Party shall not be required to delete any files stored securely by the receiving Party thatwere created during automatic system back-up.17.8.The receiving Party may disclose Confidential Information to a governmental, administrative or other regulatory bodyor during judicial process to the extent required by mandatory law. In case of such disclosure, the receiving Partyshall provide the disclosing Party with written notice of such request or requirement so that the disclosing Party mayseek a protective order or other appropriate remedy. The Parties shall use all reasonable efforts to limit thedisclosure and maintain the confidentiality of such Confidential Information to the extent permitted by Applicable Lawand regulation. If the receiving Party is unable to inform the disclosing Party before the information is disclosedpursuant to this Section, it shall to the extent permitted by law inform the disclosing Party of the full circumstances ofdisclosure and the Confidential Information which has been disclosed immediately after the disclosure. The receivingParty agrees further to provide immediate notice to the disclosing Party in the case of any unauthorized use ofConfidential Information.17.9.Rentschler may disclose this Contract and Customer Confidential Information to its insurers, its insurance brokersand to surveyors in case of occurrence of event insured as appropriately required. Rentschler will safeguard thatinsurance, insurance broker and surveyors are obligated to treat the same as confidential, either by law or by aseparate non-disclosure agreement, in the same manner and to the same extent as provided herein.17.10.Customer may disclose this Contract and Rentschler Confidential Information to its insurers, its insurance brokers, itsauditors, and governmental entities to the extent reasonably necessary in connection with pursuit of intellectualproperty procurement and protection, development and commercialization activities related to the Products, andapplications and approvals to use and sell the Products. Moreover, Customer may disclose Rentschler ConfidentialInformation to entities with which Customer has (or may have in the future) a marketing and/or developmentcollaboration for the Products and who have a specific need to know such information and who are bound byreasonable obligations of confidentiality and restrictions on use.17.11.The provisions of this Section 17. do not apply to information which:17.11.1.the receiving Party already knew, the prior knowledge of which it can document by prior written records;17.11.2.is or becomes public knowledge other than through the receiving Party´s breach of this promise ofconfidentiality;17.11.3.the receiving Party receives in good faith from a third party not in violation of an obligation of confidentiality; or17.11.4.the receiving Party independently develops, discovers or arrives at without use of or reference to theConfidential Information.Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc17.12.For the avoidance of doubt, no provision in this Contract shall restrict each Party's right to disclose the existence of abusiness relationship between the Parties to potential customers.17.13.The provisions of this Section 17. shall survive the termination or expiration of this Contract for a period of [***] .18.Representations and Warranties18.1.Each Party hereby represents, warrants and covenants to the other Party as follows:18.1.1.it is a corporation duly organized and validly existing under the laws of the jurisdiction of incorporation orformation;18.1.2.the execution, delivery and performance of this Contract by such Party has been duly authorized by all requisitecorporate action;18.1.3.it has the power and authority to execute and deliver this Contract and to perform its obligations hereunder; and18.1.4.it has and shall maintain during the Term and for a period of [***] thereafter, comprehensive general liabilityinsurance including coverage in amounts which are reasonable and customary in the pharmaceutical industryfor companies of comparable size and activities at their respective place of business, including product liabilityinsurance with coverage against all mandatory liability, including liability for personal injury, physical injury andproperty damage. Upon a Party’s written request, the other Party shall within [***] provide the requesting Partywith a written confirmation of the existence of such insurance.18.2.Rentschler hereby represents and states that:18.2.1.it is entitled to use its Facility in Erwin-Rentschler-Straße 21, 88471 Laupheim, Germany for the purposes setforth in this Contract (the “ Facility ”);18.2.2.it has the right, without restriction, to grant the licenses granted under this Contract;18.2.3.it is entitled to use Rentschler’s Confidential Information for the purposes set forth in this Contract;18.2.4.all Product that is required to be produced to cGMP standards will, [***] , (a) have been Manufactured inaccordance with (i) cGMP requirements, (ii) all other Applicable Laws, (iii) [***] , (iv) the Quality Agreement, and(v) the Acceptance Criteria, and (b) not be adulterated or misbranded under the United States Federal Food,Drug and Cosmetic Act, 21 U.S.C. § 321 et seq., as amended from time to time, or any comparable laws, rulesor regulations applicable at the place of manufacture;18.2.5.it has not been debarred, nor is it subject to a pending debarment, and that it will not use in any capacity inconnection with the Manufacture under this Contract any person who has been debarred pursuant to section306 of theConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcFDCA, 21 U.S.C. § 335a, or who is the subject of a conviction described in such section. Rentschler agrees tonotify Customer in writing immediately if Rentschler or any person who is performing Manufacture is debarredor is the subject of a conviction described in section 306, or if any action, suit, Claim, investigation, orproceeding is pending, or to Rentschler’s knowledge, is threatened, relating to the debarment or conviction ofRentschler or any person performing Manufacture under this Contract; and18.2.6.as of the Effective Date no third party has [***].19.Term and Termination19.1.This Contract is effective from the Effective Date and shall remain in force, absent earlier termination