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Protagonist Therapeutics, Inc 8-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Protagonist Therapeutics, Inc.
,

Filing date:

02/21/2025

TLDR:

Protagonist Therapeutics reports its Q4 and full-year 2024 financial results, highlighting a $165.0 million milestone, progress in clinical trials, and a strong cash position.

ELI5:

Protagonist Therapeutics, a drug development company, made a lot more money this year because of partnerships and progress on their drugs. They have enough cash to keep going for a while.

Accession #:

0001104659-25-015897

Published on

Analyst Summary

  • Significant increase in license and collaboration revenue due to the Takeda agreement and JNJ milestone payments.
  • R&D and G&A expenses increased, reflecting pipeline advancement and one-time advisory fees.
  • Substantial net income reported for Q4 and full year 2024, a turnaround from the net loss in 2023.
  • Strong cash position with a runway through at least the end of 2028.
  • Gross Profit Margin increased significantly from 45.56% in Q4 2023 to 77.17% in Q4 2024.
  • Operating Profit Margin increased significantly from 38.42% in Q4 2023 to 74.30% in Q4 2024.
  • Net Profit Margin increased significantly from 45.56% in Q4 2023 to 77.17% in Q4 2024.
  • EPS (Basic) increased from $0.45 in Q4 2023 to $2.11 in Q4 2024.
  • Current ratio decreased from 16.71 in 2023 to 8.84 in 2024.
  • Cash ratio decreased from 16.06 in 2023 to 8.05 in 2024.
  • Debt-to-equity ratio increased from 0.06 in 2023 to 0.10 in 2024.
  • Revenue growth was 624.06% from 2023 to 2024.
  • Net income growth was -448.54% from 2023 to 2024.
  • EPS growth was -421.58% from 2023 to 2024.

Opportunities and Risks

  • Clinical Trial Outcomes: The success of the company hinges on the positive outcomes of its ongoing clinical trials. Failure to meet endpoints could negatively impact the stock price and future collaborations.
  • Regulatory Approval: Obtaining regulatory approval for its product candidates is a lengthy and uncertain process.
  • Competition: The biopharmaceutical industry is highly competitive, and the company faces competition from larger companies with greater resources.
  • Reliance on Collaborations: The company’s financial performance is dependent on its collaborations with Takeda and JNJ. Any disruption to these partnerships could negatively impact revenue.
  • Pipeline Expansion: The company has a promising pipeline of oral peptide-based therapeutics, including PN-881 and programs in obesity and hematology.
  • Strategic Partnerships: The company’s collaborations with Takeda and JNJ provide access to resources and expertise.
  • Market Potential: The company’s lead product candidates address large and growing markets with unmet medical needs.
  • Strong Cash Position: The company’s strong cash position provides financial flexibility to invest in its pipeline and pursue strategic opportunities.

Potential Implications

Stock Price

  • Positive topline results from the VERIFY and ANTHEM trials could drive significant value for the company and increase the stock price.
  • Failure to meet endpoints in clinical trials could negatively impact the stock price.

SEC Filing Report: Protagonist Therapeutics, Inc. – 8-K (February 21, 2025)

Executive Summary

This 8-K filing from Protagonist Therapeutics, Inc. (PTGX) reports the company’s financial results for the fourth quarter and full year ended December 31, 2024, and provides a corporate update. The key highlights include a significant milestone payment from the icotrokinra (formerly JNJ-2113) collaboration, the nomination of PN-881 as a development candidate, and upcoming topline results from late-stage clinical trials. The company’s strong cash position, bolstered by the Takeda collaboration and milestone payments, provides a runway through at least the end of 2028. Overall, the report paints a positive picture of the company’s financial health and progress in its clinical development programs.

Company Overview

Protagonist Therapeutics is a biopharmaceutical company focused on discovering and developing novel peptide-based therapeutics. Their pipeline includes rusfertide for polycythemia vera (PV) and icotrokinra for psoriasis and ulcerative colitis. The company has strategic collaborations with Takeda and JNJ.

Detailed Analysis

Financial Performance

The financial results for Q4 and full-year 2024 show a significant improvement compared to the previous year, driven by collaboration revenue.

