Protagonist Therapeutics earns $220M in Q3 2026
After opting out of U.S. 50/50 profit-and-loss sharing, PTGX became eligible for 14%–29% royalties on worldwide net sales and up to $800.0 million in MIMRYLO milestones.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Protagonist Therapeutics (PTGX) reported third-quarter 2026 license and collaboration revenue of $274.4 million, versus $4.7 million a year earlier, and net income of $220.0 million, versus a $39.3 million loss. For the first nine months, revenue was $544.3 million and net income was $386.6 million, compared with $38.6 million in revenue and an $85.8 million net loss in 2025. Revenue reflected Takeda opt-out and milestone payments; nine-month revenue also included a $50.0 million JNJ milestone.
Cash, cash equivalents and marketable securities totaled approximately $834.6 million as of September 30, compared with approximately $646.0 million as of December 31, 2025. In September, the European Commission approved JNJ’s ICOTYDE application, and MIMRYLO received approval in the United Arab Emirates. After PTGX opted out of its 50/50 U.S. profit-and-loss sharing arrangement with Takeda, Takeda assumed sole U.S. operational and financial responsibility.
PTGX repurchased 40,560 shares for $5.8 million under a program authorizing up to $300.0 million; $294.2 million remained authorized as of September 30. The company expects research and development expenses to increase for the rest of 2026 as it advances PN-881 toward Phase 2b and develops other programs.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter collaboration revenue: $274.4 million, versus $4.7 million in 2025.
- Moderate pointNine-month net income: $386.6 million, versus an $85.8 million loss in 2025.
- Moderate pointNine-month operating cash flow: $146.9 million, versus $94.6 million in 2025.
Negative
- None.
Filing Explained
At September 30, 1.5 million pre-funded warrants remained outstanding and could add shares upon exercise, subject to an ownership limit.
The 10-Q reports that Protagonist received from Takeda in October a
At September 30, 1.5 million pre-funded warrants remained outstanding; none were exercised during the quarter or nine months, and exercise is priced at
Key Figures
Key Terms
tiered royalties financial
opt-out financial
cost-based input method financial
available-for-sale financial
anti-dilutive financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was PTGX's revenue in Q3 2026?
How much did PTGX earn in Q3 2026?
What MIMRYLO royalties can PTGX receive from Takeda?
How many PTGX shares did the company repurchase in Q3 2026?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | | (I.R.S. Employer |
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(Address of registrant’s principal executive offices) | | (Zip code) |
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( (Registrant’s telephone number, including area code) | ||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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☒ | Accelerated filer | ☐ | |
| | Smaller reporting company | |
Non-accelerated filer | ☐ | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 31, 2026, there were
Table of Contents
PROTAGONIST THERAPEUTICS, INC.
FORM 10-Q
TABLE OF CONTENTS
I | ||
Page | ||
PART I | FINANCIAL INFORMATION | |
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Item 1. | Condensed Consolidated Financial Statements (unaudited) | |
Condensed Consolidated Balance Sheets | 1 | |
Condensed Consolidated Statements of Operations | 2 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | 3 | |
Condensed Consolidated Statements of Stockholders’ Equity | 4 | |
Condensed Consolidated Statements of Cash Flows | 6 | |
Notes to Unaudited Condensed Consolidated Financial Statements | 7 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 32 |
Item 4. | Controls and Procedures | 32 |
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PART II | OTHER INFORMATION | |
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Item 1. | Legal Proceedings | 33 |
Item 1A. | Risk Factors | 33 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 |
Item 3. | Defaults Upon Senior Securities | 34 |
Item 4. | Mine Safety Disclosures | 34 |
Item 5. | Other Information | 34 |
Item 6. | Exhibits | 35 |
SIGNATURES | 36 |
Table of Contents
PART I. – FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
PROTAGONIST THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Assets | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | | | $ | |
Marketable securities | | | | | | |
Receivable from collaboration partner | | | | | | |
Contract asset | | | | | | — |
Prepaid expenses and other current assets | | | | | | |
Total current assets | | | | | | |
Marketable securities - noncurrent | | | | | | |
Property and equipment, net | | | | | | |
Restricted cash - noncurrent | | | | | | |
Operating lease right-of-use asset | | | | | | |
Other non-current asset | | | | | | — |
Total assets | | $ | | | $ | |
Liabilities and Stockholders’ Equity | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | | | $ | |
Accrued expenses and other payables | | | | | | |
Deferred revenue | | | | | | |
Income taxes payable | | | | | | — |
Operating lease liability | | | | | | |
Total current liabilities | | | | | | |
Operating lease liability - noncurrent | | | | | | |
Total liabilities | | | | | | |
Commitments and contingencies | | | | | | |
Stockholders’ equity: | | | | | | |
Preferred stock, $ | | | — | | | — |
Common stock, $ | | | | | | |
Additional paid-in capital | | | | | | |
Treasury stock | | | ( | | | — |
Accumulated other comprehensive (loss) income | | | ( | | | |
Accumulated deficit | | | ( | | | ( |
Total stockholders’ equity | | | | | | |
Total liabilities and stockholders’ equity | | $ | | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
Table of Contents
PROTAGONIST THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
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| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
License and collaboration revenue | | $ | | | $ | | | $ | | | $ | |
Operating expenses: | | | | | | | | | | | | |
Cost of revenue | | | | | | — | | | | | | — |
Research and development | | | | | | | | | | | | |
General and administrative | |
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Total operating expenses | |
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Income (loss) from operations | |
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Interest income | |
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Other (expense) income, net | | | ( | | | | | | ( | | | |
Income (loss) before income tax expense | | | | | | ( | | | | | | ( |
Income tax expense | | | | | | — | | | | | | |
Net income (loss) | | $ | | | $ | ( | | $ | | | $ | ( |
Net income (loss) per share: | | | | | | | | | | | | |
Basic | | $ | | | $ | ( | | $ | | | $ | ( |
Diluted | | $ | | | $ | ( | | $ | | | $ | ( |
Weighted-average shares used to compute net income (loss) per share: | | | | | | | | | | | | |
Basic | |
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Diluted | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PROTAGONIST THERAPEUTICS, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(In thousands)
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| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net income (loss) | | $ | | | $ | ( | | $ | | | $ | ( |
Other comprehensive (loss) income: | | | | | | | | | | | | |
Unrealized (loss) gain on marketable securities | | | ( | | | | | | ( | | | |
Comprehensive income (loss) | | $ | | | $ | ( | | $ | | | $ | ( |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
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PROTAGONIST THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Accumulated | | | | | ||||||||||
| | | | | | Additional | | Other | | | | Total | ||||||||||
| | Common | | Treasury | | Paid-In | | Comprehensive | | Accumulated | | Stockholders’ | ||||||||||
| | Stock | | Stock | | Capital | | (Loss) Income | | Deficit | | Equity | ||||||||||
Three months ended September 30, 2026 | | Shares | | Amount | | Shares | | Amount | | | | | | | | | | |
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Balance at June 30, 2026 |
| | | $ | | | — | | $ | — | | $ | | | $ | ( | | $ | ( | | $ | |
Issuance of common stock under equity incentive and employee stock purchase plans | | | |
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Repurchase of common stock | | — | | | — | | ( | | | ( | | | — | | | — | | | — | | | ( |
Stock-based compensation expense |
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Other comprehensive loss |
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Net income |
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Balance at September 30, 2026 |
| | | $ | | | ( | | $ | ( | | $ | | | $ | ( | | $ | ( | | $ | |
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| | | | | | | | Accumulated | | | | | ||||||||||
| | | | | | Additional | | Other | | | | Total | ||||||||||
| | Common | | Treasury | | Paid-In | | Comprehensive | | Accumulated | | Stockholders’ | ||||||||||
| | Stock | | Stock | | Capital | | (Loss) Income | | Deficit | | Equity | ||||||||||
Three months ended September 30, 2025 | | Shares | | Amount | | Shares | | Amount | | | | | | | | | | |
| | ||
Balance at June 30, 2025 | | | | $ | | | — | | $ | — | | $ | | | $ | ( | | $ | ( | | $ | |
Issuance of common stock under equity incentive and employee stock purchase plans | | | |
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Stock-based compensation expense |
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Other comprehensive income |
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Net loss |
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Balance at September 30, 2025 |
| | | $ | | | — | | $ | — | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PROTAGONIST THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Accumulated | | | | | ||||||||||
| | | | | | Additional | | Other | | | | Total | ||||||||||
| | Common | | Treasury | | Paid-In | | Comprehensive | | Accumulated | | Stockholders’ | ||||||||||
| | Stock | | Stock | | Capital | | (Loss) Income | | Deficit | | Equity | ||||||||||
Nine months ended September 30, 2026 | | Shares | | Amount | | Shares | | Amount | | | | | | | | | | |
| | ||
Balance at December 31, 2025 |
| | | $ | | | — | | $ | — | | $ | | | $ | | | $ | ( | | $ | |
Issuance of common stock under equity incentive and employee stock purchase plans | | | | | — | | — | | | — | | | | | | — | | | — | | | |
Repurchase of common stock | | — | | | — | | ( | | | ( | | | — | | | — | | | — | | | ( |
Stock-based compensation expense |
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Other comprehensive loss |
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Net income |
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Balance at September 30, 2026 |
| | | $ | | | ( | | $ | ( | | $ | | | $ | ( | | $ | ( | | $ | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Accumulated | | | | | ||||||||||
| | | | | | Additional | | Other | | | | Total | ||||||||||
| | Common | | Treasury | | Paid-In | | Comprehensive | | Accumulated | | Stockholders’ | ||||||||||
| | Stock | | Stock | | Capital | | (Loss) Income | | Deficit | | Equity | ||||||||||
Nine months ended September 30, 2025 | | Shares | | Amount | | Shares | | Amount | | | | | | | | | | |
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Balance at December 31, 2024 | | | | $ | | | — | | $ | — | | $ | | | $ | ( | | $ | ( | | $ | |
Issuance of common stock under equity incentive and employee stock purchase plans |