in accordancewith this Section 19., for a term of seven (7) years (the “ Initial Term ”), and shall automatically extend for a furtherterm of two (2) years (the “ Renewal Term ”), unless either Party gives at least eighteen (18) months’ written noticeto terminate the Contract at the end of the Initial Term or at any time during the Renewal Term. The Parties maymutually agree to extend the term of this Contract following the end of the first Renewal Term for further periods oftwo (2) years, and each such two (2) year period shall be an additional Renewal Term. The Initial Term and anyRenewal Term(s) shall constitute the “ Term ”. [***] .19.2.Termination of this Contract shall not [***] .19.3.If a Party materially breaches any material term or condition of this Contract, the other Party may notify the breachingParty in writing of such breach, setting forth the nature of the breach in reasonable detail. If the breaching Party failsto cure such breach within [***] after the receipt of the foregoing notice from the non-breaching Party, the non-breaching Party may terminate this Contract effective immediately upon a second written notice to the breachingParty.19.4.Customer may terminate this Contract at its election on [***] written notice to Rentschler if the Initial TechnologyTransfer has finally not been completed by June 30, 2017, subject to any Exit Fees payable under Section 10. forany Binding Forecast placed by Customer prior to such termination , provided that (a) this Section 19.4. shall notapply if the failure to complete the Initial Technology Transfer by June 30, 2017 is the result of Customer’s [***] or[***] in [***] necessary for Rentschler to [***] , and (b) if the Initial Technology Transfer is completed after June 30,2017, and Customer has not exercised its right to terminate the Contract under this Section 19.4. prior to suchcompletion of the Initial Technology Transfer, Customer shall have [***] under this Section 19.4.20.Third Party Technology Transfer20.1.Upon (i) termination by either Party or during the notice period for such termination of this Contract or PurchaseOrder pursuant to Section 19.1., (ii) at any time at Customer’s sole discretion during the term of this Contract or aPurchase Order, including in connection with Customer’s appointment of a Second Source pursuant to Section 3.4.;or (iii) on approaching expiration of this Contract: Customer may by written notice (“ Transfer Request ”) toRentschler seek assistance from Rentschler with respect to the transfer to another manufacturer of the [***] and anyassociated Technology solely for the purpose of Manufacturing ProductConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc(“ Technology Transfer ”) Following Rentschler’s receipt of such Transfer Request, the Parties will establish, ingood faith, a schedule and plan to enable a knowledgeable manufacturer to continue Manufacture of Productconsistent with then current industry standards for effecting such transfer. Rentschler will thereafter use itscommercially reasonable efforts to implement the plan.20.2.As part of the Technology Transfer, Rentschler will (i) transfer to the manufacturer or Customer, as Customer directs,all Technology, know-how and information necessary for performing the process by a party skilled in the art ofbiotechnology processing (ii) make available for collection, subject to any regulatory obligations, [***] generatedpursuant to this Contract and the Manufacture up to the date of termination or expiry, i.e., Batch records,development reports and production process documentation, and (iii) transfer, or if transfer cannot reasonably beperformed, make available, to Customer, all other documentation reasonably necessary for the Manufacture of theProduct.20.3.Rentschler shall initiate Technology Transfer within [***] after written notice from Customer requesting such initiation(“ Initiation Notice ”), which Initiation Notice may be made by Customer [***] after the date of the Transfer Request.20.4.Customer shall [***] for similar technology transfer services.21.Force MajeureNeither Party is liable to the other Party for failure or delay to the extent and for so long as such failure or delay resultsfrom causes beyond the reasonable control of such Party, including fires, earthquakes, floods, embargoes, wars, acts ofwar (whether war is declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or other labourdisturbances, acts of God or other acts, omissions or delays in acting by any administrative authority or other party. Aforce majeure event of Rentschler´s suppliers, or approved subcontractors shall be deemed to be a force majeure eventof Rentschler solely with respect to the specific aspects of the Manufacture affected and Rentschler shall not be relievedof its responsibilities for aspects of the Manufacture unaffected by such force majeure event of the suppliers, or approvedsubcontractors.22.Form of Changes to this ContractNo change of this Contract is valid unless it is in writing and signed by the Parties.23.Further AssurancesFrom time to time on and after the Effective Date, each Party shall at the reasonable request of the other Party (a) deliverto the other Party such records, data, or other documents consistent with the provisions of this Contract, (b) execute, anddeliver or cause to be delivered, all assignments, consents, documents, or further instruments of transfer or license, and(c) take or cause to be taken all other actions as such other Party may reasonably deem necessary or desirable in orderfor such Party to obtain the full benefits of this Contract and the transactions contemplated hereby, as far as necessaryfor any Party to execute their contractual rights and subject to the confidentiality requirements set forth in this Contract.24.Law and VenueConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plc24.1.Governing Law . Subject to Section 24.3. (ii), this Contract shall be governed by the laws of [***] , [***] . The [***]shall not apply to this Contract.24.2.Dispute Resolution .24.2.1.All disputes arising out of or in connection with this Contract shall be finally settled under the Rules ofArbitration of the International Chamber of Commerce by [***] appointed in accordance with the said Rules.The language of the arbitration shall be English. The place of the