Protagonist Therapeutics Inc (PTGX): Is There Still a Light at the End of the Tunnel?

It’s a short and dramatic plunge for Protagonist Therapeutics Inc (NASDAQ:PTGX). Today, the drug maker’s shares lost nearly 60% of their value after the company’s PROPEL Phase 2b trial in moderate to severe ulcerative colitis (UC) patients failed due to “high placebo rate.”

However, Protagonist’s path to progressing its other peptide-based assets currently in clinical development, keeps BMO analyst Ian Somaiya in the Bulls’ camp. The analyst reiterated an Outperform rating on Protagonist shares, while slashing the price target to $13 (from $42), which implies an upside of 49% from current levels. (To watch Somaiya’s track record, click here)

Somaiya wrote, “Our valuation is now driven by risk-adjusted (33%) sales of PTG-200, which represents a higher probability clinical program with peak sales >$2bn. We continue to exclude PTG-300 pending clinical data. We believe the clinical disappointment today and the resulting reset of PTGX shares provides investors an opportunity to buy ahead of PTG-200 data and J&J advancement into Phase 2 trials.”

The analyst added, “PTG-200’s target (IL-23 receptor; IL-23R) is different than α4β7s given it is primarily intestinally localized and moreover IL23R expression has been demonstrated to be increased in systemic IBD inflammation. As such, orally delivered PTG-200 is ideally formulated to tackle Crohn’s disease (CD) by a mechanism already validated by J&J’s Stelara, which is approved as an IV-formulation for CD and UC. This rationale supported J&J’s decision to license PTG-200 and should lead to an IND filing (triggering a $25mn milestone) and start of Phase 2 trial in 2H18. We model unadjusted peak sales of $2.2bn in CD & UC.”

According to TipRanks’s data, 3 out of 4 analysts who cover Protagonist stock still rate it a Buy, while one issues a Hold.


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