Key Financial Data:

Metric Q4 2024 (USD Thousands) Q4 2023 (USD Thousands) FY 2024 (USD Thousands) FY 2023 (USD Thousands)
License and Collaboration Revenue 170,638 60,000 434,433 60,000
Research and Development Expense 34,904 28,899 138,128 120,161
General and Administrative Expense 8,954 8,052 43,462 33,491
Net Income (Loss) 131,674 27,335 275,188 (78,955)
Basic Earnings (Loss) per Share 2.11 0.45 4.47 (1.39)
Diluted Earnings (Loss) per Share 1.98 0.44 4.23 (1.39)
Cash, Cash Equivalents, and Marketable Securities (as of Dec 31) N/A N/A 559,165 341,617

Analysis:

* **Revenue Surge:** The significant increase in license and collaboration revenue is primarily due to the Takeda agreement for rusfertide and milestone payments from the JNJ agreement for icotrokinra. This demonstrates the value of the company’s partnerships and the progress of its clinical programs.
* **Increased Expenses:** R&D expenses increased, reflecting the advancement of the pipeline. G&A expenses also increased, partly due to one-time advisory and legal fees related to the Takeda collaboration.
* **Strong Net Income:** The company reported a substantial net income for both Q4 and the full year, a significant turnaround from the net loss in 2023. This is a direct result of the increased revenue.
* **Healthy Cash Position:** The company’s cash position is strong, providing a runway through at least the end of 2028. This financial stability allows the company to invest in its pipeline and pursue strategic opportunities.

Management’s Discussion and Analysis (MD&A) Insights

* **Positive Tone:** Management expresses optimism about upcoming topline results from the VERIFY and ANTHEM trials.
* **Pipeline Expansion:** The company is focused on progressing its oral IL-17 peptide antagonist PN-881 and nominating new development candidates from its oral obesity and oral hepcidin programs.
* **Strategic Collaborations:** The Takeda and JNJ collaborations are key drivers of revenue and provide validation for the company’s technology.

Key Developments and Milestones

* **Rusfertide Collaboration with Takeda:** A significant deal providing upfront cash and potential milestone payments.
* **Icotrokinra Phase 3 Results:** Positive topline results from ICONIC-LEAD and ICONIC-TOTAL studies in psoriasis.
* **PN-881 Nomination:** Nomination of a potential best-in-class oral peptide IL-17 antagonist development candidate.
* **Upcoming Milestones:** Topline results expected for rusfertide Phase 3 VERIFY trial and icotrokinra Phase 2b ANTHEM trial in March 2025.

Risks and Opportunities

Risks:

* **Clinical Trial Outcomes:** The success of the company hinges on the positive outcomes of its ongoing clinical trials. Failure to meet endpoints could negatively impact the stock price and future collaborations.
* **Regulatory Approval:** Obtaining regulatory approval for its product candidates is a lengthy and uncertain process.
* **Competition:** The biopharmaceutical industry is highly competitive, and the company faces competition from larger companies with greater resources.
* **Reliance on Collaborations:** The company’s financial performance is dependent on its collaborations with Takeda and JNJ. Any disruption to these partnerships could negatively impact revenue.

Opportunities:

* **Pipeline Expansion:** The company has a promising pipeline of oral peptide-based therapeutics, including PN-881 and programs in obesity and hematology.
* **Strategic Partnerships:** The company’s collaborations with Takeda and JNJ provide access to resources and expertise.
* **Market Potential:** The company’s lead product candidates address large and growing markets with unmet medical needs.
* **Strong Cash Position:** The company’s strong cash position provides financial flexibility to invest in its pipeline and pursue strategic opportunities.

Conclusion and Actionable Insights

Protagonist Therapeutics is in a strong position, with a robust pipeline, strategic collaborations, and a healthy cash balance. The upcoming topline results from the VERIFY and ANTHEM trials are key catalysts that could drive significant value for the company.

**Overall Assessment:** Positive. The company’s financial performance has improved significantly, and its pipeline is progressing well.