arbitration shall be [***] . Judgment upon anyawards rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.24.2.2.Nothing in this Contract shall prevent either Party from seeking provisional measures from any court ofcompetent jurisdiction,24.2.3.The Parties undertake to keep confidential all awards in their arbitration, together with all materials in theproceedings created for the purpose of the arbitration and all other documents produced by another Party in theproceedings not otherwise in the public domain, save and to the extent that disclosure may be required of aParty by legal duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedingsbefore a court or other judicial authority.24.3.Injunctive Relief; [***] . Notwithstanding anything in this Contract to the contrary: (i) each Party shall have the right toseek injunctive relief from any court of competent jurisdiction and any such request shall not be deemedincompatible with the agreement to arbitrate or a waiver of the right to arbitrate; and (ii) with respect to any disputerelating to [***] , including without limitation [***] .25.Independent ContractorsThe relationship of Rentschler and Customer established by this Contract is that of independent contractors. Nothing inthis Contract shall be constructed to create any other relationship between Rentschler and Customer. Neither Party shallhave any right, power, or authority to bind the other or assume, create, or incur any expense, liability, or obligation,express or implied, on behalf of the other.26.SeverabilityIn case one of the Sections of this Contract is invalid or unenforceable, the other Sections remain unaffected by this. Therespective invalid or unenforceable Section is instead replaced by the valid Section which comes as close as possible tothe original economic intention of the Parties with retroactive effect.27.PublicityNo press release or other form of publicity regarding this Contract shall be permitted by either Party to be publishedunless both Parties have indicated their consent to the form of the release in writing. Nothing in this Section shall preventthe Parties from disclosing this Contract, if and as far as required by applicable laws, rules or regulations. However,Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcthe disclosing Party shall inform the other Party well in advance whenever reasonably possible and shall provide theopportunity to comment on such required disclosure (e.g. under U.S. Securities Exchange Commission rules).28.NoticesAny notice required or permitted to be given hereunder by either Party shall be in writing and shall be (i) deliveredpersonally, (ii) sent by registered mail, return receipt requested, postage prepaid or (iii) delivered by facsimile withimmediate confirmation of receipt, to the addresses or facsimile numbers set forth below:If to Rentschler:Rentschler Biotechnologie GmbHErwin-Rentschler-Str. 2188471 Laupheim,GERMANYFor the attention of: [***]If to Customer:Prothena Therapeutics LimitedAdelphi Plaza,Upper George’s StreetDún LaoghaireA96 T927IRELANDFor the attention of: [***]With a copy to: Prothena Biosciences Inc,650 Gateway Boulevard,South San Francisco, CA 94080For the attention of: [***]29.WaiverNo waiver of any term, provision or condition of this Contract whether by conduct or otherwise in any one or moreinstances shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition orof any other term, provision or condition of this Contract.30.No Third Party BeneficiariesThis Contract is neither expressly nor impliedly made for the benefit of any Party other than those executing it.31.AssignmentConfidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcRentschler may not assign or otherwise transfer this Contract or any Purchase Order, in whole or in part, without the priorwritten consent of Customer. Customer may assign this Contract to an Affiliate of Customer, or to a third party successorin interest in connection with a merger, acquisition or sale of Customer, or of all or substantially all of the assets to whichthis Contract relates without the consent of Rentschler. Any purported assignment or transfer in violation of this Section31. shall be void. This Contract shall be binding upon and inure to the benefit of the Parties’ respective successors andpermitted assigns.32.Counterparts33. This Contract may be executed in counterparts, each of which shall be deemed an original and all of whichtogether shall constitute one instrument.(Rest of page intentionally left blank, signature page follows immediately.)Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcRentschler Biotechnologie GmbHDate: 09 Nov. 2016Signature: /s/ Klaus SchoepeName: Dr. Klaus SchoepePosition: VP Project Management Date: 09 Nov 2016Signature: /s/ Frank MathiasName: Dr. Frank MathiasPosition: CEO Rentschler Biotechnologie GmbH Prothena Therapeutics LimitedDate: Nov 9, 2016Signature: /s/ Yvonne TchrakianName: Yvonne TchrakianPosition: Director Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Confidential Treatment Requested by Prothena Corporation plcSchedule 1Price: Subject to the [***] for volume set out below, the Price (Rentschler fees not including Consumables and reasonableexpenses for third party quality control testing services) payable by Customer per Batch of Product [***] volume discounts [***] .The Price shall be subject to [***] as set forth in the table below, based on [***] during each Contract Year. The Price shall bedetermined [***] , based on the [***] for the applicable Contract Year .