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| — | | — | |
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Shares withheld for net settlement of tax withholding upon vesting of restricted stock units | | ( | | | — | | — | | | — | | | ( | | | — | | | — | | | ( |
Stock-based compensation expense |
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Other comprehensive income |
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Net loss |
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Balance at September 30, 2025 |
| | | $ | | | — | | $ | — | | $ | | | $ | | | $ | ( | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PROTAGONIST THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| | | | | | |
| | Nine Months Ended | ||||
| | September 30, | ||||
| | 2026 | | 2025 | ||
Cash Flows from Operating Activities |
| | | | | |
Net income (loss) | | $ | | | $ | ( |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | |
Stock-based compensation | | | | | | |
Non-cash lease expense | | | | | | |
Depreciation | | | | | | |
Accretion of discount on marketable securities | | | ( | | | ( |
Other | | | ( | | | |
Changes in operating assets and liabilities: | | | | | | |
Receivable from collaboration partner | | | ( | | | |
Contract asset | | | ( | | | — |
Prepaid expenses and other assets | | | | | | ( |
Accounts payable | | | | | | |
Accrued expenses and other payables | | | ( | | | ( |
Deferred revenue | | | | | | ( |
Income taxes payable | | | | | | ( |
Operating lease liability | | | ( | | | ( |
Other non-current asset | | | ( | | | — |
Net cash provided by operating activities | | | | | | |
Cash Flows from Investing Activities | | | | | | |
Purchase of marketable securities | | | ( | | | ( |
Proceeds from maturities of marketable securities | | | | | | |
Proceeds from sale of marketable securities | | | | | | |
Purchases of property and equipment | | | ( | | | ( |
Net cash provided by (used in) investing activities | | | | | | ( |
Cash Flows from Financing Activities | | | | | | |
Proceeds from issuance of common stock upon exercise of stock options and purchases under employee stock purchase plan | | | | | | |
Repurchase of common stock | | | ( | | | — |
Tax withholding payments related to net settlement of restricted stock units | | | — | | | ( |
Net cash provided by financing activities | | | | | | |
Net increase in cash, cash equivalents and restricted cash | | | | | | |
Cash, cash equivalents and restricted cash, beginning of period | |
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Cash, cash equivalents and restricted cash, end of period | | $ | | | $ | |
Supplemental Disclosure of Non-Cash Financing and Investing Information: | | | | | | |
Common stock issued for cash not yet received | | $ | | | $ | — |
Purchases of property and equipment in accounts payable and accrued liabilities | | $ | | | $ | |
Leasehold improvements obtained under tenant improvement allowance | | $ | — | | $ | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PROTAGONIST THERAPEUTICS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1.Organization and Description of Business
Protagonist Therapeutics, Inc. (the “Company”) is a biopharmaceutical company built on a proprietary peptide technology platform. The Company’s programs fall into
ICOTYDE® (icotrokinra) was approved in the United States in March 2026 for the treatment of moderate-to-severe plaque psoriasis in adults and pediatric patients 12 years of age or older who weigh at least 40 kg and are candidates for systemic therapy or phototherapy. ICOTYDE is the first and only targeted oral peptide that precisely blocks the Interleukin-23 receptor (“IL-23R”) and is licensed to Janssen Biotech, Inc., a Johnson & Johnson company (“JNJ”). ICOTYDE was jointly discovered by the Company and JNJ scientists, with the Company having primary responsibility for the development of ICOTYDE through Phase 1, and JNJ assuming responsibility for further development and commercialization. In September 2026, the European Commission granted approval of JNJ’s marketing application for ICOTYDE for the treatment of adults and pediatric patients 12 years of age and older with moderate-to-severe plaque psoriasis. ICOTYDE has also received regulatory approval in Japan and China. ICOTYDE is in Phase 3 development for additional immune-mediated diseases, including psoriatic arthritis, ulcerative colitis, and Crohn’s disease.
MIMRYLO™ (rusfertide), a subcutaneously delivered first-in-class hepcidin mimetic, was approved in the United States in August 2026 for the treatment of erythrocytosis in adults with the rare blood disorder polycythemia vera (“PV”). On September 30, 2026, MIMRYLO was also approved in the United Arab Emirates. MIMRYLO is licensed to Takeda Pharmaceuticals, Inc. (“Takeda”) and is the first and only hepcidin mimetic approved for PV, a blood cancer characterized by excessive production of red blood cells. The Company discovered and led development for MIMRYLO through its New Drug Application (“NDA”) filing in December 2025, and Takeda is responsible for further development and commercialization.
The Company also has a number of clinical and pre-clinical programs addressing biologically and commercially validated targets, including IL-17 oral peptide antagonist PN-881, obesity triple agonist peptide PN-477, obesity dual agonist peptide PN-458, oral small molecule hepcidin functional mimetic PN-8047, and IL-4 and amylin programs.
The Company is headquartered in Newark, California and has one wholly-owned subsidiary, Protagonist Pty Limited (“Protagonist Australia”), located in Brisbane, Queensland, Australia.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted and, accordingly, the condensed consolidated balance sheet as of September 30, 2026 has been derived from the Company’s unaudited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the Company’s condensed consolidated financial statements. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any future period.
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The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 25, 2026.
Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany transactions and balances have been eliminated upon consolidation.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, accruals for research and development activities, stock-based compensation, income taxes, marketable securities and leases. Estimates related to revenue recognition include assumptions used to determine standalone selling price utilized to allocate the transaction price between distinct performance obligations, assumptions used to recognize revenue over time for certain performance obligations for which a cost-based input method is used as the measure of progress, estimates of whether contingent consideration should be included in the transaction price at each reporting period, and estimates related to royalty revenue recognition. Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Actual results may differ materially from these estimates.
There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including but not limited to geopolitical instability and changes in trade policies, including tariffs or other trade restrictions or the threat of such actions and retaliatory actions. The Company’s business may also be impacted by changes or disruptions at the U.S. Food and Drug Administration (the “FDA”) and other government agencies. The Company has taken into consideration any known impacts to its accounting estimates to date and is not aware of any additional specific events or circumstances that would require any additional updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the filing date of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Cash as Reported in Condensed Consolidated Statements of Cash Flows
Cash as reported in the condensed consolidated statements of cash flows includes the aggregate amounts of cash and cash equivalents and restricted cash as presented on the condensed consolidated balance sheets.
Cash as reported in the condensed consolidated statements of cash flows consisted of (in thousands):
| | | | | | |
| | September 30, | ||||
| | 2026 | | 2025 | ||
Cash and cash equivalents | | $ | | | $ | |
Restricted cash - noncurrent | |
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Total cash reported on condensed consolidated statements of cash flows | | $ | | | $ | |
Restricted cash as of September 30, 2026 and 2025 consists of a cash deposit held as security in connection with a letter of credit related to the Company’s facility lease entered into in March 2017, as subsequently amended, and a cash deposit held as security in connection with the issuance of a bank guarantee in May 2025 to maintain the active status of the Company’s value-added tax registration.
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Stock-Based Compensation Expense
The Company has granted stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”).
Stock-based compensation expense associated with stock options is based on the estimated grant date fair value using the Black-Scholes valuation model, which requires the use of assumptions related to expected stock price volatility, option term, risk-free interest rate and dividend yield. The Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest.
Stock-based compensation expense associated with RSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing market price of the Company’s common stock on the grant date. For RSUs, the Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest.
PSUs allow the recipients of such awards to earn fully vested shares of the Company’s common stock upon the achievement of pre-established performance objectives. Stock-based compensation expense associated with PSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing market price of the Company’s common stock on the grant date and is recognized when the performance objective is expected to be achieved. The Company evaluates the probability of achieving the performance criteria on a quarterly basis. The cumulative effect on current and prior periods of a change in the estimated number of PSUs expected to be earned is recognized as compensation expense or as reduction of previously recognized compensation expense in the period of the revised estimate.
The Company recognizes forfeitures of stock-based awards as they occur.
Total stock-based compensation expense was as follows (in thousands):
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Research and development | | $ | | | $ | | | $ | | | $ | |
General and administrative | |
| | |
| | |
| | |
| |
Total stock-based compensation expense | | $ | | | $ | | | $ | | | $ | |
Significant Accounting Policies
There have been no material changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2026, as compared to those disclosed in Note 2. Summary of Significant Accounting Policies included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Recently Issued Accounting Pronouncements Not Yet Adopted as of September 30, 2026
In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2025-11 Interim Reporting (Topic 270) – Narrow Scope Improvements (“ASU 2025-11”), which clarifies interim disclosure requirements. ASU 2025-11 also requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This guidance is effective for the Company for interim reporting periods within annual reporting periods beginning on January 1, 2028. Early adoption is permitted. The guidance may be applied either (1) prospectively or (2) retrospectively to any or all prior periods presented in the financial statements. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements and related disclosures.
