Protagonist Therapeutics Inc (PTGX) Skyrockets, BMO Boosts Price Target; Here’s Why


It’s a very rewarding trading day for investors in Protagonist Therapeutics Inc (NASDAQ:PTGX) with shares up over 40%, making the stock Wall Street’s bull of the day. The reason? The biotech company announced that it has entered into a worldwide license and collaboration agreement with Janssen Biotech for the co-development and commercialization of PTG-200, Protagonist’s first-in-class, oral peptide IL-23 receptor antagonist for all indications including inflammatory bowel disease (IBD).

CEO Dinesh V. Patel said, “We are very pleased to partner with Janssen, a world-leader in the development of innovative therapies for patients suffering with chronic inflammatory and immunomodulatory diseases. As an oral IL-23 receptor antagonist, PTG-200 nicely complements Janssen’s current IBD portfolio […] The funding provided by this transaction enables us to advance our platform and clinical pipeline of innovative peptide drugs, including our lead oral peptide alpha-4-beta-7 integrin antagonist, PTG-100, which is currently in a Phase 2b clinical trial as a potential treatment for ulcerative colitis.”

In reaction, BMO analyst Ian Somaiya raised his price target for PTGX from $34.00 to $45.00, while reiterating an Outperform rating on the stock.

Somaiya stated, “We believe a licensing deal for PTG-200 reduces the need for future financings and increases the probability of clinical and regulatory success in Crohn’s and ulcerative colitis. The cash-rich deal with Janssen includes a $50mn upfront payment and front end-loaded milestones ($325mn total post Phase 2 opt-in) and 10% to mid-teen royalties. We believe Janssen is an ideal partner given commercial success of Stelara (anti-IL-23 antibody, 2016 sales ~$3.2bn) and company’s commitment to IBD. We are adding probability adjusted (20%) sales of PTG-200 in Crohn’s, increasing our PT to $45 from $34.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ian Somaiya has a yearly average return of 8.5% and a 50% success rate. Somaiya has an -43.3% average return when recommending PTGX, and is ranked #592 out of 4571 analysts.

As of this writing, all the 3 analysts polled by TipRanks (in the past 12 months) rate Protagonist stock a Buy. With a return potential of 150%, the stock’s consensus target price stands at $29.50.