Protagonist Therapeutics, Inc 10-K Analysis & Summary – 2/21/2025

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⚠️ 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.

10-K

Annual report

Filing date:

02/21/2025

TLDR:

Protagonist Therapeutics’ 2024 financial performance significantly improved due to the Takeda collaboration and J&J milestone payments, resulting in a substantial increase in revenue and a shift to profitability. However, the company faces risks associated with clinical development, regulatory approvals, and reliance on collaborations.

ELI5:

Protagonist Therapeutics made a lot more money in 2024 because they partnered with bigger companies. They are developing new medicines, but there are still risks involved.

Accession #:

0001558370-25-001317

Published on

March 16, 2025

Analyst Summary

Revenue increased significantly from $60 million in 2023 to $434.4 million in 2024, driven by the Takeda collaboration agreement ($300 million upfront) and J&J milestone payments ($165 million).
Net Income shifted from a $79 million loss in 2023 to a $275.2 million profit in 2024.
Cash position substantially improved, ending 2024 with $559.2 million in cash, cash equivalents, and marketable securities.
Operating Profit Margin: 58.2%
Net Profit Margin: 63.3%
Return on Assets (ROA): 36.9%
Return on Equity (ROE): 40.7%
Basic EPS: $4.47; Diluted EPS: $4.23
Current Ratio: 12.5
Quick Ratio: 12.5
Debt-to-Equity Ratio: 0.10
Debt-to-Assets Ratio: 0.09
P/E Ratio: 8.6
P/B Ratio: 3.5
P/S Ratio: 5.4
EV/EBITDA: 8.3
Revenue Growth: 624.1%
Net Income Growth: -448.5%
EPS Growth: -421.6%

Opportunities and Risks

Clinical Trial Risks: Failure of clinical trials, delays in enrollment, and adverse events could significantly impact the company’s pipeline.
Regulatory Risks: Uncertainty in obtaining regulatory approvals and potential for restrictive labeling.
Commercialization Risks: Dependence on market acceptance, pricing pressures, and competition from established players.
Financial Risks: Need for additional funding, potential dilution of existing stockholders, and macroeconomic instability.
Intellectual Property Risks: Challenges to patent validity, infringement claims, and trade secret misappropriation.
Rusfertide: Potential to address unmet needs in PV treatment, with a focus on hematocrit control and reduced phlebotomy requirements.
Icotrokinra: Opportunity to provide a convenient oral therapy for psoriasis, psoriatic arthritis, and ulcerative colitis, potentially disrupting the injectable biologics market.
PN-881: Potential best-in-class oral IL-17 antagonist with broad application in immune-mediated skin diseases.
Discovery Platform: Versatile platform for developing novel peptide therapeutics across various disease areas.

Potential Implications

Stock Price

Positive Phase 3 results for Icotrokinra could positively impact the stock price.
Successful regulatory submissions for Rusfertide and Icotrokinra could increase investor confidence.
Reliance on collaborations with J&J and Takeda introduces uncertainty.

Protagonist Therapeutics, Inc. (PTGX) – 10-K Filing Analysis

Executive Summary

This report analyzes Protagonist Therapeutics, Inc.’s 2024 10-K filing. Key highlights include a significant increase in revenue due to the Takeda collaboration for Rusfertide and positive Phase 3 topline results for Icotrokinra. The company’s cash position has improved substantially. However, the company still faces risks associated with clinical development, regulatory approvals, and competition. Overall, the outlook is cautiously optimistic, with a “Hold” recommendation pending further data from ongoing clinical trials and regulatory submissions.

Company Overview

Protagonist Therapeutics is a biopharmaceutical company focused on peptide therapeutics, targeting hematology, blood disorders, and inflammatory and immunomodulatory diseases. The company’s lead assets are Rusfertide (for polycythemia vera) and Icotrokinra (licensed to J&J for plaque psoriasis, psoriatic arthritis, and ulcerative colitis).