[***][***][***][***][***][***][***][***]Confidential Portions of this Exhibit marked as [***] have been omitted pursuant to a request for confidential treatment and have been filedseparately with the Securities and Exchange Commission.Exhibit 10.27SEPARATION AGREEMENTThis Separation Agreement (this “ Agreement ”) by and between David B. McNinch (“ Executive ”) and ProthenaBiosciences Inc, a Delaware corporation (the “ Company ”), is made effective as of the eighth (8 th ) day following the dateExecutive signs this Agreement (the “ Effective Date ”) with reference to the following facts: A. Executive’s employment with the Company and status as an officer and employee of the Company and as an officer ofeach of its affiliates will end effective upon the Separation Date (as defined below).B. Executive and the Company want to end their relationship amicably and also to establish the obligations of the partiesincluding, without limitation, all amounts due and owing to Executive.NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree asfollows:1. Separation Date . Executive acknowledges and agrees that his status as an officer and employee of the Company,and as an officer of its ultimate parent company, Prothena Corporation plc (“ Prothena ”), will end effective as of the close ofbusiness on December 15, 2016 (the “ Separation Date ”). Executive hereby agrees to execute such further documents as shall bedetermined by the Company as necessary or desirable to give effect to the termination of Executive’s status as an officer of theCompany and of Prothena.2. Final Paycheck; Payment of Accrued Wages and Expenses .(a) Final Paycheck . As soon as administratively practicable on or after the Separation Date, the Company willpay to Executive all accrued but unpaid base salary and all accrued and unused vacation earned through the Separation Date, subjectto standard payroll deductions and withholdings. Executive is entitled to these payments regardless of whether Executive executesthis Agreement.(b) Business Expenses . As soon as administratively practicable on or after the Separation Date, the Company shallreimburse Executive for all outstanding business expenses incurred by him prior to the Separation Date that are consistent with theCompany’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to theCompany’s requirements with respect to reporting and documenting such expenses. Executive is entitled to these reimbursementsregardless of whether Executive executes this Agreement.1. Separation Payment and Benefits . Without admission of any liability, fact or claim, the Company hereby agrees, subjectto the execution of this Agreement and Executive’s performance of his continuing obligations pursuant to this Agreement and thatcertain Employee Proprietary Information and Invention Assignment Agreement by and between Executive and the1Company (the “ Confidentiality Agreement ”), to provide Executive the severance benefits set forth below. Specifically, theCompany and Executive agree as follows:(a) Severance . Executive shall be entitled to receive an amount equal to the sum of (i) $360,000.00, whichconstitutes twelve months of Executive’s base salary as in effect on the Separation Date, plus (ii) $106,000.00, which amount (the “Severance Payment ”) shall be payable in a cash lump sum as soon as administratively practicable on or after the Effective Date.(b) Option Vesting Acceleration . The vesting of Executive’s option to purchase ordinary shares of Prothena (the “Option ”) shall accelerate upon the Effective Date in respect of that number of ordinary shares that would have vested hadExecutive’s employment with the Company continued through the first anniversary of the Separation Date as set forth on Exhibit Aattached hereto. The unvested portion of the Option, after giving effect to the accelerated vesting described in the precedingsentence, shall be forfeited as of the Separation Date. The vested Options shall remain exercisable through the one year anniversaryof the Separation Date. Any vested Options not exercised prior to the one year anniversary of the Separation Date shall thereuponexpire.(c) Taxes . Executive understands and agrees that all payments under this Agreement will be subject to appropriatetax withholding and other deductions. To the extent any taxes may be payable by Executive for the benefits provided to him by thisAgreement beyond those withheld by the Company, Executive agrees to pay them himself and to indemnify and hold the Companyand the other Releases (defined below) harmless for any tax claims or penalties, and associated attorneys’ fees and costs, resultingfrom any failure by him to make required payments.(d) SEC Reporting . Executive acknowledges that to the extent required by the Securities Exchange Act of 1934, asamended (the “ Exchange Act ”), he will have continuing obligations under Sections 16(a) and 16(b) of the Exchange Act to reportany matching transactions in Company common stock for six (6) months following the Separation Date. Executive hereby agrees notto undertake, directly or indirectly, any matching transactions until the end of such six (6) month period.(e) Sole Separation Benefit . Executive agrees that the Severance Payment is not required under the Company’snormal policies and procedures (including without limitation under its Amended and Restated Severance Plan or Prothena’sIncentive Compensation Plan) and is provided as a severance solely in connection with this Agreement. Executive acknowledges andagrees that the Severance Payment constitutes adequate and valuable consideration, in and of itself, for the promises contained in thisAgreement.2. Full Payment . Executive acknowledges that the payments and arrangements herein shall constitute full and completesatisfaction of any and all amounts properly due and owing to Executive as a result of his employment with the Company and thetermination thereof. Executive further acknowledges that, other than the Confidentiality Agreement, the Deed of Indemnification byand between Prothena and Executive (the “ Indemnification Agreement ”) and the Nonstatutory Stock Option Agreement by andbetween Prothena and Executive evidencing2the Option (the “ Option Agreement ”), this Agreement shall supersede each agreement entered into between Executive and theCompany regarding Executive’s employment, including, without limitation, any offer letter, employment agreement, severanceand/or change in control agreement, and each such agreement shall be deemed terminated and of no further effect as of theSeparation Date.3. Executive’s Release of the Company . Executive understands that by agreeing to the release provided by this Section 5,Executive is agreeing not to sue, or otherwise file any claim against, the Company or any of the other Releases (defined below) forany reason whatsoever based on anything that has occurred as of the date Executive signs this Agreement.