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In November 2024, the FASB issued ASU No. 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires detailed disclosures about specified categories of expenses (including employee compensation, depreciation, and amortization) included in certain expense captions presented on the face of the income statement. In January 2025, the FASB issued an update to ASU 2024-03 clarifying that all public business entities should initially adopt the disclosure requirements in the first annual reporting period beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. ASU 2024-03 is effective for the Company for fiscal years beginning on January 1, 2027, and for interim periods beginning on January 1, 2028. Early adoption is permitted. The guidance may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or (2) retrospectively to all prior periods presented in the financial statements. The Company does not expect the adoption of this guidance to have a material effect on its consolidated financial statements and continues to evaluate disclosure presentation alternatives.
Note 3. License and Collaboration Agreements
JNJ License and Collaboration Agreement
The Company and JNJ are parties to an Amended and Restated License and Collaboration Agreement, which was originally effective in July 2017, amended in May 2019, amended and restated in July 2021 and amended in November 2024 (as amended, the “JNJ License and Collaboration Agreement”). The JNJ License and Collaboration Agreement relates to the development, manufacture and commercialization of oral IL-23R antagonist drug candidates and enables JNJ to develop collaboration compounds for multiple indications. Under the JNJ License and Collaboration Agreement, JNJ is required to use commercially reasonable efforts to develop at least one collaboration compound for at least two indications.
During the first quarter of 2026, the Company earned a $
Upcoming potential development milestones under the JNJ License and Collaboration Agreement include:
| ● | $ |
| ● | $ |
| ● | $ |
| ● | $ |
Pursuant to the agreement, the Company is eligible to receive future sales milestone payments and tiered royalties on net product sales at percentages ranging from
Takeda Collaboration Agreement
In January 2024, the Company entered into a worldwide license and collaboration agreement for MIMRYLO with Takeda, which became effective in March 2024, and was amended in March 2025 (the “Takeda Collaboration Agreement”).
Pursuant to the Takeda Collaboration Agreement, the Company and Takeda agreed to jointly develop and commercialize MIMRYLO and potentially other specified second-generation injectable hepcidin mimetic compounds
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(the “Licensed Products”) in the United States (the “Profit-Share Territory”). Takeda was solely and exclusively responsible for the development and commercialization of the Licensed Products in all other countries (the “Takeda Territory”). The Company and Takeda shared the costs of the development, manufacture and commercialization activities for the Licensed Products in the Profit-Share Territory, provided that (i) the Company led, and was solely responsible for its costs associated with, completion of the ongoing Phase 3 VERIFY trial evaluating MIMRYLO for the treatment of PV; (ii) Takeda led, and was solely responsible for its costs associated with, U.S. regulatory and pre-commercialization activities related to MIMRYLO in the Profit-Share Territory; and (iii) Takeda led commercialization of MIMRYLO in the Profit-Share Territory, though the Company held an option to co-detail. Takeda was solely responsible for all costs for the development, manufacture and commercialization of the Licensed Products in the Takeda Territory. The Company granted Takeda a non-transferable, sublicensable and, except for certain specified exceptions, exclusive license to certain intellectual property of the Company to exercise its rights and perform its obligations under the Takeda Collaboration Agreement. In March 2025, the Company and Takeda agreed, pursuant to the provisions of the Takeda Collaboration Agreement, as amended, that Takeda would assume responsibility for leading and implementing the regulatory strategy and associated activities for preparation of the NDA related to MIMRYLO in PV, which was submitted to the FDA in December 2025 and approved in August 2026. The Company was primarily responsible for clinical development activities through the NDA filing and for conducting ongoing MIMRYLO long-term extension studies.
Pursuant to the Takeda Collaboration Agreement, the Company received a one-time, non-refundable upfront payment of $
On April 28, 2026, the Company announced that it exercised its right to opt out of the U.S. profit and loss sharing arrangement (
Upcoming potential development milestones under the Takeda Collaboration Agreement include:
| ● | $ |
| ● | $ |
The Company was obligated to perform certain wind-down activities during the
The Company initially evaluated the Takeda Collaboration Agreement and concluded that it had elements that were within the scope of ASC Topic 606 and ASC Topic 808. As of the effective date of the Takeda Collaboration Agreement, the Company identified two distinct performance obligations: (i) the MIMRYLO license delivered upon the effectiveness of the Takeda Collaboration Agreement and (ii) certain development services to be provided prior to the opt-out period, including certain of the Company’s responsibilities to complete the VERIFY Phase 3 clinical trial in PV
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and associated manufacturing services. Following the completion of the wind-down period on July 27, 2026, the Takeda Collaboration Agreement no longer meets the definition of a collaborative arrangement under ASC Topic 808.
The Company determined that the initial transaction price totaled $
The amount allocated to the license, which represents functional intellectual property that was transferred at a point in time, was satisfied upon transfer of the license to Takeda. The amount allocated to development services will be recognized over time based on a measure of the Company’s efforts toward satisfying the performance obligation relative to the total expected efforts or inputs to satisfy the performance obligation (e.g., costs incurred compared to total budget). As of the opt-out date, the development services performance obligation remained partially unsatisfied.
The exercise of the opt-out right results in a contract modification under ASC Topic 606 because it changes the enforceable rights and obligations of the parties under the Takeda Collaboration Agreement. As a result, the remaining unconstrained consideration was allocated to the remaining development services performance obligation, and the modification was accounted for as part of the existing contract.
Revenue Recognition
For the three months ended September 30, 2026, the Company recognized license and collaboration revenue of $
For the nine months ended September 30, 2026, the Company recognized license and collaboration revenue of $
For the three and nine months ended September 30, 2026, the Company recognized $
Note 4. Fair Value Measurements
Financial assets and liabilities are recorded at fair value. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance
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establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3—Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
In determining fair value, the Company utilizes quoted market prices, broker or dealer quotations, or valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.
The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands):
| | | | | | | | | | | | |
| | September 30, 2026 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Assets: | | | | | | | | | | | | |
Money market funds | | $ | | | $ | — | | $ | — |
| $ | |
Certificates of deposit | |
| — | | | | |
| — |
|
| |
U.S. Treasury and agency securities | | | — | | | | | | — | | | |
Commercial paper | |
| — | | | | |
| — |
|
| |
Corporate debt securities | | | — | | | | | | — | | | |
Total financial assets | | $ | | | $ | | | $ | — |
| $ | |
| | | | | | | | | | | | |
| | December 31, 2025 | ||||||||||
| | Level 1 | | Level 2 | | Level 3 | | Total | ||||
Assets: | | | | | | | | | | | | |
Money market funds | | $ | | | $ | — | | $ | — |
| $ | |
Certificates of deposit | |
| — | | | | |
| — |
|
| |
U.S. Treasury and agency securities | | | — | | | | | | — | | | |
Commercial paper | |
| — | |
| | |
| — |
|
| |
Corporate debt securities | |
| — | |
| | |
| — |
|
| |
Total financial assets | | $ | | | $ | | | $ | — |
| $ | |
The Company’s certificates of deposit, U.S. Treasury and agency securities, including U.S. Treasury bills, commercial paper and corporate debt securities are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques, for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.
The carrying amount of the Company’s remaining financial assets and liabilities, including cash, receivables and payables, approximates their fair value due to their short-term nature.
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Note 5. Cash Equivalents and Marketable Securities
Cash equivalents and marketable securities consisted of the following (in thousands):
| | | | | | | | | | | | |
| | September 30, 2026 | ||||||||||
| | Amortized | | Gross Unrealized | |
| ||||||
| | Cost | | Gains | | Losses | | Fair Value | ||||
Money market funds | | $ | | | $ | — | | $ | — | | $ | |
Certificates of deposit | | | | | | — | |
| ( | |
| |
U.S. Treasury and agency securities | | | | | | — | | | ( | | | |
Commercial paper | |
| | | | — | | | ( | |
| |
Corporate debt securities | | | | | | | | | ( | | | |
Total cash equivalents and marketable securities | | $ | | | $ | | | $ | ( | | $ | |
Classified as: | | | | | | | | | | | | |
Cash equivalents | | | | | | | | | | | $ | |
Marketable securities - current | | | | | | | | | | |
| |
Marketable securities - noncurrent | | | | | | | | | | |
| |
Total cash equivalents and marketable securities | | | | | | | | | | | $ | |
| | | | | | | | | | | | |
| | December 31, 2025 | ||||||||||
| | Amortized | | Gross Unrealized | |
| ||||||
| | Cost | | Gains | | Losses | | Fair Value | ||||
Money market funds | | $ | | | $ | — | | $ | — | | $ | |
Certificates of deposit | | | | | | | | | — | |
| |
U.S. Treasury and agency securities | | | | | | | | | ( | | | |
Commercial paper | |
| | |
| | |
| ( | |
| |
Corporate debt securities | | | | |
| | |
| ( | |
| |
Total cash equivalents and marketable securities | | $ | | | $ | | | $ | ( | | $ | |
Classified as: | | | | | | | | | | | | |
Cash equivalents | | | | | | | | | | | $ | |
Marketable securities - current | | | | | | | | | | |
| |
Marketable securities - noncurrent | | | | | | | | | | |
| |
Total cash equivalents and marketable securities | | | | | | | | | | | $ | |
All of the Company’s marketable securities are classified as available-for-sale. Current marketable securities of $
During the nine months ended September 30, 2026 and 2025, the Company sold $
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Note 6. Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Accrued interest receivable | | $ | | | $ | |
Prepaid clinical and research related expenses | | | | | | |
Prepaid licenses | | | | | | |
Prepaid insurance | | | | | | |
Other | | | | | | |
Prepaid expenses and other current assets | | $ | | | $ | |
Other current assets as of September 30, 2026 included $
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Laboratory equipment | | $ | | | $ | |
Furniture and computer equipment | |
| | |
| |
Leasehold improvements | |
| | |
| |
Total property and equipment | |
| | |
| |
Accumulated depreciation | |
| ( | |
| ( |
Property and equipment, net | | $ | | | $ | |
Accrued Expenses and Other Payables
Accrued expenses and other payables consisted of the following (in thousands):
| | | | | | |
| | September 30, | | December 31, | ||
| | 2026 | | 2025 | ||
Accrued clinical and research related expenses | | $ | | | $ | |
Accrued employee related expenses | |
| | |
| |
Accrued professional service fees | | | | | | |
Other | |
| | |
| |
Total accrued expenses and other payables | | $ | | | $ | |
Note 7. Stockholders’ Equity
Stock Repurchase Program
On September 8, 2026, the Company announced that its board of directors authorized a share repurchase program under which the Company may repurchase up to $
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the Securities Exchange Act of 1934, as amended. The Company intends to fund repurchases from its cash, cash equivalents and marketable securities, as well as royalties and other payments received under its collaboration arrangements with Takeda related to MIMRYLO and JNJ related to ICOTYDE. The timing and amount of any repurchases will depend on market conditions, alternative capital deployment opportunities and other factors.
