LONDON (Reuters) - Hedge fund Kerrisdale Capital has taken a short position in drugmaker Prothena (>> Prothena Corporation PLC), a company backed by UK investor Neil Woodford, calling it "the next big biotech blowup".

Shares in the company, which is headquartered in Ireland and listed on Nasdaq, fell 9 percent on Wednesday following the news.

Kerrisdale said it believed Prothena's main asset NEOD001, an antibody used to treat a rare disease called amyloidosis, is likely to fail its ongoing clinical effectiveness trials.

"Our conclusion is that the drug just doesn't work," Kerrisdale's founder Sahm Adrangi told Reuters, adding that the fund believed Prothena's share price could fall by as much as 80 percent.

A spokesperson for Prothena declined to comment.

This is the second time Kerrisdale has taken aim at a company backed by Woodford, one of Britain's best-known fund managers.

He owns 30 percent of Prothena according to filings, and it is the largest holding in his Patient Capital investment trust aimed at funding early-stage companies.

Holding a "short" position in Prothena's stock, means Kerrisdale will profit if the shares fall. Investment firm Muddy Waters, run by prominent short seller Carson Block, also holds a short position in Prothena.

Kerrisdale had previously criticised Woodford-backed biotech incubator Allied Minds (>> Allied Minds PLC), calling its assets "duds" in a 2015 report and predicting its share price would fall by 67 percent.

Allied Minds' stock tumbled in March after it pulled the plug on a number of investments.

"We thought Allied Minds was a sloppy investment," Adrangi said. "Woodford has made mistakes in the past and we have no problems being on the other side of this trade".

A spokesperson for Woodford declined to comment.

Dublin-based Prothena, which specialises in developing immune system-based drugs to fight progressive diseases, was spun out of Irish drugmaker Elan in 2012.

Its lead product NEOD001 is an antibody drug for AL amyloidosis, a serious condition caused by a build-up of an abnormal protein called amyloid that impairs proper tissue function. It can lead to heart, kidney and other organ failure.

There is currently no cure but doctors can take steps to stop more of the abnormal proteins being produced, for example by giving patients chemotherapy.

As a result of the unmet need, NEOD001 has been granted orphan drug designation by both the U.S. Food and Drug Administration and the European Medicines Agency.

Industry analysts expect Prothena to report crucial clinical trial results next year, but Kerrisdale is convinced the product will fail those upcoming Phase IIb and Phase III studies, after what it said were disappointing results in earlier-stage tests. In 2014 Prothena's share price fell after it published detailed data from an earlier study on NEOD001.

Kerrisdale's analysis of trial data argues the problem protein deposits are simply too heterogeneous for a single antibody to work consistently among patients.

Woodford has endured a difficult year with troubles at shareholdings AstraZeneca (>> AstraZeneca) and Provident Financial (>> Provident Financial) making his flagship Equity Income Fund among the worst performers of its kind in 2017.

In September Woodford apologised for a "really difficult two months" in a video to investors, while in October one of his longest-standing backers pulled 300 million pounds out of the funds.

(Reporting by Alasdair Pal and Ben Hirschler; Editing by Susan Fenton)

By Alasdair Pal and Ben Hirschler