Company Update - Protagonist Therapeutics (NASDAQ: PTGX) is preparing to report top-line results from its phase 3 VERIFY study for rusfertide (PTG-300), a subcutaneous injectable Hepcidin Mimetic, targeting Polycythemia Vera (PV) patients [1] Author Background - The article is authored by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace [4] - Biotech Analysis Central offers a library of 600+ biotech investing articles, a model portfolio of 10+ small and mid-cap stocks with deep analysis, live chat, and analysis/news reports for healthcare investors [1] Subscription Details - Biotech Analysis Central SA marketplace subscription costs $49 per month [4] - A yearly subscription plan offers a 33.50% discount, reducing the price to $399 per year [4] - A two-week free trial period is currently available for new subscribers [4]

Core Viewpoint - Protagonist Therapeutics (PTGX) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Revisions - The Zacks rating system is primarily based on changes in a company's earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [2]. - For the fiscal year ending December 2024, Protagonist Therapeutics is expected to earn $2.33 per share, reflecting a substantial increase of 267.6% from the previous year [9]. - Over the past three months, the Zacks Consensus Estimate for Protagonist Therapeutics has risen by 12.4%, indicating a positive trend in earnings estimates [9]. Impact of Institutional Investors - Changes in earnings estimates are strongly correlated with stock price movements, with institutional investors using these estimates to determine the fair value of shares [5]. - The buying and selling activities of institutional investors based on earnings estimates can lead to significant price movements in stocks [5]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [8]. - Protagonist Therapeutics' upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [11].

Core Viewpoint - Protagonist Therapeutics reported a quarterly loss of $0.54 per share, which was better than the Zacks Consensus Estimate of a loss of $0.59, indicating an earnings surprise of 8.47% [1][2] Financial Performance - The company posted revenues of $4.68 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 3.89%, compared to zero revenues a year ago [2] - Over the last four quarters, Protagonist Therapeutics has exceeded consensus EPS estimates three times [2] Stock Performance - Protagonist Therapeutics shares have increased approximately 107.6% since the beginning of the year, significantly outperforming the S&P 500's gain of 24.3% [3] Future Outlook - The company's earnings outlook will be crucial for determining future stock movements, with current consensus EPS estimates at $0.09 on $60.2 million in revenues for the upcoming quarter and $2.80 on $308.15 million in revenues for the current fiscal year [7] - The estimate revisions trend for Protagonist Therapeutics is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Medical - Biomedical and Genetics industry, to which Protagonist Therapeutics belongs, is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Drug Development - The company has two peptide-based new chemical entities, rusfertide and JNJ-2113, in advanced Phase 3 stages of development[86]. - Rusfertide is in a global Phase 3 trial (VERIFY) for polycythemia vera with approximately 250 patients, and top-line data is expected in Q1 2025[87]. - In the REVIVE trial, rusfertide showed a responder rate of 69.2% compared to 18.5% for placebo (p=0.0003) in maintaining hematocrit control without phlebotomy[90]. - JNJ-2113 is being evaluated in multiple Phase 3 trials for moderate-to-severe plaque psoriasis, with topline results expected in Q4 2024 and Q1 2025[96][97]. - JNJ-2113 Phase 2b FRONTIER trials demonstrated promising efficacy and safety for moderate-to-severe plaque psoriasis, maintaining high skin clearance rates through 52 weeks[101]. - The company expects to file a New Drug Application (NDA) for rusfertide in Q4 2025 following the VERIFY trial results[87]. - The ongoing two-year carcinogenicity study for rusfertide is expected to yield results by the end of 2024[87]. - The company expects to nominate a development candidate for a new oral IL-17 peptide antagonist program by the end of 2024[105]. - The company expects to nominate a development candidate from its discovery platform for IND-enabling studies by the end of 2024[130]. Financial Performance - The company incurred cumulative net losses of $472.2 million from inception through September 30, 2024, primarily due to research and development costs[108]. - The net loss for the three months ended September 30, 2024, was $33.21 million, a slight improvement from a net loss of $34.11 million in the previous year[125]. - License and collaboration revenue for the three months ended September 30, 2024, was $4.675 million, a significant increase compared to the previous period[125]. - License and collaboration revenue increased from $0 for the nine months ended September 30, 2023 to $263.8 million for the nine months ended September 30, 2024, primarily due to the Takeda Collaboration Agreement[139]. - Research and development expenses increased by 17% to $35.97 million for the three months ended September 30, 2024, compared to $30.66 million in the same period last year[125]. - Research and development expenses increased by $12.0 million, or 13%, from $91.3 million for the nine months ended September 30, 2023 to $103.2 million for the nine months ended September 30, 2024[141]. - General and administrative expenses rose by 33% to $10.16 million for the three months ended September 30, 2024, compared to $7.66 million in the prior year[125]. - General and administrative expenses increased by $9.1 million, or 36%, from $25.4 million for the nine months ended September 30, 2023 to $34.5 million for the nine months ended September 30, 2024[143]. - Interest income increased by 81% to $7.68 million for the three months ended September 30, 2024, compared to $4.25 million in the same period last year[125]. - Interest income increased by $8.8 million, or 83%, from $10.6 million for the nine months ended September 30, 2023 to $19.5 million for the nine months ended September 30, 2024, primarily due to higher invested balances[147]. - The effective tax rate was 1.53% for the nine months ended September 30, 2024, compared to 0% for the same period in 2023[148]. Collaboration and Milestones - The company received a one-time upfront payment of $300 million from Takeda for the rusfertide collaboration, with potential milestone payments of up to $330 million[93]. - The company shares profits and losses equally with Takeda for rusfertide in the U.S. market[94]. - The company received a $50 million milestone payment from JNJ upon dosing the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, totaling $172.5 million in non-refundable payments earned to date[102]. - Future milestone payments from JNJ could reach approximately $795 million, including $115 million for meeting co-primary endpoints in ICONIC Phase 3 trials and $35 million upon NDA filing with the FDA[102]. - Upcoming potential milestones under the Takeda Collaboration Agreement include $25.0 million for achieving primary endpoints in the Phase 3 VERIFY trial and $50.0 million upon FDA approval of rusfertide[156]. - A milestone payment of $50.0 million was earned upon dosing the third patient in the ICONIC-TOTAL Phase 3 trial in October 2023, with total non-refundable payments from JNJ amounting to $172.5 million since 2017[157]. Cash and Funding - The company had $583.3 million in cash, cash equivalents, and marketable securities as of September 30, 2024, compared to $341.6 million as of December 31, 2023[149]. - Cash provided by operating activities for the nine months ended September 30, 2024 was $213.3 million, primarily due to a net income of $143.5 million and a $300.0 million payment from Takeda[164]. - Cash used in investing activities for the nine months ended September 30, 2024 was $290.8 million, mainly from purchases of marketable securities totaling $507.3 million[165]. - Cash provided by financing activities for the nine months ended September 30, 2024 was $21.8 million, a decrease of $148.1 million compared to the same period in 2023[166]. - The company may require additional funding to advance its early discovery pipeline and develop new product candidates, depending on various factors including clinical trial progress and commercialization success[160]. - An immediate 100 basis point increase in interest rates would increase the company's annual interest income by approximately $3.4 million[173].