During the three and nine months ended September 30, 2026, the Company repurchased
Pre-Funded Warrants
In August 2023, the Company entered into certain agreements with certain accredited investors and their affiliates (the “Investors”) under which the Company issued pre-funded warrants with an exercise price of $
Note 8. Income Taxes
The Company recorded income tax expense of $
Note 9. Net Income (Loss) per Share
The computation of basic net income (loss) per share of common stock is based on the weighted-average number of shares of common stock outstanding during each period. The computation of diluted net income (loss) per share of common stock is based on the weighted-average number of shares of common stock outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to stock options, RSUs, PSUs, the Company’s employee stock purchase plan (“ESPP”), and warrants.
In periods when the Company has net income, the dilutive effect of all potentially outstanding shares is computed using the treasury stock method. In periods in which the Company reports a net loss, all common stock equivalents are deemed anti-dilutive such that basic net loss per share of common stock and diluted net loss per share of common stock are equal.
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The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except share and per share data):
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Basic net income (loss) per share of common stock | | | | | | | | | | | | |
Numerator: | | | | | | | | | | | | |
Net income (loss) | | $ | | | $ | ( | | $ | | | $ | ( |
Denominator: | | | | | | | | | | | | |
Weighted-average shares of common stock, basic | | | 66,362,300 | | | 63,772,332 | | | 65,799,973 | | | 63,418,522 |
Basic net income (loss) per share of common stock | | $ | | | $ | ( | | $ | | | $ | ( |
Diluted net income (loss) per share of common stock | | | | | | | | | | | | |
Numerator: | | | | | | | | | | | | |
Net income (loss) | | $ | 220,015 | | $ | (39,339) | | $ | 386,647 | | $ | (85,765) |
Denominator: | | | | | | | | | | | | |
Weighted-average shares of common stock, basic | |
| 66,362,300 | |
| 63,772,332 | |
| 65,799,973 | |
| 63,418,522 |
Dilutive effect of common stock equivalents | |
| | |
| — | |
| | |
| — |
Weighted-average shares of common stock, diluted | | | | | | | | | | | | |
Diluted net income (loss) per share of common stock | | $ | | | $ | ( | | $ | | | $ | ( |
Approximately
Note 10. Segment Reporting
Operating segments are components of an enterprise for which separate financial information is available and which are evaluated by a company’s chief operating decision maker (“CODM”) in deciding how to allocate resources and to assess performance.
The Company operates and manages its business as
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| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | | | | | | |
| | |
| |
Revenue | | $ | | | $ | | | $ | | | $ | |
Less: | | | | | | | | | | | | |
Cost of revenue | | | ( | | | — | | | ( | | | — |
Discovery department expense (1)(2) | | | ( | | | ( | | | ( | | | ( |
Development department expense (1)(2) | | | ( | | | ( | | | ( | | | ( |
General and administrative expenses (1) | | | ( | | | ( | | | ( | | | ( |
Employee wages and benefits - discovery (2) | | | ( | | | ( | | | ( | | | ( |
Employee wages and benefits - development (2) | | | ( | | | ( | | | ( | | | ( |
Employee wages and benefits - general and administrative | | | ( | | | ( | | | ( | | | ( |
Stock-based compensation expense | | | ( | | | ( | | | ( | | | ( |
Other segment items (3) | | | ( | | | | | | ( | | | |
Interest income | | | | | | | | | | | | |
Income tax expense | | | ( | | | — | | | ( | | | ( |
Segment profit (loss) | | $ | | | $ | ( | | $ | | | $ | ( |
Reconciliation of profit (loss) | | | | | | | | | | | | |
Adjustments and reconciling items | | $ | — | | $ | — | | $ | — | | $ | — |
Consolidated net income (loss) | | $ | | | $ | ( | | $ | | | $ | ( |
(1) Amounts exclude employee wages and benefits, stock-based compensation and expense allocations.
(2) As of April 1, 2025, the information regularly provided to the CODM was changed to reclassify pre-clinical expenses from development expense to discovery expense. Prior period segment information has been recast to reflect this change.
(3)
The accounting policies of the Company’s operating segment are the same as those described in Note 2. Summary of Significant Accounting Policies. The measure of segment assets is reported as total assets on the Company’s condensed consolidated balance sheets for the periods presented.
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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our Unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q (the “Quarterly Report”) and with our Audited Consolidated Financial Statements and related notes thereto for the year ended December 31, 2025, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2026.
Forward-Looking Statements
This Quarterly Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact, including statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, expectations, plans or intentions relating to clinical development, product candidates, the regulatory approval process, products and markets, and business trends and other information referred to under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements. These statements are subject to substantial known and unknown risks, uncertainties and other factors that may cause our actual results, outcomes, performance or achievements, or the timing of such results, outcomes, performance or achievements, to be materially different from any results, outcomes, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “assumes,” “believes,” “commitments,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “targets,” “will,” “would,” “seeks” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events, are based on assumptions, and are subject to risks, uncertainties and other important factors, including, among other things, the commercial acceptance and success of ICOTYDE and MIMRYLO, which depends on the efforts of our collaboration partners; the timing and amount of royalty and milestone payments we receive from our ICOTYDE and MIMRYLO collaborations; the results of ICOTYDE and MIMRYLO clinical trials; the potential for our programs; the timing, initiation, progress and expected results of our clinical trials and research and development programs, including enrollment, data, costs and regulatory submissions and approvals; our cash runway; our ability to advance product candidates into, and successfully complete, non-clinical studies and clinical trials; our eligibility for, and any expected benefits of, any U.S. Food and Drug Administration (“FDA”) programs or special designations; the potential for eventual regulatory approval and commercialization of our product candidates; the commercialization of our product candidates, if approved; our ability and the potential to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved; the pricing, coverage, and reimbursement of our product candidates, if approved; future operating results; our ability and that of our collaboration partners to generate sales, income or cash flow; our estimates regarding expenses, capital requirements, and potential needs for additional financing and our ability to obtain additional capital; our ability to retain the continued service of our key executives and to identify, hire, and retain additional qualified professionals; developments relating to our competitors and our industry, including competing product candidates and therapies; uncertainty and disruption in the global economy and financial markets due to a number of factors, including but not limited to geopolitical instability, such as the ongoing military conflicts between Russia and Ukraine and in the Middle East and rising tensions between China and Taiwan, elevated and sustained inflation, high oil and other commodity prices and changes in trade policies, including tariffs or other trade restrictions or the threat of such actions and retaliatory actions; the availability of credit; and other factors. Forward-looking statements involve risks, uncertainties and assumptions that are beyond our ability to control or predict, including those risks, uncertainties and assumptions discussed in Part II, Item 1A, of this Quarterly Report, Part 1. Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in our other filings with the SEC. These statements are based on information available to us as of the date of this Quarterly Report and, while we believe such information provides a reasonable basis for these statements, the information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Given these risks, uncertainties and other important factors, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report. Except as required by law, we
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assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results or outcomes could differ materially from those anticipated in any forward-looking statements, whether as a result of new information, future developments, changes in assumptions or otherwise. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.
“Protagonist,” the Protagonist logo and other trademarks, service marks and trade names of Protagonist are registered and unregistered marks of Protagonist Therapeutics, Inc. in the United States and other jurisdictions. Other registered and unregistered trademarks, service marks and trade names are the property of their respective owners.
Overview
We are a biopharmaceutical company built on a proprietary peptide technology platform. Our development products and discovery programs fall into three broad therapeutic areas: (i) inflammation and immunology (“I&I”), (ii) hematology and (iii) metabolic diseases. Our aim is to develop medicines for biologically and commercially validated targets which demonstrate a strong differentiation compared to existing therapies.