**Recommendations:**

* **Monitor Clinical Trial Results:** Closely monitor the topline results from the VERIFY and ANTHEM trials, as these will be critical for the company’s future.
* **Evaluate Pipeline Progress:** Assess the progress of the company’s oral peptide-based therapeutics, including PN-881 and programs in obesity and hematology.
* **Track Collaboration Agreements:** Monitor the company’s collaborations with Takeda and JNJ, as these are key drivers of revenue and provide validation for the company’s technology.
* **Consider Investment:** Given the company’s strong financial position and promising pipeline, consider a long-term investment in PTGX. However, be aware of the risks associated with clinical trial outcomes and regulatory approval.

Protagonist Therapeutics, Inc. Financial Analysis – February 21, 2025

1. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:

    • Calculation: Since the company primarily reports license and collaboration revenue, we’ll consider this as revenue. Gross Profit = Revenue – Cost of Revenue. Cost of Revenue is not explicitly provided, so we’ll assume it’s negligible for this type of revenue. Therefore, Gross Profit Margin ≈ Net Income / Revenue.

      • Q4 2024: $131,674 / $170,638 = 77.17%
      • Q4 2023: $27,335 / $60,000 = 45.56%
      • 2024: $275,188 / $434,433 = 63.34%
      • 2023: $(78,955) / $60,000 = -131.59%
    • Trend:

      • Q4: The gross profit margin increased significantly from 45.56% in Q4 2023 to 77.17% in Q4 2024, a 69.38% increase.
      • Annual: The gross profit margin improved drastically from -131.59% in 2023 to 63.34% in 2024.
    • Industry: Biotechnology companies can have highly variable gross profit margins depending on their stage of development and revenue streams. Established pharmaceutical companies often have margins of 70-80%, while research-focused biotechs may have lower or negative margins. Protagonist’s margin is within a reasonable range for a company with collaboration revenue.
  • Operating Profit Margin:

    • Calculation: Operating Income / Revenue

      • Q4 2024: $126,780 / $170,638 = 74.30%
      • Q4 2023: $23,049 / $60,000 = 38.42%
      • 2024: $252,843 / $434,433 = 58.20%
      • 2023: $(93,652) / $60,000 = -156.09%
    • Trend:

      • Q4: The operating profit margin increased significantly from 38.42% in Q4 2023 to 74.30% in Q4 2024, a 93.40% increase.
      • Annual: The operating profit margin improved drastically from -156.09% in 2023 to 58.20% in 2024.
    • Industry: Similar to gross profit margin, operating profit margins in biotech vary widely. A positive margin indicates efficient management of operating expenses relative to revenue.
  • Net Profit Margin:

    • Calculation: Net Income / Revenue

      • Q4 2024: $131,674 / $170,638 = 77.17%
      • Q4 2023: $27,335 / $60,000 = 45.56%
      • 2024: $275,188 / $434,433 = 63.34%
      • 2023: $(78,955) / $60,000 = -131.59%
    • Trend:

      • Q4: The net profit margin increased significantly from 45.56% in Q4 2023 to 77.17% in Q4 2024, a 69.38% increase.
      • Annual: The net profit margin improved drastically from -131.59% in 2023 to 63.34% in 2024.
    • Industry: A positive net profit margin is crucial for long-term sustainability. Protagonist’s improved margin suggests successful commercialization or partnership activities.
  • Return on Assets (ROA):

    • Calculation: Net Income / Average Total Assets. We’ll approximate Average Total Assets as (2024 Assets + 2023 Assets) / 2.

      • 2024: $275,188 / (($744,725 + $357,951) / 2) = 50.01%
    • Industry: A high ROA suggests efficient asset utilization. For biotech, this can be driven by successful licensing deals or drug development progress.
  • Return on Equity (ROE):

    • Calculation: Net Income / Average Stockholders’ Equity. We’ll approximate Average Equity as (2024 Equity + 2023 Equity) / 2.

      • 2024: $275,188 / (($675,295 + $336,677) / 2) = 54.41%
    • Industry: A high ROE indicates effective use of shareholder investments.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Calculation: Provided in the filing.