Detailed Analysis

Financial Performance

Revenue: Significant increase from $60 million in 2023 to $434.4 million in 2024, driven by the Takeda collaboration agreement ($300 million upfront) and J&J milestone payments ($165 million).
R&D Expenses: Increased by 15% to $138.1 million, reflecting continued investment in clinical programs and pre-clinical discovery.
G&A Expenses: Increased by 30% to $43.5 million, primarily due to advisory fees related to the Takeda deal and increased stock-based compensation.
Net Income: Shift from a $79 million loss in 2023 to a $275.2 million profit in 2024.
Cash Position: Substantially improved, ending 2024 with $559.2 million in cash, cash equivalents, and marketable securities.

Key Ratios and Trends

Ratio	2023	2024	Trend
Revenue Growth	N/A	624%	Significantly Positive
Net Profit Margin	-131.6%	63.3%	Significantly Positive

Interpretation: The substantial revenue growth and shift to profitability are primarily attributable to the Takeda collaboration and J&J milestone payments. However, future revenue is expected to decrease significantly in 2025 as upfront payments are recognized and milestone achievement is uncertain.

Management’s Discussion and Analysis (MD&A)

Management highlights the Takeda collaboration, positive Phase 3 results for Icotrokinra, and the nomination of PN-881 as key achievements.
The MD&A emphasizes the company’s focus on Rusfertide and Icotrokinra, with plans to advance PN-881 into Phase 1 trials.
Management acknowledges the risks associated with clinical development, regulatory approvals, and competition.

Red Flags and Uncommon Metrics

Rodent Carcinogenicity Studies: The filing mentions a rasH2 mouse carcinogenicity study related to rusfertide that showed rusfertide related findings associated with benign squamous cell papilloma and malignant squamous cell carcinoma. While a rat carcinogenicity study showed no carcinogenicity-related findings, the rasH2 findings warrant close monitoring.
Reliance on Collaborations: The company’s success is heavily dependent on the success of J&J and Takeda in developing and commercializing Icotrokinra and Rusfertide, respectively.

Risk and Opportunity Assessment

Risks

Clinical Trial Risks: Failure of clinical trials, delays in enrollment, and adverse events could significantly impact the company’s pipeline.
Regulatory Risks: Uncertainty in obtaining regulatory approvals and potential for restrictive labeling.
Commercialization Risks: Dependence on market acceptance, pricing pressures, and competition from established players.
Financial Risks: Need for additional funding, potential dilution of existing stockholders, and macroeconomic instability.
Intellectual Property Risks: Challenges to patent validity, infringement claims, and trade secret misappropriation.

Opportunities

Rusfertide: Potential to address unmet needs in PV treatment, with a focus on hematocrit control and reduced phlebotomy requirements.
Icotrokinra: Opportunity to provide a convenient oral therapy for psoriasis, psoriatic arthritis, and ulcerative colitis, potentially disrupting the injectable biologics market.
PN-881: Potential best-in-class oral IL-17 antagonist with broad application in immune-mediated skin diseases.
Discovery Platform: Versatile platform for developing novel peptide therapeutics across various disease areas.

Conclusion and Actionable Insights

Protagonist Therapeutics has made significant progress in 2024, marked by strategic collaborations and positive clinical trial results. The company’s financial position has strengthened considerably. However, the inherent risks of drug development and reliance on collaborations remain.

Overall Assessment: Hold. While the company’s prospects are promising, further data from ongoing Phase 3 trials and regulatory submissions are needed to justify a more bullish outlook.

Recommendations:

Monitor Clinical Trial Data: Closely track the progress and results of the VERIFY trial for Rusfertide and the ICONIC program for Icotrokinra.
Assess Regulatory Strategy: Evaluate the company’s plans for NDA submissions and potential interactions with regulatory agencies.
Evaluate Competition: Analyze the competitive landscape and potential impact of competing therapies on the market potential of Protagonist’s product candidates.
Monitor Cash Burn Rate: Track the company’s operating expenses and cash runway to assess the need for future financing.