(a) On behalf of Executive and Executive’s heirs, assigns, executors, administrators, trusts, spouse and estate,Executive hereby releases and forever discharges the “ Releasees ” hereunder, consisting of the Company, and each of its owners,affiliates, subsidiaries, predecessors, successors, assigns, agents, directors, officers, partners, employees, and insurers, and allpersons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, causeor causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss,cost or expense, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “ Claims ”), which Executivenow has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from thebeginning of time to the date hereof, including, without limiting the generality of the foregoing, any Claims arising out of, basedupon, or relating to Executive’s hire, employment, remuneration or resignation by the Releasees, or any of them, Claims arisingunder federal, state, or local laws relating to employment, Claims of any kind that may be brought in any court or administrativeagency, including any Claims arising under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000, et seq.;Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C.§ 701 et seq.; Age Discrimination in Employment Act, as amended, 29 U.S.C. § 621, et seq.; Civil Rights Act of 1866, and CivilRights Act of 1991; 42 U.S.C. § 1981, et seq.; Equal Pay Act, as amended, 29 U.S.C. § 206(d); regulations of the Office of FederalContract Compliance, 41 C.F.R. Section 60, et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; theFair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security Act, as amended,29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq.; theCalifornia Fair Employment and Housing Act, as amended, Cal. Lab. Code § 12940 et seq.; the California Equal Pay Law, asamended, Cal. Lab. Code §§ 1197.5(a),199.5; the Moore-Brown-Roberti Family Rights Act of 1991, as amended, Cal. Gov’t Code§§12945.2, 19702.3; California Labor Code §§ 1101, 1102; the California WARN Act, California Labor Code §§ 1400 et. seq;California Labor Code §§ 1102.5(a),(b); claims for wages under the California Labor Code and any other federal, state or local lawsof similar effect; the employment and civil rights laws of California; Claims for breach of contract; Claims arising in tort, including,without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation,defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith3and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages,punitive damages, injunctive relief and attorney’s fees.(b) Notwithstanding the generality of the foregoing, Executive does not release the following claims:(i) Claims for unemployment compensation or any state disability insurance benefits pursuant to the termsof applicable state law;(ii) Claims for workers’ compensation insurance benefits under the terms of any worker’s compensationinsurance policy or fund of the Company;(iii) Claims to continued participation in certain of the Company’s group benefit plans pursuant to the termsand conditions of COBRA;(iv) Claims to any benefit entitlements vested as the date of Executive’s employment termination, pursuantto written terms of any Company employee benefit plan;(v) Claims for indemnification under the Indemnification Agreement, the Company’s Bylaws, Prothena’sConstitution, California Labor Code Section 2802 or any other applicable law; and(vi) Executive’s right to bring to the attention of the Equal Employment Opportunity Commission claims ofdiscrimination; provided , however , that Executive does release Executive’s right to secure any damages for alleged discriminatorytreatment.(c) Whistleblower Protection. For the avoidance of doubt, nothing in this Agreement will be construed to prohibitExecutive from filing a charge with, reporting possible violations to, or participating or cooperating with any governmental agencyor entity, including but not limited to the EEOC, the Department of Justice, the Securities and Exchange Commission, Congress, orany agency Inspector General, or making other disclosures that are protected under the whistleblower, anti-discrimination, or anti-retaliation provisions of federal, state or local law or regulation; provided, however, that Executive may not disclose information ofthe Company or Parent that is protected by the attorney-client privilege, except as otherwise required by law. Executive does notneed the prior authorization of the Company to make any such reports or disclosures, and Executive is not required to notify theCompany that he has made such reports or disclosures.(d) Acknowledgement. In accordance with the Older Workers Benefit Protection Act of 1990, Executive has beenadvised of the following:(i) Executive should consult with an attorney before signing this Agreement;(ii) Executive has been given at least twenty-one (21) days to consider this Agreement;4(iii) Executive has seven (7) days after signing this Agreement to revoke it. If Executive wishes to revokethis Agreement, Executive must deliver notice of Executive’s revocation in writing, no later than 5:00 p.m. Pacific time on the 7thday following Executive’s execution of this Agreement, to Kevin Hickey, the Company’s Vice President, Human Resources, fax(650) 745-2698. Executive understands that if he revokes this Agreement, it will be null and void in its entirety, and he will not beentitled to any payments or benefits provided in this Agreement, other than as provided in Section 2.(e) EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS BEEN ADVISED OF AND IS FAMILIARWITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW ORSUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IFKNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITHTHE DEBTOR.”BEING AWARE OF SAID CODE SECTION, EXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTSEXECUTIVE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAWPRINCIPLES OF SIMILAR EFFECT.4. Non-Disparagement, Transition, Transfer of Company Property and Limitations on Service . Executive further agreesthat:(a) Non-Disparagement . Executive agrees that he shall not disparage, criticize or defame the Company, itsaffiliates and their respective affiliates, directors, officers, agents, partners, stockholders, employees, products, services, technologyor business, either publicly or privately. The Company agrees that Prothena’s current directors and officers shall not disparage,criticize or defame Executive, either publicly or privately. Nothing in this Section 6(a) shall have application to any evidence ortestimony required by any court, arbitrator or government agency.