ICOTYDE® (icotrokinra)
ICOTYDE® (icotrokinra) was approved in the United States in March 2026 for the treatment of moderate-to-severe plaque psoriasis in adults and pediatric patients 12 years of age or older who weigh at least 40 kg and are candidates for systemic therapy or phototherapy. ICOTYDE is the first and only targeted oral peptide that precisely blocks the Interleukin-23 receptor (“IL-23R”), which underpins the inflammatory response in psoriasis and offers potential in other IL-23-mediated diseases. ICOTYDE is licensed to Janssen Biotech, Inc., a Johnson & Johnson company (“JNJ”), under a license and collaboration agreement initially entered into in 2017. Following ICOTYDE’s joint discovery by Protagonist and JNJ scientists, we were primarily responsible for the development of ICOTYDE through Phase 1, with JNJ assuming responsibility for further development and commercialization. In September 2026, the European Commission granted approval of JNJ’s marketing application for ICOTYDE for the treatment of adults and pediatric patients 12 years of age and older with moderate-to-severe plaque psoriasis. ICOTYDE has also received regulatory approval in Japan and China. ICOTYDE is in Phase 3 development for additional immune-mediated diseases, including psoriatic arthritis, ulcerative colitis and Crohn’s disease.
In October 2026 JNJ submitted an abstract accepted for presentation at the American College of Rheumatology Convergence 2026 outlining Week 24 results from a Phase 3, randomized, double-blind, placebo-controlled study evaluating icotrokinra in biologic-naïve participants with active psoriatic arthritis. The publicly released abstract reported that in biologic-naïve patients with active psoriatic arthritis, once-daily ICOTYDE 200 mg demonstrated both joint and skin improvements versus placebo at Week 16, with 400 mg showing no additional benefit beyond the 200 mg dose. Continued improvements were observed through Week 24 for both joint and skin responses. Adverse event profiles were comparable across groups with no new safety signals identified.
In November 2026, JNJ disclosed the following results from the Phase 3 ICONIC-ASCEND study evaluating ICOTYDE in adult and pediatric patients 12 years of age and older with moderate-to-severe plaque psoriasis versus placebo and ustekinumab:
| ● | ICOTYDE met both co-primary endpoints, with 70% of adults and adolescents with moderate-to-severe plaque psoriasis achieving clear or almost clear skin (IGA 0/1) and 55% achieving PASI 90 versus placebo at Week 16. |
| ● | Results showed ICOTYDE achieved non-inferiority to ustekinumab, with numerically higher skin clearance rates in both systemic-naive and biologic-experienced plaque psoriasis patients, though statistical superiority was not demonstrated. ICOTYDE delivered consistent skin clearance against a comparator that performed at a level well above what has been seen historically. |
| ● | ICOTYDE delivered a 17-point improvement in complete skin clearance (PASI 100) versus ustekinumab in systemic-naïve patients at Week 28 (48% versus 31%). |
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MIMRYLO™ (rusfertide)
MIMRYLO™ (rusfertide), a subcutaneously delivered first-in-class hepcidin mimetic, was approved in the United States in August 2026 for the treatment of erythrocytosis in adults with the rare blood disorder polycythemia vera (“PV”). On September 30, 2026, MIMRYLO was also approved in the United Arab Emirates. MIMRYLO, the first and only hepcidin mimetic approved for PV, a blood cancer characterized by the excessive production of red blood cells, demonstrated key efficacy outcomes of response rate and hematocrit control as well as fatigue improvement. We discovered MIMRYLO, advanced it into Phase 3 development, and entered into a license and collaboration agreement with Takeda Pharmaceuticals, Inc. (“Takeda”) in January 2024 (the “Takeda Collaboration Agreement”). We remained primarily responsible for clinical development activities through MIMRYLO’s New Drug Application (“NDA”) filing for the treatment of erythrocytosis in patients with PV, which we and Takeda submitted in December 2025, and Takeda is responsible for further development and commercialization. In September 2026, MIMRYLO was added as a Category 1 treatment option for both low- and high-risk PV in the National Comprehensive Cancer Network’s updated guidelines. MIMRYLO previously received Orphan Drug designation, which qualifies sponsors for various incentives, including the potential for extended market exclusivity.
IL-17 Program
PN-881. We are developing PN-881, a potential best-in-class oral peptide IL-17 antagonist, for the treatment of immune-mediated skin diseases. PN-881 targets three IL-17 dimers (IL-17 AA, AF and FF), and may offer potential treatment options for plaque psoriasis, psoriatic arthritis, hidradenitis suppurativa, and spondyloarthritis.
In October 2025, the first human subject was dosed in our Phase 1 trial of PN-881 (ClinicalTrials.gov identifier NCT07153146) evaluating its safety, tolerability, pharmacokinetics and pharmacodynamics in healthy adults. We believe data from our completed Phase 1 study supports our decision to advance PN-881 into a comprehensive Phase 2b psoriasis program, with initiation of a dose range-finding study in patients with plaque psoriasis expected in early first quarter 2027. Phase 1 data are expected to be presented at a future medical meeting.
Obesity Program
PN-477. In June 2025, we nominated PN-477, a potential best-in-class novel triple GLP-1, GIP and GCG receptor agonist peptide, as a development candidate for the treatment of obesity. In the subcutaneously administered PN-477sc single ascending dose study, we observed positive dose-related pharmacokinetic, pharmacodynamic and clinical activity. Based on these highly encouraging findings, we have made a strategic decision to prioritize the orally administered PN-477o clinical development program. The initiation of a Phase 1 study of PN-477o is anticipated in the first half of 2027.
PN-458. In December 2025, we nominated PN-458, a potential best-in-class novel dual GLP-1 and GIP receptor agonist peptide, as a development candidate for the treatment of obesity. IND-enabling studies are ongoing, with the initiation of a Phase 1 study for the PN-458 oral formulation anticipated in the second half of 2027.
Oral Hepcidin Program
PN-8047. In December 2025, we nominated development candidate PN-8047, an orally administered small molecule hepcidin functional mimetic, which we believe may be complementary to the injectable MIMRYLO for offering the best treatment options for PV. IND-enabling studies for PN-8047 are ongoing, with the initiation of a Phase 1 study anticipated in the first quarter of 2027.
Other Programs
We also have pre-clinical stage drug discovery programs addressing biologically and commercially validated targets, including an oral IL-4R alpha antagonist for the treatment of atopic dermatitis and moderate-to-severe asthma, and amylinR-based mono- and poly-agonists for the treatment of obesity.
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Significant Cash Resources
We ended the third quarter of 2026 with cash, cash equivalents and marketable securities of approximately $834.6 million, as compared to cash, cash equivalents and marketable securities of approximately $646.0 million as of December 31, 2025. For the remainder of 2026 and beyond, we are eligible to receive significant milestone, royalty and other payments from our collaborations with JNJ and Takeda, as described below.
License and Collaboration Agreements
JNJ License and Collaboration Agreement
We and JNJ are parties to a license and collaboration agreement related to the development and commercialization of ICOTYDE. We entered into the agreement in July 2017, and amended it in May 2019, July 2021 and November 2024 (as amended, the “JNJ License and Collaboration Agreement”). Pursuant to the JNJ License and Collaboration Agreement, we were primarily responsible for the discovery, IND-enabling studies, and the initial Phase 1 study for ICOTYDE, and JNJ is responsible for conducting all further development.
In March 2026, we earned a $50.0 million milestone payment upon FDA approval of ICOTYDE for the treatment of moderate-to-severe plaque psoriasis in adults and pediatric patients 12 years of age or older who weigh at least 40 kg and are candidates for systemic therapy or phototherapy. As of September 30, 2026, we have earned a total of $387.5 million in non-refundable upfront and milestone payments from JNJ under the agreement. We are eligible to receive up to $580.0 million in future development and sales milestone payments, including the following potential milestones:
| | | | | | | | |
ICOTYDE® Potential Development Milestones | | ICOTYDE® Potential Sales Milestones | ||||||
2nd indication | | NDA filing acceptance | | $25 Million | | Calendar Year Net Sales | | Sales Milestone |
| | Receipt of marketing approval | | $45 Million | | $1 Billion | | $70 Million |
3rd Indication | | NDA filing acceptance | | $35 Million | | $2 Billion | | $95 Million |
| | Receipt of marketing approval | | $50 Million | | $3 Billion | | $160 Million |
Total Potential Development Milestones | | $155 Million | | $5 Billion | | $100 Million | ||
| | | | | | Total Potential Sales Milestones | | $425 Million |
We are also eligible to receive upward tiered royalties on net worldwide ICOTYDE product sales at percentages ranging from 6% to 10%. Our weighted-average royalty rate on the first $4.0 billion in annual net sales is 7.25%, and the rate on net sales over $4.0 billion is 10%. The ultimate magnitude of our royalty stream, along with the achievement of development and commercial milestones, will depend upon ICOTYDE’s commercial launch success and market trajectory, which depends on the efforts of our collaboration partner, as well as the successful clinical development, regulatory approval, and commercialization of ICOTYDE in the additional indications currently being studied.
