Protagonist Therapeutics 'Poised For Upside,' Stifel Says

Protagonist Therapeutics Inc PTGX has been central to the portfolios of three Street analysts. Now it's taking a leading role with Stifel Nicolaus.

The Rating

Stifel analyst Adam Walsh initiated coverage on Protagonist with a Buy rating and $32 price target.

The Thesis

Two oral treatments in the biotech’s pipeline — PTG-100 and PTG-200 for inflammatory bowel disease — could disrupt a category of peptide drugs otherwise only available in injectable form, Walsh said in a Monday note. (See the analyst's track record here.) 

The Food and Drug Administration’s data monitoring committee is expected to recommend continuation of PTG-100 phase 2b trials in moderate-to-severe ulcerative colitis, the results of which will be released in the fourth quarter, Walsh said. The analyst said he anticipates both regulatory support and positive interim data to drive shares higher.

Protagonist is also expected to release phase 1 results for PTG-200 in Crohn’s disease in the second quarter, and the firm’s partnership with Johnson & Johnson JNJ’s Janssen could yield a potential $990 million in milestones plus royalties upwards of 15 percent, according to Stifel. 

PTG-300, an injectable peptide for rare iron overload disorders that is not included in Stifel’s model, will likely begin phase 2 trials in 2018.

“With a sub-$400 million market cap, three unique pipeline assets in the clinic targeting potential $1-billion-plus market opportunities, and cash through FY19, Protagonist appears poised for upside, in our opinion,” Walsh said. 

Price Action

Protagonist shares were up 13.26 percent at $21.78 at the time of publication. 

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