(b) Transition . Each of the Company and Executive shall use their respective reasonable efforts to cooperate witheach other in good faith to facilitate a smooth transition of Executive’s duties to other executive(s) of the Company or its affiliates.(c) Transfer of Company Property . On or before the Separation Date, Executive shall turn over to the Company allfiles, memoranda, records and other documents, and any other physical or personal property which are the property of the Companyand which he had in his possession, custody or control at the time he signed this Agreement.5. Executive Representations . Executive warrants and represents that (a) he has not filed or authorized the filing of anycomplaints, charges or lawsuits against the Company or any affiliate of the Company with any governmental agency or court, andthat if, unbeknownst to5Executive, such a complaint, charge or lawsuit has been filed on his behalf, he will immediately cause it to be withdrawn anddismissed, (b) he has reported all hours worked as of the date of this Agreement and has been paid all compensation, wages, bonuses,commissions, and/or benefits to which he may be entitled and no other compensation, wages, bonuses, commissions and/or benefitsare due to him, except as provided in this Agreement, (c) he has no known workplace injuries or occupational diseases and has beenprovided and/or has not been denied any leave requested under the Family and Medical Leave Act or any similar state law, (d) theexecution, delivery and performance of this Agreement by Executive does not and will not conflict with, breach, violate or cause adefault under any agreement, contract or instrument to which Executive is a party or any judgment, order or decree to whichExecutive is subject, and (e) upon the execution and delivery of this Agreement by the Company and Executive, this Agreement willbe a valid and binding obligation of Executive, enforceable in accordance with its terms.6. No Assignment by Executive . Executive warrants and represents that no portion of any of the matters released herein,and no portion of any recovery or settlement to which Executive might be entitled, has been assigned or transferred to any otherperson, firm or corporation not a party to this Agreement, in any manner, including by way of subrogation or operation of law orotherwise. If any claim, action, demand or suit should be made or instituted against the Company or any other Releasee because ofany actual assignment, subrogation or transfer by Executive, Executive agrees to indemnify and hold harmless the Company and allother Releasees against such claim, action, suit or demand, including necessary expenses of investigation, attorneys’ fees and costs.In the event of Executive’s death, this Agreement shall inure to the benefit of Executive and Executive’s executors, administrators,heirs, distributees, devisees, and legatees. None of Executive’s rights or obligations may be assigned or transferred by Executive,other than Executive’s rights to payments hereunder, which may be transferred only upon Executive’s death by will or operation oflaw.7. Governing Law . This Agreement shall be construed and enforced in accordance with, and the rights of the parties shallbe governed by, the laws of the State of California or, where applicable, United States federal law, in each case, without regard toany conflicts of laws provisions or those of any state other than California.8. Miscellaneous . This Agreement, collectively with the Confidentiality Agreement, the Indemnification Agreement andthe Option Agreement comprise the entire agreement between the parties with regard to the subject matter hereof and supersedes, intheir entirety, any other agreements between Executive and the Company with regard to the subject matter hereof. Executiveacknowledges that there are no other agreements, written, oral or implied, and that he may not rely on any prior negotiations,discussions, representations or agreements. This Agreement may be modified only in writing, and such writing must be signed byboth parties and recited that it is intended to modify this Agreement. This Agreement may be executed in separate counterparts, eachof which is deemed to be an original and all of which taken together constitute one and the same agreement.9. Company Assignment and Successors . The Company may assign its rights and obligations under this Agreement to anysuccessor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall bebinding upon and6inure to the benefit of the Company and its affiliates, successors, assigns, personnel and legal representatives.10. Maintaining Confidential Information . Executive reaffirms his obligations under the Confidentiality Agreement.Executive acknowledges and agrees that the payments provided in Section 3 above shall be subject to Executive’s continuedcompliance with Executive’s obligations under the Confidentiality Agreement.11. Executive’s Cooperation . After the Separation Date, Executive shall cooperate with the Company and its affiliates,upon the Company’s reasonable request, with respect to any internal investigation or administrative, regulatory or judicialproceeding involving matters within the scope of Executive’s duties and responsibilities to the Company or its affiliates during hisemployment with the Company (including, without limitation, Executive being available to the Company upon reasonable notice forinterviews and factual investigations, appearing at the Company’s reasonable request to give testimony without requiring service of asubpoena or other legal process, and turning over to the Company all relevant Company documents which are or may have come intoExecutive’s possession during his employment); provided , however , that any such request by the Company shall not be undulyburdensome or interfere with Executive’s personal schedule or ability to engage in gainful employment. 