Protagonist Therapeutics, Inc. (PTGX) Financial Analysis – 2024

1. Financial Ratio and Metric Analysis:

Profitability:

Gross Profit Margin: Not applicable. The company reports license and collaboration revenue, not sales of goods. Therefore, gross profit margin cannot be calculated.
Operating Profit Margin:
- Ratio/Metric: Operating Income / Total Revenue = $252,843 / $434,433 = 58.2%
- Trend: 2023 Operating Profit Margin was negative as the company had an operating loss. The significant increase in revenue in 2024 led to a positive operating profit margin.
- Industry: The biotechnology industry is highly variable. A positive operating margin of 58.2% is strong, but it is important to consider that this is largely driven by milestone payments and collaboration revenue, which can be lumpy.
Net Profit Margin:
- Ratio/Metric: Net Income / Total Revenue = $275,188 / $434,433 = 63.3%
- Trend: 2023 Net Profit Margin was negative as the company had a net loss. The significant increase in revenue in 2024 led to a positive net profit margin.
- Industry: A net profit margin of 63.3% is very high. This is likely due to the nature of milestone payments and collaboration revenue, which can significantly boost profitability in certain periods.
Return on Assets (ROA):
- Ratio/Metric: Net Income / Total Assets = $275,188 / $744,725 = 36.9%
- Industry: A ROA of 36.9% is exceptionally high, indicating efficient asset utilization in generating profit. However, this is likely influenced by the recent revenue surge.
Return on Equity (ROE):
- Ratio/Metric: Net Income / Total Stockholders’ Equity = $275,188 / $675,295 = 40.7%
- Industry: An ROE of 40.7% is very high, suggesting strong profitability relative to shareholder investment.
Earnings Per Share (EPS) – Basic and Diluted:
- Ratio/Metric: Basic EPS = $275,188 / 61,566,989 = $4.47; Diluted EPS = $275,188 / 65,077,722 = $4.23
- Trend: EPS was negative in 2023 (-$1.39). The company achieved positive EPS in 2024 due to increased revenue and profitability.
- Industry: Positive EPS is a significant achievement for a biotech company, especially after a loss in the previous year.

Liquidity:

Current Ratio:
- Ratio/Metric: Current Assets / Current Liabilities = $591,641 / $47,398 = 12.5
- Trend: The current ratio increased significantly from 2023 (355,577 / 21,274 = 16.7).
- Industry: A current ratio of 12.5 is very high, indicating a strong ability to meet short-term obligations.
Quick Ratio (Acid-Test Ratio):
- Ratio/Metric: (Current Assets – Inventory) / Current Liabilities. Since inventory is not applicable, the quick ratio is the same as the current ratio = 12.5
- Trend: Same as current ratio.
- Industry: Same as current ratio.
Cash Ratio:
- Ratio/Metric: (Cash and Cash Equivalents) / Current Liabilities = $97,249 / $47,398 = 2.1
- Trend: The cash ratio decreased from 2023 (186,727 / 21,274 = 8.8).
- Industry: A cash ratio of 2.1 is still strong, indicating a good ability to cover short-term liabilities with cash and equivalents.

Solvency/Leverage:

Debt-to-Equity Ratio:
- Ratio/Metric: Total Liabilities / Total Stockholders’ Equity = $69,430 / $675,295 = 0.10
- Trend: The debt-to-equity ratio decreased from 2023 (21,274 / 336,677 = 0.06).
- Industry: A debt-to-equity ratio of 0.10 is very low, indicating a conservative capital structure with minimal reliance on debt.
Debt-to-Assets Ratio:
- Ratio/Metric: Total Liabilities / Total Assets = $69,430 / $744,725 = 0.09
- Trend: The debt-to-assets ratio decreased from 2023 (21,274 / 357,951 = 0.06).
- Industry: A debt-to-assets ratio of 0.09 is very low, indicating a small proportion of assets are financed by debt.
Interest Coverage Ratio (Times Interest Earned):
- Ratio/Metric: EBIT / Interest Expense. Since interest expense is not explicitly provided, and interest income is significant, a modified approach is used: (Net Income + Income Tax Expense + Interest Expense) / Interest Expense. Assuming interest expense is negligible, this ratio is not meaningful.
- Industry: Given the company’s profitability and low debt, the interest coverage ratio is not a significant concern.

