Protagonist Therapeutics: There Are Reasons Behind Johnson & Johnson’s Optimism (PTGX)

Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is developing JNJ-2113 (PN-235), an oral IL-23 drug targeting psoriasis, however partner Johnson & Johnson (JNJ) says that until the oral drug can show non-inferior efficacy to J&J’s own injectable anti-IL-23 drug Tremfya, there is no point in developing it further.

In April, Protagonist went up considerably after PN-235 showed a superior efficacy profile over other approved oral psoriasis drugs. However, in June, the stock was down again after PN-235 failed to beat Tremfya in a cross-trial comparison. That is, roughly, the Protagonist story.

2113 is the only oral IL-23 targeting molecule in development. Other companies have oral versions of other immunotherapies, like Dice which has an IL-17 inhibitor, and Morphic which has an α4β7 integrin inhibitor. However, if 2113 fails to deliver, it will be joining a long list of other JNJ projects that Protagonist tested but abandoned.

The March data was from the phase 2 FRONTIER 1 trial. There were 255 patients with moderate-to-severe plaque psoriasis who were administered three once-daily and two twice-daily dosages. Here’s the efficacy and safety data from Seeking Alpha:

FRONTIER 1 reached the primary endpoint as a “statistically significant greater proportion of patients” across all five JNJ-2113 groups indicated a 75% improvement in skin lesions at Week 16 as measured by the Psoriasis Area and Severity Index (PASI 75).

According to the company, there was no “meaningful difference” in the incidence of adverse events between the treatment and placebo arms of the trial.

More complete data from this trial comparing 2113 with placebo is as follows:

At W16, the proportions of patients achieving PASI75 were PBO 9.3%, JNJ-77242113: 25mg QD 37.2%, 50mg QD 58.1%, 25mg BID 51.2%, 100mg QD 65.1%, 100mg BID 78.6%, demonstrating significant dose response. PASI90 response rates were PBO 2.3%, JNJ-77242113: 25mg QD 25.6%, 50mg QD 51.2%, 25mg BID 26.8%, 100mg QD 46.5%, 100mg BID 59.5%. PASI75 and PASI90 response rates for all JNJ-77242113 doses were significantly higher than PBO (nominal p ≤0.002 for all comparisons). The proportions of patients with adverse events (AES’) were comparable between JNJ-77242113 groups and the PBO group. Most frequently reported AEs were COVID-19 and nasopharyngitis with no dose-dependent trends.

Now, if we put the complete data presented in July, here’s what we get:

Click to enlarge

Tremfya’s performance in VOYAGER 1 and 2 were much better than these, numerically speaking. Those were 83-91% for Pasi 75 and 70-73% for Pasi-90. As you can see, numerically, Tremfya’s data was much better at both PASI 75 and PASI 90.

This data came out in late June or early July, and really tanked the stock; a situation from which it has not recovered since.

Interestingly, though, on July 4, JNJ came out with the announcement that they will proceed with a phase 3 trial for 2113. This sounds contrary to their original statement, but it really is not. Although tremfya has numerically stronger data than 2113, if you combine 2113’s ease of administration with its quite strong data, you feel that it should be given a fair chance to prove itself in a phase 3 trial. Also, it may benefit some patients comprehensively, although it may not benefit all patients adequately; thus, it could be used as a first line, inexpensive and easier therapy before injections are given to those that need it.

It must be noted that 2113 had a best-in-class profile insofar as the class of oral therapies were concerned. As FierceBiotech notes:

J.P. Morgan said the data “solidified” the multi-billion dollar potential against Bristol Myers Squibb’s oral psoriasis med Sotyktu. That therapy achieved a PASI 90 score of 36% and 27% at week 16 in a pair of phase 3 trials. The firm noted that JNJ-2113 appears to have missed out on achieving a “Tremfya-like profile,” but did come close to the injectable’s performance in a phase 2 study. The future phase 3 trial could examine a higher dose to try and boost efficacy.

Thus, as Lloyd Miller, M.D., Ph.D., Vice President, Immunodermatology Disease Area Stronghold Leader, Janssen Research & Development, LLC, noted:

The development of a novel oral therapy that specifically targets IL-23R could potentially change the treatment paradigm for patients living with moderate-to-severe plaque psoriasis,. Until now, advanced psoriasis treatments have been largely limited to injectable biologics. An oral therapy that can uniquely inhibit the IL-23 pathway by directly targeting the IL-23 receptor could help address the needs and preferences of patients, and may offer greater freedom, with the aim of driving greater adoption of advanced treatment.

Especially note that last part of the statement, which seems to indicate 2113 can play a screener role in the treatment paradigm.

Financials

PTGX has a market cap of $976mn and a cash balance of $313mn. R&D expenses were $33.2 million for the three months ended June 30, 2023, while G&A expenses were $9.2 million. At that rate, they have a cash runway of 6-7 quarters.

PTGX stock is largely held by institutions. Key holders are RTW, Farallon and Biotechnology Value fund. Insiders hardly ever transact in PTGX stock.

Bottom Line

This article does not cover all of Protagonist Therapeutics, Inc., especially their positive polycythemia vera phase 2 data that came out recently. I focused on their lead indication, and what we note is that despite the market’s reaction, there are reasons for JNJ’s optimism. PTGX will be an interesting stock to watch.