12. Section 409A of the Code . This Agreement is intended, to the greatest extent permitted under law, to comply with theshort-term deferral exemption and the separation pay exemption provided in Section 409A of the Internal Revenue Code of 1986, asamended, and the regulations and other interpretative guidance issued thereunder (“ Section 409A ”) such that no benefits orpayments under this Agreement are subject to Section 409A. Notwithstanding anything herein to the contrary, the timing of anypayments under this Agreement shall be made consistent with such exemption. Executive’s right to receive a series of installmentpayments under this Agreement, if any, shall be treated as a right to receive a series of separate payments. To the extent applicable,this Agreement shall be interpreted in accordance with Section 409A, including without limitation any such regulations or otherguidance that may be issued after the Separation Date. Notwithstanding any provision of this Agreement to the contrary, in the eventthat the Company determines that any amounts payable hereunder may be subject to Section 409A, the Company may, to the extentpermitted under Section 409A cooperate in good faith to adopt such amendments to this Agreement or adopt other appropriatepolicies and procedures, including amendments and policies with retroactive effect, that the Company determines are necessary orappropriate to avoid the imposition of taxes under Section 409A; provided, however, that this paragraph shall not create anobligation on the part of the Company to adopt any such amendment, policy or procedure or take any such other action, nor shall theCompany have any liability for failing to do so. To the extent that any reimbursements payable pursuant to this Agreement aresubject to the provisions of Section 409A, such reimbursements shall be paid to Executive no later than December 31 of the yearfollowing the year in which the expense was incurred, the amount of expenses reimbursed in one year shall not affect the amounteligible for reimbursement in any subsequent year, and Executive’s right to reimbursement under this Agreement will not be subjectto liquidation or exchange for another benefit.(Signature page follow)7IN WITNESS WHEREOF, the undersigned have caused this Separation Agreement to be duly executed and delivered as ofthe date indicated next to their respective signatures below.DATED: December 15, 2016/s/ David B. McNinch David B. McNinchPROTHENA BIOSCIENCES INCDATED: December 15, 2016By: /s/ A. W. Homan Name: A. W. HomanTitle: Secretary 8Exhibit 10.27EXHIBIT AACCELERATED OPTION SHARESThe table below sets forth the shares subject to the Option that will be accelerated to effect twelve months of accelerated vesting.Grant DateVesting Start DateExercise PriceAccelerated SharesFebruary 24, 2016February 2, 2016$34.61/share45,833A-1 Exhibit 10.28 Carol Karp December 1, 2016Dear Carol:I am pleased to confirm this offer for you to join Prothena Biosciences Inc (“Prothena” or the “Company”). We are confident in yourknowledge, expertise and judgment, and believe your performance will meet our team’s high-quality objectives and standards.You will be appointed as Chief Regulatory Officer (with additional functional responsibility for Quality and Safety) by the Boardof Directors of Prothena Corporation plc at its next meeting, scheduled to be held on December 14. In this position, you will report toGene Kinney (CEO and President), although your duties, title and reporting relationship may change, based on the Company’s needsand priorities. This is a full-time, exempt position.Your starting salary will be $400,000.00/year , paid twice per month. Your pay is subject to applicable taxes and withholdings.Prothena embraces a pay-for-performance philosophy. All employees are currently eligible for an annual cash bonus under the termsof the Company's cash incentive plan (the Prothena Corporation plc Incentive Compensation Plan). The amount of these annual cashbonuses are determined by the Company on the basis of a number of factors, including industry competitiveness, Prothena’s businessstrategy, and the degree to which Company, function and/or individual goals are met. Your targeted cash bonus will be 40% of youractual plan year salaried earnings. Any earned cash bonus will be paid no later than March 15 in the year following the conclusion ofthe plan year. The cash bonus plan is operated at the sole discretion of Prothena, is subject to review on a regular basis and maychange from time to time.In connection with your commencement of employment, you will also be eligible to receive an option to acquire 100,000 shares ofProthena Corporation plc. This stock option award is at the discretion of the Compensation Committee of the Board of Directors ofProthena Corporation plc (the “Committee”) and is subject to the terms and conditions of the Prothena Corporation plc Amended andRestated 2012 Long Term Incentive Plan and the terms and conditions of the award agreement for such a stock option. The grantdate of this stock option will be the date of the Committee’s next meeting, scheduled to be held on December 14, or on such otherdate as determined by the Committee in its sole discretion. The option exercise price will be equal to the closing price of ProthenaCorporation plc’s ordinary shares on the NASDAQ Global Select Market on that date. Subject to your continued employment, thestock option will vest 25% after the first year of active service from your employment start date, and monthly at a rate of 1/48th ofthe award thereafter, such that the option will fully vest after a four-year period of continuous employment. On the first day of the month following your Start Date, you will be eligible to participate in Prothena’s comprehensive health andwelfare benefits program. On your Start Date, you will also be eligible to participate in our retirement benefits plan, as well as theProthena Biosciences Inc Amended and Restated Severance Plan. Details about these and other applicable plans will be providedseparately.Further information regarding onboarding requirements and/or documents needed before or after your employment start date (e.g.,Employee Proprietary Information and Invention Assignment Agreement, Code of Conduct, Form I-9 completion process, directdeposit information, Form W-4 allowance elections) will be provided separately.Prothena’s offer of employment is contingent upon our receiving satisfactory results from your references, background check anddrug screening, as well as any other pre-employment testing that may be required due to the specific nature of our industry