Protagonist Therapeutics(PTGX) - 2019 Q4 - Annual Report

Drug Development and Clinical Trials - PTG-200 is an orally delivered gut-restricted IL-23R antagonist for IBD, with a $25 million milestone payment received from Janssen in May 2019 for expanded collaboration[20] - PN-943, a backup compound to PTG-100, completed Phase 1 studies in 2019, with a U.S. IND submitted in December 2019, and a Phase 2 study anticipated to start in Q2 2020[21] - PTG-300, an injectable hepcidin mimetic, is being developed for disorders like beta-thalassemia, with orphan drug designation and Fast Track designation from the FDA[32] - The TRANSCEND Phase 2 study for PTG-300 in beta-thalassemia began in Q1 2019, focusing on safety and efficacy, with primary endpoints including changes in hemoglobin and transfusion burden[33] - Preliminary results from the Phase 2 study of PTG-300 showed significant reductions in transfusion burden and serum iron levels at doses of 40 mg and 80 mg[34] - The Phase 2 study of PTG-300 in polycythemia vera (PV) is expected to enroll approximately 30 patients, evaluating safety and efficacy over a 16-week period[38] - An open-label study of PTG-300 in hereditary hemochromatosis (HH) was initiated in January 2020, targeting reductions in TSAT and phlebotomy requirements[39] - The company plans to initiate an investigator-sponsored trial of PTG-300 in myelodysplastic syndromes (MDS) in the first half of 2020[40] - A Phase 2 clinical study called PRISM is evaluating PTG-200 in 90 patients with moderate-to-severe CD, with results expected in 2021[57] - PN-943, an orally delivered α4β7 integrin antagonist, is being developed for moderate-to-severe UC, targeting the same pathway as the FDA-approved drug Entyvio[58][61] - The Phase 1 clinical trial for PN-943 was completed in 2019, involving dose escalation from 100 mg to 1,400 mg for the single ascending dose (SAD) portion[63] - The company filed an Investigational New Drug (IND) application for PN-943 in January 2020, with plans to initiate a Phase 2 proof-of-concept study in ulcerative colitis (UC) in Q2 2020[66] Market Opportunities - The global market opportunity for beta-thalassemia is estimated between $1.4 billion to $2.5 billion, with approximately 300,000 patients globally[28] - The market opportunity for polycythemia vera is estimated between $1.0 billion to $2.0 billion, with over 150,000 diagnosed patients in key markets[29] - There are over 1.6 million IBD patients in the United States, with an increase of approximately 200,000 patients since 2011[42] - The UC market is estimated at $5.3 billion and is expected to grow at a CAGR of approximately 2.5% to $6.8 billion by 2026[42] - The CD market reached approximately $9.6 billion and is projected to grow at approximately 3.7% per year to $13.8 billion by 2026[42] - Johnson & Johnson's Stelara sales exceeded $5.0 billion in 2018, while Takeda Pharmaceuticals' Entyvio sales reached approximately $3.0 billion in 2019[43] - Current treatments for moderate-to-severe IBD show clinical remission rates of only 15% to 31%, indicating a significant unmet medical need[43] Regulatory and Compliance - The FDA's review process for new drug applications (NDAs) typically takes about 12 months from submission, with a goal of 10 months for standard NDAs[95] - The company must comply with substantial regulatory requirements imposed by the FDA and other authorities throughout the drug development process[87] - The FDA may grant fast track designation for drugs intended to treat serious conditions, allowing for expedited development and review[103] - Orphan designation can provide financial incentives and exclusivity for drugs treating rare diseases affecting fewer than 200,000 individuals in the U.S.[105] - The company is subject to extensive FDA regulations post-approval, including requirements for recordkeeping, periodic reporting, and product sampling[106] - The FDA may require post-marketing testing and surveillance to monitor product safety and effectiveness after commercialization[107] - The company must maintain compliance with cGMP requirements to avoid regulatory penalties and ensure product quality[108] - The company must ensure compliance with GCPs during clinical trials, as failure could lead to unreliable data and regulatory rejection[179] Financial Condition and Funding - The company has incurred significant operating losses, with a net loss of $77.2 million for the year ended December 31, 2019, and an accumulated deficit of $217.7 million as of the same date[156] - The company does not anticipate generating revenue from product sales for the foreseeable future and has no product candidates in registration or pivotal clinical trials[158] - The company expects to continue incurring significant research and development expenses related to ongoing operations and product development, including clinical activities under the Janssen License and Collaboration Agreement[156] - As of December 31, 2019, the company had cash, cash equivalents, and marketable securities of $133.0 million, which is expected to fund operations for at least the next 12 months[161] - The company may require substantial additional funding to complete clinical development and commercialize product candidates, which may not be available on acceptable terms[160] - The company faces challenges with third-party payors regarding coverage and reimbursement, which may limit product sales if deemed not cost-effective[111] Collaboration and Partnerships - The Janssen License and Collaboration Agreement, effective July 2017, included a non-refundable upfront cash payment of $50 million and a subsequent payment of $25 million in Q2 2019[71] - The collaboration with Janssen triggered a $25.0 million milestone payment for expanding efforts towards second-generation IL-23R antagonists[56] - The company currently has no active collaborations for its product candidates, relying solely on the Janssen License and Collaboration Agreement[175] - Future collaborations may not be successful, with risks including reduced payments and conflicts over development plans[177] - The Co-Detailing Option with Janssen allows the company to provide up to 30% of the PTG-200 selling effort in the U.S. if approved, but a separate agreement specifying detailed responsibilities is still needed[198] Manufacturing and Supply Chain - All product candidates are manufactured by third-party contract manufacturing organizations (CMOs), with no plans to establish owned manufacturing facilities[85] - The company engages CMOs on a "fee for services" basis and plans to enter into longer-term contracts as product candidates progress to Phase 3 clinical trials[86] - The company has not assessed the capabilities of third-party manufacturers beyond the supply of clinical materials to date[86] - Manufacturing risks exist as the company relies on third parties for drug production, lacking internal capabilities for clinical or commercial scale[183] - The company faces potential delays in clinical trials due to reliance on contract manufacturers for raw materials[184] - Critical active pharmaceutical ingredients sourced from suppliers in China may disrupt the supply chain due to port closures and country lockdowns[216] Challenges and Risks - The company is an early clinical-stage biopharmaceutical firm with no approved products and no historical product revenue, making it difficult to assess future prospects[135] - The company expects significant fluctuations in financial condition and operating results due to factors such as clinical outcomes, funding, competition, and regulatory approvals[136] - The company has no product candidates in registrational or pivotal clinical trials, and the success of its business heavily depends on the success of its early-stage clinical candidates[138] - If clinical trials reveal unacceptable safety or efficacy results, it could lead to delays or halts in development, adversely affecting the company's business[169] - The company may face disagreements with Janssen regarding the development and commercialization of PTG-200, which could impact financial condition and operational plans[172] - The company faces challenges in recruiting and retaining patients for clinical trials, which may lead to delays and increased costs[147] - The company may face scrutiny over pricing practices, with potential legislative measures aimed at reducing drug prices and increasing transparency[119] - The company anticipates that future healthcare reforms could limit government payments for therapies, potentially reducing demand for its products[207] - The company may face adverse effects on operations due to health epidemics like COVID-19, particularly in regions with significant manufacturing and distribution facilities[213] - The full impact of the COVID-19 outbreak on the company's operations and supply chain remains uncertain, with potential material effects[218] - The company is closely monitoring the COVID-19 situation and implementing risk mitigation strategies as needed[218]