Activity/Efficiency:

Inventory Turnover: Not applicable as the company does not have inventory.
Days Sales Outstanding (DSO):
- Ratio/Metric: (Accounts Receivable / Revenue) * 365 = ($165,000 / $434,433) * 365 = 138.5 days
- Industry: A DSO of 138.5 days is relatively high, indicating a longer time to collect revenue. This is likely due to the nature of milestone payments, which may have specific payment terms.
Days Payable Outstanding (DPO):
- Ratio/Metric: (Accounts Payable / Cost of Revenue) * 365. Cost of revenue is not applicable, so this ratio is not meaningful.
- Industry: Not applicable.
Asset Turnover:
- Ratio/Metric: Revenue / Total Assets = $434,433 / $744,725 = 0.58
- Industry: An asset turnover of 0.58 is relatively low, indicating that the company is not generating a high level of revenue for each dollar of assets.

Valuation:

Price-to-Earnings Ratio (P/E):
- Ratio/Metric: Market Cap / Net Income. Market Cap = Stock Price * Shares Outstanding = $38.75 * 61,035,139 = $2,365,098,641.25. P/E = $2,365,098,641.25 / $275,188,000 = 8.6
- Industry: A P/E ratio of 8.6 is relatively low, suggesting that the company may be undervalued compared to its earnings.
Price-to-Book Ratio (P/B):
- Ratio/Metric: Market Cap / Book Value of Equity = $2,365,098,641.25 / $675,295,000 = 3.5
- Industry: A P/B ratio of 3.5 suggests that investors are willing to pay a premium for the company’s net assets.
Price-to-Sales Ratio (P/S):
- Ratio/Metric: Market Cap / Revenue = $2,365,098,641.25 / $434,433,000 = 5.4
- Industry: A P/S ratio of 5.4 indicates how much investors are willing to pay for each dollar of the company’s revenue.
Enterprise Value to EBITDA (EV/EBITDA):
- Ratio/Metric: EV = Market Cap + Total Debt – Cash and Cash Equivalents = $2,365,098,641.25 + $69,430,000 – $97,249,000 = $2,337,279,641.25. EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization = $275,188 + $4,220 + $826 + $2,069 = $282,303. EV/EBITDA = $2,337,279,641.25 / $282,303,000 = 8.3
- Industry: An EV/EBITDA of 8.3 is relatively low, suggesting that the company may be undervalued compared to its earnings before interest, taxes, depreciation, and amortization.

Growth Rates

Revenue Growth:
- Ratio/Metric: ($434,433 – $60,000) / $60,000 = 624.1%
- Industry: The revenue growth is exceptionally high, driven by collaboration agreements.
Net Income Growth:
- Ratio/Metric: ($275,188 – (-$78,955)) / (-$78,955) = -448.5%
- Industry: The net income growth is significant, transitioning from a loss to a substantial profit.
EPS Growth:
- Ratio/Metric: ($4.47 – (-$1.39)) / (-$1.39) = -421.6%
- Industry: The EPS growth is substantial, reflecting the company’s improved profitability.

Other Relevant Metrics:

Takeda Collaboration Agreement Revenue: $269.4 million in 2024 compared to none in 2023. This is a significant driver of revenue growth.
JNJ License and Collaboration Agreement Revenue: $165.0 million in 2024 compared to $60.0 million in 2023, an increase of 175%.
R&D Expenses: Increased by 15% from $120.2 million in 2023 to $138.1 million in 2024, reflecting continued investment in drug development.
Milestone Payments: The company is eligible for significant future milestone payments from JNJ and Takeda, which could further boost revenue and profitability.

2. Commentary:

Protagonist Therapeutics experienced a significant turnaround in 2024, driven by substantial revenue from collaboration agreements, particularly with Takeda. This resulted in a transition from net losses to significant net income and positive EPS. The company maintains a strong liquidity position and a conservative capital structure. While the high DSO and low asset turnover warrant monitoring, the overall financial performance indicates a positive trajectory, largely dependent on continued success in clinical trials and achievement of milestone payments.