and/oryour position. Your employment is “at will.” This means that you and Prothena each have the right to terminate the employmentrelationship at any time, with or without cause. Nothing in this letter should be taken as a guarantee of continued employment or aspecific term of employment. Further, all benefits and compensation provided by the Company are contingent upon your continuedemployment.To ensure rapid and economical resolution of any disputes regarding your employment under this offer letter, the parties herebyagree that any and all claims, disputes or controversies of any nature whatsoever arising out of, or relating to, this offer letter, or itsinterpretation, enforcement, breach, performance or execution, your employment with the Company or the termination of suchemployment, shall be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration in San Francisco,CA conducted before a single arbitrator by JAMS, Inc. (“JAMS”) or its successor, under the then applicable JAMS arbitration rules.The parties each acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any suchdispute, claim or demand through a trial by jury or judge or by administrative proceeding. You may be represented by legalcounsel at any arbitration proceeding. The arbitrator shall: (i) have the authority to compel adequate discovery for the resolution ofthe dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (ii) issue awritten statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, thereasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based. The arbitrator, and not acourt, shall also be authorized to determine whether the provisions of this paragraph apply to a dispute, controversy, or claim soughtto be resolved in accordance with these arbitration procedures. The parties will share the costs of arbitration equally except that theCompany will bear the cost of the arbitrator’s fee, any other type of expense or cost that the employee would not be required to bearif the employee were to bring the dispute or claim in court. Both parties will be responsible for their own attorney’s fees, and thearbitrator may not award attorney’s fees unless a statute or contract at issue specifically authorizes such an award. This arbitrationprovision does not apply to claims concerning worker’s compensation or unemployment insurance claims. Nothing in thisAgreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harmpending the conclusion of any arbitration.To accept our offer, please sign this letter and return it to Kevin Hickey by December 5, 2016 . By signing this letter, youacknowledge that it sets out our entire agreement between you and the Company and supersedes all prior oral and written agreements, understandings, commitments and practices. No amendments to this agreement maybe made except in writing signed by a duly authorized representative of Prothena.We look forward to having you join Prothena. If you have any questions, or would like additional information to help you reach adecision, please feel free to contact Kevin at (650) 837-8545.Sincerely,/s/ Gene KinneyGene KinneyPresident and CEOProthena Biosciences IncACCEPTANCE:/s/ Carol Karp 12/5/16 Carol Karp DateExhibit 21.1List of Subsidiaries Subsidiary Name Jurisdiction of Incorporation or OrganizationProthena Biosciences Limited IrelandProthena Therapeutics Limited IrelandProthena Biosciences Inc DelawareProthena Switzerland GmbH SwitzerlandExhibit 23.1Consent of Independent Registered Public Accounting FirmThe Board of DirectorsProthena Corporation plc:We consent to the incorporation by reference in the registration statements (Nos. 333-196572, 333-187726 and 333-211653) on Form S-8 and the registrationstatements (Nos. 333-196965, 333-193416, 333-197006 and 333‑203258) on Form S-3 of Prothena Corporation plc of our reports dated February 24, 2017 withrespect to the consolidated balance sheets of Prothena Corporation plc as of December 31, 2016 and 2015 , and the related consolidated statements of operations,stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016 , and the effectiveness of internal control overfinancial reporting as of December 31, 2016 , which reports appear in the December 31, 2016 annual report on Form 10‑K of Prothena Corporation plc./s/ KPMG LLPSan Francisco, CaliforniaFebruary 24, 2017Exhibit 31.1CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO SECTION 302 OFTHE SARBANES-OXLEY ACT OF 2002I, Gene G. Kinney, certify that:1.I have reviewed this Annual Report on Form 10-K of Prothena Corporation plc;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Date:February 24, 2017/s/ Gene G. Kinney Gene G. Kinney President and Chief Executive Officer (Principal Executive Officer)Exhibit 31.2CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO SECTION 302 OFTHE SARBANES-OXLEY ACT OF 2002I, Tran B. Nguyen, certify that:1.I have reviewed this Annual Report on Form 10-K of Prothena Corporation plc;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness ofthe disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant’s ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control overfinancial reporting.Date:February 24, 2017/s/ Tran B. Nguyen Tran B. Nguyen Chief Financial Officer (Principal Financial Officer)Exhibit 32.1CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERAND PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63of Title 18 of the United States Code (18 U.S.C. §1350), Gene G. Kinney, President and Chief Executive Officer of Prothena Corporation plc (the “Company”) andTran B. Nguyen, Chief Financial Officer of the Company, each hereby certify that, to the best of his knowledge:1.The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , to which this Certification is attached as Exhibit 32.1 (the“Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date:February 24, 2017/s/ Gene G. Kinney Gene G. Kinney President and Chief Executive Officer (Principal Executive Officer) /s/ Tran B. Nguyen Tran B. Nguyen Chief Financial Officer (Principal Financial Officer) A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 has beenprovided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to beincorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or afterthe date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

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