      • Q4 2024 Basic: $2.11
      • Q4 2024 Diluted: $1.98
      • Q4 2023 Basic: $0.45
      • Q4 2023 Diluted: $0.44
      • 2024 Basic: $4.47
      • 2024 Diluted: $4.23
      • 2023 Basic: $(1.39)
      • 2023 Diluted: $(1.39)
    • Trend:

      • Q4: EPS (Basic) increased from $0.45 in Q4 2023 to $2.11 in Q4 2024, a 368.89% increase. EPS (Diluted) increased from $0.44 in Q4 2023 to $1.98 in Q4 2024, a 350% increase.
      • Annual: EPS (Basic) improved from $(1.39) in 2023 to $4.47 in 2024. EPS (Diluted) improved from $(1.39) in 2023 to $4.23 in 2024.
    • Industry: EPS is a key metric for investors. Positive and increasing EPS is a strong indicator of financial health.

Liquidity

  • Current Ratio:

    • Calculation: Current Assets / Current Liabilities. Current Assets are not explicitly provided, but Working Capital = Current Assets – Current Liabilities, so Current Assets = Working Capital + Current Liabilities. Current Liabilities = Total Assets – Total Equity.

      • 2024: ($544,243 + ($744,725 – $675,295)) / ($744,725 – $675,295) = $613,673 / $69,430 = 8.84
      • 2023: ($334,303 + ($357,951 – $336,677)) / ($357,951 – $336,677) = $355,577 / $21,274 = 16.71
    • Trend: The current ratio decreased from 16.71 in 2023 to 8.84 in 2024, a -47.10% change.
    • Industry: A current ratio above 1 indicates that a company has more current assets than current liabilities. A high current ratio is generally favorable, but an extremely high ratio might suggest inefficient use of assets. The decrease could be due to increased deferred revenue.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: (Current Assets – Inventory) / Current Liabilities. Inventory is not applicable for this company. Therefore, Quick Ratio = Current Ratio.

      • 2024: 8.84
      • 2023: 16.71
    • Trend: The quick ratio decreased from 16.71 in 2023 to 8.84 in 2024, a -47.10% change.
    • Industry: Similar to the current ratio, a quick ratio above 1 is generally desirable.
  • Cash Ratio:

    • Calculation: Cash and Cash Equivalents / Current Liabilities

      • 2024: $559,165 / $69,430 = 8.05
      • 2023: $341,617 / $21,274 = 16.06
    • Trend: The cash ratio decreased from 16.06 in 2023 to 8.05 in 2024, a -49.88% change.
    • Industry: A high cash ratio indicates a strong ability to meet short-term obligations.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Calculation: Total Liabilities / Total Stockholders’ Equity. Total Liabilities = Total Assets – Total Equity.

      • 2024: ($744,725 – $675,295) / $675,295 = 0.10
      • 2023: ($357,951 – $336,677) / $336,677 = 0.06
    • Trend: The debt-to-equity ratio increased from 0.06 in 2023 to 0.10 in 2024, a 66.67% increase.
    • Industry: A low debt-to-equity ratio suggests the company relies more on equity financing than debt.
  • Debt-to-Assets Ratio:

    • Calculation: Total Liabilities / Total Assets

      • 2024: ($744,725 – $675,295) / $744,725 = 0.09
      • 2023: ($357,951 – $336,677) / $357,951 = 0.06
    • Trend: The debt-to-assets ratio increased from 0.06 in 2023 to 0.09 in 2024, a 50% increase.
    • Industry: A low debt-to-assets ratio indicates a smaller proportion of assets are financed by debt.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: EBIT / Interest Expense. EBIT = Earnings Before Interest and Taxes. Since interest expense is not explicitly provided, we will calculate it using Income (loss) before income tax expense – Net income (loss) – Interest income + Other income (expense), net.

      • 2024: ($279,408 – $275,188 – $26,315 – $250) / $26,315 = -0.85
      • 2023: ($-78,955 – ($-78,955) – $14,898 + $201) / $14,898 = -0.99
    • Trend: The interest coverage ratio increased from -0.99 in 2023 to -0.85 in 2024, a 14.14% increase.
    • Industry: A higher ratio indicates a greater ability to cover interest payments. A negative ratio indicates that the company is not earning enough to cover its interest expense.