Financial Position - Cash, cash equivalents, and marketable securities totaled $583.3 million as of September 30, 2024, up from $341.6 million as of December 31, 2023, indicating a strong cash position[7] - Working capital increased to $432,191 thousand as of September 30, 2024, compared to $334,303 thousand at the end of 2023, indicating a 29% growth[18] - Total assets reached $603,857 thousand as of September 30, 2024, up from $357,951 thousand at the end of 2023, marking a 68% increase[18] - The accumulated deficit improved to $(472,196) thousand as of September 30, 2024, from $(615,710) thousand at the end of 2023, showing a reduction of approximately 23%[18] - Total stockholders' equity increased to $531,915 thousand as of September 30, 2024, compared to $336,677 thousand at the end of 2023, reflecting a 58% rise[18] Revenue and Collaboration - License and collaboration revenue for the nine months ended September 30, 2024, was $263.8 million, primarily from a $300 million upfront payment from the Takeda Collaboration Agreement[9] - The company recognized $4.7 million of deferred revenue during the third quarter of 2024 based on costs incurred[9] - Deferred revenue stood at $36,205 thousand as of September 30, 2024, with no deferred revenue reported at the end of 2023[18] Expenses - Research and development expenses increased by $5.3 million for the three months ended September 30, 2024, compared to the prior year, driven by higher drug discovery and pre-clinical research costs[10] - General and administrative expenses rose by $2.5 million for the three months ended September 30, 2024, primarily due to increases in stock-based compensation and personnel-related expenses[11] - Research and development stock-based compensation for the three months ended September 30, 2024, was $5,212 thousand, up from $3,780 thousand for the same period in 2023, representing a 38% increase[17] - Total stock-based compensation expense for the nine months ended September 30, 2024, was $28,461 thousand, compared to $22,692 thousand for the same period in 2023, reflecting a 25% increase[17] Net Loss - The net loss for the three months ended September 30, 2024, was $33.2 million, or $0.54 per share, compared to a net loss of $34.1 million, or $0.58 per share, for the same period in 2023[12] Clinical Trials and Development - Top line results for JNJ-2113 Phase 3 ICONIC-LEAD and ICONIC-TOTAL clinical trials in psoriasis are expected in Q4 2024[1] - Top line results for rusfertide Phase 3 VERIFY clinical trial in polycythemia vera are anticipated in Q1 2025[3] - The company expects to nominate a development candidate for an oral IL-17 peptide antagonist in Q4 2024[5] - The company is pursuing the discovery of novel oral peptides targeting various diseases, with additional candidates expected to be nominated in 2025[5]