Takeda Collaboration Agreement
In January 2024, we entered into the Takeda Collaboration Agreement related to MIMRYLO (and specified second-generation injectable hepcidin mimetic compounds developed and commercialized under the agreement that are not currently in development). In December 2025, we and Takeda submitted an NDA to the FDA for MIMRYLO in PV, which was approved in August 2026. We were primarily responsible for the clinical development of MIMRYLO through NDA filing and remain primarily responsible for conducting ongoing MIMRYLO long-term extension studies. Under the terms of the agreement, we received an upfront payment of $300.0 million in April 2024 and a $25.0 million milestone payment in September 2025 upon completion of the Phase 3 VERIFY clinical trial (NCT05210790) report.
Effective April 28, 2026, we exercised our right to opt out of the U.S. profit and loss sharing arrangement (50% to us and 50% to Takeda) under the Takeda Collaboration Agreement. The opt-out election triggered a $200.0 million payment to us, which we received in the second quarter of 2026. In August 2026, we earned an additional $200.0 million opt-out payment and a separate $75.0 million milestone upon FDA approval of MIMRYLO, which were received in October 2026. Following the opt-out, Takeda has an exclusive worldwide license to develop and commercialize MIMRYLO, and we are eligible to receive tiered royalties ranging from 14% to 29% on annual worldwide net sales,
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with an approximate weighted-average royalty rate of 21% at $1.5 billion in annual net sales and a rate of 29% for incremental annual net sales over $1.5 billion. In addition, under the agreement, we are eligible to receive up to $800.0 million in potential development and sales milestones for MIMRYLO in PV as follows:
| | | | | | | | |
MIMRYLO™ Selected Upcoming Potential Development Milestones | | MIMRYLO™ Potential Sales Milestones | ||||||
PV | | First regulatory approval in three European countries | | $15 Million | | Calendar Year Net Sales | | Sales Milestone |
| | First regulatory approval in Japan | | $10 Million | | $250 Million | | $25 Million |
Total Upcoming Potential Development Milestones | | $25 Million | | $500 Million | | $50 Million | ||
| | | | | | $1.0 Billion | | $100 Million |
| | | | | | $1.5 Billion | | $150 Million |
| | | | | | $2.0 Billion | | $200 Million |
| | | | | | $2.5 Billion | | $250 Million |
| | | | | | Total Potential Sales Milestones | | $775 Million |
The receipt of future royalties and commercial milestones is contingent upon the relevant products achieving a successful commercial launch, which depends on the efforts of our collaboration partner.
Risks and Uncertainties
We describe the respective risks, uncertainties and assumptions that could affect our business, financial condition or results of operations in Part II, Item 1A. “Risk Factors” herein, Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 and in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.
Operations
We have incurred cumulative net losses from inception through September 30, 2026 of $84.0 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant research and development expenses, and other expenses related to our ongoing operations, clinical development and pre-clinical discovery programs.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, and the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies during the three and nine months ended September 30, 2026, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report for the year ended December 31, 2025 filed with the SEC on February 25, 2026.
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Components of Our Results of Operations
License and Collaboration Revenue
Our license and collaboration revenue is derived from payments we receive from our collaboration partners under the JNJ License and Collaboration Agreement and the Takeda Collaboration Agreement. See Note 3 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.
Early in a product launch, prescription volume and recognized royalty revenue may not move in parallel. Commercial launches often include access-support initiatives, such as starter packs and bridge programs designed to help patients initiate therapy while reimbursement pathways are established. As a result, prescription activity can serve as a leading indicator of strong adoption, while associated royalty revenue may lag in the near term as prescriptions convert into reimbursed, recurring product sales.
Cost of Revenue
Cost of revenue represents costs incurred pursuant to a collaboration agreement entered into in June 2012 and a related arbitration resolution agreement entered into in August 2021 between us and Zealand Pharma A/S (“Zealand”). We are obligated to pay Zealand certain milestone and royalty payments for MIMRYLO. These payments are recorded as cost of revenue in the period in which they are incurred. As of September 30, 2026, remaining potential payments under the agreement include: (i) up to $1.65 million in development milestone payments; (ii) a 1% royalty on worldwide net sales of MIMRYLO; and (iii) sales milestone payments on achievement of specified annual net sales amounts in specified geographies.
Research and Development Expenses
Research and development expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred unless there is an alternative future use in other research and development projects or otherwise. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when payment has been made. In instances where we enter into agreements with third parties to provide research and development services to us, costs are expensed as services are performed. Amounts due under such arrangements may be either fixed fee or fee for service and may include upfront payments, monthly payments, and payments upon the completion of milestones or the receipt of deliverables.
Research and development expenses consist primarily of the following:
| ● | expenses incurred under agreements with clinical trial sites that conduct research and development activities on our behalf; |
| ● | employee-related expenses, which include salaries, benefits and stock-based compensation; |
| ● | laboratory vendor expenses related to the preparation and conduct of pre-clinical studies and clinical trials; |
| ● | costs related to production of clinical supplies and pre-clinical materials, including fees paid to contract manufacturers; |
| ● | license fees and certain milestone payments under license and collaboration agreements; and |
| ● | facilities and other allocated expenses, which include expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and administrative and other supplies. |
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We allocate direct and indirect costs incurred to product candidates when they enter clinical development. For product candidates in clinical development, direct costs consist primarily of clinical, pre-clinical, and drug discovery costs, costs of supplying drug substance and drug product for use in clinical and pre-clinical studies, including clinical manufacturing costs, contract research organization fees, and other contracted services pertaining to specific clinical and pre-clinical studies. Indirect costs allocated to our product candidates on a program-specific basis include research and development employee salaries, benefits, and stock-based compensation, and indirect overhead and other administrative support costs. Program-specific costs are unallocated when the related expenses are incurred for our early-stage research and drug discovery projects as our internal resources, employees and infrastructure are not tied to any one research or drug discovery project and are typically deployed across multiple projects. As such, we do not provide financial information regarding the costs incurred for early-stage pre-clinical and drug discovery programs on a program-specific basis prior to the clinical development stage.
The process of conducting research, identifying potential product candidates, conducting pre-clinical studies and clinical trials necessary to obtain regulatory approval and commencing pre-commercialization activities is costly and time intensive. We may never succeed in achieving marketing approval for our current or future product candidates regardless of our costs and efforts. The probability of success of our product candidates may be affected by numerous factors, including pre-clinical data, clinical data, competition, manufacturing capability, our cost of goods to be sold, our ability to receive, and the timing of, regulatory approvals, market conditions, and our ability to successfully commercialize our products if they are approved for marketing. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will be able to generate revenue from the commercialization and sale of any of our current or future product candidates. Our research and development programs are subject to change from time to time as we evaluate our priorities and available resources.
General and Administrative Expenses
General and administrative expenses consist of personnel costs, allocated costs and other expenses for outside professional services, including legal, human resources, audit and accounting services. Personnel costs consist of salaries, benefits and stock-based compensation. Allocated costs consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and administrative supplies. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of the national securities exchange on which our securities are traded, insurance expenses, investor relations expenses, audit fees, professional services and general overhead and administrative costs.
Interest Income
Interest income consists of interest earned on our cash, cash equivalents and marketable securities, which is comprised of contractual interest, premium amortization and discount accretion.
Other (Expense) Income, Net
Other (expense) income, net consists primarily of amounts related to foreign exchange gains and losses, realized gains and losses on sale of marketable securities and related items.
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Results of Operations
Comparison of the Three Months Ended September 30, 2026 and 2025
| | | | | | | | | | | |
| | Three Months Ended | | | | | |||||
| | September 30, | | Dollar | | % | |||||
| | 2026 | | 2025 | | Change | | Change | |||
| | (Dollars in thousands) | | | |||||||
License and collaboration revenue | | $ | 274,410 | | $ | 4,712 | | $ | 269,698 | | * |
Operating expenses: |
| | |
| | |
| | |
| |
Cost of revenue | | | 1,100 | | | — | | | 1,100 |
| * |
Research and development (1) | | | 41,274 | | | 40,003 | | | 1,271 |
| 3 |
General and administrative (2) | |
| 13,704 | |
| 11,130 | |
| 2,574 |
| 23 |
Total operating expenses | |
| 56,078 | |
| 51,133 | |
| 4,945 |
| 10 |
Income (loss) from operations | |
| 218,332 | |
| (46,421) | |
| 264,753 |
| * |
Interest income | |
| 8,253 | |
| 7,049 | |
| 1,204 |
| 17 |
Other (expense) income, net | | | (14) | | | 33 | | | (47) | | (142) |
Income (loss) before income tax expense | | | 226,571 | | | (39,339) | | | 265,910 | | * |
Income tax expense | | | 6,556 | | | — | | | 6,556 | | * |
Net income (loss) | | $ | 220,015 | | $ | (39,339) | | $ | 259,354 |
| * |
*Percentage not meaningful.
| (1) | Includes $7.7 million and $6.0 million of non-cash stock-based compensation expense for the three months ended September 30, 2026 and 2025, respectively. |
| (2) | Includes $6.6 million and $4.6 million of non-cash stock-based compensation expense for the three months ended September 30, 2026 and 2025, respectively. |
License and Collaboration Revenue
Our revenue is derived from licensing and collaboration agreements and is highly variable and dependent upon factors such as the timing of when regulatory and sales milestones are achieved, if at all, commercial launch efforts by our collaboration partners, and the accounting for any upfront payments associated with any existing or new agreements.
