Protagonist Therapeutics, Inc. — Q2 2023 Form 10-Q Summary
Business context and reporting period
Protagonist Therapeutics is a clinical-stage biopharmaceutical company developing peptide-based therapies for hematology, blood disorders, inflammatory diseases and immunomodulatory conditions. The company’s principal programs are wholly owned rusfertide and partnered JNJ-2113. The filing covers the quarter and six months ended June 30, 2023, and was filed August 3, 2023.
- Rusfertide is being developed for polycythemia vera and other blood disorders; the global Phase 3 VERIFY trial was ongoing.
- Janssen is responsible for further development of JNJ-2113, an oral IL-23 receptor antagonist.
- PN-943 development was de-prioritized, and the company does not intend to dedicate further internal resources to its clinical development or contract manufacturing activities.
Financial results and liquidity
| Metric | Three months ended June 30, 2023 | Six months ended June 30, 2023 |
|---|---|---|
| License and collaboration revenue | $0 | $0 |
| Research and development expense | $33.2 million | $60.6 million |
| General and administrative expense | $9.2 million | $17.8 million |
| Loss from operations | $(42.4) million | $(78.4) million |
| Interest income | $3.9 million | $6.4 million |
| Net loss | $(38.5) million | $(72.2) million |
| Net loss per share | $(0.68) | $(1.34) |
| Cash used in operating activities | Not separately reported | $(60.6) million |
- Revenue and profit margins are not meaningful because the company has no product sales and reported no collaboration revenue in the period.
- Cash, cash equivalents and marketable securities totaled $313.4 million at June 30, 2023, including $235.4 million of cash and cash equivalents and $78.0 million of marketable securities.
- Total assets were $320.5 million and total liabilities were $26.4 million. The filing does not disclose outstanding debt; liabilities principally consisted of accounts payable, accrued expenses and operating lease liabilities.
- Accumulated deficit was $608.9 million.
- Cash provided by financing activities was $134.6 million, primarily from the April public offering and first-quarter ATM sales.
Material changes versus the prior comparable period
- Quarterly net loss improved to $38.5 million from $41.0 million, despite the absence of collaboration revenue, primarily because interest income increased by $3.4 million.
- Six-month net loss increased to $72.2 million from $62.0 million. The prior-year period included $26.6 million of license and collaboration revenue, including a $25.0 million Janssen milestone.
- Six-month research and development expense declined 15% to $60.6 million. PN-943 spending decreased $28.2 million, while rusfertide spending increased $21.9 million, primarily for the Phase 3 VERIFY trial and contract manufacturing.
- Second-quarter rusfertide-related clinical and development expense increased 97% to $27.9 million, while PN-943 expense declined 98% to $0.2 million.
- General and administrative expense decreased 2% for the six-month period but increased 19% for the second quarter, primarily due to payroll, stock-based compensation and general expenses.
- April 2023 equity financing generated approximately $107.8 million of net proceeds from 5.75 million shares. First-quarter ATM sales generated an additional $24.3 million.
- Shares outstanding increased to 57.5 million at June 30, 2023 from 49.3 million at December 31, 2022, reflecting equity financings and employee-related issuances.
Guidance, outlook, commentary and risks
- Management expects second-half 2023 research and development expense to remain relatively flat compared with the first half as it focuses on advancing rusfertide and preparing for potential commercialization.
- VERIFY enrollment completion is expected in the first quarter of 2024. The PACIFIC Phase 2 trial was completed in the second quarter of 2023, and the randomized-withdrawal portion of REVIVE was completed in the first quarter of 2023.
- Management reported positive REVIVE results, with 69.2% of rusfertide-treated subjects versus 18.5% of placebo subjects meeting the responder definition; the filing states the difference was statistically significant.
- Janssen reported positive FRONTIER1 Phase 2b results for JNJ-2113 and announced plans for a Phase 3 psoriasis study. Potential future Janssen milestones include $50.0 million upon dosing of the third patient in a Phase 3 trial and $115.0 million upon meeting a Phase 3 primary endpoint, subject to achievement and applicable terms.
- The company believes existing cash, cash equivalents and marketable securities will fund anticipated requirements for at least the next 12 months, but states that substantial additional funding will be required in the future.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, rusfertide safety concerns, reliance on Janssen and third-party manufacturers and CROs, manufacturing and supply-chain disruptions, future dilution or inability to raise capital, inflation, interest rates, geopolitical events and banking-system risks.
- The company has no approved products, no product-sales revenue and does not expect sustained profitability in the foreseeable future.
- No material legal proceedings were reported. Management concluded that disclosure controls and procedures were effective at the reasonable-assurance level, with no material changes in internal control over financial reporting.
Most important facts for investors to verify
- Enrollment progress and final timing for the VERIFY Phase 3 trial, including efficacy and safety data.
- Regulatory and clinical implications of the prior rusfertide clinical hold and historical nonclinical tumor findings.
- Janssen’s timing and commitment to initiate Phase 3 development of JNJ-2113 and the probability of future milestone payments.
- Actual cash burn, updated runway and the timing and terms of any future equity, debt or partnership financing.
- Potential dilution from outstanding options, warrants and other equity awards; 11.7 million potentially dilutive securities were excluded from loss-per-share calculations at June 30, 2023.
- Manufacturing readiness, supply availability and commercial planning for rusfertide if late-stage development is successful.