Clinical Trials and Drug Development - Rusfertide is in a Phase 3 trial (VERIFY) for polycythemia vera with 250 patients enrolled, expecting top-line data in Q1 2025 and potential NDA filing in Q4 2025[78]. - The Phase 2 REVIVE trial showed rusfertide significantly reduced the need for phlebotomy, with 69.2% of subjects responding compared to 18.5% for placebo (p=0.0003)[81]. - Long-term follow-up from the REVIVE trial indicated durable hematocrit control and no new safety signals in patients with polycythemia vera[83]. - The VERIFY trial for rusfertide has completed enrollment, with results from a two-year carcinogenicity study expected by the end of 2024[78]. - The PACIFIC Phase 2 trial for rusfertide indicated improvements in iron deficiency markers in patients with polycythemia vera[83]. - JNJ-2113, an oral IL-23 receptor antagonist, is undergoing multiple Phase 3 trials for plaque psoriasis, with a peak sales projection exceeding $5 billion[89]. - The Phase 2b FRONTIER 1 trial for JNJ-2113 achieved primary and secondary endpoints, showing significant improvement in skin lesions compared to placebo[87]. - JNJ-2113's potential across multiple indications includes plaque psoriasis, psoriatic arthritis, and inflammatory bowel disease, with significant market potential[89]. Financial Performance and Revenue - Cumulative net losses from inception through June 30, 2024, amounted to $439.0 million, primarily due to research and development costs[95]. - License and collaboration revenue increased from $0 for the three months ended June 30, 2023, to $4.2 million for the three months ended June 30, 2024[111]. - The company earned a $50.0 million milestone payment upon dosing the third patient in the ICONIC-TOTAL Phase 3 trial in late October 2023, received in December 2023[90]. - The company is eligible for up to approximately $795.0 million in future development and sales milestone payments from JNJ[90]. - License and collaboration revenue surged to $259.1 million for the six months ended June 30, 2024, compared to $0 for the same period in 2023, primarily due to the Takeda Collaboration Agreement[118]. - Net income for the six months ended June 30, 2024, was $176.7 million, a significant increase from a net loss of $72.2 million for the same period in 2023[120]. - Cash provided by operating activities for the six months ended June 30, 2024, was $241.2 million, primarily due to a net income of $176.7 million and a $300.0 million upfront payment from Takeda[140]. Research and Development Expenses - Research and development expenses for the three months ended June 30, 2024, were $33.5 million, a slight increase from $33.2 million in the same period of 2023[109]. - Research and development expenses increased by $0.3 million, or 1%, from $33.2 million for the three months ended June 30, 2023, to $33.5 million for the three months ended June 30, 2024[112]. - Total research and development expenses for the six months ended June 30, 2024, were $67.3 million, an increase of $6.7 million, or 11%, compared to $60.6 million for the same period in 2023[120]. - The company anticipates an increase in research and development expenses in the near term as it progresses its rusfertide program and pre-clinical research[106]. - Research and development personnel-related expenses increased by $1.3 million for the three months ended June 30, 2024, compared to the same period in 2023[114]. Cash and Funding - The company had $595.4 million in cash, cash equivalents, and marketable securities as of June 30, 2024, compared to $341.6 million at the end of 2023[125]. - The company expects its existing cash and marketable securities to be sufficient to fund operations for at least the next twelve months[136]. - The company may require additional funding to advance its early discovery pipeline and develop new product candidates[136][138]. - Cash used in investing activities for the six months ended June 30, 2024, was $82.0 million, mainly due to purchases of marketable securities[141]. - An immediate 100 basis point increase in interest rates would increase the company's annual interest income by approximately $4.7 million[146]. Collaborations and Milestones - A collaboration with Takeda for rusfertide includes a $300 million upfront payment and potential milestone payments up to $330 million, with royalties of 10% to 17% on ex-U.S. net sales[84][85]. - The company is eligible for additional milestones under the Takeda Collaboration Agreement, including $25.0 million for achieving the primary endpoint in the Phase 3 VERIFY trial and up to $75.0 million upon FDA approval of rusfertide[132][134]. - The company has received $172.5 million in nonrefundable payments from JNJ to date[90]. - Upcoming potential milestones under the JNJ License and Collaboration Agreement include $115.0 million for a Phase 3 trial and $50.0 million upon FDA approval of a second-generation compound[134].