For the three months ended September 30, 2026, we recognized license and collaboration revenue of $274.4 million. This revenue was primarily driven by the proportional recognition of $266.6 million related to the $275.0 million in total opt-out and milestone payments earned under the Takeda Collaboration Agreement during the period, ongoing development services, and other revenues.
License and collaboration revenue for the three months ended September 30, 2025 was $4.7 million and was related to the Takeda Collaboration Agreement for development services provided by us during the period based on the cost-based input method.
Cost of Revenue
For the three months ended September 30, 2026, we recorded cost of revenue of $1.1 million for a milestone payment due to Zealand upon the FDA’s approval and the commercial launch of MIMRYLO. No expense was recorded for cost of revenue for the three months ended September 30, 2025.
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Research and Development Expenses
Research and development expenses increased $1.3 million, as detailed in the table below:
| | | | | | | | | | | |
| | Three Months Ended | | | | | | ||||
| | September 30, | | Dollar | | % | |||||
| | 2026 | | 2025 | | Change | | Change | |||
| | (Dollars in thousands) | | | |||||||
Clinical and development expense — PN-881 | | $ | 10,434 | | $ | — | | $ | 10,434 | | * |
Clinical and development expense — MIMRYLO | | | 3,209 | | | 21,525 | | | (18,316) | | (85) |
Clinical and development expense — other | | | 44 | | | 46 | | | (2) | | (4) |
Pre-clinical and drug discovery research expense | | | 27,587 | | | 18,432 | | | 9,155 | | 50 |
Total research and development expenses | | $ | 41,274 | | $ | 40,003 | | $ | 1,271 | | 3 |
*Percentage not meaningful.
We had 111 and 99 full-time equivalent research and development headcount as of September 30, 2026 and 2025, respectively. Research and development personnel-related expenses for the three months ended September 30, 2026 increased by $0.6 million as compared to the three months ended September 30, 2025, primarily driven by increases in wages, benefits and stock-based compensation.
We expect research and development expenses to increase for the remainder of the year as compared to the prior quarters in 2026. The increase is expected to be driven primarily by the advancement of PN-881 into a comprehensive Phase 2b psoriasis program, planned investments in clinical manufacturing and related activities, including at-risk expenditures to ensure readiness for other programs as they advance to clinical development (PN-477o, PN-458, PN-8047), additional pre-clinical discovery programs, and increases in headcount and stock-based compensation expense. The timing and magnitude of these expenses will vary depending on the progress of our programs, including the initiation and pace of clinical trials and related development activities.
General and Administrative Expenses
General and administrative expenses increased $2.6 million, or 23%, from $11.1 million for the three months ended September 30, 2025 to $13.7 million for the three months ended September 30, 2026. The increase was primarily due to an increase in personnel-related expenses driven by increases in wages, benefits and stock-based compensation.
We had 38 and 29 full-time equivalent general and administrative headcount as of September 30, 2026 and 2025, respectively.
Interest Income
Interest income increased by $1.2 million, or 17%, from $7.0 million for the three months ended September 30, 2025 to $8.2 million for the three months ended September 30, 2026 primarily due to higher average investment balances as compared to the prior period.
Income Tax Expense
Income tax expense was $6.6 million and zero for the three months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the three months ended September 30, 2026 was primarily due to pretax income recorded as compared to a pretax loss for the prior year period. The effective tax rate was 2.9% and 0% for the three months ended September 30, 2026 and 2025, respectively.
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Comparison of the Nine Months Ended September 30, 2026 and 2025
| | | | | | | | | | | |
| | Nine Months Ended | | | | | | ||||
| | September 30, | | Dollar | | % | |||||
| | 2026 | | 2025 | | Change | | Change | |||
| | (Dollars in thousands) | | | |||||||
License and collaboration revenue | | $ | 544,253 | | $ | 38,579 | | $ | 505,674 | | * |
Operating expenses: |
| | |
| | |
| | |
| |
Cost of revenue | | | 1,100 | | | — | | | 1,100 |
| * |
Research and development (1) | | | 130,074 | | | 112,932 | | | 17,142 |
| 15 |
General and administrative (2) | |
| 39,629 | |
| 33,419 | |
| 6,210 |
| 19 |
Total operating expenses | |
| 170,803 | |
| 146,351 | |
| 24,452 |
| 17 |
Income (loss) from operations | |
| 373,450 | |
| (107,772) | |
| 481,222 |
| (447) |
Interest income | |
| 20,558 | | | 22,028 | |
| (1,470) |
| (7) |
Other (expense) income, net | | | (42) | | | 151 | | | (193) | | (128) |
Income (loss) before income tax expense | | | 393,966 | | | (85,593) | | | 479,559 | | * |
Income tax expense | | | 7,319 | | | 172 | | | 7,147 | | * |
Net income (loss) | | $ | 386,647 | | $ | (85,765) | | $ | 472,412 |
| * |
*Percentage not meaningful.
| (1) | Includes $23.1 million and $20.3 million of non-cash stock-based compensation expense for the nine months ended September 30, 2026 and 2025, respectively. |
| (2) | Includes $19.9 million and $15.0 million of non-cash stock-based compensation expense for the nine months ended September 30, 2026 and 2025, respectively. |
License and Collaboration Revenue
Our revenue is derived from licensing and collaboration agreements and is highly variable and dependent upon factors such as the timing of when regulatory and sales milestones are achieved, if at all, commercial launch efforts by our collaboration partners, and the accounting for any upfront payments associated with any existing or new agreements.
For the nine months ended September 30, 2026, we recognized license and collaboration revenue of $544.3 million. This revenue was primarily driven by proportional recognition of $460.5 million related to the $475.0 million in total opt-out and milestone payments earned under the Takeda Collaboration Agreement during the period, ongoing development services, and other revenues, and (ii) a $50.0 million milestone payment related to the JNJ License and Collaboration Agreement, and other revenues.
License and collaboration revenue for the nine months ended September 30, 2025 was $38.6 million and was related to the Takeda Collaboration Agreement, which consisted of (i) $21.3 million representing a portion of the $25.0 million milestone payment received in September 2025 that was allocated to the MIMRYLO license delivery performance obligation under the agreement and (ii) $17.3 million for development services provided by us during the period based on the cost-based input method.
Cost of Revenue
For the nine months ended September 30, 2026, we recorded cost of revenue of $1.1 million for a milestone payment due to Zealand upon the FDA’s approval and the commercial launch of MIMRYLO. No expense was recorded for cost of revenue for the nine months ended September 30, 2025.
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Research and Development Expenses
Research and development expenses increased $17.1 million, as detailed in the table below:
| | | | | | | | | | | |
| | Nine Months Ended | | | | | | ||||
| | September 30, | | Dollar | | % | |||||
| | 2026 | | 2025 | | Change | | Change | |||
| | (Dollars in thousands) | | | |||||||
Clinical and development expense — PN-881 | | $ | 27,888 | | $ | — | | $ | 27,888 | | * |
Clinical and development expense — MIMRYLO | | | 31,581 | | | 65,800 | | | (34,219) | | (52) |
Clinical and development expense — other | | | 135 | | | 200 | | | (65) | | (33) |
Pre-clinical and drug discovery research expense | | | 70,470 | | | 46,932 | | | 23,538 | | 50 |
Total research and development expenses | | $ | 130,074 | | $ | 112,932 | | $ | 17,142 | | 15 |
*Percentage not meaningful.
We had 111 and 99 full-time equivalent research and development headcount as of September 30, 2026 and 2025, respectively. Research and development personnel-related expenses for the nine months ended September 30, 2026 increased by $5.4 million as compared to the nine months ended September 30, 2025, primarily driven by increases in wages, benefits and stock-based compensation.
We expect research and development expenses to increase for the remainder of the year as compared to the prior quarters in 2026. The increase is expected to be driven primarily by the advancement of PN-881 into a comprehensive Phase 2b psoriasis program, planned investments in clinical manufacturing and related activities, including at-risk expenditures to ensure readiness for other programs as they advance to clinical development (PN-477o, PN-458, PN-8047), additional pre-clinical discovery programs, and increases in headcount and stock-based compensation expense. The timing and magnitude of these expenses will vary depending on the progress of our programs, including the initiation and pace of clinical trials and related development activities.
General and Administrative Expenses
General and administrative expenses increased $6.2 million, or 19%, from $33.4 million for the nine months ended September 30, 2025 to $39.6 million for the nine months ended September 30, 2026. The increase was primarily due to an increase in personnel-related expenses, primarily driven by increases in wages, benefits and stock-based compensation.
We had 38 and 29 full-time equivalent general and administrative headcount as of September 30, 2026 and 2025, respectively.
Interest Income
Interest income decreased by $1.5 million, or 7%, from $22.0 million for the nine months ended September 30, 2025 to $20.6 million for the nine months ended September 30, 2026 primarily due to lower average investment balances as compared to the prior year period.
Income Tax Expense
Income tax expense was $7.3 million and $0.2 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in income tax expense for the nine months ended September 30, 2026 was primarily due to pretax income recorded as compared to a pretax loss for the prior year period. The effective tax rate was 1.9% and 0% for the nine months ended September 30, 2026 and 2025, respectively.
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Liquidity and Capital Resources
Sources of Liquidity
We had $834.6 million and $646.0 million in cash, cash equivalents and marketable securities as of September 30, 2026 and December 31, 2025, respectively. Historically, we have funded our operations primarily from receipt of payments under collaboration agreements, as discussed in “License and Collaboration Agreements” above, and net proceeds from the sale of shares of our common stock.