Activity/Efficiency

  • Inventory Turnover: Not applicable (biotech company).
  • Days Sales Outstanding (DSO):

    • Calculation: (Average Accounts Receivable / Revenue) * 365. Accounts Receivable is not provided, so this cannot be calculated.
  • Days Payable Outstanding (DPO):

    • Calculation: (Average Accounts Payable / Cost of Revenue) * 365. Accounts Payable and Cost of Revenue are not provided, so this cannot be calculated.
  • Asset Turnover:

    • Calculation: Revenue / Average Total Assets. We’ll approximate Average Total Assets as (2024 Assets + 2023 Assets) / 2.

      • 2024: $434,433 / (($744,725 + $357,951) / 2) = 0.79
    • Industry: This ratio indicates how efficiently a company uses its assets to generate revenue.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Stock Price / EPS (Annual). Stock price is $38.75.

      • 2024: $38.75 / $4.47 = 8.67
    • Industry: A lower P/E ratio can indicate that a stock is undervalued.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap / Book Value of Equity. Market Cap = Stock Price * Shares Outstanding. Shares outstanding is not provided, so we will use the weighted average shares used to compute net income (loss) per share, basic for 2024. Book Value of Equity = Total Stockholders’ Equity.

      • 2024: ($38.75 * 61,566,989) / $675,295,000 = 3.53
    • Industry: A lower P/B ratio can indicate that a stock is undervalued.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap / Revenue.

      • 2024: ($38.75 * 61,566,989) / $434,433,000 = 5.49
    • Industry: A lower P/S ratio can indicate that a stock is undervalued.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: (Market Cap + Total Debt – Cash) / EBITDA. EBITDA = Net Income + Interest + Taxes + Depreciation and Amortization. Depreciation and Amortization is not provided, so we will calculate it using Net income (loss) + Interest income – Other income (expense), net – Income (loss) before income tax expense.

      • 2024: (($38.75 * 61,566,989) + ($744,725 – $675,295) – $559,165) / ($275,188 + $4,220) = 8.54
    • Industry: A lower EV/EBITDA ratio can indicate that a stock is undervalued.

Growth Rates

  • Revenue Growth:

    • Calculation: (Current Revenue – Previous Revenue) / Previous Revenue

      • 2024: ($434,433 – $60,000) / $60,000 = 624.06%
    • Trend: Revenue growth was 624.06% from 2023 to 2024.
  • Net Income Growth:

    • Calculation: (Current Net Income – Previous Net Income) / Previous Net Income

      • 2024: ($275,188 – (-$78,955)) / (-$78,955) = -448.54%
    • Trend: Net income growth was -448.54% from 2023 to 2024.
  • EPS Growth:

    • Calculation: (Current EPS – Previous EPS) / Previous EPS

      • 2024: ($4.47 – (-$1.39)) / (-$1.39) = -421.58%
    • Trend: EPS growth was -421.58% from 2023 to 2024.

Other Relevant Metrics

  • Takeda License and Collaboration Agreement: The $300 million upfront payment and potential for up to $330 million in milestones, plus profit sharing, significantly impacts revenue and future earnings potential. The opt-out clause adds further flexibility and potential for increased milestone payments and royalties.
  • Icotrokinra Phase 3 Results: Positive topline results from the ICONIC-LEAD and ICONIC-TOTAL studies are a major catalyst, demonstrating significant skin clearance versus placebo. This supports potential regulatory approval and commercialization.
  • PN-881 Nomination: Nomination of PN-881 as a development candidate in the IL-17 pathway expands the company’s pipeline and targets a large market. Its enhanced potency compared to existing therapies is a key differentiator.
  • Upcoming Milestones: The expected topline data from the VERIFY, ANTHEM, and ICONIC-ADVANCE studies in March and Q2 2025 represent significant near-term catalysts.

2. Commentary

Protagonist Therapeutics has demonstrated a remarkable financial turnaround in 2024, driven by the Takeda collaboration and positive clinical trial results. The company’s profitability metrics have significantly improved, with a substantial increase in revenue, net income, and EPS. While liquidity ratios have decreased, they remain healthy, and the company is well-positioned to fund its ongoing clinical programs. Upcoming data readouts in 2025 represent key catalysts that could further enhance shareholder value.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️