Core Insights - Protagonist Therapeutics reported a quarterly loss of $0.50 per share, which aligns with the Zacks Consensus Estimate, showing an improvement from a loss of $0.68 per share a year ago [1] - The company posted revenues of $4.17 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 89.58%, compared to zero revenues a year ago [2] - Protagonist Therapeutics shares have increased approximately 56.1% since the beginning of the year, significantly outperforming the S&P 500's gain of 8.7% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.64 on $5 million in revenues, while for the current fiscal year, it is $2.24 on $303.73 million in revenues [7] - The estimate revisions trend for Protagonist Therapeutics is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Medical - Biomedical and Genetics industry, to which Protagonist Therapeutics belongs, is currently in the top 37% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Protagonist reported cash, cash equivalents, and marketable securities of $595.4 million as of June 30, 2024, up from $341.6 million as of December 31, 2023, reflecting a significant increase due to a $300 million upfront payment from the Takeda collaboration[7]. - License and collaboration revenue for the six months ended June 30, 2024, was $259.1 million, primarily from the Takeda collaboration agreement, which included $255 million recognized in Q1 2024[9]. - License and collaboration revenue for the three months ended June 30, 2024, was $4,167,000, compared to $0 for the same period in 2023[15]. - Total operating expenses for the three months ended June 30, 2024, were $42,960,000, an increase from $42,354,000 in the same period of 2023[15]. - Net loss for the three months ended June 30, 2024, was $30,616,000, compared to a net loss of $38,460,000 for the same period in 2023[15]. - The net loss for Q2 2024 was $30.6 million, or $0.50 per share, an improvement from a net loss of $38.5 million, or $0.68 per share, in Q2 2023[11]. - Interest income for the three months ended June 30, 2024, was $7,404,000, compared to $3,913,000 for the same period in 2023[15]. Expenses - Research and development expenses increased by $6.7 million for the six months ended June 30, 2024, primarily due to higher drug discovery and pre-clinical research costs[10]. - General and administrative expenses rose by $6.6 million for the six months ended June 30, 2024, mainly due to one-time advisory and legal fees related to the Takeda collaboration[10]. - Research and development expenses for the six months ended June 30, 2024, were $67,254,000, up from $60,598,000 in the same period of 2023[15]. - Stock-based compensation expense for the three months ended June 30, 2024, was $8,944,000, compared to $8,343,000 for the same period in 2023[16]. Assets and Equity - Total assets as of June 30, 2024, were $614,629,000, an increase from $357,951,000 as of December 31, 2023[17]. - Total stockholders' equity increased to $541,324,000 as of June 30, 2024, from $336,677,000 as of December 31, 2023[17]. - The accumulated deficit as of June 30, 2024, was $(438,986,000), down from $(615,710,000) as of December 31, 2023[17]. Clinical Development - Protagonist anticipates top-line results from the Phase 3 VERIFY study of rusfertide in polycythemia vera in Q1 2025[4]. - The primary endpoint portions of the Phase 3 ICONIC-LEAD and ICONIC-TOTAL studies for JNJ-2113 are expected to be completed in Q4 2024[5]. - Protagonist is pursuing the discovery of novel oral peptides, with a development candidate for an oral IL-17 program expected by the end of 2024[7]. - The company is currently conducting five Phase 3 trials for JNJ-2113 in psoriasis and a Phase 2b study in ulcerative colitis, with rapid enrollment progress reported[2]. Market Position - Protagonist's addition to the S&P SmallCap 600 index enhances visibility and reflects the company's value to shareholders[2].

Core Insights - The article discusses the effectiveness of a "Recent Price Strength" screen for identifying stocks with strong fundamentals that can maintain an upward price trend [1] - Protagonist Therapeutics (PTGX) is highlighted as a strong candidate for trend investors due to its significant price increase and favorable rankings [11] Group 1: Price Trends and Performance - PTGX has experienced a price increase of 39.8% over the past 12 weeks, indicating strong investor interest [6] - The stock has also seen a price increase of 10.2% over the past four weeks, suggesting that the upward trend is still intact [2] - PTGX is currently trading at 91.3% of its 52-week high-low range, indicating a potential breakout [12] Group 2: Ratings and Recommendations - PTGX carries a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [7] - The average broker recommendation for PTGX is 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term performance [13] Group 3: Investment Strategy - The article emphasizes the importance of ensuring that stocks have sound fundamentals and positive earnings estimate revisions to sustain price momentum [5] - The Zacks Rank stock-rating system has a proven track record, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [3]

Table of Contents ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to PROTAGONIST THERAPEUTICS, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Exact name of registrant as specified in its charter) Washington, D.C. 20549 FORM 10-Q Commission File No. 001-37852 (State or other jurisdiction of ...