Capital Requirements
As of September 30, 2026, we had $834.6 million in cash, cash equivalents and marketable securities and an accumulated deficit of $84.0 million. Our capital expenditures were $0.6 million and $1.6 million for the nine months ended September 30, 2026 and the year ended December 31, 2025, respectively. Our primary uses of cash are to fund our costs and operating expenses, including our cost of revenue, research and development expenditures and general and administrative costs. We expect that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next twelve months from the date of this Quarterly Report based on current operating plans and financial forecasts.
We do not currently anticipate a need for additional funding in the near term. However, we may require additional funding in the future to advance our discovery pipeline and to develop, acquire, or in-license other potential product candidates. Our future funding requirements will depend on many factors, including those described in Part II, Item 1A, “Risk Factors” herein, Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 and in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025. Such additional funding may come from various sources, including raising additional capital, seeking access to debt, and seeking additional collaborative or other arrangements with partners, but such funding may not be available on terms acceptable to us, if at all.
Stock Repurchase Program
On September 8, 2026, we announced that our board of directors authorized a stock repurchase program under which the Company may repurchase up to $300.0 million of its outstanding common stock (the “Repurchase Program”). The Repurchase Program has no fixed expiration, does not obligate us to repurchase any specific number of shares and may be modified, suspended or discontinued at any time without prior notice. We intend to fund repurchases from our cash, cash equivalents and marketable securities, as well as royalties and other payments received under our collaboration arrangements with Takeda related to MIMRYLO and JNJ related to ICOTYDE. The timing and amount of any repurchases will depend on market conditions, alternative capital deployment opportunities and other factors. During the three months ended September 30, 2026, we repurchased 40,560 shares of our common stock under the Repurchase Program for an aggregate purchase price of $5.8 million, which are held as Treasury shares. As of September 30, 2026, $294.2 million remained available and authorized for repurchase under the Repurchase Program.
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Cash Flows
The following table summarizes our cash flows for the periods indicated:
| | | | | | |
| | Nine Months Ended | ||||
| | September 30, | ||||
| | 2026 | | 2025 | ||
Condensed Consolidated Statements of Cash Flows Data: | | (Dollars in thousands) | ||||
Cash provided by operating activities | | $ | 146,888 | | $ | 94,646 |
Cash provided by (used in) investing activities | | $ | 181,896 | | $ | (98,147) |
Cash provided by financing activities | | $ | 41,124 | | $ | 20,027 |
Stock-based compensation | | $ | 42,920 | | $ | 35,273 |
Change in deferred revenue | | $ | 6,761 | | $ | (13,579) |
Cash Provided by Operating Activities
Cash provided by operating activities for the nine months ended September 30, 2026 was $146.9 million and consisted primarily of net income of $386.6 million and certain non-cash items, including $42.9 million of stock-based compensation expense, partially offset by a net change of $282.1 million in net operating assets and liabilities. The $52.2 million increase in cash provided by operating activities during the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily due to a $472.4 million increase in net income related to opt-out and milestone payments earned during the period, a $20.3 million increase in deferred revenue and a $6.9 million increase in income taxes payable, partially offset by a $448.1 million change in receivable from collaboration partner.
Cash Provided by (Used in) Investing Activities
Cash provided by investing activities for the nine months ended September 30, 2026 was $181.9 million and consisted primarily of proceeds from maturities and sales of marketable securities of $395.1 million, partially offset by purchases of marketable securities of $212.6 million and purchases of property and equipment of $0.6 million. The $280.0 million increase in cash provided by investing activities for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily related to the investment of payments received from collaboration partners in 2026. Purchases of property and equipment were primarily related to laboratory equipment and furniture and fixtures.
Cash Provided by Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2026 was $41.1 million and consisted of net cash proceeds of $46.9 million from the issuance of common stock upon exercises of stock options and purchases of stock under our employee stock purchase plan (“ESPP”), partially offset by $5.8 million in stock repurchases. The $21.1 million increase in cash provided by financing activities for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily due to a $26.4 million increase in proceeds from the issuance of common stock upon exercise of options and purchases of common stock under the ESPP, partially offset by $5.8 million in stock repurchases.
Contractual Obligations and Other Commitments
During the nine months ended September 30, 2026, there were no material changes to our material cash requirements, including commitments for capital expenditures, described under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 25, 2026.
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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities related to our interest-earning investments and inflation risk affecting labor costs and clinical trial costs.
Interest Rate Fluctuation Risk
We had $834.6 million and $646.0 million in cash, cash equivalents and marketable securities at September 30, 2026 and December 31, 2025, respectively. Our cash and cash equivalents consist of cash, money market funds, certificates of deposit and commercial paper. Marketable securities consist of government and agency bonds, commercial paper and corporate bonds. A portion of our investments may be subject to interest rate risk and could decline in value if market interest rates increase. Based on our interest rate sensitivity analysis, an immediate 100 basis point increase in interest rates would increase our annual interest income by approximately $6.2 million, while an immediate 100 basis point decrease in interest rates would decrease our annual interest income by approximately $6.2 million.
Approximately $1.0 million and $2.8 million of our cash balance was located in Australia at September 30, 2026 and December 31, 2025, respectively. Our expenses, except those related to our Australian operations, are generally denominated in U.S. dollars. For our operations in Australia, the majority of our expenses are denominated in Australian dollars. To date, we have not had a formal hedging program with respect to foreign currency, but we may do so in the future if our exposure to foreign currency becomes more significant. A 10% increase or decrease in current exchange rates would not have a material effect on the results of our operations.
Inflation Fluctuation Risk
Inflation generally affects us by increasing our costs, such as the cost of labor and research and development contract costs. We do not believe inflation has had a material adverse effect on the results of our operations during the nine months ended September 30, 2026.
ITEM 4.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, under the supervision and with the participation of our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective at the reasonable assurance level.
Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting
In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
From time to time, we may become subject to litigation and claims arising in the ordinary course of business. We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, financial condition or cash flows.
ITEM 1A.RISK FACTORS
Our business, results of operations and financial condition are subject to various risks. These risks are described elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026. Except as set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, there have been no material changes from the risk factors identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities
None.
Repurchases of Shares or of Company Equity Securities
The following table summarizes our stock repurchase activity for the three months ended September 30, 2026:
| | | | | | | | | | |
| | | | | | | | | Approximate Dollar Value of | |
| | Total Number of Shares | | Average Price Paid | | Total Number of Shares Purchased as | | Shares that May Yet Be Purchased | ||
Period | | Purchased | | Per Share (1) | | Part of Publicly Announced Program (2) | | Under the Program (2) | ||
| | | | | | | (in millions) | |||
July 1 - 31, 2026 |
| — | | $ | — |
| — |
| $ | |
August 1 - 31, 2026 |
| — | | $ | — |
| — |
| $ | |
September 1 - 30, 2026 |
| 40,560 | | $ | 142.77 | | 40,560 | | $ | 294.21 |
Total | | 40,560 | | | |
| 40,560 | | | |
| (1) | Average price paid per share includes cost associated with the repurchases. |
| (2) | On September 8, 2026, we announced that our board of directors authorized a $300.0 million stock repurchase program. The repurchase program has no fixed expiration, does not obligate us to repurchase any specific number of shares and may be modified, suspended or discontinued at any time without prior notice. Under the repurchase program, stock repurchases may be made from time to time in open market or through privately negotiated transactions, including transactions pursuant to a trading plan adopted in accordance with Rule 10b5-1 under the Exchange Act. See Note 7 to the condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information. |
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ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5.OTHER INFORMATION
(c) Trading Plans
During the fiscal quarter ended September 30, 2026,
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ITEM 6.EXHIBITS
EXHIBIT INDEX
| | | | | | | | | | |
Exhibit | | | | Incorporation By Reference | ||||||
Number | | Exhibit Description | | Form | | SEC File No. | | Exhibit | | Filing Date |
3.1 | | Amended and Restated Certificate of Incorporation | | 8-K | | 001-37852 | | 3.1 | | 8/16/2016 |
3.2 | | Certificate of Amendment to the Amended and Restated Certificate of Incorporation | | 8-K | | 001-37852 | | 3.1 | | 6/26/2024 |
3.3 | | Amended and Restated Bylaws | | S-1/A | | 333-212476 | | 3.2b | | 8/1/2016 |
31.1+ | | Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | | |
31.2+ | | Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | | |
32.1+* | | Certification of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | | | | | |
101.INS+ | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document. | | | | | | | | |
101.SCH+ | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | |
101.CAL+ | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | |
101.DEF+ | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | |
101.LAB+ | | Inline XBRL Taxonomy Extension Labels Linkbase Document | | | | | | | | |
101.PRE+ | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | |
104 | | Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | | | | | | | | |
+ Filed herewith.
* This certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Protagonist Therapeutics, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of the Form 10-Q, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PROTAGONIST THERAPEUTICS, INC. | |
| | |
| | |
Date: November 6, 2026 | By: | /s/ Dinesh V. Patel, Ph.D. |
| | Dinesh V. Patel, Ph.D. |
| | President, Chief Executive Officer and Director |
| | (Principal Executive Officer) |
| | |
Date: November 6, 2026 | By: | /s/ Asif Ali |
| | Asif Ali |
| | Executive Vice President, Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |
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