Protagonist Therapeutics, Inc. 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. Key programs include wholly owned rusfertide and partnered JNJ-2113. The filing covers the unaudited three months ended March 31, 2023, compared with the same period in 2022.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| License and collaboration revenue | $0 | $25.7 million | Down 100% |
| Research and development expense | $27.4 million | $36.3 million | Down 25% |
| General and administrative expense | $8.6 million | $10.5 million | Down 18% |
| Operating loss | $36.0 million | $21.1 million | Loss increased $14.9 million |
| Interest income | $2.5 million | $0.2 million | Up $2.3 million |
| Net loss | $33.7 million | $20.9 million | Loss increased $12.8 million |
| Net loss per share | $0.67 | $0.43 | Loss per share increased |
| Cash used in operating activities | $34.3 million | $37.7 million | Use decreased $3.3 million |
At March 31, 2023, cash, cash equivalents and marketable securities totaled $230.8 million, consisting of $127.7 million of cash and cash equivalents and $103.1 million of marketable securities. Total assets were $239.9 million and total liabilities were $23.7 million. The company had no conventional debt reported; liabilities primarily consisted of accounts payable, accrued expenses and operating lease liabilities.
Financing activities provided $26.5 million, including $24.3 million of net proceeds from the at-the-market offering. Investing activities provided $9.8 million, primarily reflecting maturities of marketable securities exceeding purchases. Cash, cash equivalents and restricted cash increased by $1.9 million during the quarter.
Material changes versus the prior comparable period
- Revenue fell to zero because the company completed its performance obligation under the Janssen collaboration in June 2022. Q1 2022 revenue included a $25.0 million milestone related to JNJ-2113.
- Research and development spending declined by $8.9 million. PN-943 spending decreased by $14.8 million as further development was deprioritized, while rusfertide spending increased by $8.3 million primarily due to the Phase 3 VERIFY trial.
- The company reported a larger operating and net loss despite lower operating expenses, principally because of the absence of collaboration revenue.
- Higher yields on invested balances increased interest income by $2.3 million.
- The company issued 1.75 million shares under its 2022 ATM facility for $24.3 million of net proceeds, increasing shares outstanding from 49.3 million at December 31, 2022 to 51.4 million at March 31, 2023.
- In April 2023, after the reporting date, the company completed an underwritten offering of 5.75 million shares at $20.00 per share, generating approximately $107.7 million of net proceeds.
Guidance, outlook, commentary and risks
Management expects cash, cash equivalents and marketable securities at March 31, 2023 to fund anticipated operating and capital requirements for at least the next 12 months, based on its current plan and assumptions. The company nevertheless expects to require substantial additional funding to advance rusfertide, pursue regulatory approval and develop or acquire additional candidates.
- Rusfertide remains the principal internal priority. The Phase 3 VERIFY trial in polycythemia vera is expected to complete enrollment in the fourth quarter of 2023.
- The Phase 2 REVIVE randomized withdrawal portion produced positive topline results: 69.2% of rusfertide-treated subjects versus 18.5% of placebo-treated subjects met the responder definition, with a reported p-value of 0.0003.
- Completion of the rusfertide PACIFIC 52-week trial was expected in the second quarter of 2023. Trials in additional rusfertide indications were paused, partly because of the Inflation Reduction Act.
- Janssen reported positive topline Phase 2b FRONTIER1 results for JNJ-2113 in plaque psoriasis. The company expects JNJ-2113 to progress to Phase 3, subject to Janssen’s decisions and further development results.
- The company expects research and development expense and cash burn to decrease in the near term as resources are focused on rusfertide and PN-943 activities are discontinued. Actual spending may increase if trials expand, advance, enroll slowly or encounter delays.
- Potential future Janssen milestones include $10 million, $50 million, $15 million and $115 million for specified development achievements. These payments are contingent and are not assured.
- Major risks include clinical or regulatory failure, adverse safety findings, enrollment and manufacturing delays, reliance on Janssen and other third parties, supply-chain disruptions, inflation, capital-market volatility, banking risk, dilution from future equity offerings and the need for additional financing.
- The company has no approved products, no product-sales revenue and no history of profitability. Management expects continued losses for the foreseeable future.
Most important facts for investors to verify
- Progress, enrollment and safety data for the VERIFY Phase 3 rusfertide trial, including the expected fourth-quarter 2023 enrollment completion.
- Regulatory developments related to rusfertide, including the prior FDA clinical hold and the status of the product’s safety profile.
- Janssen’s plans for JNJ-2113, including Phase 3 initiation, development milestones and the risk of collaboration termination or reduced activity.
- The company’s cash runway after incorporating the approximately $107.7 million April 2023 offering and expected clinical-trial spending.
- Future financing needs and potential dilution under the remaining ATM facility or other equity, debt or collaboration transactions.
- Whether the decline in PN-943 and other program spending is sustained and whether rusfertide spending increases as VERIFY advances.
- Exposure of cash and investments to uninsured bank deposits, interest-rate changes, marketable-security valuation and broader capital-market disruption.